BILL REQ. #:  H-1871.2 

READ FIRST TIME 02/14/07.   

     AN ACT Relating to cost-reimbursement agreements under chapter 78.52 RCW; and adding a new section to chapter 78.52 RCW.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 78.52 RCW to read as follows:
     (1) Until July 2013, the department may enter into a written cost-reimbursement agreement with an applicant, permit holder, or project operator to recover from the applicant, permit holder, or project operator the reasonable costs incurred by the department in carrying out the requirements of this chapter, as they relate to permit coordination, environmental review, application review, technical studies in support of permit processing, or orders issued by the oil and gas supervisor and permit compliance. Cost-reimbursement agreements are considered an interim measure until oil and gas development activities necessitate additional department staffing resources. Cost-reimbursement agreements must be initiated at the request of an applicant for the purpose of assisting the department in expediting and facilitating the permitting and compliance processes. The cost-reimbursement agreement must identify the specific tasks, costs, and schedule for work to be conducted under the agreement.
     (2) The written cost-reimbursement agreement must be negotiated with the applicant, permit holder, or project operator. Under the provisions of a cost-reimbursement agreement, funds from the applicant, permit holder, or project operator must be used by the department to contract with a third party to carry out the work covered by the cost-reimbursement agreement and the department's administrative costs. The administrative costs are those costs incurred by the department in receiving an application for a drilling permit, establishment of a development unit, or approval or issuance of a pooling order including negotiating the cost-reimbursement agreement, negotiating the contracts for services with third parties, management of the cost-reimbursement and services contracts, reviewing the reports of the third party, and issuing the permits, orders, or agreements. For the purposes of this subsection, the department shall charge no more than forty dollars per hour to recover administrative costs of the contract for services with the third party. If departmental wages increase significantly, the legislature may review and adjust this amount to reflect the additional costs of administering third-party contracts.
     (3) The department shall, in developing and implementing the cost-reimbursement agreement, ensure that the department reviews and oversees the work performed by the third party, including the actual issuance of permits and reviewing reports and taking final action related to permit compliance. Final decisions that involve policy matters must be made by the department and not by the consultant. The billing process must provide for accurate time and cost accounting and may include a billing cycle that provides for progress payments. The restrictions of chapter 42.52 RCW apply to any cost-reimbursement agreement, and to any person hired as a result of a cost-reimbursement agreement.