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FIFTY-FIRST DAY

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MORNING SESSION

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Senate Chamber, Olympia, Tuesday, February 29, 2000

The Senate was called to order at 9:00 a.m. by President Pro Tempore Wojahn. The Secretary called the roll and announced to the President Pro Tempore that all Senators were present except Senators Eide, Fraser, Horn, Sellar and West. On motion of Senator Franklin, Senators Eide and Fraser were excused. On motion of Senator Honeyford, Senators Horn and Sellar were excused.

The Sergeant at Arms Color Guard, consisting of Pages Lindsey Tomlinson and Joel Pratt, presented the Colors. Reverend David Robin, pastor of the First Presbyterian Church in Tenino, offered the prayer.

MOTION

On motion of Senator Betti Sheldon, the reading of the Journal of the previous day was dispensed with and it was approved.

MOTION

On motion of Senator Goings, the following resolution was adopted:

SENATE RESOLUTION 2000-8708

By Senator Franklin, Goings, Wojahn, Winsley, Rasmussen, Eide, Kohl-Welles, and Oke

WHEREAS, The Pacific Lutheran University “Lutes” football team is the 1999 NCAA Division III National Champion, having defeated New Jersey’s Rowan University in a decisive fashion, 42-13 on December 18, 1999; and

WHEREAS, The Lutes entered the championship as the underdogs, but immediately proceeded to defy the oddsmakers and thoroughly dominate the game from start to finish; and

WHEREAS, The guiding force for PLU football is Head Coach Frosty Westering, who has well served a full generation of young men since joining the university in 1972; and

WHEREAS, Coach Westering has been honored as the 1999 Division III National Coach of the Year by the American Football Coaches Association.

WHEREAS, The 1999 NCAA Division III national title is Coach Westering’s fourth championship, having won the NAIA Division II National Championship three times--in 1980, 1987, and 1993; and

WHEREAS, The Lutes also finished as national runner-up in 1983, 1985, 1991, and 1994; and

WHEREAS, Frosty Westering is truly one of football’s greatest coaches, holding a 36-year collegiate coaching record of two-hundred seventy-seven wins, eighty-four losses, and seven ties, a .762 winning percentage; and

WHEREAS, He is one of a select group of coaches ever to win two hundred and fifty or more games, a group that includes such names as Paul “Bear” Bryant, Charles “Pop” Warner, Amos Alonzo Stagg, Joe Paterno, Bobby Bowden, and Tom Osborne; and

WHEREAS, Under his leadership, no PLU team has ever finished a season with a losing record; and

WHEREAS, The most important and astounding thing about the continuing success of the PLU football year after year remains the noticeable lack of a win-at-all-costs attitude, and the overriding sense of caring and support demonstrated by coaches and players toward each other as well as toward their opponents;

NOW, THEREFORE, BE IT RESOLVED, That the members of the Washington State Senate do hereby recognize and honor the Pacific Lutheran University football team’s outstanding 1999 season capped by the well-deserved NCAA Division III National Championship, under the leadership and guidance of Head Coach Frosty Westering and his staff; and, even more important, that we recognize and honor the team’s unwavering example of true sportsmanship, humility in victory, graciousness in loss, and a caring for each other and opponents that extends well beyond the field of play; and

BE IT FURTHER RESOLVED, That the Secretary of the Senate do hereby immediately transmit copies of this resolution to Pacific Lutheran University in care of President Loren Anderson, and to Head Coach Frosty Westering, his staff, and his team, the National Champion Lutes.

Senators Goings and Franklin spoke to Senate Resolution 2000-8708.

MOTION

On motion of Senator Kohl-Welles, the following resolution was adopted:

SENATE RESOLUTION 2000-8735

By Senators Kohl-Welles, Sheahan, McAuliffe, Spanel, Hochstatter, Prentice, Rasmussen and Fairley

WHEREAS, The students selected for special recognition as Washington Scholars in 2000 have distinguished themselves as exceptional students, student leaders, and as talented and enthusiastic participants in many diverse activities including art, debate, drama, honor societies, interscholastic sports, Junior Achievement, knowledge competitions, music, and student government; and

WHEREAS, These exemplary students have also contributed to the welfare of those less fortunate in their neighborhoods through volunteer efforts with community service organizations such as the United Way, Special Olympics, March of Dimes, Big Brothers, Big Sisters, community food drives, senior centers, scouting, and church groups; and

WHEREAS, The state of Washington benefits greatly from the accomplishments of these caring and gifted individuals, not only in their roles as students, but also as citizens, role models for other young people, and future leaders of our communities and our state; and

WHEREAS, Through the Washington Scholars Program, the Governor, the Legislature, and the state's citizens have an opportunity to recognize and honor three outstanding seniors from each of the state's forty-nine legislative districts for the students' exceptional academic achievements, leadership abilities, and contributions to their communities;

NOW, THEREFORE, BE IT RESOLVED, That the Senate honor and congratulate the Washington Scholars for their hard work, dedication, contributions, and maturity in achieving this significant accomplishment; and

BE IT FURTHER RESOLVED, That the families of these students be commended for the encouragement and support they have provided to the scholars; and

BE IT FURTHER RESOLVED, That the principals, teachers, and classmates of these highly esteemed students be recognized for the important part they played in helping the scholars to learn, contribute, lead, and excel; and

BE IT FURTHER RESOLVED, That copies of this resolution be immediately transmitted by the Secretary of the Senate to each of the Washington Scholars selected in 2000.

MOTION

On motion of Senator Betti Sheldon, the Senate reverted to the sixth order of business.

Vice President Pro Tempore Bauer assumed the Chair.

SECOND READING

ENGROSSED HOUSE BILL NO. 2995, by Representatives G. Chandler and Linville

Modifying provisions concerning apiaries.

The bill was read the second time.

MOTION

Senator Rasmussen moved that the following Committee on Agriculture and Rural Economic Development striking amendment be adopted:

Strike everything after the enacting clause and insert the following:

"Sec. 1. RCW 15.60.005 and 1994 c 178 s 1 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter:

(1) "Department" means the department of agriculture of the state of Washington.

(2) "Director" means the director of the state department of agriculture or the director's authorized representative.

(3) "Apiary" means a site where hives of bees or hives are kept or found.

(4) (("Abandoned hive" means any hive, with or without bees, that evidences a lack of being properly managed in that it has not been supered in the spring, except nucs, or unsupered in the fall, or is otherwise unmanaged and left without authorization and unattended on the property of another person or on public land.

(5))) "Apiarist" means any person who owns bees or is a keeper of bees in Washington.

(((6) "Beekeeping equipment" means any implements or devices used in the manipulation of bees, their brood, or hives in an apiary.

(7))) (5) "Bees" means adult insects, eggs, larvae, pupae, or other immature stages of the species Apis mellifera.

(((8) "Certificate" or "certificate of inspection" means an official document certifying compliance with the requirements of this chapter and accompanying the movement of inspected bees, bee hives, or beekeeping equipment.

(9))) (6) "Colony" refers to a natural group of bees having a queen or queens.

(((10) "Compliance agreement" means a written agreement between the department and a person engaged in apiculture, or handling, selling, or moving of hives or beekeeping equipment in which the person agrees to comply with stipulated requirements.

(11) "Feral colony" means a colony of bees in a natural cavity or a manufactured structure not intended for the keeping of bees on movable frames and comb.

(12) "Swarm" means a natural group of bees having a queen or queens, which is the progeny of a parent colony, without a hive, and not a feral colony.

(13) "Disease" means American foulbrood, European foulbrood, chalkbrood, nosema, sacbrood, or any other viral, fungal, bacterial or insect-related disease affecting bees or their brood.

(14) "Regulated bee pests" means a disease of bees for which maximum allowable limits of infection, or mites, or other parasites are set in rule.

(15))) (7) "Hive" means a manufactured receptacle or container prepared for the use of bees, that includes movable frames, combs, and substances deposited into the hive by bees.

(((16))) (8) "Person" means a natural person, individual, firm, partnership, company, society, association, corporation or every officer, agent, or employee of one of these entities.

(((17) "Bee pests" means a disease, mite, or other parasite that causes injury to bees.

(18) "Nets" means a device that is made of fabricated material and that is designed and utilized to prevent the escape of bees from bee hives during transit.

(19) "Apparently free" means no specified bee pest was found during inspection of survey activities.

(20) "Substantially free" means levels of specified bee pests found during inspection or survey activities were within established tolerances.

(21) "Africanized honey bee" means any bee of the subspecies Apis mellifera scutellata.

(22) "Super" means the portion of a hive in which honey is stored by bees.

(23))) (9) "Broker" means a person((,)) who is engaged in pollinating agricultural crops((,)) for a fee using hives that are owned by another person.

(((24) "Grower" means a person engaged in producing agricultural crops, and a user of honey bees for pollination of the crops.))

Sec. 2. RCW 15.60.010 and 1994 c 178 s 3 are each amended to read as follows:

((An apiary advisory committee is established to advise the director on the administration of this chapter. The apiary advisory committee may consist of up to eleven members.

(1) The committee shall include six apiarists, appointed by the director, and representing the major geographical divisions of the beekeeping industry in the state as established in rule. In making an appointment, the director shall seek nominations from the beekeepers' organizations within the geographic area and from nonaffiliated apiarists. Apiarists may nominate themselves.

(2) The committee shall include the director and a representative from the Washington State University apiary program or cooperative extension.

(3) The committee may include up to three representatives of receivers of pollination services.

(4) The terms of the apiarist members of the committee shall be staggered and the members shall serve a term of three years and until their successors have been appointed and qualified.

In the event a committee member resigns, is disqualified, or vacates a position on the committee for any reason, the vacancy shall be filled by the director under the provisions of this section.

(5))) The director may establish an apiary advisory committee including members representing the major segments of the apiary industry including commercial and noncommercial beekeepers, representatives from the Washington State University apiary program or cooperative extension, and receivers of pollination services as deemed appropriate.

The committee shall advise the director on administration of this chapter and issues affecting the apiary industry. The committee may also advise the director on the funding of research projects of benefit to the apiary industry.

The committee shall meet ((at least once yearly. It may also meet)) at the call of the director ((or the request of any three members of the committee)). Members of the committee shall serve without compensation but ((shall)) may be reimbursed for travel expenses incurred in attending meetings of the committee and any other official duty authorized ((by the committee and approved)) by the director, pursuant to RCW 43.03.050 and 43.03.060((, if apiarists are charged a registration fee, under RCW 15.60.050, to cover the expenses of the committee)).

Sec. 3. RCW 15.60.050 and 1994 c 178 s 6 are each amended to read as follows:

(1) Each person owning one or more hives with bees, brokers ((of)) renting hives, and ((beekeepers)) apiarists resident in other states who operate hives in Washington((,)) shall register with the director ((on or before)) by April 1st each year.

(((1))) (2) The registration application shall include:

(a) The name, address, and phone number of the ((owner)) apiarist or broker((,));

(b) The number of colonies of bees to be owned, brokered, or operated in Washington((, and such)) that year;

(c) A registration fee as ((may be)) prescribed in rule ((under subsection (2) of this section.)) by the director, with the advice of the apiary advisory committee; and

(d) Any other information required by the department by rule.

(3) The director shall issue to each ((resident)) apiarist or broker registered with the department an apiarist identification number. ((The apiarist identification number shall be displayed on hives of an apiary in a manner prescribed by the director in rule.

(2) A registration fee may be set in rule by the director, with the advice of the apiary advisory committee. The fee shall be used for covering the expenses of the apiary advisory committee and may be used for supporting the industry apiary program of the department or funding research projects of benefit to the apiary industry that the director may select upon the advice of the apiary advisory committee.))

Sec. 4. RCW 15.60.043 and 1994 c 178 s 5 are each amended to read as follows:

((The inspection fees, registration fees, pollination service fees, and other charges provided in this chapter shall become due and payable upon billing by the department.)) A late ((charge)) fee of one and one-half percent per month shall be assessed on ((the unpaid balance against persons more than thirty days in arrears. In addition to any other penalties, the director may refuse to perform an inspection or certification service for a person in arrears unless the person makes payment in full prior to such inspection or certification service)) registration fees received after April 1st.

Sec. 5. RCW 15.60.040 and 1994 c 178 s 4 are each amended to read as follows:

(((1) There is hereby established a fee on the use, by growers of agricultural crops, of bee pollination services provided by others. This pollination service fee is in the amount of fifty cents for each setting of each hive containing a colony that is used by the grower. The fee shall be paid by the grower using the service, shall be collected by the beekeeper providing the service, and shall be remitted by the beekeeper to the department as provided by rules adopted by the director. All such fees shall be deposited in the industry apiary program account. Revenues from these fees shall be directed to use in providing services to the apiary industry that assist in ensuring the vitality and availability of bees for commercial pollination services for the agricultural industry.

(2) There is established an industry apiary program account within the agricultural local fund.)) All money collected under this chapter ((including fees for requested services, required inspections, or treatments, registration fees, and apiary assessments)) shall be placed in ((the industry apiary program)) an account in the agricultural local fund. Money in the account ((may only)) shall be used to carry out the purposes of this chapter and may be used for apiary-related activities of the department or funding research projects of benefit to the apiary industry that the director may select upon the advice of the apiary advisory committee. No appropriation is required for disbursement from the ((industry apiary program)) account.

Sec. 6. RCW 17.24.007 and 1991 c 257 s 4 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Department" means the state department of agriculture.

(2) "Director" means the director of the state department of agriculture or the director's designee.

(3) "Quarantine" means a rule issued by the department that prohibits or regulates the movement of articles, bees, plants, or plant products from designated quarantine areas within or outside the state to prevent the spread of disease, plant pathogens, or pests to nonquarantine areas.

(4) "Plant pest" means a living stage of an insect, mite, nematode, slug, snail, or protozoa, or other invertebrate animal, bacteria, fungus, or parasitic plant, or their reproductive parts, or viruses, or an organism similar to or allied with any of the foregoing plant pests, including a genetically engineered organism, or an infectious substance that can directly or indirectly injure or cause disease or damage in plants or parts of plants or in processed, manufactured, or other products of plants.

(5) "Plants and plant products" means trees, shrubs, vines, forage, and cereal plants, and all other plants and plant parts, including cuttings, grafts, scions, buds, fruit, vegetables, roots, bulbs, seeds, wood, lumber, and all products made from the plants and plant products.

(6) "Certificate" or "certificate of inspection" means an official document certifying compliance with the requirements of this chapter. The term "certificate" includes labels, rubber stamp imprints, tags, permits, written statements, or a form of inspection and certification document that accompanies the movement of inspected and certified plant material and plant products, or bees, bee hives, or beekeeping equipment.

(7) "Compliance agreement" means a written agreement between the department and a person engaged in growing, handling, or moving articles, plants, plant products, or bees, bee hives, or beekeeping equipment regulated under this chapter, in which the person agrees to comply with stipulated requirements.

(8) "Distribution" means the movement of a regulated article from the property where it is grown or kept, to property that is not contiguous to the property, regardless of the ownership of the properties.

(9) "Genetically engineered organism" means an organism altered or produced through genetic modification from a donor, vector, or recipient organism using recombinant DNA techniques, excluding those organisms covered by the food, drug and cosmetic act (21 U.S.C. Secs. 301-392).

(10) "Person" means a natural person, individual, firm, partnership, corporation, company, society, or association, and every officer, agent, or employee of any of these entities.

(11) "Sell" means to sell, to hold for sale, offer for sale, handle, or to use as inducement for the sale of another article or product.

(12) "Noxious weed" means a living stage, including, but not limited to, seeds and reproductive parts, of a parasitic or other plant of a kind that presents a threat to Washington agriculture or environment.

(13) "Regulated article" means a plant or plant product, bees or beekeeping equipment, noxious weed or other articles or equipment capable of harboring or transporting plant or bee pests or noxious weeds that is specifically addressed in rules or quarantines adopted under this chapter.

(14) "Owner" means the person having legal ownership, possession, or control over a regulated article covered by this chapter including, but not limited to, the owner, shipper, consignee, or their agent.

(15) "Nuisance" means a plant, or plant part, apiary, or property found in a commercial area on which is found a pest, pathogen, or disease that is a source of infestation to other properties.

(16) "Bees" means ((honey producing insects of the species apis mellifera and includes the adults, eggs, larvae, pupae, and other immature stages of)) adult insects, eggs, larvae, pupae, or other immature stages of the species Apis mellifera.

(17) "Bee pests" means a mite, other parasite, or disease that causes injury to bees and those honey bees generally recognized to have undesirable behavioral characteristics such as or as found in Africanized honey bees.

(18) "Biological control" means the use by humans of living organisms to control or suppress undesirable animals and plants; the action of parasites, predators, or pathogens on a host or prey population to produce a lower general equilibrium than would prevail in the absence of these agents.

(19) "Biological control agent" means a parasite, predator, or pathogen intentionally released, by humans, into a target host or prey population with the intent of causing population reduction of that host or prey.

(20) "Emergency" means a situation where there is an imminent danger of an infestation of plant pests or disease that seriously threatens the state's agricultural or horticultural industries or environment and that cannot be adequately addressed with normal procedures or existing resources.

NEW SECTION. Sec. 7. The following sections are recodified within chapter 15.60 RCW in the following order:

RCW 15.60.005

RCW 15.60.010

RCW 15.60.050

RCW 15.60.043

RCW 15.60.040

RCW 15.60.170

RCW 15.60.180

RCW 15.60.190

RCW 15.60.210

RCW 15.60.220

RCW 15.60.900

NEW SECTION. Sec. 8. The following acts or parts of acts are each repealed:

(1) RCW 15.60.007 (Industry apiary program) and 1994 c 178 s 2, 1993 c 89 s 2, & 1988 c 4 s 14;

(2) RCW 15.60.015 (Bee pests--Control--Quarantine) and 1993 c 89 s 4, 1988 c 4 s 2, 1977 ex.s. c 362 s 2, & 1961 c 11 s 15.60.015;

(3) RCW 15.60.020 (Abandoned hives--Impoundment) and 1993 c 89 s 5, 1988 c 4 s 3, 1975-'76 2nd ex.s. c 34 s 17, & 1961 c 11 s 15.60.020;

(4) RCW 15.60.025 (Specific rule-making authority) and 1993 c 89 s 6, 1988 c 4 s 4, & 1977 ex.s. c 362 s 8;

(5) RCW 15.60.030 (Bringing bees or equipment into state--Requirements) and 1993 c 89 s 7, 1988 c 4 s 5, 1981 c 296 s 7, 1977 ex.s. c 362 s 3, 1965 c 44 s 1, & 1961 c 11 s 15.60.030;

(6) RCW 15.60.042 (Request of department services) and 1993 c 89 s 9 & 1988 c 4 s 7;

(7) RCW 15.60.100 (Director's powers) and 1993 c 89 s 12, 1988 c 4 s 10, 1981 c 296 s 10, 1977 ex.s. c 362 s 7, & 1961 c 11 s 15.60.100;

(8) RCW 15.60.110 (Access and entry by director) and 1993 c 89 s 13, 1988 c 4 s 11, 1977 ex.s. c 362 s 6, & 1961 c 11 s 15.60.110;

(9) RCW 15.60.120 (Queen bee rearing apiaries) and 1993 c 89 s 14, 1988 c 4 s 12, 1981 c 296 s 11, & 1961 c 11 s 15.60.120;

(10) RCW 15.60.140 (Africanized honey bees) and 1993 c 89 s 15, 1988 c 4 s 13, 1981 c 296 s 12, & 1961 c 11 s 15.60.140;

(11) RCW 15.60.150 (Unlawful acts enumerated) and 1993 c 89 s 16, 1981 c 296 s 13, & 1961 c 11 s 15.60.150; and

(12) RCW 15.60.230 (Injunction) and 1993 c 89 s 19.

NEW SECTION. Sec. 9. This act takes effect June 30, 2001."

Debate ensued.

The Vice President Pro Tempore declared the question before the Senate to be the adoption of the Committee on Agriculture and Rural Economic Development striking amendment to Engrossed House Bill No. 2995.

The motion by Senator Rasmussen carried and the committee striking amendment was adopted.

MOTIONS

On motion of Senator Rasmussen, the following title amendment was adopted:

On page 1, line 1 of the title, after "apiaries;" strike the remainder of the title and insert "amending RCW 15.60.005, 15.60.010, 15.60.050, 15.60.043, 15.60.040, and 17.24.007; adding new sections to chapter 15.60 RCW; recodifying RCW 15.60.005, 15.60.010, 15.60.050, 15.60.043, 15.60.040, 15.60.170, 15.60.180, 15.60.190, 15.60.210, 15.60.220, and 15.60.900; repealing RCW 15.60.007, 15.60.015, 15.60.020, 15.60.025, 15.60.030, 15.60.042, 15.60.100, 15.60.110, 15.60.120, 15.60.140, 15.60.150, and 15.60.230; and providing an effective date."

On motion of Senator Rasmussen, the rules were suspended, Engrossed House Bill No. 2995, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

The Vice President Pro Tempore declared the question before the Senate to be the roll call on the final passage of Engrossed House Bill No. 2995, as amended by the Senate.

ROLL CALL

The Secretary called the roll on the final passage of Engrossed House Bill No. 2995, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 43; Nays, 1; Absent, 1; Excused, 4.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Fairley, Finkbeiner, Franklin, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Hochstatter, Honeyford, Jacobsen, Johnson, Kline, Kohl-Welles, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, Winsley, Wojahn and Zarelli - 43.

Voting nay: Senator Sheldon, T. - 1.

Absent: Senator West - 1.

Excused: Senators Eide, Fraser, Horn and Sellar - 4.

ENGROSSED HOUSE BILL NO. 2995, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

President Pro Tempore Wojahn assumed the Chair.

MOTION

On motion of Senator McCaslin, Senator West was excused.

SECOND READING

ENGROSSED HOUSE BILL NO. 2873, by Representatives Parlette, Scott, Mulliken and Kessler

Increasing local government debt limits to finance capital facilities.

The bill was read the second time.

MOTION

On motion of Senator Patterson, the following Committee on State and Local Government striking amendment was adopted:

Strike everything after the enacting clause and insert the following:

"Sec. 1. RCW 39.36.020 and 1994 c 277 s 1 are each amended to read as follows:

(1) Except as otherwise expressly provided by law or in subsections (2), (3) and (4) of this section, no taxing district shall for any purpose become indebted in any manner to an amount exceeding three-eighths of one percent of the value of the taxable property in such taxing district without the assent of three-fifths of the voters therein voting at an election to be held for that purpose, nor in cases requiring such assent shall the total indebtedness incurred at any time exceed one and one-fourth percent on the value of the taxable property therein.

(2)(a)(i) Public hospital districts are limited to an indebtedness amount not exceeding three-fourths of one percent of the value of the taxable property in such public hospital districts without the assent of three-fifths of the voters therein voting at an election held for that purpose.

(ii) Counties, cities, and towns are limited to an indebtedness amount not exceeding one and one-half percent of the value of the taxable property in such counties, cities, or towns without the assent of three-fifths of the voters therein voting at an election held for that purpose.

(b) In cases requiring such assent counties, cities, towns, and public hospital districts are limited to a total indebtedness of two and one-half percent of the value of the taxable property therein. However, any county that has assumed the rights, powers, functions, and obligations of a metropolitan municipal corporation under chapter 36.56 RCW may become indebted to a larger amount for its authorized metropolitan functions, as provided under chapter 35.58 RCW, but not exceeding an additional three-fourths of one percent of the value of the taxable property in the county without the assent of three-fifths of the voters therein voting at an election held for that purpose, and in cases requiring such assent not exceeding an additional two and one-half percent of the value of the taxable property in the county.

(3) School districts are limited to an indebtedness amount not exceeding three-eighths of one percent of the value of the taxable property in such district without the assent of three-fifths of the voters therein voting at an election held for that purpose. In cases requiring such assent school districts are limited to a total indebtedness of two and one-half percent of the value of the taxable property therein.

(4) No part of the indebtedness allowed in this chapter shall be incurred for any purpose other than strictly county, city, town, school district, township, port district, metropolitan park district, or other municipal purposes: PROVIDED, That a city or town, with such assent, may become indebted to a larger amount, but not exceeding two and one-half percent additional, determined as herein provided, for supplying such city or town with water, artificial light, and sewers, when the works for supplying such water, light, and sewers shall be owned and controlled by the city or town; and a city or town, with such assent, may become indebted to a larger amount, but not exceeding two and one-half percent additional for acquiring or developing open space ((and)), park facilities, and capital facilities associated with economic development: PROVIDED FURTHER, That any school district may become indebted to a larger amount but not exceeding two and one-half percent additional for capital outlays.

(5) Such indebtedness may be authorized in any total amount in one or more propositions and the amount of such authorization may exceed the amount of indebtedness which could then lawfully be incurred. Such indebtedness may be incurred in one or more series of bonds from time to time out of such authorization but at no time shall the total general indebtedness of any taxing district exceed the above limitation.

The term "value of the taxable property" as used in this section shall have the meaning set forth in RCW 39.36.015."

MOTIONS

On motion of Senator Patterson, the following title amendment was adopted:

On page 1, line 3 of the title, after "development;" strike the remainder of the title and insert "and amending RCW 39.36.020."

On motion of Senator Patterson, the rules were suspended, Engrossed House Bill No. 2873, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of Engrossed House Bill No. 2873, as amended by the Senate.

ROLL CALL

The Secretary called the roll on the final passage of Engrossed House Bill No. 2873, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 44; Nays, 0; Absent, 0; Excused, 5.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Fairley, Finkbeiner, Franklin, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Hochstatter, Honeyford, Jacobsen, Johnson, Kline, Kohl-Welles, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, Winsley, Wojahn and Zarelli - 44.

Excused: Senators Eide, Fraser, Horn, Sellar and West - 5.

ENGROSSED HOUSE BILL NO. 2873, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MOTION

On motion of Senator McCaslin, Senator Deccio was excused.

SECOND READING

SUBSTITUTE HOUSE BILL NO. 2441, by House Committee on State Government (originally sponsored by Representatives Wensman, Ogden, Rockefeller, McMorris, Alexander, Regala, Mielke, Doumit, Thomas, Kessler, Hatfield, O'Brien, Lisk, McDonald, Carlson, Conway, Mulliken, Koster, Woods, Talcott, Huff, Radcliff, Wolfe, Ruderman, Edmonds, Pflug, Parlette, Esser, Hurst and Benson) (by request of Joint Legislative Audit and Review Committee)

Increasing government accountability through the state sunset review process.

The bill was read the second time.

MOTION

On motion of Senator Gardner, the following Committee on State and Local Government striking amendment was adopted:

Strike everything after the enacting clause and insert the following:

"Sec. 1. RCW 43.131.020 and 1977 ex.s. c 289 s 2 are each amended to read as follows:

The state legislature finds that state ((agencies)) entities may fail to deliver services as effectively and efficiently as is expected by the general public and as originally contemplated by the legislature. It further finds that state government actions have produced a substantial increase in numbers of ((agencies)) entities, growth of programs, and proliferation of rules ((and regulations)), and that the entire process has evolved without sufficient legislative and executive oversight, regulatory accountability, or a system of checks and balances. The legislature further finds that by establishing a system for the termination, continuation, or modification of state ((agencies)) entities, coupled with a system of scheduled review of such ((agencies)) entities, it will be in a better position to: Evaluate the need for the continued existence of existing and future state ((agencies)) entities; assess the effectiveness and performance of agencies, boards, commissions, and programs; and ensure public accountability. The legislature recognizes that the executive branch shares in this duty and responsibility to assure that state government operates in an efficient, orderly, and responsive manner.

Sec. 2. RCW 43.131.030 and 1983 1st ex.s. c 27 s 1 are each amended to read as follows:

As used in this chapter the following words and phrases shall have the following meanings unless the context clearly requires otherwise.

(1) (("Committees of reference" means the standing legislative committees designated by the senate and house of representatives to consider termination, modification, or reestablishment of state agencies pursuant to this chapter.)) "Entity" includes every state office, department, board, commission, unit or subunit, and agency of the state, and where provided by law, programs and activities involving less than the full responsibility of a state agency. "Entity" also includes any part of the Revised Code of Washington scheduled for repeal, expiration, or program termination.

(2) "Person" includes every natural person, firm, partnership, corporation, association, or organization.

(((3) "Regulatory entity" means any board, commission, agency, division, or other unit or subunit of state government which licenses or regulates one or more professions, occupations, industries, businesses, or other endeavors in the state of Washington.

(4) "State agency" includes every state office, department, board, commission, regulatory entity and agency of the state, and where provided by law, programs and activities involving less than the full responsibility of a state agency.))

Sec. 3. RCW 43.131.040 and 1983 1st ex.s. c 27 s 2 are each amended to read as follows:

Any state ((agency)) entity scheduled for termination by the processes provided in this chapter may be reestablished by the legislature for a specified period of time or indefinitely. The legislature may again review the state ((agency)) entity in a manner consistent with the provisions of this chapter and reestablish, modify, or consolidate such state ((agency)) entity or allow it to be terminated.

NEW SECTION. Sec. 4. A new section is added to chapter 43.131 RCW to read as follows:

The joint legislative audit and review committee shall conduct a program and fiscal review of any entity scheduled for termination under this chapter. This program and fiscal review shall be completed and a preliminary report prepared during the calendar year prior to the date established for termination. These reports shall be prepared in the manner set forth in RCW 44.28.071 and 44.28.075. Upon completion of its preliminary report, the joint legislative audit and review committee shall transmit copies of the report to the office of financial management and any affected entity. The final report shall include the response, if any, of the affected entity and the office of financial management in the same manner as set forth in RCW 44.28.088, except the affected entity and the office of financial management shall have sixty days to respond to the report. The joint legislative audit and review committee shall transmit the final report to the legislature, to the state entity affected, to the governor, and to the state library.

NEW SECTION. Sec. 5. A new section is added to chapter 43.131 RCW to read as follows:

(1) Any entity may be scheduled for sunset termination and review under this chapter by law.

(2) An entity scheduled for sunset termination shall establish performance measures, as required under subsection (3) of this section, and must be evaluated, in part, in terms of the results. The entity has the burden of demonstrating the extent to which performance results have been achieved. The sunset termination legislation shall name a lead entity, if more than one entity is impacted by scheduled termination. The affected entity or lead entity has the responsibility for developing and implementing a data collection plan and submitting the resulting performance information to the joint legislative audit and review committee.

(3) An entity shall develop performance measures and a data collection plan and submit them for review and comment to the joint legislative audit and review committee within one year of the effective date of the legislation establishing the sunset termination.

(4) Unless specified otherwise, sunset terminations under this chapter shall be a minimum of seven years. The joint legislative audit and review committee shall complete its review in the year prior to the date of termination.

NEW SECTION. Sec. 6. A new section is added to chapter 43.131 RCW to read as follows:

(1) In conducting the review of an entity, the joint legislative audit and review committee shall determine the scope and objectives of the review and consider, but not be limited to, the following factors, if applicable:

(a) The extent to which the entity has complied with legislative intent;

(b) The extent to which the entity is operating in an efficient and economical manner which results in optimum performance;

(d) The extent to which the entity duplicates the activities of other entities or of the private sector;

(e) The extent to which the entity is meeting the performance measures developed under section 5 of this act; and

(f) The possible impact of the termination or modification of the entity.

(2) After completing the review under subsection (1) of this section, the committee shall make its recommendations to the legislature.

Sec. 7. RCW 43.131.090 and 1993 c 281 s 54 are each amended to read as follows:

Unless the legislature specifies a shorter period of time, a terminated ((state agency)) entity shall continue in existence until June 30th of the next succeeding year for the purpose of concluding its affairs: PROVIDED, That the powers and authority of the ((state agency)) entity shall not be reduced or otherwise limited during this period. Unless otherwise provided:

(1) All employees of terminated ((state agencies)) entities classified under chapter 41.06 RCW, the state civil service law, shall be transferred as appropriate or as otherwise provided in the procedures adopted by the Washington personnel resources board pursuant to RCW 41.06.150;

(2) All documents and papers, equipment, or other tangible property in the possession of the terminated ((state agency)) entity shall be delivered to the custody of the ((agency)) entity assuming the responsibilities of the terminated ((agency)) entity or if such responsibilities have been eliminated, documents and papers shall be delivered to the state archivist and equipment or other tangible property to the department of general administration;

(3) All funds held by, or other moneys due to, the terminated ((state agency)) entity shall revert to the fund from which they were appropriated, or if that fund is abolished to the general fund;

(4) Notwithstanding the provisions of RCW 34.05.020, all rules made by a terminated ((state agency)) entity shall be repealed, without further action by the ((state agency)) entity, at the end of the period provided in this section, unless assumed and reaffirmed by the ((agency)) entity assuming the related legal responsibilities of the terminated ((state agency)) entity;

(5) All contractual rights and duties of ((a state agency)) an entity shall be assigned or delegated to the ((agency)) entity assuming the responsibilities of the terminated ((state agency)) entity, or if there is none to such ((agency)) entity as the governor shall direct.

Sec. 8. RCW 43.131.100 and 1977 ex.s. c 289 s 10 are each amended to read as follows:

This chapter shall not affect the right to institute or prosecute any cause of action by or against ((a state agency)) an entity terminated pursuant to this chapter if the cause of action arose prior to the end of the period provided in RCW 43.131.090. Such causes of action may be instituted, prosecuted, or defended in the name of the state of Washington by the office of the attorney general. Any hearing or other proceeding pending before ((a state agency)) an entity to be terminated and not completed before the end of the period provided in RCW 43.131.090, may be completed by the ((agency)) entity assuming the responsibilities of the terminated ((state agency)) entity.

Sec. 9. RCW 43.131.130 and 1977 ex.s. c 289 s 13 are each amended to read as follows:

Nothing in this chapter or RCW 43.06.010 ((as now or hereafter amended,)) shall prevent the legislature from abolishing or modifying ((a state agency)) an entity scheduled for termination prior to the ((agency's)) entity's established termination date or from abolishing or modifying any other ((state agency)) entity.

Sec. 10. RCW 43.131.150 and 1983 1st ex.s. c 27 s 8 are each amended to read as follows:

The ((state agencies and programs)) entities scheduled for termination under this chapter shall be subject to all of the processes provided in this chapter.

NEW SECTION. Sec. 11. The following acts or parts of acts are each repealed:

(1) RCW 43.131.050 (Joint legislative audit and review committee and office of financial management--Duties--Reports required) and 1996 c 288 s 43, 1990 c 297 s 2, 1979 c 22 s 1, & 1977 ex.s. c 289 s 5;

(2) RCW 43.131.060 (Joint legislative audit and review committee review of regulatory entity--Factors for consideration) and 1996 c 288 s 44, 1988 c 17 s 1, & 1977 ex.s. c 289 s 6;

(3) RCW 43.131.070 (Joint legislative audit and review committee review of a state agency other than a regulatory entity--Factors for consideration) and 1996 c 288 s 45 & 1977 ex.s. c 289 s 7; and

(4) RCW 43.131.080 (Committees of reference--Powers and duties) and 1996 c 288 s 46, 1989 c 175 s 109, 1983 1st ex.s. c 27 s 3, & 1977 ex.s. c 289 s 8.

Sec. 12. RCW 43.131.900 and 1988 c 17 s 2 are each amended to read as follows:

RCW 43.131.010 through 43.131.150 shall expire on June 30, ((2000)) 2015, unless extended by law for an additional fixed period of time.

NEW SECTION. Sec. 13. 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."

MOTIONS

On motion of Senator Gardner, the following title amendment was adopted:

On page 1, line 2 of the title, after "process;" strike the remainder of the title and insert "amending RCW 43.131.020, 43.131.030, 43.131.040, 43.131.090, 43.131.100, 43.131.130, 43.131.150, and 43.131.900; adding new sections to chapter 43.131 RCW; repealing RCW 43.131.050, 43.131.060, 43.131.070, and 43.131.080; and providing an expiration date."

On motion of Senator Gardner, the rules were suspended, Substitute House Bill No. 2441, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 2441, as amended by the Senate.

ROLL CALL

The Secretary called the roll on the final passage of Substitute House Bill No. 2441, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 44; Nays, 0; Absent, 0; Excused, 5.

Voting yea: Senators Bauer, Benton, Brown, Costa, Fairley, Finkbeiner, Franklin, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Hochstatter, Honeyford, Jacobsen, Johnson, Kline, Kohl-Welles, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, West, Winsley, Wojahn and Zarelli - 44.

Excused: Senators Deccio, Eide, Fraser, Horn and Sellar - 5.

SUBSTITUTE HOUSE BILL NO. 2441, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MOTION

On motion of Senator Goings, Senators Haugen and Loveland were excused.

SECOND READING

SUBSTITUTE HOUSE BILL NO. 1218, by House Committee on Health Care (originally sponsored by Representatives Cody and Parlette) (by request of Department of Health)

Modifying provisions related to nurse delegation of tasks.

The bill was read the second time.

MOTIONS

On motion of Senator Thibaudeau, the following Committee on Health and Long-Term Care amendment was adopted:

On page 7, line 38, after "30," strike "2000" and insert "2001"

On motion of Senator Thibaudeau, the rules were suspended, Substitute House Bill No. 1218, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

POINT OF INQUIRY

Senator Costa: “Senator Thibaudeau, does the underlying bill prevent nurse delegation to certified medical assistance?”

Senator Thibaudeau: “No, it would not.”

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 1218, as amended by the Senate.

ROLL CALL

The Secretary called the roll on the final passage of Substitute House Bill No. 1218, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 44; Nays, 0; Absent, 0; Excused, 5.

Excused: Senators Deccio, Eide, Fraser, Horn and Sellar - 5.

SUBSTITUTE HOUSE BILL NO. 1218, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

SECOND READING

SUBSTITUTE HOUSE BILL NO. 2022, by House Committee on Higher Education (originally sponsored by Representatives Schindler, Sullivan, Bush, Lantz, Mielke, Lovick, Cairnes, Hurst, Kastama, McDonald, Esser, Conway, Campbell, Benson and D. Schmidt)

Expanding the national guard scholarship program.

The bill was read the second time.

MOTION

On motion of Senator Kohl-Welles, the rules were suspended, Substitute House Bill No. 2022 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

Debate ensued.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 2022.

ROLL CALL

The Secretary called the roll on the final passage of Substitute House Bill No. 2022 and the bill passed the Senate by the following vote: Yeas, 43; Nays, 0; Absent, 1; Excused, 5.

Voting yea: Senators Bauer, Benton, Brown, Costa, Fairley, Finkbeiner, Franklin, Gardner, Goings, Hale, Hargrove, Heavey, Hochstatter, Honeyford, Horn, Jacobsen, Johnson, Kline, Kohl-Welles, Long, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, West, Winsley, Wojahn and Zarelli - 43.

Absent: Senator Deccio - 1.

Excused: Senators Eide, Fraser, Haugen, Loveland and Sellar - 5.

SUBSTITUTE HOUSE BILL NO. 2022, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

SECOND READING

SUBSTITUTE HOUSE BILL NO. 2644, by House Committee on Agriculture and Ecology (originally sponsored by Representatives Delvin, Grant, Hankins, Linville and G. Chandler)

Restoring unfinished nuclear power sites.

The bill was read the second time.

MOTION

On motion of Senator Brown, the following Committee on Energy, Technology and Telecommunications striking amendment was adopted:Strike everything after the enacting clause and insert the following:

"Sec. 1. RCW 80.50.300 and 1996 c 4 s 2 are each amended to read as follows:

(1) This section applies only to unfinished nuclear power projects ((that are not located on federal property)). If a certificate holder stops construction of a nuclear energy facility before completion, terminates the project or otherwise resolves not to complete construction, never introduces or stores fuel for the energy facility on the site, and never operates the energy facility as designed to produce energy, the certificate holder may contract, establish interlocal agreements, or use other formal means to effect the transfer of site restoration responsibilities, which may include economic development activities, to any political subdivision or subdivisions of the state composed of elected officials. The contracts, interlocal agreements, or other formal means of cooperation may include, but are not limited to provisions effecting the transfer or conveyance of interests in the site and energy facilities from the certificate holder to other political subdivisions of the state, including costs of maintenance and security, capital improvements, and demolition and salvage of the unused energy facilities and infrastructure.

(2) If a certificate holder transfers all or a portion of the site to a political subdivision or subdivisions of the state composed of elected officials and located in the same county as the site, the council shall amend the site certification agreement to release those portions of the site ((that are transferred pursuant to this section)) that it finds are no longer intended for the development of an energy facility.

Immediately upon release of all or a portion of the site pursuant to this section, all responsibilities for maintaining the public welfare for portions of the site transferred, including but not limited to health and safety, are transferred to the political subdivision or subdivisions of the state. For sites located on federal land, all responsibilities for maintaining the public welfare for all of the site, including but not limited to health and safety, must be transferred to the political subdivision or subdivisions of the state irrespective of whether all or a portion of the site is released.

(3) The legislature finds that for all or a portion of sites that have been transferred to a political subdivision or subdivisions of the state prior to September 1, 1999, ensuring water for site restoration including economic development, completed pursuant to this section can best be accomplished by a transfer of existing surface water rights, and that such a transfer is best accomplished administratively through procedures set forth in existing statutes and rules. However, if a transfer of water rights is not possible, the department of ecology shall, within six months of the transfer of the site or portion thereof pursuant to subsection (1) of this section, create a trust water right under chapter 90.42 RCW containing between ten and twenty cubic feet per second for the benefit of the appropriate political subdivision or subdivisions of the state. The trust water right shall be used in fulfilling site restoration responsibilities, including economic development. The trust water right shall be from existing valid water rights within the basin where the site is located.

(4) For purposes of this section, "political subdivision or subdivisions of the state" means a city, town, county, public utility district, port district, or joint operating agency."

MOTIONS

On motion of Senator Brown, the following title amendment was adopted:

On page 1, line 4 of the title, after "sites;" strike the remainder of the title and insert "and amending RCW 80.50.300."

On motion of Senator Brown, the rules were suspended, Substitute House Bill No. 2644, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

Debate ensued.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 2644, as amended by the Senate.

ROLL CALL

The Secretary called the roll on the final passage of Substitute House Bill No. 2644, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 43; Nays, 1; Absent, 0; Excused, 5.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Fairley, Finkbeiner, Franklin, Gardner, Goings, Hale, Hargrove, Heavey, Hochstatter, Honeyford, Horn, Johnson, Kline, Kohl-Welles, Long, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, West, Winsley, Wojahn and Zarelli - 43.

Voting nay: Senator Jacobsen - 1.

Excused: Senators Eide, Fraser, Haugen, Loveland and Sellar - 5.

SUBSTITUTE HOUSE BILL NO. 2644, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

SECOND READING

ENGROSSED HOUSE BILL NO. 2322, by Representatives Esser, Lantz, Constantine, Carlson and Hurst

Amending the partnership and limited liability company acts.

The bill was read the second time.

MOTION

On motion of Senator Heavey, the rules were suspended, Engrossed House Bill No. 2322 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

Debate ensued.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of Engrossed House Bill No. 2322.

ROLL CALL

The Secretary called the roll on the final passage of Engrossed House Bill No. 2322 and the bill passed the Senate by the following vote: Yeas, 44; Nays, 0; Absent, 0; Excused, 5.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Fairley, Finkbeiner, Franklin, Gardner, Goings, Hale, Hargrove, Heavey, Hochstatter, Honeyford, Horn, Jacobsen, Johnson, Kline, Kohl-Welles, Long, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, West, Winsley, Wojahn and Zarelli - 44.

Excused: Senators Eide, Fraser, Haugen, Loveland and Sellar - 5.

ENGROSSED HOUSE BILL NO. 2322, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

SECOND READING

HOUSE BILL NO. 2765, by Representatives McIntire, Mulliken, Wensman, Fisher, Ogden and Edwards

Authorizing delegation of authority regarding revenue bonds for port districts.

The bill was read the second time.

MOTION

On motion of Senator Patterson, the rules were suspended, House Bill No. 2765 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

Debate ensued.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of House Bill No. 2765.

ROLL CALL

The Secretary called the roll on the final passage of House Bill No. 2765 and the bill passed the Senate by the following vote: Yeas, 42; Nays, 3; Absent, 0; Excused, 4.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Eide, Fairley, Finkbeiner, Franklin, Gardner, Goings, Hale, Hargrove, Hochstatter, Honeyford, Horn, Jacobsen, Johnson, Kline, Kohl-Welles, Long, McAuliffe, McCaslin, McDonald, Morton, Oke, Prentice, Rasmussen, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, West, Winsley, Wojahn and Zarelli - 42.

Voting nay: Senators Heavey, Patterson and Roach - 3.

Excused: Senators Fraser, Haugen, Loveland and Sellar - 4.

HOUSE BILL NO. 2765, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MOTION

At 10:09 a.m., on motion of Senator Betti Sheldon, the Senate was declared to be at ease.

The Senate was called to order at 11:23 a.m. by President Pro Tempore Wojahn.

SECOND READING

SENATE BILL NO. 6304, by Senators McCaslin and Haugen

Modifying the license plate replacement program.

MOTIONS

On motion of Senator Haugen, Substitute Senate Bill No. 6304 was substituted for Senate Bill No. 6304 and the substitute bill was placed on second reading and read the second time.

On motion of Senator Haugen, the rules were suspended, Substitute Senate Bill No. 6304 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

Debate ensued.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of Substitute Senate Bill No. 6304.

ROLL CALL

The Secretary called the roll on the final passage of Substitute Senate Bill No. 6304 and the bill passed the Senate by the following vote: Yeas, 47; Nays, 0; Absent, 0; Excused, 2.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Eide, Fairley, Finkbeiner, Franklin, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Hochstatter, Honeyford, Horn, Jacobsen, Johnson, Kline, Kohl-Welles, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, West, Winsley, Wojahn and Zarelli - 47.

Excused: Senators Fraser and Sellar - 2.

SUBSTITUTE SENATE BILL NO. 6304, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MOTION

On motion of Senator Honeyford, Senator Rossi was excused.

SECOND READING

HOUSE BILL NO. 2333, by Representatives Schual-Berke, Dickerson, Carlson, Hurst and D. Sommers

Clarifying rights and responsibilities of bicyclists.

The bill was read the second time.

MOTION

On motion of Senator Goings, the rules were suspended, House Bill No. 2333 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

Debate ensued.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of House Bill No. 2333.

ROLL CALL

The Secretary called the roll on the final passage of House Bill No. 2333 and the bill passed the Senate by the following vote: Yeas, 39; Nays, 6; Absent, 1; Excused, 3.

Voting yea: Senators Bauer, Brown, Costa, Deccio, Eide, Fairley, Finkbeiner, Franklin, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Horn, Jacobsen, Johnson, Kline, Kohl-Welles, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Oke, Prentice, Rasmussen, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Swecker, Thibaudeau, West, Winsley and Wojahn - 39.

Voting nay: Senators Benton, Hochstatter, Honeyford, Roach, Stevens and Zarelli - 6.

Absent: Senator Patterson - 1.

Excused: Senators Fraser, Rossi and Sellar - 3.

HOUSE BILL NO. 2333, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

SECOND READING

SUBSTITUTE HOUSE BILL NO. 2599, by House Committee on Local Government (originally sponsored by Representatives Doumit, Mulliken, Scott, Fisher and Alexander)

Creating a training program for port district officials.

The bill was read the second time.

MOTIONS

On motion of Senator Fairley, the following Committee on Labor and Workforce Development amendments were considered simultaneously and were adopted:

On page 3, beginning on line 1, after "association" strike all material through "chapter," on line 3

On page 3, beginning on line 3, after "auditor" strike all material through "chapter" on line 6

On page 3, line 6 after "chapter." insert "The financial records of any nonprofit corporation utilized by port districts shall be subject to audit by the state auditor to determine compliance with the contractual terms and conditions under which payments or reimbursements are received under chapter 53.06 RCW."

On motion of Senator Fairley, the rules were suspended, Substitute House Bill No. 2599, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

Debate ensued.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 2599, as amended by the Senate.

ROLL CALL

The Secretary called the roll on the final passage of Substitute House Bill No. 2599, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 47; Nays, 0; Absent, 0; Excused, 2.

Excused: Senators Fraser and Sellar - 2.

SUBSTITUTE HOUSE BILL NO. 2599, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

SECOND READING

HOUSE BILL NO. 2516, by Representatives Stensen, Cox, Cooper and Thomas (by request of Department of Revenue)

Regarding disclosure of information to persons against whom successor tax liability is asserted.

The bill was read the second time.

MOTION

On motion of Senator Loveland, the rules were suspended, House Bill No. 2516 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of House Bill No. 2516.

ROLL CALL

The Secretary called the roll on the final passage of House Bill No. 2516 and the bill passed the Senate by the following vote: Yeas, 47; Nays, 0; Absent, 0; Excused, 2.

Excused: Senators Fraser and Sellar - 2.

HOUSE BILL NO. 2516, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

SECOND READING

HOUSE BILL NO. 2535, by Representatives Miloscia, D. Schmidt, Ogden, Veloria and Haigh

Facilitating payments to subcontractors on design-build projects.

The bill was read the second time.

MOTION

On motion of Senator Patterson, the rules were suspended, House Bill No. 2535 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

` Debate ensued.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of House Bill No. 2535.

ROLL CALL

The Secretary called the roll on the final passage of House Bill No. 2535 and the bill passed the Senate by the following vote: Yeas, 47; Nays, 0; Absent, 0; Excused, 2.

Excused: Senators Fraser and Sellar - 2.

HOUSE BILL NO. 2535, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MOTION

On motion of Senator Eide, Senator Patterson was excused.

SECOND READING

SUBSTITUTE HOUSE BILL NO. 2899, by House Committee on Commerce and Labor (originally sponsored by Representatives Conway, Clements, Cody, Cooper and Keiser) (by request of Department of Social and Health Services)

Developing a workplace safety plan for state hospitals.

The bill was read the second time.

MOTION

On motion of Senator Costa, the rules were suspended, Substitute House Bill No. 2899 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 2899.

ROLL CALL

The Secretary called the roll on the final passage of Substitute House Bill No. 2899 and the bill passed the Senate by the following vote: Yeas, 47; Nays, 0; Absent, 0; Excused, 2.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Eide, Fairley, Finkbeiner, Franklin, Fraser, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Hochstatter, Honeyford, Horn, Jacobsen, Johnson, Kline, Kohl-Welles, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Oke, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, West, Winsley, Wojahn and Zarelli - 47.

Excused: Senators Patterson and Sellar - 2.

SUBSTITUTE HOUSE BILL NO. 2899, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

SECOND READING

HOUSE BILL NO. 2329, by Representatives McDonald, Lantz and Constantine

Changing descriptions in judgments involving real property.

The bill was read the second time.

MOTION

On motion of Senator Heavey, the rules were suspended, House Bill No. 2329 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

Debate ensued.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of House Bill No. 2329.

ROLL CALL

The Secretary called the roll on the final passage of House Bill No. 2329 and the bill passed the Senate by the following vote: Yeas, 47; Nays, 0; Absent, 0; Excused, 2.

\ Excused: Senators Patterson and Sellar - 2.

HOUSE BILL NO. 2329, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MOTION

At 12:01 p.m., on motion of Senator Betti Sheldon, the Senate was declared to be at ease.

The Senate was called to order at 2:05 p.m. by President Owen.

SECOND READING

ENGROSSED SUBSTITUTE HOUSE BILL NO. 2589, by House Committee on Natural Resources (originally sponsored by Representatives Buck, Regala, Stensen, Anderson, Sump, G. Chandler, Pennington, Ericksen, Clements, Eickmeyer, Doumit, Alexander, Rockefeller and Dunn)

Clarifying what projects are eligible for funding by the salmon recovery funding board.

The bill was read the second time.

MOTION

Senator Morton moved that the following amendments be considered simultaneously and be adopted:On page 1, line 12, after "address" strike "both" and insert "((both))"

On page 1, line 13, after "habitat" insert "and effective predator control"

POINT OF ORDER

Senator Jacobsen: “A point of order, Madam President. I am asking for a ruling on the amendments by Senator Morton. I think the bill clarifies what projects are eligible by authorizing the board to fund projects by landowners under an ESA obligation and also addresses property transfers as part of board-funded projects. Nowhere does the bill address ‘predators.’ The floor amendments add a new type of activity to the funding allocation and preferences standards of the board’s organic law.

“This is totally outside the scope of the bill addressing what projects are eligible. Landowners don’t own predators like marine mammals and birds, so the floor amendments have no possible relationship to the underlying bill clarifying landowner eligibility for board funding.”

Debate ensued.

PARLIAMENTARY INQUIRY

Senator Goings: “Madam President, a point of parliamentary inquiry. I think the discussion up at the rostrum relates to the two amendments by Senator Morton that are very similar in nature to the other amendment on the desk. Would it be appropriate to bring the other amendment before the body and make a scope request on that one, as well, so that the President may discuss and decide both scopes at the same time?”

REPLY BY THE PRESIDENT PRO TEMPORE:

President Pro Tempore Wojahn: “A very good choice--yes.”

WITHDRAW OF SECOND AMENDMENT

There being no objection, Senator Morton did not move, but withdrew the second amendment that was on the desk.

MOTION

On motion of Senator Goings, further consideration of Engrossed Substitute House Bill No. 2589 was deferred.

MOTION

On motion of Senator Honeyford, Senator Winsley was excused.

SECOND READING

ENGROSSED HOUSE BILL NO. 2561, by Representatives Rockefeller, Woods, Mulliken, Scott, Lantz, Ogden, Constantine and Haigh

Authorizing the preservation and development of national historic towns outside of urban growth areas.

The bill was read the second time.

MOTION

On motion of Senator Betti Sheldon, the following amendments by Senators Betti Sheldon and Hale were considered simultaneously and were adopted:

On page 2, line 15, after "buffering." insert "Provisions for transitional uses and buffering must be compatible with the town's historic character and must protect the existing natural and built environment under the requirements of this chapter within and beyond the additional limited areas, including visual compatibility."

On page 2, line 17, after "town," insert "including the additional limited areas,"

On motion of Senator Betti Sheldon, the rules were suspended, Engrossed House Bill No. 2561, as amended by the Senate, was advanced to third reading the second reading considered the third and the bill was placed on final passage.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of Engrossed House Bill No. 2561, as amended by the Senate.

ROLL CALL

The Secretary called the roll on the final passage of Engrossed House Bill No. 2561, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 46; Nays, 1; Absent, 0; Excused, 2.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Eide, Fairley, Finkbeiner, Franklin, Fraser, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Hochstatter, Honeyford, Horn, Jacobsen, Johnson, Kline, Kohl-Welles, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, West, Wojahn and Zarelli - 46.

Voting nay: Senator Roach - 1.

Excused: Senators Sellar and Winsley - 2.

ENGROSSED HOUSE BILL NO. 2561, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MOTION

On motion of Senator Honeyford, Senator Rossi was excused.

SECOND READING

HOUSE BILL NO. 2660, by Representatives Huff, H. Sommers, Hatfield and Benson (by request of State Investment Board)

Changing record checks for the state investment board.

The bill was read the second time.

MOTION

On motion of Senator Goings, the rules were suspended, House Bill No. 2660 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of House Bill No. 2660.

ROLL CALL

The Secretary called the roll on the final passage of House Bill No. 2660 and the bill passed the Senate by the following vote: Yeas, 47; Nays, 0; Absent, 0; Excused, 2.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Eide, Fairley, Finkbeiner, Franklin, Fraser, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Hochstatter, Honeyford, Horn, Jacobsen, Johnson, Kline, Kohl-Welles, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, West, Winsley, Wojahn and Zarelli - 47.

Excused: Senators Rossi and Sellar - 2.

HOUSE BILL NO. 2660, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

SECOND READING

SUBSTITUTE HOUSE BILL NO. 2590, by House Committee on Financial Institutions and Insurance (originally sponsored by Representatives Benson and Hatfield) (by request of Pollution Liability Insurance Agency)

Extending the expiration date on certain pollution liability insurance programs.

The bill was read the second time.

MOTION

On motion of Senator Prentice, the rules were suspended, Substitute House Bill No. 2590 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 2590.

ROLL CALL

The Secretary called the roll on the final passage of Substitute House Bill No. 2590 and the bill passed the Senate by the following vote: Yeas, 46; Nays, 0; Absent, 2; Excused, 1.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Eide, Fairley, Finkbeiner, Franklin, Fraser, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Hochstatter, Honeyford, Horn, Jacobsen, Johnson, Kline, Kohl-Welles, Long, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Spanel, Stevens, Swecker, Thibaudeau, West, Winsley, Wojahn and Zarelli - 46.

Absent: Senators Loveland and Snyder - 2.

Excused: Senator Sellar - 1.

SUBSTITUTE HOUSE BILL NO. 2590, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

INTRODUCTION OF SPECIAL GUESTS

The President Pro Tempore welcomed and introduced the mayors form northeast Washington visiting the state capitol with the Association of Mayors and as guests of Senators Sheahan, Morton and West.

SECOND READING

HOUSE BILL NO. 2722, by Representatives Kenney, Carlson and Esser (by request of University of Washington)

Excluding exempt positions from bargaining units of employees of institutions of higher education governed by chapter 41.56 RCW.

The bill was read the second time.

MOTION

On motion of Senator Kohl-Welles, the rules were suspended, House Bill No. 2722 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

Debate ensued.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of House Bill No. 2722.

ROLL CALL

The Secretary called the roll on the final passage of House Bill No. 2722 and the bill passed the Senate by the following vote: Yeas, 48; Nays, 0; Absent, 0; Excused, 1.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Eide, Fairley, Finkbeiner, Franklin, Fraser, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Hochstatter, Honeyford, Horn, Jacobsen, Johnson, Kline, Kohl-Welles, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, West, Winsley, Wojahn and Zarelli - 48.

Excused: Senator Sellar - 1.

HOUSE BILL NO. 2722, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

SECOND READING

HOUSE BILL NO. 2926, by Representatives DeBolt, Crouse, Alexander, Thomas, Kessler, Murray, Bush and Wolfe

Repealing certain coal tax exemptions.

The bill was read the second time.

MOTION

On motion of Senator Goings, the rules were suspended, House Bill No. 2926 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

Debate ensued.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of House Bill No. 2926.

ROLL CALL

The Secretary called the roll on the final passage of House Bill No. 2926 and the bill passed the Senate by the following vote: Yeas, 47; Nays, 1; Absent, 0; Excused, 1.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Eide, Fairley, Finkbeiner, Franklin, Fraser, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Hochstatter, Honeyford, Horn, Jacobsen, Johnson, Kline, Kohl-Welles, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, West, Winsley, Wojahn and Zarelli - 47.

Voting nay: Senator Thibaudeau - 1.

Excused: Senator Sellar - 1.

HOUSE BILL NO. 2926, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

SECOND READING

ENGROSSED SUBSTITUTE SENATE BILL NO. 6067, by Senate Committee on Health and Long-Term Care (originally sponsored by Senator Thibaudeau)

Modifying provisions concerning access to individual health insurance coverage.

MOTIONS

On motion of Senator Thibaudeau, Second Substitute Senate Bill No. 6067 was substituted for Engrossed Substitute Senate Bill No. 6067 and the second substitute bill was placed on second reading and read the second time.

Senator Thibaudeau moved that the following striking amendment by Senators Thibaudeau and Deccio be adopted:

Strike everything after the enacting clause and insert the following:

"Sec. 1. RCW 48.04.010 and 1990 1st ex.s. c 3 s 1 are each amended to read as follows:

(1) The commissioner may hold a hearing for any purpose within the scope of this code as he or she may deem necessary. The commissioner shall hold a hearing:

(a) If required by any provision of this code; or

(b) Upon written demand for a hearing made by any person aggrieved by any act, threatened act, or failure of the commissioner to act, if such failure is deemed an act under any provision of this code, or by any report, promulgation, or order of the commissioner other than an order on a hearing of which such person was given actual notice or at which such person appeared as a party, or order pursuant to the order on such hearing.

(2) Any such demand for a hearing shall specify in what respects such person is so aggrieved and the grounds to be relied upon as basis for the relief to be demanded at the hearing.

(3) Unless a person aggrieved by a written order of the commissioner demands a hearing thereon within ninety days after receiving notice of such order, or in the case of a licensee under Title 48 RCW within ninety days after the commissioner has mailed the order to the licensee at the most recent address shown in the commissioner's licensing records for the licensee, the right to such hearing shall conclusively be deemed to have been waived.

(4) If a hearing is demanded by a licensee whose license has been temporarily suspended pursuant to RCW 48.17.540, the commissioner shall hold such hearing demanded within thirty days after receipt of the demand or within thirty days of the effective date of a temporary license suspension issued after such demand, unless postponed by mutual consent.

(5) A licensee under this title may request that a hearing authorized under this section be presided over by an administrative law judge assigned under chapter 34.12 RCW. Any such request shall not be denied.

(6) Any hearing held relating to section 3, 29, or 32 of this act shall be presided over by an administrative law judge assigned under chapter 34.12 RCW.

Sec. 2. RCW 48.18.110 and 1985 c 264 s 9 are each amended to read as follows:

(1) The commissioner shall disapprove any such form of policy, application, rider, or endorsement, or withdraw any previous approval thereof, only:

(a) If it is in any respect in violation of or does not comply with this code or any applicable order or regulation of the commissioner issued pursuant to the code; or

(b) If it does not comply with any controlling filing theretofore made and approved; or

(c) If it contains or incorporates by reference any inconsistent, ambiguous or misleading clauses, or exceptions and conditions which unreasonably or deceptively affect the risk purported to be assumed in the general coverage of the contract; or

(d) If it has any title, heading, or other indication of its provisions which is misleading; or

(e) If purchase of insurance thereunder is being solicited by deceptive advertising.

(2) In addition to the grounds for disapproval of any such form as provided in subsection (1) of this section, the commissioner may disapprove any form of disability insurance policy, except an individual health benefit plan, if the benefits provided therein are unreasonable in relation to the premium charged.

NEW SECTION. Sec. 3. A new section is added to chapter 48.20 RCW to read as follows:

(1) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.

(a) "Claims" means the cost to the insurer of health care services, as defined in RCW 48.43.005, provided to a policyholder or paid to or on behalf of the policyholder in accordance with the terms of a health benefit plan, as defined in RCW 48.43.005. This includes capitation payments or other similar payments made to providers for the purpose of paying for health care services for a policyholder.

(b) "Claims reserves" means: (i) The liability for claims which have been reported but not paid; (ii) the liability for claims which have not been reported but which may reasonably be expected; (iii) active life reserves; and (iv) additional claims reserves whether for a specific liability purpose or not.

(c) "Earned premiums" means premiums, as defined in RCW 48.43.005, plus any rate credits or recoupments less any refunds, for the applicable period, whether received before, during, or after the applicable period.

(d) "Incurred claims expense" means claims paid during the applicable period plus any increase, or less any decrease, in the claims reserves.

(e) "Loss ratio" means incurred claims expense as a percentage of earned premiums.

(f) "Reserves" means: (i) Active life reserves; and (ii) additional reserves whether for a specific liability purpose or not.

(2) An insurer shall file, for informational purposes only, a notice of its schedule of rates for its individual health benefit plans with the commissioner prior to use.

(3) An insurer shall file with the notice required under subsection (2) of this section supporting documentation of its method of determining the rates charged. The commissioner may request only the following supporting documentation:

(a) A description of the insurer's rate-making methodology;

(b) An actuarially determined estimate of incurred claims which includes the experience data, assumptions, and justifications of the insurer's projection;

(c) The percentage of premium attributable in aggregate for nonclaims expenses used to determine the adjusted community rates charged; and

(d) A certification by a member of the American academy of actuaries, or other person approved by the commissioner, that the adjusted community rate charged can be reasonably expected to result in a loss ratio that meets or exceeds the loss ratio standard established in subsection (7) of this section.

(4) The commissioner may not disapprove or otherwise impede the implementation of the filed rates.

(5) By the last day of May each year any insurer providing individual health benefit plans in this state shall file for review by the commissioner supporting documentation of its actual loss ratio for its individual health benefit plans offered in the state in aggregate for the preceding calendar year. The filing shall include a certification by a member of the American academy of actuaries, or other person approved by the commissioner, that the actual loss ratio has been calculated in accordance with accepted actuarial principles.

(a) At the expiration of a thirty-day period beginning with the date the filing is delivered to the commissioner, the filing shall be deemed approved unless prior thereto the commissioner contests the calculation of the actual loss ratio.

(b) If the commissioner contests the calculation of the actual loss ratio, the commissioner shall state in writing the grounds for contesting the calculation to the insurer.

(c) Any dispute regarding the calculation of the actual loss ratio shall, upon written demand of either the commissioner or the insurer, be submitted to hearing under chapters 48.04 and 34.05 RCW.

(6) If the actual loss ratio for the preceding calendar year is less than the loss ratio established in subsection (7) of this section, a remittance is due and the following shall apply:

(a) The insurer shall calculate a percentage of premium to be remitted to the Washington state health insurance pool by subtracting the actual loss ratio for the preceding year from the loss ratio established in subsection (7) of this section.

(b) The remittance to the Washington state health insurance pool is the percentage calculated in (a) of the subsection, multiplied by the premium earned from each enrollee in the previous calendar year. Interest shall be added to the remittance due at a five percent annual rate calculated from the end of the calendar year for which the remittance is due to the date the remittance is made.

(c) All remittances shall be aggregated and such amounts shall be remitted to the Washington state high risk pool to be used as directed by the pool board of directors.

(d) Any remittance required to be issued under this section shall be issued within thirty days after the actual loss ratio is deemed approved under subsection (5)(a) of this section or the determination by an administrative law judge under subsection (5)(c) of this section.

(7) The loss ratio applicable to this section shall be seventy-four percent minus the premium tax rate applicable to the insurer's individual health benefit plans under RCW 48.14.0201.

Sec. 4. RCW 48.20.028 and 1997 c 231 s 207 are each amended to read as follows:

(1)(((a) An insurer offering any health benefit plan to any individual shall offer and actively market to all individuals a health benefit plan providing benefits identical to the schedule of covered health benefits that are required to be delivered to an individual enrolled in the basic health plan subject to RCW 48.43.025 and 48.43.035. Nothing in this subsection shall preclude an insurer from offering, or an individual from purchasing, other health benefit plans that may have more or less comprehensive benefits than the basic health plan, provided such plans are in accordance with this chapter. An insurer offering a health benefit plan that does not include benefits provided in the basic health plan shall clearly disclose these differences to the individual in a brochure approved by the commissioner.

(b) A health benefit plan shall provide coverage for hospital expenses and services rendered by a physician licensed under chapter 18.57 or 18.71 RCW but is not subject to the requirements of RCW 48.20.390, 48.20.393, 48.20.395, 48.20.397, 48.20.410, 48.20.411, 48.20.412, 48.20.416, and 48.20.420 if the health benefit plan is the mandatory offering under (a) of this subsection that provides benefits identical to the basic health plan, to the extent these requirements differ from the basic health plan.

(2))) Premiums for health benefit plans for individuals shall be calculated using the adjusted community rating method that spreads financial risk across the carrier's entire individual product population. All such rates shall conform to the following:

(a) The insurer shall develop its rates based on an adjusted community rate and may only vary the adjusted community rate for:

(i) Geographic area;

(ii) Family size;

(iii) Age;

(iv) Tenure discounts; and

(v) Wellness activities.

(b) The adjustment for age in (a)(iii) of this subsection may not use age brackets smaller than five-year increments which shall begin with age twenty and end with age sixty-five. Individuals under the age of twenty shall be treated as those age twenty.

(c) The insurer shall be permitted to develop separate rates for individuals age sixty-five or older for coverage for which medicare is the primary payer and coverage for which medicare is not the primary payer. Both rates shall be subject to the requirements of this subsection.

(d) The permitted rates for any age group shall be no more than four hundred twenty-five percent of the lowest rate for all age groups on January 1, 1996, four hundred percent on January 1, 1997, and three hundred seventy-five percent on January 1, 2000, and thereafter.

(e) A discount for wellness activities shall be permitted to reflect actuarially justified differences in utilization or cost attributed to such programs not to exceed twenty percent.

(f) The rate charged for a health benefit plan offered under this section may not be adjusted more frequently than annually except that the premium may be changed to reflect:

(i) Changes to the family composition;

(ii) Changes to the health benefit plan requested by the individual; or

(iii) Changes in government requirements affecting the health benefit plan.

(g) For the purposes of this section, a health benefit plan that contains a restricted network provision shall not be considered similar coverage to a health benefit plan that does not contain such a provision, provided that the restrictions of benefits to network providers result in substantial differences in claims costs. This subsection does not restrict or enhance the portability of benefits as provided in RCW 48.43.015.

(h) A tenure discount for continuous enrollment in the health plan of two years or more may be offered, not to exceed ten percent.

(((3))) (2) Adjusted community rates established under this section shall pool the medical experience of all individuals purchasing coverage, and shall not be required to be pooled with the medical experience of health benefit plans offered to small employers under RCW 48.21.045.

(((4))) (3) As used in this section, "health benefit plan," (("basic health plan,")) "adjusted community rate," and "wellness activities" mean the same as defined in RCW 48.43.005.

Sec. 5. RCW 48.41.020 and 1987 c 431 s 2 are each amended to read as follows:

It is the purpose and intent of the legislature to provide access to health insurance coverage to all residents of Washington who are denied ((adequate)) health insurance ((for any reason. It is the intent of the legislature that adequate levels of health insurance coverage be made available to residents of Washington who are otherwise considered uninsurable or who are underinsured)). It is the intent of the Washington state health insurance coverage access act to provide a mechanism to ((insure)) ensure the availability of comprehensive health insurance to persons unable to obtain such insurance coverage on either an individual or group basis directly under any health plan.

Sec. 6. RCW 48.41.030 and 1997 c 337 s 6 are each amended to read as follows:

((As used in this chapter, the following terms have the meaning indicated,)) The definitions in this section apply throughout this chapter unless the context clearly requires otherwise((:)).

(1) "Accounting year" means a twelve-month period determined by the board for purposes of record-keeping and accounting. The first accounting year may be more or less than twelve months and, from time to time in subsequent years, the board may order an accounting year of other than twelve months as may be required for orderly management and accounting of the pool.

(2) "Administrator" means the entity chosen by the board to administer the pool under RCW 48.41.080.

(3) "Board" means the board of directors of the pool.

(4) "Commissioner" means the insurance commissioner.

(5) "Covered person" means any individual resident of this state who is eligible to receive benefits from any member, or other health plan.

(6) "Health care facility" has the same meaning as in RCW 70.38.025.

(7) "Health care provider" means any physician, facility, or health care professional, who is licensed in Washington state and entitled to reimbursement for health care services.

(8) "Health care services" means services for the purpose of preventing, alleviating, curing, or healing human illness or injury.

(9) "Health carrier" or "carrier" has the same meaning as in RCW 48.43.005.

(10) "Health coverage" means any group or individual disability insurance policy, health care service contract, and health maintenance agreement, except those contracts entered into for the provision of health care services pursuant to Title XVIII of the Social Security Act, 42 U.S.C. Sec. 1395 et seq. The term does not include short-term care, long-term care, dental, vision, accident, fixed indemnity, disability income contracts, civilian health and medical program for the uniform services (CHAMPUS), 10 U.S.C. 55, limited benefit or credit insurance, coverage issued as a supplement to liability insurance, insurance arising out of the worker's compensation or similar law, automobile medical payment insurance, or insurance under which benefits are payable with or without regard to fault and which is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.

(((10))) (11) "Health plan" means any arrangement by which persons, including dependents or spouses, covered or making application to be covered under this pool, have access to hospital and medical benefits or reimbursement including any group or individual disability insurance policy; health care service contract; health maintenance agreement; uninsured arrangements of group or group-type contracts including employer self-insured, cost-plus, or other benefit methodologies not involving insurance or not governed by Title 48 RCW; coverage under group-type contracts which are not available to the general public and can be obtained only because of connection with a particular organization or group; and coverage by medicare or other governmental benefits. This term includes coverage through "health coverage" as defined under this section, and specifically excludes those types of programs excluded under the definition of "health coverage" in subsection (((9))) (10) of this section.

(((11))) (12) "Medical assistance" means coverage under Title XIX of the federal Social Security Act (42 U.S.C., Sec. 1396 et seq.) and chapter 74.09 RCW.

(((12))) (13) "Medicare" means coverage under Title XVIII of the Social Security Act, (42 U.S.C. Sec. 1395 et seq., as amended).

(((13))) (14) "Member" means any commercial insurer which provides disability insurance or stop loss insurance, any health care service contractor, and any health maintenance organization licensed under Title 48 RCW. "Member" also means the Washington state health care authority as issuer of the state uniform medical plan. "Member" shall also mean, as soon as authorized by federal law, employers and other entities, including a self-funding entity and employee welfare benefit plans that provide health plan benefits in this state on or after May 18, 1987. "Member" does not include any insurer, health care service contractor, or health maintenance organization whose products are exclusively dental products or those products excluded from the definition of "health coverage" set forth in subsection (((9))) (10) of this section.

(((14))) (15) "Network provider" means a health care provider who has contracted in writing with the pool administrator or a health carrier contracting with the pool administrator to offer pool coverage to accept payment from and to look solely to the pool or health carrier according to the terms of the pool health plans.

(((15))) (16) "Plan of operation" means the pool, including articles, by-laws, and operating rules, adopted by the board pursuant to RCW 48.41.050.

(((16))) (17) "Point of service plan" means a benefit plan offered by the pool under which a covered person may elect to receive covered services from network providers, or nonnetwork providers at a reduced rate of benefits.

(((17))) (18) "Pool" means the Washington state health insurance pool as created in RCW 48.41.040.

(((18) "Substantially equivalent health plan" means a "health plan" as defined in subsection (10) of this section which, in the judgment of the board or the administrator, offers persons including dependents or spouses covered or making application to be covered by this pool an overall level of benefits deemed approximately equivalent to the minimum benefits available under this pool.))

Sec. 7. RCW 48.41.040 and 1989 c 121 s 2 are each amended to read as follows:

(1) There is ((hereby)) created a nonprofit entity to be known as the Washington state health insurance pool. All members in this state on or after May 18, 1987, shall be members of the pool. When authorized by federal law, all self-insured employers shall also be members of the pool.

(2) Pursuant to chapter 34.05 RCW the commissioner shall, within ninety days after May 18, 1987, give notice to all members of the time and place for the initial organizational meetings of the pool. A board of directors shall be established, which shall be comprised of ((nine)) ten members. ((The commissioner shall select three members of the board who shall represent (a) the general public, (b) health care providers, and (c) health insurance agents.)) The governor shall select one member of the board from each list of three nominees submitted by state-wide organizations representing each of the following: (a) Health care providers; (b) health insurance agents; (c) small employers; and (d) large employers. The governor shall select two members of the board from a list of nominees submitted by state-wide organizations representing health care consumers. The remaining four members of the board shall be selected by election from among the members of the pool. The elected members shall, to the extent possible, include at least one representative of health care service contractors, one representative of health maintenance organizations, and one representative of commercial insurers which provides disability insurance. The members of the board shall elect a chair from the voting members of the board. The insurance commissioner shall be a nonvoting, ex officio member. When self-insured organizations other than the Washington state health care authority become eligible for participation in the pool, the membership of the board shall be increased to eleven and at least one member of the board shall represent the self-insurers.

(3) The original members of the board of directors shall be appointed for intervals of one to three years. Thereafter, all board members shall serve a term of three years. Board members shall receive no compensation, but shall be reimbursed for all travel expenses as provided in RCW 43.03.050 and 43.03.060.

(4) The board shall submit to the commissioner a plan of operation for the pool and any amendments thereto necessary or suitable to assure the fair, reasonable, and equitable administration of the pool. The commissioner shall, after notice and hearing pursuant to chapter 34.05 RCW, approve the plan of operation if it is determined to assure the fair, reasonable, and equitable administration of the pool and provides for the sharing of pool losses on an equitable, proportionate basis among the members of the pool. The plan of operation shall become effective upon approval in writing by the commissioner consistent with the date on which the coverage under this chapter must be made available. If the board fails to submit a plan of operation within one hundred eighty days after the appointment of the board or any time thereafter fails to submit acceptable amendments to the plan, the commissioner shall, within ninety days after notice and hearing pursuant to chapters 34.05 and 48.04 RCW, adopt such rules as are necessary or advisable to effectuate this chapter. The rules shall continue in force until modified by the commissioner or superseded by a plan submitted by the board and approved by the commissioner.

NEW SECTION. Sec. 8. Sixty days from the effective date of this section, the existing board of directors of the Washington state health insurance pool shall be dissolved, and the appointment or election of new members under RCW 48.41.040 shall be effective. For purposes of setting terms, the new members shall be treated as original members.

Sec. 9. RCW 48.41.060 and 1997 c 337 s 5 are each amended to read as follows:

(1) The board shall have the general powers and authority granted under the laws of this state to insurance companies, health care service contractors, and health maintenance organizations, licensed or registered to offer or provide the kinds of health coverage defined under this title. In addition thereto, the board ((may:

(1) Enter into contracts as are necessary or proper to carry out the provisions and purposes of this chapter including the authority, with the approval of the commissioner, to enter into contracts with similar pools of other states for the joint performance of common administrative functions, or with persons or other organizations for the performance of administrative functions;

(2) Sue or be sued, including taking any legal action as necessary to avoid the payment of improper claims against the pool or the coverage provided by or through the pool;

(3))) shall:

(a) Designate or establish the standard health questionnaire to be used under RCW 48.41.100 and section 21 of this act, including the form and content of the standard health questionnaire and the method of its application. The questionnaire must provide for an objective evaluation of an individual's health status by assigning a discreet measure, such as a system of point scoring to each individual. The questionnaire must not contain any questions related to pregnancy, and pregnancy shall not be a basis for coverage by the pool. The questionnaire shall be designed such that it is reasonably expected to identify the eight percent of persons who are the most costly to treat who are under individual coverage in health benefit plans, as defined in RCW 48.43.005, in Washington state or are covered by the pool, if applied to all such persons;

(b) Obtain from a member of the American academy of actuaries, who is independent of the board, a certification that the standard health questionnaire meets the requirements of (a) of this subsection;

(c) Approve the standard health questionnaire and any modifications needed to comply with this chapter. The standard health questionnaire shall be submitted to an actuary for certification, modified as necessary, and approved at least every eighteen months. The designation and approval of the standard health questionnaire by the board shall not be subject to review and approval by the commissioner. The standard health questionnaire or any modification thereto shall not be used until ninety days after public notice of the approval of the questionnaire or any modification thereto, except that the initial standard health questionnaire approved for use by the board after the effective date of this section may be used immediately following public notice of such approval;

(d) Establish appropriate rates, rate schedules, rate adjustments, expense allowances, ((agent referral fees,)) claim reserve formulas and any other actuarial functions appropriate to the operation of the pool. Rates shall not be unreasonable in relation to the coverage provided, the risk experience, and expenses of providing the coverage. Rates and rate schedules may be adjusted for appropriate risk factors such as age and area variation in claim costs and shall take into consideration appropriate risk factors in accordance with established actuarial underwriting practices consistent with Washington state ((small group)) individual plan rating requirements under RCW ((48.44.023 and 48.46.066)) 48.44.022 and 48.46.064;

(((4))) (e) Assess members of the pool in accordance with the provisions of this chapter, and make advance interim assessments as may be reasonable and necessary for the organizational or interim operating expenses. Any interim assessments will be credited as offsets against any regular assessments due following the close of the year;

(((5))) (f) Issue policies of health coverage in accordance with the requirements of this chapter;

(((6))) (g) Establish procedures for the administration of the premium discount provided under RCW 48.41.200(3)(a)(iii);

(h) Contract with the Washington state health care authority for the administration of the premium discounts provided under RCW 48.41.200(3)(a) (i) and (ii);

(i) Set a reasonable fee to be paid to an insurance agent licensed in Washington state for submitting an acceptable application for enrollment in the pool; and

(j) Provide certification to the commissioner when assessments will exceed the threshold level established in section 36 of this act.

(2) In addition thereto, the board may:

(a) Enter into contracts as are necessary or proper to carry out the provisions and purposes of this chapter including the authority, with the approval of the commissioner, to enter into contracts with similar pools of other states for the joint performance of common administrative functions, or with persons or other organizations for the performance of administrative functions;

(b) Sue or be sued, including taking any legal action as necessary to avoid the payment of improper claims against the pool or the coverage provided by or through the pool;

(c) Appoint appropriate legal, actuarial, and other committees as necessary to provide technical assistance in the operation of the pool, policy, and other contract design, and any other function within the authority of the pool; and

(((7))) (d) Conduct periodic audits to assure the general accuracy of the financial data submitted to the pool, and the board shall cause the pool to have an annual audit of its operations by an independent certified public accountant.

(3) Nothing in this section shall be construed to require or authorize the adoption of rules under chapter 34.05 RCW.

Sec. 10. RCW 48.41.080 and 1997 c 231 s 212 are each amended to read as follows:

The board shall select an administrator ((from the membership of the pool whether domiciled in this state or another state)) through a competitive bidding process to administer the pool.

(1) The board shall evaluate bids based upon criteria established by the board, which shall include:

(a) The administrator's proven ability to handle health coverage;

(b) The efficiency of the administrator's claim-paying procedures;

(d) The administrator's ability to administer the pool in a cost-effective manner.

(2) The administrator shall serve for a period of three years subject to removal for cause. At least six months prior to the expiration of each three-year period of service by the administrator, the board shall invite all interested parties, including the current administrator, to submit bids to serve as the administrator for the succeeding three-year period. Selection of the administrator for this succeeding period shall be made at least three months prior to the end of the current three-year period.

(3) The administrator shall perform such duties as may be assigned by the board including:

(a) ((All)) Administering eligibility and administrative claim payment functions relating to the pool;

(b) Establishing a premium billing procedure for collection of premiums from covered persons. Billings shall be made on a periodic basis as determined by the board, which shall not be more frequent than a monthly billing;

(i) Making available information relating to the proper manner of submitting a claim for benefits to the pool, and distributing forms upon which submission shall be made;

(ii) Taking steps necessary to offer and administer managed care benefit plans; and

(iii) Evaluating the eligibility of each claim for payment by the pool;

(d) Submission of regular reports to the board regarding the operation of the pool. The frequency, content, and form of the report shall be as determined by the board;

(e) Following the close of each accounting year, determination of net paid and earned premiums, the expense of administration, and the paid and incurred losses for the year and reporting this information to the board and the commissioner on a form as prescribed by the commissioner.

(4) The administrator shall be paid as provided in the contract between the board and the administrator for its expenses incurred in the performance of its services.

Sec. 11. RCW 48.41.090 and 1989 c 121 s 6 are each amended to read as follows:

(1) Following the close of each accounting year, the pool administrator shall determine the net premium (premiums less administrative expense allowances), the pool expenses of administration, and incurred losses for the year, taking into account investment income and other appropriate gains and losses.

(2)(a) Each member's proportion of participation in the pool shall be determined annually by the board based on annual statements and other reports deemed necessary by the board and filed by the member with the commissioner; and shall be determined by multiplying the total cost of pool operation by a fraction((,)). The numerator of ((which)) the fraction equals that member's total number of resident insured persons, including spouse and dependents ((under the member's)), covered under all health plans in the state by that member during the preceding calendar year((, and)). The denominator of ((which)) the fraction equals the total number of resident insured persons, including spouses and dependents ((insured)), covered under all health plans in the state by all pool members during the preceding calendar year.

(b) For purposes of calculating the numerator and the denominator under (a) of this subsection:

(i) All health plans in the state by the state health care authority include only the uniform medical plan; and

(ii) Each ten resident insured persons, including spouse and dependents, under a stop loss plan or the uniform medical plan shall count as one resident insured person.

(c) Except as provided in section 36 of this act, any deficit incurred by the pool shall be recouped by assessments among members apportioned under this subsection pursuant to the formula set forth by the board among members.

(3) The board may abate or defer, in whole or in part, the assessment of a member if, in the opinion of the board, payment of the assessment would endanger the ability of the member to fulfill its contractual obligations. If an assessment against a member is abated or deferred in whole or in part, the amount by which such assessment is abated or deferred may be assessed against the other members in a manner consistent with the basis for assessments set forth in subsection (2) of this section. The member receiving such abatement or deferment shall remain liable to the pool for the deficiency.

(4) If assessments exceed actual losses and administrative expenses of the pool, the excess shall be held at interest and used by the board to offset future losses or to reduce pool premiums. As used in this subsection, "future losses" includes reserves for incurred but not reported claims.

Sec. 12. RCW 48.41.100 and 1995 c 34 s 5 are each amended to read as follows:

(1) ((Any individual)) The following persons who ((is a)) are residents of this state ((is)) are eligible for pool coverage ((upon providing evidence of rejection for medical reasons, a requirement of restrictive riders, an up-rated premium, or a preexisting conditions limitation on health insurance, the effect of which is to substantially reduce coverage from that received by a person considered a standard risk, by at least one member within six months of the date of application. Evidence of rejection may be waived in accordance with rules adopted by the board)):

(a) Any person who provides evidence of a carrier's decision not to accept him or her for enrollment in an individual health benefit plan as defined in RCW 48.43.005 based upon, and within ninety days of the receipt of, the results of the standard health questionnaire designated by the board and administered by health carriers under section 21 of this act;

(b) Any person who continues to be eligible for pool coverage based upon the results of the standard health questionnaire designated by the board and administered by the pool administrator pursuant to subsection (3) of this section;

(c) Any person who resides in a county of the state where no carrier or insurer regulated under chapter 48.15 RCW offers to the public an individual health benefit plan other than a catastrophic health plan as defined in RCW 48.43.005 at the time of application to the pool, and who makes direct application to the pool; and

(d) Any medicare eligible person upon providing evidence of rejection for medical reasons, a requirement of restrictive riders, an up-rated premium, or a preexisting conditions limitation on a medicare supplemental insurance policy under chapter 48.66 RCW, the effect of which is to substantially reduce coverage from that received by a person considered a standard risk by at least one member within six months of the date of application.

(2) The following persons are not eligible for coverage by the pool:

(a) Any person having terminated coverage in the pool unless (i) twelve months have lapsed since termination, or (ii) that person can show continuous other coverage which has been involuntarily terminated for any reason other than nonpayment of premiums;

(b) Any person on whose behalf the pool has paid out ((five hundred thousand)) one million dollars in benefits;

(d) Any person who resides in a county of the state where any carrier or insurer regulated under chapter 48.15 RCW offers to the public an individual health benefit plan other than a catastrophic health plan as defined in RCW 48.43.005 at the time of application to the pool and who does not qualify for pool coverage based upon the results of the standard health questionnaire, or pursuant to subsection (1)(d) of this section.

(3) ((Any person whose health insurance coverage is involuntarily terminated for any reason other than nonpayment of premium may apply for coverage under the plan.)) When a carrier or insurer regulated under chapter 48.15 RCW begins to offer an individual health benefit plan in a county where no carrier had been offering an individual health benefit plan:

(a) If the health benefit plan offered is other than a catastrophic health plan as defined in RCW 48.43.005, any person enrolled in a pool plan pursuant to subsection (1)(c) of this section in that county shall no longer be eligible for coverage under that plan pursuant to subsection (1)(c) of this section, but may continue to be eligible for pool coverage based upon the results of the standard health questionnaire designated by the board and administered by the pool administrator. The pool administrator shall offer to administer the questionnaire to each person no longer eligible for coverage under subsection (1)(c) of this section within thirty days of determining that he or she is no longer eligible.

(b) Losing eligibility for pool coverage under this subsection (3) does not affect a person's eligibility for pool coverage under subsection (1)(a), (b), or (d) of this section; and

(c) The pool administrator shall provide written notice to any person who is no longer eligible for coverage under a pool plan under this subsection (3) within thirty days of the administrator's determination that the person is no longer eligible. The notice shall: (i) Indicate that coverage under the plan will cease ninety days from the date that the notice is dated; (ii) describe any other coverage options, either in or outside of the pool, available to the person; (iii) describe the procedures for the administration of the standard health questionnaire to determine the person's continued eligibility for coverage under subsection (1)(b) of this section; and (iv) describe the enrollment process for the available options outside of the pool.

Sec. 13. RCW 48.41.110 and 1997 c 231 s 213 are each amended to read as follows:

(1) The pool ((is authorized to)) shall offer one or more ((managed)) care management plans of coverage. Such plans may, but are not required to, include point of service features that permit participants to receive in-network benefits or out-of-network benefits subject to differential cost shares. Covered persons enrolled in the pool on January 1, ((1997)) 2001, may continue coverage under the pool plan in which they are enrolled on that date. However, the pool may incorporate managed care features into such existing plans.

(2) The administrator shall prepare a brochure outlining the benefits and exclusions of the pool policy in plain language. After approval by the board ((of directors)), such brochure shall be made reasonably available to participants or potential participants.

(3) The health insurance policy issued by the pool shall pay only ((usual, customary, and)) reasonable ((charges)) amounts for medically necessary eligible health care services rendered or furnished for the diagnosis or treatment of illnesses, injuries, and conditions which are not otherwise limited or excluded. Eligible expenses are the ((usual, customary, and)) reasonable ((charges)) amounts for the health care services and items for which benefits are extended under the pool policy. Such benefits shall at minimum include, but not be limited to, the following services or related items:

(a) Hospital services, including charges for the most common semiprivate room, for the most common private room if semiprivate rooms do not exist in the health care facility, or for the private room if medically necessary, but limited to a total of one hundred eighty inpatient days in a calendar year, and limited to thirty days inpatient care for mental and nervous conditions, or alcohol, drug, or chemical dependency or abuse per calendar year;

(b) Professional services including surgery for the treatment of injuries, illnesses, or conditions, other than dental, which are rendered by a health care provider, or at the direction of a health care provider, by a staff of registered or licensed practical nurses, or other health care providers;

(c) The first twenty outpatient professional visits for the diagnosis or treatment of one or more mental or nervous conditions or alcohol, drug, or chemical dependency or abuse rendered during a calendar year by one or more physicians, psychologists, or community mental health professionals, or, at the direction of a physician, by other qualified licensed health care practitioners, in the case of mental or nervous conditions, and rendered by a state certified chemical dependency program approved under chapter 70.96A RCW, in the case of alcohol, drug, or chemical dependency or abuse;

(d) Drugs and contraceptive devices requiring a prescription;

(e) Services of a skilled nursing facility, excluding custodial and convalescent care, for not more than one hundred days in a calendar year as prescribed by a physician;

(f) Services of a home health agency;

(g) Chemotherapy, radioisotope, radiation, and nuclear medicine therapy;

(h) Oxygen;

(i) Anesthesia services;

(j) Prostheses, other than dental;

(k) Durable medical equipment which has no personal use in the absence of the condition for which prescribed;

(l) Diagnostic x-rays and laboratory tests;

(m) Oral surgery limited to the following: Fractures of facial bones; excisions of mandibular joints, lesions of the mouth, lip, or tongue, tumors, or cysts excluding treatment for temporomandibular joints; incision of accessory sinuses, mouth salivary glands or ducts; dislocations of the jaw; plastic reconstruction or repair of traumatic injuries occurring while covered under the pool; and excision of impacted wisdom teeth;

(n) Maternity care services((, as provided in the managed care plan to be designed by the pool board of directors, and for which no preexisting condition waiting periods may apply));

(o) Services of a physical therapist and services of a speech therapist;

(p) Hospice services;

(q) Professional ambulance service to the nearest health care facility qualified to treat the illness or injury; and

(r) Other medical equipment, services, or supplies required by physician's orders and medically necessary and consistent with the diagnosis, treatment, and condition.

(((3))) (4) The board shall design and employ cost containment measures and requirements such as, but not limited to, care coordination, provider network limitations, preadmission certification, and concurrent inpatient review which may make the pool more cost-effective.

(((4))) (5) The pool benefit policy may contain benefit limitations, exceptions, and cost shares such as copayments, coinsurance, and deductibles that are consistent with managed care products, except that differential cost shares may be adopted by the board for nonnetwork providers under point of service plans. The pool benefit policy cost shares and limitations must be consistent with those that are generally included in health plans approved by the insurance commissioner; however, no limitation, exception, or reduction may be used that would exclude coverage for any disease, illness, or injury.

(((5))) (6) The pool may not reject an individual for health plan coverage based upon preexisting conditions of the individual or deny, exclude, or otherwise limit coverage for an individual's preexisting health conditions; except that it ((may)) shall impose a ((three-month)) six-month benefit waiting period for preexisting conditions for which medical advice was given, ((or)) for which a health care provider recommended or provided treatment, or for which a prudent layperson would have sought advice or treatment, within ((three)) six months before the effective date of coverage. The preexisting condition waiting period shall not apply to prenatal care services. The pool may not avoid the requirements of this section through the creation of a new rate classification or the modification of an existing rate classification. Credit against the waiting period shall be as provided in subsection (7) of this section.

(7) The pool shall credit any preexisting condition waiting period in its plans for a person who was enrolled at any time during the sixty-three day period immediately preceding the date of application for the new pool plan in a group health benefit plan or an individual health benefit plan other than a catastrophic health plan. The carrier must credit the period of coverage the person was continuously covered under the immediately preceding health plan toward the waiting period of the new health plan. For the purposes of this subsection, a preceding health plan includes an employer-provided self-funded health plan.

Sec. 14. RCW 48.41.120 and 1989 c 121 s 8 are each amended to read as follows:

(1) Subject to the limitation provided in subsection (3) of this section, a pool policy offered in accordance with ((this chapter)) RCW 48.41.110(3) shall impose a deductible. Deductibles of five hundred dollars and one thousand dollars on a per person per calendar year basis shall initially be offered. The board may authorize deductibles in other amounts. The deductible shall be applied to the first five hundred dollars, one thousand dollars, or other authorized amount of eligible expenses incurred by the covered person.

(2) Subject to the limitations provided in subsection (3) of this section, a mandatory coinsurance requirement shall be imposed at the rate of twenty percent of eligible expenses in excess of the mandatory deductible.

(3) The maximum aggregate out of pocket payments for eligible expenses by the insured in the form of deductibles and coinsurance under a pool policy offered in accordance with RCW 48.41.110(3) shall not exceed in a calendar year:

(a) One thousand five hundred dollars per individual, or three thousand dollars per family, per calendar year for the five hundred dollar deductible policy;

(b) Two thousand five hundred dollars per individual, or five thousand dollars per family per calendar year for the one thousand dollar deductible policy; or

(4) Eligible expenses incurred by a covered person in the last three months of a calendar year, and applied toward a deductible, shall also be applied toward the deductible amount in the next calendar year.

Sec. 15. RCW 48.41.130 and 1997 c 231 s 215 are each amended to read as follows:

All policy forms issued by the pool shall conform in substance to prototype forms developed by the pool, and shall in all other respects conform to the requirements of this chapter, and shall be filed with and approved by the commissioner before they are issued. ((The pool shall not issue a pool policy to any individual who, on the effective date of the coverage applied for, already has or would have coverage substantially equivalent to a pool policy as an insured or covered dependent, or who would be eligible for such coverage if he or she elected to obtain it at a lesser premium rate. However, coverage provided by the basic health plan, as established pursuant to chapter 70.47 RCW, shall not be deemed substantially equivalent for the purposes of this section.))

Sec. 16. RCW 48.41.140 and 1987 c 431 s 14 are each amended to read as follows:

(1) Coverage shall provide that health insurance benefits are applicable to children of the person in whose name the policy is issued including adopted and newly born natural children. Coverage shall also include necessary care and treatment of medically diagnosed congenital defects and birth abnormalities. If payment of a specific premium is required to provide coverage for the child, the policy may require that notification of the birth or adoption of a child and payment of the required premium must be furnished to the pool within thirty-one days after the date of birth or adoption in order to have the coverage continued beyond the thirty-one day period. For purposes of this subsection, a child is deemed to be adopted, and benefits are payable, when the child is physically placed for purposes of adoption under the laws of this state with the person in whose name the policy is issued; and, when the person in whose name the policy is issued assumes financial responsibility for the medical expenses of the child. For purposes of this subsection, "newly born" means, and benefits are payable, from the moment of birth.

(2) A pool policy shall provide that coverage of a dependent, unmarried person shall terminate when the person becomes nineteen years of age: PROVIDED, That coverage of such person shall not terminate at age nineteen while he or she is and continues to be both (a) incapable of self-sustaining employment by reason of developmental disability or physical handicap and (b) chiefly dependent upon the person in whose name the policy is issued for support and maintenance, provided proof of such incapacity and dependency is furnished to the pool by the policyholder within thirty-one days of the dependent's attainment of age nineteen and subsequently as may be required by the pool but not more frequently than annually after the two-year period following the dependent's attainment of age nineteen.

(((3) A pool policy may contain provisions under which coverage is excluded during a period of six months following the effective date of coverage as to a given covered individual for preexisting conditions, as long as medical advice or treatment was recommended or received within a period of six months before the effective date of coverage.

These preexisting condition exclusions shall be waived to the extent to which similar exclusions have been satisfied under any prior health insurance which was for any reason other than nonpayment of premium involuntarily terminated, if the application for pool coverage is made not later than thirty days following the involuntary termination. In that case, with payment of appropriate premium, coverage in the pool shall be effective from the date on which the prior coverage was terminated.))

Sec. 17. RCW 48.41.200 and 1997 c 231 s 214 are each amended to read as follows:

(1) The pool shall determine the standard risk rate by calculating the average ((group)) individual standard rate ((for groups comprised of up to fifty persons)) charged for coverage comparable to pool coverage by the five largest members, measured in terms of individual market enrollment, offering such coverages in the state ((comparable to the pool coverage)). In the event five members do not offer comparable coverage, the standard risk rate shall be established using reasonable actuarial techniques and shall reflect anticipated experience and expenses for such coverage in the individual market.

(2) Subject to subsection (3) of this section, maximum rates for pool coverage shall be ((one hundred fifty percent for the indemnity health plan and one hundred twenty-five percent for managed care plans of the rates established as applicable for group standard risks in groups comprised of up to fifty persons)) as follows:

(a) Maximum rates for a pool indemnity health plan shall be one hundred fifty percent of the rate calculated under subsection (1) of this section;

(b) Maximum rates for a pool care management plan shall be one hundred twenty-five percent of the rate calculated under subsection (1) of this section; and

(c) Maximum rates for a person eligible for pool coverage pursuant to RCW 48.41.100(1)(a) who was enrolled at any time during the sixty-three day period immediately prior to the date of application for pool coverage in a group health benefit plan or an individual health benefit plan other than a catastrophic health plan as defined in RCW 48.43.005, where such coverage was continuous for at least eighteen months, shall be:

(i) For a pool indemnity health plan, one hundred twenty-five percent of the rate calculated under subsection (1) of this section; and

(ii) For a pool care management plan, one hundred ten percent of the rate calculated under subsection (1) of this section.

(3)(a) Subject to (b) and (c) of this subsection:

(i) The rate for any person aged fifty to sixty-four whose current gross family income is less than two hundred fifty-one percent of the federal poverty level shall be reduced by thirty percent from what it would otherwise be;

(ii) The rate for any person aged fifty to sixty-four whose current gross family income is more than two hundred fifty but less than three hundred one percent of the federal poverty level shall be reduced by fifteen percent from what it would otherwise be;

(iii) The rate for any person who has been enrolled in the pool for more than thirty-six months shall be reduced by five percent from what it would otherwise be.

(b) In no event shall the rate for any person be less than one hundred ten percent of the rate calculated under subsection (1) of this section.

(c) Rate reductions under (a)(i) and (ii) of this subsection shall be available only to the extent that funds are specifically appropriated for this purpose in the omnibus appropriations act.

Sec. 18. RCW 48.43.005 and 1997 c 231 s 202 and 1997 c 55 s 1 are each reenacted and amended to read as follows:

Unless otherwise specifically provided, the definitions in this section apply throughout this chapter.

(1) "Adjusted community rate" means the rating method used to establish the premium for health plans adjusted to reflect actuarially demonstrated differences in utilization or cost attributable to geographic region, age, family size, and use of wellness activities.

(2) "Basic health plan" means the plan described under chapter 70.47 RCW, as revised from time to time.

(3) (("Basic health plan model plan" means a health plan as required in RCW 70.47.060(2)(d).

(4))) "Basic health plan services" means that schedule of covered health services, including the description of how those benefits are to be administered, that are required to be delivered to an enrollee under the basic health plan, as revised from time to time.

(((5))) (4) "Catastrophic health plan" means:

(a) In the case of a contract, agreement, or policy covering a single enrollee, a health benefit plan requiring a calendar year deductible of, at a minimum, one thousand five hundred dollars and an annual out-of-pocket expense required to be paid under the plan (other than for premiums) for covered benefits of at least three thousand dollars; and

(b) In the case of a contract, agreement, or policy covering more than one enrollee, a health benefit plan requiring a calendar year deductible of, at a minimum, three thousand dollars and an annual out-of-pocket expense required to be paid under the plan (other than for premiums) for covered benefits of at least five thousand five hundred dollars; or

(c) Any health benefit plan that provides benefits for hospital inpatient and outpatient services, professional and prescription drugs provided in conjunction with such hospital inpatient and outpatient services, and excludes or substantially limits outpatient physician services and those services usually provided in an office setting.

(5) "Certification" means a determination by a review organization that an admission, extension of stay, or other health care service or procedure has been reviewed and, based on the information provided, meets the clinical requirements for medical necessity, appropriateness, level of care, or effectiveness under the auspices of the applicable health benefit plan.

(6) "Concurrent review" means utilization review conducted during a patient's hospital stay or course of treatment.

(7) "Covered person" or "enrollee" means a person covered by a health plan including an enrollee, subscriber, policyholder, beneficiary of a group plan, or individual covered by any other health plan.

(8) "Dependent" means, at a minimum, the enrollee's legal spouse and unmarried dependent children who qualify for coverage under the enrollee's health benefit plan.

(9) "Eligible employee" means an employee who works on a full-time basis with a normal work week of thirty or more hours. The term includes a self-employed individual, including a sole proprietor, a partner of a partnership, and may include an independent contractor, if the self-employed individual, sole proprietor, partner, or independent contractor is included as an employee under a health benefit plan of a small employer, but does not work less than thirty hours per week and derives at least seventy-five percent of his or her income from a trade or business through which he or she has attempted to earn taxable income and for which he or she has filed the appropriate internal revenue service form. Persons covered under a health benefit plan pursuant to the consolidated omnibus budget reconciliation act of 1986 shall not be considered eligible employees for purposes of minimum participation requirements of chapter 265, Laws of 1995.

(10) "Emergency medical condition" means the emergent and acute onset of a symptom or symptoms, including severe pain, that would lead a prudent layperson acting reasonably to believe that a health condition exists that requires immediate medical attention, if failure to provide medical attention would result in serious impairment to bodily functions or serious dysfunction of a bodily organ or part, or would place the person's health in serious jeopardy.

(11) "Emergency services" means otherwise covered health care services medically necessary to evaluate and treat an emergency medical condition, provided in a hospital emergency department.

(12) "Enrollee point-of-service cost-sharing" means amounts paid to health carriers directly providing services, health care providers, or health care facilities by enrollees and may include copayments, coinsurance, or deductibles.

(13) "Grievance" means a written complaint submitted by or on behalf of a covered person regarding: (a) Denial of payment for medical services or nonprovision of medical services included in the covered person's health benefit plan, or (b) service delivery issues other than denial of payment for medical services or nonprovision of medical services, including dissatisfaction with medical care, waiting time for medical services, provider or staff attitude or demeanor, or dissatisfaction with service provided by the health carrier.

(14) "Health care facility" or "facility" means hospices licensed under chapter 70.127 RCW, hospitals licensed under chapter 70.41 RCW, rural health care facilities as defined in RCW 70.175.020, psychiatric hospitals licensed under chapter 71.12 RCW, nursing homes licensed under chapter 18.51 RCW, community mental health centers licensed under chapter 71.05 or 71.24 RCW, kidney disease treatment centers licensed under chapter 70.41 RCW, ambulatory diagnostic, treatment, or surgical facilities licensed under chapter 70.41 RCW, drug and alcohol treatment facilities licensed under chapter 70.96A RCW, and home health agencies licensed under chapter 70.127 RCW, and includes such facilities if owned and operated by a political subdivision or instrumentality of the state and such other facilities as required by federal law and implementing regulations.

(15) "Health care provider" or "provider" means:

(a) A person regulated under Title 18 or chapter 70.127 RCW, to practice health or health-related services or otherwise practicing health care services in this state consistent with state law; or

(b) An employee or agent of a person described in (a) of this subsection, acting in the course and scope of his or her employment.

(16) "Health care service" means that service offered or provided by health care facilities and health care providers relating to the prevention, cure, or treatment of illness, injury, or disease.

(17) "Health carrier" or "carrier" means a disability insurer regulated under chapter 48.20 or 48.21 RCW, a health care service contractor as defined in RCW 48.44.010, or a health maintenance organization as defined in RCW 48.46.020.

(18) "Health plan" or "health benefit plan" means any policy, contract, or agreement offered by a health carrier to provide, arrange, reimburse, or pay for health care services except the following:

(a) Long-term care insurance governed by chapter 48.84 RCW;

(b) Medicare supplemental health insurance governed by chapter 48.66 RCW;

(d) Disability income;

(e) Coverage incidental to a property/casualty liability insurance policy such as automobile personal injury protection coverage and homeowner guest medical;

(f) Workers' compensation coverage;

(g) Accident only coverage;

(h) Specified disease and hospital confinement indemnity when marketed solely as a supplement to a health plan;

(i) Employer-sponsored self-funded health plans;

(j) Dental only and vision only coverage; and

(k) Plans deemed by the insurance commissioner to have a short-term limited purpose or duration, or to be a student-only plan that is guaranteed renewable while the covered person is enrolled as a regular full-time undergraduate or graduate student at an accredited higher education institution, after a written request for such classification by the carrier and subsequent written approval by the insurance commissioner.

(19) "Material modification" means a change in the actuarial value of the health plan as modified of more than five percent but less than fifteen percent.

(20) (("Open enrollment" means the annual sixty-two day period during the months of July and August during which every health carrier offering individual health plan coverage must accept onto individual coverage any state resident within the carrier's service area regardless of health condition who submits an application in accordance with RCW 48.43.035(1).

(21))) "Preexisting condition" means any medical condition, illness, or injury that existed any time prior to the effective date of coverage.

(((22))) (21) "Premium" means all sums charged, received, or deposited by a health carrier as consideration for a health plan or the continuance of a health plan. Any assessment or any "membership," "policy," "contract," "service," or similar fee or charge made by a health carrier in consideration for a health plan is deemed part of the premium. "Premium" shall not include amounts paid as enrollee point-of-service cost-sharing.

(((23))) (22) "Review organization" means a disability insurer regulated under chapter 48.20 or 48.21 RCW, health care service contractor as defined in RCW 48.44.010, or health maintenance organization as defined in RCW 48.46.020, and entities affiliated with, under contract with, or acting on behalf of a health carrier to perform a utilization review.

(((24))) (23) "Small employer" or "small group" means any person, firm, corporation, partnership, association, political subdivision except school districts, or self-employed individual that is actively engaged in business that, on at least fifty percent of its working days during the preceding calendar quarter, employed no more than fifty eligible employees, with a normal work week of thirty or more hours, the majority of whom were employed within this state, and is not formed primarily for purposes of buying health insurance and in which a bona fide employer-employee relationship exists. In determining the number of eligible employees, companies that are affiliated companies, or that are eligible to file a combined tax return for purposes of taxation by this state, shall be considered an employer. Subsequent to the issuance of a health plan to a small employer and for the purpose of determining eligibility, the size of a small employer shall be determined annually. Except as otherwise specifically provided, a small employer shall continue to be considered a small employer until the plan anniversary following the date the small employer no longer meets the requirements of this definition. The term "small employer" includes a self-employed individual or sole proprietor. The term "small employer" also includes a self-employed individual or sole proprietor who derives at least seventy-five percent of his or her income from a trade or business through which the individual or sole proprietor has attempted to earn taxable income and for which he or she has filed the appropriate internal revenue service form 1040, schedule C or F, for the previous taxable year.

(((25))) (24) "Utilization review" means the prospective, concurrent, or retrospective assessment of the necessity and appropriateness of the allocation of health care resources and services of a provider or facility, given or proposed to be given to an enrollee or group of enrollees.

(((26))) (25) "Wellness activity" means an explicit program of an activity consistent with department of health guidelines, such as, smoking cessation, injury and accident prevention, reduction of alcohol misuse, appropriate weight reduction, exercise, automobile and motorcycle safety, blood cholesterol reduction, and nutrition education for the purpose of improving enrollee health status and reducing health service costs.

NEW SECTION. Sec. 19. A new section is added to chapter 48.43 RCW to read as follows:

(1) No carrier may reject an individual for an individual health benefit plan based upon preexisting conditions of the individual except as provided in section 21 of this act.

(2) No carrier may deny, exclude, or otherwise limit coverage for an individual's preexisting health conditions except as provided in this section.

(3) For an individual health benefit plan originally issued on or after the effective date of this section preexisting condition waiting periods imposed upon a person enrolling in an individual health benefit plan shall be no more than nine months for a preexisting condition for which medical advice was given, for which a health care provider recommended or provided treatment, or for which a prudent layperson would have sought advice or treatment, within six months prior to the effective date of the plan.

(4) Individual health benefit plan preexisting condition waiting periods shall not apply to prenatal care services.

(5) No carrier may avoid the requirements of this section through the creation of a new rate classification or the modification of an existing rate classification. A new or changed rate classification will be deemed an attempt to avoid the provisions of this section if the new or changed classification would substantially discourage applications for coverage from individuals who are higher than average health risks. These provisions apply only to individuals who are Washington residents.

Sec. 20. RCW 48.43.015 and 1995 c 265 s 5 are each amended to read as follows:

(1) For a health benefit plan offered to a group other than a small group, every health carrier shall ((waive)) reduce any preexisting condition exclusion or limitation for persons or groups who had similar health coverage under a different health plan at any time during the three-month period immediately preceding the date of application for the new health plan if such person was continuously covered under the immediately preceding health plan. If the person was continuously covered for at least three months under the immediately preceding health plan, the carrier may not impose a waiting period for coverage of preexisting conditions. If the person was continuously covered for less than three months under the immediately preceding health plan, the carrier must credit any waiting period under the immediately preceding health plan toward the new health plan. For the purposes of this subsection, a preceding health plan includes an employer provided self-funded health plan and plans of the Washington state health insurance pool.

(2) For a health benefit plan offered to a small group, every health carrier shall reduce any preexisting condition exclusion or limitation for persons or groups who had similar health coverage under a different health plan at any time during the three-month period immediately preceding the date of application for the new health plan if such person was continuously covered under the immediately preceding health plan. If the person was continuously covered for at least nine months under the immediately preceding health plan, the carrier may not impose a waiting period for coverage of preexisting conditions. If the person was continuously covered for less than nine months under the immediately preceding health plan, the carrier must credit any waiting period under the immediately preceding health plan toward the new health plan. For the purposes of this subsection, a preceding health plan includes an employer provided self-funded health plan and plans of the Washington state health insurance pool.

(3) For a health benefit plan offered to an individual, every health carrier shall credit any preexisting condition waiting period in that plan for a person who was enrolled at any time during the sixty-three day period immediately preceding the date of application for the new health plan in a group health benefit plan or an individual health benefit plan, other than a catastrophic health plan, and (a) the benefits under the previous plan provide equivalent or greater overall benefit coverage than that provided in the health benefit plan the individual seeks to purchase; or (b) the person is seeking an individual health benefit plan due to his or her change of residence from one geographic area in Washington state to another geographic area in Washington state where his or her current health plan is not offered; or (c) The person is seeking an individual health benefit plan: (i) Because a health care provider with whom he or she has an established care relationship and from whom he or she has received treatment within the past twelve months is no longer part of the carrier's provider network under his or her existing Washington individual health benefit plan; and (ii) his or her health care provider is part of another carrier's provider network; and (iii) application for a health benefit plan under that carrier's provider network individual coverage is made within ninety days of his or her provider leaving the previous carrier's provider network. The carrier must credit the period of coverage the person was continuously covered under the immediately preceding health plan toward the waiting period of the new health plan. For the purposes of this subsection (3), a preceding health plan includes an employer-provided self-funded health plan and plans of the Washington state health insurance pool.

(4) Subject to the provisions of subsections (1) through (3) of this section, nothing contained in this section requires a health carrier to amend a health plan to provide new benefits in its existing health plans. In addition, nothing in this section requires a carrier to waive benefit limitations not related to an individual or group's preexisting conditions or health history.

NEW SECTION. Sec. 21. A new section is added to chapter 48.43 RCW to read as follows:

(1) Except as provided in (a) and (b) of this subsection, a health carrier may require any person applying for an individual health benefit plan to complete the standard health questionnaire designated under chapter 48.41 RCW.

(a) If a person is seeking an individual health benefit plan due to his or her change of residence from one geographic area in Washington state to another geographic area in Washington state where his or her current health plan is not offered, completion of the standard health questionnaire shall not be a condition of coverage if application for coverage is made within ninety days of relocation.

(b) If a person is seeking an individual health benefit plan:

(i) Because a health care provider with whom he or she has an established care relationship and from whom he or she has received treatment within the past twelve months is no longer part of the carrier's provider network under his or her existing Washington individual health benefit plan; and

(ii) His or her health care provider is part of another carrier's provider network; and

(iii) Application for a health benefit plan under that carrier's provider network individual coverage is made within ninety days of his or her provider leaving the previous carrier's provider network; then completion of the standard health questionnaire shall not be a condition of coverage.

(2) If, based upon the results of the standard health questionnaire, the person qualifies for coverage under the Washington state health insurance pool, the following shall apply:

(a) The carrier may decide not to accept the person's application for enrollment in its individual health benefit plan; and

(b) Within fifteen business days of receipt of a completed application, the carrier shall provide written notice of the decision not to accept the person's application for enrollment to both the person and the administrator of the Washington state health insurance pool. The notice to the person shall state that the person is eligible for health insurance provided by the Washington state health insurance pool, and shall include information about the Washington state health insurance pool and an application for such coverage.

(3) If the person applying for an individual health benefit plan: (a) Does not qualify for coverage under the Washington state health insurance pool based upon the results of the standard health questionnaire; (b) does qualify for coverage under the Washington state health insurance pool based upon the results of the standard health questionnaire and the carrier elects to accept the person for enrollment; or (c) is not required to complete the standard health questionnaire designated under this chapter under subsection (1)(a) or (b) of this section, the carrier shall accept the person for enrollment if he or she resides within the carrier's service area and provide or assure the provision of all covered services regardless of age, sex, family structure, ethnicity, race, health condition, geographic location, employment status, socioeconomic status, other condition or situation, or the provisions of RCW 49.60.174(2). The commissioner may grant a temporary exemption from this subsection if, upon application by a health carrier, the commissioner finds that the clinical, financial, or administrative capacity to serve existing enrollees will be impaired if a health carrier is required to continue enrollment of additional eligible individuals.

NEW SECTION. Sec. 22. A new section is added to chapter 48.43 RCW to read as follows:

Except as otherwise required by statute or rule, a carrier and the Washington state health insurance pool, and persons acting at the direction of or on behalf of a carrier or the pool, who are in receipt of an enrollee's or applicant's personally identifiable health information included in the standard health questionnaire shall not disclose the identifiable health information unless such disclosure is explicitly authorized in writing by the person who is the subject of the information.

Sec. 23. RCW 48.43.025 and 1995 c 265 s 6 are each amended to read as follows:

(1) For group health benefit plans for groups other than small groups, no carrier may reject an individual for health plan coverage based upon preexisting conditions of the individual and no carrier may deny, exclude, or otherwise limit coverage for an individual's preexisting health conditions; except that a carrier may impose a three-month benefit waiting period for preexisting conditions for which medical advice was given, or for which a health care provider recommended or provided treatment, or for which a prudent layperson would have sought advice or treatment, within three months before the effective date of coverage. Any preexisting condition waiting period or limitation relating to pregnancy as a preexisting condition shall be imposed only to the extent allowed in the federal health insurance portability and accountability act of 1996.

(2) For group health benefit plans for small groups, no carrier may reject an individual for health plan coverage based upon preexisting conditions of the individual and no carrier may deny, exclude, or otherwise limit coverage for an individual's preexisting health conditions. Except that a carrier may impose a nine-month benefit waiting period for preexisting conditions for which medical advice was given, or for which a health care provider recommended or provided treatment, or for which a prudent layperson would have sought advice or treatment, within six months before the effective date of coverage. Any preexisting condition waiting period or limitation relating to pregnancy as a preexisting condition shall be imposed only to the extent allowed in the federal health insurance portability and accountability act of 1996.

(3) No carrier may avoid the requirements of this section through the creation of a new rate classification or the modification of an existing rate classification. A new or changed rate classification will be deemed an attempt to avoid the provisions of this section if the new or changed classification would substantially discourage applications for coverage from individuals or groups who are higher than average health risks. These provisions apply only to individuals who are Washington residents.

Sec. 24. RCW 48.43.035 and 1995 c 265 s 7 are each amended to read as follows:

For group health benefit plans, the following shall apply:

(1) All health carriers shall accept for enrollment any state resident within the group to whom the plan is offered and within the carrier's service area and provide or assure the provision of all covered services regardless of age, sex, family structure, ethnicity, race, health condition, geographic location, employment status, socioeconomic status, other condition or situation, or the provisions of RCW 49.60.174(2). The insurance commissioner may grant a temporary exemption from this subsection, if, upon application by a health carrier the commissioner finds that the clinical, financial, or administrative capacity to serve existing enrollees will be impaired if a health carrier is required to continue enrollment of additional eligible individuals.

(2) Except as provided in subsection (5) of this section, all health plans shall contain or incorporate by endorsement a guarantee of the continuity of coverage of the plan. For the purposes of this section, a plan is "renewed" when it is continued beyond the earliest date upon which, at the carrier's sole option, the plan could have been terminated for other than nonpayment of premium. ((In the case of group plans,)) The carrier may consider the group's anniversary date as the renewal date for purposes of complying with the provisions of this section.

(3) The guarantee of continuity of coverage required in health plans shall not prevent a carrier from canceling or nonrenewing a health plan for:

(a) Nonpayment of premium;

(b) Violation of published policies of the carrier approved by the insurance commissioner;

(c) Covered persons entitled to become eligible for medicare benefits by reason of age who fail to apply for a medicare supplement plan or medicare cost, risk, or other plan offered by the carrier pursuant to federal laws and regulations;

(d) Covered persons who fail to pay any deductible or copayment amount owed to the carrier and not the provider of health care services;

(e) Covered persons committing fraudulent acts as to the carrier;

(f) Covered persons who materially breach the health plan; or

(g) Change or implementation of federal or state laws that no longer permit the continued offering of such coverage.

(4) The provisions of this section do not apply in the following cases:

(a) A carrier has zero enrollment on a product; or

(b) A carrier replaces a product and the replacement product is provided to all covered persons within that class or line of business, includes all of the services covered under the replaced product, and does not significantly limit access to the kind of services covered under the replaced product. The health plan may also allow unrestricted conversion to a fully comparable product; or

(c) A carrier is withdrawing from a service area or from a segment of its service area because the carrier has demonstrated to the insurance commissioner that the carrier's clinical, financial, or administrative capacity to serve enrollees would be exceeded.

(5) The provisions of this section do not apply to health plans deemed by the insurance commissioner to be unique or limited or have a short-term purpose, after a written request for such classification by the carrier and subsequent written approval by the insurance commissioner.

NEW SECTION. Sec. 25. A new section is added to chapter 48.43 RCW to read as follows:

(1) Except as provided in subsection (4) of this section, all individual health plans shall contain or incorporate by endorsement a guarantee of the continuity of coverage of the plan. For the purposes of this section, a plan is "renewed" when it is continued beyond the earliest date upon which, at the carrier's sole option, the plan could have been terminated for other than nonpayment of premium.

(2) The guarantee of continuity of coverage required in individual health plans shall not prevent a carrier from canceling or nonrenewing a health plan for:

(a) Nonpayment of premium;

(b) Violation of published policies of the carrier approved by the commissioner;

(d) Covered persons who fail to pay any deductible or copayment amount owed to the carrier and not the provider of health care services;

(e) Covered persons committing fraudulent acts as to the carrier;

(f) Covered persons who materially breach the health plan; or

(g) Change or implementation of federal or state laws that no longer permit the continued offering of such coverage.

(3) This section does not apply in the following cases:

(a) A carrier has zero enrollment on a product;

(b) A carrier is withdrawing from a service area or from a segment of its service area because the carrier has demonstrated to the commissioner that the carrier's clinical, financial, or administrative capacity to serve enrollees would be exceeded;

(c) No sooner than the first day of the month following the expiration of a one hundred eighty-day period beginning on the effective date of this section, a carrier discontinues offering a particular type of health benefit plan offered in the individual market if: (i) The carrier provides notice to each covered individual provided coverage of this type of such discontinuation at least ninety days prior to the date of the discontinuation; (ii) the carrier offers to each individual provided coverage of this type the option, without being subject to the standard health questionnaire, to enroll in any other individual health benefit plan currently being offered by the carrier; and (iii) in exercising the option to discontinue coverage of this type and in offering the option of coverage under (c)(ii) of this subsection, the carrier acts uniformly without regard to any health status-related factor of enrolled individuals or individuals who may become eligible for such coverage; or

(d) A carrier discontinues offering all individual health coverage in the state and discontinues coverage under all existing individual health benefit plans if: (i) The carrier provides notice to the commissioner of its intent to discontinue offering all individual health coverage in the state and its intent to discontinue coverage under all existing health benefit plans at least one hundred eighty days prior to the date of the discontinuation of coverage under all existing health benefit plans; and (ii) the carrier provides notice to each covered individual of the intent to discontinue his or her existing health benefit plan at least one hundred eighty days prior to the date of such discontinuation. In the case of discontinuation under this subsection, the carrier may not issue any individual health coverage in this state for a five-year period beginning on the date of the discontinuation of the last health plan not so renewed. Nothing in this subsection (3) shall be construed to require a carrier to provide notice to the commissioner of its intent to discontinue offering a health benefit plan to new applicants where the carrier does not discontinue coverage of existing enrollees under that health benefit plan.

(4) The provisions of this section do not apply to health plans deemed by the commissioner to be unique or limited or have a short-term purpose, after a written request for such classification by the carrier and subsequent written approval by the commissioner.

NEW SECTION. Sec. 26. A new section is added to chapter 48.43 RCW to read as follows:

(1) All individual health benefit plans, other than catastrophic health plans, offered or renewed on or after the effective date of this section, shall include benefits described in this section. Nothing in this section shall be construed to require a carrier to offer an individual health benefit plan.

(a) Maternity services that include, with no enrollee cost-sharing requirements beyond those generally applicable cost-sharing requirements: Diagnosis of pregnancy; prenatal care; delivery; care for complications of pregnancy; physician services; hospital services; operating or other special procedure rooms; radiology and laboratory services; appropriate medications; anesthesia; and services required under RCW 48.43.115; and

(b) Prescription drug benefits with at least a two thousand dollar benefit payable by the carrier annually.

(2) If a carrier offers a health benefit plan that is not a catastrophic health plan to groups, and it chooses to offer a health benefit plan to individuals, it must offer at least one health benefit plan to individuals that is not a catastrophic health plan.

NEW SECTION. Sec. 27. A new section is added to chapter 48.46 RCW to read as follows:

Notwithstanding the provisions of this chapter, a health maintenance organization may offer catastrophic health plans as defined in RCW 48.43.005.

Sec. 28. RCW 48.44.020 and 1990 c 120 s 5 are each amended to read as follows:

(1) Any health care service contractor may enter into contracts with or for the benefit of persons or groups of persons which require prepayment for health care services by or for such persons in consideration of such health care service contractor providing one or more health care services to such persons and such activity shall not be subject to the laws relating to insurance if the health care services are rendered by the health care service contractor or by a participating provider.

(2) The commissioner may on examination, subject to the right of the health care service contractor to demand and receive a hearing under chapters 48.04 and 34.05 RCW, disapprove any individual or group contract form for any of the following grounds:

(a) If it contains or incorporates by reference any inconsistent, ambiguous or misleading clauses, or exceptions and conditions which unreasonably or deceptively affect the risk purported to be assumed in the general coverage of the contract; or

(b) If it has any title, heading, or other indication of its provisions which is misleading; or

(d) ((If, the benefits provided therein are unreasonable in relation to the amount charged for the contract;

(e))) If it contains unreasonable restrictions on the treatment of patients; or

(((f))) (e) If it violates any provision of this chapter; or

(((g))) (f) If it fails to conform to minimum provisions or standards required by regulation made by the commissioner pursuant to chapter 34.05 RCW; or

(((h))) (g) If any contract for health care services with any state agency, division, subdivision, board, or commission or with any political subdivision, municipal corporation, or quasi-municipal corporation fails to comply with state law.

(3) In addition to the grounds listed in subsection (2) of this section, the commissioner may disapprove any group contract if the benefits provided therein are unreasonable in relation to the amount charged for the contract.

(4)(a) Every contract between a health care service contractor and a participating provider of health care services shall be in writing and shall state that in the event the health care service contractor fails to pay for health care services as provided in the contract, the enrolled participant shall not be liable to the provider for sums owed by the health care service contractor. Every such contract shall provide that this requirement shall survive termination of the contract.

(b) No participating provider, agent, trustee, or assignee may maintain any action against an enrolled participant to collect sums owed by the health care service contractor.

NEW SECTION. Sec. 29. A new section is added to chapter 48.44 RCW to read as follows:

(1) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.

(a) "Claims" means the cost to the health care service contractor of health care services, as defined in RCW 48.43.005, provided to a contract holder or paid to or on behalf of a contract holder in accordance with the terms of a health benefit plan, as defined in RCW 48.43.005. This includes capitation payments or other similar payments made to providers for the purpose of paying for health care services for an enrollee.

(d) "Incurred claims expense" means claims paid during the applicable period plus any increase, or less any decrease, in the claims reserves.

(e) "Loss ratio" means incurred claims expense as a percentage of earned premiums.

(f) "Reserves" means: (i) Active life reserves; and (ii) additional reserves whether for a specific liability purpose or not.

(2) A health care service contractor shall file, for informational purposes only, a notice of its schedule of rates for its individual contracts with the commissioner prior to use.

(3) A health care service contractor shall file with the notice required under subsection (2) of this section supporting documentation of its method of determining the rates charged. The commissioner may request only the following supporting documentation:

(a) A description of the health care service contractor's rate-making methodology;

(b) An actuarially determined estimate of incurred claims which includes the experience data, assumptions, and justifications of the health care service contractor's projection;

(c) The percentage of premium attributable in aggregate for nonclaims expenses used to determine the adjusted community rates charged; and

(4) The commissioner may not disapprove or otherwise impede the implementation of the filed rates.

(5) By the last day of May each year any health care service contractor providing individual health benefit plans in this state shall file for review by the commissioner supporting documentation of its actual loss ratio for its individual health benefit plans offered in this state in aggregate for the preceding calendar year. The filing shall include a certification by a member of the American academy of actuaries, or other person approved by the commissioner, that the actual loss ratio has been calculated in accordance with accepted actuarial principles.

(b) If the commissioner contests the calculation of the actual loss ratio, the commissioner shall state in writing the grounds for contesting the calculation to the health care service contractor.

(c) Any dispute regarding the calculation of the actual loss ratio shall upon written demand of either the commissioner or the health care service contractor be submitted to hearing under chapters 48.04 and 34.05 RCW.

(6) If the actual loss ratio for the preceding calendar year is less than the loss ratio standard established in subsection (7) of this section, a remittance is due and the following shall apply:

(a) The health care service contractor shall calculate a percentage of premium to be remitted to the Washington state health insurance pool by subtracting the actual loss ratio for the preceding year from the loss ratio established in subsection (7) of this section.

(b) The remittance to the Washington state health insurance pool is the percentage calculated in (a) of this subsection, multiplied by the premium earned from each enrollee in the previous calendar year. Interest shall be added to the remittance due at a five percent annual rate calculated from the end of the calendar year for which the remittance is due to the date the remittance is made.

(c) All remittances shall be aggregated and such amounts shall be remitted to the Washington state high risk pool to be used as directed by the pool board of directors.

(7) The loss ratio applicable to this section shall be seventy-four percent minus the premium tax rate applicable to the health care service contractor's individual health benefit plans under RCW 48.14.0201.

Sec. 30. RCW 48.44.022 and 1997 c 231 s 208 are each amended to read as follows:

(1)(((a) A health care service contractor offering any health benefit plan to any individual shall offer and actively market to all individuals a health benefit plan providing benefits identical to the schedule of covered health benefits that are required to be delivered to an individual enrolled in the basic health plan, subject to the provisions in RCW 48.43.025 and 48.43.035. Nothing in this subsection shall preclude a contractor from offering, or an individual from purchasing, other health benefit plans that may have more or less comprehensive benefits than the basic health plan, provided such plans are in accordance with this chapter. A contractor offering a health benefit plan that does not include benefits provided in the basic health plan shall clearly disclose these differences to the individual in a brochure approved by the commissioner.

(b) A health benefit plan shall provide coverage for hospital expenses and services rendered by a physician licensed under chapter 18.57 or 18.71 RCW but is not subject to the requirements of RCW 48.44.225, 48.44.240, 48.44.245, 48.44.290, 48.44.300, 48.44.310, 48.44.320, 48.44.325, 48.44.330, 48.44.335, 48.44.340, 48.44.344, 48.44.360, 48.44.400, 48.44.440, 48.44.450, and 48.44.460 if the health benefit plan is the mandatory offering under (a) of this subsection that provides benefits identical to the basic health plan, to the extent these requirements differ from the basic health plan.

(2))) Premium rates for health benefit plans for individuals shall be subject to the following provisions:

(a) The health care service contractor shall develop its rates based on an adjusted community rate and may only vary the adjusted community rate for:

(i) Geographic area;

(ii) Family size;

(iii) Age;

(iv) Tenure discounts; and

(v) Wellness activities.

(c) The health care service contractor shall be permitted to develop separate rates for individuals age sixty-five or older for coverage for which medicare is the primary payer and coverage for which medicare is not the primary payer. Both rates shall be subject to the requirements of this subsection.

(e) A discount for wellness activities shall be permitted to reflect actuarially justified differences in utilization or cost attributed to such programs not to exceed twenty percent.

(f) The rate charged for a health benefit plan offered under this section may not be adjusted more frequently than annually except that the premium may be changed to reflect:

(i) Changes to the family composition;

(ii) Changes to the health benefit plan requested by the individual; or

(iii) Changes in government requirements affecting the health benefit plan.

(h) A tenure discount for continuous enrollment in the health plan of two years or more may be offered, not to exceed ten percent.

(((4))) (3) As used in this section and RCW 48.44.023 "health benefit plan," "small employer," (("basic health plan,")) "adjusted community rates," and "wellness activities" mean the same as defined in RCW 48.43.005.

Sec. 31. RCW 48.46.060 and 1989 c 10 s 10 are each amended to read as follows:

(1) Any health maintenance organization may enter into agreements with or for the benefit of persons or groups of persons, which require prepayment for health care services by or for such persons in consideration of the health maintenance organization providing health care services to such persons. Such activity is not subject to the laws relating to insurance if the health care services are rendered directly by the health maintenance organization or by any provider which has a contract or other arrangement with the health maintenance organization to render health services to enrolled participants.

(2) All forms of health maintenance agreements issued by the organization to enrolled participants or other marketing documents purporting to describe the organization's comprehensive health care services shall comply with such minimum standards as the commissioner deems reasonable and necessary in order to carry out the purposes and provisions of this chapter, and which fully inform enrolled participants of the health care services to which they are entitled, including any limitations or exclusions thereof, and such other rights, responsibilities and duties required of the contracting health maintenance organization.

(3) Subject to the right of the health maintenance organization to demand and receive a hearing under chapters 48.04 and 34.05 RCW, the commissioner may disapprove an individual or group agreement form for any of the following grounds:

(a) If it contains or incorporates by reference any inconsistent, ambiguous, or misleading clauses, or exceptions or conditions which unreasonably or deceptively affect the risk purported to be assumed in the general coverage of the agreement;

(b) If it has any title, heading, or other indication which is misleading;

(d) ((If the benefits provided therein are unreasonable in relation to the amount charged for the agreement;

(e))) If it contains unreasonable restrictions on the treatment of patients;

(((f))) (e) If it is in any respect in violation of this chapter or if it fails to conform to minimum provisions or standards required by the commissioner by rule under chapter 34.05 RCW; or

(((g))) (f) If any agreement for health care services with any state agency, division, subdivision, board, or commission or with any political subdivision, municipal corporation, or quasi-municipal corporation fails to comply with state law.

(4) In addition to the grounds listed in subsection (2) of this section, the commissioner may disapprove any group agreement if the benefits provided therein are unreasonable in relation to the amount charged for the agreement.

(5) No health maintenance organization authorized under this chapter shall cancel or fail to renew the enrollment on any basis of an enrolled participant or refuse to transfer an enrolled participant from a group to an individual basis for reasons relating solely to age, sex, race, or health status((: PROVIDED HOWEVER, That)). Nothing contained herein shall prevent cancellation of an agreement with enrolled participants (a) who violate any published policies of the organization which have been approved by the commissioner, or (b) who are entitled to become eligible for medicare benefits and fail to enroll for a medicare supplement plan offered by the health maintenance organization and approved by the commissioner, or (c) for failure of such enrolled participant to pay the approved charge, including cost-sharing, required under such contract, or (d) for a material breach of the health maintenance agreement.

(((5))) (6) No agreement form or amendment to an approved agreement form shall be used unless it is first filed with the commissioner.

NEW SECTION. Sec. 32. A new section is added to chapter 48.46 RCW to read as follows:

(1) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.

(a) "Claims" means the cost to the health maintenance organization of health care services, as defined in RCW 48.43.005, provided to an enrollee or paid to or on behalf of the enrollee in accordance with the terms of a health benefit plan, as defined in RCW 48.43.005. This includes capitation payments or other similar payments made to providers for the purpose of paying for health care services for an enrollee.

(d) "Incurred claims expense" means claims paid during the applicable period plus any increase, or less any decrease, in the claims reserves.

(e) "Loss ratio" means incurred claims expense as a percentage of earned premiums.

(f) "Reserves" means: (i) Active life reserves; and (ii) additional reserves whether for a specific liability purpose or not.

(2) A health maintenance organization shall file, for informational purposes only, a notice of its schedule of rates for its individual agreements with the commissioner prior to use.

(3) A health maintenance organization shall file with the notice required under subsection (2) of this section supporting documentation of its method of determining the rates charged. The commissioner may request only the following supporting documentation:

(a) A description of the health maintenance organization's rate-making methodology;

(b) An actuarially determined estimate of incurred claims which includes the experience data, assumptions, and justifications of the health maintenance organization's projection;

(c) The percentage of premium attributable in aggregate for nonclaims expenses used to determine the adjusted community rates charged; and

(4) The commissioner may not disapprove or otherwise impede the implementation of the filed rates.

(5) By the last day of May each year any health maintenance organization providing individual health benefit plans in this state shall file for review by the commissioner supporting documentation of its actual loss ratio for its individual health benefit plans offered in the state in aggregate for the preceding calendar year. The filing shall include a certification by a member of the American academy of actuaries, or other person approved by the commissioner, that the actual loss ratio has been calculated in accordance with accepted actuarial principles.

(b) If the commissioner contests the calculation of the actual loss ratio, the commissioner shall state in writing the grounds for contesting the calculation to the health maintenance organization.

(c) Any dispute regarding the calculation of the actual loss ratio shall, upon written demand of either the commissioner or the health maintenance organization, be submitted to hearing under chapters 48.04 and 34.05 RCW.

(6) If the actual loss ratio for the preceding calendar year is less than the loss ratio standard established in subsection (7) of this section, a remittance is due and the following shall apply:

(a) The health maintenance organization shall calculate a percentage of premium to be remitted to the Washington state health insurance pool by subtracting the actual loss ratio for the preceding year from the loss ratio established in subsection (7) of this section.

(c) All remittances shall be aggregated and such amounts shall be remitted to the Washington state high risk pool to be used as directed by the pool board of directors.

(7) The loss ratio applicable to this section shall be seventy-four percent minus the premium tax rate applicable to the health maintenance organization's individual health benefit plans under RCW 48.14.0201.

Sec. 33. RCW 48.46.064 and 1997 c 231 s 209 are each amended to read as follows:

(1)(((a) A health maintenance organization offering any health benefit plan to any individual shall offer and actively market to all individuals a health benefit plan providing benefits identical to the schedule of covered health benefits that are required to be delivered to an individual enrolled in the basic health plan, subject to the provisions in RCW 48.43.025 and 48.43.035. Nothing in this subsection shall preclude a health maintenance organization from offering, or an individual from purchasing, other health benefit plans that may have more or less comprehensive benefits than the basic health plan, provided such plans are in accordance with this chapter. A health maintenance organization offering a health benefit plan that does not include benefits provided in the basic health plan shall clearly disclose these differences to the individual in a brochure approved by the commissioner.

(b) A health benefit plan shall provide coverage for hospital expenses and services rendered by a physician licensed under chapter 18.57 or 18.71 RCW but is not subject to the requirements of RCW 48.46.275, 48.46.280, 48.46.285, 48.46.290, 48.46.350, 48.46.355, 48.46.375, 48.46.440, 48.46.480, 48.46.510, 48.46.520, and 48.46.530 if the health benefit plan is the mandatory offering under (a) of this subsection that provides benefits identical to the basic health plan, to the extent these requirements differ from the basic health plan.

(2))) Premium rates for health benefit plans for individuals shall be subject to the following provisions:

(a) The health maintenance organization shall develop its rates based on an adjusted community rate and may only vary the adjusted community rate for:

(i) Geographic area;

(ii) Family size;

(iii) Age;

(iv) Tenure discounts; and

(v) Wellness activities.

(c) The health maintenance organization shall be permitted to develop separate rates for individuals age sixty-five or older for coverage for which medicare is the primary payer and coverage for which medicare is not the primary payer. Both rates shall be subject to the requirements of this subsection.

(e) A discount for wellness activities shall be permitted to reflect actuarially justified differences in utilization or cost attributed to such programs not to exceed twenty percent.

(f) The rate charged for a health benefit plan offered under this section may not be adjusted more frequently than annually except that the premium may be changed to reflect:

(i) Changes to the family composition;

(ii) Changes to the health benefit plan requested by the individual; or

(iii) Changes in government requirements affecting the health benefit plan.

(h) A tenure discount for continuous enrollment in the health plan of two years or more may be offered, not to exceed ten percent.

(((4))) (3) As used in this section and RCW 48.46.066, "health benefit plan," (("basic health plan,")) "adjusted community rate," "small employer," and "wellness activities" mean the same as defined in RCW 48.43.005.

Sec. 34. RCW 70.47.060 and 1998 c 314 s 17 and 1998 c 148 s 1 are each reenacted and amended to read as follows:

The administrator has the following powers and duties:

(1) To design and from time to time revise a schedule of covered basic health care services, including physician services, inpatient and outpatient hospital services, prescription drugs and medications, and other services that may be necessary for basic health care. In addition, the administrator may, to the extent that funds are available, offer as basic health plan services chemical dependency services, mental health services and organ transplant services; however, no one service or any combination of these three services shall increase the actuarial value of the basic health plan benefits by more than five percent excluding inflation, as determined by the office of financial management. All subsidized and nonsubsidized enrollees in any participating managed health care system under the Washington basic health plan shall be entitled to receive covered basic health care services in return for premium payments to the plan. The schedule of services shall emphasize proven preventive and primary health care and shall include all services necessary for prenatal, postnatal, and well-child care. However, with respect to coverage for ((groups of)) subsidized enrollees who are eligible to receive prenatal and postnatal services through the medical assistance program under chapter 74.09 RCW, the administrator shall not contract for such services except to the extent that such services are necessary over not more than a one-month period in order to maintain continuity of care after diagnosis of pregnancy by the managed care provider. The schedule of services shall also include a separate schedule of basic health care services for children, eighteen years of age and younger, for those subsidized or nonsubsidized enrollees who choose to secure basic coverage through the plan only for their dependent children. In designing and revising the schedule of services, the administrator shall consider the guidelines for assessing health services under the mandated benefits act of 1984, RCW 48.47.030, and such other factors as the administrator deems appropriate.

((However, with respect to coverage for subsidized enrollees who are eligible to receive prenatal and postnatal services through the medical assistance program under chapter 74.09 RCW, the administrator shall not contract for such services except to the extent that the services are necessary over not more than a one-month period in order to maintain continuity of care after diagnosis of pregnancy by the managed care provider.))

(2)(a) To design and implement a structure of periodic premiums due the administrator from subsidized enrollees that is based upon gross family income, giving appropriate consideration to family size and the ages of all family members. The enrollment of children shall not require the enrollment of their parent or parents who are eligible for the plan. The structure of periodic premiums shall be applied to subsidized enrollees entering the plan as individuals pursuant to subsection (9) of this section and to the share of the cost of the plan due from subsidized enrollees entering the plan as employees pursuant to subsection (10) of this section.

(b) To determine the periodic premiums due the administrator from nonsubsidized enrollees. Premiums due from nonsubsidized enrollees shall be in an amount equal to the cost charged by the managed health care system provider to the state for the plan plus the administrative cost of providing the plan to those enrollees and the premium tax under RCW 48.14.0201.

(c) An employer or other financial sponsor may, with the prior approval of the administrator, pay the premium, rate, or any other amount on behalf of a subsidized or nonsubsidized enrollee, by arrangement with the enrollee and through a mechanism acceptable to the administrator.

(((d) To develop, as an offering by every health carrier providing coverage identical to the basic health plan, as configured on January 1, 1996, a basic health plan model plan with uniformity in enrollee cost-sharing requirements.))

(3) To design and implement a structure of enrollee cost-sharing due a managed health care system from subsidized and nonsubsidized enrollees. The structure shall discourage inappropriate enrollee utilization of health care services, and may utilize copayments, deductibles, and other cost-sharing mechanisms, but shall not be so costly to enrollees as to constitute a barrier to appropriate utilization of necessary health care services.

(4) To limit enrollment of persons who qualify for subsidies so as to prevent an overexpenditure of appropriations for such purposes. Whenever the administrator finds that there is danger of such an overexpenditure, the administrator shall close enrollment until the administrator finds the danger no longer exists.

(5) To limit the payment of subsidies to subsidized enrollees, as defined in RCW 70.47.020. The level of subsidy provided to persons who qualify may be based on the lowest cost plans, as defined by the administrator.

(6) To adopt a schedule for the orderly development of the delivery of services and availability of the plan to residents of the state, subject to the limitations contained in RCW 70.47.080 or any act appropriating funds for the plan.

(7) To solicit and accept applications from managed health care systems, as defined in this chapter, for inclusion as eligible basic health care providers under the plan for either subsidized enrollees, or nonsubsidized enrollees, or both. The administrator shall endeavor to assure that covered basic health care services are available to any enrollee of the plan from among a selection of two or more participating managed health care systems. In adopting any rules or procedures applicable to managed health care systems and in its dealings with such systems, the administrator shall consider and make suitable allowance for the need for health care services and the differences in local availability of health care resources, along with other resources, within and among the several areas of the state. Contracts with participating managed health care systems shall ensure that basic health plan enrollees who become eligible for medical assistance may, at their option, continue to receive services from their existing providers within the managed health care system if such providers have entered into provider agreements with the department of social and health services.

(8) To receive periodic premiums from or on behalf of subsidized and nonsubsidized enrollees, deposit them in the basic health plan operating account, keep records of enrollee status, and authorize periodic payments to managed health care systems on the basis of the number of enrollees participating in the respective managed health care systems.

(9) To accept applications from individuals residing in areas served by the plan, on behalf of themselves and their spouses and dependent children, for enrollment in the Washington basic health plan as subsidized or nonsubsidized enrollees, to establish appropriate minimum-enrollment periods for enrollees as may be necessary, and to determine, upon application and on a reasonable schedule defined by the authority, or at the request of any enrollee, eligibility due to current gross family income for sliding scale premiums. Funds received by a family as part of participation in the adoption support program authorized under RCW 26.33.320 and 74.13.100 through 74.13.145 shall not be counted toward a family's current gross family income for the purposes of this chapter. When an enrollee fails to report income or income changes accurately, the administrator shall have the authority either to bill the enrollee for the amounts overpaid by the state or to impose civil penalties of up to two hundred percent of the amount of subsidy overpaid due to the enrollee incorrectly reporting income. The administrator shall adopt rules to define the appropriate application of these sanctions and the processes to implement the sanctions provided in this subsection, within available resources. No subsidy may be paid with respect to any enrollee whose current gross family income exceeds twice the federal poverty level or, subject to RCW 70.47.110, who is a recipient of medical assistance or medical care services under chapter 74.09 RCW. If a number of enrollees drop their enrollment for no apparent good cause, the administrator may establish appropriate rules or requirements that are applicable to such individuals before they will be allowed to reenroll in the plan.

(10) To accept applications from business owners on behalf of themselves and their employees, spouses, and dependent children, as subsidized or nonsubsidized enrollees, who reside in an area served by the plan. The administrator may require all or the substantial majority of the eligible employees of such businesses to enroll in the plan and establish those procedures necessary to facilitate the orderly enrollment of groups in the plan and into a managed health care system. The administrator may require that a business owner pay at least an amount equal to what the employee pays after the state pays its portion of the subsidized premium cost of the plan on behalf of each employee enrolled in the plan. Enrollment is limited to those not eligible for medicare who wish to enroll in the plan and choose to obtain the basic health care coverage and services from a managed care system participating in the plan. The administrator shall adjust the amount determined to be due on behalf of or from all such enrollees whenever the amount negotiated by the administrator with the participating managed health care system or systems is modified or the administrative cost of providing the plan to such enrollees changes.

(11) To determine the rate to be paid to each participating managed health care system in return for the provision of covered basic health care services to enrollees in the system. Although the schedule of covered basic health care services will be the same or actuarially equivalent for similar enrollees, the rates negotiated with participating managed health care systems may vary among the systems. In negotiating rates with participating systems, the administrator shall consider the characteristics of the populations served by the respective systems, economic circumstances of the local area, the need to conserve the resources of the basic health plan trust account, and other factors the administrator finds relevant.

(12) To monitor the provision of covered services to enrollees by participating managed health care systems in order to assure enrollee access to good quality basic health care, to require periodic data reports concerning the utilization of health care services rendered to enrollees in order to provide adequate information for evaluation, and to inspect the books and records of participating managed health care systems to assure compliance with the purposes of this chapter. In requiring reports from participating managed health care systems, including data on services rendered enrollees, the administrator shall endeavor to minimize costs, both to the managed health care systems and to the plan. The administrator shall coordinate any such reporting requirements with other state agencies, such as the insurance commissioner and the department of health, to minimize duplication of effort.

(13) To evaluate the effects this chapter has on private employer-based health care coverage and to take appropriate measures consistent with state and federal statutes that will discourage the reduction of such coverage in the state.

(14) To develop a program of proven preventive health measures and to integrate it into the plan wherever possible and consistent with this chapter.

(15) To provide, consistent with available funding, assistance for rural residents, underserved populations, and persons of color.

(16) In consultation with appropriate state and local government agencies, to establish criteria defining eligibility for persons confined or residing in government-operated institutions.

(17) To administer the premium discounts provided under RCW 48.41.200(3)(a) (i) and (ii) pursuant to a contract with the Washington state health insurance pool.

Sec. 35. RCW 70.47.100 and 1987 1st ex.s. c 5 s 12 are each amended to read as follows:

(1) A managed health care ((systems)) system participating in the plan shall do so by contract with the administrator and shall provide, directly or by contract with other health care providers, covered basic health care services to each enrollee covered by its contract with the administrator as long as payments from the administrator on behalf of the enrollee are current. A participating managed health care system may offer, without additional cost, health care benefits or services not included in the schedule of covered services under the plan. A participating managed health care system shall not give preference in enrollment to enrollees who accept such additional health care benefits or services. Managed health care systems participating in the plan shall not discriminate against any potential or current enrollee based upon health status, sex, race, ethnicity, or religion. The administrator may receive and act upon complaints from enrollees regarding failure to provide covered services or efforts to obtain payment, other than authorized copayments, for covered services directly from enrollees, but nothing in this chapter empowers the administrator to impose any sanctions under Title 18 RCW or any other professional or facility licensing statute.

(2) The plan shall allow, at least annually, an opportunity for enrollees to transfer their enrollments among participating managed health care systems serving their respective areas. The administrator shall establish a period of at least twenty days in a given year when this opportunity is afforded enrollees, and in those areas served by more than one participating managed health care system the administrator shall endeavor to establish a uniform period for such opportunity. The plan shall allow enrollees to transfer their enrollment to another participating managed health care system at any time upon a showing of good cause for the transfer.

((Any contract between a hospital and a participating managed health care system under this chapter is subject to the requirements of RCW 70.39.140(1) regarding negotiated rates.))

(3) Prior to negotiating with any managed health care system, the administrator shall determine, on an actuarially sound basis, the reasonable cost of providing the schedule of basic health care services, expressed in terms of upper and lower limits, and recognizing variations in the cost of providing the services through the various systems and in different areas of the state.

(4) In negotiating with managed health care systems for participation in the plan, the administrator shall adopt a uniform procedure that includes at least the following:

(((1))) (a) The administrator shall issue a request for proposals, including standards regarding the quality of services to be provided; financial integrity of the responding systems; and responsiveness to the unmet health care needs of the local communities or populations that may be served;

(((2))) (b) The administrator shall then review responsive proposals and may negotiate with respondents to the extent necessary to refine any proposals;

(((3))) (c) The administrator may then select one or more systems to provide the covered services within a local area; and

(((4))) (d) The administrator may adopt a policy that gives preference to respondents, such as nonprofit community health clinics, that have a history of providing quality health care services to low-income persons.

(5) The administrator may contract with a managed health care system to provide covered basic health care services to either subsidized enrollees, or nonsubsidized enrollees, or both.

(6) The administrator may establish procedures and policies to further negotiate and contract with managed health care systems following completion of the request for proposal process in subsection (4) of this section, upon a determination by the administrator that it is necessary to provide access, as defined in the request for proposal documents, to covered basic health care services for enrollees.

(7)(a) The administrator shall implement a self-funded or self-insured method of providing insurance coverage to subsidized enrollees, as provided under RCW 41.05.140, if one of the following conditions is met:

(i) The authority determines that no managed health care system other than the authority is willing and able to provide access, as defined in the request for proposal documents, to covered basic health care services for all subsidized enrollees in an area; or

(ii) The authority determines that no other managed health care system is willing to provide access, as defined in the request for proposal documents, for one hundred thirty-three percent of the state-wide benchmark price or less, and the authority is able to offer such coverage at a price that is less than the lowest price at which any other managed health care system is willing to provide such access in an area.

(b) The authority shall initiate steps to provide the coverage described in (a) of this subsection within ninety days of making its determination that the conditions for providing a self-funded or self-insured method of providing insurance have been met.

(c) The administrator may not implement a self-funded or self-insured method of providing insurance in an area unless the administrator has received a certification from a member of the American academy of actuaries that the funding available in the basic health plan self-insurance reserve account is sufficient for the self-funded or self-insured risk assumed, or expected to be assumed, by the administrator.

NEW SECTION. Sec. 36. A new section is added to chapter 48.41 RCW to read as follows:

The Washington state health insurance pool account is created in the custody of the state treasurer. All receipts from moneys specifically appropriated to the account must be deposited in the account. Expenditures from this account shall be used to cover deficits incurred by the Washington state health insurance pool under this chapter in excess of the threshold established in this section. To the extent funds are available in the account, funds shall be expended from the account to offset that portion of the deficit that would otherwise have to be recovered by imposing an assessment on members in excess of a threshold of seventy cents per insured person per month. The commissioner shall authorize expenditures from the account, to the extent that funds are available in the account, upon certification by the pool board that assessments will exceed the threshold level established in this section. The account is subject to the allotment procedures under chapter 43.88 RCW, but an appropriation is not required for expenditures.

Sec. 37. RCW 43.84.092 and 1999 c 380 s 8, 1999 c 309 s 928, 1999 c 268 s 4, and 1999 c 94 s 2 are each reenacted and amended to read as follows:

(1) All earnings of investments of surplus balances in the state treasury shall be deposited to the treasury income account, which account is hereby established in the state treasury.

(2) The treasury income account shall be utilized to pay or receive funds associated with federal programs as required by the federal cash management improvement act of 1990. The treasury income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for refunds or allocations of interest earnings required by the cash management improvement act. Refunds of interest to the federal treasury required under the cash management improvement act fall under RCW 43.88.180 and shall not require appropriation. The office of financial management shall determine the amounts due to or from the federal government pursuant to the cash management improvement act. The office of financial management may direct transfers of funds between accounts as deemed necessary to implement the provisions of the cash management improvement act, and this subsection. Refunds or allocations shall occur prior to the distributions of earnings set forth in subsection (4) of this section.

(3) Except for the provisions of RCW 43.84.160, the treasury income account may be utilized for the payment of purchased banking services on behalf of treasury funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasury and affected state agencies. The treasury income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for payments to financial institutions. Payments shall occur prior to distribution of earnings set forth in subsection (4) of this section.

(4) Monthly, the state treasurer shall distribute the earnings credited to the treasury income account. The state treasurer shall credit the general fund with all the earnings credited to the treasury income account except:

(a) The following accounts and funds shall receive their proportionate share of earnings based upon each account's and fund's average daily balance for the period: The capitol building construction account, the Cedar River channel construction and operation account, the Central Washington University capital projects account, the charitable, educational, penal and reformatory institutions account, the common school construction fund, the county criminal justice assistance account, the county sales and use tax equalization account, the data processing building construction account, the deferred compensation administrative account, the deferred compensation principal account, the department of retirement systems expense account, the drinking water assistance account, the Eastern Washington University capital projects account, the education construction fund, the emergency reserve fund, the federal forest revolving account, the health services account, the public health services account, the health system capacity account, the personal health services account, the state higher education construction account, the higher education construction account, the highway infrastructure account, the industrial insurance premium refund account, the judges' retirement account, the judicial retirement administrative account, the judicial retirement principal account, the local leasehold excise tax account, the local real estate excise tax account, the local sales and use tax account, the medical aid account, the mobile home park relocation fund, the municipal criminal justice assistance account, the municipal sales and use tax equalization account, the natural resources deposit account, the perpetual surveillance and maintenance account, the public employees' retirement system plan 1 account, the public employees' retirement system plan 2 account, the Puyallup tribal settlement account, the resource management cost account, the site closure account, the special wildlife account, the state employees' insurance account, the state employees' insurance reserve account, the state investment board expense account, the state investment board commingled trust fund accounts, the supplemental pension account, the teachers' retirement system plan 1 account, the teachers' retirement system plan 2 account, the tobacco prevention and control account, the tobacco settlement account, the transportation infrastructure account, the tuition recovery trust fund, the University of Washington bond retirement fund, the University of Washington building account, the volunteer fire fighters' and reserve officers' relief and pension principal ((account)) fund, the volunteer fire fighters' ((relief and pension)) and reserve officers' administrative ((account)) fund, the Washington judicial retirement system account, the Washington law enforcement officers' and fire fighters' system plan 1 retirement account, the Washington law enforcement officers' and fire fighters' system plan 2 retirement account, the Washington state health insurance pool account, the Washington state patrol retirement account, the Washington State University building account, the Washington State University bond retirement fund, the water pollution control revolving fund, and the Western Washington University capital projects account. Earnings derived from investing balances of the agricultural permanent fund, the normal school permanent fund, the permanent common school fund, the scientific permanent fund, and the state university permanent fund shall be allocated to their respective beneficiary accounts. All earnings to be distributed under this subsection (4)(a) shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.

(b) The following accounts and funds shall receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The aeronautics account, the aircraft search and rescue account, the county arterial preservation account, the department of licensing services account, the essential rail assistance account, the ferry bond retirement fund, the grade crossing protective fund, the high capacity transportation account, the highway bond retirement fund, the highway safety account, the marine operating fund, the motor vehicle fund, the motorcycle safety education account, the pilotage account, the public transportation systems account, the Puget Sound capital construction account, the Puget Sound ferry operations account, the recreational vehicle account, the rural arterial trust account, the safety and education account, the special category C account, the state patrol highway account, the transportation equipment fund, the transportation fund, the transportation improvement account, the transportation improvement board bond retirement account, and the urban arterial trust account.

(5) In conformance with Article II, section 37 of the state Constitution, no treasury accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

Sec. 38. RCW 43.84.092 and 1999 c 380 s 8, 1999 c 309 s 928, 1999 c 268 s 4, 1999 c 94 s 3, and 1999 c 94 s 2 are each reenacted and amended to read as follows:

(1) All earnings of investments of surplus balances in the state treasury shall be deposited to the treasury income account, which account is hereby established in the state treasury.

(b) The following accounts and funds shall receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The aeronautics account, the aircraft search and rescue account, the county arterial preservation account, the department of licensing services account, the essential rail assistance account, the ferry bond retirement fund, the grade crossing protective fund, the high capacity transportation account, the highway bond retirement fund, the highway safety account, the motor vehicle fund, the motorcycle safety education account, the pilotage account, the public transportation systems account, the Puget Sound capital construction account, the Puget Sound ferry operations account, the recreational vehicle account, the rural arterial trust account, the safety and education account, the special category C account, the state patrol highway account, the transportation equipment fund, the transportation fund, the transportation improvement account, the transportation improvement board bond retirement account, and the urban arterial trust account.

(5) In conformance with Article II, section 37 of the state Constitution, no treasury accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

Sec. 39. RCW 43.84.092 and 1999 c 380 s 9, 1999 c 309 s 929, 1999 c 268 s 5, and 1999 c 94 s 4 are each reenacted and amended to read as follows:

(1) All earnings of investments of surplus balances in the state treasury shall be deposited to the treasury income account, which account is hereby established in the state treasury.

(a) The following accounts and funds shall receive their proportionate share of earnings based upon each account's and fund's average daily balance for the period: The capitol building construction account, the Cedar River channel construction and operation account, the Central Washington University capital projects account, the charitable, educational, penal and reformatory institutions account, the common school construction fund, the county criminal justice assistance account, the county sales and use tax equalization account, the data processing building construction account, the deferred compensation administrative account, the deferred compensation principal account, the department of retirement systems expense account, the drinking water assistance account, the Eastern Washington University capital projects account, the education construction fund, the emergency reserve fund, the federal forest revolving account, the health services account, the public health services account, the health system capacity account, the personal health services account, the state higher education construction account, the higher education construction account, the highway infrastructure account, the industrial insurance premium refund account, the judges' retirement account, the judicial retirement administrative account, the judicial retirement principal account, the local leasehold excise tax account, the local real estate excise tax account, the local sales and use tax account, the medical aid account, the mobile home park relocation fund, the municipal criminal justice assistance account, the municipal sales and use tax equalization account, the natural resources deposit account, the perpetual surveillance and maintenance account, the public employees' retirement system plan 1 account, the public employees' retirement system plan 2 account, the Puyallup tribal settlement account, the resource management cost account, the site closure account, the special wildlife account, the state employees' insurance account, the state employees' insurance reserve account, the state investment board expense account, the state investment board commingled trust fund accounts, the supplemental pension account, the teachers' retirement system plan 1 account, the teachers' retirement system combined plan 2 and plan 3 account, the tobacco prevention and control account, the tobacco settlement account, the transportation infrastructure account, the tuition recovery trust fund, the University of Washington bond retirement fund, the University of Washington building account, the volunteer fire fighters' and reserve officers' relief and pension principal ((account)) fund, the volunteer fire fighters' ((relief and pension)) and reserve officers' administrative ((account)) fund, the Washington judicial retirement system account, the Washington law enforcement officers' and fire fighters' system plan 1 retirement account, the Washington law enforcement officers' and fire fighters' system plan 2 retirement account, the Washington school employees' retirement system combined plan 2 and 3 account, the Washington state health insurance pool account, the Washington state patrol retirement account, the Washington State University building account, the Washington State University bond retirement fund, the water pollution control revolving fund, and the Western Washington University capital projects account. Earnings derived from investing balances of the agricultural permanent fund, the normal school permanent fund, the permanent common school fund, the scientific permanent fund, and the state university permanent fund shall be allocated to their respective beneficiary accounts. All earnings to be distributed under this subsection (4)(a) shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.

(b) The following accounts and funds shall receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The aeronautics account, the aircraft search and rescue account, the county arterial preservation account, the department of licensing services account, the essential rail assistance account, the ferry bond retirement fund, the grade crossing protective fund, the high capacity transportation account, the highway bond retirement fund, the highway safety account, the motor vehicle fund, the motorcycle safety education account, the pilotage account, the public transportation systems account, the Puget Sound capital construction account, the Puget Sound ferry operations account, the recreational vehicle account, the rural arterial trust account, the safety and education account, the special category C account, the state patrol highway account, the transportation equipment fund, the transportation fund, the transportation improvement account, the transportation improvement board bond retirement account, and the urban arterial trust account.

(5) In conformance with Article II, section 37 of the state Constitution, no treasury accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

NEW SECTION. Sec. 40. A new section is added to chapter 48.01 RCW to read as follows:

(1) Except as required in RCW 48.21.045, 48.44.023, and 48.46.066, nothing in this title shall be construed to require a carrier, as defined in RCW 48.43.005, to offer any health benefit plan for sale.

(2) Nothing in this title shall prohibit a carrier as defined in RCW 48.43.005 from ceasing sale of any or all health benefit plans to new applicants if the closed plans are closed to all new applicants.

(3) This section is intended to clarify, and not modify, existing law.

NEW SECTION. Sec. 41. (1) The task force on health care reinsurance is created, and is composed of seven members, including: Three members appointed by the governor, one of whom shall be the chair of the Washington state health insurance pool; two members of the senate, one member of each party caucus appointed by the president of the senate; and two members of the house of representatives, one member of each party caucus appointed by the co-speakers of the house of representatives. The chair shall be elected by the task force from among its members.

(2) The task force shall:

(a) Monitor the provisions of this act regarding its effect on:

(i) Carrier participation in the individual market, especially in areas where coverage is currently minimal or not available;

(ii) Affordability and availability of private health plan coverage;

(iii) Washington state health insurance pool operations;

(iv) The Washington basic health plan operations;

(v) The cost of the Washington state insurance pool;

(vi) Premium affordability in the individual and small group market;

(vii) The ability of consumers to purchase, renew, and change their health insurance coverage;

(viii) The availability of coverage for medical benefits such as, but not limited to, maternity and prescription drugs in the individual market; and

(ix) The number of uninsured people in the state of Washington;

(b) After studying the feasibility of reinsurance as a method of health insurance market stability, if appropriate, develop a reinsurance system implementation plan; and

(c) Seek participation from interested parties, including but not limited to consumer, carriers, health care providers, health care purchasers, and insurance brokers and agents, in an effective manner.

(3) In the conduct of its business, the task force shall have access to all health data available by statute to health-related state agencies and may, to the extent that funds are available, purchase necessary analytical and staff support.

(4) Task force members will receive no compensation for their service.

(5) The task force shall submit an interim report to the governor and the legislature in December 2000 and December 2001, and a final report no later than December 1, 2002.

(6) The task force expires December 31, 2002.

Sec. 42. RCW 70.47.010 and 1993 c 492 s 208 are each amended to read as follows:

(1)(a) The legislature finds that limitations on access to health care services for enrollees in the state, such as in rural and underserved areas, are particularly challenging for the basic health plan. Statutory restrictions have reduced the options available to the administrator to address the access needs of basic health plan enrollees. It is the intent of the legislature to authorize the administrator to develop alternative purchasing strategies to ensure access to basic health plan enrollees in all areas of the state, including: (i) The use of differential rating for managed health care systems based on geographic differences in costs; and (ii) limited use of self-insurance in areas where adequate access cannot be assured through other options.

(b) In developing alternative purchasing strategies to address health care access needs, the administrator shall consult with interested persons including health carriers, health care providers, and health facilities, and with other appropriate state agencies including the office of the insurance commissioner and the office of community and rural health. In pursuing such alternatives, the administrator shall continue to give priority to prepaid managed care as the preferred method of assuring access to basic health plan enrollees followed, in priority order, by preferred providers, fee for service, and self-funding.

(2) The legislature further finds that:

(a) A significant percentage of the population of this state does not have reasonably available insurance or other coverage of the costs of necessary basic health care services;

(b) This lack of basic health care coverage is detrimental to the health of the individuals lacking coverage and to the public welfare, and results in substantial expenditures for emergency and remedial health care, often at the expense of health care providers, health care facilities, and all purchasers of health care, including the state; and

(c) The use of managed health care systems has significant potential to reduce the growth of health care costs incurred by the people of this state generally, and by low-income pregnant women, and at-risk children and adolescents who need greater access to managed health care.

(((2))) (3) The purpose of this chapter is to provide or make more readily available necessary basic health care services in an appropriate setting to working persons and others who lack coverage, at a cost to these persons that does not create barriers to the utilization of necessary health care services. To that end, this chapter establishes a program to be made available to those residents not eligible for medicare who share in a portion of the cost or who pay the full cost of receiving basic health care services from a managed health care system.

(((3))) (4) It is not the intent of this chapter to provide health care services for those persons who are presently covered through private employer-based health plans, nor to replace employer-based health plans. However, the legislature recognizes that cost-effective and affordable health plans may not always be available to small business employers. Further, it is the intent of the legislature to expand, wherever possible, the availability of private health care coverage and to discourage the decline of employer-based coverage.

(((4))) (5)(a) It is the purpose of this chapter to acknowledge the initial success of this program that has (i) assisted thousands of families in their search for affordable health care; (ii) demonstrated that low-income, uninsured families are willing to pay for their own health care coverage to the extent of their ability to pay; and (iii) proved that local health care providers are willing to enter into a public-private partnership as a managed care system.

(b) As a consequence, the legislature intends to extend an option to enroll to certain citizens above two hundred percent of the federal poverty guidelines within the state who reside in communities where the plan is operational and who collectively or individually wish to exercise the opportunity to purchase health care coverage through the basic health plan if the purchase is done at no cost to the state. It is also the intent of the legislature to allow employers and other financial sponsors to financially assist such individuals to purchase health care through the program so long as such purchase does not result in a lower standard of coverage for employees.

(c) The legislature intends that, to the extent of available funds, the program be available throughout Washington state to subsidized and nonsubsidized enrollees. It is also the intent of the legislature to enroll subsidized enrollees first, to the maximum extent feasible.

(d) The legislature directs that the basic health plan administrator identify enrollees who are likely to be eligible for medical assistance and assist these individuals in applying for and receiving medical assistance. The administrator and the department of social and health services shall implement a seamless system to coordinate eligibility determinations and benefit coverage for enrollees of the basic health plan and medical assistance recipients.

Sec. 43. RCW 70.47.020 and 1997 c 335 s 1 are each amended to read as follows:

As used in this chapter:

(1) "Washington basic health plan" or "plan" means the system of enrollment and payment ((on a prepaid capitated basis)) for basic health care services, administered by the plan administrator through participating managed health care systems, created by this chapter.

(2) "Administrator" means the Washington basic health plan administrator, who also holds the position of administrator of the Washington state health care authority.

(3) "Managed health care system" means: (a) Any health care organization, including health care providers, insurers, health care service contractors, health maintenance organizations, or any combination thereof, that provides directly or by contract basic health care services, as defined by the administrator and rendered by duly licensed providers, ((on a prepaid capitated basis)) to a defined patient population enrolled in the plan and in the managed health care system; or (b) a self-funded or self-insured method of providing insurance coverage to subsidized enrollees provided under RCW 41.05.140 and subject to the limitations under RCW 70.47.100(7).

(4) "Subsidized enrollee" means an individual, or an individual plus the individual's spouse or dependent children: (a) Who is not eligible for medicare; (b) who is not confined or residing in a government-operated institution, unless he or she meets eligibility criteria adopted by the administrator; (c) who resides in an area of the state served by a managed health care system participating in the plan; (d) whose gross family income at the time of enrollment does not exceed ((twice)) two hundred percent of the federal poverty level as adjusted for family size and determined annually by the federal department of health and human services; and (e) who chooses to obtain basic health care coverage from a particular managed health care system in return for periodic payments to the plan. To the extent that state funds are specifically appropriated for this purpose, with a corresponding federal match, "subsidized enrollee" also means an individual, or an individual's spouse or dependent children, who meets the requirements in (a) through (c) and (e) of this subsection and whose gross family income at the time of enrollment is more than two hundred percent, but less than two hundred fifty-one percent, of the federal poverty level as adjusted for family size and determined annually by the federal department of health and human services.

(5) "Nonsubsidized enrollee" means an individual, or an individual plus the individual's spouse or dependent children: (a) Who is not eligible for medicare; (b) who is not confined or residing in a government-operated institution, unless he or she meets eligibility criteria adopted by the administrator; (c) who resides in an area of the state served by a managed health care system participating in the plan; (d) who chooses to obtain basic health care coverage from a particular managed health care system; and (e) who pays or on whose behalf is paid the full costs for participation in the plan, without any subsidy from the plan.

(6) "Subsidy" means the difference between the amount of periodic payment the administrator makes to a managed health care system on behalf of a subsidized enrollee plus the administrative cost to the plan of providing the plan to that subsidized enrollee, and the amount determined to be the subsidized enrollee's responsibility under RCW 70.47.060(2).

(7) "Premium" means a periodic payment, based upon gross family income which an individual, their employer or another financial sponsor makes to the plan as consideration for enrollment in the plan as a subsidized enrollee or a nonsubsidized enrollee.

(8) "Rate" means the ((per capita)) amount, negotiated by the administrator with and paid to a participating managed health care system, that is based upon the enrollment of subsidized and nonsubsidized enrollees in the plan and in that system.

Sec. 44. RCW 41.05.140 and 1994 c 153 s 10 are each amended to read as follows:

(1) Except for property and casualty insurance, the authority may self-fund, self-insure, or enter into other methods of providing insurance coverage for insurance programs under its jurisdiction ((except property and casualty insurance)), including the basic health plan as provided in chapter 70.47 RCW. The authority shall contract for payment of claims or other administrative services for programs under its jurisdiction. If a program does not require the prepayment of reserves, the authority shall establish such reserves within a reasonable period of time for the payment of claims as are normally required for that type of insurance under an insured program. The authority shall endeavor to reimburse basic health plan health care providers under this section at rates similar to the average reimbursement rates offered by the state-wide benchmark plan determined through the request for proposal process.

(2) Reserves established by the authority for employee and retiree benefit programs shall be held in a separate trust fund by the state treasurer and shall be known as the public employees' and retirees' insurance reserve fund. The state investment board shall act as the investor for the funds and, except as provided in RCW 43.33A.160, one hundred percent of all earnings from these investments shall accrue directly to the public employees' and retirees' insurance reserve fund.

(3) Any savings realized as a result of a program created for employees and retirees under this section shall not be used to increase benefits unless such use is authorized by statute.

(4) Reserves established by the authority to provide insurance coverage for the basic health plan under chapter 70.47 RCW shall be held in a separate trust account in the custody of the state treasurer and shall be known as the basic health plan self-insurance reserve account. The state investment board shall act as the investor for the funds and, except as provided in RCW 43.33A.160, one hundred percent of all earnings from these investments shall accrue directly to the basic health plan self-insurance reserve account.

(5) Any program created under this section shall be subject to the examination requirements of chapter 48.03 RCW as if the program were a domestic insurer. In conducting an examination, the commissioner shall determine the adequacy of the reserves established for the program.

(((5))) (6) The authority shall keep full and adequate accounts and records of the assets, obligations, transactions, and affairs of any program created under this section.

(((6))) (7) The authority shall file a quarterly statement of the financial condition, transactions, and affairs of any program created under this section in a form and manner prescribed by the insurance commissioner. The statement shall contain information as required by the commissioner for the type of insurance being offered under the program. A copy of the annual statement shall be filed with the speaker of the house of representatives and the president of the senate.

Sec. 45. RCW 43.79A.040 and 1999 c 384 s 8 and 1999 c 182 s 2 are each reenacted and amended to read as follows:

(1) Money in the treasurer's trust fund may be deposited, invested, and reinvested by the state treasurer in accordance with RCW 43.84.080 in the same manner and to the same extent as if the money were in the state treasury.

(2) All income received from investment of the treasurer's trust fund shall be set aside in an account in the treasury trust fund to be known as the investment income account.

(3) The investment income account may be utilized for the payment of purchased banking services on behalf of treasurer's trust funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasurer or affected state agencies. The investment income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for payments to financial institutions. Payments shall occur prior to distribution of earnings set forth in subsection (4) of this section.

(4)(a) Monthly, the state treasurer shall distribute the earnings credited to the investment income account to the state general fund except under (b) and (c) of this subsection.

(b) The following accounts and funds shall receive their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The Washington advanced college tuition payment program account, the agricultural local fund, the American Indian scholarship endowment fund, the basic health plan self-insurance reserve account, the Washington international exchange scholarship endowment fund, the developmental disabilities endowment trust fund, the energy account, the fair fund, the game farm alternative account, the grain inspection revolving fund, the juvenile accountability incentive account, the rural rehabilitation account, the stadium and exhibition center account, the youth athletic facility grant account, the self-insurance revolving fund, the sulfur dioxide abatement account, and the children's trust fund. However, the earnings to be distributed shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.

(c) The following accounts and funds shall receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The advanced right of way revolving fund, the advanced environmental mitigation revolving account, the federal narcotics asset forfeitures account, the high occupancy vehicle account, the local rail service assistance account, and the miscellaneous transportation programs account.

(5) In conformance with Article II, section 37 of the state Constitution, no trust accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

NEW SECTION. Sec. 46. A new section is added to chapter 41.05 RCW to read as follows:

(1) The administrator shall design and offer a plan of health care coverage as described in subsection (2) of this section, for any person eligible under subsection (3) of this section. The health care coverage shall be designed and offered only to the extent that state funds are specifically appropriated for this purpose.

(2) The plan of health care coverage shall have the following components:

(a) Services covered more limited in scope than those contained in RCW 48.41.110(3);

(b) Enrollee cost-sharing that may include but not be limited to point-of-service cost-sharing for covered services;

(c) Deductibles of three thousand dollars on a per person per calendar year basis, and four thousand dollars on a per family per calendar year basis. The deductible shall be applied to the first three thousand dollars, or four thousand dollars, of eligible expenses incurred by the covered person or family, respectively, except that the deductible shall not be applied to clinical preventive services as recommended by the United States public health service. Enrollee out-of-pocket expenses required to be paid under the plan for cost-sharing and deductibles shall not exceed five thousand dollars per person, or six thousand dollars per family;

(d) Payment methodologies for network providers may include but are not limited to resource-based relative value fee schedules, capitation payments, diagnostic related group fee schedules, and other similar strategies including risk-sharing arrangements; and

(e) Other appropriate care management and cost-containment measures determined appropriate by the administrator, including but not limited to care coordination, provider network limitations, preadmission certification, and utilization review.

(3) Any person is eligible for coverage in the plan who resides in a county of the state where no carrier, as defined in RCW 48.43.005, or insurer regulated under chapter 48.15 RCW offers to the public an individual health benefit plan as defined in RCW 48.43.005 other than a catastrophic health plan as defined in RCW 48.43.005 at the time of application to the administrator. Such eligibility may terminate pursuant to subsection (7) of this section.

(4) The administrator may not reject an individual for coverage based upon preexisting conditions of the individual or deny, exclude, or otherwise limit coverage for an individual's preexisting health conditions; except that it shall impose a nine-month benefit waiting period for preexisting conditions for which medical advice was given, or for which a health care provider recommended or provided treatment, or for which a prudent layperson would have sought advice or treatment, within six months before the effective date of coverage. The preexisting condition waiting period shall not apply to prenatal care services. Credit against the waiting period shall be provided pursuant to subsection (5) of this section.

(5) The administrator shall credit any preexisting condition waiting period in the plan for a person who was enrolled at any time during the sixty-three day period immediately preceding the date of application for the plan in a group health benefit plan or an individual health benefit plan other than a catastrophic health plan. The administrator must credit the period of coverage the person was continuously covered under the immediately preceding health plan toward the waiting period of the new health plan. For the purposes of this subsection, a preceding health plan includes an employer-provided self-funded health plan.

(6) The administrator shall set the rates to be charged plan enrollees.

(7) When a carrier, as defined in RCW 48.43.005, or an insurer regulated under chapter 48.15 RCW, begins to offer an individual health benefit plan as defined in RCW 48.43.005 in a county where no carrier or insurer had been offering an individual health benefit plan:

(a) If the health benefit plan offered is other than a catastrophic health plan as defined in RCW 48.43.005, any person enrolled in the plan under subsection (3) of this section in that county shall no longer be eligible;

(b) The administrator shall provide written notice to any person who is no longer eligible for coverage under the plan within thirty days of the administrator's determination that the person is no longer eligible. The notice shall: (i) Indicate that coverage under the plan will cease ninety days from the date that the notice is dated; (ii) describe any other coverage options available to the person; and (iii) describe the enrollment process for the available options.

NEW SECTION. Sec. 47. RCW 48.41.180 (Offer of coverage to eligible persons) and 1987 c 431 s 18 are each repealed.

NEW SECTION. Sec. 48. 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. 49. Sections 37 and 38 of this act expire September 1, 2000.

NEW SECTION. Sec. 50. (1) Section 38 of this act takes effect July 1, 2000.

(2) Section 39 of this act takes effect September 1, 2000.

(3) Section 26 of this act takes effect on the first day of the month following the expiration of a one hundred eighty-day period beginning on the effective date of section 25 of this act.

NEW SECTION. Sec. 51. Except for sections 26, 38, and 39 of this act, this act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately."

MOTION

Senator Snyder moved that the following amendments to the striking amendment by Senators Thibaudeau and Deccio be considered simultaneously and be adopted:

On page 31, line 5, after "group" strike "other than a small group" and insert "of more than five persons"

On page 31, line 21, before ", every" strike "small group" and insert "group of one to five persons"

On page 34, line 23, after "groups" strike "other than small groups" and insert "of more than five persons"

On page 34, line 36, before ", no" strike "small groups" and insert "groups of one to five persons"

Debate ensued.

Senator Snyder demanded a roll call and the demand was sustained.

Further debate ensued.

The President Pro Tempore declared the question before the Senate to be the roll call on the adoption of the amendments by Senator Snyder on page 31, lines 5 and 21, and page 34, lines 23 and 36, to the striking amendment by Senators Thibaudeau and Deccio to Second Substitute Senate Bill No. 6067.

ROLL CALL

The Secretary called the roll and the amendments to the striking amendment were not adopted by the following vote: Yeas, 20; Nays, 27; Absent, 1; Excused, 1.

Voting yea: Senators Bauer, Brown, Costa, Fairley, Franklin, Fraser, Gardner, Goings, Jacobsen, Kline, Kohl-Welles, Loveland, McAuliffe, Patterson, Prentice, Sheldon, B., Snyder, Spanel, Thibaudeau and Wojahn - 20.

Voting nay: Senators Benton, Deccio, Eide, Finkbeiner, Hale, Hargrove, Heavey, Hochstatter, Honeyford, Horn, Johnson, Long, McCaslin, McDonald, Morton, Oke, Rasmussen, Roach, Rossi, Sheahan, Sheldon, T., Shin, Stevens, Swecker, West, Winsley and Zarelli - 27.

Absent: Senator Haugen - 1.

Excused: Senator Sellar - 1.

MOTION

Senator Patterson moved that the following amendment by Senators Patterson and Fairley to the striking amendment by Senators Thibaudeau and Deccio be adopted:

On page 78, after line 12, insert the following:

"NEW SECTION. Sec. 52. If, one year from the effective date of this section, the Insurance Commissioner determines that no health benefit plan, as defined in RCW 48.43.005, is available for sale to new individual enrollees in twenty-five counties or more in this state, this act shall expire."

Renumber the sections consecutively and correct any internal references accordingly.

Debate ensued.

The President Pro Tempore declared the question before the Senate to be the adoption amendment by Senators Patterson and Fairley on page 78, after line 12, to the striking amendment by Senators Thibaudeau and Deccio to Second Substitute Senate Bill No. 6067.

The motion by Senator Patterson failed and the amendment to the striking amendment was not adopted on a rising vote.

The President Pro Tempore declared the question before the Senate to be the adoption of the striking amendment by Senators Thibaudeau and Deccio to Second Substitute Senate Bill No. 6067.

Debate ensued.

DEMAND FOR THE PREVIOUS QUESTION

Senators Snyder, Betti Sheldon and Spanel demanded the previous question and the demand was sustained.

The President Pro Tempore declared the question before the Senate to be shall the main question be now put.

The demand for the previous question carried.

The President Pro Tempore declared the question before the Senate to be the adoption of the striking amendment by Senators Thibaudeau and Deccio to Second Substitute Senate Bill No. 6067.

The motion by Senator Thibaudeau carried and the striking amendment was adopted.

MOTIONS

On motion of Senator Thibaudeau, the following title amendment was adopted:

On page 1, line 1 of the title, after "coverage;" strike the remainder of the title and insert "amending RCW 48.04.010, 48.18.110, 48.20.028, 48.41.020, 48.41.030, 48.41.040, 48.41.060, 48.41.080, 48.41.090, 48.41.100, 48.41.110, 48.41.120, 48.41.130, 48.41.140, 48.41.200, 48.43.015, 48.43.025, 48.43.035, 48.44.020, 48.44.022, 48.46.060, 48.46.064, 70.47.100, 70.47.010, 70.47.020, and 41.05.140; reenacting and amending RCW 48.43.005, 70.47.060, 43.84.092, 43.84.092, 43.84.092, and 43.79A.040; adding a new section to chapter 48.20 RCW; adding a new section to chapter 48.41 RCW; adding new sections to chapter 48.43 RCW; adding new sections to chapter 48.46 RCW; adding a new section to chapter 48.44 RCW; adding a new section to chapter 48.01 RCW; adding a new section to chapter 41.05 RCW; creating new sections; repealing RCW 48.41.180; providing effective dates; providing an expiration date; and declaring an emergency."

On motion of Senator Thibaudeau, the rules were suspended, Engrossed Second Substitute Senate Bill No. 6067 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

Debate ensued.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of Engrossed Second Substitute Senate Bill No. 6067.

ROLL CALL

The Secretary called the roll on the final passage of Engrossed Second Substitute Senate Bill No. 6067 and the bill passed the Senate by the following vote: Yeas, 43; Nays, 5; Absent, 0; Excused, 1.

Voting yea: Senators Bauer, Benton, Brown, Deccio, Eide, Finkbeiner, Franklin, Fraser, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Hochstatter, Honeyford, Horn, Jacobsen, Johnson, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Spanel, Stevens, Swecker, Thibaudeau, West, Winsley, Wojahn and Zarelli - 43.

Voting nay: Senators Costa, Fairley, Kline, Kohl-Welles and Snyder - 5.

Excused: Senator Sellar - 1.

ENGROSSED SECOND SUBSTITUTE SENATE BILL NO. 6067, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MOTION

On motion of Senator Honeyford, Senator Hochstatter was excused.

SECOND READING

HOUSE JOINT MEMORIAL NO. 4022, by Representatives Delvin, Hankins, G. Chandler, B. Chandler, Mastin, Lisk, Grant, Linville and Mitchell

Requesting full funding for a vitrification treatment plant at the Hanford site.

The joint memorial was read the second time.

MOTION

On motion of Senator Goings, the rules were suspended, House Joint Memorial No. 4022 was advanced to third reading, the second reading considered the third and the joint memorial was placed on final passage.

Debate ensued.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of House Joint Memorial No. 4022.

ROLL CALL

The Secretary called the roll on the final passage of House Joint Memorial No. 4022 and the joint memorial passed the Senate by the following vote: Yeas, 47; Nays, 0; Absent, 0; Excused, 2.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Eide, Fairley, Finkbeiner, Franklin, Fraser, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Honeyford, Horn, Jacobsen, Johnson, Kline, Kohl-Welles, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, West, Winsley, Wojahn and Zarelli - 47.

Excused: Senators Hochstatter and Sellar - 2.

HOUSE JOINT MEMORIAL NO. 4022, having received the constitutional majority, was declared passed

SECOND READING

SUBSTITUTE HOUSE BILL NO. 2423, by House Committee on Natural Resources (originally sponsored by Representatives Pennington, Hatfield, Boldt and Haigh)

Allowing for the disposal of Mt. St. Helen's dredge spoils from public or private lands.

The bill was read the second time.

MOTION

On motion of Senator Jacobsen, the rules were suspended, Substitute House Bill No. 2423 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 2423.

ROLL CALL

The Secretary called the roll on the final passage of Substitute House Bill No. 2423 and the bill passed the Senate by the following vote: Yeas, 47; Nays, 0; Absent, 0; Excused, 2.

Excused: Senators Hochstatter and Sellar - 2.

SUBSTITUTE HOUSE BILL NO. 2423, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MOTION

On motion of Senator Honeyford, Senator Zarelli was excused.

SECOND READING

SUBSTITUTE HOUSE BILL NO. 2493, by House Committee on Finance (originally sponsored by Representatives Ruderman, Cox, Dunshee, Thomas and Kenney) (by request of Department of Revenue)

Simplifying implementation of sales and use tax rate changes.

The bill was read the second time.

MOTION

On motion of Senator Loveland, the rules were suspended, Substitute House Bill No. 2493 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 2493.

ROLL CALL

The Secretary called the roll on the final passage of Substitute House Bill No. 2493 and the bill passed the Senate by the following vote: Yeas, 46; Nays, 0; Absent, 0; Excused, 3.

Excused: Senators Hochstatter, Sellar and Zarelli - 3.

SUBSTITUTE HOUSE BILL NO. 2493, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

SECOND READING

HOUSE BILL NO. 2607, by Representatives Delvin, H. Sommers, Lambert, Alexander, Doumit, Carlson, Schoesler, Pflug, Talcott, Clements, Ruderman, Wolfe, Bush, Morris and Rockefeller (by request of Joint Committee on Pension Policy)

Decreasing the employee contribution rate for the Washington state patrol retirement system.

The bill was read the second time.

MOTION

On motion of Senator Loveland, the rules were suspended, Substitute House Bill No. 2607 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 2607.

ROLL CALL

The Secretary called the roll on the final passage of Substitute House Bill No. 2607 and the bill passed the Senate by the following vote: Yeas, 45; Nays, 0; Absent, 1; Excused, 3.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Eide, Fairley, Finkbeiner, Fraser, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Honeyford, Horn, Jacobsen, Johnson, Kline, Kohl-Welles, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, West, Winsley and Wojahn - 45.

Absent: Senator Franklin - 1.

Excused: Senators Hochstatter, Sellar and Zarelli - 3.

SUBSTITUTE HOUSE BILL NO. 2607, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MOTION

On motion of Senator Eide, Senator Thibaudeau was excused.

SECOND READING

HOUSE BILL NO. 2684, by Representatives D. Sommers and Tokuda (by request of Department of Social and Health Services)

Clarifying what records are available to the department of social and health services.

The bill was read the second time.

MOTION

On motion of Senator Hargrove, the following Committee on Human Services and Corrections striking amendment was adopted:

Strike everything after the enacting clause and insert the following:

"NEW SECTION. Sec. 1. A new section is added to chapter 28A.150 RCW to read as follows:

In order to effectively serve students who are under the jurisdiction of the juvenile justice system as dependent pursuant to chapter 13.34 RCW, education records shall be released upon request to the department of social and health services provided that the department of social and health services certifies that it will not disclose to any other party the education records without prior written consent of the parent or student unless authorized to disclose the records under state law. The department of social and health services is authorized to disclose education records it obtains pursuant to this section to a foster parent, guardian, or other entity authorized by the department of social and health services to provide residential care to the student.

Sec. 2. RCW 74.13.285 and 1997 c 272 s 5 are each amended to read as follows:

(1) Within available resources, the department shall prepare a passport containing all known and available information concerning the mental, physical, health, and educational status of the child for any child who has been in a foster home for ninety consecutive days or more. The passport shall contain education records obtained pursuant to section 1 of this act. The passport shall be provided to a foster parent at any placement of a child covered by this section. The department shall update the passport during the regularly scheduled court reviews required under chapter 13.34 RCW.

New placements after July 1, 1997, shall have first priority in the preparation of passports. Within available resources, the department may prepare passports for any child in a foster home on July 1, 1997, provided that no time spent in a foster home before July 1, 1997, shall be included in the computation of the ninety days.

(2) In addition to the requirements of subsection (1) of this section, the department shall, within available resources, notify a foster parent before placement of a child of any known health conditions that pose a serious threat to the child and any known behavioral history that presents a serious risk of harm to the child or others.

(3) The department shall hold harmless the provider for any unauthorized disclosures caused by the department."

MOTIONS

On motion of Senator Hargrove, the following title amendment was adopted:

On page 1, line 2 of the title, after "services;" strike the remainder of the title and insert "amending RCW 74.13.285; and adding a new section to chapter 28A.150 RCW."

On motion of Senator Hargrove, the rules were suspended, House Bill No. 2684, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of House Bill No. 2684, as amended by the Senate.

ROLL CALL

The Secretary called the roll on the final passage of House Bill No. 2684, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 45; Nays, 0; Absent, 0; Excused, 4.

Excused: Senators Hochstatter, Sellar, Thibaudeau and Zarelli - 4.

HOUSE BILL NO. 2684, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MOTION

On motion of Senator Eide, Senator Kline was excused.

SECOND READING

SUBSTITUTE HOUSE BILL NO. 2358, by House Committee on Commerce and Labor (originally sponsored by Representatives Wood, McMorris, Clements, Conway and Radcliff)

Allowing charitable organizations to hire vendors to conduct fund raising events.

The bill was read the second time.

MOTION

On motion of Senator Prentice, the rules were suspended, Substitute House Bill No. 2358 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

Debate ensued.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 2358.

ROLL CALL

The Secretary called the roll on the final passage of Substitute House Bill No. 2358 and the bill passed the Senate by the following vote: Yeas, 27; Nays, 17; Absent, 0; Excused, 5.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Finkbeiner, Fraser, Gardner, Goings, Hale, Heavey, Honeyford, Horn, Jacobsen, Kohl-Welles, Loveland, McAuliffe, McCaslin, Patterson, Prentice, Roach, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel and West - 27.

Voting nay: Senators Eide, Fairley, Franklin, Hargrove, Haugen, Johnson, Long, McDonald, Morton, Oke, Rasmussen, Rossi, Sheahan, Stevens, Swecker, Winsley and Wojahn - 17.

Excused: Senators Hochstatter, Kline, Sellar, Thibaudeau and Zarelli - 5.

SUBSTITUTE HOUSE BILL NO. 2358, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

SECOND READING

HOUSE BILL NO. 2328, by Representatives Lantz, Constantine, Ogden, Edmonds, Stensen, Regala, O'Brien, Kagi, Dickerson, Cody, Keiser, Kessler, Schual-Berke, Hurst, Santos and Kenney

Decreasing filing fees for petition for unlawful harassment.

The bill was read the second time.

MOTION

On motion of Senator Heavey, the rules were suspended, House Bill No. 2328 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

Debate ensued.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of House Bill No. 2328.

ROLL CALL

The Secretary called the roll on the final passage of House Bill No. 2328 and the bill passed the Senate by the following vote: Yeas, 44; Nays, 0; Absent, 0; Excused, 5.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Eide, Fairley, Finkbeiner, Franklin, Fraser, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Honeyford, Horn, Jacobsen, Johnson, Kohl-Welles, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, West, Winsley and Wojahn - 44.

Excused: Senators Hochstatter, Kline, Sellar, Thibaudeau and Zarelli - 5.

HOUSE BILL NO. 2328, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

There being no objection, the Senate resumed consideration of Engrossed Substitute House Bill No. 2589 and the pending amendments by Senators Morton on page 1, lines 12 and 13 deferred earlier today.

RULING BY THE PRESIDENT PRO TEMPORE

President Pro Tempore Wojahn: “In ruling upon the point of order raised by Senator Jacobsen to the scope and object of the amendments by Senator Morton on page 1, lines 12 and 13, the President finds that Engrossed Substitute House Bill No. 2589 is a measure which relates only to expanding the class of recipients eligible for funds allocated by the salmon recovery board. Specifically, the measure would make eligible those landowners who are required to perform habitat recovery projects under local, state or federal law.

“The amendments on page 1, lines 12 and 13 would change the substantive criteria used by the board to allocate funds. Current law provides that allocations should address salmon habitat protection and restoration. The amendments would provide that allocations also address effective predator control.

“The President, therefore, finds that the amendments do change the scope and object of the bill and the point of order is well taken.”

The amendments by Senator Morton on page 1, lines 12 and 13, to Engrossed Substitute House Bill No. 2589 were ruled out of order.

MOTION

On motion of Senator Jacobsen, the rules were suspended, Engrossed Substitute House Bill No. 2589 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

Debate ensued.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of Engrossed Substitute House Bill No. 2589.

ROLL CALL

The Secretary called the roll on the final passage of Engrossed Substitute House Bill No. 2589 and the bill passed the Senate by the following vote: Yeas, 45; Nays, 0; Absent, 0; Excused, 4.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Eide, Fairley, Finkbeiner, Franklin, Fraser, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Honeyford, Horn, Jacobsen, Johnson, Kohl-Welles, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, West, Winsley and Wojahn - 45.

Excused: Senators Hochstatter, Kline, Sellar and Zarelli - 4.

ENGROSSED SUBSTITUTE HOUSE BILL NO. 2589, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MOTION

On motion of Senator Eide, Senator Hargrove was excused.

SECOND READING

HOUSE BILL NO. 2630, by Representatives Schoesler, Mastin, Linville and Anderson (by request of Commissioner of Public Lands Belcher)

Changing warehouse receipts.

The bill was read the second time.

MOTION

On motion of Senator Jacobsen, the rules were suspended, House Bill No. 2630 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

Debate ensued.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of House Bill No. 2630.

ROLL CALL

The Secretary called the roll on the final passage of House Bill No. 2630 and the bill passed the Senate by the following vote: Yeas, 45; Nays, 0; Absent, 0; Excused, 4.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Eide, Fairley, Finkbeiner, Franklin, Fraser, Gardner, Goings, Hale, Haugen, Heavey, Honeyford, Horn, Jacobsen, Johnson, Kline, Kohl-Welles, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, West, Winsley and Wojahn - 45.

Excused: Senators Hargrove, Hochstatter, Sellar and Zarelli - 4.

HOUSE BILL NO. 2630, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

SECOND READING

HOUSE BILL NO. 2344, by Representatives Huff, McIntire, Linville, Alexander, Kenney and Parlette (by request of Caseload Forecast Council)

Authorizing the caseload forecast council to forecast community corrections caseloads.

The bill was read the second time.

MOTION

On motion of Senator Loveland, the following Committee on Ways and Means striking amendment was adopted:

Strike everything after the enacting clause and insert the following:

"Sec. 1. RCW 43.88C.010 and 1997 c 168 s 1 are each amended to read as follows:

(1) The caseload forecast council is hereby created. The council shall consist of two individuals appointed by the governor and four individuals, one of whom is appointed by the chairperson of each of the two largest political caucuses in the senate and house of representatives. The chair of the council shall be selected from among the four caucus appointees. The council may select such other officers as the members deem necessary.

(2) The council shall employ a caseload forecast supervisor to supervise the preparation of all caseload forecasts. As used in this chapter, "supervisor" means the caseload forecast supervisor.

(3) Approval by an affirmative vote of at least five members of the council is required for any decisions regarding employment of the supervisor. Employment of the supervisor shall terminate after each term of three years. At the end of the first year of each three-year term the council shall consider extension of the supervisor's term by one year. The council may fix the compensation of the supervisor. The supervisor shall employ staff sufficient to accomplish the purposes of this section.

(4) The caseload forecast council shall oversee the preparation of and approve, by an affirmative vote of at least four members, the official state caseload forecasts prepared under RCW 43.88C.020. If the council is unable to approve a forecast before a date required in RCW 43.88C.020, the supervisor shall submit the forecast without approval and the forecast shall have the same effect as if approved by the council.

(5) A council member who does not cast an affirmative vote for approval of the official caseload forecast may request, and the supervisor shall provide, an alternative forecast based on assumptions specified by the member.

(6) Members of the caseload forecast council shall serve without additional compensation but shall be reimbursed for travel expenses in accordance with RCW 44.04.120 while attending sessions of the council or on official business authorized by the council. Nonlegislative members of the council shall be reimbursed for travel expenses in accordance with RCW 43.03.050 and 43.03.060.

(7) "Caseload," as used in this chapter, means the number of persons expected to meet entitlement requirements and require the services of public assistance programs, state correctional institutions, state correctional noninstitutional supervision, state institutions for juvenile offenders, the common school system, long-term care, medical assistance, foster care, and adoption support.

(8) Unless the context clearly requires otherwise, the definitions provided in RCW 43.88.020 apply to this chapter.

NEW SECTION. Sec. 2. This act takes effect July 1, 2000."

MOTIONS

On motion of Senator Loveland, the following title amendment was adopted:

On page 1, line 1 of the title, after "forecasting;" strike the remainder of the title and insert "amending RCW 43.88C.010; and providing an effective date."

On motion of Senator Loveland, the rules were suspended, House Bill No. 2344, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

The President declared the question before the Senate to be the roll call on the final passage of House Bill No. 2344, as amended by the Senate.

ROLL CALL

The Secretary called the roll on the final passage of House Bill No. 2344, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 45; Nays, 0; Absent, 0; Excused, 4.

Excused: Senators Hargrove, Hochstatter, Sellar and Zarelli - 4.

HOUSE BILL NO. 2344, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

SECOND READING

HOUSE BILL NO. 2031, by Representatives Ruderman, Dunn, Dickerson, Fortunato, Conway, Boldt, Kessler, Murray, O'Brien, Romero, Cairnes, Ogden, Rockefeller, Linville, Kenney, Edmonds, Schual-Berke, Kagi, Tokuda, McIntire, Keiser, Cooper, Lantz, Santos and Miloscia

Including midwives in women's health care services.

The bill was read the second time.

MOTION

On motion of Senator Thibaudeau, the rules were suspended, House Bill No. 2031 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of House Bill No. 2031.

ROLL CALL

The Secretary called the roll on the final passage of House Bill No. 2031 and the bill passed the Senate by the following vote: Yeas, 45; Nays, 0; Absent, 1; Excused, 3.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Eide, Fairley, Finkbeiner, Franklin, Fraser, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Honeyford, Horn, Jacobsen, Johnson, Kline, Kohl-Welles, Long, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, West, Winsley and Wojahn - 45.

Absent: Senator Loveland - 1.

Excused: Senators Hochstatter, Sellar and Zarelli - 3.

HOUSE BILL NO. 2031, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MOTION

On motion of Senator Franklin, Senator Loveland was excused.

SECOND READING

HOUSE BILL NO. 2532, by Representatives Fisher, Mitchell, Cairnes, Ogden, Dunn and Hurst (by request of Department of Transportation)

Allowing the department of transportation to recognize volunteer pilots.

The bill was read the second time.

MOTION

On motion of Senator Goings, the rules were suspended, House Bill No. 2532 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of House Bill No. 2532.

ROLL CALL

The Secretary called the roll on the final passage of House Bill No. 2532 and the bill passed the Senate by the following vote: Yeas, 44; Nays, 0; Absent, 1; Excused, 4.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Eide, Fairley, Finkbeiner, Franklin, Fraser, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Honeyford, Horn, Jacobsen, Johnson, Kline, Kohl-Welles, Long, McAuliffe, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, West, Winsley and Wojahn - 44.

Absent: Senator McCaslin - 1.

Excused: Senators Hochstatter, Loveland, Sellar and Zarelli - 4.

HOUSE BILL NO. 2532, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MOTION

On motion of Senator Honeyford, Senator McCaslin was excused.

SECOND READING

SUBSTITUTE HOUSE BILL NO. 2528, by House Committee on Local Government (originally sponsored by Representatives Cairnes, Cooper, G. Chandler, Dunshee, Tokuda, Linville, Stensen, Lovick, Esser, Kenney, Barlean, Constantine, Murray and Keiser)

Regulating capacity charges for sewage facilities by metropolitan municipal corporations.

The bill was read the second time.

MOTION

On motion of Senator Patterson, the rules were suspended, Substitute House Bill No. 2528 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 2528.

ROLL CALL

The Secretary called the roll on the final passage of Substitute House Bill No. 2528 and the bill passed the Senate by the following vote: Yeas, 41; Nays, 3; Absent, 0; Excused, 5.

Voting yea: Senators Bauer, Brown, Costa, Deccio, Eide, Fairley, Finkbeiner, Franklin, Fraser, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Honeyford, Horn, Jacobsen, Johnson, Kline, Kohl-Welles, Long, McAuliffe, McDonald, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Thibaudeau, West, Winsley and Wojahn - 41.

Voting nay: Senators Benton, Morton and Swecker - 3.

Excused: Senators Hochstatter, Loveland, McCaslin, Sellar and Zarelli - 5.

SUBSTITUTE HOUSE BILL NO. 2528, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

NOTICE FOR RECONSIDERATION

Having voted on the prevailing side, Senator Roach served notice to reconsider the vote by which Substitute House Bill No. 2528 passed the Senate.

SECOND READING

HOUSE BILL NO. 2496, by Representatives Delvin, Wood, Clements, Conway and B. Chandler

Creating an exemption for out-of-state certificate of approval holders that furnish wine or beer to nonprofit charitable organizations.

The bill was read the second time.

MOTION

On motion of Senator Prentice, the rules were suspended, House Bill No. 2496 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of House Bill No. 2496.

ROLL CALL

The Secretary called the roll on the final passage of House Bill No. 2496 and the bill passed the Senate by the following vote: Yeas, 45; Nays, 0; Absent, 0; Excused, 4.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Eide, Fairley, Finkbeiner, Franklin, Fraser, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Honeyford, Horn, Jacobsen, Johnson, Kline, Kohl-Welles, Long, Loveland, McAuliffe, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, West, Winsley and Wojahn - 45.

Excused: Senators Hochstatter, McCaslin, Sellar and Zarelli - 4.

HOUSE BILL NO. 2496, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

SECOND READING

HOUSE BILL NO. 2519, by Representatives Lovick, Fortunato, Dunshee, Thomas, Haigh and Kenney (by request of Department of Revenue)

Simplifying the excise tax code.

The bill was read the second time.

MOTION

On motion of Senator Loveland, the rules were suspended, House Bill No. 2519 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of House Bill No. 2519.

ROLL CALL

The Secretary called the roll on the final passage of House Bill No. 2519 and the bill passed the Senate by the following vote: Yeas, 45; Nays, 0; Absent, 0; Excused, 4.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Eide, Fairley, Finkbeiner, Franklin, Fraser, Gardner, Goings, Hale, Hargrove, Haugen, Heavey, Honeyford, Horn, Jacobsen, Johnson, Kline, Kohl-Welles, Long, Loveland, McAuliffe, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Sheldon, T., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, West, Winsley and Wojahn - 45.

Excused: Senators Hochstatter, McCaslin, Sellar and Zarelli - 4.

HOUSE BILL NO. 2519, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

SECOND READING

HOUSE BILL NO. 1070, by Representatives Romero and D. Schmidt (by request of Alternative Public Works Methods Oversight Committee)

Authorizing the general contractor/construction manager contracting procedure for school district capital projects.

The bill was read the second time.

MOTION

On motion of Senator Patterson, the following Committee on State and Local Government striking amendment was adopted:

Strike everything after the enacting clause and insert the following:

"Sec. 1. RCW 39.10.020 and 1997 c 376 s 1 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Alternative public works contracting procedure" means the design-build and the general contractor/construction manager contracting procedures authorized in RCW 39.10.050 and 39.10.060, respectively.

(2) "Public body" means the state department of general administration; the University of Washington; Washington State University; every city with a population greater than one hundred fifty thousand; every city authorized to use the design-build procedure for a water system demonstration project under RCW 39.10.065(3); every county with a population greater than four hundred fifty thousand; ((and)) every port district with a population greater than five hundred thousand; and those school districts proposing projects that are considered and approved by the school district project review board under section 4 of this act.

(3) "Public works project" means any work for a public body within the definition of the term public work in RCW 39.04.010.

Sec. 2. RCW 39.10.060 and 1997 c 376 s 4 are each amended to read as follows:

(1) Notwithstanding any other provision of law, and after complying with RCW 39.10.030, the following public bodies may utilize the general contractor/construction manager procedure of public works contracting for public works projects authorized under subsection (2) of this section: The state department of general administration; the University of Washington; Washington State University; every city with a population greater than one hundred fifty thousand; every county with a population greater than four hundred fifty thousand; ((and)) every port district with a population greater than five hundred thousand; and those school districts proposing projects that are considered and approved by the school district project review board under section 4 of this act. For the purposes of this section, "general contractor/construction manager" means a firm with which a public body has selected and negotiated a maximum allowable construction cost to be guaranteed by the firm, after competitive selection through formal advertisement and competitive bids, to provide services during the design phase that may include life-cycle cost design considerations, value engineering, scheduling, cost estimating, constructability, alternative construction options for cost savings, and sequencing of work, and to act as the construction manager and general contractor during the construction phase.

(2) Except those school districts proposing projects that are considered and approved by the school district project review board public bodies authorized under this section may utilize the general contractor/construction manager procedure for public works projects valued over ten million dollars where:

(a) Implementation of the project involves complex scheduling requirements;

(b) The project involves construction at an existing facility which must continue to operate during construction; or

(c) The involvement of the general contractor/construction manager during the design stage is critical to the success of the project.

(3) Public bodies should select general contractor/construction managers early in the life of public works projects, and in most situations no later than the completion of schematic design.

(4) Contracts for the services of a general contractor/construction manager under this section shall be awarded through a competitive process requiring the public solicitation of proposals for general contractor/construction manager services. The public solicitation of proposals shall include: A description of the project, including programmatic, performance, and technical requirements and specifications when available; the reasons for using the general contractor/construction manager procedure; a description of the qualifications to be required of the proposer, including submission of the proposer's accident prevention program; a description of the process the public body will use to evaluate qualifications and proposals, including evaluation factors and the relative weight of factors; the form of the contract to be awarded; the estimated maximum allowable construction cost; minority and women business enterprise total project goals, where applicable; and the bid instructions to be used by the general contractor/construction manager finalists. Evaluation factors shall include, but not be limited to: Ability of professional personnel, past performance in negotiated and complex projects, and ability to meet time and budget requirements; location; recent, current, and projected work loads of the firm; and the concept of their proposal. A public body shall establish a committee to evaluate the proposals. After the committee has selected the most qualified finalists, these finalists shall submit final proposals, including sealed bids for the percent fee, which is the percentage amount to be earned by the general contractor/construction manager as overhead and profit, on the estimated maximum allowable construction cost and the fixed amount for the detailed specified general conditions work. The public body shall select the firm submitting the highest scored final proposal using the evaluation factors and the relative weight of factors published in the public solicitation of proposals.

(5) The maximum allowable construction cost may be negotiated between the public body and the selected firm after the scope of the project is adequately determined to establish a guaranteed contract cost for which the general contractor/construction manager will provide a performance and payment bond. The guaranteed contract cost includes the fixed amount for the detailed specified general conditions work, the negotiated maximum allowable construction cost, the percent fee on the negotiated maximum allowable construction cost, and sales tax. If the public body is unable to negotiate a satisfactory maximum allowable construction cost with the firm selected that the public body determines to be fair, reasonable, and within the available funds, negotiations with that firm shall be formally terminated and the public body shall negotiate with the next highest scored firm and continue until an agreement is reached or the process is terminated. If the maximum allowable construction cost varies more than fifteen percent from the bid estimated maximum allowable construction cost due to requested and approved changes in the scope by the public body, the percent fee shall be renegotiated.

(6) All subcontract work shall be competitively bid with public bid openings. Subcontract work shall not be issued for bid until the public body has approved, in consultation with the office of minority and women's business enterprises or the equivalent local agency, a plan prepared by the general contractor/construction manager for attaining applicable minority and women business enterprise total project goals that equitably spreads women and minority enterprise opportunities to as many firms in as many bid packages as is practicable. When critical to the successful completion of a subcontractor bid package the owner and general contractor/construction manager may evaluate for bidding eligibility a subcontractor's ability, time, budget, and specification requirements based on the subcontractor's performance of those items on previous projects. Subcontract bid packages shall be awarded to the responsible bidder submitting the low responsive bid. The requirements of RCW 39.30.060 apply to each subcontract bid package. All subcontractors who bid work over three hundred thousand dollars shall post a bid bond and all subcontractors who are awarded a contract over three hundred thousand dollars shall provide a performance and payment bond for their contract amount. All other subcontractors shall provide a performance and payment bond if required by the general contractor/construction manager. A low bidder who claims error and fails to enter into a contract is prohibited from bidding on the same project if a second or subsequent call for bids is made for the project. Except as provided for under subsection (7) of this section, bidding on subcontract work by the general contractor/construction manager or its subsidiaries is prohibited. The general contractor/construction manager may negotiate with the low-responsive bidder in accordance with RCW 39.10.080 or, if unsuccessful in such negotiations, rebid.

(7) The general contractor/construction manager, or its subsidiaries, may bid on subcontract work on projects valued over twenty million dollars if:

(a) The work within the subcontract bid package is customarily performed by the general contractor/construction manager;

(b) The bid opening is managed by the public body; and

(c) Notification of the general contractor/construction manager's intention to bid is included in the public solicitation of bids for the bid package.

In no event may the value of subcontract work performed by the general contractor/construction manager exceed twenty percent of the negotiated maximum allowable construction cost.

(8) A public body may include an incentive clause in any contract awarded under this section for savings of either time or cost or both from that originally negotiated. No incentives granted may exceed five percent of the maximum allowable construction cost. If the project is completed for less than the agreed upon maximum allowable construction cost, any savings not otherwise negotiated as part of an incentive clause shall accrue to the public body. If the project is completed for more than the agreed upon maximum allowable construction cost, excepting increases due to any contract change orders approved by the public body, the additional cost shall be the responsibility of the general contractor/construction manager.

NEW SECTION. Sec. 3. A new section is added to chapter 39.10 RCW to read as follows:

In addition to the projects authorized in RCW 39.10.060, public bodies may also use the general contractor/construction manager contracting procedure for the construction of school district capital demonstration projects, subject to the following conditions:

(1) The project must receive approval from the school district project review board established under section 4 of this act.

(2) The school district project review board may not authorize more than two demonstration projects valued over ten million dollars and two demonstration projects valued between five and ten million dollars.

(3) The school district project review board may not approve more than one demonstration project under this section for each school district.

NEW SECTION. Sec. 4. A new section is added to chapter 39.10 RCW to read as follows:

(1) The school district project review board is established to review school district proposals submitted by school districts to use alternative public works contracting procedures. The board shall select and approve qualified projects based upon an evaluation of the information submitted by the school district under subsection (2) of this section. The membership of the board shall be selected by the independent oversight committee as established under RCW 39.10.110 and shall include the following representatives, each having experience with public works or commercial construction: One representative from the office of the superintendent of public instruction; one representative from the office of financial management; two representatives from the construction industry, one of whom works for a construction company with gross annual revenues of twenty million dollars or less; one representative from the specialty contracting industry; one representative from organized labor; one representative from the design industry; one representative from a public body previously authorized under this chapter to use an alternative public works contracting procedure who has experience using such alternative contracting procedures; one representative from school districts with ten thousand or more annual average full-time equivalent pupils; and one representative from school districts with fewer than ten thousand average full-time equivalent pupils. Each member shall be appointed for a term of three years, with the first three-year term commencing after the effective date of this section. Any member of the school district project review board who is directly affiliated with any applicant before the board must recuse him or herself from consideration of the application.

(2) A school district seeking to use alternative contracting procedures authorized under this chapter shall file an application with the school district project review board. The application form shall require the district to submit a detailed statement of the proposed project, including the school district's name; student population based upon October full-time equivalents; the current projected total budget for the project, including the estimated construction costs, costs for professional services, equipment and furnishing costs, off-site costs, contract administration costs, and other related project costs; the anticipated project design and construction schedule; a summary of the school district's construction activity for the preceding six years; and an explanation of why the school district believes the use of an alternative contracting procedure is in the public interest and why the school district is qualified to use an alternative contracting procedure, including a summary of the relevant experience of the school district's management team. The applicant shall also provide in a timely manner any other information concerning implementation of projects under this chapter requested by the school district project review board to assist in its consideration.

(3) Any school district whose application is approved by the school district project review board shall comply with the public notification and review requirements in RCW 39.10.030.

(4) Any school district whose application is approved by the school district project review board shall not use as an evaluation factor whether a contractor submitting a bid for the approved project has had prior general contractor/construction manager procedure experience.

(5) The school district project review board shall prepare and issue a report reviewing the use of the alternative public works contracting procedures by school districts. The board shall report to the independent oversight committee at least sixty days before the oversight committee is required to report to the legislature under RCW 39.10.110(4)."

MOTIONS

On motion of Senator Patterson, the following title amendment was adopted:

On page 1, line 2 of the title, after "districts;" strike the remainder of the title and insert "amending RCW 39.10.020 and 39.10.060; and adding new sections to chapter 39.10 RCW."

On motion of Senator Patterson, the rules were suspended, House Bill No. 1070, as amended by the Senate, was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

Debate ensued.

MOTION

On motion of Senator Spanel, Senator Franklin was excused.

The President Pro Tempore declared the question before the Senate to be the roll call on the final passage of House Bill No. 1070, as amended by the Senate.

ROLL CALL

The Secretary called the roll on the final passage of House Bill No. 1070, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 39; Nays, 5; Absent, 0; Excused, 5.

Voting yea: Senators Bauer, Benton, Brown, Costa, Deccio, Eide, Fairley, Fraser, Gardner, Goings, Hale, Hargrove, Haugen, Honeyford, Horn, Jacobsen, Kline, Kohl-Welles, Long, Loveland, McAuliffe, McDonald, Morton, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Sheahan, Sheldon, B., Shin, Snyder, Spanel, Stevens, Swecker, Thibaudeau, West and Winsley - 39.

Voting nay: Senators Finkbeiner, Heavey, Johnson, Sheldon, T. and Wojahn - 5.

Excused: Senators Franklin, Hochstatter, McCaslin, Sellar and Zarelli - 5.

HOUSE BILL NO. 1070, as amended by the Senate, having received the constitutional majority, was declared passed. There being no objection, the title of the bill will stand as the title of the act.

MOTION

At 5:09 p.m., on motion of Senator Betti Sheldon, the Senate adjourned until 9:00 a.m., Wednesday, March 1, 2000.

BRAD OWEN, President of the Senate

TONY M. COOK, Secretary of the Senate