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FIFTY-NINTH DAY

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MORNING SESSION

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Senate Chamber, Olympia, Wednesday, March 11, 1998

The Senate was called to order at 9:00 a.m. by President Owen. The Secretary called the roll and announced to the President that all Senators were present except Senators Hargrove, Kline, Long, Patterson, Sellar, Wood and Zarelli. On motion of Senator Hale, Senators Long, Sellar, Wood and Zarelli were excused. On motion of Senator Franklin, Senators Hargrove, Kline and Patterson were excused.

The Sergeant at Arms Color Guard, consisting of Pages Kristina Zangar and Corinne Anderson, presented the Colors. Reverend Kenneth Bates, pastor of the Napavine Baptist Church, and a guest of Senator Val Stevens, offered the prayer.

MOTION

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

MESSAGE FROM THE HOUSE

March 10, 1998

MR.. PRESIDENT:

The Speaker has signed:

SUBSTITUTE HOUSE BILL NO. 1072,

ENGROSSED SUBSTITUTE HOUSE BILL NO. 1221,

HOUSE BILL NO. 1252,

ENGROSSED SUBSTITUTE HOUSE BILL NO. 1769,

SUBSTITUTE HOUSE BILL NO. 1781,

SUBSTITUTE HOUSE BILL NO. 1786,

SUBSTITUTE HOUSE BILL NO. 1867,

SUBSTITUTE HOUSE BILL NO. 2166,

SUBSTITUTE HOUSE BILL NO. 2394,

HOUSE BILL NO. 2463,

HOUSE BILL NO. 2550,

SUBSTITUTE HOUSE BILL NO. 2688,

ENGROSSED SUBSTITUTE HOUSE BILL NO. 2819,

SUBSTITUTE HOUSE BILL NO. 2936,

SUBSTITUTE HOUSE BILL NO. 2941,

HOUSE JOINT MEMORIAL NO. 4039, and the same are herewith transmitted.

TIMOTHY A. MARTIN, Chief Clerk

SIGNED BY THE PRESIDENT

The President signed:

SUBSTITUTE HOUSE BILL NO. 1072,

ENGROSSED SUBSTITUTE HOUSE BILL NO. 1221,

HOUSE BILL NO. 1252,

ENGROSSED SUBSTITUTE HOUSE BILL NO. 1769,

SUBSTITUTE HOUSE BILL NO. 1781,

SUBSTITUTE HOUSE BILL NO. 1786,

SUBSTITUTE HOUSE BILL NO. 1867,

SUBSTITUTE HOUSE BILL NO. 2166,

SUBSTITUTE HOUSE BILL NO. 2394,

HOUSE BILL NO. 2463,

HOUSE BILL NO. 2550,

SUBSTITUTE HOUSE BILL NO. 2688,

ENGROSSED SUBSTITUTE HOUSE BILL NO. 2819,

SUBSTITUTE HOUSE BILL NO. 2936,

SUBSTITUTE HOUSE BILL NO. 2941,

HOUSE JOINT MEMORIAL NO. 4039.

MOTION

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

SENATE RESOLUTION 1998-8727

By Senators Thibaudeau, Jacobsen, Kline, Kohl, Fraser, Spanel and B. Sheldon

WHEREAS, Hazel Wolf has dedicated a full third of her long life to the preservation and enjoyment of the environment; and

WHEREAS, She has been recognized for her tireless efforts on behalf of the environment, including being named recipient of the 1997 Audubon Medal, and the Chevron Conservation Award; and

WHEREAS, She has endeavored to share her love of the world and its creatures by helping found twenty-one of twenty-six Audubon Society chapters in Washington; and

WHEREAS, She continues to serve as secretary of the Seattle chapter of the Audubon Society; and

WHEREAS, She knows well that our environment belongs to all, and has demonstrated that knowledge by founding the Community Coalition for Environmental Justice; and

WHEREAS, She has been a tireless worker for the rights of the people and the human right to self-determination as evidenced by her service as a volunteer monitor of free elections in Nicaragua; and

WHEREAS, On March 10, 1998, she celebrated her centennial birthday and she is now looking forward to her second hundred years;

NOW, THEREFORE BE IT RESOLVED, That the Washington State Senate do hereby recognize and honor Hazel Wolf’s life, her accomplishments, and her contributions to the countless number of people who have come in contact with her and who have been changed for the better; and

BE IT FURTHER RESOLVED, That the Secretary of the Senate immediately transmit a copy of this resolution to Hazel Wolf.

Senators Thibaudeau, Brown, Jacobsen and Fraser spoke to Senate Resolution 1998-8727.

MOTION

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

SENATE RESOLUTION 1998-8728

By Senator Franklin, B. Sheldon and Kohl

WHEREAS, K.C. Boutiette, a native of Tacoma and graduate of Mount Tahoma High School, competed and distinguished himself in mens' speed skating at the 18^th Olympic Winter Games at Nagano, Japan; and

WHEREAS, Mr. Boutiette, America’s top mens' speed skater going into these Olympic Games, solidified that position by establishing three new American mens' speed skating records, in the 1,500 meter, 5,000 meter, and 10,000 meter events; and

WHEREAS, He also briefly held the new Olympic record in the 1,500 meter event, his specialty race; and

WHEREAS, His eighth-place, American record-setting finish in the 10,000 meter event, at thirteen minutes, forty-four and three-one-hundredths seconds, was nearly twenty-five seconds faster than his previous personal best; and

WHEREAS, Mr. Boutiette also qualified for the American Olympic team and competed in the 1994 Winter Games at Lillehammer, Norway, only several months after taking up the sport of speed skating; and

WHEREAS, He began his skating career as an inline skater, winning two national championships in that sport before crossing over to the ice; and

WHEREAS, He is by far the most successful cross-over from inline skating to speed skating; and

WHEREAS, Following the Olympic Winter Games at Nagano, Mr. Boutiette remains America’s preeminent mens' speed skater;

NOW, THEREFORE, BE IT RESOLVED, That the members of the Washington State Senate do hereby recognize and honor Mr. K.C. Boutiette for his outstanding effort and accomplishments at the 1998 Olympic Winter Games at Nagano, Japan, in mens' speed skating; and that we wish him the best of luck in future competition; and

BE IT FURTHER RESOLVED, That the Secretary of the Senate immediately transmit copies of this resolution to Mr. Boutiette, and to his family in Tacoma.

INTRODUCTION OF SPECIAL GUEST

The President welcomed and introduced the mother of K. C. Boutiette, who was seated in the gallery.

MOTION

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

SENATE RESOLUTION 1998-8726

By Senators Winsley, Hale, Sellar, Prentice, T. Sheldon, Heavey, B. Sheldon, Kohl, Loveland, Sellar, Deccio, Horn, Snyder, Prince, Bauer, Schow, McCaslin and Wojahn

WHEREAS, Lyle Jacobsen is a man of character, intelligence, courage, integrity, initiative, charm, and compassion, who has made significant contributions to the growth and development of the state of Washington and to the quality of state government; and

WHEREAS, Lyle Jacobsen is a native son of the state of Washington, having been born and raised in Onalaska, Washington; and

WHEREAS, Lyle Jacobsen majored in mathematics and received his college degree in education from Western Washington University; and

WHEREAS, Lyle Jacobsen contributed to the growth and education of our youth as a teacher of mathematics and as an athletics coach at Bethel High School and Onalaska High School; and

WHEREAS, Lyle Jacobsen, in 1973, commenced employment with the Washington State Legislature as staff for the Senate Ways and Means Committee, hired by then-Committee Staff Director, Governor Mike Lowry; and

WHEREAS, Lyle Jacobsen served as Staff Director of the Senate Ways and Means Committee under the chairmanship of Senator Hubert Donahue, establishing a legacy of excellence for legislative staff that remains the standard today; and

WHEREAS, Lyle Jacobsen, in 1979, was appointed by Governor Dixie Lee Ray and confirmed by the Washington State Senate, as the Director of the Office of Financial Management; and

WHEREAS, Lyle Jacobsen, in 1982, became the Assistant State Treasurer, serving under State Treasurer Robert O'Brien and State Treasurer Daniel Grimm and contributing significantly to the financial health of Washington state government; and

WHEREAS, Lyle Jacobsen served as a member and the vice-chairman of the Higher Education Coordinating Board from 1986 to 1993; and

WHEREAS, Lyle Jacobsen, in 1993, retired from state employment following over thirty years of service; and

WHEREAS, Lyle Jacobsen began a new career in government affairs, representing the interests of both the finance and the housing industries; and

WHEREAS, Members of the Senate will miss Lyle Jacobsen's "institutional memory" when he retires on March 12, 1998, from government affairs;

NOW, THEREFORE, BE IT RESOLVED, That the Washington State Senate recognize and honor Martin Lyle Jacobsen for his longstanding contribution to state government; and

BE IT FURTHER RESOLVED, That copies of this resolution be immediately transmitted by the Secretary of the Senate to the Governor of the state of Washington, to the State Treasurer, to the Director of the Office of Financial Management, to the Director of the Higher Education Coordinating Board, to the Director of the Department of Financial Institutions, to the Director of the Housing Finance Commission, to the Washington Savings League, and to Lyle Jacobsen and his wife, children, and grandchildren.

Senators Winsley, Prentice, Jacobsen, McCaslin, Thibaudeau, Loveland and Snyder spoke to Senate Resolution 1998-8726.

INTRODUCTION OF SPECIAL GUEST

The President welcomed and introduced Lyle Jacobsen, who was seated in the gallery.

INTRODUCTION OF SPECIAL GUESTS

The President welcomed and introduced Dr. James Moruzzi, a member of the Washington Medical Association, and registered nurses Diane Hettinger and Betsy Minnick from the legislative health clinic. The President also welcomed and thanked Winnie Cline who performs all administrative duties for the clinic. All were seated in the gallery.

SECOND READING

ENGROSSED SECOND SUBSTITUTE HOUSE BILL NO. 1328, by House Committee on Finance (originally sponsored by Representatives Schoesler, Chandler, Sheahan, Mulliken, Bush, McMorris and Mastin) (by request of Department of Revenue)

Revising the business and occupation tax on the handling of hay, alfalfa, and seed.

The bill was read the second time.

MOTION

On motion of Senator West, the rules were suspended, Engrossed Second Substitute House Bill No. 1328 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

Debate ensued.

The President declared the question before the Senate to be the roll call on the final passage of Engrossed Second Substitute House Bill No. 1328.

ROLL CALL

The Secretary called the roll on the final passage of Engrossed Second Substitute House Bill No. 1328 and the bill passed the Senate by the following vote: Yeas, 36; Nays, 4; Absent, 2; Excused, 7.

Voting yea: Senators Anderson, Bauer, Benton, Deccio, Fairley, Franklin, Goings, Hale, Haugen, Heavey, Hochstatter, Horn, Jacobsen, Johnson, Kohl, Loveland, McAuliffe, McCaslin, McDonald, Morton, Newhouse, Oke, Prentice, Prince, Rasmussen, Roach, Rossi, Schow, Sheldon, B., Sheldon, T., Stevens, Strannigan, Swecker, Thibaudeau, West and Winsley - 36. Voting nay: Senators Brown, Fraser, Snyder and Spanel - 4. Absent: Senators Finkbeiner and Wojahn - 2. Excused: Senators Hargrove, Kline, Long, Patterson, Sellar, Wood and Zarelli - 7.

ENGROSSED SECOND SUBSTITUTE HOUSE BILL NO. 1328, 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, Senator Franklin was excused.

SECOND READING

SUBSTITUTE HOUSE BILL NO. 1447, by House Committee on Finance (originally sponsored by Representatives Robertson, L. Thomas, Clements, Kastama and Cooke)

Providing tax exemptions related to thoroughbred horses.

The bill was read the second time.

MOTION

On motion of Senator West, the rules were suspended, Substitute House Bill No. 1447 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 Substitute House Bill No. 1447.

ROLL CALL

The Secretary called the roll on the final passage of Substitute House Bill No. 1447 and the bill passed the Senate by the following vote: Yeas, 37; Nays, 3; Absent, 1; Excused, 8.

Voting yea: Senators Anderson, Bauer, Benton, Brown, Deccio, Finkbeiner, Goings, Hale, Haugen, Heavey, Hochstatter, Horn, Jacobsen, Johnson, Kohl, Loveland, McAuliffe, McCaslin, McDonald, Morton, Newhouse, Prentice, Prince, Rasmussen, Roach, Rossi, Schow, Sheldon, B., Sheldon, T., Snyder, Spanel, Stevens, Strannigan, Swecker, Thibaudeau, West and Winsley - 37. Voting nay: Senators Fairley, Fraser and Oke - 3. Absent: Senator Wojahn - 1. Excused: Senators Franklin, Hargrove, Kline, Long, Patterson, Sellar, Wood and Zarelli - 8. SUBSTITUTE HOUSE BILL NO. 1447, 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. 2278, by Representatives Honeyford and Lisk

Exempting electric generating facilities powered by landfill gas from sales and use taxes.

The bill was read the second time.

MOTION

Senator Finkbeiner moved that the following amendments by Senators Finkbeiner, Brown, Hochstatter and Jacobsen be considered simultaneously and be adopted:

On page 1, line 13, after "generating" insert ": (a) For wind or sun facilities, not less than twenty watts of electricity; or (b) for landfill gas facilities,"

On page 1, beginning on line 15, after "department" strike all material through "require" on line 17, and insert "((by rule, and the purchaser provides the department with a duplicate of the certificate or a summary of exempt sales as the department may require))"

On page 2, line 5, after "means" strike "industrial" and insert "((industrial))"

On page 2, beginning on line 18, after "wind" strike all material through "systems" on line 22, and insert "((or solar power if it provides any part of the process that captures the energy of the wind or sun, converts that energy to electricity, and transforms or transmits that electricity for entry into electric transmission and distribution systems)) or sun energy or landfill gas if it captures, converts, transforms, stores, or transmits wind or sun energy or landfill gas or the electricity created from wind or sun energy or landfill gas"

On page 2, beginning on line 29, after "power" strike all material through "state" on line 36, and insert "((, but only when the user provides the department with:

(a) An exemption certificate in a form and manner prescribed by the department within sixty days of the first use of such machinery and equipment in this state; or

(b) An annual summary listing the machinery and equipment by January 31st of the year following the calendar year in which the machinery and equipment is first used in this state))"

On page 3, beginning on line 1, after "Sec. 3." strike all material through "immediately." on line 4, and insert "This act takes effect July 1, 1998."

Correct the title.

Debate ensued.

POINT OF ORDER

Senator West: “I rise to a point of order. It is with a great deal of reluctance that I challenge the scope and object on these amendments. Looking to the underlying bill, Mr. President, the title of the bill that's published is 'An Act relating to exempting electric generating facilities powered by landfill gas from sales and use taxes.' While, it is true, the amendments go to the same sections of law, it certainly wasn't the intent, I don't believe, in the original bill to amend this tax exemption in here--by looking at the title. So, I would challenge them on that basis.”

Further debate ensued.

MOTION

On motion of Senator Johnson, further consideration of House Bill No. 2278 was deferred.

SECOND READING

HOUSE BILL NO. 2335, by Representatives B. Thomas, Mulliken, Thompson, Morris, Gardner, Linville, Backlund, Cooke, Carrell, Kastama, Schoesler, Van Luven, Dunn and Lambert (by request of Department of Revenue)

Consolidating business and occupation tax rates into fewer categories.

The bill was read the second time.

MOTION

Senator Thibaudeau moved that the following amendment by Senators Thibaudeau, Brown and Kohl be adopted:

On page 7, after line 3, insert the following:

"NEW SECTION. Sec. 7. A new section is added to chapter 82.04 RCW to read as follows:

Upon every person engaging within this state in the business of providing child care for periods of less than twenty-four hours; as to such persons the amount of tax with respect to such business shall be equal to the gross proceeds derived from such sales multiplied by the rate of 0.484 percent.

Sec. 8. RCW 82.04.290 and 1997 c 7 s 2 are each amended to read as follows:

(1) Upon every person engaging within this state in the business of providing international investment management services, as to such persons, the amount of tax with respect to such business shall be equal to the gross income or gross proceeds of sales of the business multiplied by a rate of 0.275 percent.

(2) Upon every person engaging within this state in any business activity other than or in addition to those enumerated in RCW 82.04.230, 82.04.240, 82.04.250, 82.04.255, 82.04.260, 82.04.270, section 7 of this act, and 82.04.280, and subsection (1) of this section; as to such persons the amount of tax on account of such activities shall be equal to the gross income of the business multiplied by the rate of 1.5 percent.

This section includes, among others, and without limiting the scope hereof (whether or not title to materials used in the performance of such business passes to another by accession, confusion or other than by outright sale), persons engaged in the business of rendering any type of service which does not constitute a "sale at retail" or a "sale at wholesale." The value of advertising, demonstration, and promotional supplies and materials furnished to an agent by his principal or supplier to be used for informational, educational and promotional purposes shall not be considered a part of the agent's remuneration or commission and shall not be subject to taxation under this section."

Renumber the remaining sections consecutively and correct any internal references accordingly.

POINT OF ORDER

Senator West: “Once again, reluctantly, I rise to a point of order. I challenge the scope and object of the amendment by Senators Thibaudeau, Brown and Kohl. While it a nice amendment--a good amendment actually--it doesn't fit in this bill. This bill is 'An Act relating to consolidating business and occupation tax rates into fewer categories.' The purpose and intent of the bill was to take the numerous categories for B&O taxes that we have in this state and reduce them down to five. While it is true, that several taxes appear to be lowered, it is simply a feature of changing the categories from the numerous ones down to five. This is adding a new tax exemption. Therefore, it is beyond the scope and object.”

Further debate ensued.

MOTION

On motion of Senator Johnson, further debate on the amendment by Senators Thibaudeau, Brown and Kohl was deferred.

MOTION

Senator Tim Sheldon moved that the following amendment by Senators Hargrove, Tim Sheldon and Snyder be adopted:

On page 8, after line 31, insert the following:

"NEW SECTION. Sec. 10. A new section is added to chapter 82.04 RCW to read as follows:

In order to consolidate business and occupation taxes in distressed areas the legislation The legislature intends to adopt sections 11 and 12 of this act.

NEW SECTION. Sec. 11. A new section is added to chapter 82.04 RCW to read as follows:

(1) The definitions in this subsection apply to this section, sections 3 and 4 of this act, RCW 82.62.030, and sections 9 through 16 of this act, unless the context clearly requires otherwise.

(a) "Business" means the person applying for the tax deferral, credit, or exemption.

(b) "Construction" means the construction of a manufacturing operation complex and includes labor and services rendered in respect to construction. "Construction" ends when a project is completed as determined under subsection (2)(c) of this section.

(c) "Distressed county" means a county in which the average level of unemployment for the three years before the year in which an application is filed under this chapter exceeds the average state unemployment for those years by twenty percent.

(d) "Employment position" means a position in which a permanent full-time employee is employed in a project during the entire tax year. "The entire tax year" means the full-time position is filled for a period of twelve consecutive months. "Full-time" means at least thirty-five hours a week.

(e) "Equipping and operating" means the acquisition of tangible personal property for use at the manufacturing operation complex, and includes labor and services rendered in respect to the installation of tangible personal property.

(f) "Finished product" means an article, substance, or commodity that is manufactured at and shipped from the manufacturing operation complex.

(g) "Manufacturing operation complex" means the buildings, structures, and improvements located at the site where the manufacturing activity occurs. The complex includes the buildings, structures, and improvements used to receive, store, and ship raw materials and finished products as well as buildings, structures, and improvements used for the manufacturing production line. In addition, the term includes all administrative offices, employee support facilities, and production support facilities located at the site. The manufacturing operation complex does not include buildings, structures, and improvements located off of the site.

(h) "Person" has the meaning given in RCW 82.04.030.

(i) "Project" means the site preparation, construction, and equipping and operating of a manufacturing operation complex.

(j) "Raw material" means the ingredients, components, substances, articles, or other tangible personal property that is received at the manufacturing operation complex for use as ingredients or components of the finished product.

(k) "Site" means a discrete geographical location.

(l) "Site preparation" means demolition of existing improvements, environmental remediation, earth moving, land clearing, site excavation, and shoring, and includes labor and services rendered in respect to site preparation.

(2) As a condition to receiving initial approval and as a condition of continuing eligibility, the following criteria must be met:

(a) The project must be located in a distressed county and must be owned and operated by a person who meets the definition of "manufacturer" as defined in RCW 82.04.110;

(b) The business must commit to an investment, by the time of completion of the project, in land, structures, and equipment, the value of which must be at least four percent of the total of the equalized assessed value in the county in which the project is located. The total equalized assessed value in the county is as published annually by the department in accordance with RCW 84.48.080. Continuing eligibility is conditioned on this investment having actually occurred;

(c)(i) The business must commit to and must create a minimum of twenty new employment positions at the project within two years of completion of the project.

(ii) The business must commit to and create one new employment position for each two million dollars invested in the project within two years of completion of the project. The twenty minimum positions in (c)(i) of this subsection are part of and not in addition to the positions required to meet the investment to job ratio.

(iii) The individuals in the new employment positions must be the employees of the business and must not have been relocated from other locations of the business within this state. Completion of the project is deemed to have occurred when the project is capable of operating and producing finished products. The department of community, trade, and economic development shall determine when the project is complete;

(d) The business must commit to and must pay an average wage of at least one hundred fifty percent of the average wage in the county. The employment security department shall determine the average wage in the county and shall report this amount to the department of community, trade, and economic development; and

(e) The business must remain operational for a fifteen-year period after the project is completed. "Operational" means that the level of employment at the manufacturing operation complex must not drop below the total employment positions required under (c) of this subsection.

(3)(a) The department of community, trade, and economic development shall determine the eligibility of a business and certify eligibility to the department of revenue. A component of the department's eligibility review must include a determination as to whether the project would have a major adverse impact on an existing in-state company that is engaged in manufacturing a similar product. If the department does find a major adverse impact would occur and that a competitive alternative location is not available in the northwest, then the project may be deemed ineligible for the purposes of sections 2 through 5 of this act, RCW 81.104.170(3), section 7 of this act, RCW 82.62.030(5), sections 9 through 19 of this act, RCW 82.14.370, and sections 21 through 23 of this act.

(b) Approval of the project by a public vote of the governing body of the county or city in which the project is located is a precondition to deferral certification by the department of revenue. If the county or city approves the project, the county or city shall send a written notification of the approval to the department of revenue. If the project is in two jurisdictions, both jurisdictions must approve the project.

(c) When both of the notices under (a) and (b) of this subsection are received, the department of revenue shall issue a sales and use tax deferral certificate for use under sections 3 and 4 of this act.

(4) In addition to the initial certification under subsection (3) of this section, the project must be reviewed by the department of community, trade, and economic development each year for continuing eligibility. The business shall provide an annual report to the department of community, trade, and economic development, in a form as required by the department, of its status relative to the eligibility criteria under subsection (2) of this section. The department of community, trade, and economic development shall review the annual report and determine whether the project continues to meet the eligibility criteria. The department of community, trade, and economic development shall provide a written notice of this determination to the business and to the department of revenue. Annual reapproval by the county or city in which the project is located is not required. If the project fails to meet the eligibility criteria the amount of taxes deferred under sections 3 and 4 of this act are immediately due.

(5) Taxes deferred under sections 3 and 4 of this act need not be repaid if the project maintains its eligibility criteria for a fifteen-year period. The fifteen-year period begins when the deferral certificate is sent under subsection (3)(c) of this section by the department of revenue to the business.

(6) Application for the deferral under sections 3 and 4 of this act may not be accepted before the effective date of this section or after June 30, 2003.

(7) The employment security department shall provide such data to the department of revenue and the department of community, trade, and economic development as is necessary to administer this section wage data shall be updated annually to reflect current state and county conditions.

Sec. 12. RCW 82.62.030 and 1997 c 366 s 5 are each amended to read as follows:

(1) A person shall be allowed a credit against the tax due under chapter 82.04 RCW as provided in this section. For an application approved before January 1, 1996, the credit shall equal one thousand dollars for each qualified employment position directly created in an eligible business project. For an application approved on or after January 1, 1996, the credit shall equal two thousand dollars for each qualified employment position directly created in an eligible business project. For an application approved on or after July 1, 1997, the credit shall equal four thousand dollars for each qualified employment position with wages and benefits greater than forty thousand dollars annually that is directly created in an eligible business. For an application approved on or after July 1, 1997, the credit shall equal two thousand dollars for each qualified employment position with wages and benefits less than or equal to forty thousand dollars annually that is directly created in an eligible business.

(2) The department shall keep a running total of all credits granted under this chapter during each fiscal year. The department shall not allow any credits which would cause the tabulation to exceed five million five hundred thousand dollars in fiscal year 1998 or 1999 or seven million five hundred thousand dollars in any fiscal year thereafter. If all or part of an application for credit is disallowed under this subsection, the disallowed portion shall be carried over for approval the next fiscal year. However, the applicant's carryover into the next fiscal year is only permitted if the tabulation for the next fiscal year does not exceed the cap for that fiscal year as of the date on which the department has disallowed the application.

(3) No recipient may use the tax credits to decertify a union or to displace existing jobs in any community in the state.

(4) No recipient may receive a tax credit on taxes which have not been paid during the taxable year.

(5) A business that has received certification from the department of revenue under section 11 of this act is eligible for an annual credit of four thousand dollars for each of the positions used to establish project eligibility. Positions created in excess of those required to maintain eligibility are also eligible for the credit under this subsection. The business may apply for the credit once the project is complete, as determined in section 11 of this act. The business may apply each of the successive seven years following its initial application under this subsection and shall receive the credit if the continuing employment requirements of section 11 of this act are met. The credits granted under this subsection do not affect the caps under subsection (2) of this section and the fifteen percent requirement under RCW 82.62.010. Application for the credit under this subsection may not be accepted before the effective date of this section."

Renumber the sections consecutively and correct any internal references accordingly.

Make necessary title amendments

POINT OF ORDER

Senator West: “Mr. President, I rise to challenge the scope and object of this amendment. Again, this bill was simply consolidating business and occupation tax rates into fewer categories. While it appears on first glance that there is new language that would create new exemptions or new or different rates, in fact, that it is a transfer from one section to another--if one would look at the language that is struck out. This bill is not one of creating new tax categories or creating new exemptions or changing rates in this fashion. So, I would argue that it is beyond the scope and object.”

Further debate ensued.

MOTION

On motion of Senator Johnson, further consideration of House Bill No. 2335 was deferred.

SECOND READING

ENGROSSED SUBSTITUTE HOUSE BILL NO. 2933, by House Committee on Finance (originally sponsored by Representatives Radcliff, Cooper, Cooke, Morris, Doumit, Dyer, L. Thomas, Zellinsky, Grant and Thompson)

Prescribing the taxation of business warehousing and selling pharmaceutical drugs.

The bill was read the second time.

MOTION

On motion of Senator West, the following Committee on Ways and Means amendment was adopted:

Strike everything after the enacting clause and insert the following:

"NEW SECTION. Sec. 1. A new section is added to chapter 82.04 RCW to read as follows:

(1) Upon every person engaging within this state in the business of warehousing and reselling prescription drugs; as to such persons, the amount of the tax shall be equal to the gross income of the business multiplied by the rate of 0.138 percent.

(2) For the purposes of this section:

(a) "Prescription drug" has the same meaning as that term is given in RCW 82.08.0281; and

(b) "Warehousing and reselling prescription drugs" means the buying of prescription drugs from a manufacturer or another wholesaler, and reselling of the drugs to persons selling at retail or to hospitals, clinics, health care providers, or other providers of health care services, by a wholesaler or retailer who is registered with the federal drug enforcement administration and licensed by the state board of pharmacy.

Sec. 2. RCW 82.04.270 and 1994 c 124 s 2 are each amended to read as follows:

(1) Upon every person except persons taxable under ((subsections (1) or (8) of)) RCW 82.04.260 (1) or (8) or section 1 of this act engaging within this state in the business of making sales at wholesale; as to such persons the amount of tax with respect to such business shall be equal to the gross proceeds of sales of such business multiplied by the rate of 0.484 percent.

(2) The tax imposed by this section is levied and shall be collected from every person engaged in the business of distributing in this state articles of tangible personal property, owned by them from their own warehouse or other central location in this state to two or more of their own retail stores or outlets, where no change of title or ownership occurs, the intent hereof being to impose a tax equal to the wholesaler's tax upon persons performing functions essentially comparable to those of a wholesaler, but not actually making sales. The tax designated in this section may not be assessed twice to the same person for the same article. The amount of the tax as to such persons shall be computed by multiplying 0.484 percent of the value of the article so distributed as of the time of such distribution. The department of revenue shall prescribe uniform and equitable rules for the purpose of ascertaining such value, which value shall correspond as nearly as possible to the gross proceeds from sales at wholesale in this state of similar articles of like quality and character, and in similar quantities by other taxpayers. Delivery trucks or vans will not under the purposes of this section be considered to be retail stores or outlets.

Sec. 3. RCW 82.04.280 and 1994 c 112 s 1 are each amended to read as follows:

Upon every person engaging within this state in the business of: (1) Printing, and of publishing newspapers, periodicals, or magazines; (2) building, repairing or improving any street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state or by the United States and which is used or to be used, primarily for foot or vehicular traffic including mass transportation vehicles of any kind and including any readjustment, reconstruction or relocation of the facilities of any public, private or cooperatively owned utility or railroad in the course of such building, repairing or improving, the cost of which readjustment, reconstruction, or relocation, is the responsibility of the public authority whose street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle is being built, repaired or improved; (3) extracting for hire or processing for hire; (4) operating a cold storage warehouse or storage warehouse, but not including the rental of cold storage lockers; (5) representing and performing services for fire or casualty insurance companies as an independent resident managing general agent licensed under the provisions of RCW 48.05.310; (6) radio and television broadcasting, excluding network, national and regional advertising computed as a standard deduction based on the national average thereof as annually reported by the Federal Communications Commission, or in lieu thereof by itemization by the individual broadcasting station, and excluding that portion of revenue represented by the out-of-state audience computed as a ratio to the station's total audience as measured by the 100 micro-volt signal strength and delivery by wire, if any; (7) engaging in activities which bring a person within the definition of consumer contained in RCW 82.04.190(6); as to such persons, the amount of tax on such business shall be equal to the gross income of the business multiplied by the rate of 0.484 percent.

As used in this section, "cold storage warehouse" means a storage warehouse used to store fresh and/or frozen perishable fruits or vegetables, meat, seafood, dairy products, or fowl, or any combination thereof, at a desired temperature to maintain the quality of the product for orderly marketing.

As used in this section, "storage warehouse" means a building or structure, or any part thereof, in which goods, wares, or merchandise are received for storage for compensation, except field warehouses, fruit warehouses, fruit packing plants, warehouses licensed under chapter 22.09 RCW, public garages storing automobiles, railroad freight sheds, docks and wharves, and "self-storage" or "mini storage" facilities whereby customers have direct access to individual storage areas by separate entrance. "Storage warehouse" does not include a building or structure, or that part of such building or structure, in which an activity taxable under section 1 of this act is conducted.

As used in this section, "periodical or magazine" means a printed publication, other than a newspaper, issued regularly at stated intervals at least once every three months, including any supplement or special edition of the publication.

Sec. 4. RCW 82.04.290 and 1997 c 7 s 2 are each amended to read as follows:

(2) Upon every person engaging within this state in any business activity other than or in addition to those enumerated in RCW 82.04.230, 82.04.240, 82.04.250, 82.04.255, 82.04.260, 82.04.270, ((and)) 82.04.280, and section 1 of this act, and subsection (1) of this section; as to such persons the amount of tax on account of such activities shall be equal to the gross income of the business multiplied by the rate of 1.5 percent.

Sec. 5. RCW 82.04.250 and 1993 sp.s. c 25 s 103 are each amended to read as follows:

(1) Upon every person except persons taxable under RCW 82.04.260(8), section 1 of this act, or subsection (2) of this section engaging within this state in the business of making sales at retail, as to such persons, the amount of tax with respect to such business shall be equal to the gross proceeds of sales of the business, multiplied by the rate of 0.471 percent.

(2) Upon every person engaging within this state in the business of making sales at retail that are exempt from the tax imposed under chapter 82.08 RCW by reason of RCW 82.08.0261, 82.08.0262, or 82.08.0263, as to such persons, the amount of tax with respect to such business shall be equal to the gross proceeds of sales of the business, multiplied by the rate of 0.484 percent.

NEW SECTION. Sec. 6. This act takes effect July 1, 2001."

MOTIONS

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

On page 1, line 4 of the title, after "pharmacy;" strike the remainder of the title and insert "amending RCW 82.04.270, 82.04.280, 82.04.290, and 82.04.250; adding a new section to chapter 82.04 RCW; and providing an effective date."

On motion of Senator West, the rules were suspended, Engrossed Substitute House Bill No. 2933, 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 Engrossed Substitute House Bill No. 2933, as amended by the Senate.

ROLL CALL

The Secretary called the roll on the final passage of Engrossed Substitute House Bill No. 2933, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 41; Nays, 2; Absent, 0; Excused, 6.

Voting yea: Senators Anderson, Bauer, Benton, Brown, Deccio, Finkbeiner, Franklin, Goings, Hale, Haugen, Heavey, Hochstatter, Horn, Jacobsen, Johnson, Kline, Kohl, Loveland, McAuliffe, McCaslin, McDonald, Morton, Newhouse, Oke, Prentice, Prince, Rasmussen, Roach, Rossi, Schow, Sheldon, B., Sheldon, T., Snyder, Spanel, Stevens, Strannigan, Swecker, Thibaudeau, West, Winsley and Wojahn - 41. Voting nay: Senators Fairley and Fraser - 2. Excused: Senators Hargrove, Long, Patterson, Sellar, Wood and Zarelli - 6. ENGROSSED SUBSTITUTE HOUSE BILL NO. 2933, 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 SECOND SUBSTITUTE HOUSE BILL NO. 2342, by House Committee on Finance (originally sponsored by Representatives Van Luven, McDonald, Regala, Talcott, Huff, Conway, Lantz, Fisher, Gardner, Anderson, Lambert and Boldt)

Providing tax exemptions for businesses in community empowerment zones that provide selected international services.

The bill was read the second time.

MOTION

Senator West moved that the following Committee on Ways and Means amendment be adopted:

Strike everything after the enacting clause and insert the following:

"NEW SECTION. Sec. 1. It is the intent of the legislature to attract and retain businesses that provide professional services and insurance services to international customers. To that end, the legislature finds that an incentive measured by a business's growth in jobs is a meaningful method of attracting and retaining such businesses. Therefore, the incentive in this act is specifically targeted at "net new jobs." In addition, to further the impact and benefit of this program, this incentive is limited to those urban areas of the state, both in eastern Washington and western Washington, that are characterized by unemployment and poverty. The legislature finds that providing this targeted incentive will be of benefit to the state as a whole.

NEW SECTION. Sec. 2. A new section is added to chapter 82.04 RCW to read as follows:

(1) Subject to the limits in this section, an eligible person is allowed a credit against the tax due under this chapter. The credit is based on qualified employment positions in eligible areas. The credit is available to persons who are engaged in international services as defined in this section. In order to receive the credit, the international service activities must take place at a business within the eligible area.

(2)(a) The credit shall equal three thousand dollars for each qualified employment position created after the effective date of this act in an eligible area. A credit is earned for the calendar year the person is hired to fill the position, plus the four subsequent consecutive years, if the position is maintained for those four years. (b) Credit may not be taken for hiring of persons into positions that exist on the effective date of this act. Credit is authorized for new employees hired for new positions created after the effective date of this act. New positions filled by existing employees are eligible for the credit under this section only if the position vacated by the existing employee is filled by a new hire.

(c) When a position is newly created, if it is filled before July 1st, this position is eligible for the full yearly credit. If it is filled after June 30th, this position is eligible for half of the credit.

(d) Credit may be accrued and carried over until it is used. No refunds may be granted for credits under this section.

(3) For the purposes of this section:

(a) "Eligible area" means: (i) A community empowerment zone under RCW 43.63A.700; or (ii) a contiguous group of census tracts that meets the unemployment and poverty criteria of RCW 43.63A.710 and is designated under subsection (4) of this section;

(b) "Eligible person" means a person, as defined in RCW 82.04.030, who in an eligible area at a specific location is engaged in the business of providing international services;

(c)(i) "International services" means the provision of a service, as defined under (c)(iii) of this subsection, that is subject to tax under RCW 82.04.290(2), and either:

(A) Is for a person domiciled outside the United States; or

(B) The service itself is for use primarily outside of the United States.

(ii) "International services" excludes any service taxable under RCW 82.04.290(1).

(iii) Eligible services are: Computer; data processing; information; legal; accounting and tax preparation; engineering; architectural; business consulting; business management; public relations and advertising; surveying; geological consulting; real estate appraisal; or financial services. For the purposes of this section these services mean the following:

(A) "Computer services" are services such as computer programming, custom software modification, customization of canned software, custom software installation, custom software maintenance, custom software repair, training in the use of software, computer systems design, and custom software update services;

(B) "Data processing services" are services such as word processing, data entry, data retrieval, data search, information compilation, payroll processing, business accounts processing, data production, and other computerized data and information storage or manipulation. "Data processing services" also includes the use of a computer or computer time for data processing whether the processing is performed by the provider of the computer or by the purchaser or other beneficiary of the service;

(C) "Information services" are services such as electronic data retrieval or research that entails furnishing financial or legal information, data or research, internet service as defined in RCW 82.04.297, general or specialized news, or current information;

(D) "Legal services" are services such as representation by an attorney, or other person when permitted, in an administrative or legal proceeding, legal drafting, paralegal services, legal research services, and court reporting services, arbitration, and mediation services;

(E) "Accounting and tax preparation services" are services such as accounting, auditing, actuarial, bookkeeping, or tax preparation services;

(F) "Engineering services" are services such as civil, electrical, mechanical, petroleum, marine, nuclear, and design engineering, machine designing, machine tool designing, and sewage disposal system designing services;

(G) "Architectural services" are services such as structural or landscape design or architecture, interior design, building design, building program management, and space planning services;

(H) "Business consulting services" are services such as primarily providing operating counsel, advice, or assistance to the management or owner of any business, private, nonprofit, or public organization, including but not limited to those in the following areas: Administrative management consulting; general management consulting; human resource consulting or training; management engineering consulting; management information systems consulting; manufacturing management consulting; marketing consulting; operations research consulting; personnel management consulting; physical distribution consulting; site location consulting; economic consulting; motel, hotel, and resort consulting; restaurant consulting; government affairs consulting; and lobbying;

(I) "Business management services" are services such as administrative management, business management, and office management. "Business management services" does not include property management or property leasing, motel, hotel, and resort management, or automobile parking management;

(J) "Public relations and advertising services" are services such as layout, art direction, graphic design, copy writing, mechanical preparation, opinion research, marketing research, marketing, or production supervision;

(K) "Surveying services" are services such as land surveying;

(L) "Geological consulting services" are services rendered for the oil, gas, and mining industry and other earth resource industries, and other services such as soil testing;

(M) "Real estate appraisal services" are services such as market appraisal and other real estate valuation; and

(N) "Financial services" are services such as banking, loan, security, investment management, investment advisory, mortgage servicing, contract collection, and finance leasing services, engaged in by financial businesses, or businesses similar to or in competition with financial businesses; and

(d) "Qualified employment position" means a permanent full-time position to provide international services. If an employee is either voluntarily or involuntarily separated from employment, the employment position is considered filled on a full-time basis if the employer is either training or actively recruiting a replacement employee.

(4) By ordinance, the legislative authority of a city with population greater than eighty thousand, located in a county containing no community empowerment zones as designated under RCW 43.63A.700, may designate a contiguous group of census tracts within the city as an eligible area under this section. Each of the census tracts must meet the unemployment and poverty criteria of RCW 43.63A.710. Upon making the designation, the city shall transmit to the department of revenue a certification letter and a map, each explicitly describing the boundaries of the census tract. This designation must be made by December 31, 1998.

(5) No application is necessary for the tax credit. The person must keep records necessary for the department to verify eligibility under this section. This information includes:

(a) Employment records for the previous six years;

(b) Information relating to description of international service activity engaged in at the eligible location by the person; and

(6) If at any time the department finds that a person is not eligible for tax credit under this section, the amount of taxes for which a credit has been used shall be immediately due. The department shall assess interest, but not penalties, on the credited taxes for which the person is not eligible. The interest shall be assessed at the rate provided for delinquent excise taxes under chapter 82.32 RCW, shall be assessed retroactively to the date the tax credit was taken, and shall accrue until the taxes for which a credit has been used are repaid.

(7) The employment security department shall provide to the department of revenue such information needed by the department of revenue to verify eligibility under this section.

NEW SECTION. Sec. 3. A new section is added to chapter 48.14 RCW to read as follows:

(1) Subject to the limits in this section, an eligible person is allowed a credit against the tax due under RCW 48.14.020. The credit is based on qualified employment positions in eligible areas. The credit is available to persons who are engaged in international insurance services as defined in this section. In order to receive the credit, the international insurance services activities must take place at a business within the eligible area.

(d) Credit may be accrued and carried over until it is used. No refunds may be granted for credits under this section.

(3) For the purposes of this section:

(b) "Eligible person" means a person, as defined in RCW 82.04.030, who in an eligible area at a specific location is engaged in the business of providing international insurance services;

(c) "International insurance services" means a business that provides insurance services related directly to the delivery of the service outside the United States or on behalf of persons residing outside the United States; and

(d) "Qualified employment position" means a permanent full-time position to provide international insurance services. If an employee is either voluntarily or involuntarily separated from employment, the employment position is considered filled on a full-time basis if the employer is either training or actively recruiting a replacement employee.

(5) No application is necessary for the tax credit. The person must keep records necessary for the department to verify eligibility under this section. This information includes:

(a) Employment records for the previous six years;

(b) Information relating to description of international insurance services activity engaged in at the eligible location by the person; and

(c) Information relating to customers of international insurance services activity engaged in at that location by the person.

(7) The employment security department shall provide to the department of revenue such information needed by the department of revenue to verify eligibility under this section.

NEW SECTION. Sec. 4. This act takes effect July 1, 1998."

MOTION

Senator Fraser moved that the following amendments by Senators Fraser, Loveland and Schow to the Committee on Ways and Means striking amendment be considered simultaneously and be adopted:

On page 4, line 23 of the amendment, after "city" insert ", or legislative authorities of contiguous cities by ordinance of each city's legislative authority,"

On page 4, line 26 of the amendment, after "city" insert "or cities"

On page 4, line 29 of the amendment, after "city" insert "or cities"

POINT OF INQUIRY

Senator West: “Senator Fraser, how many contiguous cities of eighty thousand population are there in this state?”

Senator Fraser: “I have not researched the specific question, but I believe in the Twenty-Second District, there is such a population aggregation of three cities and it might possibly occur in other areas of the state. I have not researched the specific question, but they would have to meet the same criteria for eligibility as the other cities would in terms of census tract statistics.”

Senator West: “Thank you, Senator Fraser.”

Further debate ensued.

The President declared the question before the Senate to be the adoption of the amendments by Senators Fraser, Loveland and Schow on page 4, lines 23, 26, and 29, to the Committee on Ways and Means striking amendment to Engrossed Second Substitute House Bill No. 2342.

The motion by Senator Fraser carried and the amendments to the committee striking amendment were adopted.

The President declared the question before the Senate to be the adoption of the Committee on Ways and Means striking amendment, as amended, to Engrossed Second Substitute House Bill No. 2342.

The motion by Senator West carried and the Committee on Ways and Means striking amendment, as amended, was adopted.

MOTIONS

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

On page 1, line 1 of the title, after "services;" strike the remainder of the title and insert "adding a new section to chapter 82.04 RCW; adding a new section to chapter 48.14 RCW; creating a new section; and providing an effective date."

On motion of Senator West, the rules were suspended, Engrossed Second Substitute House Bill No. 2342, 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 Hale, Senator Horn was excused.

The President declared the question before the Senate to be the roll call on the final passage of Engrossed Second Substitute House Bill No. 2342, as amended by the Senate.

ROLL CALL

The Secretary called the roll on the final passage of Engrossed Second Substitute House Bill No. 2342, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 42; Nays, 0; Absent, 0; Excused, 7.

Voting yea: Senators Anderson, Bauer, Benton, Brown, Deccio, Fairley, Finkbeiner, Franklin, Fraser, Goings, Hale, Haugen, Heavey, Hochstatter, Jacobsen, Johnson, Kline, Kohl, Loveland, McAuliffe, McCaslin, McDonald, Morton, Newhouse, Oke, Prentice, Prince, Rasmussen, Roach, Rossi, Schow, Sheldon, B., Sheldon, T., Snyder, Spanel, Stevens, Strannigan, Swecker, Thibaudeau, West, Winsley and Wojahn - 42. Excused: Senators Hargrove, Horn, Long, Patterson, Sellar, Wood and Zarelli - 7. ENGROSSED SECOND SUBSTITUTE HOUSE BILL NO. 2342, 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.

There being no objection, the President returned the Senate to the fourth order of business.

MESSAGE FROM THE HOUSE

March 10, 1998

MR. PRESIDENT:

The House grants the request of the Senate for a conference on SUBSTITUTE SENATE BILL NO. 6455. The Speaker has appointed the following members as conferees: Representatives Sehlin, Honeyford and Ogden.

EDITOR'S NOTE: A conference was granted on Second Engrossed Second Substitute House Bill No. 1354 on March 10, 1998, but no conferees were appointed at that time.

APPOINTMENT OF CONFERENCE COMMITTEE ON SECOND ENGROSSED SECOND SUBSTITUTE HOUSE BILL NO. 1354

The President appointed as members of the Conference Committee on Second Engrossed Second Substitute House Bill No. 1354 and the Senate amendments thereto: Senators Morton, Fraser and Prince.

MOTION

On motion of Senator Johnson, the conferees were confirmed.

There being no objection, the President advanced to the sixth order of business.

MOTION

On motion of Senator Hale, Senator Rossi was excused.

SECOND READING

SECOND SUBSTITUTE HOUSE BILL NO. 3058, by House Committee on Appropriations (originally sponsored by Representatives Chandler and Linville)

Changing statutes for waste reduction, recycling, and litter control.

The bill was read the second time.

MOTION

On motion of Senator West, the rules were suspended, Second Substitute House Bill No. 3058 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

POINT OF INQUIRY

Senator Snyder: “Senator West, will this put more people along side of the roads picking up the trash like we have had in the past? You know, it started out that is where all the money went, originally, but it has drifted away from that and now we have less and less people. Will this put more people back--”

Senator West: “The purpose of the bill is to get more people on the roadways picking up litter. We tried to do a similar thing last year; we weren't successful. We think we have all the pieces in place now. In fact, some of this money will go back to counties for them to use jail inmates to go out and pick up litter and to pay for the expenses of doing that. So, I think you will see a lot more people out there doing the job that we originally intended this money for.”

Further debate ensued.

The President declared the question before the Senate to be the roll call on the final passage of Second Substitute House Bill No. 3058.

ROLL CALL

The Secretary called the roll on the final passage of Second Substitute House Bill No. 3058 and the bill passed the Senate by the following vote: Yeas, 41; Nays, 3; Absent, 0; Excused, 5.

Voting yea: Senators Anderson, Bauer, Benton, Brown, Deccio, Fairley, Finkbeiner, Franklin, Fraser, Goings, Hale, Hargrove, Hochstatter, Jacobsen, Johnson, Kohl, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Newhouse, Oke, Prentice, Prince, Rasmussen, Roach, Schow, Sheldon, B., Sheldon, T., Snyder, Spanel, Stevens, Strannigan, Swecker, Thibaudeau, West, Winsley, Wojahn and Zarelli - 41. Voting nay: Senators Haugen, Heavey and Kline - 3. Excused: Senators Horn, Patterson, Rossi, Sellar and Wood - 5. SECOND SUBSTITUTE HOUSE BILL NO. 3058, 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 Finkbeiner was excused.

SECOND READING

SUBSTITUTE HOUSE BILL NO. 3109, by House Committee on Appropriations (originally sponsored by Representatives Huff, H. Sommers, Dyer and Carrell)

Verifying the income of subsidized enrollees of the state basic health plan.

The bill was read the second time.

MOTION

On motion of Senator West, the rules were suspended, Substitute House Bill No. 3109 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 Substitute House Bill No. 3109.

ROLL CALL

The Secretary called the roll on the final passage of Substitute House Bill No. 3109 and the bill passed the Senate by the following vote: Yeas, 43; Nays, 0; Absent, 0; Excused, 6.

Voting yea: Senators Anderson, Bauer, Benton, Brown, Deccio, Fairley, Franklin, Fraser, Goings, Hale, Hargrove, Haugen, Heavey, Hochstatter, Jacobsen, Johnson, Kline, Kohl, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Newhouse, Oke, Prentice, Prince, Rasmussen, Roach, Schow, Sheldon, B., Sheldon, T., Snyder, Spanel, Stevens, Strannigan, Swecker, Thibaudeau, West, Winsley, Wojahn and Zarelli - 43. Excused: Senators Finkbeiner, Horn, Patterson, Rossi, Sellar and Wood - 6. SUBSTITUTE HOUSE BILL NO. 3109, 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.

REPORT OF CONFERENCE COMMITTEE

SHB 1126 March 10, 1998

Includes “NEW ITEM”: YES

Providing for 911 emergency communications funding

MR. PRESIDENT:

MR. SPEAKER:

We of your Conference Committee, to whom was referred SUBSTITUTE HOUSE BILL NO. 1126, 911 emergency funding, have had the same under consideration and we recommend that all previous proposed amendments not be adopted, and that the following striking amendment be adopted:

Strike everything after the enacting clause and insert the following:

"NEW SECTION. Sec. 1. The legislature finds that:

(1) The state enhanced 911 excise tax imposed at the current rate of twenty cents per switched access line per month generates adequate tax revenues to enhance the 911 telephone system for switched access lines state-wide by December 31, 1998, as mandated in RCW 38.52.510;

(2) The tax revenues generated from the state enhanced 911 excise tax when the tax rate decreases to a maximum of ten cents per switched access line on January 1, 1999, will not be adequate to fund the long-term operation and equipment replacement costs for the enhanced 911 telephone systems in the counties or multicounty regions that receive financial assistance from the state enhanced 911 office;

(3) Some counties or multicounty regions will need financial assistance from the state enhanced 911 office to implement and maintain enhanced 911 because the tax revenue generated from the county enhanced 911 excise tax is not adequate;

(4) Counties with populations of less than seventy-five thousand will need salary assistance to create multicounty regions and counties with populations of seventy-five thousand or more, if requested by smaller counties, will need technical assistance and incentives to provide multicounty services; and

(5) Counties should not request state financial assistance for implementation and maintenance of enhanced 911 for switched access lines unless the county has imposed the maximum enhanced 911 tax authorized in RCW 82.14B.030.

Sec. 2. RCW 82.14B.020 and 1994 c 96 s 2 are each amended to read as follows:

As used in this chapter:

(1) "Emergency services communication system" means a multicounty, county-wide, or district-wide radio or landline communications network, including an enhanced 911 telephone system, which provides rapid public access for coordinated dispatching of services, personnel, equipment, and facilities for police, fire, medical, or other emergency services.

(2) "Enhanced 911 telephone system" means a public telephone system consisting of a network, data base, and on-premises equipment that is accessed by dialing 911 and that enables reporting police, fire, medical, or other emergency situations to a public safety answering point. The system includes the capability to selectively route incoming 911 calls to the appropriate public safety answering point that operates in a defined 911 service area and the capability to automatically display the name, address, and telephone number of incoming 911 calls at the appropriate public safety answering point.

(3) "Switched access line" means the telephone service line which connects a subscriber's main telephone(s) or equivalent main telephone(s) to the local exchange company's switching office.

(4) "Local exchange company" has the meaning ascribed to it in RCW 80.04.010.

(5) "Radio access line" means the telephone number assigned to or used by ((an end user)) a subscriber for two-way local wireless voice service available to the public for hire from a radio communications service company. Radio access lines include, but are not limited to, radio-telephone communications lines used in cellular telephone service, personal communications services, and network radio access lines, or their functional and competitive equivalent. Radio access lines do not include lines that provide access to one-way signaling service, such as paging service, or to communications channels suitable only for data transmission, or to nonlocal radio access line service, such as wireless roaming service, or to a private telecommunications system.

(6) "Radio communications service company" has the meaning ascribed to it in RCW 80.04.010.

(7) "Private telecommunications system" has the meaning ascribed to it in RCW 80.04.010.

(8) "Subscriber" means the retail purchaser of telephone service as telephone service is defined in RCW 82.04.065(3).

Sec. 3. RCW 82.14B.030 and 1994 c 96 s 3 are each amended to read as follows:

(1) The legislative authority of a county may impose a county enhanced 911 excise tax on the use of switched access lines in an amount not exceeding fifty cents per month for each switched access line. The amount of tax shall be uniform for each switched access line. Each county shall provide notice of such tax to all local exchange companies serving in the county at least sixty days in advance of the date on which the first payment is due.

(2) The legislative authority of a county may also impose a county 911 excise tax on the use of radio access lines located within the county in an amount not exceeding twenty-five cents per month for each radio access line. The amount of tax shall be uniform for each radio access line. The county shall provide notice of such tax to all radio communications service companies serving in the county at least sixty days in advance of the date on which the first payment is due. Any county imposing this tax shall include in its ordinance a refund mechanism whereby the amount of any tax ordered to be refunded by the judgment of a court of record, or as a result of the resolution of any appeal therefrom, shall be refunded to the radio communications service company or local exchange company that collected the tax, and those companies shall reimburse the ((users)) subscribers who paid the tax. The ordinance shall further provide that to the extent the ((users)) subscribers who paid the tax cannot be identified or located, the tax paid by those ((users)) subscribers shall be returned to the county.

(3) ((Beginning January 1, 1992,)) A state enhanced 911 excise tax is imposed on all switched access lines in the state. ((For 1992, the tax shall be set at a rate of twenty cents per month for each switched access line. Until December 31, 1998,)) The amount of tax shall not exceed twenty cents per month for each switched access line ((and thereafter shall not exceed ten cents per month for each switched access line)). The tax shall be uniform for each switched access line. The tax imposed under this subsection shall be remitted to the department of revenue by local exchange companies on a tax return provided by the department. Tax proceeds shall be deposited by the treasurer in the enhanced 911 account created in RCW 38.52.540.

(4) By August 31st of each year the state enhanced 911 coordinator shall recommend the level for the next year of the state enhanced 911 excise tax, based on a systematic cost and revenue analysis, to the utilities and transportation commission. The commission shall by the following October 31st determine the level of the state enhanced 911 excise tax for the following year.

Sec. 4. RCW 82.14B.040 and 1994 c 96 s 4 are each amended to read as follows:

The state enhanced 911 tax and the county enhanced 911 tax on switched access lines shall be collected from the ((user)) subscriber by the local exchange company providing the switched access line. The county 911 tax on radio access lines shall be collected from the ((end user)) subscriber by the radio communications service company providing the radio access line to the ((end user)) subscriber. The amount of the tax shall be stated separately on the billing statement which is sent to the ((user)) subscriber.

Sec. 5. RCW 82.14B.060 and 1981 c 160 s 6 are each amended to read as follows:

A county legislative authority imposing a tax under this chapter shall establish by ordinance all necessary and appropriate procedures for the administration and collection of the tax, which ordinance shall provide for reimbursement to the telephone companies for actual costs of administration and collection of the tax imposed. The ordinance shall also provide that the due date for remittance of the tax collected shall be ((thirty days following the collection month)) on or before the last day of the month following the month in which the tax liability accrues.

NEW SECTION. Sec. 6. A new section is added to chapter 82.14B RCW to read as follows:

(1) The department of revenue shall administer and shall adopt such rules as may be necessary to enforce and administer the state enhanced 911 excise tax imposed by this chapter. Chapter 82.32 RCW, with the exception of RCW 82.32.045, 82.32.145, and 82.32.380, applies to the administration, collection, and enforcement of the state enhanced 911 excise tax.

(2) The state enhanced 911 excise tax imposed by this chapter, along with reports and returns on forms prescribed by the department, are due monthly on or before the last day of the month following the month in which the tax liability accrues.

(3) The department of revenue may relieve any taxpayer or class of taxpayers from the obligation of remitting monthly and may require the return to cover other longer reporting periods, but in no event may returns be filed for a period greater than one year. For these taxpayers, tax payments are due on or before the last day of the month next succeeding the end of the period covered by the return.

(4) The state enhanced 911 excise tax imposed by this chapter is in addition to any taxes imposed upon the same persons under chapters 82.08 and 82.12 RCW.

NEW SECTION. Sec. 7. A new section is added to chapter 82.14B RCW to read as follows:

(1) A local exchange company or radio communications service company shall file tax returns on a cash receipts or accrual basis according to which method of accounting is regularly employed in keeping the books of the company. A local exchange company or radio communications service company filing returns on a cash receipts basis is not required to pay tax on debts that are deductible as worthless for federal income tax purposes.

(2) A local exchange company or radio communications service company is entitled to a credit or refund for state enhanced 911 excise taxes previously paid on debts that are deductible as worthless for federal income tax purposes.

NEW SECTION. Sec. 8. A new section is added to chapter 82.14B RCW to read as follows:

The taxes imposed by this chapter do not apply to any activity that the state or county is prohibited from taxing under the constitution of this state or the constitution or laws of the United States.

NEW SECTION. Sec. 9. A new section is added to chapter 82.14B RCW to read as follows:

(1) The state enhanced 911 excise tax imposed by this chapter must be paid by the subscriber to the local exchange company providing the switched access line, and each local exchange company shall collect from the subscriber the full amount of the tax payable. The state enhanced 911 excise tax required by this chapter to be collected by the local exchange company is deemed to be held in trust by the local exchange company until paid to the department. Any local exchange company that appropriates or converts the tax collected to its own use or to any use other than the payment of the tax to the extent that the money collected is not available for payment on the due date as prescribed in this chapter is guilty of a gross misdemeanor.

(2) If any local exchange company fails to collect the state enhanced 911 excise tax or, after collecting the tax, fails to pay it to the department in the manner prescribed by this chapter, whether such failure is the result of its own act or the result of acts or conditions beyond its control, the local exchange company is personally liable to the state for the amount of the tax, unless the local exchange company has taken from the buyer in good faith a properly executed resale certificate under section 10 of this act.

(3) The amount of tax, until paid by the subscriber to the local exchange company or to the department, constitutes a debt from the subscriber to the local exchange company. Any local exchange company that fails or refuses to collect the tax as required with intent to violate the provisions of this chapter or to gain some advantage or benefit, either direct or indirect, and any subscriber who refuses to pay any tax due under this chapter is guilty of a misdemeanor. The state enhanced 911 excise tax required by this chapter to be collected by the local exchange company must be stated separately on the billing statement that is sent to the subscriber.

(4) If a subscriber has failed to pay to the local exchange company the state enhanced 911 excise tax imposed by this chapter and the local exchange company has not paid the amount of the tax to the department, the department may, in its discretion, proceed directly against the subscriber for collection of the tax, in which case a penalty of ten percent may be added to the amount of the tax for failure of the subscriber to pay the tax to the local exchange company, regardless of when the tax is collected by the department. For the sole purpose of applying the various provisions of chapter 82.32 RCW, the last day of the month following the tax period in which the tax liability accrued is to be considered as the due date of the tax.

NEW SECTION. Sec. 10. A new section is added to chapter 82.14B RCW to read as follows:

(1) Unless a local exchange company has taken from the buyer a resale certificate or equivalent document under RCW 82.04.470, the burden of proving that a sale of the use of a switched access lines was not a sale to a subscriber is upon the person who made the sale.

(2) If a local exchange company does not receive a resale certificate at the time of the sale, have a resale certificate on file at the time of the sale, or obtain a resale certificate from the buyer within a reasonable time after the sale, the local exchange company remains liable for the tax as provided in section 9 of this act, unless the local exchange company can demonstrate facts and circumstances according to rules adopted by the department of revenue that show the sale was properly made without payment of the state enhanced 911 excise tax.

(3) The penalty imposed by RCW 82.32.291 may not be assessed on state enhanced 911 excise taxes due but not paid as a result of the improper use of a resale certificate. This subsection does not prohibit or restrict the application of other penalties authorized by law.

NEW SECTION. Sec. 11. A new section is added to chapter 82.14B RCW to read as follows:

(1) Upon termination, dissolution, or abandonment of a corporate or limited liability company business, any officer, member, manager, or other person having control or supervision of state enhanced 911 excise tax funds collected and held in trust under section 9 of this act, or who is charged with the responsibility for the filing of returns or the payment of state enhanced 911 excise tax funds collected and held in trust under section 9 of this act, is personally liable for any unpaid taxes and interest and penalties on those taxes, if such officer or other person willfully fails to pay or to cause to be paid any state enhanced 911 excise taxes due from the corporation under this chapter. For the purposes of this section, any state enhanced 911 excise taxes that have been paid but not collected are deductible from the state enhanced 911 excise taxes collected but not paid. For purposes of this subsection "willfully fails to pay or to cause to be paid" means that the failure was the result of an intentional, conscious, and voluntary course of action.

(2) The officer, member, manager, or other person is liable only for taxes collected that became due during the period he or she had the control, supervision, responsibility, or duty to act for the corporation described in subsection (1) of this section, plus interest and penalties on those taxes.

(3) Persons liable under subsection (1) of this section are exempt from liability if nonpayment of the state enhanced 911 excise tax funds held in trust is due to reasons beyond their control as determined by the department by rule.

(4) Any person having been issued a notice of assessment under this section is entitled to the appeal procedures under RCW 82.32.160 through 82.32.200.

(5) This section applies only if the department has determined that there is no reasonable means of collecting the state enhanced 911 excise tax funds held in trust directly from the corporation.

(6) This section does not relieve the corporation or limited liability company of other tax liabilities or otherwise impair other tax collection remedies afforded by law.

(7) Collection authority and procedures prescribed in chapter 82.32 RCW apply to collections under this section.

Sec. 12. RCW 82.32.010 and 1984 c 204 s 26 are each amended to read as follows:

The provisions of this chapter shall apply with respect to the taxes imposed under chapters 82.04 through 82.14 RCW, under RCW 82.14B.030(3), under chapters 82.16 through 82.29A RCW of this title, under chapter 84.33 RCW, and under other titles, chapters, and sections in such manner and to such extent as indicated in each such title, chapter, or section.

Sec. 13. RCW 82.32.105 and 1996 c 149 s 17 are each amended to read as follows:

(1) If the department of revenue finds that the payment by a taxpayer of a tax less than that properly due or the failure of a taxpayer to pay any tax by the due date was the result of circumstances beyond the control of the taxpayer, the department of revenue shall waive or cancel any penalties imposed under this chapter with respect to such tax.

(2) The department shall waive or cancel the penalty imposed under RCW 82.32.090(1) when the circumstances under which the delinquency occurred do not qualify for waiver or cancellation under subsection (1) of this section if:

(a) The taxpayer requests the waiver for a tax return required to be filed under RCW 82.32.045, section 6 of this act, 82.23B.020, 82.27.060, 82.29A.050, or 84.33.086; and

(b) The taxpayer has timely filed and remitted payment on all tax returns due for that tax program for a period of twenty-four months immediately preceding the period covered by the return for which the waiver is being requested.

(3) The department shall waive or cancel interest imposed under this chapter if:

(a) The failure to timely pay the tax was the direct result of written instructions given the taxpayer by the department; or

(b) The extension of a due date for payment of an assessment of deficiency was not at the request of the taxpayer and was for the sole convenience of the department.

(4) The department of revenue shall adopt rules for the waiver or cancellation of penalties and interest imposed by this chapter.

Sec. 14. RCW 38.52.540 and 1994 c 96 s 7 are each amended to read as follows:

The enhanced 911 account is created in the state treasury. All receipts from the state enhanced 911 excise tax imposed by RCW 82.14B.030 shall be deposited into the account. Moneys in the account shall be used only to help implement and operate enhanced 911 state-wide((, and to conduct a study of the tax base and rate for the 911 excise tax)). Moneys in the account may be used to provide salary assistance on a temporary basis not to exceed three years to counties with a population of less than seventy-five thousand that need additional resources to cover unfunded costs that can be shown to result from handling 911 calls. Moneys in the account may be used to assist multicounty regions, including ongoing salary assistance for multicounty regions consisting of counties with populations of less than seventy-five thousand. However, funds shall not be distributed to any county that has not imposed the maximum county enhanced 911 taxes allowed under RCW 82.14B.030 (1) and (2). The state enhanced 911 coordinator, with the advice and assistance of the enhanced 911 advisory committee, shall specify by rule the purposes for which moneys may be expended from this account.

NEW SECTION. Sec. 15. This act takes effect January 1, 1999, except section 14 of this act which takes effect July 1, 1998."

On page 1, line 3 of the title, after "funding;" strike the remainder of the title and insert "amending RCW 82.14B.020, 82.14B.030, 82.14B.040, 82.14B.060, 82.32.010, 82.32.105, and 38.52.540; adding new sections to chapter 82.14B RCW; creating a new section; prescribing penalties; and providing effective dates.", and the bill do pass as recommended by the Conference Committee.

Signed by Senators West, Snyder, Strannigan; Representatives Mastin, D. Schmidt.

MOTION

On motion of Senator Johnson, the Report of the Conference Committee on Substitute House Bill No. 1126 was adopted.

Debate ensued.

The President declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 1126, as recommended by the Conference Committee.

ROLL CALL

The Secretary called the roll on the final passage of Substitute House Bill No. 1126, as recommended by the Conference Committee, and the bill passed the Senate by the following vote: Yeas, 45; Nays, 0; Absent, 0; Excused, 4.

Voting yea: Senators Anderson, Bauer, Benton, Brown, Deccio, Fairley, Finkbeiner, Franklin, Fraser, Goings, Hale, Hargrove, Haugen, Heavey, Hochstatter, Jacobsen, Johnson, Kline, Kohl, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Newhouse, Oke, Prentice, Prince, Rasmussen, Roach, Rossi, Schow, Sheldon, B., Sheldon, T., Snyder, Spanel, Stevens, Strannigan, Swecker, Thibaudeau, West, Winsley, Wojahn and Zarelli - 45. Excused: Senators Horn, Patterson, Sellar and Wood - 4. SUBSTITUTE HOUSE BILL NO. 1126, as recommended by the Conference Committee, 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.

REPORT OF CONFERENCE COMMITTEE

ESHB 2439 March 10, 1998

Includes “NEW ITEM”: YES

Providing for traffic safety education

MR. PRESIDENT:

MR. SPEAKER:

We of your Conference Committee, to whom was referred ENGROSSED SUBSTITUTE HOUSE BILL NO. 2439, traffic safety education, have had the same under consideration and we recommend that the Senate Transportation Committee striking amendment, as amended, adopted March 5, 1998, be adopted with the following change:

On page 4, line 3 of the striking amendment, after “act” insert: “during the 1997-1999 fiscal biennium. Appropriations from the regulatory account may only be made for the initial costs of establishing the bicycle and pedestrian safety programs established under section 3 of this act. To the extent that private contributions are received by the traffic safety commission for the purposes of bicycle and pedestrian safety programs established under section 3 of this act, the appropriations from the insurance commissioner's regulatory account for this purpose shall lapse.”, and the bill do pass as recommended by the Conference Committee.

Signed by Senators Benton, Prince; Representatives D. Sommers, Mitchell.

MOTION

On motion of Senator Prince, the Report of the Conference Committee on Engrossed Substitute House Bill No. 2439 was adopted.

Debate ensued.

The President declared the question before the Senate to be the roll call on the final passage of Engrossed Substitute House Bill No. 2439, as recommended by the Conference Committee.

ROLL CALL

The Secretary called the roll on the final passage of Engrossed Substitute House Bill No. 2439, as recommended by the Conference Committee, and the bill passed the Senate by the following vote: Yeas, 47; Nays, 0; Absent, 0; Excused, 2.

Voting yea: Senators Anderson, Bauer, Benton, Brown, Deccio, Fairley, Finkbeiner, Franklin, Fraser, Goings, Hale, Hargrove, Haugen, Heavey, Hochstatter, Horn, Jacobsen, Johnson, Kline, Kohl, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Newhouse, Oke, Prentice, Prince, Rasmussen, Roach, Rossi, Schow, Sheldon, B., Sheldon, T., Snyder, Spanel, Stevens, Strannigan, Swecker, Thibaudeau, West, Winsley, Wojahn, Wood and Zarelli - 47. Excused: Senators Patterson and Sellar - 2. ENGROSSED SUBSTITUTE HOUSE BILL NO. 2439, as recommended by the Conference Committee, 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.

REPORT OF CONFERENCE COMMITTEE

SHB 2077 March 10, 1998

Includes “NEW ITEM”: YES

Providing uniform exemptions to competitive bidding procedures

MR. PRESIDENT:

MR. SPEAKER:

We of your Conference Committee, to whom was referred SUBSTITUTE HOUSE BILL NO. 2077, competitive bidding, have had the same under consideration and we recommend that all previous amendments not be adopted, and that the following striking amendment be adopted:

Strike everything after the enacting clause and insert the following:

"NEW SECTION. Sec. 1. A new section is added to chapter 39.04 RCW to read as follows:

This section provides uniform exemptions to competitive bidding requirements utilized by municipalities when awarding contracts for public works and contracts for purchases. The statutes governing a specific type of municipality may also include other exemptions from competitive bidding requirements. The purpose of this section is to supplement and not to limit the current powers of any municipality to provide exemptions from competitive bidding requirements.

(1) Competitive bidding requirements may be waived by the governing body of the municipality for:

(a) Purchases that are clearly and legitimately limited to a single source of supply;

(b) Purchases involving special facilities or market conditions;

(d) Purchases of insurance or bonds; and

(e) Public works in the event of an emergency.

(2)(a) The waiver of competitive bidding requirements under subsection (1) of this section may be by resolution or by the terms of written policies adopted by the municipality, at the option of the governing body of the municipality. If the governing body elects to waive competitive bidding requirements by the terms of written policies adopted by the municipality, immediately after the award of any contract, the contract and the factual basis for the exception must be recorded and open to public inspection.

If a resolution is adopted by a governing body to waive competitive bidding requirements under (b) of this subsection, the resolution must recite the factual basis for the exception. This subsection (2)(a) does not apply in the event of an emergency.

(b) If an emergency exists, the person or persons designated by the governing body of the municipality to act in the event of an emergency may declare an emergency situation exists, waive competitive bidding requirements, and award all necessary contracts on behalf of the municipality to address the emergency situation. If a contract is awarded without competitive bidding due to an emergency, a written finding of the existence of an emergency must be made by the governing body or its designee and duly entered of record no later than two weeks following the award of the contract.

(3) For purposes of this section "emergency" means unforeseen circumstances beyond the control of the municipality that either: (a) Present a real, immediate threat to the proper performance of essential functions; or (b) will likely result in material loss or damage to property, bodily injury, or loss of life if immediate action is not taken.

Sec. 2. RCW 35.22.620 and 1993 c 198 s 9 are each amended to read as follows:

(1) As used in this section, the term "public works" means as defined in RCW 39.04.010.

(2) A first class city may have public works performed by contract pursuant to public notice and call for competitive bids. As limited by subsection (3) of this section, a first class city may have public works performed by city employees in any annual or biennial budget period equal to a dollar value not exceeding ten percent of the public works construction budget, including any amount in a supplemental public works construction budget, over the budget period. The amount of public works that a first class city has a county perform for it under RCW 35.77.020 shall be included within this ten percent limitation.

If a first class city has public works performed by public employees in any budget period that are in excess of this ten percent limitation, the amount in excess of the permitted amount shall be reduced from the otherwise permitted amount of public works that may be performed by public employees for that city in its next budget period. Twenty percent of the motor vehicle fuel tax distributions to that city shall be withheld if two years after the year in which the excess amount of work occurred, the city has failed to so reduce the amount of public works that it has performed by public employees. The amount so withheld shall be distributed to the city when it has demonstrated in its reports to the state auditor that the amount of public works it has performed by public employees has been so reduced.

Whenever a first class city has had public works performed in any budget period up to the maximum permitted amount for that budget period, all remaining public works within that budget period shall be done by contract pursuant to public notice and call for competitive bids.

The state auditor shall report to the state treasurer any first class city that exceeds this amount and the extent to which the city has or has not reduced the amount of public works it has performed by public employees in subsequent years.

(3) In addition to the percentage limitation provided in subsection (2) of this section, a first class city with a population in excess of one hundred fifty thousand shall not have public employees perform a public works project in excess of fifty thousand dollars if more than a single craft or trade is involved with the public works project, or a public works project in excess of twenty-five thousand dollars if only a single craft or trade is involved with the public works project or the public works project is street signalization or street lighting. In addition to the percentage limitation provided in subsection (2) of this section, a first class city with a population of one hundred fifty thousand or less shall not have public employees perform a public works project in excess of thirty-five thousand dollars if more than one craft or trade is involved with the public works project, or a public works project in excess of twenty thousand dollars if only a single craft or trade is involved with the public works project or the public works project is street signalization or street lighting. A public works project means a complete project. The restrictions in this subsection do not permit the division of the project into units of work or classes of work to avoid the restriction on work that may be performed by day labor on a single project.

(4) In addition to the accounting and record-keeping requirements contained in RCW 39.04.070, every first class city annually shall prepare a report for the state auditor indicating the total public works construction budget and supplemental public works construction budget for that year, the total construction costs of public works performed by public employees for that year, and the amount of public works that is performed by public employees above or below ten percent of the total construction budget. However, if a city budgets on a biennial basis, this annual report shall indicate the amount of public works that is performed by public employees within the current biennial period that is above or below ten percent of the total biennial construction budget.

After September 1, 1987, each first class city with a population of one hundred fifty thousand or less shall use the form required by RCW 43.09.205 to account and record costs of public works in excess of five thousand dollars that are not let by contract.

(5) The cost of a separate public works project shall be the costs of materials, supplies, equipment, and labor on the construction of that project. The value of the public works budget shall be the value of all the separate public works projects within the budget.

(6) ((When any emergency shall require the immediate execution of such public work, upon the finding of the existence of such emergency by the authority having power to direct such public work to be done and duly entered of record, publication of description and estimate may be made within seven days after the commencement of the work. Within two weeks of the finding that such an emergency existed, the city council shall adopt a resolution certifying the existence of this emergency situation.)) The competitive bidding requirements of this section may be waived by the city legislative authority pursuant to section 1 of this act if an exemption contained within that section applies to the work or contract.

(7) In lieu of the procedures of subsections (2) and (6) of this section, a first class city may use ((a)) the small works roster process ((and)) in RCW 39.04.155 to award contracts for public works projects with an estimated value of one hundred thousand dollars or less ((as provided in RCW 39.04.155)).

Whenever possible, the city shall invite at least one proposal from a minority or woman contractor who shall otherwise qualify under this section.

(8) The allocation of public works projects to be performed by city employees shall not be subject to a collective bargaining agreement.

(9) This section does not apply to performance-based contracts, as defined in RCW 39.35A.020(3), that are negotiated under chapter 39.35A RCW.

(10) Nothing in this section shall prohibit any first class city from allowing for preferential purchase of products made from recycled materials or products that may be recycled or reused.

Sec. 3. RCW 35.23.352 and 1996 c 18 s 2 are each amended to read as follows:

(1) Any second class city or any town may construct any public works, as defined in RCW 39.04.010, by contract or day labor without calling for bids therefor whenever the estimated cost of the work or improvement, including cost of materials, supplies and equipment will not exceed the sum of thirty thousand dollars if more than one craft or trade is involved with the public works, or twenty thousand dollars if a single craft or trade is involved with the public works or the public works project is street signalization or street lighting. A public works project means a complete project. The restrictions in this subsection do not permit the division of the project into units of work or classes of work to avoid the restriction on work that may be performed by day labor on a single project.

Whenever the cost of the public work or improvement, including materials, supplies and equipment, will exceed these figures, the same shall be done by contract. All such contracts shall be let at public bidding upon publication of notice calling for sealed bids upon the work. The notice shall be published in the official newspaper, or a newspaper of general circulation most likely to bring responsive bids, at least thirteen days prior to the last date upon which bids will be received. The notice shall generally state the nature of the work to be done that plans and specifications therefor shall then be on file in the city or town hall for public inspections, and require that bids be sealed and filed with the council or commission within the time specified therein. Each bid shall be accompanied by a bid proposal deposit in the form of a cashier's check, postal money order, or surety bond to the council or commission for a sum of not less than five percent of the amount of the bid, and no bid shall be considered unless accompanied by such bid proposal deposit. The council or commission of the city or town shall let the contract to the lowest responsible bidder or shall have power by resolution to reject any or all bids and to make further calls for bids in the same manner as the original call.

When the contract is let then all bid proposal deposits shall be returned to the bidders except that of the successful bidder which shall be retained until a contract is entered into and a bond to perform the work furnished, with surety satisfactory to the council or commission, in accordance with RCW 39.08.030. If the bidder fails to enter into the contract in accordance with his or her bid and furnish a bond within ten days from the date at which he or she is notified that he or she is the successful bidder, the check or postal money order and the amount thereof shall be forfeited to the council or commission or the council or commission shall recover the amount of the surety bond. 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.

If no bid is received on the first call the council or commission may readvertise and make a second call, or may enter into a contract without any further call or may purchase the supplies, material or equipment and perform the work or improvement by day labor.

(2) The allocation of public works projects to be performed by city or town employees shall not be subject to a collective bargaining agreement.

(3) In lieu of the procedures of subsection (1) of this section, a second class city or a town may use the small works roster process provided in RCW 39.04.155 to award public works contracts with an estimated value of one hundred thousand dollars or less.

Whenever possible, the city or town shall invite at least one proposal from a minority or woman contractor who shall otherwise qualify under this section.

(4) The form required by RCW 43.09.205 shall be to account and record costs of public works in excess of five thousand dollars that are not let by contract.

(5) The cost of a separate public works project shall be the costs of the materials, equipment, supplies, and labor on that construction project.

(6) Any purchase of supplies, material, or equipment, except for public work or improvement, where the cost thereof exceeds seven thousand five hundred dollars shall be made upon call for bids.

(7) Bids shall be called annually and at a time and in the manner prescribed by ordinance for the publication in a newspaper of general circulation in the city or town of all notices or newspaper publications required by law. The contract shall be awarded to the lowest responsible bidder.

(8) For advertisement and formal sealed bidding to be dispensed with as to purchases ((between seven thousand five hundred and)) with an estimated value of fifteen thousand dollars or less, the council or commission must authorize by resolution, use of the uniform procedure provided in RCW 39.04.190.

(9) ((These requirements for purchasing may be waived by resolution of the city or town council or commission which declared that the purchase is clearly and legitimately limited to a single source or supply within the near vicinity, or the materials, supplies, equipment, or services are subject to special market conditions, and recites why this situation exists. Such actions are subject to RCW 39.30.020.)) The city or town legislative authority may waive the competitive bidding requirements of this section pursuant to section 1 of this act if an exemption contained within that section applies to the purchase or public work.

(10) This section does not apply to performance-based contracts, as defined in RCW 39.35A.020(3), that are negotiated under chapter 39.35A RCW.

(11) Nothing in this section shall prohibit any second class city or any town from allowing for preferential purchase of products made from recycled materials or products that may be recycled or reused.

Sec. 4. RCW 36.32.270 and 1963 c 4 s 36.32.270 are each amended to read as follows:

((In the event of an emergency when the public interest or property of the county would suffer material injury or damage by delay, upon resolution of the board of county commissioners declaring the existence of such emergency and reciting the facts constituting the same, the board)) The county legislative authority may waive the competitive bidding requirements of this chapter ((with reference to any)) pursuant to section 1 of this act if an exemption contained within that section applies to the purchase or ((contract)) public work.

Sec. 5. RCW 52.14.110 and 1993 c 198 s 11 are each amended to read as follows:

Insofar as practicable, purchases and any public works by the district shall be based on competitive bids. A formal sealed bid procedure shall be used as standard procedure for purchases and contracts for purchases executed by the board of commissioners. Formal sealed bidding shall not be required for:

(1) ((Emergency purchases if the sealed bidding procedure would prevent or hinder the emergency from being addressed appropriately. The term emergency means an occurrence that creates an immediate threat to life or property;

(2))) The purchase of any materials, supplies, or equipment if the cost will not exceed the sum of four thousand five hundred dollars. However, whenever the estimated cost ((is from four thousand five hundred dollars up to)) does not exceed ten thousand dollars, the commissioners may by resolution use the process provided in RCW 39.04.190 to award contracts;

(((3))) (2) Contracting for work to be done involving the construction or improvement of a fire station or other buildings where the estimated cost will not exceed the sum of two thousand five hundred dollars, which includes the costs of labor, material, and equipment. However, whenever the estimated cost ((is from two thousand five hundred dollars up to)) does not exceed ten thousand dollars, the commissioner may by resolution use the small works roster process provided in RCW 39.04.155; and

(((4) Purchases which are clearly and legitimately limited to a single source of supply, or services, in which instances the purchase price may be best established by direct negotiation: PROVIDED, That this subsection shall not apply to purchases or contracts relating to public works as defined in chapter 39.04 RCW; and

(5) Purchases of insurance and bonds.)) (3) Any contract for purchases or public work pursuant to section 1 of this act if an exemption contained within that section applies to the purchase or public work.

Sec. 6. RCW 53.08.120 and 1993 c 198 s 13 are each amended to read as follows:

All material required by a port district may be procured in the open market or by contract and all work ordered may be done by contract or day labor. All such contracts for work, the estimated cost of which exceeds one hundred thousand dollars, shall be let at public bidding upon notice published in a newspaper of general circulation in the district at least thirteen days before the last date upon which bids will be received, calling for sealed bids upon the work, plans and specifications for which shall then be on file in the office of the commission for public inspection. The same notice may call for bids on such work or material based upon plans and specifications submitted by the bidder. The competitive bidding requirements for purchases or public works may be waived pursuant to section 1 of this act if an exemption contained within that section applies to the purchase or public work.

Each port district shall maintain a small works roster, as provided in RCW 39.04.155, and may use the small works roster process to award contracts in lieu of calling for sealed bids whenever work is done by contract, the estimated cost of which is one hundred thousand dollars or less. Whenever possible, the managing official shall invite at least one proposal from a minority contractor who shall otherwise qualify under this section.

When awarding such a contract for work, when utilizing proposals from the small works roster, the managing official shall give weight to the contractor submitting the lowest and best proposal, and whenever it would not violate the public interest, such contracts shall be distributed equally among contractors, including minority contractors, on the small works roster.

Sec. 7. RCW 54.04.070 and 1993 c 198 s 14 are each amended to read as follows:

Any item, or items of the same kind of materials, equipment, or supplies purchased, the estimated cost of which is in excess of five thousand dollars, exclusive of sales tax shall be by contract: PROVIDED, That a district may make purchases of the same kind of items of materials, equipment and supplies not exceeding five thousand dollars in any calendar month without a contract, purchasing any excess thereof over five thousand dollars by contract. Any work ordered by a district commission, the estimated cost of which is in excess of ten thousand dollars exclusive of sales tax, shall be by contract, except that a district commission may have its own regularly employed personnel perform work which is an accepted industry practice under prudent utility management without a contract. Prudent utility management means performing work with regularly employed personnel utilizing material of a worth not exceeding fifty thousand dollars in value without a contract: PROVIDED, That such limit on the value of material being utilized in work being performed by regularly employed personnel shall not include the value of individual items of equipment purchased or acquired and used as one unit of a project. Before awarding such a contract, the commission shall publish a notice once or more in a newspaper of general circulation in the district at least thirteen days before the last date upon which bids will be received, inviting sealed proposals for the work or materials; plans and specifications of which shall at the time of the publication be on file at the office of the district subject to public inspection. Any published notice ordering work to be performed for the district shall be mailed at the time of publication to any established trade association which files a written request with the district to receive such notices. The commission may at the same time and as part of the same notice, invite tenders for the work or materials upon plans and specifications to be submitted by the bidders.

Notwithstanding any other provisions herein, all contract projects, the estimated cost of which is less than one hundred thousand dollars, may be awarded to a contractor using the small works roster process provided in RCW 39.04.155. All contract projects equal to or in excess of one hundred thousand dollars shall be let by competitive bidding.

Whenever equipment or materials required by a district are held by a governmental agency and are available for sale but such agency is unwilling to submit a proposal, the commission may ascertain the price of such items and file a statement of such price supported by the sworn affidavit of one member of the commission and may consider such price as a bid without a deposit or bond. ((In the event of an emergency when the public interest or property of the district would suffer material injury or damage by delay, upon resolution of the commission, or proclamation of an official designated by the board to act for the board during such emergencies, declaring the existence of such emergency and reciting the facts constituting the same, the board, or the official acting for the board, may waive the requirements of this chapter with reference to any purchase or contract, after having taken precautions to secure the lowest price practicable under the circumstances.

After determination by the commission during a public meeting that a particular purchase is available clearly and legitimately only from a single source of supply, the bidding requirements of this section may be waived by the commission.))

The commission may waive the competitive bidding requirements of this section pursuant to section 1 of this act if an exemption contained within that section applies to the purchase or public work.

Sec. 8. RCW 57.08.050 and 1997 c 245 s 4 are each amended to read as follows:

(1) All work ordered, the estimated cost of which is in excess of five thousand dollars shall be let by contract. All contract projects, the estimated cost of which is less than fifty thousand dollars, may be awarded to a contractor using the small works roster process provided in RCW 39.04.155. The board of commissioners may set up uniform procedures to prequalify contractors for inclusion on the small works roster. All contract projects equal to or in excess of fifty thousand dollars shall be let by competitive bidding. Before awarding any such contract the board of commissioners shall publish a notice in a newspaper of general circulation where the district is located at least once thirteen days before the last date upon which bids will be received, inviting sealed proposals for such work, plans and specifications which must at the time of publication of such notice be on file in the office of the board of commissioners subject to the public inspection. The notice shall state generally the work to be done and shall call for proposals for doing the same to be sealed and filed with the board of commissioners on or before the day and hour named therein.

Each bid shall be accompanied by a certified or cashier's check or postal money order payable to the order of the county treasurer for a sum not less than five percent of the amount of the bid, or accompanied by a bid bond in an amount not less than five percent of the bid with a corporate surety licensed to do business in the state, conditioned that the bidder will pay the district as liquidated damages the amount specified in the bond, unless the bidder enters into a contract in accordance with the bidder's bid, and no bid shall be considered unless accompanied by such check, cash or bid bond. At the time and place named such bids shall be publicly opened and read and the board of commissioners shall proceed to canvass the bids and may let such contract to the lowest responsible bidder upon plans and specifications on file or to the best bidder submitting the bidder's own plans and specifications. ((However, no contract shall be let in excess of the cost of the materials or work.)) The board of commissioners may reject all bids for good cause and readvertise and in such case all checks, cash or bid bonds shall be returned to the bidders. If the contract is let, then all checks, cash, or bid bonds shall be returned to the bidders, except that of the successful bidder, which shall be retained until a contract shall be entered into for doing the work, and a bond to perform such work furnished with sureties satisfactory to the board of commissioners in the full amount of the contract price between the bidder and the commission in accordance with the bid. If the bidder fails to enter into the contract in accordance with the bid and furnish the bond within ten days from the date at which the bidder is notified that the bidder is the successful bidder, the check, cash, or bid bonds and the amount thereof shall be forfeited to the district. If the bidder fails to enter into a contract in accordance with the bidder's bid, and the board of commissioners deems it necessary to take legal action to collect on any bid bond required by this section, then the district shall be entitled to collect from the bidder any legal expenses, including reasonable attorneys' fees occasioned thereby. 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.

(2) Any purchase of materials, supplies, or equipment, with an estimated cost in excess of ten thousand dollars, shall be by contract. Any purchase of materials, supplies, or equipment, with an estimated cost of ((from five thousand dollars to)) less than fifty thousand dollars shall be made using the process provided in RCW ((39.04.155 or by competitive bidding following the procedure for letting contracts for projects under subsection (1) of this section)) 39.04.190. Any purchase of materials, supplies, or equipment with an estimated cost of fifty thousand dollars or more shall be made by competitive bidding following the procedure for letting contracts for projects under subsection (1) of this section.

(3) ((In the event of an emergency when the public interest or property of the district would suffer material injury or damage by delay, upon resolution of the board of commissioners, or proclamation of an official designated by the board to act for the board during such emergencies, declaring the existence of such emergency and reciting the facts constituting the same, the board or official acting for the board may waive the requirements of this chapter with reference to any purchase or contract. In addition, these requirements may be waived for purchases which are clearly and legitimately limited to a single source of supply and purchases involving special facilities, services, or market conditions, in which instances the purchase price may be best established by direct negotiation.)) The board may waive the competitive bidding requirements of this section pursuant to section 1 of this act if an exemption contained within that section applies to the purchase or public work.

Sec. 9. RCW 70.44.140 and 1996 c 18 s 15 are each amended to read as follows:

(1) All materials purchased and work ordered, the estimated cost of which is in excess of five thousand dollars, shall be by contract. Before awarding any such contract, the commission shall publish a notice at least thirteen days before the last date upon which bids will be received, inviting sealed proposals for such work. The plans and specifications must at the time of the publication of such notice be on file at the office of the public hospital district, subject to public inspection: PROVIDED, HOWEVER, That the commission may at the same time, and as part of the same notice, invite tenders for the work or materials upon plans and specifications to be submitted by bidders. The notice shall state generally the work to be done, and shall call for proposals for doing the same, to be sealed and filed with the commission on or before the day and hour named therein. Each bid shall be accompanied by bid proposal security in the form of a certified check, cashier's check, postal money order, or surety bond made payable to the order of the commission, for a sum not less than five percent of the amount of the bid, and no bid shall be considered unless accompanied by such bid proposal security. At the time and place named, such bids shall be publicly opened and read, and the commission shall proceed to canvass the bids, and may let such contract to the lowest responsible bidder upon plans and specifications on file, or to the best bidder submitting his or her own plans and specifications: PROVIDED, HOWEVER, That no contract shall be let in excess of the estimated cost of the materials or work, or if, in the opinion of the commission, all bids are unsatisfactory, they may reject all of them and readvertise, and in such case all bid proposal security shall be returned to the bidders((; but if such)). If the contract ((be)) is let, then ((and in such case)) all bid proposal security shall be returned to the bidders, except that of the successful bidder, which ((shall be)) is retained until a contract shall be entered into for the purchase of such materials for doing such work, and a bond to perform such work furnished, with sureties satisfactory to the commission, in an amount to be fixed by the commission, not less than twenty-five percent of contract price in any case, between the bidder and commission, in accordance with the bid. If such bidder fails to enter into the contract in accordance with the bid and furnish such bond within ten days from the date at which the bidder is notified that he or she is the successful bidder, the bid proposal security and the amount thereof shall be forfeited to the public hospital district. 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.

(2) In lieu of the procedures of subsection (1) of this section, a public hospital district may use ((a)) the small works roster process provided in RCW 39.04.155 and award public works contracts for projects ((in excess of five thousand dollars up to)) with an estimated value in excess of fifty thousand dollars ((as provided in RCW 39.04.155)).

(3) ((For advertisement and formal sealed bidding to be dispensed with as to)) Any purchases ((between five thousand and)) with an estimated cost of up to fifteen thousand dollars((, the commission must authorize by resolution a procedure as)) may be made using the process provided in RCW 39.04.190.

(4) The commission may waive the competitive bidding requirements of this section pursuant to section 1 of this act if an exemption contained within that section applies to the purchase or public work.

NEW SECTION. Sec. 10. A new section is added to chapter 36.34 RCW to read as follows:

In accordance with RCW 35.42.010 through 35.42.220, a county with a population of one million or more may lease space and provide for the leasing of such space through leases with an option to purchase and the acquisition of buildings erected upon land owned by the county upon the expiration of lease of such land. For the purposes of this section, "building," as defined in RCW 35.42.020 shall be construed to include any building or buildings used as part of, or in connection with, the operation of the county. The authority conferred by this section is in addition to and not in lieu of any other provision authorizing counties to lease property.

Sec. 11. RCW 39.04.150 and 1994 c 264 s 12 and 1994 c 243 s 2 are each reenacted and amended to read as follows:

(1) As used in this section, "agency" means the department of general administration, the department of fish and wildlife, the department of natural resources, the department of transportation, and the state parks and recreation commission.

(2) In addition to any other power or authority that an agency may have, each agency, alone or in concert, may establish a small works roster consisting of all qualified contractors who have requested to be included on the roster.

(3) The small works roster may make distinctions between contractors based on the geographic areas served and the nature of the work the contractor is qualified to perform. At least once every year, the agency shall advertise in a newspaper of general circulation the existence of the small works roster and shall add to the roster those contractors who request to be included on the roster.

(4) Construction, repair, or alteration projects estimated to cost less than one hundred thousand dollars are exempt from the requirement that the contracts be awarded after advertisement and competitive bid as defined by RCW 39.04.010. In lieu of advertisement and competitive bid, ((the agency shall solicit at least five quotations, confirmed in writing, from contractors chosen from the small works roster for the category of job type involved and shall award the work to the party with the lowest quotation or reject all quotations. If the agency does not receive at least two responsive quotations for a particular project, then the project shall be advertised and competitively bid. The agency shall solicit quotations from contractors selected randomly from the small works roster in a manner which will equitably distribute the opportunity for these contracts among contractors on the roster. The agency shall invite at least one proposal each from a certified minority and a certified women-owned contractor who shall otherwise qualify to perform such work. Immediately after an award is made, the bid quotations obtained shall be recorded, open to public inspection, and available by telephone request. If the work is executed by competitive bid, the agency shall invite at least one proposal each from a certified minority and a certified women-owned contractor who shall otherwise qualify to perform such work)) each agency alone or in concert shall establish a procedure for securing telephone, electronic, or written quotations from the contractors on the small works roster to assure establishment of a competitive price and for awarding contracts to the lowest responsive and responsible bidder. This procedure shall require either that the agency make a good faith effort to request quotations from all contractors on the small works roster who have indicated the capability of performing the kind of public works being contracted or that the agency solicit quotations from at least five contractors in a manner that will equitably distribute the opportunity among contractors willing to perform in the geographic area of the work. The agency shall invite at least one proposal from a certified minority or women-owned contractor, if available, who is otherwise qualified to perform such work. Immediately after an award is made, the bid quotations obtained shall be recorded, open to public inspection, and available by telephone inquiry.

(5) The breaking down of any public work or improvement into units or accomplishing any public work or improvement by phases for the purpose of avoiding the minimum dollar amount for bidding is contrary to public policy and is prohibited.

(6) The director of general administration shall adopt by rule a procedure to ((prequalify)) qualify contractors for inclusion on the small works roster. Each agency shall follow the procedure adopted by the director of general administration. No agency shall be required to make available for public inspection or copying under chapter 42.17 RCW financial information required to be provided by the ((prequalification)) qualification procedure.

(7) An agency may adopt by rule procedures to implement this section which shall not be inconsistent with the procedures adopted by the director of the department of general administration pursuant to subsection (6) of this section.

Sec. 12. RCW 39.04.155 and 1993 c 198 s 1 are each amended to read as follows:

(1) This section provides a uniform process to award contracts for public works projects by those municipalities that are authorized to use a small works roster in lieu of the requirements for formal sealed bidding. The state statutes governing a specific type of municipality shall establish the maximum dollar thresholds of the contracts that can be awarded under this process, and may include other matters concerning the small works roster process, for the municipality.

(2) Such municipalities may create a single general small works roster, or may create a small works roster for different categories of anticipated work. The small works roster or rosters shall consist of all responsible contractors who have requested to be on the list, and where required by law are properly licensed or registered to perform such work in this state. At least twice a year, the municipality shall publish in a newspaper of general circulation within the jurisdiction a notice of the existence of the roster or rosters and solicit the names of contractors for such roster or rosters.

The governing body of the municipality shall establish a procedure for securing telephone or written quotations from the contractors on the general small works roster, or a specific small works roster for the appropriate category of work, to assure that a competitive price is established and to award contracts to the lowest responsible bidder, as defined in RCW 43.19.1911. Such invitations for quotations shall include an estimate of the scope and nature of the work to be performed as well as materials and equipment to be furnished. However, detailed plans and specifications need not be included in the invitation. This section does not eliminate other requirements for architectural or engineering approvals as to quality and compliance with building codes. Whenever possible at least five contractors shall be invited to submit bids. Once a contractor has been afforded an opportunity to submit a proposal, that contractor shall not be offered another opportunity until all other appropriate contractors on the small works roster have been afforded an opportunity to submit a proposal on a contract. Proposals may be invited from all appropriate contractors on the small works roster.

A contract awarded from a small works roster under this section need not be advertised.

Immediately after an award is made, the bid quotations obtained shall be recorded, open to public inspection, and available by telephone inquiry."

On page 1, line 1 of the title, after "bidding;" strike the remainder of the title and insert "amending RCW 35.22.620, 35.23.352, 36.32.270, 52.14.110, 53.08.120, 54.04.070, 57.08.050, 70.44.140, and 39.04.155; reenacting and amending RCW 39.04.150; adding a new section to chapter 39.04 RCW; and adding a new section to chapter 36.34 RCW.", and the bill do pass as recommended by the Conference Committee.

Signed by Senators Hale, Patterson, Horn; Representatives D. Schmidt, Wensman, Wolfe.

MOTION

On motion of Senator Horn, the Report of the Conference Committee on Substitute House Bill No. 2077 was adopted.

The President declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 2077, as recommended by the Conference Committee.

ROLL CALL

The Secretary called the roll on the final passage of Substitute House Bill No. 2077, as recommended by the Conference Committee, and the bill passed the Senate by the following vote: Yeas, 45; Nays, 1; Absent, 1; Excused, 2.

Voting yea: Senators Anderson, Benton, Brown, Deccio, Finkbeiner, Franklin, Fraser, Goings, Hale, Hargrove, Haugen, Heavey, Hochstatter, Horn, Jacobsen, Johnson, Kline, Kohl, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Newhouse, Oke, Prentice, Prince, Rasmussen, Roach, Rossi, Schow, Sheldon, B., Sheldon, T., Snyder, Spanel, Stevens, Strannigan, Swecker, Thibaudeau, West, Winsley, Wojahn, Wood and Zarelli - 45. Voting nay: Senator Fairley - 1. Absent: Senator Bauer - 1. Excused: Senators Patterson and Sellar - 2. SUBSTITUTE HOUSE BILL NO. 2077, as recommended by the Conference Committee, 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 Hale, Senator Swecker was excused.

MESSAGE FROM THE HOUSE

March 10, 1998

MR. PRESIDENT:

The House has passed ENGROSSED SUBSTITUTE SENATE BILL NO. 6187 with the following amendment(s):

Strike everything after the enacting clause and insert the following:

"Sec. 1. RCW 46.20.311 and 1997 c 58 s 807 are each amended to read as follows:

(1)(a) The department shall not suspend a driver's license or privilege to drive a motor vehicle on the public highways for a fixed period of more than one year, except as specifically permitted under RCW 46.20.342 or other provision of law. Except for a suspension under RCW 46.20.289, 46.20.291(5), or 74.20A.320, whenever the license or driving privilege of any person is suspended by reason of a conviction, a finding that a traffic infraction has been committed, pursuant to chapter 46.29 RCW, or pursuant to RCW 46.20.291 or 46.20.308, the suspension shall remain in effect until the person gives and thereafter maintains proof of financial responsibility for the future as provided in chapter 46.29 RCW. If the suspension is the result of a violation of RCW 46.61.502 or 46.61.504, the department shall determine the person's eligibility for licensing based upon the reports provided by the alcoholism agency or probation department designated under RCW 46.61.5056 and shall deny reinstatement until enrollment and participation in an approved program has been established and the person is otherwise qualified. Whenever the license or driving privilege of any person is suspended as a result of certification of noncompliance with a child support order under chapter 74.20A RCW or a residential or visitation order, the suspension shall remain in effect until the person provides a release issued by the department of social and health services stating that the person is in compliance with the order.

(b)(i) The department shall not issue to the person a new, duplicate, or renewal license until the person pays a reissue fee of twenty dollars.

(ii) If the suspension is the result of a violation of RCW 46.61.502 or 46.61.504, or is the result of administrative action under RCW 46.20.308, the reissue fee shall be one hundred fifty dollars.

(2)(a) Any person whose license or privilege to drive a motor vehicle on the public highways has been revoked, unless the revocation was for a cause which has been removed, is not entitled to have the license or privilege renewed or restored until: (((a))) (i) After the expiration of one year from the date the license or privilege to drive was revoked; (((b))) (ii) after the expiration of the applicable revocation period provided by RCW 46.20.3101 or 46.61.5055; (((c))) (iii) after the expiration of two years for persons convicted of vehicular homicide; or (((d))) (iv) after the expiration of the applicable revocation period provided by RCW 46.20.265.

(b)(i) After the expiration of the appropriate period, the person may make application for a new license as provided by law together with a reissue fee in the amount of twenty dollars((, but)).

(ii) If the revocation is the result of a violation of RCW 46.20.308, 46.61.502, or 46.61.504, the reissue fee shall be one hundred fifty dollars. If the revocation is the result of a violation of RCW 46.61.502 or 46.61.504, the department shall determine the person's eligibility for licensing based upon the reports provided by the alcoholism agency or probation department designated under RCW 46.61.5056 and shall deny reissuance of a license, permit, or privilege to drive until enrollment and participation in an approved program has been established and the person is otherwise qualified.

(c) Except for a revocation under RCW 46.20.265, the department shall not then issue a new license unless it is satisfied after investigation of the driving ability of the person that it will be safe to grant the privilege of driving a motor vehicle on the public highways, and until the person gives and thereafter maintains proof of financial responsibility for the future as provided in chapter 46.29 RCW. For a revocation under RCW 46.20.265, the department shall not issue a new license unless it is satisfied after investigation of the driving ability of the person that it will be safe to grant that person the privilege of driving a motor vehicle on the public highways.

(3)(a) Whenever the driver's license of any person is suspended pursuant to Article IV of the nonresident violators compact or RCW 46.23.020 or 46.20.289 or 46.20.291(5), the department shall not issue to the person any new or renewal license until the person pays a reissue fee of twenty dollars.

(b) If the suspension is the result of a violation of the laws of this or any other state, province, or other jurisdiction involving (((a))) (i) the operation or physical control of a motor vehicle upon the public highways while under the influence of intoxicating liquor or drugs, or (((b))) (ii) the refusal to submit to a chemical test of the driver's blood alcohol content, the reissue fee shall be one hundred fifty dollars.

NEW SECTION. Sec. 2. A new section is added to chapter 46.68 RCW to read as follows:

The impaired driving safety account is created in the custody of the state treasurer. All receipts from fees collected under RCW 46.20.311 (1)(b)(ii), (2)(b)(ii), and (3)(b) shall be deposited according to RCW 46.68.041. Expenditures from this account may be used only to fund projects to reduce impaired driving and to provide funding to local governments for costs associated with enforcing laws relating to driving and boating while under the influence of intoxicating liquor or any drug. The account is subject to allotment procedures under chapter 43.88 RCW. Moneys in the account may be spent only after appropriation.

Sec. 3. RCW 46.68.041 and 1995 2nd sp.s. c 3 s 1 are each amended to read as follows:

(1) Except as provided in subsection (2) of this section, the department shall forward all funds accruing under the provisions of chapter 46.20 RCW together with a proper identifying, detailed report to the state treasurer who shall deposit such moneys to the credit of the highway safety fund.

(2) Sixty-three percent of each fee collected by the department under RCW 46.20.311 (1)(b)(ii), (2)(b)(ii), and (3)(b) shall be deposited in the impaired driving safety account."

Correct the title., and the same are herewith transmitted.

TIMOTHY A. MARTIN, Chief Clerk

MOTION

Senator Stevens moved that the Senate refuse to concur in the House amendment to Engrossed Substitute Senate Bill No. 6187 and requests of the House a conference thereon.

Debate ensued.

The President declared the question before the Senate to be the motion by Senator Stevens that the Senate refuse to concur in the House amendment to Engrossed Substitute Senate Bill No. 6187 and requests of the House a conference thereon.

The motion by Senator Stevens carried and the Senate refuses to concur in the House amendment to Engrossed Substitute Senate Bill No. 6187 and requests of the House a conference thereon.

APPOINTMENT OF CONFERENCE COMMITTEE

The President appointed as members of the Conference Committee on Engrossed Substitute Senate Bill No. 6187 and the House amendment thereto: Senators Stevens, Fairley and Roach.

MOTION

On motion of Senator Johnson, the Conference Committee appointments were confirmed.

MESSAGE FROM THE HOUSE

March 10, 1998

MR. PRESIDENT:

Under suspension of the rules, ENGROSSED SUBSTITUTE SENATE BILL NO. 6328 was returned to second reading for the purpose of an amendment. The bill passed the House with the following amendment:

Strike everything after the enacting clause and insert the following:

"NEW SECTION. Sec. 1. PURPOSE. The legislature finds that merger of the departments of fisheries and wildlife resulted in two criminal codes applicable to fish and wildlife, and that it has become increasingly difficult to administer and enforce the two criminal codes. Furthermore, laws defining crimes involving fish and wildlife have evolved over many years of changing uses and management objectives for fish and wildlife. The resulting two codes make it difficult for citizens to comply with the law and unnecessarily complicate enforcement of laws against violators.

The legislature intends by chapter . . ., Laws of 1998 (this act) to revise and recodify the criminal laws governing fish and wildlife, ensuring that all people involved with fish and wildlife are able to know and understand the requirements of the laws and the risks of violation. Additionally, the legislature intends to create a more uniform approach to criminal laws governing fish and wildlife and to the laws authorizing prosecution, sentencing, and punishments, including repealing crimes that are redundant to other provisions of the criminal code.

Chapter . . ., Laws of 1998 (this act) is not intended to alter existing powers of the commission or the director to adopt rules or exercise powers over fish and wildlife. In some places reference is made to violation of department rules, but this is intended to conform with current powers of the commission, director, or both, to adopt rules governing fish and wildlife activities.

NEW SECTION. Sec. 2. EXEMPTION FOR DEPARTMENT ACTIONS. A person is not guilty of a crime under this chapter if the person is an officer, employee, or agent of the department lawfully acting in the course of his or her authorized duties.

NEW SECTION. Sec. 3. AUTHORITY TO DEFINE VIOLATION OF A RULE AS AN INFRACTION. If the commission or director has authority to adopt a rule that is punishable as a crime under this chapter, then the commission or director may provide that violation of the rule shall be punished with notice of infraction under RCW 7.84.030.

NEW SECTION. Sec. 4. SEPARATE OFFENSES FOR EACH BIG GAME, PROTECTED, OR ENDANGERED ANIMAL. Where it is unlawful to hunt, take, fish, or possess big game or protected or endangered fish or wildlife, then each individual animal unlawfully taken or possessed is a separate offense.

NEW SECTION. Sec. 5. JURISDICTION. District courts have jurisdiction concurrent with superior courts for misdemeanors and gross misdemeanors committed in violation of this chapter and may impose the punishment provided for these offenses. Superior courts have jurisdiction over felonies committed in violation of this chapter. Venue for offenses occurring in off-shore waters shall be in a county bordering on the Pacific Ocean, or the county where fish or wildlife from the offense are landed.

NEW SECTION. Sec. 6. CONVICTION IN A STATE OR MUNICIPAL COURT. Unless the context clearly requires otherwise, as used in this chapter, "conviction" means a final conviction in a state or municipal court or an unvacated forfeiture of bail or collateral deposited to secure the defendant's appearance in court. A plea of guilty, or a finding of guilt for a violation of this title or rule of the commission or director constitutes a conviction regardless of whether the imposition of sentence is deferred or the penalty is suspended.

NEW SECTION. Sec. 7. REFERENCE TO CHAPTERS 7.84 AND 9A.20 RCW. Crimes defined by this chapter shall be punished as infractions, misdemeanors, gross misdemeanors, or felonies, based on the classification of crimes set out in chapters 7.84 and 9A.20 RCW.

NEW SECTION. Sec. 8. ACTING FOR COMMERCIAL PURPOSES--VALUE OF FISH OR WILDLIFE--PROOF. (1) For purposes of this chapter, a person acts for commercial purposes if the person:

(a) Acts with intent to sell, attempted to sell, sold, bartered, attempted to purchase, or purchased fish or wildlife;

(b) Uses gear typical of that used in commercial fisheries;

(c) Exceeds the bag or possession limits for personal use by taking or possessing more than three times the amount of fish or wildlife allowed;

(d) Delivers or attempts to deliver fish or wildlife to a person who sells or resells fish or wildlife including any licensed or unlicensed wholesaler; or

(e) Takes fish using a vessel designated on a commercial fishery license and gear not authorized in a personal use fishery.

(2) For purposes of this chapter, the value of any fish or wildlife may be proved based on evidence of legal or illegal sales involving the person charged or any other person, of offers to sell or solicitation of offers to sell by the person charged or by any other person, or of any market price for the fish or wildlife including market price for farm-raised game animals. The value assigned to specific wildlife by RCW 77.21.070 may be presumed to be the value of such wildlife. It is not relevant to proof of value that the person charged misrepresented that the fish or wildlife was taken in compliance with law if the fish or wildlife was unlawfully taken and had no lawful market value.

NEW SECTION. Sec. 9. UNLAWFUL HUNTING OF GAME BIRDS. (1) A person is guilty of unlawful hunting of game birds in the second degree if the person:

(a) Hunts a game bird and the person does not have and possess all licenses, tags, stamps, and permits required under this title;

(b) Maliciously destroys, takes, or harms the eggs or nests of a game bird except when authorized by permit; or

(c) Violates any rule of the commission or director regarding seasons, bag or possession limits but less than two times the bag or possession limit, closed areas including game reserves, closed times, or other rule addressing the manner or method of hunting or possession of game birds.

(2) A person is guilty of unlawful hunting of game birds in the first degree if the person hunts game birds and the person takes or possesses two times or more than the possession or bag limit for such game birds allowed by rule of the commission or director.

(3)(a) Unlawful hunting of game birds in the second degree is a misdemeanor.

(b) Unlawful hunting of game birds in the first degree is a gross misdemeanor.

NEW SECTION. Sec. 10. UNLAWFUL HUNTING OF BIG GAME. (1) A person is guilty of unlawful hunting of big game in the second degree if the person:

(a) Hunts big game and the person does not have and possess all licenses, tags, or permits required under this title; or

(b) Violates any rule of the commission or director regarding seasons, bag or possession limits, closed areas including game reserves, closed times, or any other rule governing the hunting, taking, or possession of big game.

(2) A person is guilty of unlawful hunting of big game in the first degree if the person was previously convicted of any crime under this title involving unlawful hunting, killing, possessing, or taking big game, and within five years of the date that the prior conviction was entered the person hunts for big game and:

(a) The person does not have and possess all licenses, tags, or permits required under this title; or

(b) The act was in violation of any rule of the commission or director regarding seasons, bag or possession limits, closed areas including game reserves, or closed times.

(3)(a) Unlawful hunting of big game in the second degree is a gross misdemeanor.

(b) Unlawful hunting of big game in the first degree is a class C felony. Upon conviction, the department shall revoke all licenses or tags involved in the crime and the department shall order the person's hunting privileges suspended for two years.

NEW SECTION. Sec. 11. UNLAWFUL HUNTING OF GAME ANIMALS. (1) A person is guilty of unlawful hunting of game animals in the second degree if the person:

(a) Hunts a game animal that is not classified as big game, and does not have and possess all licenses, tags, or permits required by this title; or

(b) Violates any rule of the commission or director regarding seasons, bag or possession limits but less than two times the bag or possession limit, closed areas including game reserves, closed times, or other rule addressing the manner or method of hunting or possession of game animals not classified as big game.

(2)(a) A person is guilty of unlawful hunting of game animals in the first degree if the person hunts a game animal that is not classified as big game; and

(b) The person takes or possesses two times or more than the possession or bag limit for such game animals allowed by rule of the commission or director.

(3)(a) Unlawful hunting of game animals in the second degree is a misdemeanor.

(b) Unlawful hunting of game animals in the first degree is a gross misdemeanor.

NEW SECTION. Sec. 12. WEAPONS, TRAPS, OR DOGS ON GAME RESERVES. (1) A person is guilty of unlawful use of weapons, traps, or dogs on game reserves if:

(a) The person uses firearms, other hunting weapons, or traps on a game reserve; or

(b) The person negligently allows a dog upon a game reserve.

(2) This section does not apply to persons on a public highway or if the conduct is authorized by rule of the department.

(3) This section does not apply to a person in possession of a handgun if the person in control of the handgun possesses a valid concealed pistol license and the handgun is concealed on the person.

(4) Unlawful use of weapons, traps, or dogs on game reserves is a misdemeanor.

NEW SECTION. Sec. 13. UNLAWFUL TAKING OF ENDANGERED FISH OR WILDLIFE. (1) A person is guilty of unlawful taking of endangered fish or wildlife in the second degree if the person hunts, fishes, possesses, maliciously harasses or kills fish or wildlife, or maliciously destroys the nests or eggs of fish or wildlife and the fish or wildlife is designated by the commission as endangered, and the taking has not been authorized by rule of the commission.

(2) A person is guilty of unlawful taking of endangered fish or wildlife in the first degree if the person has been:

(a) Convicted under subsection (1) of this section or convicted of any crime under this title involving the killing, possessing, harassing, or harming of endangered fish or wildlife; and

(b) Within five years of the date of the prior conviction the person commits the act described by subsection (1) of this section.

(3)(a) Unlawful taking of endangered fish or wildlife in the second degree is a gross misdemeanor.

(b) Unlawful taking of endangered fish or wildlife in the first degree is a class C felony. The department shall revoke any licenses or tags used in connection with the crime and order the person's privileges to hunt, fish, trap, or obtain licenses under this title and Title 75 RCW to be suspended for two years.

NEW SECTION. Sec. 14. UNLAWFUL TAKING OF PROTECTED FISH OR WILDLIFE. (1) A person is guilty of unlawful taking of protected fish or wildlife if:

(a) The person hunts, fishes, possesses, or maliciously kills protected fish or wildlife, or the person possesses or maliciously destroys the eggs or nests of protected fish or wildlife, and the taking has not been authorized by rule of the commission; or

(b) The person violates any rule of the commission regarding the taking, harming, harassment, possession, or transport of protected fish or wildlife.

(2) Unlawful taking of protected fish or wildlife is a misdemeanor.

NEW SECTION. Sec. 15. UNLAWFUL TAKING OF UNCLASSIFIED FISH OR WILDLIFE. (1) A person is guilty of unlawful taking of unclassified fish or wildlife if:

(a) The person kills, hunts, fishes, takes, holds, possesses, transports, or maliciously injures or harms fish or wildlife that is not classified as big game, game fish, game animals, game birds, food fish, shellfish, protected wildlife, or endangered wildlife; and

(b) The act violates any rule of the commission or the director.

(2) Unlawful taking of unclassified fish or wildlife is a misdemeanor.

NEW SECTION. Sec. 16. UNLAWFUL USE OF POISON OR EXPLOSIVES. (1) A person is guilty of unlawful use of poison or explosives if:

(a) The person lays out, sets out, or uses a drug, poison, or other deleterious substance that kills, injures, harms, or endangers fish or wildlife, except if the person is using the substance in compliance with federal and state laws and label instructions; or

(b) The person lays out, sets out, or uses an explosive that kills, injures, harms, or endangers fish or wildlife, except if authorized by law or permit of the director.

(2) Unlawful use of poison or explosives is a gross misdemeanor.

NEW SECTION. Sec. 17. INFRACTION VIOLATION OF RULES GOVERNING FISH AND WILDLIFE. A person is guilty of an infraction, which shall be cited and punished as provided under chapter 7.84 RCW, if the person:

(1) Fails to immediately record a catch of fish or shellfish on a catch record card required by RCW 75.25.190 or 77.32.050, or required by rule of the commission under this title or Title 75 RCW; or

(2) Fishes for personal use using barbed hooks in violation of any rule; or

(3) Violates any other rule of the commission or director that is designated by rule as an infraction.

NEW SECTION. Sec. 18. UNLAWFUL RECREATIONAL FISHING IN THE SECOND DEGREE. (1) A person is guilty of unlawful recreational fishing in the second degree if the person fishes for, takes, possesses, or harvests fish or shellfish and:

(a) The person does not have and possess the license or the catch record card required by chapter 75.25 or 77.32 RCW for such activity; or

(b) The action violates any rule of the commission or the director regarding seasons, bag or possession limits but less than two times the bag or possession limit, closed areas, closed times, or any other rule addressing the manner or method of fishing or possession of fish, except for use of a net to take fish as provided for in section 50 of this act.

(2) Unlawful recreational fishing in the second degree is a misdemeanor.

NEW SECTION. Sec. 19. UNLAWFUL RECREATIONAL FISHING IN THE FIRST DEGREE. (1) A person is guilty of unlawful recreational fishing in the first degree if:

(a) The person takes, possesses, or retains two times or more than the bag limit or possession limit of fish or shellfish allowed by any rule of the director or commission setting the amount of food fish, game fish, or shellfish that can be taken, possessed, or retained for noncommercial use;

(b) The person fishes in a fishway; or

(c) The person shoots, gaffs, snags, snares, spears, dipnets, or stones fish in state waters, or possesses fish taken by such means, unless such means are authorized by express rule of the commission or director.

(2) Unlawful recreational fishing in the first degree is a gross misdemeanor.

NEW SECTION. Sec. 20. UNLAWFUL TAKING OF SEAWEED. (1) A person is guilty of unlawful taking of seaweed if the person takes, possesses, or harvests seaweed and:

(a) The person does not have and possess the license required by chapter 75.25 RCW for taking seaweed; or

(b) The action violates any rule of the department or the department of natural resources regarding seasons, possession limits, closed areas, closed times, or any other rule addressing the manner or method of taking, possessing, or harvesting of seaweed.

(2) Unlawful taking of seaweed is a misdemeanor. This does not affect rights of the state to recover civilly for trespass, conversion, or theft of state-owned valuable materials.

NEW SECTION. Sec. 21. WASTE OF FISH AND WILDLIFE. (1) A person is guilty of waste of fish and wildlife in the second degree if:

(a) The person kills, takes, or possesses fish or wildlife and the value of the fish or wildlife is greater than twenty dollars but less than two hundred fifty dollars; and

(b) The person recklessly allows such fish or wildlife to be wasted.

(2) A person is guilty of waste of fish and wildlife in the first degree if:

(a) The person kills, takes, or possesses food fish, shellfish, game fish, game birds, or game animals having a value of two hundred fifty dollars or more; and

(b) The person recklessly allows such fish or wildlife to be wasted.

(3)(a) Waste of fish and wildlife in the second degree is a misdemeanor.

(b) Waste of fish and wildlife in the first degree is a gross misdemeanor. Upon conviction, the department shall revoke any license or tag used in the crime and shall order suspension of the person's privileges to engage in the activity in which the person committed waste of fish and wildlife in the first degree for a period of one year.

(4) It is prima facie evidence of waste if a processor purchases or engages a quantity of food fish, shellfish, or game fish that cannot be processed within sixty hours after the food fish or shellfish are taken from the water, unless the food fish or shellfish are preserved in good marketable condition.

NEW SECTION. Sec. 22. UNLAWFUL INTERFERENCE WITH FISHING OR HUNTING GEAR. (1) A person is guilty of unlawful interference with fishing or hunting gear in the second degree if the person:

(a) Takes or releases a wild animal from another person's trap without permission;

(b) Springs, pulls up, damages, possesses, or destroys another person's trap without the owner's permission; or

(2) Unlawful interference with fishing or hunting gear in the second degree is a misdemeanor.

(3) A person is guilty of unlawful interference with fishing or hunting gear in the first degree if the person:

(a) Takes or releases food fish or shellfish from commercial fishing gear without the owner's permission; or

(b) Intentionally destroys or interferes with commercial fishing gear.

(4) Unlawful interference with fishing or hunting gear in the first degree is a gross misdemeanor.

(5) A person is not in violation of unlawful interference with fishing or hunting gear if the person removes a trap placed on property owned, leased, or rented by the person.

NEW SECTION. Sec. 23. FAILING TO IDENTIFY TRAPS FOR FURBEARING ANIMALS. (1) A person is guilty of failing to identify traps for furbearing animals if the person fails to attach to the person's traps or devices a legible metal tag with either the department identification number of the trapper or the name and address of the trapper in English letters not less than one-eighth inch in height.

(2) Failing to identify traps for furbearing animals is a misdemeanor.

NEW SECTION. Sec. 24. OBSTRUCTING THE TAKING OF FISH OR WILDLIFE. (1) A person is guilty of obstructing the taking of fish or wildlife if the person:

(a) Harasses, drives, or disturbs fish or wildlife with the intent of disrupting lawful pursuit or taking thereof; or

(b) Harasses, intimidates, or interferes with an individual engaged in the lawful taking of fish or wildlife or lawful predator control with the intent of disrupting lawful pursuit or taking thereof.

(2) Obstructing the taking of fish or wildlife is a gross misdemeanor.

(3) It is an affirmative defense to a prosecution for obstructing the taking of fish or wildlife that the person charged was:

(a) Interfering with a person engaged in hunting outside the legally established hunting season; or

(b) Preventing or attempting to prevent unauthorized trespass on private property.

(4) The person raising a defense under subsection (3) of this section has the burden of proof by a preponderance of the evidence.

NEW SECTION. Sec. 25. UNLAWFUL POSTING. (1) A person is guilty of unlawful posting if the individual posts signs preventing hunting or fishing on any land not owned or leased by the individual, or without the permission of the person who owns, leases, or controls the land posted.

(2) Unlawful posting is a misdemeanor.

NEW SECTION. Sec. 26. UNLAWFUL USE OF DEPARTMENT LANDS OR FACILITIES. (1) A person is guilty of unlawful use of department lands or facilities if the person enters upon, uses, or remains upon department lands or facilities in violation of any rule of the department.

(2) Unlawful use of department lands or facilities is a misdemeanor.

NEW SECTION. Sec. 27. SPOTLIGHTING BIG GAME. (1) A person is guilty of spotlighting big game in the second degree if the person hunts big game with the aid of a spotlight or other artificial light while in possession or control of a firearm, bow and arrow, or cross bow.

(2) A person is guilty of spotlighting big game in the first degree if:

(a) The person has any prior conviction for gross misdemeanor or felony for a crime under this title involving big game including but not limited to subsection (1) of this section or section 10 of this act; and

(b) Within ten years of the date that such prior conviction was entered the person commits the act described by subsection (1) of this section.

(3)(a) Spotlighting big game in the second degree is a gross misdemeanor.

(b) Spotlighting big game in the first degree is a class C felony. Upon conviction, the department shall order suspension of all privileges to hunt wildlife for a period of two years.

NEW SECTION. Sec. 28. UNLAWFUL USE OR POSSESSION OF A LOADED FIREARM. (1) A person is guilty of unlawful possession of a loaded firearm in a motor vehicle if:

(a) The person carries, transports, conveys, possesses, or controls a rifle or shotgun in a motor vehicle; and

(b) The rifle or shotgun contains shells or cartridges in the magazine or chamber, or is a muzzle-loading firearm that is loaded and capped or primed.

(2) A person is guilty of unlawful use of a loaded firearm if the person negligently shoots a firearm from, across, or along the maintained portion of a public highway.

(3) Unlawful possession of a loaded firearm in a motor vehicle is a misdemeanor.

(4) This section does not apply if the person:

(a) Is a law enforcement officer who is authorized to carry a firearm and is on duty within the officer's respective jurisdiction;

(b) Possesses a disabled hunter's permit as provided by RCW 77.32.237 and complies with all rules of the department concerning hunting by persons with disabilities.

(5) For purposes of this section, a firearm shall not be considered loaded if the detachable clip or magazine is not inserted in or attached to the firearm.

NEW SECTION. Sec. 29. UNLAWFULLY AVOIDING WILDLIFE CHECK STATIONS OR FIELD INSPECTIONS. (1) A person is guilty of unlawfully avoiding wildlife check stations or field inspections if the person fails to:

(a) Obey check station signs;

(b) Stop and report at a check station if directed to do so by a uniformed fish and wildlife officer; or

(c) Produce for inspection upon request by a fish and wildlife officer: (i) Hunting or fishing equipment; (ii) seaweed, fish, shellfish, or wildlife; or (iii) licenses, permits, tags, stamps, or catch record cards required by this title or Title 75 RCW.

(2) Unlawfully avoiding wildlife check stations or field inspections is a gross misdemeanor.

(3) Wildlife check stations may not be established upon interstate highways or state routes.

NEW SECTION. Sec. 30. UNLAWFUL USE OF DOGS--PUBLIC NUISANCE. (1) A person is guilty of unlawful use of dogs if the person:

(a) Negligently fails to prevent a dog under the person's control from pursuing or injuring deer, elk, or an animal classified as endangered under this title;

(b) Uses the dog to hunt deer or elk; or

(c) During the closed season for a species of game animal or game bird, negligently fails to prevent the dog from pursuing such animal or destroying the nest of a game bird.

(2) Unlawful use of dogs is a misdemeanor. A dog that is the basis for a violation of this section may be declared a public nuisance.

NEW SECTION. Sec. 31. UNLAWFUL RELEASE OF FISH OR WILDLIFE. (1)(a) A person is guilty of unlawfully releasing, planting, or placing fish or wildlife if the person knowingly releases, plants, or places live fish, wildlife, or aquatic plants within the state, except for a release of game fish into private waters for which a game fish stocking permit has been obtained or the planting of food fish or shellfish by permit of the commission.

(b) A violation of this subsection is a gross misdemeanor. In addition, the department shall order the person to pay all costs the department incurred in capturing, killing, or controlling the fish or wildlife released or its progeny. This does not affect the existing authority of the department to bring a separate civil action to recover costs of capturing, killing, controlling the fish or wildlife released or their progeny, or restoration of habitat necessitated by the unlawful release.

(2)(a) A person is guilty of unlawful release of deleterious exotic wildlife if the person knowingly releases, plants, or places live fish or wildlife within the state and such fish or wildlife has been classified as deleterious exotic wildlife by rule of the commission.

(b) A violation of this subsection is a class C felony. In addition, the department shall also order the person to pay all costs the department incurred in capturing, killing, or controlling the fish or wildlife released or its progeny. This does not affect the existing authority of the department to bring a separate civil action to recover costs of capturing, killing, controlling the fish or wildlife released or their progeny, or restoration of habitat necessitated by the unlawful release.

NEW SECTION. Sec. 32. ENGAGING IN COMMERCIAL WILDLIFE ACTIVITY WITHOUT A LICENSE. (1) A person is guilty of engaging in commercial wildlife activity without a license if the person:

(a) Deals in raw furs for commercial purposes and does not hold a fur dealer license required by chapter 77.32 RCW;

(b) Practices taxidermy for profit and does not hold a taxidermy license required by chapter 77.32 RCW; or

(2) Engaging in commercial wildlife activities without a license is a gross misdemeanor.

NEW SECTION. Sec. 33. UNLAWFUL USE OF A COMMERCIAL WILDLIFE LICENSE. (1) A person who holds a fur buyer's license or taxidermy license is guilty of unlawful use of a commercial wildlife license if the person:

(a) Fails to have the license in possession while engaged in fur buying or practicing taxidermy for commercial purposes; or

(b) Violates any rule of the department regarding the use, possession, display, or presentation of the taxidermy or fur buyer's license.

(2) Unlawful use of a commercial wildlife license is a misdemeanor.

NEW SECTION. Sec. 34. UNLAWFUL TRAPPING. (1) A person is guilty of unlawful trapping if the person:

(a) Sets out traps that are capable of taking wild animals, game animals, or furbearing mammals and does not possess all licenses, tags, or permits required under this title; or

(2) Unlawful trapping is a misdemeanor.

NEW SECTION. Sec. 35. COMMERCIAL FISHING WITHOUT A LICENSE. (1) A person is guilty of commercial fishing without a license in the second degree if the person fishes for, takes, or delivers food fish, shellfish, or game fish while acting for commercial purposes and:

(a) The person does not hold a fishery license or delivery license under chapter 75.28 RCW for the food fish or shellfish; or

(b) The person is not a licensed operator designated as an alternate operator on a fishery or delivery license under chapter 75.28 RCW for the food fish or shellfish.

(2) A person is guilty of commercial fishing without a license in the first degree if the person commits the act described by subsection (1) of this section and:

(a) The violation involves taking, delivery, or possession of food fish or shellfish with a value of two hundred fifty dollars or more; or

(b) The violation involves taking, delivery, or possession of food fish or shellfish from an area that was closed to the taking of such food fish or shellfish by any statute or rule.

(3)(a) Commercial fishing without a license in the second degree is a gross misdemeanor.

(b) Commercial fishing without a license in the first degree is a class C felony.

NEW SECTION. Sec. 36. COMMERCIAL FISH GUIDING OR CHARTERING WITHOUT A LICENSE. (1) A person is guilty of commercial fish guiding or chartering without a license if:

(a) The person operates a charter boat and does not hold the charter boat license required for the food fish taken;

(b) The person acts as a professional salmon guide and does not hold a professional salmon guide license; or

(2) Commercial fish guiding or chartering without a license is a gross misdemeanor.

NEW SECTION. Sec. 37. COMMERCIAL FISHING USING UNLAWFUL GEAR OR METHODS. (1) A person is guilty of commercial fishing using unlawful gear or methods if the person acts for commercial purposes and takes or fishes for any fish or shellfish using any gear or method in violation of a rule of the department specifying, regulating, or limiting the gear or method for taking, fishing, or harvesting of such fish or shellfish.

(2) Commercial fishing using unlawful gear or methods is a gross misdemeanor.

NEW SECTION. Sec. 38. UNLAWFUL USE OF A NONDESIGNATED VESSEL. (1) A person who holds a fishery license required by chapter 75.28 RCW, or who holds an operator's license and is designated as an alternate operator on a fishery license required by chapter 75.28 RCW, is guilty of unlawful use of a nondesignated vessel if the person takes, fishes for, or delivers from that fishery using a vessel not designated on the person's license, when vessel designation is required by chapter 75.28 RCW.

(2) Unlawful use of a nondesignated vessel is a gross misdemeanor.

(3) A nondesignated vessel may be used, subject to appropriate notification to the department and in accordance with rules established by the commission, when a designated vessel is inoperative because of accidental damage or mechanical breakdown.

(4) If the person commits the act described by subsection (1) of this section and the vessel designated on the person's fishery license was used by any person in the fishery on the same day, then the violation for using a nondesignated vessel is a class C felony. Upon conviction the department shall order revocation and suspension of all commercial fishing privileges under chapter 75.28 RCW for a period of one year.

NEW SECTION. Sec. 39. UNLAWFUL USE OF A COMMERCIAL FISHERY LICENSE. (1) A person who holds a fishery license required by chapter 75.28 RCW, or who holds an operator's license and is designated as an alternate operator on a fishery license required by chapter 75.28 RCW, is guilty of unlawful use of a commercial fishery license if the person:

(a) Does not have the commercial fishery license or operator's license in possession during fishing or delivery; or

(b) Violates any rule of the department regarding the use, possession, display, or presentation of the person's license, decals, or vessel numbers.

(2) Unlawful use of a commercial fishery license is a misdemeanor.

NEW SECTION. Sec. 40. VIOLATION OF COMMERCIAL FISHING AREA OR TIME. (1) A person is guilty of violating commercial fishing area or time in the second degree if the person acts for commercial purposes and takes, fishes for, delivers, or receives food fish or shellfish:

(a) At a time not authorized by statute or rule; or

(b) From an area that was closed to the taking of such food fish or shellfish for commercial purposes by statute or rule.

(2) A person is guilty of violating commercial fishing area or time in the first degree if the person commits the act described by subsection (1) of this section and:

(a) The person acted with knowledge that the area or time was not open to the taking or fishing of food fish or shellfish for commercial purposes; and

(b) The violation involved two hundred fifty dollars or more worth of food fish or shellfish.

(3)(a) Violating commercial fishing area or time in the second degree is a gross misdemeanor.

(b) Violating commercial fishing area or time in the first degree is a class C felony.

NEW SECTION. Sec. 41. FAILURE TO REPORT COMMERCIAL FISH HARVEST OR DELIVERY. (1) Except as provided in section 45 of this act, a person is guilty of failing to report a commercial fish or shellfish harvest or delivery if the person acts for commercial purposes and takes or delivers any fish or shellfish, and the person:

(a) Fails to sign a fish-receiving ticket that documents the delivery of fish or shellfish or otherwise documents the taking or delivery; or

(b) Fails to report or document the taking, landing, or delivery as required by any rule of the department.

(2) Failing to report a commercial fish harvest or delivery is a gross misdemeanor.

(3) For purposes of this section, "delivery" of fish or shellfish occurs when there is a transfer or conveyance of title or control from the person who took, fished for, or otherwise harvested the fish or shellfish.

NEW SECTION. Sec. 42. UNLAWFUL TRAFFICKING IN FISH OR WILDLIFE. (1) A person is guilty of unlawful trafficking in fish or wildlife in the second degree if the person traffics in fish or wildlife with a wholesale value of less than two hundred fifty dollars and:

(a) The fish or wildlife is classified as game, food fish, shellfish, game fish, or protected wildlife and the trafficking is not authorized by statute or rule of the department; or

(b) The fish or wildlife is unclassified and the trafficking violates any rule of the department.

(2) A person is guilty of unlawful trafficking in fish or wildlife in the first degree if the person commits the act described by subsection (1) of this section and:

(a) The fish or wildlife has a value of two hundred fifty dollars or more; or

(b) The fish or wildlife is designated as endangered or deleterious exotic wildlife and such trafficking is not authorized by any statute or rule of the department.

(3)(a) Unlawful trafficking in fish or wildlife in the second degree is a gross misdemeanor.

(b) Unlawful trafficking in fish or wildlife in the first degree is a class C felony.

NEW SECTION. Sec. 43. ENGAGING IN FISH DEALING ACTIVITY WITHOUT A LICENSE. (1) A person is guilty of engaging in fish dealing activity without a license in the second degree if the person:

(a) Engages in the commercial processing of fish or shellfish, including custom canning or processing of personal use fish or shellfish and does not hold a wholesale dealer's license required by RCW 75.28.300(1) or 77.32.211 for anadromous game fish;

(b) Engages in the wholesale selling, buying, or brokering of food fish or shellfish and does not hold a wholesale dealer's or buying license required by RCW 75.28.300(2) or 77.32.211 for anadromous game fish;

(c) Is a fisher who lands and sells his or her catch or harvest in the state to anyone other than a licensed wholesale dealer within or outside the state and does not hold a wholesale dealer's license required by RCW 75.28.300(3) or 77.32.211 for anadromous game fish; or

(d) Engages in the commercial manufacture or preparation of fertilizer, oil, meal, caviar, fish bait, or other byproducts from food fish or shellfish and does not hold a wholesale dealer's license required by RCW 75.28.300(4) or 77.32.211 for anadromous game fish.

(2) Engaging in fish dealing activity without a license in the second degree is a gross misdemeanor.

(3) A person is guilty of engaging in fish dealing activity without a license in the first degree if the person commits the act described by subsection (1) of this section and the violation involves fish or shellfish worth two hundred fifty dollars or more. Engaging in fish dealing activity without a license in the first degree is a class C felony.

NEW SECTION. Sec. 44. UNLAWFUL USE OF FISH BUYING AND DEALING LICENSES. (1) A person who holds a fish dealer's license required by RCW 75.28.300, an anadromous game fish buyer's license required by RCW 77.32.211, or a fish buyer's license required by RCW 75.28.340 is guilty of unlawful use of fish buying and dealing licenses in the second degree if the person:

(a) Possesses or receives fish or shellfish for commercial purposes worth less than two hundred fifty dollars; and

(b) Fails to document such fish or shellfish with a fish-receiving ticket required by statute or rule of the department.

(2) A person is guilty of unlawful use of fish buying and dealing licenses in the first degree if the person commits the act described by subsection (1) of this section and:

(a) The violation involves fish or shellfish worth two hundred fifty dollars or more;

(b) The person acted with knowledge that the fish or shellfish were taken from a closed area, at a closed time, or by a person not licensed to take such fish or shellfish for commercial purposes; or

(3)(a) Unlawful use of fish buying and dealing licenses in the second degree is a gross misdemeanor.

(b) Unlawful use of fish buying and dealing licenses in the first degree is a class C felony. Upon conviction, the department shall suspend all privileges to engage in fish buying or dealing for two years.

NEW SECTION. Sec. 45. VIOLATING RULES GOVERNING WHOLESALE FISH BUYING AND DEALING. (1) A person who holds a wholesale fish dealer's license required by RCW 75.28.300, an anadromous game fish buyer's license required by RCW 77.32.211, or a fish buyer's license required by RCW 75.28.340 is guilty of violating rules governing wholesale fish buying and dealing if the person:

(a) Fails to possess or display his or her license when engaged in any act requiring the license;

(b) Fails to display or uses the license in violation of any rule of the department;

(d) Violates any other rule of the department regarding wholesale fish buying and dealing.

(2) Violating rules governing wholesale fish buying and dealing is a gross misdemeanor.

NEW SECTION. Sec. 46. PROVIDING FALSE INFORMATION REGARDING FISH OR WILDLIFE. (1) A person is guilty of providing false information regarding fish or wildlife if the person knowingly provides false or misleading information required by any statute or rule to be provided to the department regarding the taking, delivery, possession, transportation, sale, transfer, or any other use of fish or wildlife.

(2) Providing false information regarding fish or wildlife is a gross misdemeanor.

NEW SECTION. Sec. 47. VIOLATING RULES REQUIRING REPORTING OF FISH OR WILDLIFE HARVEST. (1) A person is guilty of violating rules requiring reporting of fish or wildlife harvest if the person:

(a) Fails to make a harvest log report of a commercial fish or shellfish catch in violation of any rule of the commission or the director;

(b) Fails to maintain a trapper's report or taxidermist ledger in violation of any rule of the commission or the director;

(c) Fails to submit any portion of a big game animal for a required inspection required by rule of the commission or the director; or

(d) Fails to return a catch record card or wildlife harvest report to the department as required by rule of the commission or director.

(2) Violating rules requiring reporting of fish or wildlife harvest is a misdemeanor.

NEW SECTION. Sec. 48. UNLAWFUL TRANSPORTATION OF FISH OR WILDLIFE. (1) A person is guilty of unlawful transportation of fish or wildlife in the second degree if the person:

(a) Knowingly imports, moves within the state, or exports fish or wildlife in violation of any rule of the commission or the director governing the transportation or movement of fish or wildlife and the transportation does not involve big game, endangered fish or wildlife, deleterious exotic wildlife, or fish or wildlife having a value greater than two hundred fifty dollars; or

(b) Possesses but fails to affix or notch a big game transport tag as required by rule of the commission or director.

(2) A person is guilty of unlawful transportation of fish or wildlife in the first degree if the person:

(a) Knowingly imports, moves within the state, or exports fish or wildlife in violation of any rule of the commission or the director governing the transportation or movement of fish or wildlife and the transportation involves big game, endangered fish or wildlife, deleterious exotic wildlife, or fish or wildlife with a value of two hundred fifty dollars or more; or

(b) Knowingly transports shellfish, shellstock, or equipment used in commercial culturing, taking, handling, or processing shellfish without a permit required by authority of this title.

(3)(a) Unlawful transportation of fish or wildlife in the second degree is a misdemeanor.

(b) Unlawful transportation of fish or wildlife in the first degree is a gross misdemeanor.

Sec. 49. RCW 75.12.320 and 1983 1st ex.s. c 46 s 63 are each amended to read as follows:

(1) Except as provided in subsection (((2))) (3) of this section, it is unlawful for a person who is not a treaty Indian fisherman to participate in the taking of ((food)) fish or shellfish in a treaty Indian fishery, or to be on board a vessel, or associated equipment, operating in a treaty Indian fishery. A violation of this subsection is a gross misdemeanor.

(2) A person who violates subsection (1) of this section with the intent of acting for commercial purposes, including any sale of catch, control of catch, profit from catch, or payment for fishing assistance, is guilty of a class C felony. Upon conviction, the department shall order revocation of any license and a one-year suspension of all commercial fishing privileges requiring a license under chapter 75.28 or 75.30 RCW.

(3)(a) The spouse, forebears, siblings, children, and grandchildren of a treaty Indian fisherman may assist the fisherman in exercising treaty Indian fishing rights when the treaty Indian fisherman is present at the fishing site.

(b) Other treaty Indian fishermen with off-reservation treaty fishing rights in the same usual and accustomed places, whether or not the fishermen are members of the same tribe or another treaty tribe, may assist a treaty Indian fisherman in exercising treaty Indian fishing rights when the treaty Indian fisherman is present at the fishing site.

(((3))) (4) For the purposes of this section:

(a) "Treaty Indian fisherman" means a person who may exercise treaty Indian fishing rights as determined under United States v. Washington, 384 F. Supp. 312 (W.D. Wash. 1974), or Sohappy v. Smith, 302 F. Supp. 899 (D. Oregon 1969), and post-trial orders of those courts;

(b) "Treaty Indian fishery" means a fishery open to only treaty Indian fishermen by tribal or federal regulation;

(c) "To participate" and its derivatives mean an effort to operate a vessel or fishing equipment, provide immediate supervision in the operation of a vessel or fishing equipment, or otherwise assist in the fishing operation, ((or)) to claim possession of a share of the catch, or to represent that the catch was lawfully taken in an Indian fishery.

(((4))) (5) A violation of this section ((involving salmon)) constitutes illegal fishing and is subject to the ((sanctions provided under RCW 75.10.130)) suspensions provided for commercial fishing violations.

NEW SECTION. Sec. 50. UNLAWFUL USE OF NETS TO TAKE FISH. (1) A person is guilty of unlawful use of a net to take fish in the second degree if the person:

(a) Lays, sets, uses, or controls a net or other device or equipment capable of taking fish from the waters of this state, except if the person has a valid license for such fishing gear from the director under this title and is acting in accordance with all rules of the commission and director; or

(b) Fails to return unauthorized fish to the water immediately while otherwise lawfully operating a net under a valid license.

(2) A person is guilty of unlawful use of a net to take fish in the first degree if the person:

(a) Commits the act described by subsection (1) of this section; and

(b) The violation occurs within five years of entry of a prior conviction for a gross misdemeanor or felony under this title or Title 75 RCW involving fish, other than a recreational fishing violation, or involving unlawful use of nets.

(3)(a) Unlawful use of a net to take fish in the second degree is a gross misdemeanor. Upon conviction, the department shall revoke any license held under this title or Title 75 RCW allowing commercial net fishing used in connection with the crime.

(b) Unlawful use of a net to take fish in the first degree is a class C felony. Upon conviction, the department shall order a one-year suspension of all commercial fishing privileges requiring a license under this title or Title 75 RCW.

(4) Notwithstanding subsections (1) and (2) of this section, it is lawful to use a landing net to land fish otherwise legally hooked.

NEW SECTION. Sec. 51. UNLAWFUL USE OF COMMERCIAL FISHING VESSEL FOR RECREATIONAL OR CHARTER FISHING. (1) A person is guilty of unlawful use of a commercial fishing vessel, except as may be authorized by rule of the commission, for recreational or charter fishing if the person uses, operates, or controls a vessel on the same day for both:

(a) Charter or recreational fishing; and

(b) Commercial fishing or shellfish harvesting.

(2) Unlawful use of a commercial fishing vessel for recreational or charter fishing is a gross misdemeanor.

NEW SECTION. Sec. 52. UNLAWFUL HYDRAULIC PROJECT ACTIVITIES. (1) A person is guilty of unlawfully undertaking hydraulic project activities if the person constructs any form of hydraulic project or performs other work on a hydraulic project and:

(a) Fails to have a hydraulic project approval required under chapter 75.20 RCW for such construction or work; or

(b) Violates any requirements or conditions of the hydraulic project approval for such construction or work.

(2) Unlawfully undertaking hydraulic project activities is a gross misdemeanor.

NEW SECTION. Sec. 53. UNLAWFUL FAILURE TO USE OR MAINTAIN APPROVED FISH GUARD ON WATER DIVERSION DEVICE. (1) A person is guilty of unlawful failure to use or maintain an approved fish guard on a diversion device if the person owns, controls, or operates a device used for diverting or conducting water from a lake, river, or stream and:

(a) The device is not equipped with a fish guard, screen, or bypass approved by the director as required by RCW 75.20.040 or 77.16.220; or

(b) The person knowingly fails to maintain or operate an approved fish guard, screen, or bypass so as to effectively screen or prevent fish from entering the intake.

(2) Unlawful failure to use or maintain an approved fish guard, screen, or bypass on a diversion device is a gross misdemeanor. Following written notification to the person from the department that there is a violation, each day that a diversion device is operated without an approved or maintained fish guard, screen, or bypass is a separate offense.

NEW SECTION. Sec. 54. UNLAWFUL FAILURE TO PROVIDE, MAINTAIN, OR OPERATE FISHWAY FOR DAM OR OTHER OBSTRUCTION. (1) A person is guilty of unlawful failure to provide, maintain, or operate a fishway for dam or other obstruction if the person owns, operates, or controls a dam or other obstruction to fish passage on a river or stream and:

(a) The dam or obstruction is not provided with a durable and efficient fishway approved by the director as required by RCW 75.20.060;

(b) Fails to maintain a fishway in efficient operating condition; or

(2) Unlawful failure to provide, maintain, or operate a fishway for dam or other obstruction is a gross misdemeanor. Following written notification to the person from the department that there is a violation, each day of unlawful failure to provide, maintain, or operate a fishway is a separate offense.

NEW SECTION. Sec. 55. UNLAWFUL USE OF SCIENTIFIC PERMIT. (1) A person is guilty of unlawful use of a scientific permit if the person:

(a) Violates any terms or conditions of a scientific permit issued by the director;

(b) Buys or sells fish or wildlife taken with a scientific permit; or

(2) Unlawful use of a scientific permit is a gross misdemeanor.

NEW SECTION. Sec. 56. UNLAWFUL HUNTING OR FISHING CONTESTS. (1) A person is guilty of unlawfully holding a hunting or fishing contest if the person:

(a) Conducts, holds, or sponsors a hunting contest, a fishing contest involving game fish, or a competitive field trial using live wildlife without the permit required by RCW 77.32.211; or

(b) Violates any rule of the commission or the director applicable to a hunting contest, fishing contest involving game fish, or a competitive field trial using live wildlife.

(2) Unlawfully holding a hunting or fishing contest is a misdemeanor.

NEW SECTION. Sec. 57. UNLAWFUL OPERATION OF A GAME FARM. (1) A person is guilty of unlawful operation of a game farm if the person (a) operates a game farm without the license required by RCW 77.32.211; or (b) violates any rule of the commission or the director applicable to game farms under RCW 77.12.570, 77.12.580, and 77.12.590.

(2) Unlawful operation of a game farm is a gross misdemeanor.

NEW SECTION. Sec. 58. VIOLATION OF A RULE REGARDING INSPECTION AND CONTROL OF AQUATIC FARMS. (1) A person is guilty of violating a rule regarding inspection and disease control of aquatic farms if the person:

(a) Violates any rule adopted under chapter 75.58 RCW regarding the inspection and disease control program for an aquatic farm; or

(b) Fails to register or report production from an aquatic farm as required by chapter 75.58 RCW.

(2) A violation of a rule regarding inspection and disease control of aquatic farms is a misdemeanor.

NEW SECTION. Sec. 59. UNLAWFUL PURCHASE OR USE OF A LICENSE. (1) A person is guilty of unlawful purchase or use of a license in the second degree if the person buys, holds, uses, displays, transfers, or obtains any license, tag, permit, or approval required by this title or Title 75 RCW and the person:

(a) Uses false information to buy, hold, use, display, or obtain a license, permit, tag, or approval;

(b) Acquires, holds, or buys in excess of one license, permit, or tag for a license year if only one license, permit, or tag is allowed per license year;

(d) Permits or allows a license, permit, tag, or approval to be used or displayed by another person not named on the license, permit, tag, or approval;

(e) Acquires or holds a license while privileges for the license are revoked or suspended.

(2) A person is guilty of unlawful purchase or use of a license in the first degree if the person commits the act described by subsection (1) of this section and the person was acting with intent that the license, permit, tag, or approval be used for any commercial purpose. A person is presumed to be acting with such intent if the violation involved obtaining, holding, displaying, or using a license or permit for participation in any commercial fishery issued under this title or Title 75 RCW or a license authorizing fish or wildlife buying, trafficking, or wholesaling.

(3)(a) Unlawful purchase or use of a license in the second degree is a gross misdemeanor. Upon conviction, the department shall revoke any unlawfully used or held licenses and order a two-year suspension of participation in the activities for which the person unlawfully obtained, held, or used a license.

(b) Unlawful purchase or use of a license in the first degree is a class C felony. Upon conviction, the department shall revoke any unlawfully used or held licenses and order a five-year suspension of participation in any activities for which the person unlawfully obtained, held, or used a license.

(4) For purposes of this section, a person "uses" a license, permit, tag, or approval if the person engages in any activity authorized by the license, permit, tag, or approval held or possessed by the person. Such uses include but are not limited to fishing, hunting, taking, trapping, delivery or landing fish or wildlife, and selling, buying, or wholesaling of fish or wildlife.

(5) Any license obtained in violation of this section is void upon issuance and is of no legal effect.

NEW SECTION. Sec. 60. UNLAWFUL HUNTING OR FISHING WHEN PRIVILEGES ARE REVOKED OR SUSPENDED. (1) A person is guilty of unlawful hunting or fishing when privileges are revoked or suspended in the second degree if the person hunts or fishes and the person's privilege to engage in such hunting or fishing were revoked or suspended by any court or the department.

(2) A person is guilty of unlawful hunting or fishing when privileges are revoked or suspended in the first degree if the person commits the act described by subsection (1) of this section and:

(a) The suspension of privileges that was violated was a permanent suspension;

(b) The person takes or possesses more than two hundred fifty dollars' worth of unlawfully taken food fish, wildlife, game fish, seaweed, or shellfish; or

(c) The violation involves the hunting, taking, or possession of fish or wildlife classified as endangered or threatened or big game.

(3)(a) Unlawful hunting or fishing when privileges are revoked or suspended in the second degree is a gross misdemeanor. Upon conviction, the department shall order permanent suspension of the person's privileges to engage in such hunting or fishing activities.

(b) Unlawful hunting or fishing when privileges are revoked or suspended in the first degree is a class C felony. Upon conviction, the department shall order permanent suspension of all privileges to hunt, fish, trap, or take wildlife, food fish, or shellfish.

(4) As used in this section, hunting includes trapping with a trapping license.

NEW SECTION. Sec. 61. UNLAWFUL INTERFERING IN DEPARTMENT OPERATIONS. (1) A person is guilty of unlawful interfering in department operations if the person prevents department employees from carrying out duties authorized by this title or Title 75 RCW, including but not limited to interfering in the operation of department vehicles, vessels, or aircraft.

(2) Unlawful interfering in department operations is a gross misdemeanor.

NEW SECTION. Sec. 62. CRIMINAL WILDLIFE PENALTY ASSESSMENT FOR ILLEGALLY TAKEN OR POSSESSED WILDLIFE. (1) If a person is convicted of violating section 10 of this act and that violation results in the death of wildlife listed in this section, the court shall require payment of the following amounts for each animal killed or possessed. This shall be a criminal wildlife penalty assessment that shall be paid to the clerk of the court and distributed each month to the state treasurer for deposit in the public safety and education account.

(a) Moose, mountain sheep, mountain goat, and all wildlife species classified as endangered by rule of the commission, except for mountain caribou and grizzly bear as listed under (d) of this subsection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 4,000

(b) Elk, deer, black bear, and cougar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 2,000

(c) Trophy animal elk and deer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,000

(d) Mountain caribou, grizzly bear, and trophy animal mountain sheep. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,000

(2) No forfeiture of bail may be less than the amount of the bail established for hunting during closed season plus the amount of the criminal wildlife penalty assessment in subsection (1) of this section.

(3) For the purpose of this section a "trophy animal" is:

(a) A buck deer with four or more antler points on both sides, not including eyeguards;

(b) A bull elk with five or more antler points on both sides, not including eyeguards; or

For purposes of this subsection, "eyeguard" means an antler protrusion on the main beam of the antler closest to the eye of the animal.

(4) If two or more persons are convicted of illegally possessing wildlife in subsection (1) of this section, the criminal wildlife penalty assessment shall be imposed on them jointly and separately.

(5) The criminal wildlife penalty assessment shall be imposed regardless of and in addition to any sentence, fines, or costs otherwise provided for violating any provision of this title. The criminal wildlife penalty assessment shall be included by the court in any pronouncement of sentence and may not be suspended, waived, modified, or deferred in any respect. This section may not be construed to abridge or alter alternative rights of action or remedies in equity or under common law or statutory law, criminal or civil.

(6) A defaulted criminal wildlife penalty assessment may be collected by any means authorized by law for the enforcement of orders of the court or collection of a fine or costs, including but not limited to vacation of a deferral of sentencing or vacation of a suspension of sentence.

(7) A person assessed a criminal wildlife penalty assessment under this section shall have his or her hunting license revoked and all hunting privileges suspended until the penalty assessment is paid through the registry of the court in which the penalty assessment was assessed.

NEW SECTION. Sec. 63. DISPOSITION OF FORFEITED WILDLIFE AND ARTICLES. (1) Unless otherwise provided in this title or Title 75 RCW, fish, shellfish, or wildlife unlawfully taken or possessed, or involved in a violation shall be forfeited to the state upon conviction. Unless already held by, sold, destroyed, or disposed of by the department, the court shall order such fish or wildlife to be delivered to the department. Where delay will cause loss to the value of the property and a ready wholesale buying market exists, the department may sell property to a wholesale buyer at a fair market value.

(2) The department may use, sell, or destroy any other property forfeited by the court or the department. Any sale of other property shall be at public auction or after public advertisement reasonably designed to obtain the highest price. The time, place, and manner of holding the sale shall be determined by the director. The director may contract for the sale to be through the department of general administration as state surplus property, or, except where not justifiable by the value of the property, the director shall publish notice of the sale once a week for at least two consecutive weeks before the sale in at least one newspaper of general circulation in the county in which the sale is to be held. Proceeds of the sale shall be deposited in the state treasury to be credited to the state wildlife fund.

NEW SECTION. Sec. 64. DEPARTMENT AUTHORITY TO REVOKE LICENSES. (1) Upon any conviction of any violation of this chapter, the department may revoke any license, tag, or stamp, or other permit involved in the violation or held by the person convicted, in addition to other penalties provided by law.

(2) If the department orders that a license, tag, stamp, or other permit be revoked, that order is effective upon entry of the order and any such revoked license, tag, stamp, or other permit is void as a result of such order of revocation. The department shall order such license, tag, stamp, or other permit turned over to the department, and shall order the person not to acquire a replacement or duplicate for the remainder of the period for which the revoked license, tag, stamp, or other permit would have been valid. During this period when a license is revoked, the person is subject to punishment under this chapter. If the person appeals the sentence by the court, the revocation shall be effective during the appeal.

(3) If an existing license, tag, stamp, or other permit is voided and revoked under this chapter, the department and its agents shall not be required to refund or restore any fees, costs, or money paid for the license, nor shall any person have any right to bring a collateral appeal under chapter 34.05 RCW to attack the department order.

NEW SECTION. Sec. 65. DEPARTMENT AUTHORITY TO SUSPEND PRIVILEGES--FORM AND PROCEDURE. (1) If any crime in this chapter is punishable by a suspension of privileges, then the department shall issue an order that specifies the privileges suspended and period when such suspension shall begin and end. The department has no authority to issue licenses, permits, tags, or stamps for the suspended activity until the suspension ends and any license, tag, stamp, or other permission obtained in violation of an order of suspension is void and ineffective.

(2) A court sentence may include a suspension of privileges only if grounds are provided by statute. There is no right to seek reinstatement of privileges from the department during a period of court-ordered suspension.

(3) If this chapter makes revocation or suspension of privileges mandatory, then the department shall impose the punishment in addition to any other punishments authorized by law.

NEW SECTION. Sec. 66. GROUNDS FOR DEPARTMENT REVOCATION AND SUSPENSION OF PRIVILEGES. The department shall impose revocation and suspension of privileges upon conviction in the following circumstances:

(1) If directed by statute for an offense;

(2) If the department finds that actions of the defendant demonstrated a willful or wanton disregard for conservation of fish or wildlife. Such suspension of privileges may be permanent;

(3) If a person is convicted twice within ten years for a violation involving unlawful hunting, killing, or possessing big game, the department shall order revocation and suspension of all hunting privileges for two years. RCW 77.16.020 or 77.16.050 as it existed before the effective date of this section may comprise one of the convictions constituting the basis for revocation and suspension under this subsection;

(4) If a person is convicted three times in ten years of any violation of recreational hunting or fishing laws or rules, the department shall order a revocation and suspension of all recreational hunting and fishing privileges for two years;

(5) If a person is convicted twice within five years of a gross misdemeanor or felony involving unlawful commercial fish or shellfish harvesting, buying, or selling, the department shall impose a revocation and suspension of the person's commercial fishing privileges for one year. A commercial fishery license suspended under this subsection may not be used by an alternate operator or transferred during the period of suspension.

Sec. 67. RCW 77.16.135 and 1995 1st sp.s. c 2 s 43 are each amended to read as follows:

(1) The commission shall revoke all licenses and order a ten-year suspension of all privileges extended under ((Title 77 RCW)) the authority of the department of a person convicted of assault on a ((state wildlife agent)) fish and wildlife officer or other law enforcement officer provided that:

(a) The ((wildlife agent)) fish and wildlife officer or other law enforcement officer was on duty at the time of the assault; and

(b) The ((wildlife agent)) fish and wildlife officer or other law enforcement officer was enforcing the provisions of this title ((77 RCW)).

(2) For the purposes of this section, the definition of assault includes:

(a) RCW 9A.32.030; murder in the first degree;

(b) RCW 9A.32.050; murder in the second degree;

(d) RCW 9A.32.070; manslaughter in the second degree;

(e) RCW 9A.36.011; assault in the first degree;

(f) RCW 9A.36.021; assault in the second degree; and

(g) RCW 9A.36.031; assault in the third degree.

(((3) For the purposes of this section, a conviction includes:

(a) A determination of guilt by the court;

(b) The entering of a guilty plea to the charge or charges by the accused;

(d) The imposition of a deferred or suspended sentence by the court.

(4) No license described under Title 77 RCW shall be reissued to a person violating this section for a minimum of ten years, at which time a person may petition the director for a reinstatement of his or her license or licenses. The ten-year period shall be tolled during any time the convicted person is incarcerated in any state or local correctional or penal institution, in community supervision, or home detention for an offense under this section. Upon review by the director, and if all provisions of the court that imposed sentencing have been completed, the director may reinstate in whole or in part the licenses and privileges under Title 77 RCW.))

NEW SECTION. Sec. 68. DIRECTOR'S AUTHORITY TO SUSPEND PRIVILEGES. (1) If a person shoots another person or domestic livestock while hunting, the director shall suspend all hunting privileges for three years. If the shooting of another person or livestock is the result of criminal negligence or reckless or intentional conduct, then the person's privileges shall be suspended for ten years. The suspension may be continued beyond these periods if damages owed to the victim or livestock owner have not been paid by the suspended person.

(2) If a person commits any assault upon employees, agents, or personnel acting for the department, the director shall suspend hunting or fishing privileges for ten years.

(3) Within twenty days of service of an order suspending privileges or imposing conditions under this section, a person may petition for administrative review under chapter 34.05 RCW by serving the director with a petition for review. The order is final and unappealable if there is no timely petition for administrative review.

(4) The commission may by rule authorize petitions for reinstatement of administrative suspensions and define circumstances under which reinstatement will be allowed.

NEW SECTION. Sec. 69. CIVIL FORFEITURE OF PROPERTY USED FOR VIOLATION OF THIS CHAPTER. (1) Fish and wildlife officers and ex officio fish and wildlife officers may seize without warrant boats, airplanes, vehicles, gear, appliances, or other articles they have probable cause to believe have been used in violation of this chapter. However, fish and wildlife officers may not seize any item or article, other than for evidence, if under the circumstances, it is reasonable to conclude that the violation was inadvertent. The property seized is subject to forfeiture to the state under this section regardless of ownership. Property seized may be recovered by its owner by depositing into court a cash bond equal to the value of the seized property but not more than twenty-five thousand dollars. Such cash bond is subject to forfeiture in lieu of the property. Forfeiture of property seized under this section is a civil forfeiture against property intended to be a remedial civil sanction.

(2) In the event of a seizure of property under this section, jurisdiction to begin the forfeiture proceedings shall commence upon seizure. Within fifteen days following the seizure, the seizing authority shall serve a written notice of intent to forfeit property on the owner of the property seized and on any person having any known right or interest in the property seized. Notice may be served by any method authorized by law or court rule, including service by certified mail with return receipt requested. Service by mail is deemed complete upon mailing within the fifteen-day period following the seizure.

(3) Persons claiming a right of ownership or right to possession of property are entitled to a hearing to contest forfeiture. Such a claim shall specify the claim of ownership or possession and shall be made in writing and served on the director within forty-five days of the seizure. If the seizing authority has complied with notice requirements and there is no claim made within forty-five days, then the property shall be forfeited to the state.

(4) If any person timely serves the director with a claim to property, the person shall be afforded an opportunity to be heard as to the person's claim or right. The hearing shall be before the director or director's designee, or before an administrative law judge appointed under chapter 34.12 RCW, except that a person asserting a claim or right may remove the matter to a court of competent jurisdiction if the aggregate value of the property seized is more than five thousand dollars.

(5) The hearing to contest forfeiture and any subsequent appeal shall be as provided for in Title 34 RCW. The seizing authority has the burden to demonstrate that it had reason to believe the property was held with intent to violate or was used in violation of this title or rule of the commission or director. The person contesting forfeiture has the burden of production and proof by a preponderance of evidence that the person owns or has a right to possess the property and:

(a) That the property was not held with intent to violate or used in violation of this title or Title 75 RCW; or

(b) If the property is a boat, airplane, or vehicle, that the illegal use or planned illegal use of the boat, airplane, or vehicle occurred without the owner's knowledge or consent, and that the owner acted reasonably to prevent illegal uses of such boat, airplane, or vehicle.

(6) A forfeiture of a conveyance encumbered by a perfected security interest is subject to the interest of the secured party if the secured party neither had knowledge nor consented to the act or omission. No security interest in seized property may be perfected after seizure.

(7) If seized property is forfeited under this section the department may retain it for official use unless the property is required to be destroyed, or upon application by any law enforcement agency of the state, release such property to the agency for the use of enforcing this title, or sell such property, and deposit the proceeds to the wildlife fund, as provided for in RCW 77.12.170.

Sec. 70. RCW 75.08.011 and 1996 c 267 s 2 are each amended to read as follows:

As used in this title or Title 77 RCW or rules ((of the department)) adopted under those titles, unless the context clearly requires otherwise:

(1) "Commission" means the fish and wildlife commission.

(2) "Director" means the director of fish and wildlife.

(3) "Department" means the department of fish and wildlife.

(4) "Person" means an individual or a public or private entity or organization. The term "person" includes local, state, and federal government agencies, and all business organizations, including corporations and partnerships.

(5) "((Fisheries patrol)) Fish and wildlife officer" means a person appointed and commissioned by the commission, with authority to enforce this title, rules of the department, and other statutes as prescribed by the legislature. ((Fisheries patrol)) Fish and wildlife officers are peace officers. Fish and wildlife officer includes a person commissioned before the effective date of this section as a fisheries patrol officer.

(6) "Ex officio ((fisheries patrol)) fish and wildlife officer" means a commissioned officer of a municipal, county, state, or federal agency having as its primary function the enforcement of criminal laws in general, while the officer is in the appropriate jurisdiction. The term "ex officio ((fisheries patrol)) fish and wildlife officer" also includes ((wildlife agents,)) special agents of the national marine fisheries service, United States fish and wildlife special agents, state parks commissioned officers, department of natural resources enforcement officers, and United States forest service officers, while the agents and officers are within their respective jurisdictions.

(7) "To fish," "to harvest," and "to take" and their derivatives mean an effort to kill, injure, harass, or catch ((food)) fish or shellfish.

(8) "State waters" means all marine waters and fresh waters within ordinary high water lines and within the territorial boundaries of the state.

(9) "Offshore waters" means marine waters of the Pacific Ocean outside the territorial boundaries of the state, including the marine waters of other states and countries.

(10) "Concurrent waters of the Columbia river" means those waters of the Columbia river that coincide with the Washington-Oregon state boundary.

(11) "Resident" means a person who has maintained a permanent place of abode within the state for at least ninety days immediately preceding an application for a license, has established by formal evidence an intent to continue residing within the state, and who is not licensed to hunt or fish as a resident in another state.

(12) "Nonresident" means a person who has not fulfilled the qualifications of a resident.

(13) "Food fish" means those species of the classes Osteichthyes, Agnatha, and Chondrichthyes that have been classified and that shall not be fished for except as authorized by rule of the commission. The term "food fish" includes all stages of development and the bodily parts of food fish species.

(14) "Shellfish" means those species of marine and freshwater invertebrates that have been classified and that shall not be taken except as authorized by rule of the commission. The term "shellfish" includes all stages of development and the bodily parts of shellfish species.

(15) "Salmon" means all species of the genus Oncorhynchus, except those classified as game fish in Title 77 RCW, and includes:

Scientific Name Common Name

Oncorhynchus tshawytscha Chinook salmon

Oncorhynchus kisutch Coho salmon

Oncorhynchus keta Chum salmon

Oncorhynchus gorbuscha Pink salmon

Oncorhynchus nerka Sockeye salmon

(16) "Commercial" means related to or connected with buying, selling, or bartering. Fishing for food fish or shellfish with gear unlawful for fishing for personal use, or possessing food fish or shellfish in excess of the limits permitted for personal use are commercial activities.

(17) "To process" and its derivatives mean preparing or preserving food fish or shellfish.

(18) "Personal use" means for the private use of the individual taking the food fish or shellfish and not for sale or barter.

(19) "Angling gear" means a line attached to a rod and reel capable of being held in hand while landing the fish or a hand-held line operated without rod or reel.

(20) "Open season" means those times, manners of taking, and places or waters established by rule of the commission for the lawful fishing, taking, or possession of food fish or shellfish. "Open season" includes the first and last days of the established time.

(21) "Fishery" means the taking of one or more particular species of food fish or shellfish with particular gear in a particular geographical area.

(22) "Limited-entry license" means a license subject to a license limitation program established in chapter 75.30 RCW.

(23) "Seaweed" means marine aquatic plant species that are dependent upon the marine aquatic or tidal environment, and exist in either an attached or free floating form, and includes but is not limited to marine aquatic plants in the classes Chlorophyta, Phaeophyta, and Rhodophyta.

(24) "Fish" includes all species classified as game fish or food fish by statute or rule, as well as all fin fish not currently classified as food fish or game fish if such species exist in state waters. The term "fish" includes all stages of development and the bodily parts of fish species.

Sec. 71. RCW 75.08.160 and 1983 1st ex.s. c 46 s 19 are each amended to read as follows:

The director, ((fisheries patrol)) fish and wildlife officers, ex officio ((fisheries patrol)) fish and wildlife officers, and department employees may enter upon any land or waters and remain there while performing their duties without liability for trespass.

It is lawful for aircraft operated by the department to land and take off from the beaches or waters of the state. ((It is unlawful for a person to interfere with the operation of these aircraft.))

Sec. 72. RCW 75.08.274 and 1995 1st sp.s. c 2 s 15 are each amended to read as follows:

((Except by permit of)) The commission((, it is unlawful to)) may adopt rules to authorize issuance of permits to take food fish or shellfish for propagation or scientific purposes within state waters.

Sec. 73. RCW 75.08.295 and 1995 1st sp.s. c 2 s 17 are each amended to read as follows:

((Except by permit of)) The commission((, it is unlawful to)) may adopt rules to authorize issuance of permits to release, plant, or place food fish or shellfish in state waters.

Sec. 74. RCW 75.08.300 and 1985 c 457 s 12 are each amended to read as follows:

(((1) It is unlawful for any)) A person other than the United States, an Indian tribe recognized as such by the federal government, the state, a subdivision of the state, or a municipal corporation or an agency of such a unit of government ((to)) shall not release salmon or steelhead trout into the public waters of the state and subsequently to recapture and commercially harvest such salmon or trout. This section shall not prevent any person from rearing salmon or steelhead trout in pens or in a confined area under circumstances where the salmon or steelhead trout are confined and never permitted to swim freely in open water.

(((2) A violation of this section constitutes a gross misdemeanor.))

Sec. 75. RCW 75.12.010 and 1995 1st sp.s. c 2 s 25 are each amended to read as follows:

(1) ((Except as provided in this section, it is unlawful to fish commercially for salmon within the waters described in subsection (2) of this section.)) The commission may authorize commercial fishing for sockeye salmon within the waters described in subsection (2) of this section only during the period June 10th to July 25th and for other salmon only from the second Monday of September through November 30th, except during the hours between 4:00 p.m. of Friday and 4:00 p.m. of the following Sunday.

(2) All waters east and south of a line commencing at a concrete monument on Angeles Point in Clallam county near the mouth of the Elwha River on which is inscribed "Angeles Point Monument" (latitude 48° 9' 3"north, longitude 123° 33' 01" west of Greenwich Meridian); thence running east on a line 81° 30' true across the flashlight and bell buoy off Partridge Point and thence continued to longitude 122° 40' west; thence north to the southerly shore of Sinclair Island; thence along the southerly shore of the island to the most easterly point of the island; thence 46° true to Carter Point, the most southerly point of Lummi Island; thence northwesterly along the westerly shore line of Lummi Island to where the shore line intersects line of longitude 122° 40' west; thence north to the mainland, including: The southerly portion of Hale Passage, Bellingham Bay, Padilla Bay, Fidalgo Bay, Guemes Channel, Skagit Bay, Similk Bay, Saratoga Passage, Holmes Harbor, Possession Sound, Admiralty Inlet, Hood Canal, Puget Sound, and their inlets, passages, waters, waterways, and tributaries.

(3) ((The commission may authorize commercial fishing for sockeye salmon within the waters described in subsection (2) of this section during the period June 10 to July 25 and for other salmon from the second Monday of September through November 30, except during the hours between 4:00 p.m. of Friday and 4:00 p.m. of the following Sunday.

(4))) The commission may authorize commercial fishing for salmon with gill net gear prior to the second Monday in September within the waters of Hale Passage, Bellingham Bay, Samish Bay, Padilla Bay, Fidalgo Bay, Guemes Channel, Skagit Bay, and Similk Bay, to wit: Those waters northerly and easterly of a line commencing at Stanwood, thence along the south shore of Skagit Bay to Rocky Point on Camano Island; thence northerly to Polnell Point on Whidbey Island.

(((5))) (4) Whenever the commission determines that a stock or run of salmon cannot be harvested in the usual manner, and that the stock or run of salmon may be in danger of being wasted and surplus to natural or artificial spawning requirements, the commission may authorize units of gill net and purse seine gear in any number or equivalents, by time and area, to fully utilize the harvestable portions of these salmon runs for the economic well being of the citizens of this state. Gill net and purse seine gear other than emergency and test gear authorized by the director shall not be used in Lake Washington.

(((6))) (5) The commission may authorize commercial fishing for pink salmon in each odd-numbered year from August 1st through September 1st in the waters lying inside of a line commencing at the most easterly point of Dungeness Spit and thence projected to Point Partridge on Whidbey Island and a line commencing at Olele Point and thence projected easterly to Bush Point on Whidbey Island.

Sec. 76. RCW 75.12.015 and 1995 1st sp.s. c 2 s 26 are each amended to read as follows:

((Except as provided in this section, it is unlawful to fish commercially for chinook or coho salmon in the Pacific Ocean and the Straits of Juan de Fuca.))

(1) The commission may authorize commercial fishing for coho salmon in the Pacific Ocean and the Straits of Juan de Fuca only from June 16th through October 31st.

(2) The commission may authorize commercial fishing for chinook salmon in the Pacific Ocean and the Straits of Juan de Fuca only from March 15th through October 31st.

Sec. 77. RCW 75.12.040 and 1993 sp.s. c 2 s 27 are each amended to read as follows:

(1) ((It is unlawful to)) A person shall not use, operate, or maintain a gill net which exceeds ((250 fathoms)) 1500 feet in length or a drag seine in the waters of the Columbia river for catching salmon.

(2) ((It is unlawful to)) A person shall not construct, install, use, operate, or maintain within state waters a pound net, round haul net, lampara net, fish trap, fish wheel, scow fish wheel, set net, weir, or fixed appliance for catching salmon or steelhead. The director may authorize the use of this gear for scientific investigations.

(3) The department, in coordination with the Oregon department of fish and wildlife, shall adopt rules to regulate the use of monofilament in gill net webbing on the Columbia river.

Sec. 78. RCW 75.12.132 and 1984 c 80 s 5 are each amended to read as follows:

(1) ((It is unlawful to fish for or take salmon commercially with a net within the waters of the tributaries and sloughs described in subsection (2) of this section which flow into or are connected with the Columbia river.

(2))) The ((director)) commission shall adopt rules defining geographical boundaries of the following Columbia river tributaries and sloughs:

(a) Washougal river;

(b) Camas slough;

(d) Kalama river;

(e) Cowlitz river;

(f) Elokomin river;

(g) Elokomin sloughs;

(h) Skamokawa sloughs;

(i) Grays river;

(j) Deep river;

(k) Grays bay.

(((3))) (2) The ((director)) commission may authorize commercial net fishing for salmon in the tributaries and sloughs from September 1st to November 30th only, if the time, areas, and level of effort are regulated in order to maximize the recreational fishing opportunity while minimizing excess returns of fish to hatcheries. The ((director)) commission shall not authorize commercial net fishing if a significant catch of steelhead would occur.

Sec. 79. RCW 75.12.140 and 1983 1st ex.s. c 46 s 59 are each amended to read as follows:

((It is unlawful to fish for salmon with)) The commission shall not authorize use of reef net fishing gear ((in state waters,)) except in the reef net areas described in this section.

(1) Point Roberts reef net fishing area includes those waters within 250 feet on each side of a line projected 129° true from a point at longitude 123° 01' 15" W. latitude 48° 58' 38" N. to a point one mile distant, as such description is shown upon the United States Coast and Geodetic Survey map numbered 6300, published September, 1941, in Washington, D.C., eleventh edition.

(2) Cherry Point reef net fishing area includes those waters inland and inside the 10-fathom line between lines projected 205° true from points on the mainland at longitude 122° 44' 54" latitude 48° 51' 48" and longitude 122° 44' 18" latitude 48° 51' 33", a [as] such descriptions are shown upon the United States Coast and Geodetic Survey map numbered 6380, published March, 1947, in Washington, D.C., eighth edition.

(3) Lummi Island reef net fishing area includes those waters inland and inside a line projected from Village Point 208° true to a point 900 yards distant, thence 129° true to the point of intersection with a line projected 259° true from the shore of Lummi Island 122° 40' 42" latitude 48° 41' 32", as such descriptions are shown upon the United States Coast and Geodetic Survey map numbered 6380, published March, 1947, in Washington, D.C., eighth edition, revised 11-25-57, save and except that there shall be excluded therefrom all waters lying inside of a line projected 259° true from a point at 122° 40' 42" latitude 48° 41' 32" to a point 300 yards distant from high tide, thence in a northerly direction to the United States Coast and Geodetic Survey reference mark number 2, 1941-1950, located on that point on Lummi Island known as Lovers Point, as such descriptions are shown upon the United States Coast and Geodetic Survey map number 6380 as aforesaid. The term "Village Point" as used herein shall be construed to mean a point of location on Village Point, Lummi Island, at the mean high tide line on a true bearing of 43° 53' a distance of 457 feet to the center of the chimney of a wood frame house on the east side of the county road. Said chimney and house being described as Village Point Chimney on page 612 of the United States Coast and Geodetic Survey list of geographic positions No. G-5455, Rosario Strait.

(4) Sinclair Island reef net fishing area includes those waters inland and inside a line projected from the northern point of Sinclair Island to Boulder reef, thence 200° true to the northwesterly point of Sinclair Island, as such descriptions are shown upon the United States Coast and Geodetic Survey map numbered 6380, published March, 1947, in Washington, D.C., eighth edition.

(5) Flat Point reef net fishing area includes those waters within a radius of 175 feet of a point off Lopez Island located at longitude 122° 55' 24" latitude 48° 32' 33", as such description is shown upon the United States Coast and Geodetic Survey map numbered 6380, published March, 1947, in Washington, D.C., eighth edition.

(6) Lopez Island reef net fishing area includes those waters within 400 yards of shore between lines projected true west from points on the shore of Lopez Island at longitude 122° 55' 04" latitude 48° 31' 59" and longitude 122° 55' 54" latitude 48° 30' 55", as such descriptions are shown upon the United States Coast and Geodetic Survey map numbered 6380, published March, 1947, in Washington, D.C., eighth edition.

(7) Iceberg Point reef net fishing area includes those waters inland and inside a line projected from Davis Point on Lopez Island to the west point of Long Island, thence to the southern point of Hall Island, thence to the eastern point at the entrance to Jones Bay, and thence to the southern point at the entrance to Mackaye Harbor on Lopez Island; and those waters inland and inside a line projected 320° from Iceberg Point light on Lopez Island, a distance of 400 feet, thence easterly to the point on Lopez Island at longitude 122° 53' 00" latitude 48° 25' 39", as such descriptions are shown upon the United States Coast and Geodetic Survey map numbered 6380, published March, 1947, in Washington, D.C., eighth edition.

(8) Aleck Bay reef net fishing area includes those waters inland and inside a line projected from the southwestern point at the entrance to Aleck Bay on Lopez Island at longitude 122° 51' 11" latitude 48° 25' 14" southeasterly 800 yards to the submerged rock shown on U.S.G.S. map number 6380, thence northerly to the cove on Lopez Island at longitude 122° 50' 49" latitude 48° 25' 42", as such descriptions are shown upon the United States Coast and Geodetic Survey map numbered 6380, published March, 1947, in Washington, D.C., eighth edition.

(9) Shaw Island reef net fishing area number 1 includes those waters within 300 yards of shore between lines projected true south from points on Shaw Island at longitude 122° 56' 14" latitude 48° 33' 28" and longitude 122° 57' 29" latitude 48° 32' 58", as such descriptions are shown upon the United States Coast and Geodetic Survey map numbered 6380, published March, 1947, in Washington, D.C., eighth edition.

(10) Shaw Island reef net fishing area number 2 includes those waters inland and inside a line projected from Point George on Shaw Island to the westerly point of Neck Point on Shaw Island, as such description is shown upon the United States Coast and Geodetic Survey map numbered 6380, published March, 1947, in Washington, D.C., eighth edition.

(11) Stuart Island reef net fishing area number 1 includes those waters within 600 feet of the shore of Stuart Island between lines projected true east from points at longitude 123° 10' 47" latitude 48° 39' 47" and longitude 123° 10' 47" latitude 48° 39' 33", as such descriptions are shown upon the United States Coast and Geodetic Survey map numbered 6380, published March, 1947, in Washington, D.C., eighth edition.

(12) Stuart Island reef net fishing area number 2 includes those waters within 250 feet of Gossip Island, also known as Happy Island, as such description is shown upon the United States Coast and Geodetic Survey map numbered 6380, published March, 1947, in Washington, D.C., eighth edition.

(13) Johns Island reef net fishing area includes those waters inland and inside a line projected from the eastern point of Johns Island to the northwestern point of Little Cactus Island, thence northwesterly to a point on Johns Island at longitude 123° 09' 24" latitude 48° 39' 59", as such descriptions are shown upon the United States Coast and Geodetic Survey map numbered 6380, published March, 1947, in Washington, D.C., eighth edition.

(14) Battleship Island reef net fishing area includes those waters lying within 350 feet of Battleship Island, as such description is shown upon the United States Coast and Geodetic Survey map numbered 6380, published March, 1947, in Washington, D.C., eighth edition.

(15) Open Bay reef net fishing area includes those waters lying within 150 feet of shore between lines projected true east from a point on Henry Island at longitude 123° 11' 34 1/2" latitude 48° 35' 27 1/2" at a point 250 feet south, as such descriptions are shown upon the United States Coast and Geodetic Survey map numbered 6380, published March, 1947, in Washington, D.C., eighth edition.

(16) Mitchell Reef net fishing area includes those waters within a line beginning at the rock shown on U.S.G.S. map number 6380 at longitude 123° 10' 56" latitude 48° 34' 49 1/2", and projected 50 feet northwesterly, thence southwesterly 250 feet, thence southeasterly 300 feet, thence northeasterly 250 feet, thence to the point of beginning, as such descriptions are shown upon the United States Coast and Geodetic Survey map numbered 6380, published March, 1947, in Washington, D.C., eighth edition.

(17) Smugglers Cove reef fishing area includes those waters within 200 feet of shore between lines projected true west from points on the shore of San Juan Island at longitude 123° 10' 29" latitude 48° 33' 50" and longitude 123° 10' 31" latitude 48° 33' 45", as such descriptions are shown upon the United States Coast and Geodetic Survey map numbered 6380, published March, 1947, in Washington, D.C., eighth edition.

(18) Andrews Bay reef net fishing area includes those waters lying within 300 feet of the shore of San Juan Island between a line projected true south from a point at the northern entrance of Andrews Bay at longitude 123° 09' 53 1/2" latitude 48° 33' 00" and the cable crossing sign in Andrews Bay, at longitude 123° 09' 45" latitude 48° 33' 04", as such descriptions are shown upon the United States Coast and Geodetic Survey map numbered 6380, published March, 1947, in Washington, D.C., eighth edition.

(19) Orcas Island reef net fishing area includes those waters inland and inside a line projected true west a distance of 1,000 yards from the shore of Orcas Island at longitude 122° 57' 40" latitude 48° 41' 06" thence northeasterly to a point 500 feet true west of Point Doughty, then true east to Point Doughty, as such descriptions are shown upon the United States Coast and Geodetic Survey map numbered 6380, published March, 1947, in Washington, D.C., eighth edition.

Sec. 80. RCW 75.12.210 and 1993 c 20 s 2 are each amended to read as follows:

(1) Except as provided in subsection (2) of this section, ((it is unlawful to fish for or take salmon with)) the commission shall not authorize gear other than troll gear or angling gear for taking salmon within the offshore waters or the waters of the Pacific Ocean over which the state has jurisdiction lying west of the following line: Commencing at the point of intersection of the international boundary line in the Strait of Juan de Fuca and a line drawn between the lighthouse on Tatoosh Island in Clallam County and Bonilla Point on Vancouver Island; thence southerly to the lighthouse on Tatoosh Island; thence southerly to the most westerly point of Cape Flattery; thence southerly along the state shoreline of the Pacific Ocean, crossing any river mouths at their most westerly points of land, to Point Brown at the entrance to Grays Harbor; thence southerly to Point Chehalis Light on Point Chehalis; thence southerly from Point Chehalis along the state shoreline of the Pacific Ocean to the Cape Shoalwater tower at the entrance to Willapa Bay; thence southerly to Leadbetter Point; thence southerly along the state shoreline of the Pacific Ocean to the inshore end of the North jetty at the entrance to the Columbia River; thence southerly to the knuckle of the South jetty at the entrance to said river.

(2) The ((director)) commission may authorize the use of nets for taking salmon in the waters described in subsection (1) of this section for scientific investigations.

Sec. 81. RCW 75.12.230 and 1983 1st ex.s. c 46 s 61 are each amended to read as follows:

Within the waters described in RCW 75.12.210, ((it is unlawful to)) a person shall not transport or possess salmon on board a vessel carrying fishing gear of a type other than troll lines or angling gear, unless accompanied by a certificate issued by a state or country showing that the salmon have been lawfully taken within the territorial waters of the state or country.

Sec. 82. RCW 75.12.390 and 1989 c 172 s 1 are each amended to read as follows:

The commission shall not authorize commercial bottom trawling for food fish and shellfish ((is unlawful)) in all areas of Hood Canal south of a line projected from Tala Point to Foulweather Bluff and in Puget Sound south of a line projected from Foulweather Bluff to Double Bluff and including all marine waters east of Whidbey Island and Camano Island.

Sec. 83. RCW 75.12.440 and 1993 c 340 s 50 are each amended to read as follows:

((It is unlawful to use)) The commission shall not authorize any commercial fisher to use more than fifty shrimp pots while commercially fishing for shrimp in that portion of Hood Canal lying south of the Hood Canal floating bridge.

Sec. 84. RCW 75.12.650 and 1996 c 267 s 24 are each amended to read as follows:

((It is unlawful to fish commercially for salmon using fishing gear not authorized for commercial salmon fishing by rule of the department.)) The commission shall not authorize angling gear or other personal use gear for commercial salmon fishing.

Sec. 85. RCW 75.20.040 and 1983 1st ex.s. c 46 s 70 are each amended to read as follows:

A diversion device used for conducting water from a lake, river, or stream for any purpose shall be equipped with a fish guard approved by the director to prevent the passage of fish into the diversion device. The fish guard shall be maintained at all times when water is taken into the diversion device. The fish guards shall be installed at places and times prescribed by the director upon thirty days' notice to the owner of the diversion device. ((It is unlawful for the owner of a diversion device to fail to comply with this section.))

Each day the diversion device is not equipped with an approved fish guard is a separate offense. If within thirty days after notice to equip a diversion device the owner fails to do so, the director may take possession of the diversion device and close the device until it is properly equipped. Expenses incurred by the department constitute the value of a lien upon the diversion device and upon the real and personal property of the owner. Notice of the lien shall be filed and recorded in the office of the county auditor of the county in which the action is taken.

Sec. 86. RCW 75.20.060 and 1983 1st ex.s. c 46 s 72 are each amended to read as follows:

A dam or other obstruction across or in a stream shall be provided with a durable and efficient fishway approved by the director. Plans and specifications shall be provided to the department prior to the director's approval. The fishway shall be maintained in an effective condition and continuously supplied with sufficient water to freely pass fish. ((It is unlawful for the owner, manager, agent, or person in charge of the dam or obstruction to fail to comply with this section.))

If a person fails to construct and maintain a fishway or to remove the dam or obstruction in a manner satisfactory to the director, then within thirty days after written notice to comply has been served upon the owner, his agent, or the person in charge, the director may construct a fishway or remove the dam or obstruction. Expenses incurred by the department constitute the value of a lien upon the dam and upon the personal property of the person owning the dam. Notice of the lien shall be filed and recorded in the office of the county auditor of the county in which the dam or obstruction is situated. The lien may be foreclosed in an action brought in the name of the state.

If, within thirty days after notice to construct a fishway or remove a dam or obstruction, the owner, his agent, or the person in charge fails to do so, the dam or obstruction is a public nuisance and the director may take possession of the dam or obstruction and destroy it. No liability shall attach for the destruction.

Sec. 87. RCW 75.20.100 and 1997 c 385 s 1 and 1997 c 290 s 4 are each reenacted and amended to read as follows:

(1) In the event that any person or government agency desires to construct any form of hydraulic project or perform other work that will use, divert, obstruct, or change the natural flow or bed of any of the salt or fresh waters of the state, such person or government agency shall, before commencing construction or work thereon and to ensure the proper protection of fish life, secure the approval of the department as to the adequacy of the means proposed for the protection of fish life. This approval shall not be unreasonably withheld.

(2)(a) Except as provided in RCW 75.20.1001, the department shall grant or deny approval of a standard permit within forty-five calendar days of the receipt of a complete application and notice of compliance with any applicable requirements of the state environmental policy act, made in the manner prescribed in this section.

(b) The applicant may document receipt of application by filing in person or by registered mail. A complete application for approval shall contain general plans for the overall project, complete plans and specifications of the proposed construction or work within the mean higher high water line in salt water or within the ordinary high water line in fresh water, and complete plans and specifications for the proper protection of fish life.

(i) After ten working days of receipt of the application, the applicant remains unavailable or unable to arrange for a timely field evaluation of the proposed project;

(ii) The site is physically inaccessible for inspection; or

(iii) The applicant requests delay. Immediately upon determination that the forty-five day period is suspended, the department shall notify the applicant in writing of the reasons for the delay.

(d) For purposes of this section, "standard permit" means a written permit issued by the department when the conditions under subsections (3) and (((6)))(5)(b) of this section are not met.

(3)(a) The department may issue an expedited written permit in those instances where normal permit processing would result in significant hardship for the applicant or unacceptable damage to the environment. In cases of imminent danger, the department shall issue an expedited written permit, upon request, for work to repair existing structures, move obstructions, restore banks, protect property, or protect fish resources. Expedited permit requests require a complete written application as provided in subsection (2)(b) of this section and shall be issued within fifteen calendar days of the receipt of a complete written application. Approval of an expedited permit is valid for up to sixty days from the date of issuance.

(b) For the purposes of this subsection, "imminent danger" means a threat by weather, water flow, or other natural conditions that is likely to occur within sixty days of a request for a permit application.

(c) The department may not require the provisions of the state environmental policy act, chapter 43.21C RCW, to be met as a condition of issuing a permit under this subsection.

(d) The department or the county legislative authority may determine if an imminent danger exists. The county legislative authority shall notify the department, in writing, if it determines that an imminent danger exists.

(4) Approval of a standard permit is valid for a period of up to five years from date of issuance. The permittee must demonstrate substantial progress on construction of that portion of the project relating to the approval within two years of the date of issuance. If the department denies approval, the department shall provide the applicant, in writing, a statement of the specific reasons why and how the proposed project would adversely affect fish life. Protection of fish life shall be the only ground upon which approval may be denied or conditioned. Chapter 34.05 RCW applies to any denial of project approval, conditional approval, or requirements for project modification upon which approval may be contingent.

(5) ((If any person or government agency commences construction on any hydraulic works or projects subject to this section without first having obtained approval of the department as to the adequacy of the means proposed for the protection of fish life, or if any person or government agency fails to follow or carry out any of the requirements or conditions as are made a part of such approval, the person or director of the agency is guilty of a gross misdemeanor. If any such person or government agency is convicted of violating any of the provisions of this section and continues construction on any such works or projects without fully complying with the provisions hereof, such works or projects are hereby declared a public nuisance and shall be subject to abatement as such.

(6)))(a) In case of an emergency arising from weather or stream flow conditions or other natural conditions, the department, through its authorized representatives, shall issue immediately, upon request, oral approval for removing any obstructions, repairing existing structures, restoring stream banks, or to protect property threatened by the stream or a change in the stream flow without the necessity of obtaining a written approval prior to commencing work. Conditions of an oral approval to protect fish life shall be established by the department and reduced to writing within thirty days and complied with as provided for in this section. Oral approval shall be granted immediately, upon request, for a stream crossing during an emergency situation.

(b) For purposes of this section and RCW 75.20.103, "emergency" means an immediate threat to life, the public, property, or of environmental degradation.

(c) The department or the county legislative authority may declare and continue an emergency when one or more of the criteria under (b) of this subsection are met. The county legislative authority shall immediately notify the department if it declares an emergency under this subsection.

(((7))) (6) The department shall, at the request of a county, develop five-year maintenance approval agreements, consistent with comprehensive flood control management plans adopted under the authority of RCW 86.12.200, or other watershed plan approved by a county legislative authority, to allow for work on public and private property for bank stabilization, bridge repair, removal of sand bars and debris, channel maintenance, and other flood damage repair and reduction activity under agreed-upon conditions and times without obtaining permits for specific projects.

(((8))) (7) This section shall not apply to the construction of any form of hydraulic project or other work which diverts water for agricultural irrigation or stock watering purposes authorized under or recognized as being valid by the state's water codes, or when such hydraulic project or other work is associated with streambank stabilization to protect farm and agricultural land as defined in RCW 84.34.020. These irrigation or stock watering diversion and streambank stabilization projects shall be governed by RCW 75.20.103.

A landscape management plan approved by the department and the department of natural resources under RCW 76.09.350(2), shall serve as a hydraulic project approval for the life of the plan if fish are selected as one of the public resources for coverage under such a plan.

(((9))) (8) For the purposes of this section and RCW 75.20.103, "bed" means the land below the ordinary high water lines of state waters. This definition does not include irrigation ditches, canals, storm water run-off devices, or other artificial watercourses except where they exist in a natural watercourse that has been altered by man.

(((10))) (9) The phrase "to construct any form of hydraulic project or perform other work" does not include the act of driving across an established ford. Driving across streams or on wetted stream beds at areas other than established fords requires approval. Work within the ordinary high water line of state waters to construct or repair a ford or crossing requires approval.

Sec. 88. RCW 75.20.103 and 1993 sp.s. c 2 s 32 are each amended to read as follows:

In the event that any person or government agency desires to construct any form of hydraulic project or other work that diverts water for agricultural irrigation or stock watering purposes, or when such hydraulic project or other work is associated with streambank stabilization to protect farm and agricultural land as defined in RCW 84.34.020, and when such diversion or streambank stabilization will use, divert, obstruct, or change the natural flow or bed of any river or stream or will utilize any waters of the state or materials from the stream beds, the person or government agency shall, before commencing construction or work thereon and to ensure the proper protection of fish life, secure a written approval from the department as to the adequacy of the means proposed for the protection of fish life. This approval shall not be unreasonably withheld. Except as provided in RCW 75.20.1001 ((and 75.20.1002)), the department shall grant or deny the approval within forty-five calendar days of the receipt of a complete application and notice of compliance with any applicable requirements of the state environmental policy act, made in the manner prescribed in this section. The applicant may document receipt of application by filing in person or by registered mail. A complete application for an approval shall contain general plans for the overall project, complete plans and specifications of the proposed construction or work within ordinary high water line, and complete plans and specifications for the proper protection of fish life. The forty-five day requirement shall be suspended if (1) after ten working days of receipt of the application, the applicant remains unavailable or unable to arrange for a timely field evaluation of the proposed project; (2) the site is physically inaccessible for inspection; or (3) the applicant requests delay.

Immediately upon determination that the forty-five day period is suspended, the department shall notify the applicant in writing of the reasons for the delay.

An approval shall remain in effect without need for periodic renewal for projects that divert water for agricultural irrigation or stock watering purposes and that involve seasonal construction or other work. Approval for streambank stabilization projects shall remain in effect without need for periodic renewal if the problem causing the need for the streambank stabilization occurs on an annual or more frequent basis. The permittee must notify the appropriate agency before commencing the construction or other work within the area covered by the approval.

The permittee must demonstrate substantial progress on construction of that portion of the project relating to the approval within two years of the date of issuance. If the department denies approval, the department shall provide the applicant, in writing, a statement of the specific reasons why and how the proposed project would adversely affect fish life. Protection of fish life shall be the only ground upon which approval may be denied or conditioned. Issuance, denial, conditioning, or modification shall be appealable to the hydraulic appeals board established in RCW 43.21B.005 within thirty days of the notice of decision. The burden shall be upon the department to show that the denial or conditioning of an approval is solely aimed at the protection of fish life.

The department may, after consultation with the permittee, modify an approval due to changed conditions. The modifications shall become effective unless appealed to the hydraulic appeals board within thirty days from the notice of the proposed modification. The burden is on the department to show that changed conditions warrant the modification in order to protect fish life.

A permittee may request modification of an approval due to changed conditions. The request shall be processed within forty-five calendar days of receipt of the written request. A decision by the department may be appealed to the hydraulic appeals board within thirty days of the notice of the decision. The burden is on the permittee to show that changed conditions warrant the requested modification and that such modification will not impair fish life.

((If any person or government agency commences construction on any hydraulic works or projects subject to this section without first having obtained written approval of the department as to the adequacy of the means proposed for the protection of fish life, or if any person or government agency fails to follow or carry out any of the requirements or conditions as are made a part of such approval, the person or director of the agency is guilty of a gross misdemeanor. If any such person or government agency is convicted of violating any of the provisions of this section and continues construction on any such works or projects without fully complying with the provisions hereof, such works or projects are hereby declared a public nuisance and shall be subject to abatement as such.))

In case of an emergency arising from weather or stream flow conditions or other natural conditions, the department, through its authorized representatives, shall issue immediately upon request oral approval for removing any obstructions, repairing existing structures, restoring stream banks, or to protect property threatened by the stream or a change in the stream flow without the necessity of obtaining a written approval prior to commencing work. Conditions of an oral approval shall be reduced to writing within thirty days and complied with as provided for in this section.

For purposes of this chapter, "streambank stabilization" shall include but not be limited to log and debris removal, bank protection (including riprap, jetties, and groins), gravel removal and erosion control.

Sec. 89. RCW 75.20.110 and 1995 1st sp.s. c 2 s 27 are each amended to read as follows:

(1) Except for the north fork of the Lewis river and the White Salmon river, all streams and rivers tributary to the Columbia river downstream from McNary dam are established as an anadromous fish sanctuary. This sanctuary is created to preserve and develop the food fish and game fish resources in these streams and rivers and to protect them against undue industrial encroachment.

(2) Within the sanctuary area:

(a) ((It is unlawful)) The department shall not issue hydraulic project approval to construct a dam greater than twenty-five feet high within the migration range of anadromous fish as determined by the ((commission)) department.

(b) ((Except by order of the commission, it is unlawful to)) A person shall not divert water from rivers and streams in quantities that will reduce the respective stream flow below the annual average low flow, based upon data published in United States geological survey reports.

(3) The commission may acquire and abate a dam or other obstruction, or acquire any water right vested on a sanctuary stream or river, which is in conflict with the provisions of subsection (2) of this section.

(4) Subsection (2)(a) of this section does not apply to the sediment retention structure to be built on the North Fork Toutle river by the United States army corps of engineers.

Sec. 90. RCW 75.24.080 and 1983 1st ex.s. c 46 s 83 are each amended to read as follows:

The director may designate as "restricted shellfish areas" those areas in which infection or infestation of shellfish is present. ((Except by)) A permit ((of)) issued by the director((, it)) is ((unlawful)) required to transplant or transport into or out of a restricted area shellfish or equipment used in culturing, taking, handling, or processing shellfish.

Sec. 91. RCW 75.24.100 and 1995 1st sp.s. c 2 s 29 are each amended to read as follows:

(1) ((It is unlawful)) The department may not authorize a person to take geoduck clams for commercial purposes outside the harvest area designated in a current department of natural resources geoduck harvesting agreement issued under RCW 79.96.080. ((It is unlawful to commercially)) The department may not authorize commercial harvest of geoduck clams from bottoms that are shallower than eighteen feet below mean lower low water (0.0. ft.), or that lie in an area bounded by the line of ordinary high tide (mean high tide) and a line two hundred yards seaward from and parallel to the line of ordinary high tide. This section does not apply to the harvest of private sector cultured aquatic products as defined in RCW 15.85.020.

(2) Commercial geoduck harvesting shall be done with a hand-held, manually operated water jet or suction device guided and controlled from under water by a diver. Periodically, the commission shall determine the effect of each type or unit of gear upon the geoduck population or the substrate they inhabit. The commission may require modification of the gear or stop its use if it is being operated in a wasteful or destructive manner or if its operation may cause permanent damage to the bottom or adjacent shellfish populations.

Sec. 92. RCW 75.24.110 and 1983 1st ex.s. c 46 s 87 are each amended to read as follows:

((It is unlawful for)) The department may not authorize a person to import oysters or oyster seed into this state for the purpose of planting them in state waters without a permit from the director. The director shall issue a permit only after an adequate inspection has been made and the oysters or oyster seed are found to be free of disease, pests, and other substances which might endanger oysters in state waters.

Sec. 93. RCW 75.28.010 and 1997 c 58 s 883 are each amended to read as follows:

(1) Except as otherwise provided by this title, ((it is unlawful to)) a person may not engage in any of the following activities without a license or permit issued by the director:

(a) Commercially fish for or take food fish or shellfish;

(b) Deliver food fish or shellfish taken in offshore waters;

(d) Engage in processing or wholesaling food fish or shellfish; or

(e) Act as a guide for salmon for personal use in freshwater rivers and streams, other than that part of the Columbia river below the bridge at Longview.

(2) No person may engage in the activities described in subsection (1) of this section unless the licenses or permits required by this title are in the person's possession, and the person is the named license holder or an alternate operator designated on the license and the person's license is not suspended.

(3) A valid Oregon license that is equivalent to a license under this title is valid in the concurrent waters of the Columbia river if the state of Oregon recognizes as valid the equivalent Washington license. The director may identify by rule what Oregon licenses are equivalent.

(4) No license or permit is required for the production or harvesting of private sector cultured aquatic products as defined in RCW 15.85.020 or for the delivery, processing, or wholesaling of such aquatic products. However, if a means of identifying such products is required by rules adopted under RCW 15.85.060, the exemption from licensing or permit requirements established by this subsection applies only if the aquatic products are identified in conformance with those rules.

Sec. 94. RCW 75.28.045 and 1993 c 340 s 7 are each amended to read as follows:

This section applies to all commercial fishery licenses, delivery licenses, and charter licenses.

(1) An applicant for a license subject to this section may designate a vessel to be used with the license. Except for emergency salmon delivery licenses, the director may issue a license regardless of whether the applicant designates a vessel. An applicant may designate no more than one vessel on a license subject to this section.

(2) A license for a fishery that requires a vessel authorizes no taking or delivery of food fish or shellfish unless a vessel is designated on the license. A delivery license authorizes no delivery of food fish or shellfish unless a vessel is designated on the license.

(3) ((It is unlawful to take food fish or shellfish in a fishery that requires a vessel except from a vessel designated on a commercial fishery license for that fishery.

(4) It is unlawful to operate a vessel as a charter boat unless the vessel is designated on a charter license.

(5))) No vessel may be designated on more than one commercial fishery license unless the licenses are for different fisheries. No vessel may be designated on more than one delivery license, on more than one salmon charter license, or on more than one nonsalmon charter license.

Sec. 95. RCW 75.28.095 and 1997 c 76 s 2 are each amended to read as follows:

(1) The director shall issue the charter licenses and angler permits listed in this section according to the requirements of this title. The licenses and permits and their annual fees and surcharges are:

License or Permit Annual Fee Governing

(RCW 75.50.100 Surcharge) Section

Resident Nonresident

(a) Nonsalmon charter $225 $375

(b) Salmon charter $380 $685 RCW 75.30.065

(plus $100) (plus $100)

(d) Salmon roe $ 95 $ 95 RCW 75.28.690

(2) ((Except as provided in subsection (5) of this section, it is unlawful to operate a vessel as a charter boat from which salmon or salmon and other food fish or shellfish are taken without a salmon charter license designating the vessel)) A salmon charter license designating a vessel is required to operate a charter boat to take salmon, other food fish, and shellfish. The director may issue a salmon charter license only to a person who meets the qualifications of RCW 75.30.065.

(3) ((Except as provided in subsections (2) and (5) of this section, it is unlawful to operate a vessel as a charter boat from which food fish or shellfish are taken without a nonsalmon charter license)) A nonsalmon charter license designating a vessel is required to operate a charter boat to take food fish other than salmon and shellfish. As used in this subsection, "food fish" does not include salmon.

(4) "Charter boat" means a vessel from which persons may, for a fee, fish for food fish or shellfish for personal use, and that brings food fish or shellfish into state ports or brings food fish or shellfish taken from state waters into United States ports. The director may specify by rule when a vessel is a "charter boat" within this definition. "Charter boat" does not mean a vessel used by a guide for clients fishing for food fish for personal use in freshwater rivers, streams, and lakes, other than Lake Washington or that part of the Columbia River below the bridge at Longview.

(5) A charter boat licensed in Oregon may fish without a Washington charter license under the same rules as Washington charter boat operators in ocean waters within the jurisdiction of Washington state from the southern border of the state of Washington to Leadbetter Point, as long as the Oregon vessel does not land at any Washington port with the purpose of taking on or discharging passengers. The provisions of this subsection shall be in effect as long as the state of Oregon has reciprocal laws and regulations.

(6) A salmon charter license under subsection (1)(b) of this section may be renewed if the license holder notifies the department by May 1st of that year that he or she will not participate in the fishery during that calendar year. The license holder must pay the one hundred-dollar enhancement surcharge, plus a fifteen-dollar handling charge, in order to be considered a valid renewal and eligible to renew the license the following year.

Sec. 96. RCW 75.28.113 and 1994 c 260 s 22 are each amended to read as follows:

(1) ((It is unlawful to deliver salmon taken in offshore waters to a place or port in the state without)) A salmon delivery license ((from the director)) is required to deliver salmon taken in offshore waters to a place or port in the state. The annual fee for a salmon delivery license is three hundred eighty dollars for residents and six hundred eighty-five dollars for nonresidents. The annual surcharge under RCW 75.50.100 is one hundred dollars for each license. Holders of nonlimited entry delivery licenses issued under RCW 75.28.125 may apply the nonlimited entry delivery license fee against the salmon delivery license fee.

(2) Only a person who meets the qualifications established in RCW 75.30.120 may hold a salmon delivery license issued under this section.

(3) A salmon delivery license authorizes no taking of salmon or other food fish or shellfish from the waters of the state.

(4) If the director determines that the operation of a vessel under a salmon delivery license results in the depletion or destruction of the state's salmon resource or the delivery into this state of salmon products prohibited by law, the director may revoke the license under the procedures of chapter 34.05 RCW.

Sec. 97. RCW 75.28.125 and 1994 c 260 s 21 are each amended to read as follows:

(1) Except as provided in subsection (2) of this section, ((it is unlawful to deliver with)) a person may not use a commercial fishing vessel to deliver food fish or shellfish taken in offshore waters to a port in the state without a nonlimited entry delivery license. As used in this section, "food fish" does not include salmon. As used in this section, "shellfish" does not include ocean pink shrimp or coastal crab. The annual license fee for a nonlimited entry delivery license is one hundred ten dollars for residents and two hundred dollars for nonresidents.

(2) Holders of salmon troll fishery licenses issued under RCW 75.28.110, salmon delivery licenses issued under RCW 75.28.113, crab pot fishery licenses issued under RCW 75.28.130, food fish trawl—Non-Puget Sound fishery licenses issued under RCW 75.28.120, Dungeness crab—coastal fishery licenses, ocean pink shrimp delivery licenses, and shrimp trawl—Non-Puget Sound fishery licenses issued under RCW 75.28.130 may deliver food fish or shellfish taken in offshore waters without a nonlimited entry delivery license.

(3) A nonlimited entry delivery license authorizes no taking of food fish or shellfish from state waters.

Sec. 98. RCW 75.28.710 and 1993 c 340 s 26 are each amended to read as follows:

(1) ((It is unlawful to)) A person shall not offer or perform the services of a professional salmon guide in the taking of salmon for personal use in freshwater rivers and streams, other than in that part of the Columbia river below the bridge at Longview, without a professional salmon guide license.

(2) Only an individual at least sixteen years of age may hold a professional salmon guide license. No individual may hold more than one professional salmon guide license.

Sec. 99. RCW 75.28.740 and 1993 c 340 s 18 are each amended to read as follows:

(1) The director may by rule designate a fishery as an emerging commercial fishery. The director shall include in the designation whether the fishery is one that requires a vessel.

(2) "Emerging commercial fishery" means the commercial taking of a newly classified species of food fish or shellfish, the commercial taking of a classified species with gear not previously used for that species, or the commercial taking of a classified species in an area from which that species has not previously been commercially taken. Any species of food fish or shellfish commercially harvested in Washington state as of June 7, 1990, may be designated as a species in an emerging commercial fishery, except that no fishery subject to a license limitation program in chapter 75.30 RCW may be designated as an emerging commercial fishery.

(3) ((It is unlawful to)) A person shall not take food fish or shellfish in a fishery designated as an emerging commercial fishery without an emerging commercial fishery license and a permit from the director. The director shall issue two types of permits to accompany emerging commercial fishery licenses: Trial fishery permits and experimental fishery permits. Trial fishery permits are governed by subsection (4) of this section. Experimental fishery permits are governed by RCW 75.30.220.

(4) The director shall issue trial fishery permits for a fishery designated as an emerging commercial fishery unless the director determines there is a need to limit the number of participants under RCW 75.30.220. A person who meets the qualifications of RCW 75.28.020 may hold a trial fishery permit. The holder of a trial fishery permit shall comply with the terms of the permit. Trial fishery permits are not transferable from the permit holder to any other person.

Sec. 100. RCW 75.30.070 and 1993 c 340 s 29 are each amended to read as follows:

(1) Except as provided in subsection (3) of this section, ((it is unlawful to)) a person shall not operate a vessel as a charter boat from which salmon are taken in salt water without an angler permit. The angler permit shall specify the maximum number of persons that may fish from the charter boat per trip. The angler permit expires if the salmon charter license is not renewed.

(2) Only a person who holds a salmon charter license issued under RCW 75.28.095 and 75.30.065 may hold an angler permit.

(3) An angler permit shall not be required for charter boats licensed in Oregon and fishing in ocean waters within the jurisdiction of Washington state from the southern border of the state of Washington to Leadbetter Point under the same regulations as Washington charter boat operators, as long as the Oregon vessel does not land at any Washington port with the purpose of taking on or discharging passengers. The provisions of this subsection shall be in effect as long as the state of Oregon has reciprocal laws and regulations.

Sec. 101. RCW 75.30.130 and 1997 c 233 s 1 and 1997 c 115 s 1 are each reenacted and amended to read as follows:

(1) ((It is unlawful to)) A person shall not commercially take Dungeness crab (Cancer magister) in Puget Sound without first obtaining a Dungeness crab--Puget Sound fishery license. As used in this section, "Puget Sound" has the meaning given in RCW 75.28.110(5)(a). A Dungeness crab--Puget Sound fishery license is not required to take other species of crab, including red rock crab (Cancer productus).

(2) Except as provided in subsections (3) and (6) of this section, after January 1, 1982, the director shall issue no new Dungeness crab--Puget Sound fishery licenses. Only a person who meets the following qualification may renew an existing license: The person shall have held the Dungeness crab--Puget Sound fishery license sought to be renewed during the previous year or acquired the license by transfer from someone who held it during the previous year, and shall not have subsequently transferred the license to another person.

(3) Where the person failed to obtain the license during the previous year because of a license suspension, the person may qualify for a license by establishing that the person held such a license during the last year in which the license was not suspended.

(4) This section does not restrict the issuance of commercial crab licenses for areas other than Puget Sound or for species other than Dungeness crab.

(5) Dungeness crab--Puget Sound fishery licenses are transferable from one license holder to another.

(6) If fewer than one hundred twenty-five persons are eligible for Dungeness crab--Puget Sound fishery licenses, the director may accept applications for new licenses. The director shall determine by random selection the successful applicants for the additional licenses. The number of additional licenses issued shall be sufficient to maintain one hundred twenty-five licenses in the Puget Sound Dungeness crab fishery. The director shall adopt rules governing the application, selection, and issuance procedures for new Dungeness crab--Puget Sound fishery licenses, based upon recommendations of a board of review established under RCW 75.30.050.

Sec. 102. RCW 75.30.140 and 1993 c 340 s 35 are each amended to read as follows:

(1) ((It is unlawful to)) A person shall not fish commercially for herring in state waters without a herring fishery license. As used in this section, "herring fishery license" means any of the following commercial fishery licenses issued under RCW 75.28.120: Herring dip bag net; herring drag seine; herring gill net; herring lampara; herring purse seine.

(2) Except as provided in this section, a herring fishery license may be issued only to a person who((:

(a) Established initial eligibility for a herring fishery license as provided in subsection (3) of this section or acquired such a license by transfer;

(b) Held a herring fishery license during the previous year or acquired such a license by transfer; and

(3) A person may establish initial eligibility for a herring fishery license by:

(a) Documenting to the department that the person landed herring during the period January 1, 1971, through April 15, 1973;

(b) Documenting to the department that the person landed herring during the period January 1, 1969, through December 31, 1970, if the person was in the armed forces of the United States during the period January 1, 1971, through April 15, 1973; or

(c) Applying to the department and qualifying for a herring fishery license under hardship criteria established by rule of the director.

Landings may be documented only by a department fish receiving ticket.

(4) A herring fishery license may be issued only for the type of fishing gear used to establish initial eligibility for the license.

(5) The director may establish rules governing the administration of this section based upon recommendations of a board of review established under RCW 75.30.050.

(6) Except as provided in subsection (8) of this section, after January 1, 1995, the director shall issue no new herring fishery licenses. After January 1, 1995, a person may renew an existing license only if the person)) held the license sought to be renewed during the previous year or acquired the license by transfer from someone who held it during the previous year, and if the person has not subsequently transferred the license to another person.

(((7))) (3) Herring fishery licenses may be renewed each year. A herring fishery license that is not renewed each year shall not be renewed further.

(((8))) (4) The department may issue additional herring fishery licenses if the stocks of herring will not be jeopardized by granting additional licenses.

(((9))) (5) Subject to the restrictions of ((section 11 of this act)) RCW 75.28.011, herring fishery licenses are transferable from one license holder to another.

Sec. 103. RCW 75.30.160 and 1993 c 340 s 38 are each amended to read as follows:

((It is unlawful to)) A person shall not commercially take whiting from areas that the department designates within the waters described in RCW 75.28.110(5)(a) without a whiting--Puget Sound fishery license.

Sec. 104. RCW 75.30.210 and 1993 c 340 s 41 are each amended to read as follows:

(1) ((It is unlawful to)) A person shall not commercially take any species of sea urchin using shellfish diver gear without first obtaining a sea urchin dive fishery license.

(2) Except as provided in subsections (3) and (6) of this section, after December 31, 1991, the director shall issue no new sea urchin dive fishery licenses. Only a person who meets the following qualifications may renew an existing license:

(a) The person shall have held the sea urchin dive fishery license sought to be renewed during the previous year or acquired the license by transfer from someone who held it during the previous year; and

(b) The person shall document, by valid shellfish receiving tickets issued by the department, that twenty thousand pounds of sea urchins were caught and sold under the license sought to be renewed during the two-year period ending March 31 of the most recent odd-numbered year.

(3) Where the person failed to obtain the license during the previous year because of a license suspension or revocation by the department or the court, the person may qualify for a license by establishing that the person held such a license during the last year in which the person was eligible.

(4) The director may reduce or waive the poundage requirement of subsection (2)(b) of this section upon the recommendation of a board of review established under RCW 75.30.050. The board of review may recommend a reduction or waiver of the poundage requirement in individual cases if, in the board's judgment, extenuating circumstances prevent achievement of the poundage requirement. The director shall adopt rules governing the operation of the board of review and defining "extenuating circumstances."

(5) Sea urchin dive fishery licenses are not transferable from one license holder to another, except from parent to child, or from spouse to spouse during marriage or as a result of marriage dissolution, or upon the death of the license holder.

(6) If fewer than forty-five persons are eligible for sea urchin dive fishery licenses, the director may accept applications for new licenses. The director shall determine by random selection the successful applicants for the additional licenses. The number of additional licenses issued shall be sufficient to maintain up to forty-five licenses in the sea urchin dive fishery. The director shall adopt rules governing the application, selection, and issuance procedure for new sea urchin dive fishery licenses, based upon recommendations of a board of review established under RCW 75.30.050.

Sec. 105. RCW 75.30.250 and 1993 c 340 s 44 are each amended to read as follows:

(1) ((It is unlawful to)) A person shall not commercially take while using shellfish diver gear any species of sea cucumber without first obtaining a sea cucumber dive fishery license.

(2) Except as provided in subsection (6) of this section, after December 31, 1991, the director shall issue no new sea cucumber dive fishery licenses. Only a person who meets the following qualifications may renew an existing license:

(a) The person shall have held the sea cucumber dive fishery license sought to be renewed during the previous two years or acquired the license by transfer from someone who held it during the previous year; and

(b) The person shall establish, by means of dated shellfish receiving documents issued by the department, that thirty landings of sea cucumbers totaling at least ten thousand pounds were made under the license during the previous two-year period ending December 31 of the odd-numbered year.

(3) Where the person failed to obtain the license during either of the previous two years because of a license suspension by the department or the court, the person may qualify for a license by establishing that the person held such a license during the last year in which the person was eligible.

(4) The director may reduce or waive any landing or poundage requirement established under this section upon the recommendation of a board of review established under RCW 75.30.050. The board of review may recommend a reduction or waiver of any landing or poundage requirement in individual cases if, in the board's judgment, extenuating circumstances prevent achievement of the landing or poundage requirement. The director shall adopt rules governing the operation of the board of review and defining "extenuating circumstances."

(5) Sea cucumber dive fishery licenses are not transferable from one license holder to another except from parent to child, from spouse to spouse during marriage or as a result of marriage dissolution, or upon death of the license holder.

(6) If fewer than fifty persons are eligible for sea cucumber dive fishery licenses, the director may accept applications for new licenses from those persons who can demonstrate two years' experience in the Washington state sea cucumber dive fishery. The director shall determine by random selection the successful applicants for the additional licenses. The number of additional licenses issued shall be sufficient to maintain up to fifty licenses in the sea cucumber dive fishery. The director shall adopt rules governing the application, selection, and issuance procedure for new sea cucumber dive fishery licenses, based upon recommendations of a board of review established under RCW 75.30.050.

Sec. 106. RCW 75.30.280 and 1993 c 340 s 46 are each amended to read as follows:

(1) ((It is unlawful to)) A person shall not harvest geoduck clams commercially without a geoduck fishery license. This section does not apply to the harvest of private sector cultured aquatic products as defined in RCW 15.85.020.

(2) Only a person who has entered into a geoduck harvesting agreement with the department of natural resources under RCW 79.96.080 may hold a geoduck fishery license.

(3) A geoduck fishery license authorizes no taking of geoducks outside the boundaries of the public lands designated in the underlying harvesting agreement, or beyond the harvest ceiling set in the underlying harvesting agreement.

(4) A geoduck fishery license expires when the underlying geoduck harvesting agreement terminates.

(5) The director shall determine the number of geoduck fishery licenses that may be issued for each geoduck harvesting agreement, the number of units of gear whose use the license authorizes, and the type of gear that may be used, subject to RCW 75.24.100. In making those determinations, the director shall seek to conserve the geoduck resource and prevent damage to its habitat.

(6) The holder of a geoduck fishery license and the holder's agents and representatives shall comply with all applicable commercial diving safety regulations adopted by the federal occupational safety and health administration established under the federal occupational safety and health act of 1970 as such law exists on May 8, 1979, 84 Stat. 1590 et seq.; 29 U.S.C. Sec. 651 et seq. A violation of those regulations is a violation of this subsection. For the purposes of this section, persons who dive for geoducks are "employees" as defined by the federal occupational safety and health act. A violation of this subsection is grounds for suspension or revocation of a geoduck fishery license following a hearing under the procedures of chapter 34.05 RCW. The department shall not suspend or revoke a geoduck fishery license if the violation has been corrected within ten days of the date the license holder receives written notice of the violation. If there is a substantial probability that a violation of the commercial diving standards could result in death or serious physical harm to a person engaged in harvesting geoduck clams, the department shall suspend the license immediately until the violation has been corrected. If the license holder is not the operator of the harvest vessel and has contracted with another person for the harvesting of geoducks, the department shall not suspend or revoke the license if the license holder terminates its business relationship with that person until compliance with this subsection is secured.

Sec. 107. RCW 75.30.290 and 1993 c 376 s 5 are each amended to read as follows:

((After December 31, 1993, it is unlawful to)) A person shall not commercially deliver into any Washington state port ocean pink shrimp caught in offshore waters without an ocean pink shrimp delivery license issued under RCW 75.28.730, or an ocean pink shrimp single delivery license issued under RCW 75.30.320. An ocean pink shrimp delivery license shall be issued to a vessel that:

(1) Landed a total of at least five thousand pounds of ocean pink shrimp in Washington in any single calendar year between January 1, 1983, and December 31, 1992, as documented by a valid shellfish receiving ticket; and

(2) Can show continuous participation in the Washington, Oregon, or California ocean pink shrimp fishery by being eligible to land ocean pink shrimp in either Washington, Oregon, or California each year since the landing made under subsection (1) of this section. Evidence of such eligibility shall be a certified statement from the relevant state licensing agency that the applicant for a Washington ocean pink shrimp delivery license held at least one of the following permits:

(a) For Washington: Possession of a delivery permit or delivery license issued under RCW 75.28.125 or a trawl license (other than Puget Sound) issued under RCW 75.28.140;

(b) For Oregon: Possession of a vessel permit issued under Oregon Revised Statute 508.880; or

Sec. 108. RCW 75.30.350 and 1995 c 252 s 1 are each amended to read as follows:

(1) ((Effective January 1, 1995, it is unlawful to)) A person shall not commercially fish for coastal crab in Washington state waters without a Dungeness crab—coastal or a Dungeness crab—coastal class B fishery license. Gear used must consist of one buoy attached to each crab pot. Each crab pot must be fished individually.

(2) A Dungeness crab—coastal fishery license is transferable. Except as provided in subsection (3) of this section, such a license shall only be issued to a person who proved active historical participation in the coastal crab fishery by having designated, after December 31, 1993, a vessel or a replacement vessel on the qualifying license that singly or in combination meets the following criteria:

(a) Made a minimum of eight coastal crab landings totaling a minimum of five thousand pounds per season in at least two of the four qualifying seasons identified in subsection (5) of this section, as documented by valid Washington state shellfish receiving tickets; and showed historical and continuous participation in the coastal crab fishery by having held one of the following licenses or their equivalents each calendar year beginning 1990 through 1993, and was designated on the qualifying license of the person who held one of the following licenses in 1994:

(i) Crab pot—Non-Puget Sound license, issued under RCW 75.28.130(1)(b);

(ii) Nonsalmon delivery license, issued under RCW 75.28.125;

(iii) Salmon troll license, issued under RCW 75.28.110;

(iv) Salmon delivery license, issued under RCW 75.28.113;

(v) Food fish trawl license, issued under RCW 75.28.120; or

(vi) Shrimp trawl license, issued under RCW 75.28.130; or

(b) Made a minimum of four Washington landings of coastal crab totaling two thousand pounds during the period from December 1, 1991, to March 20, 1992, and made a minimum of eight crab landings totaling a minimum of five thousand pounds of coastal crab during each of the following periods: December 1, 1991, to September 15, 1992; December 1, 1992, to September 15, 1993; and December 1, 1993, to September 15, 1994. For landings made after December 31, 1993, the vessel shall have been designated on the qualifying license of the person making the landings; or

(c) Made any number of coastal crab landings totaling a minimum of twenty thousand pounds per season in at least two of the four qualifying seasons identified in subsection (5) of this section, as documented by valid Washington state shellfish receiving tickets, showed historical and continuous participation in the coastal crab fishery by having held one of the qualifying licenses each calendar year beginning 1990 through 1993, and the vessel was designated on the qualifying license of the person who held that license in 1994.

(3) A Dungeness crab-coastal fishery license shall be issued to a person who had a new vessel under construction between December 1, 1988, and September 15, 1992, if the vessel made coastal crab landings totaling a minimum of five thousand pounds by September 15, 1993, and the new vessel was designated on the qualifying license of the person who held that license in 1994. All landings shall be documented by valid Washington state shellfish receiving tickets. License applications under this subsection may be subject to review by the advisory review board in accordance with RCW 75.30.050. For purposes of this subsection, "under construction" means either:

(a)(i) A contract for any part of the work was signed before September 15, 1992; and

(ii) The contract for the vessel under construction was not transferred or otherwise alienated from the contract holder between the date of the contract and the issuance of the Dungeness crab-coastal fishery license; and

(iii) Construction had not been completed before December 1, 1988; or

(b)(i) The keel was laid before September 15, 1992; and

(ii) Vessel ownership was not transferred or otherwise alienated from the owner between the time the keel was laid and the issuance of the Dungeness crab-coastal fishery license; and

(iii) Construction had not been completed before December 1, 1988.

(4) A Dungeness crab—coastal class B fishery license is not transferable. Such a license shall be issued to persons who do not meet the qualification criteria for a Dungeness crab—coastal fishery license, if the person has designated on a qualifying license after December 31, 1993, a vessel or replacement vessel that, singly or in combination, made a minimum of four landings totaling a minimum of two thousand pounds of coastal crab, documented by valid Washington state shellfish receiving tickets, during at least one of the four qualifying seasons, and if the person has participated continuously in the coastal crab fishery by having held or by having owned a vessel that held one or more of the licenses listed in subsection (2) of this section in each calendar year subsequent to the qualifying season in which qualifying landings were made through 1994. Dungeness crab—coastal class B fishery licenses cease to exist after December 31, 1999, and the continuing license provisions of RCW 34.05.422(3) are not applicable.

(5) The four qualifying seasons for purposes of this section are:

(a) December 1, 1988, through September 15, 1989;

(b) December 1, 1989, through September 15, 1990;

(d) December 1, 1991, through September 15, 1992.

(6) For purposes of this section and RCW 75.30.420, "coastal crab" means Dungeness crab (cancer magister) taken in all Washington territorial and offshore waters south of the United States-Canada boundary and west of the Bonilla-Tatoosh line (a line from the western end of Cape Flattery to Tatoosh Island lighthouse, then to the buoy adjacent to Duntz Rock, then in a straight line to Bonilla Point of Vancouver island), Grays Harbor, Willapa Bay, and the Columbia river.

(7) For purposes of this section, "replacement vessel" means a vessel used in the coastal crab fishery in 1994, and that replaces a vessel used in the coastal crab fishery during any period from 1988 through 1993, and which vessel's licensing and catch history, together with the licensing and catch history of the vessel it replaces, qualifies a single applicant for a Dungeness crab—coastal or Dungeness crab—coastal class B fishery license. A Dungeness crab—coastal or Dungeness crab—coastal class B fishery license may only be issued to a person who designated a vessel in the 1994 coastal crab fishery and who designated the same vessel in 1995.

Sec. 109. RCW 75.30.450 and 1994 c 260 s 16 are each amended to read as follows:

(1) ((It is unlawful for)) A Dungeness crab—coastal fishery ((licensees to)) licensee shall not take Dungeness crab in the waters of the exclusive economic zone westward of the states of Oregon or California and land crab taken in those waters into Washington state unless the licensee also holds the licenses, permits, or endorsements, required by Oregon or California to land crab into Oregon or California, respectively.

(2) This section becomes effective only upon reciprocal legislation being enacted by both the states of Oregon and California. For purposes of this section, "exclusive economic zone" means that zone defined in the federal fishery conservation and management act (16 U.S.C. Sec. 1802) as of January 1, 1995, or as of a subsequent date adopted by rule of the director.

Sec. 110. RCW 75.58.010 and 1993 sp.s. c 2 s 55 are each amended to read as follows:

(1) The director of agriculture and the director shall jointly develop a program of disease inspection and control for aquatic farmers as defined in RCW 15.85.020. The program shall be administered by the department under rules established under this section. The purpose of the program is to protect the aquaculture industry and wildstock fisheries from a loss of productivity due to aquatic diseases or maladies. As used in this section "diseases" means, in addition to its ordinary meaning, infestations of parasites or pests. The disease program may include, but is not limited to, the following elements:

(a) Disease diagnosis;

(b) Import and transfer requirements;

(d) Classification of diseases by severity;

(e) Provision for treatment of selected high-risk diseases;

(f) Provision for containment and eradication of high-risk diseases;

(g) Provision for destruction of diseased cultured aquatic products;

(h) Provision for quarantine of diseased cultured aquatic products;

(i) Provision for coordination with state and federal agencies;

(j) Provision for development of preventative or control measures;

(k) Provision for cooperative consultation service to aquatic farmers; and

(l) Provision for disease history records.

(2) The ((director)) commission shall adopt rules implementing this section. However, such rules shall have the prior approval of the director of agriculture and shall provide therein that the director of agriculture has provided such approval. The director of agriculture or the director's designee shall attend the rule-making hearings conducted under chapter 34.05 RCW and shall assist in conducting those hearings. The authorities granted the department by these rules and by RCW 75.08.080(1)(g), 75.24.080, 75.24.110, 75.28.125, 75.58.020, 75.58.030, and 75.58.040 constitute the only authorities of the department to regulate private sector cultured aquatic products and aquatic farmers as defined in RCW 15.85.020. Except as provided in subsection (3) of this section, no action may be taken against any person to enforce these rules unless the department has first provided the person an opportunity for a hearing. In such a case, if the hearing is requested, no enforcement action may be taken before the conclusion of that hearing.

(3) The rules adopted under this section shall specify the emergency enforcement actions that may be taken by the department, and the circumstances under which they may be taken, without first providing the affected party with an opportunity for a hearing. Neither the provisions of this subsection nor the provisions of subsection (2) of this section shall preclude the department from requesting the initiation of criminal proceedings for violations of the disease inspection and control rules.

(4) ((It is unlawful for any person to)) A person shall not violate the rules adopted under subsection (2) or (3) of this section or ((to)) violate RCW 75.58.040.

(5) In administering the program established under this section, the department shall use the services of a pathologist licensed to practice veterinary medicine.

(6) The director in administering the program shall not place constraints on or take enforcement actions in respect to the aquaculture industry that are more rigorous than those placed on the department or other fish-rearing entities.

Sec. 111. RCW 77.08.010 and 1996 c 207 s 2 are each amended to read as follows:

As used in this title or Title 75 RCW or rules adopted pursuant to ((this)) those titles, unless the context clearly requires otherwise:

(1) "Director" means the director of fish and wildlife.

(2) "Department" means the department of fish and wildlife.

(3) "Commission" means the state fish and wildlife commission.

(4) "Person" means and includes an individual, a corporation, or a group of two or more individuals acting with a common purpose whether acting in an individual, representative, or official capacity.

(5) "Fish and wildlife ((agent)) officer" means a person appointed and commissioned by the director, with authority to enforce laws and rules adopted pursuant to this title, and other statutes as prescribed by the legislature. Fish and wildlife officer includes a person commissioned before the effective date of this section as a wildlife agent.

(6) "Ex officio fish and wildlife ((agent)) officer" means a commissioned officer of a municipal, county, state, or federal agency having as its primary function the enforcement of criminal laws in general, while the officer is in the appropriate jurisdiction. The term "ex officio fish and wildlife ((agent)) officer" includes ((fisheries patrol officers,)) special agents of the national marine fisheries service, state parks commissioned officers, United States fish and wildlife special agents, department of natural resources enforcement officers, and United States forest service officers, while the agents and officers are within their respective jurisdictions.

(7) "To hunt" and its derivatives means an effort to kill, injure, capture, or harass a wild animal or wild bird.

(8) "To trap" and its derivatives means a method of hunting using devices to capture wild animals or wild birds.

(9) "To fish" and its derivatives means an effort to kill, injure, harass, or catch a ((game)) fish.

(10) "Open season" means those times, manners of taking, and places or waters established by rule of the commission for the lawful hunting, fishing, or possession of game animals, game birds, or game fish that conform to the special restrictions or physical descriptions established by rule of the commission or that have otherwise been deemed legal to hunt, fish, or possess by rule of the commission. "Open season" includes the first and last days of the established time.

(11) "Closed season" means all times, manners of taking, and places or waters other than those established by rule of the commission as an open season. "Closed season" also means all hunting, fishing, or possession of game animals, game birds, or game fish that do not conform to the special restrictions or physical descriptions established by rule of the commission as an open season or that have not otherwise been deemed legal to hunt, fish, or possess by rule of the commission as an open season.

(12) "Closed area" means a place where the hunting of some species of wild animals or wild birds is prohibited.

(13) "Closed waters" means all or part of a lake, river, stream, or other body of water, where fishing for game fish is prohibited.

(14) "Game reserve" means a closed area where hunting for all wild animals and wild birds is prohibited.

(15) "Bag limit" means the maximum number of game animals, game birds, or game fish which may be taken, caught, killed, or possessed by a person, as specified by rule of the commission for a particular period of time, or as to size, sex, or species.

(16) "Wildlife" means all species of the animal kingdom whose members exist in Washington in a wild state. This includes but is not limited to mammals, birds, reptiles, amphibians, fish, and invertebrates. The term "wildlife" does not include feral domestic mammals, the family Muridae of the order Rodentia (old world rats and mice), or those fish, shellfish, and marine invertebrates classified as food fish or shellfish by the director. The term "wildlife" includes all stages of development and the bodily parts of wildlife members.

(17) "Wild animals" means those species of the class Mammalia whose members exist in Washington in a wild state and the species Rana catesbeiana (bullfrog). The term "wild animal" does not include feral domestic mammals or the family Muridae of the order Rodentia (old world rats and mice).

(18) "Wild birds" means those species of the class Aves whose members exist in Washington in a wild state.

(19) "Protected wildlife" means wildlife designated by the commission that shall not be hunted or fished.

(20) "Endangered species" means wildlife designated by the commission as seriously threatened with extinction.

(21) "Game animals" means wild animals that shall not be hunted except as authorized by the commission.

(22) "Fur-bearing animals" means game animals that shall not be trapped except as authorized by the commission.

(23) "Game birds" means wild birds that shall not be hunted except as authorized by the commission.

(24) "Predatory birds" means wild birds that may be hunted throughout the year as authorized by the commission.

(25) "Deleterious exotic wildlife" means species of the animal kingdom not native to Washington and designated as dangerous to the environment or wildlife of the state.

(26) "Game farm" means property on which wildlife is held or raised for commercial purposes, trade, or gift. The term "game farm" does not include publicly owned facilities.

(27) "Person of disability" means a permanently disabled person who is not ambulatory without the assistance of a wheelchair, crutches, or similar devices.

(28) "Fish" includes all species classified as game fish or food fish by statute or rule, as well as all fin fish not currently classified as food fish or game fish if such species exist in state waters. The term "fish" includes all stages of development and the bodily parts of fish species.

Sec. 112. RCW 77.12.055 and 1993 sp.s. c 2 s 67 are each amended to read as follows:

(1) ((Jurisdiction and authority granted under RCW 77.12.060, 77.12.070, and 77.12.080 to the director, wildlife agents,)) Fish and wildlife officers and ex officio ((wildlife agents is limited to the laws and rules adopted pursuant to this title pertaining to wildlife or to the management, operation, maintenance, or use of or conduct on real property used, owned, leased, or controlled by the department)) fish and wildlife officers shall enforce this title, Title 75 RCW, rules of the department, and other statutes as prescribed by the legislature. However, when acting within the scope of these duties and when an offense occurs in the presence of the ((wildlife agent)) fish and wildlife officer who is not an ex officio ((wildlife agent, the wildlife agent)) fish and wildlife officer, the fish and wildlife officer may enforce all criminal laws of the state. The ((wildlife agent)) fish and wildlife officer must have successfully completed the basic law enforcement academy course sponsored by the criminal justice training commission, or a ((supplemental)) course ((in criminal law enforcement as)) approved by the department and the criminal justice training commission and provided by the department or the criminal justice training commission, prior to enforcing the criminal laws of the state.

(2) ((Wildlife agents)) Fish and wildlife officers are peace officers.

(3) Any liability or claim of liability ((which)) under chapter 4.92 RCW that arises out of the exercise or alleged exercise of authority by a ((wildlife agent)) fish and wildlife officer rests with the department unless the ((wildlife agent)) fish and wildlife officer acts under the direction and control of another agency or unless the liability is otherwise assumed under ((a written)) an agreement between the department and another agency.

(4) ((Wildlife agents)) Fish and wildlife officers may serve and execute warrants and processes issued by the courts.

(5) Fish and wildlife officers may enforce RCW 79.01.805 and 79.01.810.

(6) To enforce the laws of this title and Title 75 RCW, fish and wildlife officers may call to their aid any ex officio fish and wildlife officer or citizen and that person shall render aid.

NEW SECTION. Sec. 113. Based upon articulable facts that a person is engaged in fishing or hunting activities, fish and wildlife officers have the authority to temporarily stop the person and check for valid licenses, tags, permits, stamps, or catch record cards, and to inspect all fish and wildlife in possession as well as the equipment being used to ensure compliance with the requirements of this title and Title 75 RCW.

Sec. 114. RCW 77.12.080 and 1987 c 506 s 19 are each amended to read as follows:

((Wildlife agents)) Fish and wildlife officers and ex officio ((wildlife agents)) fish and wildlife officers may arrest without warrant persons found violating the law or rules adopted pursuant to this title and Title 75 RCW.

Sec. 115. RCW 77.12.090 and 1987 c 506 s 20 are each amended to read as follows:

((Wildlife agents,)) Fish and wildlife officers and ex officio ((wildlife agents)) fish and wildlife officers may make a reasonable search without warrant of a vessel, container, or conveyances, vehicles, packages, game baskets, game coats, or other receptacles for fish and wildlife, or tents, camps, or similar places which they have reason to believe contain evidence of a violation of law or rules adopted pursuant to this title or Title 75 RCW and seize evidence as needed for law enforcement. This does not preclude seizure of property if authorized for forfeiture as authorized by law.

Sec. 116. RCW 77.12.095 and 1982 c 152 s 1 are each amended to read as follows:

((Wildlife agents)) Fish and wildlife officers may inspect without warrant at reasonable times and in a reasonable manner the premises, containers, fishing equipment, fish, and wildlife, and records required by the department of any ((commercial enterprise operating under the authority of a license or permit issued by the department or any commercial business that sells, stores, transports, or possesses wildlife)) commercial fisher or wholesale dealer or fish buyer. Fish and wildlife officers may similarly inspect without warrant the premises, containers, fishing equipment, fish and wildlife, and records required by the department of any shipping agent or other person placing or attempting to place fish or wildlife into interstate commerce, any cold storage plant that the department has probable cause to believe contains fish or wildlife, or of any taxidermist or fur buyer. Fish and wildlife officers may inspect without warrant the records required by the department of any retail outlet selling fish or wildlife or both, and, if the officers have probable cause to believe a violation of this title or rules of the commission has occurred, they may inspect without warrant the premises, containers, and fish and wildlife of any retail outlet selling fish or wildlife or both.

Sec. 117. RCW 77.12.120 and 1980 c 78 s 26 are each amended to read as follows:

((Upon complaint showing probable cause for believing that wildlife unlawfully caught, taken, killed, controlled, possessed, or transported, is concealed or kept in a game basket, game coat, package, or other receptacle for wildlife, or at a business place, vehicle, or other place, the)) On a showing of probable cause that there has been a violation of any fish or wildlife law of the state of Washington, or upon a showing of probable cause to believe that evidence of such violation may be found at a place, a court shall issue a search warrant ((and have the place searched for wildlife)) or arrest warrant. Fish and wildlife officers may execute any such arrest or search warrant reasonably necessary to their duties under this title or Title 75 RCW and may seize fish and wildlife or any evidence of a crime and the fruits or instrumentalities of a crime as provided by warrant. The court may have a building, enclosure, vehicle, vessel, container, or receptacle opened or entered and the contents examined.

Sec. 118. RCW 77.16.010 and 1987 c 506 s 58 are each amended to read as follows:

((It is unlawful to)) A person shall not promote, conduct, hold, or sponsor a contest for the hunting or fishing of wildlife or a competitive field trial involving live wildlife for hunting dogs without first obtaining a hunting or fishing contest permit. Contests and field trials shall be held in accordance with established rules.

Sec. 119. RCW 77.16.020 and 1996 c 207 s 3 are each amended to read as follows:

(((1) It is unlawful to hunt, fish, or possess a game animal, game bird, or game fish during closed season for that game animal, game bird, or game fish except as provided in RCW 77.12.105 or 77.12.265.

(2) It is unlawful to kill, take, catch, possess, or control a game animal, game bird, or game fish in excess of the number fixed as the bag limit for that game animal, game bird, or game fish.

(3) It is unlawful to hunt within a game reserve or to fish for game fish within closed waters.

(4) It is unlawful to hunt wild birds or wild animals within a closed area except as authorized by rule of the commission.

(5) It is unlawful to hunt or fish for wildlife, practice taxidermy for profit, deal in raw furs for profit, act as a fishing guide, or operate a game farm, stock game fish, or collect wildlife for research or display, without having in possession the license, permit, tag, stamp, or catch record card required by chapter 77.32 RCW or rule of the department. The activities described in this subsection shall be conducted in accordance with rules adopted pursuant to this title.

(6))) For the purposes of ((this section)) establishing a season or bag limit restriction on Canada goose hunting, the department shall not consider leg length or bill length of dusky Canada geese (Branta canadensis occidentalis).

Sec. 120. RCW 77.16.095 and 1987 c 506 s 63 are each amended to read as follows:

((It is unlawful to mutilate)) The commission may adopt rules governing the possession of fish and wildlife so that the size, species, or sex ((cannot)) can be determined visually in the field or while being transported. ((The director may prescribe specific criteria for field identification to satisfy this section.))

Sec. 121. RCW 77.16.170 and 1993 sp.s. c 2 s 75 are each amended to read as follows:

((It is unlawful to take a wild animal from another person's trap without permission, or to spring, pull up, damage, possess, or destroy the trap; however, it is not unlawful for)) A property owner, lessee, or tenant ((to)) may remove a trap placed on the owner's, lessee's, or tenant's posted or fenced property by a trapper.

Trappers shall attach to the chain of their traps or devices a legible metal tag with either the department identification number of the trapper or the name and address of the trapper in English letters not less than one-eighth inch in height.

When ((an individual)) a property owner, lessee, or tenant presents a trapper identification number to the department for a trap found upon the property of the owner, lessee, or tenant and requests identification of the trapper, the department shall provide the ((individual)) requestor with the name and address of the trapper. Prior to disclosure of the trapper's name and address, the department shall obtain the name and address of the requesting individual in writing and after disclosing the trapper's name and address to the requesting individual, the requesting individual's name and address shall be disclosed in writing to the trapper whose name and address was disclosed.

Sec. 122. RCW 77.16.220 and 1980 c 78 s 89 are each amended to read as follows:

((It is unlawful to)) A person shall not divert water from a lake, river, or stream containing game fish unless the water diversion device is equipped at or near its intake with a fish guard or screen to prevent the passage of game fish into the device and, if necessary, with a means of returning game fish from immediately in front of the fish guard or screen to the waters of origin. A person who is now otherwise lawfully diverting water from a lake, river or stream shall not be deemed guilty of a violation of this section.

Plans for the fish guard, screen, and bypass shall be approved by the director prior to construction. The installation shall be approved by the director prior to the diversion of water.

The director may close a water diversion device operated in violation of this section and keep it closed until it is properly equipped with a fish guard, screen, or bypass.

Sec. 123. RCW 77.32.350 and 1992 c 41 s 1 are each amended to read as follows:

In addition to a basic hunting license, a supplemental license, permit, or stamp is required to hunt for quail, partridge, pheasant, or migratory waterfowl, to hunt with a raptor, or to hunt wild animals with a dog.

(1) A hound permit is required to hunt wild animals, except rabbits and hares, with a dog. The fee for this permit is twelve dollars.

(2) An eastern Washington upland game bird permit is required to hunt for quail, partridge, and pheasant in eastern Washington. The fee for this permit is ten dollars.

(3) A western Washington upland game bird permit is required to hunt for quail, partridge, and pheasant in western Washington. The fee for this permit is thirty-five dollars. Western Washington upland game bird permits must contain numbered spaces for recording the location and date of harvest of each western Washington pheasant. ((It is unlawful to)) A person shall not harvest a western Washington pheasant without immediately recording this information on the permit.

(4) Effective January 1, 1993, the permit shall be available as a season option, a juvenile full season option, or a two-day option. The fee for this permit is:

(a) For the full season option, thirty-five dollars;

(b) For the juvenile full season or the two-day option, twenty dollars.

For the purposes of this subsection a juvenile is defined as a person under fifteen years of age upon the opening date of the western Washington pheasant season.

(5) Western Washington upland game permits are valid for the following number of pheasants and harvesting pheasants in excess of these numbers requires another permit:

(a) A full season permit is valid for no more than ten pheasants;

(b) A juvenile full season permit is valid for no more than six pheasants;

(6) A falconry license is required to possess or hunt with a raptor, including seasons established exclusively for hunting in that manner. The fee for this license is thirty-six dollars.

(7) A migratory waterfowl stamp affixed to a basic hunting license is required for all persons sixteen years of age or older to hunt migratory waterfowl. The fee for the stamp is six dollars.

(8) The migratory waterfowl stamp shall be validated by the signature of the licensee written across the face of the stamp.

(9) The migratory waterfowl stamps required by this section expire on March 31st following the date of issuance.

NEW SECTION. Sec. 124. REPEALER. The following acts or parts of acts are each repealed:

(1) RCW 75.10.010 and 1996 c 267 s 4;

(2) RCW 75.10.020 and 1996 c 267 s 5, 1983 1st ex.s. c 46 s 33, & 1955 c 12 s 75.08.170;

(3) RCW 75.10.030 and 1996 c 267 s 6, 1990 c 144 s 5, 1983 1st ex.s. c 46 s 34, & 1955 c 12 s 75.36.010;

(4) RCW 75.10.040 and 1996 c 267 s 7, 1983 1st ex.s. c 46 s 35, 1980 c 78 s 134, & 1955 c 12 s 75.08.200;

(5) RCW 75.10.050 and 1996 c 267 s 8, 1983 1st ex.s. c 46 s 36, & 1955 c 12 s 75.08.280;

(6) RCW 75.10.060 and 1983 1st ex.s. c 46 s 37 & 1955 c 12 s 75.36.040;

(7) RCW 75.10.080 and 1983 1st ex.s. c 46 s 39 & 1955 c 12 s 75.36.050;

(8) RCW 75.10.090 and 1983 1st ex.s. c 46 s 40 & 1955 c 12 s 75.08.180;

(9) RCW 75.10.110 and 1996 c 267 s 10, 1990 c 144 s 6, 1987 c 380 s 16, 1983 1st ex.s. c 46 s 42, 1979 ex.s. c 99 s 1, & 1955 c 12 s 75.08.260;

(10) RCW 75.10.120 and 1996 c 267 s 11, 1990 c 144 s 7, 1983 1st ex.s. c 46 s 43, 1979 ex.s. c 99 s 2, 1957 c 171 s 5, & 1955 c 12 s 75.28.380;

(11) RCW 75.10.130 and 1996 c 267 s 12, 1983 1st ex.s. c 46 s 44, & 1979 ex.s. c 99 s 3;

(12) RCW 75.10.140 and 1996 c 267 s 13, 1990 c 163 s 7, 1984 c 80 s 4, 1983 1st ex.s. c 46 s 45, & 1979 ex.s. c 141 s 7;

(13) RCW 75.10.170 and 1996 c 267 s 15 & 1990 c 63 s 5;

(14) RCW 75.10.180 and 1996 c 267 s 16 & 1990 c 144 s 1;

(15) RCW 75.10.190 and 1996 c 267 s 17 & 1990 c 144 s 2;

(16) RCW 75.10.200 and 1996 c 267 s 18, 1993 sp.s. c 2 s 26, & 1990 c 144 s 3;

(17) RCW 75.10.210 and 1990 c 144 s 4;

(18) RCW 75.12.020 and 1996 c 267 s 19, 1983 1st ex.s. c 46 s 49, & 1955 c 12 s 75.12.020;

(19) RCW 75.12.031 and 1983 1st ex.s. c 46 s 51 & 1955 c 12 s 75.20.070;

(20) RCW 75.12.070 and 1996 c 267 s 20, 1983 1st ex.s. c 46 s 53, & 1955 c 12 s 75.12.070;

(21) RCW 75.12.090 and 1990 c 144 s 8, 1983 1st ex.s. c 46 s 54, 1982 c 14 s 1, & 1955 c 12 s 75.12.090;

(22) RCW 75.12.100 and 1996 c 267 s 21, 1983 1st ex.s. c 46 s 55, & 1955 c 12 s 75.12.100;

(23) RCW 75.12.115 and 1996 c 267 s 22, 1983 1st ex.s. c 46 s 56, & 1971 ex.s. c 106 s 1;

(24) RCW 75.12.120 and 1985 c 51 s 7, 1983 1st ex.s. c 46 s 57, & 1955 c 12 s 75.12.120;

(25) RCW 75.12.125 and 1983 1st ex.s. c 46 s 58;

(26) RCW 75.12.127 and 1993 c 340 s 49;

(27) RCW 75.12.400 and 1983 1st ex.s. c 46 s 64 & 1982 c 14 s 2;

(28) RCW 75.12.410 and 1983 1st ex.s. c 46 s 66 & 1955 c 12 s 75.08.130;

(29) RCW 75.12.420 and 1996 c 267 s 23, 1983 1st ex.s. c 46 s 67, & 1955 c 12 s 75.08.210;

(30) RCW 75.12.430 and 1983 1st ex.s. c 46 s 68 & 1955 c 12 s 75.08.220;

(31) RCW 75.24.050 and 1996 c 267 s 25, 1983 1st ex.s. c 46 s 80, & 1955 c 12 s 75.24.050;

(32) RCW 75.24.090 and 1996 c 267 s 26, 1983 1st ex.s c 46 s 84, 1955 c 212 s 7, & 1955 c 12 s 75.24.090;

(33) RCW 75.25.150 and 1994 c 255 s 7, 1993 sp.s. c 17 s 9, 1989 c 305 s 13, 1984 c 80 s 9, & 1983 1st ex.s. c 46 s 99;

(34) RCW 77.12.060 and 1987 c 506 s 17, 1980 c 78 s 18, 1961 c 68 s 1, & 1955 c 36 s 77.12.060;

(35) RCW 77.12.070 and 1987 c 506 s 18, 1980 c 78 s 19, 1971 ex.s. c 173 s 1, 1961 c 68 s 2, & 1955 c 36 s 77.12.070;

(36) RCW 77.16.040 and 1987 c 506 s 60, 1980 c 78 s 72, 1971 ex.s. c 166 s 4, 1961 c 75 s 1, & 1955 c 36 s 77.16.040;

(37) RCW 77.16.050 and 1980 c 78 s 73 & 1955 c 36 s 77.16.050;

(38) RCW 77.16.060 and 1993 sp.s. c 2 s 73, 1987 c 506 s 61, 1980 c 78 s 74, & 1955 c 36 s 77.16.060;

(39) RCW 77.16.080 and 1987 c 506 s 62, 1980 c 78 s 76, & 1955 c 36 s 77.16.080;

(40) RCW 77.16.090 and 1980 c 78 s 77 & 1955 c 36 s 77.16.090;

(41) RCW 77.16.100 and 1980 c 78 s 79, 1977 ex.s. c 275 s 1, & 1955 c 36 s 77.16.100;

(42) RCW 77.16.110 and 1987 c 506 s 64, 1980 c 78 s 80, & 1955 c 36 s 77.16.110;

(43) RCW 77.16.120 and 1980 c 78 s 81 & 1955 c 36 s 77.16.120;

(44) RCW 77.16.130 and 1987 c 506 s 65, 1980 c 78 s 82, & 1955 c 36 s 77.16.130;

(45) RCW 77.16.150 and 1987 c 506 s 66, 1980 c 78 s 83, & 1955 c 36 s 77.16.150;

(46) RCW 77.16.160 and 1980 c 78 s 84 & 1955 c 36 s 77.16.160;

(47) RCW 77.16.180 and 1987 c 506 s 67, 1980 c 78 s 86, & 1955 c 36 s 77.16.180;

(48) RCW 77.16.190 and 1980 c 78 s 87 & 1955 c 36 s 77.16.190;

(49) RCW 77.16.250 and 1989 c 297 s 5, 1980 c 78 s 93, & 1955 c 36 s 77.16.250;

(50) RCW 77.16.260 and 1980 c 78 s 94, 1955 c 85 s 1, & 1955 c 36 s 77.16.260;

(51) RCW 77.16.310 and 1981 c 310 s 4, 1980 c 78 s 125, & 1979 ex.s. c 127 s 1;

(52) RCW 77.16.320 and 1987 c 506 s 68, 1981 c 310 s 5, & 1980 c 44 s 1;

(53) RCW 77.16.330 and 1987 c 506 s 104 & 1985 c 243 s 3;

(54) RCW 77.16.610 and 1982 c 155 s 3;

(55) RCW 77.21.010 and 1988 c 265 s 3;

(56) RCW 77.21.040 and 1989 c 314 s 5, 1987 c 506 s 72, 1980 c 78 s 25, & 1955 c 36 s 77.12.110; and

(57) RCW 77.21.060 and 1989 c 314 s 6, 1987 c 506 s 73, 1980 c 78 s 122, & 1955 c 36 s 77.32.260.

NEW SECTION. Sec. 125. RECODIFICATION. The following sections are recodified as new sections in the chapter created in section 128 of this act:

RCW 75.10.100

RCW 75.10.220

RCW 75.12.320

RCW 77.12.120

RCW 77.12.130

RCW 77.16.135

NEW SECTION. Sec. 126. SHORT TITLE. This chapter may be known and cited as the fish and wildlife enforcement code.

NEW SECTION. Sec. 127. CAPTIONS NOT LAW. Captions used in this chapter are not any part of the law.

NEW SECTION. Sec. 128. Sections 1 through 48, 50 through 66, 68, 69, 113, 126, and 127 of this act constitute a new chapter in Title 77 RCW.

NEW SECTION. Sec. 129. The enactment of chapter . . ., Laws of 1998 (this act) does not terminate, or in any way modify, any liability, civil or criminal, that was in existence on the effective date of this section."

On page 1, line 1 of the title, after "enforcement;" strike the remainder of the title and insert "amending RCW 75.12.320, 77.16.135, 75.08.011, 75.08.160, 75.08.274, 75.08.295, 75.08.300, 75.12.010, 75.12.015, 75.12.040, 75.12.132, 75.12.140, 75.12.210, 75.12.230, 75.12.390, 75.12.440, 75.12.650, 75.20.040, 75.20.060, 75.20.103, 75.20.110, 75.24.080, 75.24.100, 75.24.110, 75.28.010, 75.28.045, 75.28.095, 75.28.113, 75.28.125, 75.28.710, 75.28.740, 75.30.070, 75.30.140, 75.30.160, 75.30.210, 75.30.250, 75.30.280, 75.30.290, 75.30.350, 75.30.450, 75.58.010, 77.08.010, 77.12.055, 77.12.080, 77.12.090, 77.12.095, 77.12.120, 77.16.010, 77.16.020, 77.16.095, 77.16.170, 77.16.220, and 77.32.350; reenacting and amending RCW 75.20.100 and 75.30.130; adding a new chapter to Title 77 RCW; creating a new section; recodifying RCW 75.10.100, 75.10.220, 75.12.320, 77.12.120, 77.12.130, and 77.16.135; repealing RCW 75.10.010, 75.10.020, 75.10.030, 75.10.040, 75.10.050, 75.10.060, 75.10.080, 75.10.090, 75.10.110, 75.10.120, 75.10.130, 75.10.140, 75.10.170, 75.10.180, 75.10.190, 75.10.200, 75.10.210, 75.12.020, 75.12.031, 75.12.070, 75.12.090, 75.12.100, 75.12.115, 75.12.120, 75.12.125, 75.12.127, 75.12.400, 75.12.410, 75.12.420, 75.12.430, 75.24.050, 75.24.090, 75.25.150, 77.12.060, 77.12.070, 77.16.040, 77.16.050, 77.16.060, 77.16.080, 77.16.090, 77.16.100, 77.16.110, 77.16.120, 77.16.130, 77.16.150, 77.16.160, 77.16.180, 77.16.190, 77.16.250, 77.16.260, 77.16.310, 77.16.320, 77.16.330, 77.16.610, 77.21.010, 77.21.040, and 77.21.060; and prescribing penalties.", and the same are herewith transmitted.

TIMOTHY A. MARTIN, Chief Clerk

MOTION

Senator Oke moved that the Senate concur in the House amendments to Engrossed Substitute Senate Bill No. 6328.

Debate ensued.

The President declared the question before the Senate to be the motion by Senator Oke to concur in the House amendments to Engrossed Substitute Senate Bill No. 6328.

The motion by Senator Oke carried and the Senate concurred in the House amendments to Engrossed Substitute Senate Bill No. 6328.

The President declared the question before the Senate to be the roll call on the final passage of Engrossed Substitute Senate Bill No. 6328, as amended by the House.

ROLL CALL

The Secretary called the roll on the final passage of Engrossed Substitute Senate Bill No. 6328, as amended by the House, and the bill passed the Senate by the following vote: Yeas, 45; Nays, 0; Absent, 1; Excused, 3.

Voting yea: Senators Anderson, Benton, Brown, Deccio, Fairley, Finkbeiner, Franklin, Fraser, Goings, Hale, Hargrove, Haugen, Heavey, Hochstatter, Horn, Jacobsen, Johnson, Kline, Kohl, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Newhouse, Oke, Prentice, Prince, Rasmussen, Roach, Rossi, Schow, Sheldon, B., Sheldon, T., Snyder, Spanel, Stevens, Strannigan, Thibaudeau, West, Winsley, Wojahn, Wood and Zarelli - 45. Absent: Senator Bauer - 1. Excused: Senators Patterson, Sellar and Swecker - 3. ENGROSSED SUBSTITUTE SENATE BILL NO. 6328, as amended by the House, 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.

PERSONAL PRIVILEGE

Senator Heavey: “Thank you, Mr. President, I rise for two points of personal privilege. The first point is, I know it is customary for freshman after their torturous first speech to give a present to the body. Having given a number of those speeches over the last four years, I wanted to add an additional present. It should be on your desk. They are brass name plates for most of us who purchased Senate chairs--and they go perfect--I will show you how to put them on the chair. They are self-adhesive; I am guaranteed they won't come off. They will be very attractive for your chair, wherever it may be--in your office or in your home. I hope you accept this with my compliments and with the compliments of Senator Snyder, who is paying for half of them also--a gift from both of us. Thank you.”

REPLY BY THE PRESIDENT

President Owen: “Thank you. Senator Heavey, your second point of personal privilege.”

Senator Heavey: “The second point of personal privilege, Mr. President, revolves around you. You served in this body in a distinguished career, but you didn't get a chair. So, in behalf of the Senate, we got you a chair and I get the opportunity to present it to you. Could somebody please bring it out here? It also has a brass name plate and we are very honored that you were a Senator, even though you have gone on to loftier things and we hope you find a use for your Senate chair.”

REPLY BY THE PRESIDENT

President Owen: “Well, Senator Heavey, I quite often expect Senator Snyder to catch me by surprise, but not you. I certainly do appreciate it. It is very, very much appreciated and I do have a wonderful place for that tremendous gift. Thank you all very much,. I am very grateful.”

POINT OF INQUIRY

Senator Deccio: “Senator Heavey, you indicated that there is a gift given by a freshman after making a tortuous speech. Is the little plaque you gave us for all the other tortuous speeches that you have given?”

Senator Heavey: “I realize I owe you eight plaques, but this will have to do.”

PERSONAL PRIVILEGE

Senator McCaslin: “I have a single point of personal privilege, Mr. President. Senator Heavey, I am so grateful that you didn't ding us in your speech there and I really appreciate it, but 'Bob' only has one 'o' in it.”

PERSONAL PRIVILEGE

Senator Franklin: “Mr. President, a point of personal privilege. Senator Heavey is really--he does great things. Even sometimes his speeches sort of dings a lot of us, but let me just take this moment to tell what happened to me during my first term in the House and with my first bill. I had what I thought was an innocuous bill--not really knowing what the process was all about. I was new, starry-eyed, serving, and then Mr. Heavey--I had this bill--had worked really hard on--and I did not know that he played tricks on the Representatives--and my bill came up to be voted on and when the lights went on and everybody said 'no,' I sat there dumbfounded. He looked over innocently and the lights changed in the House and that was my introduction to what happens in the Legislature. It is always great serving with Senator Heavey and he does wonderful things. Thank you.”

PERSONAL PRIVILEGE

Senator Thibaudeau: “A point of personal privilege. I am acknowledging Senator Heavey's gift to us--and my appreciation to Senator Snyder, also. Senator Heavey grew up in my district. I am going to speak with the Seattle City Council about that soon, but I also wanted to acknowledge Ralph Johnson. If any of you here hear from Ralph Johnson on your private line, hang up. So, thanks again, Senators. We appreciate you.”

PERSONAL PRIVILEGE

Senator Tim Sheldon: “Thank you, Mr. President. A point of personal privilege. I would just like to correct Senator Thibaudeau. Senator Heavey did not grow up--in her district.”

There being no objection, the President advanced the Senate to the eighth order of business.

MOTION

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

SENATE RESOLUTION 1998-8732

By Senators Schow, Heavey, Fraser, Winsley, Benton, B. Sheldon, Newhouse, Anderson, Prentice, Franklin, McDonald, Kline, Rasmussen, Jacobsen, Bauer, Wojahn, Oke, Fairley, Johnson, Spanel, Hargrove, Kohl, Snyder, Prince, Deccio, Thibaudeau, Zarelli, Long, Hochstatter, Stevens, Swecker, T. Sheldon, Roach, Haugen, Morton, Strannigan, Goings, McCaslin, Brown, West, McAuliffe, Loveland and Horn

WHEREAS, Patrick Woods has served the Washington State Senate for over fifteen years; and

WHEREAS, Patrick Woods left the Emerald Isle without losing his singing voice or the gift of blarney; and

WHEREAS, Patrick Woods has blessed the Senate with his beautiful singing voice, his speechifying, his generosity of spirit, and his skills as researcher, analyst, committee coordinator, and all-around fixer; and

WHEREAS, Patrick's smile and warmth bring even more joy to others than his singing; and

WHEREAS, Patrick has exemplified the helpfulness, the service, and the commitment to excellence that has set the standard for Senate employees; and

WHEREAS, Patrick has been in one institution or another since he was fourteen; and

WHEREAS, Patrick will now be leaving the institution of the Senate for a new career challenge at the Department of Labor and Industries;

NOW, THEREFORE, BE IT RESOLVED, By the Senate of the State of Washington, That:

From Ireland came young Patrick Woods

To the Senate, so he could do good

He'd so often sing

The rotunda'd ring

We'd keep him if we possibly could; and

BE IT FURTHER RESOLVED, That:

An Irishman named Woods came out West;

To the Senate, where he gave his best.

Fifteen years of his skills,

On commerce/labor ills,

Put his merry nature to the test; and

BE IT FURTHER RESOLVED, That:

Patrick long served the C & L Committee

Where he was very urbane and witty

If he disliked your bill

With a song he would kill:

"There's always next year, 'tis a pity"; and

BE IT FURTHER RESOLVED, That:

With each issue he went the full mile.

Knowing good research would take a while.

Yet he found time to croon;

A St. Paddy's Day tune.

To the joy of us needing a smile; and

BE IT FURTHER RESOLVED, That:

For our well-being he'll always care

His high hopes for us all he will share

We should strive to be

Cheerful, happy like he

Professional, compassionate, and fair; and

BE IT FURTHER RESOLVED, That:

Our friend Patrick's departure is nigh

And without him, we'll have to get by

But we find some relief

In our solid belief:

Things will n'er be the same at L & I; and

BE IT FURTHER RESOLVED, That a copy of this resolution be immediately transmitted by the Secretary of the Senate to Patrick Woods and his family.

Senators Heavey, Anderson, Newhouse, Hargrove, Deccio, Fraser, Horn, Oke, Haugen, McCaslin, Prentice, Schow and Snyder spoke to Senate Resolution 1998-8732.

The President read a Proclamation from Governor Locke, thanking Patrick Woods for his service to the state of Washington and bestowing on him honorary state citizenship and proclaiming March 11, 1998, as Patrick Woods Day in the state of Washington.

PERSONAL PRIVILEGE

Senator Wojahn: “A point of personal privilege, Mr. President. I was out of the chamber when the talks were given on this wonderful man who I know well, because I served on Commerce for several years. I want to tell you that I hope when you go to L&I they make you the legislative liaison.”

MOTION

On motion of Senator Jacobsen, the remarks by Patrick Woods will be spread upon the Journal.

INTRODUCTION OF SPECIAL GUEST

The President welcomed and introduced Patrick Woods, who was seated on the rostrum.

REMARKS BY PATRICK WOODS

Patrick Woods: “Thank you very much. I didn't expect this, so as Mike mentioned, I am usually able to speak on issues, but it is a little bit of a challenge for me when you receive this type of a commendation. I do want to speak, and probably what got me geared up for it was Irv Newhouse's party a few nights ago. This is an historic institution and you feel a lot of emotion in meeting and working here and especially in leaving.

“But, I want to speak in two aspects. One, as an Irishman, coming to America, I am so impressed and so amazed with Americans. My grandfather came over to America and got homesick and went back to Ireland, but my grandmother always said, 'God bless America.' In many ways, you never understand that until you come here, because you are a very generous people. You are a very tendentious people and a very principled people. You only appreciate that when you live among you. No other nation that I can think of or that I could have been a part in would have so easily allowed a foreign national to be a part of your staff--to be a party to the decisions that you make on a daily basis. In the fifteen and a half years that I have been here, never once--to my amazement--did I ever hear anybody say, 'Well, how would you know about that, you are not from here?' America has this tremendous ability to bring people in and bring the best out of them. Now, that is a key element to bring the best out of them and then move them into positions where they can be of impact. You have a lot to be proud of.

“There are a couple of things that as an Irishman, I am proud of too, that I just learned in the last couple of years. I am actually reading a book at the moment that has brought out that the three people in the British Parliament that stood with the colonies against the decision of the King, were three Irishmen, Edmund Burke, Captain Fitzroy and the Earl of Shelburne--all born in Ireland. One other little thing that I am proud of here today--my boys are here today--is when CaptainTravis was in the Alamo, and I learned this when I went to NCSL--I was chair of that four years--when Captain Travis was in the Alamo, thirteen of the men who stood with him were from Ireland. Those are some of the things that I am proud to be able to come and share with you.

“Now, as a staff analyst and as a member of your staff that has served you, I want to say that I am so proud to have been able to be with you, because people ask me, 'How can you deal with people with different positions on issues?' Really, it came to me that I really never have seen one member ever, in the years that I have been here, ever do anything against anybody else. They have done things for other people, because they thought that was the right thing to do, but never have I found anybody doing anything against anybody. I have had wonderful memories here and I always have that little quote--'In the twilight of my years, I will come back through here.'

“And the memories that I have had--some of those memories are, as Senator Snyder said, John A. Cherberg--the 'Gov'-when he was here. One day he said to me--and we have so many memories, Sid and I--but one day, we had a travel ban and the Gov said , 'I want you to go and represent me down in San Francisco.' I said, 'We can't do that, because, you know, there is no travel.' Then, I got a call from Sid saying, 'Come on over, your travel has been approved, without you even applying.'

“There have been other things that I have had, standing on the corner there with Senator Moore, at three o'clock in the morning, getting ready for his gubernatorial speeches that would be coming the next day. I also have had some very poignant things--I have held my chairman in my arms four days before he died--Senator Matson--and heard him say that he was at peace with his God and said that he was at peace with his life. Those were very special memories. I've had great chairmen, wonderful, wonderful people, that will always stick in my mind, ranging from the conservative Senator Matson, to the liberal Dwight Pelz. They have all been great people. One had a picture of a director of the agency, who they considered Enemy Number One and the other one had a picture of John Lennon, saying 'imagine.' I'll let you imagine which member it was.

“Finally, I do want to say--I want to thank all of the people who are here. There is one thing that I have learned, being allowed to be here for these years--the three lessons that I have learned in the Legislature are the three 'Rs.'--The Rules of the Legislature, the Reasons for bills and the Relationships. I encourage you to keep those relationships. You are a wonderful, wonderful people. It is not until you leave, that you begin to realize the value of each person and I also want to say the value of your staff. In the committee services, in the caucuses, the people like Bernie Ryan, Marty Brown, Eugene Green, Deanne Kopkas and many others that I don't have time to say all of them. They are wonderful, wonderful people. I cherish them.

“Now, I have a job to do and that is to do a song--and I probably will do a little parting one, because it is really dedicated to Olympia. This is going to speak to how much I really appreciate this place and you--and the funny things that happened here, too.”

Patrick Woods entertained with an Irish Ballad depicting life in Olympia.

INTRODUCTION OF SPECIAL GUESTS

The President welcomed and introduced Mrs. Woods and sons, who were seated in the gallery.

MOTION

` At 11:49 a.m., on motion of Senator Johnson, the Senate recessed until 2:15 p.m.

The Senate was called to order at 2:15 p.m. by President Owen.

There being no objection, the President returned the Senate to the fourth order of business.

MESSAGES FROM THE HOUSE

March 9, 1998

MR. PRESIDENT:

The House grants the request of the Senate for a conference on SECOND SUBSTITUTE SENATE BILL NO. 6190. The Speaker has appointed the following members as conferees: Representatives Mitchell, Robertson and Scott.

TIMOTHY A. MARTIN, Chief Clerk

March 10, 1998

MR. PRESIDENT:

The House has passed:

SUBSTITUTE SENATE BILL NO. 5309,

SENATE BILL NO. 5631,

SUBSTITUTE SENATE BILL NO. 6077,

SENATE BILL NO. 6270,

SENATE BILL NO. 6449,

SENATE BILL NO. 6552,

SENATE BILL NO. 6599,

SUBSTITUTE SENATE BILL NO. 6602,

SENATE BILL NO. 6662,

SENATE BILL NO. 6668, and the same are herewith transmitted.

TIMOTHY A. MARTIN, Chief Clerk

March 11, 1998

MR. PRESIDENT:

The House concurred in the Senate amendment(s) to the following House Bills and passed the bills as amended by the Senate:

SUBSTITUTE HOUSE BILL NO. 1441,

SUBSTITUTE HOUSE BILL NO. 2459.

TIMOTHY A. MARTIN, Chief Clerk

MESSAGES FROM THE HOUSE

March 11, 1998

MR. PRESIDENT:

The House has adopted the Report of the Conference Committee on SUBSTITUTE HOUSE BILL NO. 2077 and has passed the bill as recommended by the Conference Committee.

TIMOTHY A. MARTIN, Chief Clerk

March 11, 1998

MR. PRESIDENT:

The House grants the request of the Senate for a conference on SECOND ENGROSSED SECOND SUBSTITUTE HOUSE BILL NO. 1354. The Speaker has appointed the following members as conferees: Representatives Schoesler, Pennington and Cooper.

TIMOTHY A. MARTIN, Chief Clerk

MESSAGE FROM THE HOUSE

March 11, 1998

MR. PRESIDENT:

The Speaker has signed:

ENGROSSED SUBSTITUTE HOUSE BILL NO. 1074,

SUBSTITUTE HOUSE BILL NO. 1121,

ENGROSSED SUBSTITUTE HOUSE BILL NO. 1223,

SUBSTITUTE HOUSE BILL NO. 1504,

SUBSTITUTE HOUSE BILL NO. 1829,

ENGROSSED SECOND SUBSTITUTE HOUSE BILL NO. 2345,

ENGROSSED SUBSTITUTE HOUSE BILL NO. 2496,

ENGROSSED HOUSE BILL NO. 2501,

ENGROSSED SUBSTITUTE HOUSE BILL NO. 2514,

HOUSE BILL NO. 2542,

HOUSE BILL NO. 2557,

HOUSE BILL NO. 2558,

SUBSTITUTE HOUSE BILL NO. 2611,

SUBSTITUTE HOUSE BILL NO. 2710,

SUBSTITUTE HOUSE BILL NO. 2724,

SUBSTITUTE HOUSE BILL NO. 2836,

ENGROSSED SECOND SUBSTITUTE HOUSE BILL NO. 2880,

ENGROSSED SECOND SUBSTITUTE HOUSE BILL NO. 2881,

SUBSTITUTE HOUSE BILL NO. 2885,

HOUSE BILL NO. 2905,

SUBSTITUTE HOUSE BILL NO. 2960,

HOUSE BILL NO. 3052,

SECOND SUBSTITUTE HOUSE BILL NO. 3070,

SUBSTITUTE HOUSE BILL NO. 3096,

SUBSTITUTE HOUSE BILL NO. 3099, and the same are herewith transmitted.

TIMOTHY A. MARTIN, Chief Clerk

SIGNED BY THE PRESIDENT

The President signed:

SUBSTITUTE SENATE BILL NO. 5309,

SENATE BILL NO. 5631,

SUBSTITUTE SENATE BILL NO. 6077,

SENATE BILL NO. 6270,

SENATE BILL NO. 6449,

SENATE BILL NO. 6552,

SENATE BILL NO. 6599,

SUBSTITUTE SENATE BILL NO. 6602,

SENATE BILL NO. 6662,

SENATE BILL NO. 6668.

SIGNED BY THE PRESIDENT

The President signed:

SUBSTITUTE SENATE BILL NO. 6161,

ENGROSSED SUBSTITUTE SENATE BILL NO. 6418,

ENGROSSED SECOND SUBSTITUTE SENATE BILL NO. 6509,

SENATE BILL NO. 6539,

ENGROSSED SUBSTITUTE SENATE BILL NO. 6622,

SENATE BILL NO. 6699,

SUBSTITUTE SENATE BILL NO. 6727.

SIGNED BY THE PRESIDENT

The President signed:

ENGROSSED SUBSTITUTE HOUSE BILL NO. 1074,

SUBSTITUTE HOUSE BILL NO. 1121,

ENGROSSED SUBSTITUTE HOUSE BILL NO. 1223,

SUBSTITUTE HOUSE BILL NO. 1504,

SUBSTITUTE HOUSE BILL NO. 1829,

ENGROSSED SECOND SUBSTITUTE HOUSE BILL NO. 2345,

ENGROSSED SUBSTITUTE HOUSE BILL NO. 2496,

ENGROSSED HOUSE BILL NO. 2501,

ENGROSSED SUBSTITUTE HOUSE BILL NO. 2514,

HOUSE BILL NO. 2542,

HOUSE BILL NO. 2557,

HOUSE BILL NO. 2558,

SUBSTITUTE HOUSE BILL NO. 2611,

SUBSTITUTE HOUSE BILL NO. 2710,

SUBSTITUTE HOUSE BILL NO. 2724,

SUBSTITUTE HOUSE BILL NO. 2836,

ENGROSSED SECOND SUBSTITUTE HOUSE BILL NO. 2880,

ENGROSSED SECOND SUBSTITUTE HOUSE BILL NO. 2881,

SUBSTITUTE HOUSE BILL NO. 2885,

HOUSE BILL NO. 2905,

SUBSTITUTE HOUSE BILL NO. 2960,

HOUSE BILL NO. 3052,

SECOND SUBSTITUTE HOUSE BILL NO. 3070,

SUBSTITUTE HOUSE BILL NO. 3096,

SUBSTITUTE HOUSE BILL NO. 3099.

There being no objection, the President advanced the Senate to the sixth order of business.

MOTION

On motion of Senator Hale, Senator Long was excused.

SECOND READING

GUBERNATORIAL APPOINTMENTS

MOTION

On motion of Senator Wood, Gubernatorial Appointment No. 9312, Bob Craves, as Chair of the Higher Education Coordinating Board, was confirmed.

APPOINTMENT OF BOB CRAVES

The Secretary called the roll. The appointment was confirmed by the following vote: Yeas, 38; Nays, 0; Absent, 9; Excused, 2.

Voting yea: Senators Anderson, Bauer, Benton, Fairley, Franklin, Fraser, Goings, Hale, Heavey, Hochstatter, Horn, Jacobsen, Johnson, Kline, Kohl, Loveland, McAuliffe, McCaslin, McDonald, Morton, Newhouse, Oke, Patterson, Prentice, Rasmussen, Roach, Rossi, Schow, Sheldon, B., Sheldon, T., Snyder, Spanel, Stevens, Swecker, Thibaudeau, Winsley, Wojahn and Wood - 38. Absent: Senators Brown, Deccio, Finkbeiner, Hargrove, Haugen, Prince, Strannigan, West and Zarelli - 9. Excused: Senators Long and Sellar - 2.

MOTIONS

On motion of Senator Hale, Senator Finkbeiner was excused.

On motion of Senator Goings, Senator Hargrove was excused.

MOTION

On motion of Senator Wood, Gubernatorial Appointment No. 9264, Larry L. Hanson, as a member of the Higher Education Coordinating Board, was confirmed.

APPOINTMENT OF LARRY L. HANSON

The Secretary called the roll. The appointment was confirmed by the following vote: Yeas, 44; Nays, 0; Absent, 1; Excused, 4.

Voting yea: Senators Anderson, Bauer, Benton, Brown, Deccio, Fairley, Franklin, Fraser, Goings, Hale, Haugen, Heavey, Hochstatter, Horn, Jacobsen, Johnson, Kline, Kohl, Loveland, McAuliffe, McCaslin, McDonald, Morton, Newhouse, Oke, Patterson, Prentice, Prince, Rasmussen, Roach, Rossi, Schow, Sheldon, B., Sheldon, T., Snyder, Spanel, Stevens, Strannigan, Swecker, Thibaudeau, West, Winsley, Wojahn and Wood - 44. Absent: Senator Zarelli - 1. Excused: Senators Finkbeiner, Hargrove, Long and Sellar - 4.

There being no objection, the President returned the Senate to the fourth order of business.

MESSAGE FROM THE HOUSE

March 10, 1998

MR. PRESIDENT:

Under suspension of the rules, ENGROSSED SUBSTITUTE SENATE BILL NO. 5703 was returned to second reading for the purpose of an amendment. The bill passed the House with the following amendment:

Strike everything after the enacting clause and insert the following:

"NEW SECTION. Sec. 1. (1) If a person placed surface or ground water to beneficial use before January 1, 1993, for irrigation, stock watering, or domestic use supplied by a public water supply system with one hundred or fewer service connections for which a permit or certificate was not issued by the department or its predecessors, the person or the public water supply system, or their respective successors may continue to use water on an interim basis as provided in section 2 of this act and only in the amount that has been beneficially used if:

(a) The person or the public water supply system files with the department a statement of claim and the evidence required under subsections (2) and (3) of this section during the period beginning September 1, 1998, and ending midnight June 30, 1999, using the standard form prescribed by RCW 90.14.051;

(b) The person or public water supply system has applied the water to beneficial use to the full extent stated in the statement of claim during at least three of the five years preceding the date the statement is filed and the person attests to having done so on the statement; and

(c) The claimant has filed or simultaneously files with the statement of claim an application to appropriate public water under RCW 90.03.250 or 90.44.060 for the quantity of water being put to beneficial use.

(2) The person or public water supply system must file with the statement of claim evidence that the quantity of water described in the claim was used beneficially before January 1, 1993, and during three of the five years preceding the date the statement was filed in the form of any two of the following:

(a) A statement signed by two persons other than the person filing the statement of claim verifying that the claimant beneficially used the water before January 1, 1993, and during three of the five years preceding the date the statement was filed as described in the statement of claim;

(b) A copy of a dated photograph clearly demonstrating the presence of grass or a crop requiring irrigation in the amounts asserted in the statement of claim or of livestock requiring water in such amounts; or records of receipts of the sale of crops by the person or the person's successor indicating that irrigation in the amount claimed was required to produce the crops;

(c) Receipts or records of irrigation or stockwatering equipment purchases or repairs associated with the water use specified in the statement of claim;

(d) Water well construction records identifying the date the well specified in the statement of claim as the point of withdrawal was constructed;

(e) Records of electricity bills directly associated with the withdrawal of water as specified in the statement of claim;

(f) Personal records such as photographs, journals, or correspondence indicating the use of water as asserted in the statement of claim.

(3) Public water supply systems must, in addition to the requirements of subsection (2) of this section, provide evidence of service connections existing and using water as of January 1, 1993, including documentation that the homes were built and occupied.

(4) A claimant who has filed both a statement of claim and an application for a water right has standing to assert a claim of a water right in a general adjudication under RCW 90.03.105 through 90.03.245 for the water use stated in the statement of claim. The statement of claim shall be reviewed by the court as provided in section 2(5) of this act.

NEW SECTION. Sec. 2. (1) A person may continue to use water on an interim basis for the purposes claimed as provided in section 1 of this act until one of the following occurs:

(a) The department makes its final decision granting or denying the water right application filed by the applicant. However, for an application filed under chapter . . ., Laws of 1998 (this act) located within a watershed in which a watershed management planning process established under chapter 90.82 or 90.54 RCW has been initiated prior to July 1, 2000, the department shall make a final decision on the application only after completion of the watershed management plan. The decision must be consistent with an approved and adopted watershed management plan. If the watershed management plan recommends granting applications for water rights or for transfer of water or water rights to uses that are represented by claims filed under section 1 of this act, the department shall grant the application according to the plan. If the planning effort is abandoned or if a watershed management plan is not completed within four years of the date it was initiated, whichever comes earlier, the department shall thereafter make a final decision on the application; or

(b) If the department has not made a final decision on the water right application and a court of competent jurisdiction issues a decree pursuant to a general adjudication under RCW 90.03.200 that defines or denies the claimant's right to appropriate water as provided in subsection (5) of this section.

(2) The department shall notify the claimant/applicant of the instream flow conditions with which each diversion or withdrawal must comply pending the completion of a watershed management plan or general adjudication. If instream flows have been established by rule, the department shall use those flows to regulate the diversion or withdrawal of water during times when the flows are not being met. For areas in which instream flows have not been established by rule, the department shall specify the flow conditions, determined in consultation with the department of fish and wildlife, to which the diversions or withdrawals will be conditioned pending completion of watershed management planning or general adjudication. Upon the completion of a watershed management plan and adoption of instream flows by rule, the diversions or withdrawals permitted under this section shall thereafter be conditioned in accordance with the rule adopting the flows.

(3) In making decisions regarding an application associated with such a claim in the watershed, the department shall consider alternative sources or augmented sources of water for the water use in the application, including but not limited to water supplied through storage enhancements or through the substitution of the use of ground water for the use of surface water. The department may approve the use of such an alternative or augmented source under the application without requiring the application to be resubmitted and without affecting the priority date of the application.

(4) If a watershed management plan adopts locally based standards for water use efficiency, any certificates issued thereafter under this section shall be conditioned accordingly.

(5) The department or the court may authorize the continued use of water under subsection (1) of this section only if the claimant's application meets the requirements of RCW 90.03.247 through 90.03.330, chapter 90.44 RCW, and RCW 90.54.020. If the department finds that the applicable requirements are met, it shall grant the water right application and issue a certificate under RCW 90.03.330 authorizing the person to use that quantity of water that has been put to beneficial use, not to exceed that quantity requested in the application or documented in the statement of claim under section 1 of this act, whichever is less. If in a general adjudication the court finds that the requirements are met, it shall confirm such use of water in a decree issued under RCW 90.03.200 and the department shall issue a certificate under RCW 90.03.240. The claimant has the burden of presenting evidence that the claim and application meet the requirements for granting a water right. The court shall consider all relevant evidence in making its findings and decision. The court may not confirm a right in excess of the quantity of water that has been applied to beneficial use as documented in the statement of claim under section 1 of this act or the quantity requested in the application for a water right, whichever is less. The priority date of any right issued by the department or confirmed by a court under sections 1 through 9 of this act shall be the effective date of this act.

(6) If the department or the court denies the claimant's use of water under subsection (5) of this section, the claimant must cease the use of the water. A decision by the department or a court limiting or denying a claimant's right to continue using water does not constitute a compensable taking under state or federal law because such claimants have no continuing legal right to use water.

NEW SECTION. Sec. 3. If no watershed management planning process under chapter 90.82 or 90.54 RCW has been initiated as of July 1, 2000, in the water resource inventory area in which a water use affected by section 1 of this act is made, the claimant/applicant may continue to use water, subject to the same limitation provided in section 2 (2) and (4) of this act, for the purposes described in the statement of claim until the department makes its decision to grant or deny the application or a court makes its findings and decision under section 2(5) of this act. The department shall make its findings and decision on an application as soon as it is able to do so, taking into consideration its total permit processing workload. A water right certificate issued under this section is subject to the same limitations and conditions as are provided in section 2 of this act.

NEW SECTION. Sec. 4. Sections 1 through 9 of this act do not apply to or authorize any use of water that was the subject of a water right application filed with the department, where the department denied such application.

NEW SECTION. Sec. 5. A continuing interim use of water authorized under sections 1 through 9 of this act shall not affect or impair in any respect whatsoever a water right existing before the effective date of this act. Sections 1 through 9 of this act do not limit the ability of a senior water right holder to take legal action against any other water user to prevent impairment of his or her water right. A right granted under sections 1 through 9 of this act is junior in every respect to a right with a more senior date of priority. Any right granted under sections 1 through 9 of this act may only be exercised in a manner that does not impair or interfere with a water right that is senior to it. The filing of a statement of claim under this section does not constitute an adjudication of any claim to the right to the use of waters as between the claimant and the state, or as between one or more water use claimants. A statement of claim filed under this section shall be admissible in a general adjudication of water rights as prima facie evidence of the times of use and the quantity of water the claimant was withdrawing or diverting to the same extent as is provided by RCW 90.14.081 for a statement of claim in the water rights claims registry on the effective date of this act.

NEW SECTION. Sec. 6. Sections 1 through 9 of this act do not apply to ground water in an area that is, during the period established by section 1(1)(a) of this act, the subject of a general adjudication proceeding for water rights in superior court under RCW 90.03.110 through 90.03.245 and the proceeding applies to ground water rights. Sections 1 through 9 of this act do not apply to surface water in an area that is, during the period established by section 1(1)(a) of this act, the subject of a general adjudication proceeding for water rights in superior court under RCW 90.03.110 through 90.03.245 and the proceeding applies to surface water rights.

NEW SECTION. Sec. 7. The two-dollar fee for filing a water right claim required in RCW 90.14.061 is waived for purposes of claims filed under section 1(1)(a) of this act.

NEW SECTION. Sec. 8. Sections 1 through 9 of this act do not apply to rights embodied in a water right permit or certificate issued by the department or its predecessors, a water right represented by a claim in the water rights claims registry, created under RCW 90.14.111, before September 1, 1998, or a water right exempted from permit and application requirements by RCW 90.44.050.

NEW SECTION. Sec. 9. Sections 1 through 9 of this act do not apply to claims for the use of water in a ground water area or subarea for which a management program adopted by the department by rule and in effect on the effective date of this act establishes acreage expansion limitations for the use of ground water.

NEW SECTION. Sec. 10. Sections 1 through 9 of this act are each added to chapter 90.03 RCW."

Correct the title., and the same are herewith transmitted.

TIMOTHY A. MARTIN, Chief Clerk

MOTION

Senator Anderson moved that the Senate concur in the House amendment to Engrossed Substitute Senate Bill No. 5703.

Debate ensued.

The President declared the question before the Senate to be the motion by Senator Anderson to concur in the House amendment to Engrossed Substitute Senate Bill No. 5703.

The motion by Senator Anderson carried and the Senate concurred in the House amendment to Engrossed Substitute Senate Bill No. 5703.

MOTIONS

On motion of Senator Swecker, Senator Schow was excused.

On motion of Senator Hale, Senator Zarelli was excused.

On motion of Senator Goings, Senators Brown and Heavey were excused.

The President declared the question before the Senate to be the roll call on the final passage of Engrossed Substitute Senate Bill No. 5703, as amended by the House.

ROLL CALL

The Secretary called the roll on the final passage of Engrossed Substitute Senate Bill No. 5703, as amended by the House, and the bill passed the Senate by the following vote: Yeas, 32; Nays, 11; Absent, 0; Excused, 6.

Voting yea: Senators Anderson, Bauer, Benton, Deccio, Finkbeiner, Goings, Hale, Haugen, Hochstatter, Horn, Johnson, Loveland, McCaslin, McDonald, Morton, Newhouse, Oke, Prince, Rasmussen, Roach, Rossi, Sellar, Sheldon, B., Sheldon, T., Snyder, Spanel, Stevens, Strannigan, Swecker, West, Winsley and Wood - 32. Voting nay: Senators Fairley, Franklin, Fraser, Jacobsen, Kline, Kohl, McAuliffe, Patterson, Prentice, Thibaudeau and Wojahn - 11. Excused: Senators Brown, Hargrove, Heavey, Long, Schow and Zarelli - 6. ENGROSSED SUBSTITUTE SENATE BILL NO. 5703, as amended by the House, 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.

MESSAGE FROM THE HOUSE

March 10, 1998

MR. PRESIDENT:

The House has passed ENGROSSED SUBSTITUTE SENATE BILL NO. 6205 with the following amendment(s):

Strike everything after the enacting clause and insert the following:

"Sec. 1. RCW 84.56.025 and 1984 c 185 s 1 are each amended to read as follows:

(1) The interest and penalties for delinquencies on property taxes, which taxes are levied on real estate in the year of a conveyance of the real estate and which are collected in the following year, shall be waived by the county treasurer under the following circumstances:

(((1))) (a) Records conveying the real estate were filed with the county auditor on or before November 30 of the year the taxes are levied;

(((2))) (b) A grantee's name and address are included in the records; and

(((3))) (c) The notice for these taxes due, as provided in RCW 84.56.050, was not sent to a grantee due to error by the county. Where such waiver of interest and penalties has occurred, the full amount of interest and penalties shall be reinstated if the grantee fails to pay the delinquent taxes within thirty days of receiving notice that the taxes are due. Each county treasurer shall, subject to guidelines prepared by the department of revenue, establish administrative procedures to determine if grantees are eligible for this waiver.

(2) In addition to the waiver under subsection (1) of this section, the interest and penalties for delinquencies on property taxes shall be waived by the county treasurer under the following circumstances:

(a) The taxpayer fails to make one payment under RCW 84.56.020 by the due date on the taxpayer's personal residence because of hardship caused by the death of the taxpayer's spouse if the taxpayer notifies the county treasurer of the hardship within sixty days of the tax due date; or

(b) The taxpayer fails to make one payment under RCW 84.56.020 by the due date on the taxpayer's parent's or stepparent's personal residence because of hardship caused by the death of the taxpayer's parent or stepparent if the taxpayer notifies the county treasurer of the hardship within sixty days of the tax due date. (3) Before allowing a hardship waiver under subsection (2) of this section, the county treasurer may require a copy of the death certificate along with an affidavit signed by the axpayer.", and the same are herewith transmitted.

TIMOTHY A. MARTIN, Chief Clerk

MOTION

On motion of Senator McCaslin, the Senate concurred in the House amendment to Engrossed Substitute Senate Bill No. 6205.

The President declared the question before the Senate to be the roll call on the final passage of Engrossed Substitute Senate Bill No. 6205, as amended by the House.

ROLL CALL

The Secretary called the roll on the final passage of Engrossed Substitute Senate Bill No. 6205, as amended by the House, and the bill passed the Senate by the following vote: Yeas, 43; Nays, 0; Absent, 1; Excused, 5.

Voting yea: Senators Anderson, Bauer, Benton, Deccio, Fairley, Franklin, Fraser, Goings, Hale, Haugen, Heavey, Hochstatter, Horn, Jacobsen, Johnson, Kline, Kohl, Loveland, McAuliffe, McCaslin, McDonald, Morton, Newhouse, Oke, Patterson, Prentice, Prince, Rasmussen, Roach, Rossi, Sellar, Sheldon, B., Sheldon, T., Snyder, Spanel, Stevens, Strannigan, Swecker, Thibaudeau, West, Winsley, Wojahn and Wood - 43. Absent: Senator Finkbeiner - 1. Excused: Senators Brown, Hargrove, Long, Schow and Zarelli - 5. ENGROSSED SUBSTITUTE SENATE BILL NO. 6205, as amended by the House, 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.

MESSAGE FROM THE HOUSE

March 10, 1998

MR. PRESIDENT:

The House has passed ENGROSSED SUBSTITUTE SENATE BILL NO. 6533 with the following amendment(s):

On page 5, line 4, after "payments" insert "and benefits for disabilities related to the performance of military duties", and the same are herewith transmitted.

TIMOTHY A. MARTIN, Chief Clerk

MOTION

On motion of Senator Strannigan, the Senate concurred in the House amendment to Engrossed Substitute Senate Bill No. 6533.

The President declared the question before the Senate to be the roll call on the final passage of Engrossed Substitute Senate Bill No. 6533, as amended by the House.

ROLL CALL

The Secretary called the roll on the final passage of Engrossed Substitute Senate Bill No. 6533, as amended by the House, and the bill passed the Senate by the following vote: Yeas, 46; Nays, 0; Absent, 1; Excused, 2.

Voting yea: Senators Anderson, Bauer, Benton, Deccio, Fairley, Franklin, Fraser, Goings, Hale, Haugen, Heavey, Hochstatter, Horn, Jacobsen, Johnson, Kline, Kohl, Long, Loveland, McAuliffe, McCaslin, McDonald, Morton, Newhouse, Oke, Patterson, Prentice, Prince, Rasmussen, Roach, Rossi, Schow, Sellar, Sheldon, B., Sheldon, T., Snyder, Spanel, Stevens, Strannigan, Swecker, Thibaudeau, West, Winsley, Wojahn, Wood and Zarelli - 46. Absent: Senator Finkbeiner - 1. Excused: Senators Brown and Hargrove - 2. ENGROSSED SUBSTITUTE SENATE BILL NO. 6533, as amended by the House, 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 President advanced the Senate to the fifth order of business.

INTRODUCTION AND FIRST READING

SB 6763 by Senators Stevens, Hochstatter, Zarelli and Roach

AN ACT Relating to medical treatment of children in custody; amending RCW 13.34.060; and adding new sections to chapter 13.34 RCW.

Referred to Committee on Human Services and Corrections.

SCR 8429 by Senators McDonald and Snyder

Renaming the Institutions Building the Irving R. Newhouse Building.

MOTION

On motion of Senator Johnson, the rules were suspended, Senate Concurrent Resolution No. 8429 was advanced to second reading and read the second time.

SENATE CONCURRENT RESOLUTION NO. 8429

WHEREAS, The Honorable Irving R. Newhouse serves with honor and integrity as President Pro Tempore of the Washington State Senate; and

WHEREAS, Republicans and Democrats alike have great respect for Senator Newhouse for his impressive institutional knowledge as the longest serving member in the Legislature; and

WHEREAS, Senator Newhouse has demonstrated tremendous dedication to his district and to the state of Washington with more than 34 years of service since his election to the House of Representatives in 1964; and

WHEREAS, Due to his vast understanding of the political process and parliamentary procedure, Senator Newhouse has risen to several leadership positions since his appointment to the state Senate in 1980, including Senate Republican Floor Leader from 1988 to 1996 and now President Pro Tempore; and

WHEREAS, Senator Newhouse is considered "one of the sharpest minds in the Legislature and the best attorney in the Legislature, even though he isn't one"; and

WHEREAS, Governors of both parties have desired and respected his perspective on potential legislation; and

WHEREAS, His commitment to the 15th District and his dedication to agriculture brings him home to Mabton each interim where he works diligently on his farm growing hops, grapes, apples, cherries, and other crops; and

WHEREAS, The knowledge and experience he has gained as both a legislator and a farmer make him a strong and loyal advocate of the agricultural industry, recently recognized with the state Agriculture Director's Citation Award and the Washington State Farm Bureau Legislator of the Year Award; and

WHEREAS, His dedication to the Legislature and his farm can only be matched by his love and commitment to his wife, Ruth, and their six children and eighteen grandchildren; and

WHEREAS, Senator Irv Newhouse will long be remembered for his impressive and inspiring contributions to the Washington State Legislature by members, staff, lobbyists, the press, and friends and neighbors in the 15th Legislative District; and

WHEREAS, As a first generation American, he has made a significant mark on the state of Washington; and

WHEREAS, The Washington State Legislature wishes to honor Senator Newhouse with a lasting memorial to his dedication and service in the Legislature;

NOW, THEREFORE, BE IT RESOLVED, By the Washington State Senate, the House of Representatives concurring, That the Director of General Administration is directed to rename the building currently referred to as the Institutions Building, the Irving R. Newhouse Building; and

BE IT FURTHER RESOLVED, That all appropriate Senate stationery be updated to reflect this name change as soon as economically possible; and

BE IT FURTHER RESOLVED, That this resolution be forwarded to the Honorable Irving R. Newhouse, Senate President Pro Tempore; the Honorable Gary Locke, Governor of the state of Washington; and Marsha Tadano Long, Director of the Department of General Administration.

MOTION

On motion of Senator Johnson, the rules were suspended, Senate Concurrent Resolution No. 8429 was advanced to third reading, the second reading considered the third and the concurrent resolution was adopted.

SENATE CONCURRENT RESOLUTION NO. 8429, was adopted by voice vote.

Senators Johnson, McDonald, Snyder, Deccio, Heavey, McCaslin, Prentice, Anderson, Oke, Sellar, Bauer, Franklin, Wojahn, Morton,

Schow and Winsley spoke to Senate Concurrent Resolution No. 8429.

Governor Gary Locke presented Senator Newhouse with a proclamation and thanked the Senator for his many years of extraordinary service to the Legislature and to the people of the state of Washington.

INTRODUCTION OF SPECIAL GUESTS

The President welcomed and introduced the family of Senator Newhouse, who were seated in the gallery.

REMARKS BY SENATOR NEWHOUSE

Senator Newhouse: “Mr. President and ladies and gentlemen. I can't say much. With sixteen or eighteen kids up there and my wife, Ruth, I go back quite a few years. In the hall this morning, I met Stan Finkelstein, who was my staff man on legislative council days and we had written a great deal of legislation together and I said to Stan, 'We have to go over the record and find out which were the best bills we put together.' I don't think there is much question as to the one percent property tax lid. It would have been two percent if we hadn't done that. The Open Spaces Act, the Surface Mining Act--I am kind of proud of some of those things--but I think more of the great opportunity that I have had over these past thirty-five years, to participate with government and to be associated with people like you.

“We did run a farm at the same time and that is kind of tough--two hundred miles away. My wife's job of getting six kids through school. When I started in the Legislature, the oldest was almost eighteen, that's Joyce, and the youngest one was seven. That's Dorothy with her twins up there now.

“I want to thank you all for the lessons that you have given me. I appreciate very much the relationship of legislators. Governor Gary, I remember taking you on a tour of my farm one afternoon, after a meeting. What can I say? Thanks, folks! It has been a great pleasure.”

There being no objection, the President returned the Senate to the fourth order of business.

MESSAGE FROM THE HOUSE

March 10, 1998

MR. PRESIDENT:

The House has passed SENATE BILL NO. 6588 with the following amendment(s):

On page 1, line 18, after "counters" insert ", and snack counters located in theaters or centers for the performing arts", and the same are herewith transmitted.

TIMOTHY A. MARTIN, Chief Clerk

MOTION

On motion of Senator Winsley, the Senate concurred in the House amendment to Senate Bill No. 6588.

MOTIONS

On motion of Senator Hale, Senators Newhouse, Swecker and Wood were excused.

On motion of Senator Betti Sheldon, Senator Goings was excused.

On motion of Senator Franklin, Senators Haugen, Kohl and Rasmussen were excused.

The President declared the question before the Senate to be the roll call on the final passage of Senate Bill No. 6588, as amended by the House.

ROLL CALL

The Secretary called the roll on the final passage of Senate Bill No. 6588, as amended by the House, and the bill passed the Senate by the following vote: Yeas, 38; Nays, 1; Absent, 2; Excused, 8.

Voting yea: Senators Anderson, Bauer, Benton, Brown, Deccio, Fairley, Finkbeiner, Franklin, Fraser, Hale, Hargrove, Heavey, Hochstatter, Horn, Jacobsen, Johnson, Kline, Loveland, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Rossi, Schow, Sellar, Sheldon, B., Sheldon, T., Snyder, Spanel, Stevens, Strannigan, West, Winsley, Wojahn and Zarelli - 38. Voting nay: Senator Thibaudeau - 1. Absent: Senators Prince and Roach - 2. Excused: Senators Goings, Haugen, Kohl, Long, Newhouse, Rasmussen, Swecker and Wood - 8. SENATE BILL NO. 6588, as amended by the House, 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 President advanced the Senate to the sixth order of business.

SECOND READING

SUBSTITUTE HOUSE BILL NO. 1088, by House Committee on Government Administration (originally sponsored by Representatives Sheahan and Schoesler)

Designating Mammuthus COLUMBI as the official fossil of the state of Washington.

The bill was read the second time.

MOTION

On motion of Senator McCaslin, the rules were suspended, Substitute House Bill No. 1088 was advanced to third reading, the second reading considered the third and the bill was placed on final passage.

Debate ensued.

MOTIONS

On motion of Senator Sellar, Senators Benton, Hale and Roach were excused.

On motion of Senator Franklin, Senators Bauer and Loveland were excused.

The President declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 1088.

ROLL CALL

The Secretary called the roll on the final passage of Substitute House Bill No. 1088 and the bill passed the Senate by the following vote: Yeas, 34; Nays, 0; Absent, 3; Excused, 12.

Voting yea: Senators Anderson, Brown, Deccio, Fairley, Finkbeiner, Franklin, Fraser, Hargrove, Heavey, Hochstatter, Horn, Jacobsen, Johnson, Kline, McAuliffe, McCaslin, Oke, Patterson, Prentice, Rossi, Schow, Sellar, Sheldon, B., Sheldon, T., Snyder, Spanel, Stevens, Strannigan, Swecker, Thibaudeau, West, Winsley, Wojahn and Zarelli - 34. Absent: Senators McDonald, Morton and Prince - 3. Excused: Senators Bauer, Benton, Goings, Hale, Haugen, Kohl, Long, Loveland, Newhouse, Rasmussen, Roach and Wood - 12.

SUBSTITUTE HOUSE BILL NO. 1088, 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 President returned the Senate to the fourth order of business.

MESSAGE FROM THE HOUSE

March 10, 1998

MR. PRESIDENT:

The House refuses to recede from its amendment(s) to SUBSTITUTE SENATE BILL NO. 6119 and insists on its position and asks the Senate to concur therein., and the same are herewith transmitted.

TIMOTHY A MARTIN, Chief Clerk

MOTION

Senator McCaslin moved that the Senate concur in the House amendment(s) to Substitute Senate Bill No. 6119.

Debate ensued.

The President declared the question before the Senate to be the motion by Senator McCaslin that the Senate concur in the House amendment(s) to Substitute Senate Bill No. 6119.

The motion by Senator McCaslin carried and the Senate concurred in the House amendment(s) to Substitute Senate Bill No. 6119.

MOTION

On motion of Senator Sellar, Senators Morton and Winsley were excused.

The President declared the question before the Senate to be the roll call on the final passage of Substitute Senate Bill No. 6119, as amended by the House.

ROLL CALL

The Secretary called the roll on the final passage of Substitute Senate Bill No. 6119, as amended by the House, and the bill failed to passed the Senate by the following vote: Yeas, 22; Nays, 13; Absent, 0; Excused, 14.

Voting yea: Senators Anderson, Deccio, Finkbeiner, Hargrove, Heavey, Hochstatter, Horn, Johnson, McCaslin, McDonald, Oke, Patterson, Prentice, Prince, Rossi, Sellar, Sheldon, T., Stevens, Strannigan, Swecker, West and Zarelli - 22. Voting nay: Senators Brown, Fairley, Franklin, Fraser, Jacobsen, Kline, McAuliffe, Schow, Sheldon, B., Snyder, Spanel, Thibaudeau and Wojahn - 13. Excused: Senators Bauer, Benton, Goings, Hale, Haugen, Kohl, Long, Loveland, Morton, Newhouse, Rasmussen, Roach, Winsley and Wood - 14. SUBSTITUTE SENATE BILL NO. 6119, as amended by the House, having failed to received the constitutional majority, was declared lost.

PARLIAMENTARY INQUIRY

Senator McCaslin: “A point of parliamentary inquiry, Mr. President. When the President says it passes and pounds the gavel, can we accept that or--”

REPLY BY THE PRESIDENT

President Owen: “Well, you know, the votes are kind of the overriding factor there. Every once in a while--rare--but every once in a while, I make a mistake.”

Senator McCaslin: “I knew you carried a lot of weight, but I didn't know you could do that.”

President Owen: “I don't carry that much.”

MOTION

At 3:58 p.m., on motion of Senator Johnson, the Senate was declared to be at ease.

The Senate was called to order at 4:39 p.m. by President Owen.

There being no objection, the President advanced the Senate to the sixth order of business.

MOTION

On motion of Senator Goings, Senators Fairley and Rasmussen were excused.

SECOND READING

HOUSE BILL NO. 2566, by Representatives Alexander, Linville, DeBolt, Morris and Thompson

Extending the retail sales tax exemption for sales of laundry service.

The bill was read the second time.

MOTION

On motion of Senator West, the rules were suspended, House Bill No. 2566 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. 2566.

ROLL CALL

The Secretary called the roll on the final passage of House Bill No. 2566 and the bill passed the Senate by the following vote: Yeas, 43; Nays, 0; Absent, 2; Excused, 4.

Voting yea: Senators Anderson, Bauer, Benton, Brown, Deccio, Finkbeiner, Franklin, Fraser, Goings, Hale, Hargrove, Haugen, Heavey, Hochstatter, Horn, Jacobsen, Johnson, Kline, Kohl, Long, Loveland, McAuliffe, McCaslin, Morton, Oke, Patterson, Prentice, Prince, Rossi, Schow, Sellar, Sheldon, B., Sheldon, T., Snyder, Spanel, Stevens, Strannigan, Swecker, Thibaudeau, West, Winsley, Wood and Zarelli - 43. Absent: Senators McDonald and Wojahn - 2. Excused: Senators Fairley, Newhouse, Rasmussen and Roach - 4. HOUSE BILL NO. 2566, 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. 2417 and the pending Committee on Transportation striking amendment, deferred March 6, 1998.

EDITOR'S NOTE: Senate Concurrent Resolution No. 8430, adopted March 10, 1998, established cutoff dates for consideration of measures related to state and local transportation.

The President declared the question before the Senate to be the adoption of the Committee on Transportation striking amendment to Engrossed Substitute Senate Bill No. 2417.

Debate ensued.

The Committee on Transportation striking amendment was adopted.

MOTIONS

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

On page 1, line 2 of the title, after "projects;" strike the remainder of the title and insert "and amending RCW 82.80.020 and 82.80.080."

On motion of Senator Zarelli, the rules were suspended, Engrossed Substitute House Bill No. 2417, 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 Franklin, Senator Wojahn was excused.

The President declared the question before the Senate to be the roll call on the final passage of Engrossed Substitute House Bill No. 2417, as amended by the Senate.

ROLL CALL

The Secretary called the roll on the final passage of Engrossed Substitute House Bill No. 2417, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 30; Nays, 15; Absent, 0; Excused, 4.

Voting yea: Senators Anderson, Bauer, Benton, Deccio, Finkbeiner, Fraser, Hale, Hargrove, Heavey, Hochstatter, Horn, Johnson, Long, McCaslin, McDonald, Morton, Oke, Prince, Rossi, Schow, Sellar, Sheldon, B., Snyder, Stevens, Strannigan, Swecker, West, Winsley, Wood and Zarelli - 30. Voting nay: Senators Brown, Franklin, Goings, Haugen, Jacobsen, Kline, Kohl, Loveland, McAuliffe, Patterson, Prentice, Rasmussen, Sheldon, T., Spanel and Thibaudeau - 15. Excused: Senators Fairley, Newhouse, Roach and Wojahn - 4. ENGROSSED SUBSTITUTE HOUSE BILL NO. 2417, 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.

Vice President Pro Tempore Morton assumed the Chair.

MOTION

On motion of Senator Johnson, the Senate advanced to the ninth order of business.

MOTION

On motion of Senator Johnson, the Committee on Rules was relieved of Second Substitute House Bill No. 2849 and Engrossed Substitute House Bill No. 2947.

MOTION

On motion of Senator Johnson, the rules were suspended and Second Substitute House Bill No. 2849 and Engrossed Substitute House Bill No. 2947 were advanced to second reading and placed on the second reading calendar.

MOTION

Senator Johnson moved that the Senate return to the sixth order of business.

Senator Hargrove objected to returning to the sixth order of business.

Senator Johnson demanded a roll call and the demand was sustained.

The Vice President Pro Tempore declared the question before the Senate to be the roll call on the motion by Senator Johnson to return to the sixth order of business.

ROLL CALL

The Secretary called the roll and the motion to return to the sixth order of business carried by the following vote: Yeas, 24; Nays, 22; Absent, 0; Excused, 3.

Voting yea: Senators Anderson, Benton, Deccio, Finkbeiner, Hale, Hochstatter, Horn, Johnson, Long, McCaslin, McDonald, Morton, Oke, Prince, Roach, Rossi, Schow, Sellar, Stevens, Strannigan, Swecker, West, Winsley and Zarelli - 24. Voting nay: Senators Bauer, Brown, Fairley, Franklin, Fraser, Goings, Hargrove, Haugen, Heavey, Jacobsen, Kline, Kohl, Loveland, McAuliffe, Patterson, Prentice, Rasmussen, Sheldon, B., Sheldon, T., Snyder, Spanel and Thibaudeau - 22. Excused: Senators Newhouse, Wojahn and Wood - 3.

SECOND READING

SUBSTITUTE HOUSE BILL NO. 2659, by House Committee on Transportation Policy and Budget (originally sponsored by Representatives Fisher, K. Schmidt, Radcliff, O'Brien and Murray) (by request of Governor Locke)

Regulating collection of special fuel taxes and motor vehicle fuel tax.

The bill was read the second time.

MOTION

Senator Prince moved that the following Committee on Transportation amendment not be adopted:

Strike everything after the enacting clause and insert the following:

"NEW SECTION. Sec. 1. The legislature finds and declares that:

(1) The health, safety, and welfare of the people of the state of Washington are dependent on the state's ability to properly collect the taxes enacted by the legislature;

(2) The current system for collecting special fuel taxes and motor vehicle fuel tax has allowed many parties to fraudulently evade paying the special fuel taxes and motor vehicle fuel tax due the state; and

(3) By changing the point of collection of the special fuel taxes and motor vehicle fuel tax from distributors to suppliers, the department of licensing will have fewer parties to collect tax from and enforcement will be enhanced, thus leading to greater revenues for the state.

Sec. 2. RCW 35A.82.010 and 1995 c 274 s 4 are each amended to read as follows:

A code city shall collect, receive and share in the distribution of state collected and distributed excise taxes to the same extent and manner as general laws relating thereto apply to any class of city or town including, but not limited to, funds distributed to cities under RCW 82.36.020 relating to motor vehicle fuel tax, RCW 82.38.290 relating to use fuel tax, and RCW 82.36.275 and 82.38.080(((9))) (3).

Sec. 3. RCW 82.04.4285 and 1980 c 37 s 6 are each amended to read as follows:

In computing tax there may be deducted from the measure of tax so much of the sale price of motor vehicle fuel as constitutes the amount of tax imposed by the state under chapters 82.36 and 82.38 RCW or the United States government, under 26 U.S.C., Subtitle D, chapters 31 and 32, upon the sale thereof.

Sec. 4. RCW 82.08.0255 and 1983 1st ex.s. c 35 s 2 and 1983 c 108 s 1 are each reenacted and amended to read as follows:

(1) The tax levied by RCW 82.08.020 shall not apply to sales of:

(a) Motor vehicle fuel used in aircraft by the manufacturer thereof for research, development, and testing purposes; and

(b) Motor vehicle and special fuel if:

(i) The fuel is purchased for the purpose of public transportation and the purchaser is entitled to a refund or an exemption under RCW 82.36.275 or 82.38.080(((9))) (3); or

(ii) The fuel is purchased by a private, nonprofit transportation provider certified under chapter 81.66 RCW and the purchaser is entitled to a refund or an exemption under RCW 82.36.285 or 82.38.080(((8))) (1)(h); or

(iii) The fuel is taxable under chapter 82.36 or 82.38 RCW.

(2) Any person who has paid the tax imposed by RCW 82.08.020 on the sale of special fuel delivered in this state shall be entitled to a credit or refund of such tax with respect to fuel subsequently established to have been actually transported and used outside this state by persons engaged in interstate commerce. The tax shall be claimed as a credit or refunded through the tax reports required under RCW 82.38.150.

Sec. 5. RCW 82.12.0256 and 1983 1st ex.s. c 35 s 3 and 1983 c 108 s 2 are each reenacted and amended to read as follows:

The provisions of this chapter shall not apply in respect to the use of:

(1) Motor vehicle fuel used in aircraft by the manufacturer thereof for research, development, and testing purposes; and

(2) Special fuel purchased in this state upon which a refund is obtained as provided in RCW 82.38.180(2); and

(3) Motor vehicle and special fuel if:

(a) The fuel is used for the purpose of public transportation and the purchaser is entitled to a refund or an exemption under RCW 82.36.275 or 82.38.080(((9))) (3); or

(b) The fuel is purchased by a private, nonprofit transportation provider certified under chapter 81.66 RCW and the purchaser is entitled to a refund or an exemption under RCW 82.36.285 or 82.38.080(((8))) (1)(h); or

(c) The fuel is taxable under chapter 82.36 or 82.38 RCW: PROVIDED, That the use of motor vehicle and special fuel upon which a refund of the applicable fuel tax is obtained shall not be exempt under this subsection (3)(c), and the director of licensing shall deduct from the amount of such tax to be refunded the amount of tax due under this chapter and remit the same each month to the department of revenue.

Sec. 6. RCW 82.36.010 and 1995 c 287 s 1 and 1995 c 274 s 20 are each reenacted and amended to read as follows:

((For the purposes of this chapter:

(1) "Motor vehicle" means every vehicle that is in itself a self-propelled unit, equipped with solid rubber, hollow-cushion rubber, or pneumatic rubber tires and capable of being moved or operated upon a public highway, except motor vehicles used as motive power for or in conjunction with farm implements and machines or implements of husbandry;

(2) "Motor vehicle fuel" means gasoline or any other inflammable gas or liquid, by whatsoever name such gasoline, gas, or liquid may be known or sold, the chief use of which is as fuel for the propulsion of motor vehicles or motorboats;

(3) "Distributor" means every person who refines, manufactures, produces, or compounds motor vehicle fuel and sells, distributes, or in any manner uses it in this state; also every person engaged in business as a bona fide wholesale merchant dealing in motor vehicle fuel who either acquires it within the state from any person refining it within or importing it into the state, on which the tax has not been paid, or imports it into this state and sells, distributes, or in any manner uses it in this state; also every person who acquires motor vehicle fuel, on which the tax has not been paid, and exports it by commercial motor vehicle to a location outside the state. For the purposes of liability for a county fuel tax, "distributor" has that meaning defined in the county ordinance imposing the tax. For the purposes of this subsection, "commercial motor vehicle" means any motor vehicle used, designed, or maintained for transportation of persons or property and: (a) Having two axles and a gross vehicle weight or registered gross vehicle weight exceeding twenty-six thousand pounds; or (b) having three or more axles regardless of weight; or (c) is used in combination, when the weight of such combination exceeds twenty-six thousand pounds gross vehicle weight. "Commercial motor vehicle" does not include recreational vehicles;

(4) "Service station" means a place operated for the purpose of delivering motor vehicle fuel into the fuel tanks of motor vehicles;

(5) "Department" means the department of licensing;

(6) "Director" means the director of licensing;

(7) "Dealer" means any person engaged in the retail sale of liquid motor vehicle fuels;

(8) "Person" means every natural person, firm, partnership, association, or private or public corporation;

(9) "Highway" means every way or place open to the use of the public, as a matter of right, for purposes of vehicular travel;

(10) "Broker" means every person, other than a distributor, engaged in business as a broker, jobber, or wholesale merchant dealing in motor vehicle fuel or other petroleum products used or usable in propelling motor vehicles, or in other petroleum products which may be used in blending, compounding, or manufacturing of motor vehicle fuel;

(11) "Producer" means every person, other than a distributor, engaged in the business of producing motor vehicle fuel or other petroleum products used in, or which may be used in, the blending, compounding, or manufacturing of motor vehicle fuel;

(12) "Distribution" means all withdrawals of motor vehicle fuel for delivery to others, to retail service stations, or to unlicensed bulk storage plants;

(13) "Bulk storage plant" means, pursuant to the licensing provisions of RCW 82.36.070, any plant, under the control of the distributor, used for the storage of motor vehicle fuel to which no retail outlets are directly connected by pipe lines;

(14) "Marine fuel dealer" means any person engaged in the retail sale of liquid motor vehicle fuel whose place of business and or sale outlet is located upon a navigable waterway;

(15) "Alcohol" means alcohol that is produced from renewable resources;

(16) "Electronic funds transfer" means any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, which is initiated through an electronic terminal, telephonic instrument, or computer or magnetic tape so as to order, instruct, or authorize a financial institution to debit or credit an account;

(17) "Evasion" or "evade" means to diminish or avoid the computation, assessment, or payment of authorized taxes or fees through:

(a) A knowing: False statement, misrepresentation of fact, or other act of deception; or

(b) An intentional: Omission, failure to file a return or report, or other act of deception.)) The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.

(1) "Blended fuel" means a mixture of motor vehicle fuel and another liquid, other than a de minimus amount of the liquid, that can be used as a fuel to propel a motor vehicle.

(2) "Bond" means a bond duly executed with a corporate surety qualified under chapter 48.28 RCW, which bond is payable to the state of Washington conditioned upon faithful performance of all requirements of this chapter, including the payment of all taxes, penalties, and other obligations arising out of this chapter.

(3) "Bulk transfer" means a transfer of motor vehicle fuel by pipeline or vessel.

(4) "Bulk transfer-terminal system" means the motor vehicle fuel distribution system consisting of refineries, pipelines, vessels, and terminals. Motor vehicle fuel in a refinery, pipeline, vessel, or terminal is in the bulk transfer-terminal system. Motor vehicle fuel in the fuel tank of an engine, motor vehicle, or in a railcar, trailer, truck, or other equipment suitable for ground transportation is not in the bulk transfer-terminal system.

(5) "Dealer" means a person engaged in the retail sale of motor vehicle fuel.

(6) "Department" means the department of licensing.

(7) "Director" means the director of licensing.

(8) "Evasion" or "evade" means to diminish or avoid the computation, assessment, or payment of authorized taxes or fees through:

(a) A knowing: False statement; misrepresentation of fact; or other act of deception; or

(b) An intentional: Omission; failure to file a return or report; or other act of deception.

(9) "Export" means to obtain motor vehicle fuel in this state for sales or distribution outside the state.

(10) "Highway" means every way or place open to the use of the public, as a matter of right, for the purpose of vehicular travel.

(11) "Import" means to bring motor vehicle fuel into this state by a means of conveyance other than the fuel supply tank of a motor vehicle.

(12) "Licensee" means a person holding a license issued under this chapter.

(13) "Marine fuel dealer" means a person engaged in the retail sale of motor vehicle fuel whose place of business and/or sale outlet is located upon a navigable waterway.

(14) "Motor vehicle fuel blender" means a person who produces blended motor fuel outside the bulk transfer-terminal system.

(15) "Motor vehicle fuel distributor" means a person who acquires motor vehicle fuel from a supplier, distributor, or licensee for subsequent sale and distribution.

(16) "Motor vehicle fuel exporter" means a person who purchases motor vehicle fuel in this state and directly exports the fuel by a means other than the bulk transfer-terminal system to a destination outside of the state. If the exporter of record is acting as an agent, the person for whom the agent is acting is the exporter. If there is no exporter of record, the owner of the motor fuel at the time of exportation is the exporter.

(17) "Motor vehicle fuel importer" means a person who imports motor vehicle fuel into the state by a means other than the bulk transfer-terminal system. If the importer of record is acting as an agent, the person for whom the agent is acting is the importer. If there is no importer of record, the owner of the motor vehicle fuel at the time of importation is the importer.

(18) "Motor vehicle fuel supplier" means a person who owns and stores motor vehicle fuel in a terminal facility or who refines and stores motor vehicle fuel at a refinery.

(19) "Motor vehicle" means a self-propelled vehicle designed for operation upon land utilizing motor vehicle fuel as the means of propulsion.

(20) "Motor vehicle fuel" means gasoline and any other inflammable gas or liquid, by whatsoever name the gasoline, gas, or liquid may be known or sold, the chief use of which is as fuel for the propulsion of motor vehicles or motorboats.

(21) "Person" means a natural person, fiduciary, association, or corporation. The term "person" as applied to an association means and includes the partners or members thereof, and as applied to corporations, the officers thereof.

(22) "Position holder" means a person who holds the inventory position in motor vehicle fuel, as reflected by the records of the terminal operator. A person holds the inventory position in motor vehicle fuel if the person has a contractual agreement with the terminal for the use of storage facilities and terminating services at a terminal with respect to motor vehicle fuel. "Position holder" includes a terminal operator that owns motor vehicle fuel in their terminal.

(23) "Rack" means a mechanism for delivering motor vehicle fuel from a refinery or terminal into a truck, trailer, railcar, or other means of nonbulk transfer.

(24) "Refiner" means a person who owns, operates, or otherwise controls a refinery.

(25) "Removal" means a physical transfer of motor vehicle fuel other than by evaporation, loss, or destruction.

(26) "Terminal" means a motor vehicle fuel storage and distribution facility that has been assigned a terminal control number by the internal revenue service, is supplied by pipeline or vessel, and from which reportable motor vehicle fuel is removed at a rack.

(27) "Terminal operator" means a person who owns, operates, or otherwise controls a terminal.

(28) "Two-party exchange" or "buy-sell agreement" means a transaction in which taxable motor vehicle fuel is transferred from one licensed supplier to another licensed supplier under an exchange or buy-sell agreement whereby the supplier that is the position holder agrees to deliver taxable motor vehicle fuel to the other supplier or the other supplier's customer at the rack of the terminal at which the delivering supplier is the position holder.

Sec. 7. RCW 82.36.020 and 1983 1st ex.s. c 49 s 26 are each amended to read as follows:

((Every distributor shall pay, in addition to any other taxes provided by law, an excise tax to the director at a rate computed in the manner provided in RCW 82.36.025 for each gallon of motor vehicle fuel sold, distributed, or used by him in the state as well as on each gallon upon which he has assumed liability for payment of the tax under the provisions of RCW 82.36.100: PROVIDED, That under such regulations as the director may prescribe sales or distribution of motor vehicle fuel may be made by one licensed distributor to another licensed distributor free of the tax. In the computation of the tax, one-quarter of one percent of the net gallonage otherwise taxable shall be deducted by the distributor before computing the tax due, on account of the losses sustained through handling. The tax imposed hereunder shall be in addition to any other tax required by law, and shall not be imposed under circumstances in which the tax is prohibited by the Constitution or laws of the United States. The tax herein imposed shall be collected and paid to the state but once in respect to any motor vehicle fuel. An invoice shall be rendered by a distributor to a purchaser for each distribution of motor vehicle fuel.))

(1) There is hereby levied and imposed upon motor vehicle fuel users a tax at the rate computed in the manner provided in RCW 82.36.025 on each gallon of motor vehicle fuel.

(2) The tax imposed by subsection (1) of this section is imposed when any of the following occurs:

(a) Motor vehicle fuel is removed in this state from a terminal if the motor vehicle fuel is removed at the rack unless the removal is to a licensed exporter for direct delivery to a destination outside of the state;

(b) Motor vehicle fuel is removed in this state from a refinery if either of the following applies:

(i) The removal is by bulk transfer and the refiner or the owner of the motor vehicle fuel immediately before the removal is not a licensee; or

(ii) The removal is at the refinery rack unless the removal is to a licensed exporter for direct delivery to a destination outside of the state;

(i) The entry is by bulk transfer and the importer is not a licensee; or

(ii) The entry is not by bulk transfer;

(d) Motor vehicle fuel is removed in this state to an unlicensed entity unless there was a prior taxable removal, entry, or sale of the motor vehicle fuel;

(e) Blended motor vehicle fuel is removed or sold in this state by the blender of the fuel. The number of gallons of blended motor vehicle fuel subject to the tax is the difference between the total number of gallons of blended motor vehicle fuel removed or sold and the number of gallons of previously taxed motor vehicle fuel used to produce the blended motor vehicle fuel.

(3) The proceeds of the motor vehicle fuel excise tax collected ((on the net gallonage after the deduction provided for herein and)) after the deductions for payments and expenditures as provided in RCW 46.68.090((,)) shall be distributed as provided in RCW 46.68.100.

NEW SECTION. Sec. 8. (1) A position holder shall remit tax to the department on motor vehicle fuel removed from a terminal as provided in RCW 82.36.020(2)(a). On a two-party exchange, or buy-sell agreement between two suppliers, the receiving exchange partner or buyer, becomes the position holder, who shall remit the tax.

(2) A refiner shall remit tax to the department on motor vehicle fuel removed from a refinery as provided in RCW 82.36.020(2)(b).

(3) An importer shall remit tax to the department on motor vehicle fuel imported into this state as provided in RCW 82.36.020(2)(c).

(4) A blender shall remit tax to the department on the removal or sale of blended motor vehicle fuel as provided in RCW 82.36.020(2)(e).

NEW SECTION. Sec. 9. A terminal operator is jointly and severally liable for remitting the tax imposed under RCW 82.36.020(1) if, at the time of removal:

(1) The position holder with respect to the motor vehicle fuel is a person other than the terminal operator and is not a licensee;

(2) The terminal operator is not a licensee;

(3) The position holder has an expired internal revenue service notification certificate issued under 26 C.F.R. Part 48; or

(4) The terminal operator had reason to believe that information on the notification certificate was false.

NEW SECTION. Sec. 10. Upon the taxable removal of motor vehicle fuel, the licensee who acquired or removed the motor vehicle fuel, other than a motor vehicle fuel exporter, shall be entitled to a deduction from the tax liability on the gallonage of taxable motor vehicle fuel removed in order to account for handling losses, as follows: For a motor vehicle fuel supplier acting as a distributor, one-quarter of one percent; and for all other licensees, thirty one-hundredths of one percent. For those licensees required to file tax reports, the handling loss deduction shall be reported on tax reports filed with the department. For motor vehicle fuel distributors, the handling loss deduction shall be shown on the invoice provided to the motor vehicle fuel distributor by the seller.

NEW SECTION. Sec. 11. For the purpose of determining the amount of liability for the tax imposed under this chapter, and to periodically update license information, each licensee, other than a motor vehicle fuel distributor, shall file monthly tax reports with the department, on a form prescribed by the department.

A report shall be filed with the department even though no motor vehicle fuel tax is due for the reporting period. Each tax report shall contain a declaration by the person making the same, to the effect that the statements contained therein are true and made under penalties of perjury, which declaration has the same force and effect as a verification of the report and is in lieu of the verification. The report shall show information as the department may require for the proper administration and enforcement of this chapter. Tax reports shall be filed on or before the twenty-fifth day of the next succeeding calendar month following the period to which the reports relate. If the final filing date falls on a Saturday, Sunday, or legal holiday the next secular or business day shall be the final filing date.

The department, if it deems it necessary in order to ensure payment of the tax imposed under this chapter, or to facilitate the administration of this chapter, may require the filing of reports and tax remittances at shorter intervals than one month.

NEW SECTION. Sec. 12. (1) The tax imposed by this chapter shall be computed by multiplying the tax rate per gallon provided in this chapter by the number of gallons of motor vehicle fuel subject to the motor vehicle fuel tax.

(2) Except as provided in subsection (3) of this section, tax reports shall be accompanied by a remittance payable to the state treasurer covering the tax amount determined to be due for the reporting period.

(3) If the tax is paid by electronic funds transfer, the tax shall be paid on or before the tenth calendar day of the month that is the second month immediately following the reporting period. When the reporting period is May, the tax shall be paid on the last business day of June.

(4) The tax shall be paid by electronic funds transfer whenever the amount due is fifty thousand dollars or more.

(5) A motor vehicle fuel distributor shall remit tax on motor vehicle fuel purchased from a motor vehicle fuel supplier, and due to the state for that reporting period, to the motor vehicle fuel supplier.

(6) At the election of the distributor, the payment of the motor vehicle fuel tax owed on motor vehicle fuel purchased from a supplier shall be remitted to the supplier on terms agreed upon between the distributor and supplier or no later than two business days before the last business day of the following month. This election shall be subject to a condition that the distributor's remittances of all amounts of motor vehicle fuel tax due to the supplier shall be paid by electronic funds transfer. The distributor's election may be terminated by the supplier if the distributor does not make timely payments to the supplier as required by this section. This section shall not apply if the distributor is required by the supplier to pay cash or cash equivalent for motor vehicle fuel purchases.

Sec. 13. RCW 82.36.032 and 1987 c 174 s 7 are each amended to read as follows:

If any ((distributor)) licensee files a fraudulent ((monthly gallonage return)) tax report with intent to evade the tax imposed by this chapter, there shall be added to the amount of deficiency determined by the department a penalty equal to twenty-five percent of the deficiency, in addition to all other penalties prescribed by law.

NEW SECTION. Sec. 14. A motor vehicle fuel supplier shall, no later than the twentieth calendar day or next state business day after the motor vehicle fuel tax is due from a motor vehicle fuel distributor under this chapter, notify the department of the failure of a motor vehicle fuel distributor to pay the full amount of the tax owed.

Upon notification and submission of satisfactory evidence by a motor vehicle fuel supplier that a motor vehicle fuel distributor has failed to pay the full amount of the tax owed, the department may suspend the license of the motor vehicle fuel distributor.

Upon the suspension, the department shall immediately notify all motor vehicle fuel suppliers that the authority of the motor vehicle fuel distributor to purchase tax-deferred motor vehicle fuel has been suspended and all subsequent purchases of motor vehicle fuel by the motor vehicle fuel distributor must be tax-paid at the time of removal.

If, after notification by the department, a motor vehicle fuel supplier continues to sell tax-deferred motor vehicle fuel to a motor vehicle fuel distributor whose license is suspended, the motor vehicle fuel supplier's license is subject to revocation or suspension under RCW 82.36.190. Furthermore, if notified of a license suspension, a motor vehicle fuel supplier is liable for any unpaid motor vehicle fuel tax owed on motor vehicle fuel sold to a suspended motor vehicle fuel distributor.

NEW SECTION. Sec. 15. A motor vehicle fuel supplier is entitled to a credit of the tax paid over to the department on those sales of motor vehicle fuel for which the supplier has received no consideration from or on behalf of the purchaser. The amount of the tax credit shall not exceed the amount of tax imposed by this chapter on such sales. Such credit may be taken on a tax return subsequent to the tax return on which the tax was paid over to the department. If a credit has been granted under this section, any amounts collected for application against accounts on which such a credit is based shall be reported on a subsequent tax return filed after such collection, and the amount of credit received by the supplier based upon the collected amount shall be returned to the department. In the event the credit has not been paid, the amount of the credit requested by the supplier shall be adjusted by the department to reflect the decrease in the amount on which the claim is based.

Sec. 16. RCW 82.36.045 and 1996 c 104 s 2 are each amended to read as follows:

(1) If the department determines that the tax reported by a ((motor vehicle fuel distributor)) licensee is deficient, the department shall assess the deficiency on the basis of information available to it, and shall add a penalty of two percent of the amount of the deficiency.

(2) If a ((distributor, whether licensed or not licensed)) licensee, or person acting as such, fails, neglects, or refuses to file a motor vehicle fuel tax report the department shall, on the basis of information available to it, determine the tax liability of the ((distributor)) licensee or person for the period during which no report was filed. The department shall add the penalty provided in subsection (1) of this section to the tax. An assessment made by the department under this subsection or subsection (1) of this section is presumed to be correct. In any case, where the validity of the assessment is questioned, the burden is on the person who challenges the assessment to establish by a fair preponderance of evidence that it is erroneous or excessive, as the case may be.

(3) If a ((distributor)) licensee or person acting as such files a false or fraudulent report with intent to evade the tax imposed by this chapter, the department shall add to the amount of deficiency a penalty equal to twenty-five percent of the deficiency, in addition to the penalty provided in subsections (1) and (2) of this section and all other penalties prescribed by law.

(4) Motor vehicle fuel tax, penalties, and interest payable under this chapter bears interest at the rate of one percent per month, or fraction thereof, from the first day of the calendar month after the amount or any portion of it should have been paid until the date of payment. If a ((distributor)) licensee or person acting as such establishes by a fair preponderance of evidence that the failure to pay the amount of tax due was attributable to reasonable cause and was not intentional or willful, the department may waive the penalty. The department may waive the interest when it determines the cost of processing or collection of the interest exceeds the amount of interest due.

(5) Except in the case of a fraudulent report, neglect or refusal to make a report, or failure to pay or to pay the proper amount, the department shall assess the deficiency under subsection (1) or (2) of this section within five years from the last day of the succeeding calendar month after the reporting period for which the amount is proposed to be determined or within five years after the return is filed, whichever period expires later.

(6) Except in the case of violations of filing a false or fraudulent report, if the department deems mitigation of penalties and interest to be reasonable and in the best interest of carrying out the purpose of this chapter, it may mitigate such assessments upon whatever terms the department deems proper, giving consideration to the degree and extent of the lack of records and reporting errors. The department may ascertain the facts regarding recordkeeping and payment penalties in lieu of more elaborate proceedings under this chapter.

(7) A ((distributor)) licensee or person acting as such against whom an assessment is made under subsection (1) or (2) of this section may petition for a reassessment within thirty days after service upon the ((distributor)) licensee of notice of the assessment. If the petition is not filed within the thirty-day period, the amount of the assessment becomes final at the expiration of that period.

If a petition for reassessment is filed within the thirty-day period, the department shall reconsider the assessment and, if the ((distributor)) petitioner has so requested in its petition, shall grant the ((distributor)) petitioner an oral hearing and give the ((distributor)) petitioner twenty days' notice of the time and place of the hearing. The department may continue the hearing from time to time. The decision of the department upon a petition for reassessment becomes final thirty days after service of notice upon the ((distributor)) petitioner.

An assessment made by the department becomes due and payable when it becomes final. If it is not paid to the department when due and payable, the department shall add a penalty of ten percent of the amount of the tax.

(8) In a suit brought to enforce the rights of the state under this chapter, the assessment showing the amount of taxes, penalties, interest, and cost unpaid to the state is prima facie evidence of the facts as shown.

(9) A notice of assessment required by this section must be served personally or by certified or registered mail. If it is served by mail, service shall be made by deposit of the notice in the United States mail, postage prepaid, addressed to the ((distributor)) respondent at the most current address furnished to the department.

(10) The tax ((required)) imposed by this chapter, if required to be collected by the seller, is held in trust by the ((seller)) licensee until paid to the department, and a ((seller)) licensee who appropriates or converts the tax collected to his or her own use or to any use other than the payment of the tax to the extent that the money required to be collected is not available for payment on the due date as prescribed in this chapter is guilty of a felony, or gross misdemeanor in accordance with the theft and anticipatory provisions of Title 9A RCW. A person, partnership, corporation, or corporate officer who fails to collect the tax imposed by this section, or who has collected the tax and fails to pay it to the department in the manner prescribed by this chapter, is personally liable to the state for the amount of the tax.

Sec. 17. RCW 82.36.047 and 1991 c 339 s 4 are each amended to read as follows:

When an assessment becomes final in accordance with this chapter, the department may file with the clerk of any county within the state a warrant in the amount of the assessment of taxes, penalties, interest, and a filing fee of five dollars. The clerk of the county in which the warrant is filed shall immediately designate a superior court cause number for the warrant, and the clerk shall cause to be entered in the judgment docket under the superior court cause number assigned to the warrant the name of the ((distributor)) licensee or person mentioned in the warrant, the amount of the tax, penalties, interest, and filing fee, and the date when the warrant was filed. The aggregate amount of the warrant as docketed becomes a lien upon the title to and interest in all real and personal property of the named person against whom the warrant is issued, the same as a judgment in a civil case duly docketed in the office of the clerk. The warrant so docketed is sufficient to support the issuance of writs of execution and writs of garnishment in favor of the state in the manner provided by law in the case of a civil judgment, wholly or partially unsatisfied. The clerk of the court is entitled to a filing fee of five dollars.

Sec. 18. RCW 82.36.060 and 1996 c 104 s 3 are each amended to read as follows:

((Every person, before becoming a distributor or continuing in business as a distributor, shall make)) (1) An application ((to the department)) for a license ((authorizing the applicant to engage in business as a distributor. Applications for such licenses)) issued under this chapter shall be made to the department on forms to be furnished by the department and shall contain such information as the department deems necessary.

(2) Every application for a ((distributor's)) license must contain the following information to the extent it applies to the applicant:

(((1))) (a) Proof as the department may require concerning the applicant's identity, including but not limited to his or her fingerprints or those of the officers of a corporation making the application;

(((2))) (b) The applicant's form and place of organization including proof that the individual, partnership, or corporation is licensed to do business in this state;

(((3))) (c) The qualification and business history of the applicant and any partner, officer, or director;

(((4))) (d) The applicant's financial condition or history including a bank reference and whether the applicant or any partner, officer, or director has ever been adjudged bankrupt or has an unsatisfied judgment in a federal or state court;

(((5))) (e) Whether the applicant has been adjudged guilty of a crime that directly relates to the business for which the license is sought and the time elapsed since the conviction is less than ten years, or has suffered a judgment within the preceding five years in a civil action involving fraud, misrepresentation, or conversion and in the case of a corporation or partnership, all directors, officers, or partners.

(3) An applicant for a license as a motor vehicle fuel importer must list on the application each state, province, or country from which the applicant intends to import motor vehicle fuel and, if required by the state, province, or country listed, must be licensed or registered for motor vehicle fuel tax purposes in that state, province, or country.

(4) An applicant for a license as a motor vehicle fuel exporter must list on the application each state, province, or country to which the exporter intends to export motor vehicle fuel received in this state by means of a transfer outside of the bulk transfer-terminal system and, if required by the state, province, or country listed, must be licensed or registered for motor vehicle fuel tax purposes in that state, province, or country.

(5) An applicant for a license as a motor vehicle fuel supplier must have a federal certificate of registry that is issued under the internal revenue code and authorizes the applicant to enter into federal tax-free transactions on motor vehicle fuel in the terminal transfer system.

(6) After receipt of an application for a license, the director may conduct an investigation to determine whether the facts set forth are true. The director ((may)) shall require a fingerprint record check of the applicant through the Washington state patrol criminal identification system and the federal bureau of investigation before issuance of a license. The results of the background investigation including criminal history information may be released to authorized department personnel as the director deems necessary. The department shall charge a license holder or license applicant a fee of fifty dollars for each background investigation conducted.

An applicant who makes a false statement of a material fact on the application may be prosecuted for false swearing as defined by RCW 9A.72.040.

Before granting any license ((authorizing any person to engage in business as a distributor)) issued under this chapter, the department shall require applicant to file with the department, in such form as shall be prescribed by the department, a corporate surety bond duly executed by the applicant as principal, payable to the state and conditioned for faithful performance of all the requirements of this chapter, including the payment of all taxes, penalties, and other obligations arising out of this chapter. The total amount of the bond or bonds((, required of any distributor)) shall be fixed by the department and may be increased or reduced by the department at any time subject to the limitations herein provided. In fixing the total amount of the bond or bonds ((required of any distributor)), the department shall require a bond or bonds equivalent in total amount to twice the estimated monthly excise tax determined in such manner as the department may deem proper. If at any time the estimated excise tax to become due during the succeeding month amounts to more than fifty percent of the established bond, the department shall require additional bonds or securities to maintain the marginal ratio herein specified or shall demand excise tax payments to be made weekly or semimonthly to meet the requirements hereof.

The total amount of the bond or bonds required of any ((distributor)) licensee shall never be less than five thousand dollars nor more than ((fifty)) one hundred thousand dollars.

No recoveries on any bond or the execution of any new bond shall invalidate any bond and no revocation of any license shall effect the validity of any bond but the total recoveries under any one bond shall not exceed the amount of the bond.

In lieu of any such bond or bonds in total amount as herein fixed, a ((distributor)) licensee may deposit with the state treasurer, under such terms and conditions as the department may prescribe, a like amount of lawful money of the United States or bonds or other obligations of the United States, the state, or any county of the state, of an actual market value not less than the amount so fixed by the department.

Any surety on a bond furnished by a ((distributor)) licensee as provided herein shall be released and discharged from any and all liability to the state accruing on such bond after the expiration of thirty days from the date upon which such surety has lodged with the department a written request to be released and discharged, but this provision shall not operate to relieve, release, or discharge the surety from any liability already accrued or which shall accrue before the expiration of the thirty day period. The department shall promptly, upon receiving any such request, notify the ((distributor)) licensee who furnished the bond; and unless the ((distributor)) licensee, on or before the expiration of the thirty day period, files a new bond, or makes a deposit in accordance with the requirements of this section, the department shall forthwith cancel the ((distributor's)) license. Whenever a new bond is furnished by a ((distributor)) licensee, the department shall cancel ((his or her)) the old bond as soon as the department and the attorney general are satisfied that all liability under the old bond has been fully discharged.

The department may require a ((distributor)) licensee to give a new or additional surety bond or to deposit additional securities of the character specified in this section if, in its opinion, the security of the surety bond theretofore filed by such ((distributor)) licensee, or the market value of the properties deposited as security by the ((distributor)) licensee, shall become impaired or inadequate; and upon the failure of the ((distributor)) licensee to give such new or additional surety bond or to deposit additional securities within thirty days after being requested so to do by the department, the department shall forthwith cancel his or her license.

Sec. 19. RCW 82.36.070 and 1996 c 104 s 4 are each amended to read as follows:

The application in proper form having been accepted for filing, the filing fee paid, and the bond or other security having been accepted and approved, the department shall issue to the applicant ((a)) the appropriate license ((to transact business as a distributor in the state)), and such license shall be valid until canceled or revoked.

The license so issued by the department shall not be assignable, and shall be valid only for the ((distributor)) person in whose name issued.

((The department shall keep and file all applications and bonds with an alphabetical index thereof, together with a record of all licensed distributors.))

Each ((distributor)) licensee shall be assigned a license number ((upon qualifying for a license hereunder)), and the department shall issue to each ((such)) licensee a license certificate which shall be displayed conspicuously ((by the distributor)) at his or her principal place of business. The department may refuse to issue or may revoke a motor vehicle fuel ((distributor)) license, to a person:

(1) Who formerly held a motor vehicle fuel ((distributor's)) license that, before the time of filing for application, has been revoked or canceled for cause;

(2) Who is a subterfuge for the real party in interest whose license has been revoked or canceled for cause;

(3) Who, as an individual licensee or officer, director, owner, or managing employee of a nonindividual licensee, has had a motor vehicle fuel ((distributor)) license revoked or canceled for cause;

(4) Who has an unsatisfied debt to the state assessed under either chapter 82.36, ((82.37,)) 82.38, 82.42, or 46.87 RCW;

(5) Who formerly held as an individual, officer, director, owner, managing employee of a nonindividual licensee, or subterfuge for a real party in interest, a license issued by the federal government or a state that allowed a person to buy or sell untaxed motor vehicle or special fuel, which license, before the time of filing for application, has been revoked for cause;

(6) Who pled guilty to or was convicted as an individual, corporate officer, director, owner, or managing employee in this or any other state or in any federal jurisdiction of a gross misdemeanor or felony crime directly related to the business or has been subject to a civil judgment involving fraud, misrepresentation, conversion, or dishonesty, notwithstanding chapter 9.96A RCW;

(7) Who misrepresented or concealed a material fact in obtaining a license or in reinstatement thereof;

(8) Who violated a statute or administrative rule regulating fuel taxation or distribution;

(9) Who failed to cooperate with the department's investigations by:

(a) Not furnishing papers or documents;

(b) Not furnishing in writing a full and complete explanation regarding a matter under investigation by the department; or

(c) Not responding to subpoenas issued by the department, whether or not the recipient of the subpoena is the subject of the proceeding;

(10) Who failed to comply with an order issued by the director; or

(11) Upon other sufficient cause being shown.

Before such a refusal or revocation, the department shall grant the applicant a hearing and shall give the applicant at least twenty days' written notice of the time and place of the hearing.

For the purpose of considering an application for a ((distributor's)) license issued under this chapter, the department may inspect, cause an inspection, investigate, or cause an investigation of the records of this or any other state or of the federal government to ascertain the veracity of the information on the application form and the applicant's criminal and licensing history.

The department may, in the exercise of reasonable discretion, suspend a motor vehicle ((distributor)) fuel license at any time before and pending such a hearing for unpaid taxes or reasonable cause.

Sec. 20. RCW 82.36.080 and 1961 c 15 s 82.36.080 are each amended to read as follows:

(1) It shall be unlawful for any person to ((be a distributor without first securing a license from the director)) engage in business in this state as any of the following unless the person is the holder of an uncanceled license issued by the department authorizing the person to engage in that business:

(a) Motor vehicle fuel supplier;

(b) Motor vehicle fuel distributor;

(d) Motor vehicle fuel importer; or

(e) Motor vehicle fuel blender.

(2) A person engaged in more than one activity for which a license is required must have a separate license classification for each activity, but a motor vehicle fuel supplier is not required to obtain a separate license classification for any other activity for which a license is required.

(3) If any person ((becomes)) acts as a ((distributor)) licensee without first securing the license required herein the excise tax shall be immediately due and payable on account of all motor vehicle fuel distributed or used by ((him)) the person. The director shall proceed forthwith to determine from the best available sources, the amount of the tax, and ((he)) the director shall immediately assess the tax in the amount found due, together with a penalty of one hundred percent of the tax, and shall make ((his)) a certificate of such assessment and penalty. In any suit or proceeding to collect the tax or penalty, or both, such certificate shall be prima facie evidence that the person therein named is indebted to the state in the amount of the tax and penalty therein stated. Any tax or penalty so assessed may be collected in the manner prescribed in this chapter with reference to delinquency in payment of the tax or by an action at law, which the attorney general shall commence and prosecute to final determination at the request of the director. The foregoing remedies of the state shall be cumulative and no action taken pursuant to this section shall relieve any person from the penal provisions of this chapter.

Sec. 21. RCW 82.36.090 and 1967 c 153 s 2 are each amended to read as follows:

((Whenever a distributor)) A licensee who ceases to engage in business ((as a distributor)) within the state by reason of the discontinuance, sale, or transfer of ((his)) the business((, he)) shall notify the director in writing at the time the discontinuance, sale, or transfer takes effect. Such notice shall give the date of discontinuance, and, in the event of a sale or transfer of the business, the date thereof and the name and address of the purchaser or transferee thereof. All taxes, penalties, and interest under this chapter, not yet due and payable, shall become due and payable concurrently with such discontinuance, sale, or transfer, and any such ((distributor)) licensee shall make a report and pay all such taxes, interest, and penalties, and surrender to the director the license certificate theretofore issued to him or her.

If an overpayment of tax was made by the ((distributor)) licensee, prior to the discontinuance or transfer of his or her business, such overpayment may be refunded to such ((distributor or may be credited to the transferee of such business if such transferee qualifies as a distributor under the provisions of this chapter)) licensee.

Sec. 22. RCW 82.36.100 and 1983 1st ex.s. c 49 s 28 are each amended to read as follows:

Every person other than a ((distributor)) licensee who acquires any motor vehicle fuel within this state upon which payment of tax is required under the provisions of this chapter, or imports such motor vehicle fuel into this state and sells, distributes, or in any manner uses it in this state shall, if the tax has not been paid, apply for a license to carry on such activities, ((file bond, make reports,)) comply with all ((regulations)) the ((director may prescribe in respect thereto)) provisions of this chapter, and pay an excise tax at the rate computed in the manner provided in RCW 82.36.025 for each gallon thereof so sold, distributed, or used during the fiscal year for which such rate is applicable ((in the manner provided for distributors, and the director shall issue a license to such person in the manner provided for issuance of licenses to distributors)). The proceeds of the tax imposed by this section shall be distributed in the manner provided for the distribution of the motor vehicle fuel excise tax in RCW 82.36.020. ((However, a distributor licensed under this chapter may deliver motor vehicle fuel to an importer in individual quantities of five hundred gallons or less and assume the liability for payment of the tax to this state. Under such conditions, the importer is exempt from the requirements of this section.)) For failure to comply with this chapter such person is subject to the same penalties imposed upon ((distributors)) licensees. The director shall pursue against such persons the same procedure and remedies for audits, adjustments, collection, and enforcement of this chapter as is provided with respect to ((distributors)) licensees. Nothing in this section may be construed as classifying such persons as ((distributors)) licensees.

Sec. 23. RCW 82.36.120 and 1994 c 262 s 21 are each amended to read as follows:

If a ((distributor)) licensee is delinquent in the payment of an obligation imposed under this chapter, the department may give notice of the amount of the delinquency by registered or certified mail to all persons having in their possession or under their control any credits or other personal property belonging to such ((distributor)) licensee, or owing any debts to such ((distributor)) licensee at the time of receipt by them of such notice. Upon service, the notice and order to withhold and deliver constitutes a continuing lien on property of the taxpayer. The department shall include in the caption of the notice to withhold and deliver "continuing lien." The effective date of a notice to withhold and deliver served under this section is the date of service of the notice. A person so notified shall neither transfer nor make any other disposition of such credits, personal property, or debts until the department consents to a transfer or other disposition. All persons so notified must, within twenty days after receipt of the notice, advise the department of any and all such credits, personal property, or debts in their possession, under their control or owing by them, as the case may be, and shall deliver upon demand the credits, personal property, or debts to the department or its duly authorized representative to be applied to the indebtedness involved.

If a person fails to answer the notice within the time prescribed by this section, it is lawful for the court, upon application of the department and after the time to answer the notice has expired, to render judgment by default against the person for the full amount claimed by the department in the notice to withhold and deliver, together with costs.

Sec. 24. RCW 82.36.130 and 1961 c 15 s 82.36.130 are each amended to read as follows:

If any ((distributor)) licensee is in default for more than ten days in the payment of any excise taxes or penalties thereon, the director shall issue a warrant under the official seal of ((his)) the director's office directed to the sheriff of any county of the state commanding him or her to levy upon and sell the goods and chattels of the ((distributor)) licensee, without exemption, found within his or her jurisdiction, for the payment of the amount of such delinquency, with the added penalties and interest and the cost of executing the warrant, and to return such warrant to the director and to pay the director the money collected by virtue thereof within the time to be therein specified, which shall not be less than twenty nor more than sixty days from the date of the warrant. The sheriff to whom the warrant is directed shall proceed upon it in all respects and with like effect and in the same manner as prescribed by law in respect to executions issued against goods and chattels upon judgment by a court of record and shall be entitled to the same fees for his or her services to be collected in the same manner.

Sec. 25. RCW 82.36.140 and 1961 c 15 s 82.36.140 are each amended to read as follows:

In a suit or action by the state on any bond filed with the director recovery thereon may be had without first having sought or exhausted its remedy against the ((distributor)) licensee; nor shall the fact that the state has pursued, or is in the course of pursuing, any remedy against the ((distributor)) licensee waive its right to collect the taxes, penalties, and interest by proceeding against such bond or against any deposit of money or securities made by the ((distributor)) licensee.

Sec. 26. RCW 82.36.150 and 1965 ex.s. c 79 s 5 are each amended to read as follows:

Every ((distributor)) licensee shall keep a true and accurate record on such form as the director may prescribe of all stock of petroleum products on hand, of all raw gasoline, gasoline stock, diesel oil, kerosene, kerosene distillates, casing-head gasoline and other petroleum products needed in, or which may be used in, compounding, blending, or manufacturing motor vehicle fuel; of the amount of crude oil refined, the gravity thereof and the yield therefrom, as well as of such other matters relating to transactions in petroleum products as the director may require. Every ((distributor)) licensee shall take a physical inventory of the petroleum products at least once during each calendar month and have the record of such inventory and of the other matters mentioned in this section available at all times for the inspection of the director. Upon demand of the director every ((distributor)) licensee shall furnish a statement under oath as to the contents of any records to be kept hereunder.

((Every producer shall keep a true and accurate record in such form as may be prescribed by the director of all manufacture and distribution of casing-head gasoline, kerosene distillates and other petroleum products used in, or which may be used in, the blending, compounding, or manufacturing of motor vehicle fuel, and every broker shall likewise keep a true and accurate record of all purchases of such petroleum products in such manner as to disclose the vendor, the quantity purchased, the correct description of the commodity, and the means of transportation from such broker to the vendee. All records required by this section shall be available at all times for the inspection of the director or his representative who may require a statement under oath as to contents thereof.))

Sec. 27. RCW 82.36.160 and 1996 c 104 s 5 are each amended to read as follows:

Every ((distributor)) licensee shall maintain in the office of his or her principal place of business in this state, for a period of five years, records of motor vehicle fuel received, sold, distributed, or used by the ((distributor)) licensee, in such form as the director may prescribe, together with invoices, bills of lading, and other pertinent papers as may be required under the provisions of this chapter.

Every dealer purchasing motor vehicle fuel taxable under this chapter for the purpose of resale, shall maintain within this state, for a period of two years a record of motor vehicle fuels received, the amount of tax paid to the ((distributor)) licensee as part of the purchase price, together with delivery tickets, invoices, and bills of lading, and such other records as the director shall require.

Sec. 28. RCW 82.36.170 and 1961 c 15 s 82.36.170 are each amended to read as follows:

The director may, from time to time, require additional reports from ((distributors, brokers, dealers, or producers)) any licensee with reference to any of the matters herein concerned. Such reports shall be made and filed on forms prepared by the director.

NEW SECTION. Sec. 29. The department may require a person other than a licensee engaged in the business of selling, purchasing, distributing, storing, transporting, or delivering motor vehicle fuel to submit periodic reports to the department regarding the disposition of the fuel. The reports must be on forms prescribed by the department and must contain such information as the department may require.

Sec. 30. RCW 82.36.180 and 1967 ex.s. c 89 s 6 are each amended to read as follows:

The director, or ((his)) duly authorized agents, may make such examinations of the records, stocks, facilities, and equipment of ((distributors, producers, brokers)) any licensee, and service stations, and such other investigations as ((he may deem)) deemed necessary in carrying out the provisions of this chapter. If such examinations or investigations disclose that any reports of ((distributors of motor vehicle fuel)) licensees theretofore filed with the director pursuant to the requirements of this chapter have shown incorrectly the gallonage of motor vehicle fuel distributed or the tax accruing thereon, the director may make such changes in subsequent reports and payments of such ((distributors)) licensees as ((he may deem)) deemed necessary to correct the errors disclosed.

Every such ((distributor)) licensee or such other person not maintaining records in this state so that an audit of such records may be made by the director or ((his)) a duly authorized representative shall be required to make the necessary records available to the director ((at his)) upon request and at ((his)) a designated office within this state; or, in lieu thereof, the director or ((his)) a duly authorized representative shall proceed to any out-of-state office at which the records are prepared and maintained to make such examination.

Sec. 31. RCW 82.36.190 and 1990 c 250 s 80 are each amended to read as follows:

The department shall suspend or revoke the license of any ((distributor)) licensee refusing or neglecting to comply with any provision of this chapter. The department shall mail by registered mail addressed to such ((distributor)) licensee at ((his)) the last known address a notice of intention to cancel, which notice shall give the reason for cancellation. The cancellation shall become effective without further notice if within ten days from the mailing of the notice the ((distributor)) licensee has not made good his or her default or delinquency.

The department may cancel any license issued to any ((distributor)) licensee, such cancellation to become effective sixty days from the date of receipt of the written request of such ((distributor)) licensee for cancellation thereof, and the department may cancel the license of any ((distributor)) licensee upon investigation and sixty days notice mailed to the last known address of such ((distributor)) licensee if the department ascertains and finds that the person to whom the license was issued is no longer engaged in ((the)) business ((of a distributor)), and has not been so engaged for the period of six months prior to such cancellation. No license shall be canceled upon the request of any ((distributor)) licensee unless the ((distributor)) licensee, prior to the date of such cancellation, pays to the state all taxes imposed by the provisions of this chapter, together with all penalties accruing by reason of any failure on the part of the ((distributor)) licensee to make accurate reports or pay said taxes and penalties.

In the event the license of any ((distributor)) licensee is canceled, and in the further event that the ((distributor)) licensee pays to the state all excise taxes due and payable by him or her upon the receipt, sale, or use of motor vehicle fuel, together with any and all penalties accruing by reason of any failure on the part of the ((distributor)) licensee to make accurate reports or pay said taxes and penalties, the department shall cancel the bond filed by the ((distributor)) licensee.

Sec. 32. RCW 82.36.200 and 1965 ex.s. c 79 s 7 are each amended to read as follows:

The director or ((his)) authorized agents may at any time during normal business hours examine the records, stocks, facilities and equipment of any person engaged in the transportation of motor vehicle fuel within the state of Washington for the purpose of checking shipments or use of motor vehicle fuel, detecting diversions thereof or evasion of taxes on same in enforcing the provisions of this chapter.

Sec. 33. RCW 82.36.210 and 1965 ex.s. c 79 s 8 are each amended to read as follows:

Every person operating any conveyance for the purpose of hauling, transporting or delivering motor vehicle fuel in bulk ((to points in this state from any point without this state)), shall ((before entering upon the public highways of this state with such conveyance,)) have and possess during the entire time they are hauling motor vehicle fuel, an invoice, bill of sale, or other statement showing the ((true)) name ((and)), address, and license number of the seller or consignor, the destination, name, and address of the purchaser or consignee, license number, if ((any)) applicable, and the number of gallons. The person hauling such motor vehicle fuel shall at the request of any ((sheriff, deputy sheriff, constable, highway patrolman)) law enforcement officer, or authorized representative of the department, or other person authorized by law to inquire into, or investigate said matters, produce ((and offer)) for inspection such invoice, bill of sale, or other statement and shall permit such official to inspect and gauge the contents of the vehicle. ((If the hauler fails to produce the invoice, bill of sale, or other statement, or if when produced it fails to disclose the aforesaid information, the officer or other person authorized to make inquiry, shall take and impound the motor vehicle fuel together with the conveying equipment until the tax on the motor vehicle fuel, together with penalty equal to one hundred percent of the tax, and other expenses, charges, and costs have been paid. In case of default, and the taking and impounding herein provided for, the tax, damages, and costs shall be collected, even though the full excise tax may have already been paid on the motor vehicle fuel. In case the tax, damages and other charges are not paid within forty-eight hours after the taking of said property, the director may proceed to sell it in the mode and manner provided by law for the sale of personal property under execution.))

Sec. 34. RCW 82.36.230 and 1993 c 54 s 4 are each amended to read as follows:

The provisions of this chapter requiring the payment of taxes do not apply to motor vehicle fuel imported into the state in interstate or foreign commerce and intended to be sold while in interstate or foreign commerce, nor to motor vehicle fuel exported from this state by a ((qualified distributor)) licensee nor to any motor vehicle fuel sold by a ((qualified distributor)) licensee to the armed forces of the United States or to the national guard for use exclusively in ships or for export from this state. The ((distributor)) licensee shall report such imports, exports and sales to the department at such times, on such forms, and in such detail as the department may require, otherwise the exemption granted in this section is null and void, and all fuel shall be considered distributed in this state fully subject to the provisions of this chapter. Each invoice covering exempt sales shall have the statement "Ex Washington Motor Vehicle Fuel Tax" clearly marked thereon.

To claim any exemption from taxes under this section on account of sales by a ((licensed distributor)) licensee of motor vehicle fuel for export, the purchaser shall obtain from the selling ((distributor)) licensee, and such selling ((distributor)) licensee must furnish the purchaser, an invoice giving such details of the sale for export as the department may require, copies of which shall be furnished the department and the entity of the state or foreign jurisdiction of destination which is charged by the laws of that state or foreign jurisdiction with the control or monitoring, or both, of the sales or movement of motor vehicle fuel in that state or foreign jurisdiction. For the purposes of this section, motor vehicle fuel distributed to a federally recognized Indian tribal reservation located within the state of Washington is not considered exported outside this state.

To claim any ((exemption from taxes under this section)) refund of taxes previously paid on account of sales of motor vehicle fuel to the armed forces of the United States or to the national guard, the ((distributor)) licensee shall be required to execute an exemption certificate in such form as shall be furnished by the department, containing a certified statement by an authorized officer of the armed forces having actual knowledge of the purpose for which the exemption is claimed. ((Any claim for exemption based on such sales shall be made by the distributor within six months of the date of sale.)) The provisions of this section exempting motor vehicle fuel sold to the armed forces of the United States or to the national guard from the tax imposed hereunder do not apply to any motor vehicle fuel sold to contractors purchasing such fuel either for their own account or as the agents of the United States or the national guard for use in the performance of contracts with the armed forces of the United States or the national guard.

The department may at any time require of any ((distributor)) licensee any information the department deems necessary to determine the validity of the claimed exemption, and failure to supply such data will constitute a waiver of all right to the exemption claimed. The department is hereby empowered with full authority to promulgate rules and regulations and to prescribe forms to be used by ((distributors)) licensees in reporting to the department so as to prevent evasion of the tax imposed by this chapter.

Upon request from the officials to whom are entrusted the enforcement of the motor vehicle fuel tax law of any other state, the District of Columbia, the United States, its territories and possessions, the provinces, or the Dominion of Canada, the department may forward to such officials any information which the department may have relative to the import or export of any motor vehicle fuel by any ((distributor)) licensee: PROVIDED, That such governmental unit furnish like information to this state.

NEW SECTION. Sec. 35. A licensee, other than a motor vehicle fuel exporter, is entitled to a refund of motor vehicle fuel tax previously paid on motor vehicle fuel which is purchased from the licensee by a person who is exempt from payment of the motor vehicle fuel tax imposed by this chapter. Application for the refund shall be accompanied by an invoice or proof satisfactory to the department documenting each sale wherein the purchaser was exempt the motor vehicle fuel tax. Claims for refunds shall be made under this chapter.

Sec. 36. RCW 82.36.280 and 1993 c 141 s 1 are each amended to read as follows:

Any person who uses any motor vehicle fuel for the purpose of operating any internal combustion engine not used on or in conjunction with any motor vehicle licensed to be operated over and along any of the public highways, and as the motive power thereof, upon which motor vehicle fuel excise tax has been paid, shall be entitled to and shall receive a refund of the amount of the motor vehicle fuel excise tax paid on each gallon of motor vehicle fuel so used, whether such motor vehicle excise tax has been paid either directly to the vendor from whom the motor vehicle fuel was purchased or indirectly by adding the amount of such excise tax to the price of such fuel. No refund shall be made for motor vehicle fuel consumed by any motor vehicle as herein defined that is required to be registered and licensed as provided in chapter 46.16 RCW; and is operated over and along any public highway except that a refund shall be allowed for motor vehicle fuel consumed:

(1) In a motor vehicle owned by the United States that is operated off the public highways for official use;

(2) By auxiliary equipment not used for motive power, provided such consumption is accurately measured by a metering device that has been specifically approved by the department or is established by either of the following formulae:

(a) For fuel used in pumping fuel or heating oils by a power take-off unit on a delivery truck, refund shall be allowed claimant for tax paid on fuel purchased at the rate of three-fourths of one gallon for each one thousand gallons of fuel delivered: PROVIDED, That claimant when presenting his or her claim to the department in accordance with the provisions of this chapter, shall provide to said claim, invoices of fuel oil delivered, or such other appropriate information as may be required by the department to substantiate his or her claim; or

(b) For fuel used in operating a power take-off unit on a cement mixer truck or load compactor on a garbage truck, claimant shall be allowed a refund of twenty-five percent of the tax paid on all fuel used in such a truck; and

(c) The department is authorized to establish by rule additional formulae for determining fuel usage when operating other types of equipment by means of power take-off units when direct measurement of the fuel used is not feasible. The department is also authorized to adopt rules regarding the usage of on board computers for the production of records required by this chapter((; and

(3) Before December 31, 1992, in a commercial vehicle as defined in RCW 46.04.140 or a farm vehicle as defined in RCW 46.04.181, if the motor vehicle fuel consumed contains nine and one-half percent or more by volume of alcohol and the commercial vehicle or farm vehicle is operated off the public highways of this state)).

Sec. 37. RCW 82.36.300 and 1963 ex.s. c 22 s 21 are each amended to read as follows:

Every person who shall export any motor vehicle fuel for use outside of this state and who has paid the motor vehicle fuel excise tax upon such motor vehicle fuel shall be entitled to and shall receive a refund of the amount of the motor vehicle fuel excise tax paid on each gallon of motor vehicle fuel so exported. For the purposes of this section, motor vehicle fuel distributed to a federally recognized Indian tribal reservation located within the state of Washington is not considered exported outside this state.

Sec. 38. RCW 82.36.310 and 1995 c 318 s 3 are each amended to read as follows:

Any person claiming a refund for motor vehicle fuel used or exported as in this chapter provided shall not be entitled to receive such refund until he presents to the director a claim upon forms to be provided by the director with such information as the director shall require, which claim to be valid shall in all cases be accompanied by the ((original)) invoice or invoices issued to the claimant at the time of the purchases of the motor vehicle fuel, approved as to invoice form by the director((: PROVIDED, That in the event of the loss or destruction of the original invoice or invoices, the person claiming a refund may submit in lieu thereof a duplicate copy of such invoice certified by the vendor, but no payment of refund based upon such duplicate invoice shall be made until after expiration of such statutory period specified in RCW 82.36.330 for filing of refund applications)). The requirement to provide invoices may be waived for small refund amounts, as determined by the department. Claims for refund of motor vehicle fuel tax must be at least twenty dollars.

Any person claiming refund by reason of exportation of motor vehicle fuel shall in addition to the invoices required furnish to the director the export certificate therefor, and the signature on the exportation certificate shall be certified by a notary public. In all cases the claim shall be signed by the person claiming the refund, if it is a corporation, by some proper officer of the corporation, or if it is a limited liability company, by some proper manager or member of the limited liability company.

Sec. 39. RCW 82.36.330 and 1971 ex.s. c 180 s 9 are each amended to read as follows:

Upon the approval of the director of the claim for refund, the state treasurer shall draw a warrant upon the state treasury for the amount of the claim in favor of the person making such claim and the warrant shall be paid from the excise tax collected on motor vehicle fuel: PROVIDED, That the state treasurer shall deduct from each marine use refund claim an amount equivalent to one cent per gallon and shall deposit the same in the coastal protection fund created by RCW 90.48.390. Applications for refunds of excise tax shall be filed in the office of the director not later than the close of the last business day of a period thirteen months from the date of purchase of such motor fuel, and if not filed within this period the right to refund shall be forever barred, except that such limitation shall not apply to claims for loss or destruction of motor vehicle fuel as provided by the provisions of RCW 82.36.370. The department shall pay interest of one percent on any refund payable under this chapter that is issued more than thirty state business days after the receipt of a claim properly filed and completed in accordance with this section. After the end of the thirty business-day period, additional interest shall accrue at the rate of one percent on the amount payable for each thirty calendar-day period, until the refund is issued. Any person or the member of any firm or the officer or agent of any corporation who makes any false statement in any claim required for the refund of excise tax, as provided in this chapter, or who collects or causes to be repaid to him or to any other person any such refund without being entitled to the same under the provisions of this chapter shall be guilty of a gross misdemeanor.

Sec. 40. RCW 82.36.335 and 1997 c 183 s 8 are each amended to read as follows:

In lieu of the collection and refund of the tax on motor vehicle fuel used by a ((distributor)) licensee in such a manner as would entitle a purchaser to claim refund under this chapter, credit may be given the ((distributor)) licensee upon the ((distributor's)) licensee's tax return in the determination of the amount of the ((distributor's)) licensee's tax. Payment credits shall not be carried forward and applied to subsequent tax returns.

Sec. 41. RCW 82.36.350 and 1961 c 15 s 82.36.350 are each amended to read as follows:

If upon investigation the director determines that any claim has been supported by an invoice or invoices fraudulently made or altered in any manner to support the claim, ((he)) the director may suspend the pending and all further refunds to any such person making the claim for a period not to exceed one year.

Sec. 42. RCW 82.36.370 and 1967 c 153 s 5 are each amended to read as follows:

(1) A refund shall be made in the manner provided in this chapter or a credit given allowing for the excise tax paid or accrued on all motor vehicle fuel which is lost or destroyed, while applicant shall be the owner thereof, through fire, lightning, flood, wind storm, or explosion.

(2) A refund shall be made in the manner provided in this chapter or a credit given allowing for the excise tax paid or accrued on all motor vehicle fuel of five hundred gallons or more which is lost or destroyed, while applicant shall be the owner thereof, through leakage or other casualty except evaporation, shrinkage or unknown causes: PROVIDED, That the director shall be notified in writing as to the full circumstances surrounding such loss or destruction and the amount of the loss or destruction within thirty days from the day of discovery of such loss or destruction.

(3) Recovery for such loss or destruction under either subsection (1) or (2) must be susceptible to positive proof thereby enabling the director to conduct such investigation and require such information as ((he)) the director may deem necessary.

In the event that the director is not satisfied that the fuel was lost or destroyed as claimed, wherefore required information or proof as required hereunder is not sufficient to substantiate the accuracy of the claim, ((he)) the director may deem as sufficient cause the denial of all right relating to the refund or credit for the excise tax on motor vehicle fuel alleged to be lost or destroyed.

NEW SECTION. Sec. 43. A motor vehicle fuel distributor, motor vehicle fuel importer, or motor vehicle fuel blender, under rules adopted by the department, is entitled to a refund of the tax paid on those sales of motor vehicle fuel for which no consideration has been received from or on behalf of the purchaser and that has been declared to be worthless accounts receivable. The amount of tax refunded must not exceed the amount of tax paid by the motor vehicle fuel distributor, motor vehicle fuel importer, or motor vehicle fuel blender under this chapter. If the motor vehicle fuel distributor, motor vehicle fuel importer, or motor vehicle fuel blender subsequently collects any amount from the account declared worthless, the amount collected shall be apportioned between the charges for the fuel and tax thereon. The motor vehicle fuel tax collected must be returned to the department.

Sec. 44. RCW 82.36.375 and 1965 ex.s. c 79 s 16 are each amended to read as follows:

Unless otherwise provided, any credit for erroneous overpayment of tax made by a ((distributor)) licensee to be taken on a subsequent return or any claim of refund for tax erroneously overpaid by a ((distributor)) licensee, pursuant to the provisions of RCW 82.36.090, must be so taken within ((three)) five years after the date on which the overpayment was made to the state. Failure to take such credit or claim such refund within the time prescribed in this section shall constitute waiver of any and all demands against this state on account of overpayment hereunder.

Except in the case of a fraudulent report or neglect or refusal to make a report every notice of additional tax, penalty or interest assessed hereunder shall be served on the ((distributor)) licensee within ((three)) five years from the date upon which such additional taxes became due.

Sec. 45. RCW 82.36.390 and 1996 c 104 s 6 are each amended to read as follows:

Any person who((, through false statement, trick, or device, or otherwise,)) obtains motor vehicle fuel for export and fails to export the same or any portion thereof, or causes such motor vehicle fuel or any thereof not to be exported, or who diverts said motor vehicle fuel or any thereof or who causes it to be diverted from interstate or foreign transit begun in this state, or who unlawfully returns such fuel or any thereof to this state and sells or uses it or any thereof in this state or causes it or any thereof to be used or sold in this state and fails to notify the ((distributor)) licensee from whom such motor vehicle fuel was originally purchased ((of his or her act)), and any ((distributor)) licensee or ((other)) person who conspires with any person to withhold from export, or divert from interstate or foreign transit begun in this state, or to return motor vehicle fuel to this state for sale or use with intent to avoid any of the taxes imposed by this chapter, is guilty of a felony, or gross misdemeanor in accordance with the theft and anticipatory provisions of Title 9A RCW. Each shipment illegally diverted or illegally returned shall be a separate offense, and the unit of each shipment shall be the cargo of one vessel, or one railroad carload, or one automobile truck load, or such truck and trailer load, or one drum, or one barrel, or one case or one can.

Sec. 46. RCW 82.36.400 and 1971 ex.s. c 156 s 3 are each amended to read as follows:

It shall be unlawful for any person to commit any of the following acts:

(1) To display, or cause to permit to be displayed, or to have in possession, any motor vehicle fuel ((distributor's)) license knowing the same to be fictitious or to have been suspended, canceled, revoked or altered;

(2) To lend to, or knowingly permit the use of, by one not entitled thereto, any motor vehicle fuel ((distributor's)) license issued to the person lending it or permitting it to be used;

(3) To display or to represent as one's own any motor vehicle fuel ((distributor's)) license not issued to the person displaying the same;

(4) To use a false or fictitious name or give a false or fictitious address in any application or form required under the provisions of this chapter, or otherwise commit a fraud in any application, record, or report;

(5) To refuse to permit the director, or any agent appointed by him or her in writing, to examine his or her books, records, papers, storage tanks, or other equipment pertaining to the use or sale and delivery of motor vehicle fuels within the state.

Except as otherwise provided, any person violating any of the provisions of this chapter shall be guilty of a gross misdemeanor and shall, upon conviction thereof, be sentenced to pay a fine of not less than five hundred dollars nor more than one thousand dollars and costs of prosecution, or imprisonment for not more than one year, or both.

NEW SECTION. Sec. 47. A motor vehicle fuel distributor who incurs liability in December 1998 for the motor vehicle fuel tax imposed under this chapter shall report the liability and pay the tax in January 1999 in the manner required by this chapter as it existed before January 1, 1999.

A motor vehicle fuel distributor shall inventory all motor vehicle fuel that is on hand or in possession as of 12:01 a.m. on January 1, 1999, and is not in the bulk transfer-terminal system and shall report the results of the inventory to the department no later than the last business day of February 1999. The report of inventory must be made on a form prescribed by the department.

A motor vehicle fuel distributor may pay the tax due on motor vehicle fuel in inventory any time before February 28, 2000, but at least one-twelfth of the amount due must be paid by the last day of each month starting with February 1999. Payments not received in accordance with this section are late and are subject to the interest and penalty provisions of this chapter. Payments made after February 2000 are late and are subject to the interest and penalty provisions of this chapter.

NEW SECTION. Sec. 48. (1) It is intended that the ultimate liability for the tax imposed under this chapter be upon the motor vehicle fuel user, regardless of the manner in which collection of the tax is provided for in this chapter. The tax on motor vehicle fuel imposed under this chapter, if not previously imposed and paid, must be paid over to the department by the users of such motor vehicle fuel, unless such use is exempt from the motor vehicle fuel tax.

(2) This section does not apply to agreements entered into under RCW 82.36.450 between the department and federally recognized Indian tribes, nor does it apply to the consent decrees entered in Confederated Tribes of the Colville Reservation v. Washington Department of Licensing, No. CS-92-248-JLQ (E.D. Wash.) and Teo v. Steffenson, No. CY-93-3050-AAM (E.D. Wash.).

NEW SECTION. Sec. 49. The department of licensing may enter into a motor vehicle fuel tax cooperative agreement with another state or Canadian province for the administration, collection, and enforcement of each state's or Canadian province's motor vehicle fuel taxes.

Sec. 50. RCW 82.38.020 and 1995 c 287 s 3 are each amended to read as follows:

((As used in this chapter:

(1) "Person" means every natural person, fiduciary, association, or corporation. The term "person" as applied to an association means and includes the partners or members thereof, and as applied to corporations, the officers thereof.

(2) "Department" means the department of licensing.

(3) "Highway" means every way or place open to the use of the public, as a matter of right, for the purpose of vehicular travel.

(4) "Motor vehicle" means every self-propelled vehicle designed for operation upon land utilizing special fuel as the means of propulsion.

(5) "Special fuel" means and includes all combustible gases and liquids suitable for the generation of power for propulsion of motor vehicles, except that it does not include motor vehicle fuel as defined in chapter 82.36 RCW.

(6) "Bulk storage" means the placing of special fuel by a special fuel dealer into a receptacle other than the fuel supply tank of a motor vehicle.

(7) "Special fuel dealer" means any person engaged in the business of delivering special fuel into the fuel supply tank or tanks of a motor vehicle not then owned or controlled by him, or into bulk storage facilities for subsequent use in a motor vehicle. For this purpose the term "fuel supply tank or tanks" does not include cargo tanks even though fuel is withdrawn directly therefrom for propulsion of the vehicle.

(8) "Special fuel user" means any person purchasing special fuel into bulk storage without payment of the special fuel tax for subsequent use in a motor vehicle, or any person engaged in interstate commercial operation of motor vehicles any part of which is within this state.

(9) "Service station" means any location at which fueling of motor vehicles is offered to the general public.

(10) "Unbonded service station" means any service station at which an unbonded special fuel dealer regularly makes sales of special fuel by means of delivery thereof into the fuel supply tanks of motor vehicles.

(11) "Bond" means: (a) A bond duly executed by such special fuel dealer or special fuel user as principal with a corporate surety qualified under the provisions of chapter 48.28 RCW which bond shall be payable to the state of Washington conditioned upon faithful performance of all requirements of this chapter, including the payment of all taxes, penalties, and other obligations of such dealer, arising out of this chapter; or (b) a deposit with the state treasurer by the special fuel dealer or special fuel user, under such terms and conditions as the department may prescribe, a like amount of lawful money of the United States or bonds or other obligations of the United States, the state of Washington, or any county of said state, of an actual market value not less than the amount so fixed by the department; or (c) such other instruments as the department may determine and prescribe by rule to protect the interests of the state and to insure compliance of the requirements of this chapter.

(12) "Lessor" means any person (a) whose principal business is the bona fide leasing or renting of motor vehicles without drivers for compensation to the general public, and (b) who maintains established places of business and whose lease or rental contracts require such motor vehicles to be returned to the established places of business.

(13) "Natural gas" means naturally occurring mixtures of hydrocarbon gases and vapors consisting principally of methane, whether in gaseous or liquid form.

(14) "Standard pressure and temperature" means fourteen and seventy-three hundredths pounds of pressure per square inch at sixty degrees Fahrenheit.

(15) "Evasion" or "evade" means to diminish or avoid the computation, assessment, or payment of authorized taxes or fees through:

(a) A knowing: False statement, misrepresentation of fact, or other act of deception; or

(1) "Blended special fuel" means a mixture of undyed diesel fuel and another liquid, other than a de minimus amount of the liquid, that can be used as a fuel to propel a motor vehicle.

(2) "Blender" means a person who produces blended special fuel outside the bulk transfer-terminal system.

(3) "Bond" means a bond duly executed with a corporate surety qualified under chapter 48.28 RCW, which bond is payable to the state of Washington conditioned upon faithful performance of all requirements of this chapter, including the payment of all taxes, penalties, and other obligations arising out of this chapter.

(4) "Bulk transfer-terminal system" means the special fuel distribution system consisting of refineries, pipelines, vessels, and terminals. Special fuel in a refinery, pipeline, vessel, or terminal is in the bulk transfer-terminal system. Special fuel in the fuel tank of an engine, motor vehicle, or in a railcar, trailer, truck, or other equipment suitable for ground transportation is not in the bulk transfer-terminal system.

(5) "Bulk transfer" means a transfer of special fuel by pipeline or vessel.

(6) "Bulk storage" means the placing of special fuel into a receptacle other than the fuel supply tank of a motor vehicle.

(7) "Department" means the department of licensing.

(8) "Dyed special fuel user" means a person authorized by the Internal Revenue Code to operate a motor vehicle on the highway using dyed special fuel, in which the use is not exempt from the special fuel tax.

(9) "Evasion" or "evade" means to diminish or avoid the computation, assessment, or payment of authorized taxes or fees through:

(a) A knowing: False statement; misrepresentation of fact; or other act of deception; or

(b) An intentional: Omission; failure to file a return or report; or other act of deception.

(10) "Export" means to obtain special fuel in this state for sales or distribution outside the state.

(11) "Highway" means every way or place open to the use of the public, as a matter of right, for the purpose of vehicular travel.

(12) "Import" means to bring special fuel into this state by a means of conveyance other than the fuel supply tank of a motor vehicle.

(13) "International fuel tax agreement licensee" means a special fuel user operating qualified motor vehicles in interstate commerce and licensed by the department under the international fuel tax agreement.

(14) "Lessor" means a person: (a) Whose principal business is the bona fide leasing or renting of motor vehicles without drivers for compensation to the general public; and (b) who maintains established places of business and whose lease or rental contracts require the motor vehicles to be returned to the established places of business.

(15) "Licensee" means a person holding a license issued under this chapter.

(16) "Motor vehicle" means a self-propelled vehicle designed for operation upon land utilizing special fuel as the means of propulsion.

(17) "Natural gas" means naturally occurring mixtures of hydrocarbon gases and vapors consisting principally of methane, whether in gaseous or liquid form.

(18) "Person" means a natural person, fiduciary, association, or corporation. The term "person" as applied to an association means and includes the partners or members thereof, and as applied to corporations, the officers thereof.

(19) "Position holder" means a person who holds the inventory position in special fuel, as reflected by the records of the terminal operator. A person holds the inventory position in special fuel if the person has a contractual agreement with the terminal for the use of storage facilities and terminating services at a terminal with respect to special fuel. "Position holder" includes a terminal operator that owns special fuel in their terminal.

(20) "Rack" means a mechanism for delivering special fuel from a refinery or terminal into a truck, trailer, railcar, or other means of nonbulk transfer.

(21) "Refiner" means a person who owns, operates, or otherwise controls a refinery.

(22) "Removal" means a physical transfer of special fuel other than by evaporation, loss, or destruction.

(23) "Special fuel" means and includes all combustible gases and liquids suitable for the generation of power for propulsion of motor vehicles, except that it does not include motor vehicle fuel as defined in chapter 82.36 RCW, nor does it include dyed special fuel as defined by federal regulations. However, if the federal regulations authorize dyed special fuel to be used in highway vehicles, that usage is considered taxable under this chapter, unless otherwise exempted.

(24) "Special fuel distributor" means a person who acquires special fuel from a supplier, distributor, or licensee for subsequent sale and distribution.

(25) "Special fuel exporter" means a person, who purchases special fuel in this state and directly exports the fuel by a means other than the bulk transfer-terminal system to a destination outside of the state.

(26) "Special fuel importer" means a person who imports special fuel into the state by a means other than the bulk transfer-terminal system. If the importer of record is acting as an agent, the person for whom the agent is acting is the importer. If there is no importer of record, the owner of the special fuel at the time of importation is the importer.

(27) "Special fuel supplier" means a person who owns and stores special fuel in a terminal facility or who refines and stores special fuel at a refinery.

(28) "Special fuel user" means a person engaged in uses of special fuel that are not specifically exempted from the special fuel tax imposed under this chapter.

(29) "Terminal" means a special fuel storage and distribution facility that has been assigned a terminal control number by the internal revenue service, is supplied by pipeline or vessel, and from which reportable special fuel is removed at a rack.

(30) "Terminal operator" means a person who owns, operates, or otherwise controls a terminal.

(31) "Two-party exchange" or "buy-sell agreement" means a transaction in which taxable special fuel is transferred from one licensed supplier to another licensed supplier under an exchange or buy-sell agreement whereby the supplier that is the position holder agrees to deliver taxable special fuel to the other supplier or the other supplier's customer at the rack of the terminal at which the delivering supplier is the position holder.

Sec. 51. RCW 82.38.030 and 1996 c 104 s 7 are each amended to read as follows:

(1) There is hereby levied and imposed upon special fuel users a tax at the rate computed in the manner provided in RCW 82.36.025 ((per)) on each gallon of special fuel, or each one hundred cubic feet of compressed natural gas, measured at standard pressure and temperature ((on the use of special fuel in any motor vehicle operated upon the highways of this state during the fiscal year for which such rate is applicable)).

(2) The tax ((shall be collected by the special fuel dealer and shall be paid over to the department as hereinafter provided: (a) With respect to all special fuel delivered by a special fuel dealer into supply tanks of motor vehicles or into storage facilities used for the fueling of motor vehicles at unbonded service stations in this state; or (b) in all other transactions where the purchaser is not the holder of a valid special fuel license issued pursuant to this chapter allowing the purchase of untaxed special fuel, except sales of special fuel for export. To claim an exemption on account of sales by a licensed special fuel dealer for export, the purchaser shall obtain from the selling special fuel dealer, and such selling special fuel dealer must furnish the purchaser, an invoice giving such details of the sale for export as the director may require, copies of which shall be furnished the department and the entity of the state or foreign jurisdiction of destination which is charged by the laws of that state or foreign jurisdiction with the control or monitoring or both, of the sales or movement of special fuel in that state or foreign jurisdiction.

(3) The tax shall be paid over to the department by the special fuel user as hereinafter provided with respect to the taxable use of special fuel upon which the tax has not previously been imposed.

It is expressly provided that delivery of special fuel may be made without collecting the tax otherwise imposed, when such deliveries are made by a bonded special fuel dealer to special fuel users who are authorized by the department as hereinafter provided, to purchase fuel without payment of tax to the bonded special fuel dealer.

(4))) imposed by subsection (1) of this section is imposed when:

(a) Special fuel is removed in this state from a terminal if the special fuel is removed at the rack unless the removal is to a licensed exporter for direct delivery to a destination outside of the state, or the removal is to a special fuel distributor for direct delivery to an international fuel tax agreement licensee under section 84 of this act;

(b) Special fuel is removed in this state from a refinery if either of the following applies:

(i) The removal is by bulk transfer and the refiner or the owner of the special fuel immediately before the removal is not a licensee; or

(ii) The removal is at the refinery rack unless the removal is to a licensed exporter for direct delivery to a destination outside of the state, or the removal is to a special fuel distributor for direct delivery to an international fuel tax agreement licensee under section 84 of this act;

(i) The entry is by bulk transfer and the importer is not a licensee; or

(ii) The entry is not by bulk transfer;

(d) Special fuel is removed in this state to an unlicensed entity unless there was a prior taxable removal, entry, or sale of the special fuel;

(e) Blended special fuel is removed or sold in this state by the blender of the fuel. The number of gallons of blended special fuel subject to tax is the difference between the total number of gallons of blended special fuel removed or sold and the number of gallons of previously taxed special fuel used to produced the blended special fuel;

(f) Dyed special fuel is used on a highway, as authorized by the Internal Revenue Code, unless the use is exempt from the special fuel tax; and

(g) Special fuel purchased by an international fuel tax agreement licensee under section 84 of this act is used on a highway.

(3) The tax ((required)) imposed by this chapter, if required to be collected by the ((seller)) licensee, is held in trust by the ((seller)) licensee until paid to the department, and a ((seller)) licensee who appropriates or converts the tax collected to his or her own use or to any use other than the payment of the tax to the extent that the money required to be collected is not available for payment on the due date as prescribed in this chapter is guilty of a felony, or gross misdemeanor in accordance with the theft and anticipatory provisions of Title 9A RCW. A person, partnership, corporation, or corporate officer who fails to collect the tax imposed by this section, or who has collected the tax and fails to pay it to the department in the manner prescribed by this chapter, is personally liable to the state for the amount of the tax.

NEW SECTION. Sec. 52. The tax under RCW 82.38.030, if not previously imposed and paid, must be paid over to the department by special fuel users and persons licensed under the international fuel tax agreement or other fuel tax reciprocity agreements entered into with the state of Washington, on the use of special fuel to operate motor vehicles on the highways of this state, unless the use is exempt from the tax under this chapter.

NEW SECTION. Sec. 53. (1) A position holder shall remit tax to the department on special fuel removed from a terminal as provided in RCW 82.38.030(2)(a). On a two-party exchange, or buy-sell agreement between two suppliers, the receiving exchange partner or buyer becomes the position holder, who shall remit the tax.

(2) A refiner shall remit tax to the department on special fuel removed from a refinery as provided in RCW 82.38.030(2)(b).

(3) An importer shall remit tax to the department on special fuel imported into this state as provided in RCW 82.38.030(2)(c).

(4) A blender shall remit tax to the department on the removal or sale of blended special fuel as provided in RCW 82.38.030(2)(e).

(5) A dyed special fuel user shall remit tax to the department on the use of dyed special fuel as provided in RCW 82.38.030(2)(f).

NEW SECTION. Sec. 54. A terminal operator is jointly and severally liable for remitting the tax imposed under RCW 82.38.030(1) if, at the time of removal:

(1) The position holder with respect to the special fuel is a person other than the terminal operator and is not a licensee;

(2) The terminal operator is not a licensee;

(3) The position holder has an expired internal revenue service notification certificate issued under chapter 26, C.F.R. Part 48; or

(4) The terminal operator had reason to believe that information on the notification certificate was false.

NEW SECTION. Sec. 55. A terminal operator is jointly and severally liable for remitting the tax imposed under RCW 82.38.030(1) if, in connection with the removal of special fuel that is not dyed or marked in accordance with internal revenue service requirements, the terminal operator provides a person with a bill of lading, shipping paper, or similar document indicating that the special fuel is dyed or marked in accordance with internal revenue service requirements.

NEW SECTION. Sec. 56. A person may not operate or maintain a motor vehicle on a public highway of this state with dyed special fuel in the fuel supply tank unless the use is authorized by the Internal Revenue Code and the person is the holder of an uncanceled dyed special fuel user license issued to him or her by the department. The special fuel tax set forth in RCW 82.38.030 is imposed on users of dyed special fuel authorized by the Internal Revenue Code to operate on-highway motor vehicles using dyed special fuel, unless the use is exempt from the special fuel tax.

NEW SECTION. Sec. 57. (1) Special fuel that is dyed satisfies the dyeing requirements of this chapter if it meets the dyeing requirements of the internal revenue service, including, but not limited to, requirements respecting type, dosage, and timing.

(2) Marking must meet the marking requirements of the internal revenue service.

(3) As required by the internal revenue service, notice is required with respect to dyed special fuel. A notice stating "DYED DIESEL FUEL, NONTAXABLE USE ONLY, PENALTY FOR TAXABLE USE" must be:

(a) Provided by the terminal operator to a person who receives dyed special fuel at a terminal rack of that terminal operator;

(b) Provided by a seller of dyed special fuel to its buyer if the special fuel is located outside the bulk transfer-terminal system and is not sold from a retail pump posted in accordance with the requirements of this subsection; or

Sec. 58. RCW 82.38.070 and 1990 c 250 s 83 are each amended to read as follows:

A special fuel ((dealer shall be)) supplier is entitled((, under rules and regulations prescribed by the department,)) to a credit of the tax paid over to the department on those sales of special fuel for which the ((dealer)) supplier has received no consideration from or on behalf of the purchaser((, which have been declared by the dealer to be worthless accounts receivable, and which have been claimed as bad debts for federal income tax purposes)). The amount of the tax ((refunded)) credit shall not exceed the amount of tax imposed by this chapter on such sales. If a ((refund)) credit has been granted under this section, any amounts collected for application against the accounts on which such a ((refund)) credit is based shall be reported ((with the first)) on a subsequent return filed after such collection, and the amount of ((refund)) credit received by the ((dealer)) supplier based upon the collected amount shall be returned to the department. In the event the ((refund)) credit has not been paid, the amount of the ((refund)) credit requested by the ((dealer)) supplier shall be adjusted by the department to reflect the decrease in the amount on which the claim is based. ((The department may require the dealer to submit periodical reports listing accounts which are delinquent for ninety days or more.))

NEW SECTION. Sec. 59. A special fuel distributor, special fuel importer, or special fuel blender, under rules adopted by the department, is entitled to a refund of the tax paid on those sales of special fuel for which no consideration has been received from or on behalf of the purchaser and that have been declared to be worthless accounts receivable. The amount of the tax refunded must not exceed the amount of tax paid by the special fuel distributor, special fuel importer, or special fuel blender paid under this chapter. If the special fuel distributor, special fuel importer, or special fuel blender subsequently collects any amount from the account declared worthless, the amount collected shall be apportioned between the charges for the fuel and tax thereon. The special fuel tax collected must be returned to the department.

Sec. 60. RCW 82.38.080 and 1996 c 244 s 6 are each amended to read as follows:

(1) There is exempted from the tax imposed by this chapter, the use of fuel for:

(((1))) (a) Street and highway construction and maintenance purposes in motor vehicles owned and operated by the state of Washington, or any county or municipality;

(((2))) (b) Publicly owned fire fighting equipment;

(((3))) (c) Special mobile equipment as defined in RCW 46.04.552;

(((4))) (d) Power pumping units or other power take-off equipment of any motor vehicle which is accurately measured by metering devices that have been specifically approved by the department or which is established by ((either)) any of the following formulae:

(((a))) (i) Pumping propane, or fuel or heating oils or milk picked up from a farm or dairy farm storage tank by a power take-off unit on a delivery truck, at ((the)) a rate ((of three-fourths of one gallon for each one thousand gallons of fuel delivered or milk picked up)) determined by the department: PROVIDED, That claimant when presenting his or her claim to the department in accordance with ((the provisions of)) this chapter, shall provide to ((said)) the claim, invoices of propane, or fuel or heating oil delivered, or such other appropriate information as may be required by the department to substantiate his or her claim; ((or

(b))) (ii) Operating a power take-off unit on a cement mixer truck or a load compactor on a garbage truck at the rate of twenty-five percent of the total gallons of fuel used in such a truck; ((and)) or

(((c))) (iii) The department is authorized to establish by rule additional formulae for determining fuel usage when operating other types of equipment by means of power take-off units when direct measurement of the fuel used is not feasible. The department is also authorized to adopt rules regarding the usage of on board computers for the production of records required by this chapter;

(((5))) (e) Motor vehicles owned and operated by the United States government;

(((6))) (f) Heating purposes;

(((7))) (g) Moving a motor vehicle on a public highway between two pieces of private property when said moving is incidental to the primary use of the motor vehicle;

(((8))) (h) Transportation services for persons with special transportation needs by a private, nonprofit transportation provider regulated under chapter 81.66 RCW; ((and

(9))) (i) Vehicle refrigeration units, mixing units, or other equipment powered by separate motors from separate fuel tanks; and

(j) The operation of a motor vehicle as a part of or incidental to logging operations upon a highway under federal jurisdiction within the boundaries of a federal area if the federal government requires a fee for the privilege of operating the motor vehicle upon the highway, the proceeds of which are reserved for constructing or maintaining roads in the federal area, or requires maintenance or construction work to be performed on the highway for the privilege of operating the motor vehicle on the highway.

(2) There is exempted from the tax imposed by this chapter the removal or entry of special fuel under the following circumstances and conditions:

(a) If it is the removal from a terminal or refinery of, or the entry or sale of, a special fuel if all of the following apply:

(i) The person otherwise liable for the tax is a licensee other than a dyed special fuel user or international fuel tax agreement licensee;

(ii) For a removal from a terminal, the terminal is a licensed terminal; and

(iii) The special fuel satisfies the dyeing and marking requirements of this chapter;

(b) If it is an entry or removal from a terminal or refinery of taxable special fuel transferred to a refinery or terminal and the persons involved, including the terminal operator, are licensed; and

(c)(i) If it is a special fuel that, under contract of sale, is shipped to a point outside this state by a supplier by means of any of the following:

(A) Facilities operated by the supplier;

(B) Delivery by the supplier to a carrier, customs broker, or forwarding agent, whether hired by the purchaser or not, for shipment to the out-of-state point;

(C) Delivery by the supplier to a vessel clearing from port of this state for a port outside this state and actually exported from this state in the vessel.

(ii) For purposes of this subsection (2)(c):

(A) "Carrier" means a person or firm engaged in the business of transporting for compensation property owned by other persons, and includes both common and contract carriers; and

(B) "Forwarding agent" means a person or firm engaged in the business of preparing property for shipment or arranging for its shipment.

(3) Notwithstanding any provision of law to the contrary, every urban passenger transportation system and carriers as defined by chapters 81.68 and 81.70 RCW shall be exempt from the provisions of this chapter requiring the payment of special fuel taxes. For the purposes of this section "urban passenger transportation system" means every transportation system, publicly or privately owned, having as its principal source of revenue the income from transporting persons for compensation by means of motor vehicles and/or trackless trolleys, each having a seating capacity for over fifteen persons over prescribed routes in such a manner that the routes of such motor vehicles and/or trackless trolleys, either alone or in conjunction with routes of other such motor vehicles and/or trackless trolleys subject to routing by the same transportation system, shall not extend for a distance exceeding twenty-five road miles beyond the corporate limits of the county in which the original starting points of such motor vehicles are located: PROVIDED, That no refunds or credits shall be granted on special fuel used by any urban transportation vehicle or vehicle operated pursuant to chapters 81.68 and 81.70 RCW on any trip where any portion of said trip is more than twenty-five road miles beyond the corporate limits of the county in which said trip originated.

Sec. 61. RCW 82.38.090 and 1995 c 20 s 13 are each amended to read as follows:

(1) It shall be unlawful for any person to ((act as a special fuel dealer or a special fuel user)) engage in business in this state as any of the following unless ((such)) the person is the holder of an uncanceled ((special fuel dealer's or a special fuel user's)) license issued to him or her by the department((.

A special fuel dealer's license authorizes a person to deliver previously untaxed special fuel into the fuel supply tanks of motor vehicles, collect the special fuel tax on behalf of the state at the time of delivery, and remit the taxes collected to the state as provided herein. A licensed special fuel dealer may also deliver untaxed special fuel into bulk storage facilities of a licensed special fuel user or dealer without collecting the special fuel tax. Special fuel dealers, when making deliveries of special fuel into bulk storage to any person not holding a valid special fuel license, must collect the special fuel tax at time of delivery, unless the person to whom the delivery is made is specifically exempted from the tax as provided herein.

A special fuel user's license authorizes a person to purchase special fuel into bulk storage for use in motor vehicles either on or off the public highways of this state without payment of the special fuel tax at time of purchase. Holders of special fuel licenses are all subject to the bonding, reporting, tax payment, and record-keeping provisions of this chapter. All purchases of special fuel by a licensed special fuel user directly into the fuel supply tank of a motor vehicle are subject to the special fuel tax at time of purchase. Special authorization may be given to farmers, logging companies, and construction companies to purchase special fuel directly into the supply tanks of nonhighway equipment or into portable slip tanks for nonhighway use without payment of the special fuel tax.)) authorizing the person to engage in that business:

(a) Special fuel supplier;

(b) Special fuel distributor;

(d) Special fuel importer;

(e) Special fuel blender;

(f) Dyed special fuel user; or

(g) International fuel tax agreement licensee.

(2) A person engaged in more than one activity for which a license is required must have a separate license classification for each activity, but a special fuel supplier is not required to obtain a separate license classification for any other activity for which a license is required.

(3) Special fuel users operating motor vehicles in interstate commerce having two axles and a gross vehicle weight or registered gross vehicle weight not exceeding twenty-six thousand pounds are not required to be licensed. Special fuel users operating motor vehicles in interstate commerce having two axles and a gross vehicle weight or registered gross vehicle weight exceeding twenty-six thousand pounds, or having three or more axles regardless of weight, or a combination of vehicles, when the combination exceeds twenty-six thousand pounds gross vehicle weight, must comply with the licensing and reporting requirements of this chapter. A copy of the license must be carried in each motor vehicle entering this state from another state or province.

Sec. 62. RCW 82.38.100 and 1983 c 78 s 1 are each amended to read as follows:

(1) Any special fuel user operating a motor vehicle into this state for commercial purposes may make application for a trip permit ((in lieu of a special fuel user's license required in RCW 82.38.090 and 82.38.120 which)) that shall be good for a period of three consecutive days beginning and ending on the dates specified on the face of the permit issued, and only for the vehicle for which it is issued.

(2) Every permit shall identify, as the department may require, the vehicle for which it is issued and shall be completed in its entirety, signed, and dated by the operator before operation of the vehicle on the public highways of this state. Correction of data on the permit such as dates, vehicle license number, or vehicle identification number invalidates the permit. A violation of, or a failure to comply with, this subsection is a gross misdemeanor.

(3) For each permit issued, there shall be collected a filing fee of one dollar, an administrative fee of ten dollars, and an excise tax of nine dollars. Such fees and tax shall be in lieu of the special fuel tax otherwise assessable against the permit holder for importing and using special fuel in a motor vehicle on the public highways of this state and no report of mileage shall be required with respect to such vehicle. Trip permits will not be issued if the applicant has outstanding fuel taxes, penalties or interest owing to the state or has had a special fuel license revoked for cause and the cause has not been removed.

(4) Blank permits may be obtained from field offices of the department of transportation, Washington state patrol, department of licensing, or other agents appointed by the department. The department may appoint county auditors or businesses as agents for the purpose of selling trip permits to the public. County auditors or businesses so appointed may retain the filing fee collected for each trip permit to defray expenses incurred in handling and selling the permits.

(5) All fees and excise taxes collected by the department for trip permits shall be credited and deposited in the same manner as the special fuel tax collected under this chapter and shall not be subject to exchange, refund, or credit.

Sec. 63. RCW 82.38.110 and 1996 c 104 s 8 are each amended to read as follows:

(1) Application for a ((special fuel dealer's license or a special fuel user's)) license issued under this chapter shall be made to the department. The application shall be filed upon a form prepared and furnished by the department and shall contain such information as the department deems necessary.

(2) Every application for a special fuel ((dealer's)) license, other than an application for a dyed special fuel user or international fuel tax agreement license, must contain the following information to the extent it applies to the applicant:

(((1))) (a) Proof as the department ((may)) shall require concerning the applicant's identity, including but not limited to his or her fingerprints or those of the officers of a corporation making the application;

(((2))) (b) The applicant's form and place of organization including proof that the individual, partnership, or corporation is licensed to do business in this state;

(((3))) (c) The qualification and business history of the applicant and any partner, officer, or director;

(3) An applicant for a license as a special fuel importer must list on the application each state, province, or country from which the applicant intends to import fuel and, if required by the state, province, or country listed, must be licensed or registered for special fuel tax purposes in that state, province, or country.

(4) An applicant for a license as a special fuel exporter must list on the application each state, province, or country to which the exporter intends to export special fuel received in this state by means of a transfer outside the bulk transfer-terminal system and, if required by the state, province, or country listed, must be licensed or registered for special fuel tax purposes in that state, province, or country.

(5) An applicant for a license as a special fuel supplier must have a federal certificate of registry that is issued under the Internal Revenue Code and authorizes the applicant to enter into federal tax-free transactions on special fuel in the terminal transfer system.

(6) After receipt of an application for a license, the director ((may)) shall conduct an investigation to determine whether the facts set forth are true. The director ((may)) shall require a fingerprint record check of the applicant through the Washington state patrol criminal identification system and the federal bureau of investigation before issuance of a license. The results of the background investigation including criminal history information may be released to authorized department personnel as the director deems necessary. The department shall charge a license holder or license applicant a fee of fifty dollars for each background investigation conducted.

(7) An applicant who makes a false statement of a material fact on the application may be prosecuted for false swearing as defined by RCW 9A.72.040.

((No)) (8) A special fuel ((dealer's)) license may not be issued to any person or continued in force unless such person has furnished bond, as defined in RCW 82.38.020, in such form as the department may require, to secure his or her compliance with this chapter, and the payment of any and all taxes, interest, and penalties due and to become due hereunder. The requirement of furnishing a bond ((shall)) may be waived for special fuel ((dealers)) distributors who only deliver special fuel into the fuel tanks of marine vessels, for dyed special fuel users and for persons issued licenses under the international fuel tax agreement.

(9) The department may require a ((special fuel user)) licensee to post a bond if the ((special fuel user)) licensee, after having been licensed, has failed to file timely reports or has failed to remit taxes due, or when an investigation or audit indicates problems severe enough that the department, in its discretion, determines that a bond is required to protect the interests of the state. The department may also adopt rules prescribing conditions that, in the department's discretion, require a bond to protect the interests of the state.

(10) The total amount of the bond or bonds required of any ((special fuel dealer or special fuel user)) licensee shall be equivalent to three times the estimated monthly fuel tax, determined in such manner as the department may deem proper: PROVIDED, That those ((special fuel dealers)) licensees having held a special fuel license for five or more years without having said license suspended or revoked by the department shall be permitted to reduce the amount of their bond to twice the estimated monthly tax liability: PROVIDED FURTHER, That the total amount of the bond or bonds shall never be less than five hundred dollars nor more than ((fifty)) one hundred thousand dollars.

(11) An application for a dyed special fuel user license must be made to the department. The application must be filed upon a form prescribed by the department and contain such information as the department deems necessary.

(12) An application for an international fuel tax agreement license must be made to the department. The application must be filed upon a form prescribed by the department and contain such information as the department may require.

Sec. 64. RCW 82.38.120 and 1996 c 104 s 9 are each amended to read as follows:

Upon receipt and approval of an application and bond, if required, the department shall issue ((to the applicant)) a license to ((act as a special fuel dealer or a special fuel user)) the applicant. However, the department may refuse to issue a ((special fuel dealer's)) license ((or a special fuel user's license)) to any person:

(1) Who formerly held ((either type of)) a license issued under chapter 82.36 or 82.42 RCW or this chapter which, prior to the time of filing for application, has been revoked for cause;

(2) Who is a subterfuge for the real party in interest whose license prior to the time of filing for application, has been revoked for cause;

(3) Who, as an individual licensee, or officer, director, owner, or managing employee of a nonindividual licensee, has had a special fuel license revoked for cause;

(4) Who has an unsatisfied debt to the state assessed under either chapter 82.36, 82.38, ((or)) 46.87, or 82.42 RCW;

(6) Who pled guilty to or was convicted as an individual, officer, director, owner, or managing employee of a nonindividual licensee in this or any other state or in any federal jurisdiction of a gross misdemeanor or felony crime directly related to the business or has been subject to a civil judgment involving fraud, misrepresentation, conversion, or dishonesty, notwithstanding chapter 9.96A RCW;

(7) Who misrepresented or concealed a material fact in obtaining a license or in reinstatement thereof;

(8) Who violated a statute or administrative rule regulating fuel taxation or distribution;

(9) Who failed to cooperate with the department's investigations by:

(a) Not furnishing papers or documents;

(b) Not furnishing in writing a full and complete explanation regarding a matter under investigation by the department; or

(c) Not responding to subpoenas issued by the department, whether or not the recipient of the subpoena is the subject of the proceeding;

(10) Who failed to comply with an order issued by the director; or

(11) Upon other sufficient cause being shown.

Before such refusal, the department shall grant the applicant a hearing and shall grant the applicant at least twenty days written notice of the time and place thereof.

The department shall determine from the information shown in the application or other investigation the kind and class of license to be issued. For the purpose of considering any application for a special fuel ((dealer's)) license, the department may inspect, cause an inspection, investigate, or cause an investigation of the records of this or any other state or of the federal government to ascertain the veracity of the information on the application form and the applicant's criminal and licensing history.

All licenses shall be posted in a conspicuous place or kept available for inspection at the principal place of business of the owner thereof. License holders shall reproduce the license by photostat or other method and keep a copy on display for ready inspection at each additional place of business or other place of storage from which special fuel is sold, delivered or used and in each motor vehicle used by the license holder to transport special fuel purchased by him or her for resale, delivery or use. ((Every licensed special fuel user operating a motor vehicle registered in a jurisdiction other than this state shall reproduce the license and carry a photocopy thereof with each motor vehicle being operated upon the highways of this state.

A special fuel dealer may use special fuel in motor vehicles owned or operated by the dealer without securing a license as a special fuel user but the dealer is subject to all other conditions, requirements, and liabilities imposed herein upon a special fuel user.))

Each special fuel ((dealer's license and special fuel user's)) license shall be valid until the expiration date if shown on the license, or until suspended or revoked for cause or otherwise canceled.

No special fuel ((dealer's license or special fuel user's)) license shall be transferable.

Sec. 65. RCW 82.38.130 and 1994 c 262 s 24 are each amended to read as follows:

The department may revoke the license of any ((special fuel dealer, or special fuel user)) licensee for any of the grounds constituting cause for denial of a license set forth in RCW 82.38.120 or for other reasonable cause. Before revoking such license the department shall notify the licensee to show cause within twenty days of the date of the notice why the license should not be revoked: PROVIDED, That at any time prior to and pending such hearing the department may, in the exercise of reasonable discretion, suspend such license.

The department shall cancel any ((license to act as a)) special fuel ((dealer, or a special fuel user)) license immediately upon surrender thereof by the holder.

Any surety on a bond furnished by a ((special fuel dealer or special fuel user)) licensee as provided ((herein)) in this chapter shall be released and discharged from any and all liability to the state accruing on such bond after the expiration of forty-five days from the date which such surety shall have lodged with the department a written request to be released and discharged, but this provision shall not operate to relieve, release, or discharge the surety from any liability already accrued or which shall accrue before the expiration of the forty-five day period. The department shall promptly, upon receiving any such request, notify the ((special fuel dealer or special fuel user)) licensee who furnished the bond, and unless the ((special fuel dealer or special fuel user shall)) licensee, on or before the expiration of the forty-five day period, files a new bond, in accordance with ((the requirements of)) this section, ((or make a deposit in lieu thereof as provided in RCW 82.38.020(11),)) the department forthwith shall cancel the special fuel dealer's or special fuel user's license.

The department may require a ((special fuel dealer or special fuel user to give a)) new or additional surety bond ((or to deposit additional securities)) of the character specified in RCW 82.38.020(((11))) (3) if, in its opinion, the security of the surety bond therefor filed by such ((special fuel dealer or special fuel user, or the market value of the properties deposited as security by such special fuel dealer or special fuel user)) licensee, shall become impaired or inadequate. Upon failure of the ((special fuel dealer or special fuel user)) licensee to give such new or additional surety bond ((or to deposit additional securities)) within forty-five days after being requested to do so by the department, or after he or she shall fail or refuse to file reports and remit or pay taxes at the intervals fixed by the department, the department forthwith shall cancel his or her license.

Sec. 66. RCW 82.38.140 and 1996 c 104 s 10 and 1996 c 90 s 2 are each reenacted and amended to read as follows:

(1) Every ((special fuel dealer, special fuel user,)) licensee and every person importing, manufacturing, refining, dealing in, transporting, blending, or storing special fuel in this state shall keep for a period of not less than five years open to inspection at all times during the business hours of the day to the department or its authorized representatives, a complete record of all special fuel purchased or received and all of such products sold, delivered, or used by them. Such records shall show:

(a) The date of each receipt;

(b) The name and address of the person from whom purchased or received;

(d) The date of each sale or delivery;

(e) The number of gallons sold, delivered, or used for taxable purposes;

(f) The number of gallons sold, delivered, or used for any purpose not subject to the tax imposed ((herein)) in this chapter;

(g) The name, address, and special fuel license number of the purchaser if the special fuel tax is not collected on the sale or delivery;

(h) The inventories of special fuel on hand at each place of business at the end of each month.

(2)(a) All ((special fuel users using special fuel)) international fuel tax agreement licensees and dyed special fuel users authorized to use dyed special fuel on highway in vehicles licensed for highway operation shall maintain detailed mileage records on an individual vehicle basis.

(b) Such operating records shall show both on-highway and off-highway usage of special fuel on a daily basis for each vehicle.

(c) In the absence of operating records that show both on-highway and off-highway usage of special fuel on a daily basis for each vehicle, fuel consumption must be computed under RCW 82.38.060.

(3) ((Persons using special fuel for heating purposes only are not required to maintain records of fuel usage.

(4) Invoices shall be prepared for sales and deliveries of special fuel in the manner and containing such information as may be prescribed by the department.

Every special fuel dealer or special fuel user making such sales or deliveries of special fuel and every person so receiving and purchasing special fuel must each retain one copy of each such invoice as part of the dealer's permanent records for the time and purposes above provided.

(5) Every special fuel user shall keep, in addition to the dealer's records of deliveries into motor vehicles, a complete record as prescribed by the department of the total gallons of special fuel used for other purposes during each month and the purposes for which said special fuel was used.

(6) Subsections (1)(f), (2)(b), and (5) of this section do not apply to special fuel users when the special fuel is used off-highway in farming, construction, or logging operations. Upon filing a special fuel user tax report, every such special fuel user shall certify and bear the burden of proof as to the number of gallons of special fuel used off-highway.)) The department may require a person other than a licensee engaged in the business of selling, purchasing, distributing, storing, transporting, or delivering special fuel to submit periodic reports to the department regarding the disposition of the fuel. The reports must be on forms prescribed by the department and must contain such information as the department may require.

(4) Every person operating any conveyance for the purpose of hauling, transporting, or delivering special fuel in bulk shall have and possess during the entire time the person is hauling special fuel, an invoice, bill of sale, or other statement showing the name, address, and license number of the seller or consigner, the destination, name, and address of the purchaser or consignee, license number, if applicable, and the number of gallons. The person hauling such special fuel shall at the request of any law enforcement officer or authorized representative of the department, or other person authorized by law to inquire into, or investigate those types of matters, produce for inspection such invoice, bill of sale, or other statement and shall permit such official to inspect and gauge the contents of the vehicle.

Sec. 67. RCW 82.38.150 and 1996 c 104 s 11 are each amended to read as follows:

For the purpose of determining the amount of liability for the tax herein imposed, and to periodically update license information, each ((special fuel dealer and each)) licensee, other than a special fuel distributor, an international fuel tax agreement licensee, or a dyed special fuel user, shall file monthly tax reports with the department, on forms prescribed by the department. ((Special fuel dealers shall file the reports at the intervals as shown in the following schedule:

Estimated Yearly

Tax Liability Reporting Frequency

$ 0 - $100 Yearly

$101 - 250 Semi-yearly

$251 - 499 Quarterly

$500 and over Monthly))

Dyed special fuel users whose estimated yearly tax liability is two hundred fifty dollars or less, shall file a report yearly, and dyed special fuel users whose estimated yearly tax liability is more than two hundred fifty dollars, shall file reports quarterly. Special fuel users licensed under the international fuel tax agreement shall file reports quarterly. Special fuel distributors subject to the pollution liability insurance agency fee and reporting requirements shall remit pollution liability insurance agency returns and any associated payment due to the department annually.

The department shall establish the reporting frequency for each applicant at the time the special fuel license is issued. If it becomes apparent that any ((special fuel)) licensee is not reporting in accordance with the above schedule, the department shall change the licensee's reporting frequency by giving thirty days' notice to the licensee by mail to the licensee's address of record. A report shall be filed with the department even though no special fuel was used, or tax is due, for the reporting period. Each tax report shall contain a declaration by the person making the same, to the effect that the statements contained therein are true and are made under penalties of perjury, which declaration shall have the same force and effect as a verification of the report and is in lieu of such verification. The report shall show such information as the department may reasonably require for the proper administration and enforcement of this chapter. For counties within which an additional excise tax on special fuel has been levied by that jurisdiction under RCW 82.80.010, the report must show the quantities of special fuel sold, distributed, or withdrawn from bulk storage by the reporting dealer or user within the county's boundaries and the tax liability from its levy. ((The special fuel dealer or special fuel user)) A licensee shall file ((the)) a tax report on or before the twenty-fifth day of the next succeeding calendar month following the period to which it relates.

Subject to the written approval of the department, tax reports may cover a period ending on a day other than the last day of the calendar month. Taxpayers granted approval to file reports in this manner will file such reports on or before the twenty-fifth day following the end of the reporting period. No change to this reporting period will be made without the written authorization of the department.

If the final filing date falls on a Saturday, Sunday, or legal holiday the next secular or business day shall be the final filing date. Such reports shall be considered filed or received on the date shown by the post office cancellation mark stamped upon an envelope containing such report properly addressed to the department, or on the date it was mailed if proof satisfactory to the department is available to establish the date it was mailed.

The department, if it deems it necessary in order to insure payment of the tax imposed by this chapter, or to facilitate the administration of this chapter, has the authority to require the filing of reports and tax remittances at shorter intervals than one month if, in its opinion, an existing bond has become insufficient.

((The department may permit any special fuel user whose sole use of special fuel is in motor vehicles or equipment exempt from tax as provided in RCW 82.38.075 and 82.38.080 (1), (2), (3), (8), and (9), in lieu of the reports required in this section, to submit reports annually or as requested by the department, in such form as the department may require.

A special fuel user whose sole use of special fuel is for purposes other than the propulsion of motor vehicles upon the public highways of this state shall not be required to submit the reports required in this section.))

Sec. 68. RCW 82.38.160 and 1987 c 174 s 5 are each amended to read as follows:

(1) The tax imposed by this chapter shall be computed ((as follows: (a) With respect to special fuel upon which the tax has been collected by the seller thereof as a special fuel dealer,)) by multiplying the tax rate per gallon provided in this chapter by the number of gallons of special fuel ((delivered)) subject to the special fuel tax((; (b) with respect to special fuel on which the tax has not been paid to a special fuel dealer in this state and which has been consumed by the purchaser thereof as a special fuel user, by multiplying the tax rate per gallon provided in this chapter by the number of gallons of special fuel consumed by him in the propulsion of a motor vehicle on the highways of this state)).

(2) A special fuel distributor shall remit tax on special fuel purchased from a special fuel supplier, and due to the state for that reporting period, to the special fuel supplier.

(3) At the election of the distributor, the payment of the special fuel tax owed on special fuel purchased from a supplier shall be remitted to the supplier on terms agreed upon between the distributor and the supplier or no later than two business days before the last business day of the following month. This election shall be subject to a condition that the distributor's remittances of all amounts of special fuel tax due to the supplier shall be paid by electronic funds transfer. The distributor's election may be terminated by the supplier if the distributor does not make timely payments to the supplier as required by this section. This section shall not apply if the distributor is required by the supplier to pay cash or cash equivalent for special fuel purchases.

(4) Except as provided in subsection (((3))) (5) of this section, the tax return shall be accompanied by a remittance payable to the state treasurer covering the tax ((moneys collected by the special fuel dealer or the)) amount determined to be due ((hereunder by licensed users of special fuels during)) for the ((preceding)) reporting period.

(((3))) (5) If the tax is paid by electronic funds transfer ((and the reporting period ends on the last day of a calendar month)), the tax shall be paid on or before the ((state business day immediately preceding the last state business day of the month following the end of)) tenth calendar day of the month that is the second month immediately following the reporting period. When the reporting period is May, the tax shall be paid on the last state business day of June. If the tax is paid by electronic funds transfer and the reporting period ends on a day other than the last day of a calendar month as provided in RCW 82.38.150, the tax shall be paid on or before ((the state business day immediately preceding)) the last state business day of the thirty-day period following the end of the reporting period.

(((4))) (6) The tax shall be paid by electronic funds transfer whenever the amount due is fifty thousand dollars or more.

NEW SECTION. Sec. 69. A special fuel supplier shall, no later than the twentieth day or next business day after the special fuel tax is due from the special fuel distributor under RCW 82.38.160(2), notify the department of the failure of a special fuel distributor to pay the full amount of the tax owed.

Upon notification and submission of satisfactory evidence by a special fuel supplier that a special fuel distributor has failed to comply with RCW 82.38.160(2), the department may suspend the license of the special fuel distributor.

Upon the suspension, the department shall immediately notify all special fuel suppliers that the authority of the special fuel distributor to purchase tax-deferred special fuel has been suspended and all subsequent purchases of special fuel by the special fuel distributor must be tax-paid at the time of removal.

If, after notification by the department, a special fuel supplier continues to sell tax-deferred special fuel to a special fuel distributor whose license is suspended, the special fuel supplier's license is subject to revocation or suspension under RCW 82.38.130. Furthermore, if notified of a license suspension, a special fuel supplier is liable for any unpaid special fuel tax owed on special fuel sold to a suspended special fuel distributor.

Sec. 70. RCW 82.38.170 and 1996 c 104 s 12 are each amended to read as follows:

(1) If any ((special fuel dealer or special fuel user)) licensee fails to pay any taxes collected or due the state of Washington ((by said dealer or user)) within the time prescribed by RCW 82.38.150 and 82.38.160, ((said dealer or user)) the licensee shall pay in addition to such tax a penalty of ten percent of the amount thereof.

(2) If it be determined by the department that the tax reported by any ((special fuel dealer or special fuel user)) licensee is deficient it may proceed to assess the deficiency on the basis of information available to it and there shall be added to this deficiency a penalty of ten percent of the amount of the deficiency.

(3) If any ((special fuel dealer or special fuel user)) licensee, whether or not he or she is licensed as such, fails, neglects, or refuses to file a special fuel tax report required under this chapter, the department may, on the basis of information available to it, determine the tax liability of the ((special fuel dealer or the special fuel user)) licensee for the period during which no report was filed, and to the tax as thus determined, the department shall add the penalty and interest provided in subsection (2) of this section. An assessment made by the department pursuant to this subsection or to subsection (2) of this section shall be presumed to be correct, and in any case where the validity of the assessment is drawn in question, the burden shall be on the person who challenges the assessment to establish by a fair preponderance of the evidence that it is erroneous or excessive as the case may be.

(4) If any ((special fuel dealer or special fuel user shall)) licensee establishes by a fair preponderance of evidence that his or her failure to file a report or pay the proper amount of tax within the time prescribed was due to reasonable cause and was not intentional or willful, the department may waive the penalty prescribed in subsections (1), (2), and (3) of this section.

(5) If any ((special fuel dealer or special fuel user shall)) licensee files a false or fraudulent report with intent to evade the tax imposed by this chapter, there shall be added to the amount of deficiency determined by the department a penalty equal to twenty-five percent of the deficiency, in addition to the penalty provided in subsection (2) of this section and all other penalties prescribed by law.

(6) Any special fuel tax, penalties, and interest payable under this chapter shall bear interest at the rate of one percent per month, or fraction thereof, from the first day of the calendar month after the amount or any portion thereof should have been paid until the date of payment: PROVIDED, That the department may waive the interest when it determines that the cost of processing the collection of the interest exceeds the amount of interest due.

(7) Except in the case of violations of filing a false or fraudulent report, if the department deems mitigation of penalties and interest to be reasonable and in the best interests of carrying out the purpose of this chapter, it may mitigate such assessments upon whatever terms the department deems proper, giving consideration to the degree and extent of the lack of records and reporting errors. The department may ascertain the facts regarding recordkeeping and payment penalties in lieu of more elaborate proceedings under this chapter.

(8) Except in the case of a fraudulent report or of neglect or refusal to make a report, every deficiency shall be assessed under subsection (2) of this section within five years from the twenty-fifth day of the next succeeding calendar month following the reporting period for which the amount is proposed to be determined or within five years after the return is filed, whichever period expires the later.

(9) Any ((special fuel dealer or special fuel user)) licensee against whom an assessment is made under the provisions of subsections (2) or (3) of this section may petition for a reassessment thereof within thirty days after service upon the ((special fuel dealer or special fuel user)) licensee of notice thereof. If such petition is not filed within such thirty day period, the amount of the assessment becomes final at the expiration thereof.

If a petition for reassessment is filed within the thirty day period, the department shall reconsider the assessment and, if the ((special fuel dealer or special fuel user)) licensee has so requested in his or her petition, shall grant such ((special fuel dealer or special fuel user)) licensee an oral hearing and give the ((special fuel dealer or special fuel user)) licensee ten days' notice of the time and place thereof. The department may continue the hearing from time to time. The decision of the department upon a petition for reassessment shall become final thirty days after service upon the ((special fuel dealer or special fuel user)) licensee of notice thereof.

Every assessment made by the department shall become due and payable at the time it becomes final and if not paid to the department when due and payable, there shall be added thereto a penalty of ten percent of the amount of the tax.

(10) Any notice of assessment required by this section shall be served personally or by certified or registered mail; if by mail, service shall be made by depositing such notice in the United States mail, postage prepaid addressed to the ((special fuel dealer or special fuel user)) licensee at his or her address as the same appears in the records of the department.

(11) Any licensee who has had ((either their)) the licensee's special fuel ((user)) license ((or special fuel dealer license, or both,)) revoked shall pay a one hundred dollar penalty prior to the issuance of a new license.

(12) Any person who, upon audit or investigation by the department, is found to have not paid special fuel taxes as required by this chapter shall be subject to cancellation of all vehicle registrations for vehicles utilizing special fuel as a means of propulsion. Any unexpired Washington tonnage on the vehicles in question may be transferred to a purchaser of the vehicles upon application to the department who shall hold such tonnage in its custody until a sale of the vehicle is made or the tonnage has expired.

(13) Unless expressly authorized by the Internal Revenue Code and this chapter, a person using dyed special fuel in the propulsion of a motor vehicle upon the highways of this state is subject to a civil penalty of ten dollars for each gallon of dyed special fuel placed into the supply tank of the motor vehicle, or one thousand dollars, whichever is greater. The civil penalty collected as a result of this subsection must be deposited in the motor vehicle fund. The penalties must be collected and administered under this chapter.

(14) For the purposes of enforcement of this section, the Washington state patrol or other commercial vehicle safety alliance-certified officers may inspect, collect, and secure samples of special fuel used in the propulsion of a vehicle operated upon the highways of this state to detect the presence of dye or other chemical compounds.

(15) The Washington state patrol shall, by January 1, 1999, develop and implement procedures for collection, analysis, and storage of fuel samples collected under this chapter.

(16) RCW 43.05.110 does not apply to the civil penalties imposed under subsection (13) of this section.

Sec. 71. RCW 82.38.180 and 1972 ex.s. c 138 s 4 are each amended to read as follows:

Any person who has paid a special fuel tax either directly or to the vendor from whom it was purchased may file a claim with the department for a refund of the tax so paid and shall be reimbursed and repaid the amount of:

(1) Any taxes previously paid on special fuel used for purposes other than for the propulsion of motor vehicles upon the public highways in this state.

(2) Any taxes previously paid on special fuel exported for use outside of this state. Special fuel carried from this state in the fuel tank of a motor vehicle is deemed to be exported from this state. Special fuel distributed to a federally recognized Indian tribal reservation located within the state of Washington is not considered exported outside this state.

(3) Any tax, penalty, or interest erroneously or illegally collected or paid.

(4) Any taxes previously paid on all special fuel which is lost or destroyed, while applicant shall be the owner thereof, through fire, lightning, flood, wind storm, or explosion.

(5) Any taxes previously paid on all special fuel of five hundred gallons or more which is lost or destroyed while applicant shall be the owner thereof, through leakage or other casualty except evaporation, shrinkage, or unknown causes.

(6) Any taxes previously paid on special fuel that is inadvertently mixed with dyed special fuel.

Recovery for such loss or destruction under either subsection (4) ((or)), (5), or (6) of this section must be susceptible to positive proof thereby enabling the department to conduct such investigation and require such information as they may deem necessary. In the event that the department is not satisfied that the fuel was lost ((or)), destroyed, or contaminated as claimed because information or proof as required hereunder is not sufficient to substantiate the accuracy of the claim, they may deem such as sufficient cause to deny all right relating to the refund or credit for the excise tax paid on special fuel alleged to be lost or destroyed.

No refund or claim for credit shall be approved by the department unless the gallons of special fuel claimed as nontaxable satisfy the conditions specifically set forth in this section and the nontaxable event or use occurred during the period covered by the refund claim. Refunds or claims for credit by sellers or users of special fuel shall not be allowed for anticipated nontaxable use or events.

NEW SECTION. Sec. 72. (1) Upon application, the department may give special authorization to farmers, logging companies, and construction companies to purchase nondyed special fuel directly into the supply tanks of nonhighway equipment or into portable slip tanks for nonhighway use without payment of the special fuel tax. Purchases of this nondyed special fuel must be made at a card lock facility owned and operated by a special fuel distributor who is required to pay the special fuel tax on nondyed special fuel delivered to the card lock facility and has elected to sell the special fuel in this manner. The election is solely at the discretion of the special fuel distributor and must be approved by the department.

(2) A special fuel distributor who has paid the special fuel tax on nondyed special fuel purchased by a holder of a special authorization may file a claim for refund of the special fuel tax paid. A claim for refund of the special fuel tax paid under this section is allowed only if all the following apply:

(a) Special fuel tax was paid by the distributor on the nondyed special fuel to which the claim relates and the claim is supported by an invoice or invoices showing such payment;

(b) The special fuel distributor sold the special fuel to a holder of a valid special authorization issued by the department;

(c) The claim contains the name and special authorization number of each purchaser and the number of gallons sold to the purchaser;

(d) The claim contains a statement that the special fuel distributor has not included the amount of the tax in the sale price of the nondyed special fuel and has not collected the special fuel tax from the purchaser; and

(e) The claim contains a statement that the special fuel covered by the claim did not contain visible evidence of dye.

(3) Each claim for refund under this section must be made on a form prescribed by the department and must be for a period of not less than one week.

(4) The department may terminate the election of a special fuel distributor if the special fuel distributor fails to comply with this section.

(5) The department shall require a holder of a special authorization to submit a request at least once every two years for renewal of the special authorization upon forms supplied by the department. The department shall prescribe the information to be submitted by the special authorization holder and shall determine whether the special authorization shall continue.

(6) For any special fuel purchased under this special authorization, a special authorization holder shall retain records required under RCW 82.38.190 for refund submittals for three years following the purchase date of the fuel.

(7) Notwithstanding the special provisions provided under this section, the special authorization holder is subject to all provisions of this chapter that apply to refund claims.

NEW SECTION. Sec. 73. (1) Upon application, the department may give special authorization to interstate trucking companies licensed by the state under the international fuel tax agreement to purchase nondyed special fuel directly into the supply tanks of trucks engaged in interstate commerce or into portable slip tanks for use in trucks engaged in interstate commerce without payment of the special fuel tax. Purchases of this nondyed special fuel must be made at a card lock facility owned and operated by a special fuel distributor who is required to pay the special fuel tax on nondyed special fuel delivered to the card lock facility and has elected to sell the special fuel in this manner. The election is solely at the discretion of the special fuel distributor and must be approved by the department.

(a) Special fuel tax was paid by the distributor on the nondyed special fuel to which the claim relates and the claim is supported by an invoice or invoices showing such payment;

(b) The special fuel distributor sold the special fuel to a holder of a valid special authorization issued by the department;

(c) The claim contains the name and special authorization number of each purchaser and the number of gallons sold to the purchaser;

(e) The claim contains a statement that the special fuel covered by the claim did not contain visible evidence of dye.

(3) Each claim for refund under this section must be made on a form prescribed by the department and must be for a period of not less than one week.

(4) The department may terminate the election of a special fuel distributor if the special fuel distributor fails to comply with this section.

(7) Notwithstanding the special provisions provided under this section, the special authorization holder is subject to all provisions of this chapter that apply to refund claims.

(8) Purchases of special fuel made by interstate trucking companies pursuant to this section are subject to the recordkeeping and reporting provisions of the international fuel tax agreement.

NEW SECTION. Sec. 74. A licensee, other than a special fuel exporter, is entitled to a refund of the special fuel tax previously paid on special fuel which has been purchased from the licensee by a person who is exempt from payment of the special fuel tax imposed by this chapter. Application for the refund shall be accompanied by an invoice or proof satisfactory to the department documenting each sale wherein the purchaser was exempt from the special fuel tax. Claims for refunds shall be made under this chapter.

Sec. 75. RCW 82.38.190 and 1997 c 183 s 10 are each amended to read as follows:

(1) Claims under RCW 82.38.180 shall be filed with the department on forms prescribed by the department and shall show the date of filing and the period covered in the claim, the number of gallons of special fuel used for purposes subject to tax refund, and such other facts and information as may be required. Every such claim shall be supported by an invoice or invoices issued to or by the claimant, as may be prescribed by the department, and such other information as the department may require. The requirement to provide invoices may be waived for small refund amounts, as determined by the department. Claims for refund of special fuel tax must be for at least twenty dollars.

(2) Any amount determined to be refundable by the department under RCW 82.38.180 shall first be credited on any amounts then due and payable from ((the special fuel dealer or special fuel user or to any)) a person to whom the refund is due, and the department shall then certify the balance thereof to the state treasurer, who shall thereupon draw his or her warrant for ((such)) the certified amount to ((such special fuel dealer or special fuel user or any)) the person.

(3) No refund or credit shall be approved by the department unless a written claim for refund or credit stating the specific grounds upon which the claim is founded is filed with the department:

(a) Within thirteen months from the date of purchase or from the last day of the month following the close of the reporting period for which the refundable amount or credit is due with respect to refunds or credits allowable under RCW 82.38.180((, subsections)) (1), (2), (4), and (5), and if not filed within this period the right to refund shall be forever barred.

(b) Within ((three)) five years from the last day of the month following the close of the reporting period for which the overpayment is due with respect to the refunds or credits allowable under RCW 82.38.180(3). The department shall refund any amount paid that has been verified by the department to be more than ten dollars over the amount actually due for the reporting period. Payment credits shall not be carried forward and applied to subsequent tax returns for a person licensed under this chapter.

(4) Within thirty days after disallowing any claim in whole or in part, the department shall serve written notice of its action on the claimant.

(5) Interest shall be paid upon any refundable amount or credit due under RCW 82.38.180(3) at the rate of one percent per month from the last day of the calendar month following the reporting period for which the refundable amount or credit is due.

The interest shall be paid:

(a) In the case of a refund, to the last day of the calendar month following the date upon which the person making the overpayment, if he or she has not already filed a claim, is notified by the department that a claim may be filed or the date upon which the claim is approved by the department, whichever date is earlier.

(b) In the case of a credit, to the same date as that to which interest is computed on the tax or amount against which the credit is applied.

If the department determines that any overpayment has been made intentionally or by reason of carelessness, it shall not allow any interest thereon.

(6) The department shall pay interest of one percent on any refund payable under RCW 82.38.180 (1), (2), or (6) that is issued more than thirty state business days after the receipt of a claim properly filed and completed in accordance with this section. After the end of the thirty business-day period, additional interest shall accrue at the rate of one percent on the amount payable for each thirty calendar-day period, until the refund is issued.

(7) No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action or proceeding in any court against this state or against any officer of the state to prevent or enjoin the collection under this chapter of any tax or any amount of tax required to be collected.

Sec. 76. RCW 82.38.210 and 1979 c 40 s 15 are each amended to read as follows:

If any ((special fuel dealer, supplier, or user)) licensee liable for the remittance of tax imposed by this chapter fails to pay the same, the amount thereof, including any interest, penalty, or addition to such tax, together with any costs that may accrue in addition thereto, shall be a lien in favor of the state upon all franchises, property, and rights to property, whether real or personal, then belonging to or thereafter acquired by such person, whether such property is employed by such person for personal or business use or is in the hands of a trustee, or receiver, or assignee for the benefit of creditors, from the date the taxes were due and payable, until the amount of the lien is paid or the property sold in payment thereof. The lien shall have priority over any lien or encumbrance whatsoever, except the lien of other state taxes having priority by law, and except that such lien shall not be valid as against any bona fide mortgagee, pledgee, judgment creditor, or purchaser whose rights have attached prior to the time the department has filed and recorded notice of such lien as hereinafter provided.

In order to avail itself of the lien hereby created, the department shall file with any county auditor a statement of claim and lien specifying the amount of delinquent taxes, penalties and interest claimed by the department. From the time of filing for record, the amount required to be paid shall constitute a lien upon all franchises, property and rights to property, whether real or personal, then belonging to or thereafter acquired by such person in the county. Any lien as provided in this section may also be filed in the office of the secretary of state. Filing in the office of the secretary of state shall be of no effect, however, until the lien or copy thereof shall have been filed with the county auditor in the county where the property is located. When a lien is filed in compliance herewith and with the secretary of state, such filing shall have the same effect as if the lien had been duly filed for record in the office of the auditor in each county of this state.

Sec. 77. RCW 82.38.220 and 1994 c 262 s 26 are each amended to read as follows:

In the event any ((special fuel user or special fuel dealer)) licensee is delinquent in the payment of any obligation imposed under this chapter, the department may give notice of the amount of such delinquency by registered or certified mail to all persons having in their possession or under their control any credits or other personal property belonging to ((such user or dealer)) the licensee or owing any debts to ((such user or dealer)) the licensee, at the time of the receipt by them of such notice. Any person so notified shall neither transfer nor make other disposition of such credits, personal property, or debts until the department consents to a transfer or other disposition. All persons so notified must, within twenty days after receipt of the notice, advise the department of any and all such credits, personal property, or debts in their possession, under their control or owing by them, as the case may be, and shall immediately deliver such credits, personal property, or debts to the department or its duly authorized representative to be applied to the indebtedness involved.

Upon service, the notice and order to withhold and deliver constitutes a continuing lien on property of the taxpayer. The department shall include in the caption of the notice to withhold and deliver "continuing lien." The effective date of a notice to withhold and deliver served under this section is the date of service of the notice.

If a person fails to answer the notice within the time prescribed by this section, it is lawful for the court, upon application of the department and after the time to answer the notice has expired, to render judgment by default against the party named in the notice to withhold and deliver for the full amount claimed by the department in the notice to withhold and deliver, together with costs.

Sec. 78. RCW 82.38.230 and 1979 c 40 s 17 are each amended to read as follows:

Whenever any ((special fuel user, supplier or dealer)) licensee is delinquent in the payment of any obligation imposed hereunder, and such delinquency continues after notice and demand for payment by the department, the department shall proceed to collect the amount due from the ((user, supplier or dealer)) licensee in the following manner: The department shall seize any property subject to the lien of said excise tax, penalty, and interest and thereafter sell it at public auction to pay said obligation and any and all costs that may have been incurred on account of the seizure and sale. Notice of such intended sale and the time and place thereof shall be given to such delinquent ((user, supplier or dealer)) licensee and to all persons appearing of record to have an interest in such property. The notice shall be given in writing at least ten days before the date set for the sale by enclosing it in an envelope addressed to ((such user, supplier or dealer)) the licensee at ((his)) the licensee's address as the same appears in the records of the department and, in the case of any person appearing of record to have an interest in such property, addressed to such person at his or her last known residence or place of business, and depositing such envelope in the United States mail, postage prepaid. In addition, the notice shall be published for at least ten days before the date set for the sale in a newspaper of general circulation published in the county in which the property seized is to be sold. If there is no newspaper of general circulation in such county, the notice shall be posted in three public places in the county for a period of ten days. The notice shall contain a description of the property to be sold, together with a statement of the amount due ((hereunder)) under this chapter, the name of the ((user, supplier or dealer)) licensee and the further statement that unless such amount is paid on or before the time fixed in the notice the property will be sold in accordance with law.

The department shall then proceed to sell the property in accordance with the law and the notice, and shall deliver to the purchaser a bill of sale or deed which shall vest title in the purchaser. If upon any such sale the moneys received exceed the amount due to the state ((hereunder)) under this chapter from the delinquent ((user, supplier or dealer)) licensee, the excess shall be returned to ((such user, supplier or dealer)) the licensee and ((his)) the licensee's receipt obtained ((therefor)) for the excess. If any person having an interest in or lien upon the property has filed with the department prior to such sale, notice of such interest or lien, the department shall withhold payment of any such excess to ((such user, supplier or dealer)) the licensee pending a determination of the rights of the respective parties thereto by a court of competent jurisdiction. If for any reason the receipt of ((such user, supplier or dealer shall not be)) the licensee is not available, the department shall deposit such excess with the state treasurer as trustee for ((such user, supplier or dealer, his)) the licensee or the licensee's heirs, successors, or assigns: PROVIDED, That prior to making any seizure of property as ((herein)) provided for in this section, the department may first serve upon the ((user's, supplier's, or dealer's)) licensee's bondsman a notice of the delinquency, with a demand for the payment of the amount due.

Sec. 79. RCW 82.38.235 and 1979 c 40 s 22 are each amended to read as follows:

Whenever any assessment shall have become final in accordance with the provisions of this chapter, the department may file with the clerk of any county within the state a warrant in the amount of the assessment of taxes, penalties plus interest and a filing fee of five dollars. The clerk of the county wherein the warrant is filed shall immediately designate a superior court cause number for such warrant, and the clerk shall cause to be entered in the judgment docket under the superior court cause number assigned to the warrant, the name of the ((special fuel user, supplier or dealer)) licensee mentioned in the warrant, the amount of the tax, penalties, interest and filing fee and the date when such warrant was filed. The aggregate amount of such warrant as docketed shall become a lien upon the title to, and interest in all real and personal property of named person against whom the warrant is issued, the same as a judgment in a civil case duly docketed in the office of such clerk. Such warrant so docketed shall be sufficient to support the issuance of writs of execution and writs of garnishment in favor of the state in the manner provided by law in the case of civil judgment, wholly or partially unsatisfied. The clerk of the court shall be entitled to a filing fee of five dollars, which shall be added to the amount of the warrant.

Sec. 80. RCW 82.38.240 and 1971 ex.s. c 175 s 25 are each amended to read as follows:

Whenever any ((special fuel user or special fuel dealer)) licensee is delinquent in the payment of any obligation hereunder the department may transmit notice of such delinquency to the attorney general who shall at once proceed to collect by appropriate legal action the amount due the state from ((such user or dealer)) the licensee. In any suit brought to enforce the rights of the state hereunder, a certificate by the department showing the delinquency shall be prima facie evidence of the amount of the obligation, of the delinquency thereof and of compliance by the department with all provisions of this chapter relating to such obligation.

Sec. 81. RCW 82.38.260 and 1995 c 274 s 25 are each amended to read as follows:

The department shall enforce the provisions of this chapter, and may prescribe, adopt, and enforce reasonable rules and regulations relating to the administration and enforcement thereof. The Washington state patrol and its officers shall aid the department in the enforcement of this chapter, and, for this purpose, are declared to be peace officers, and given police power and authority throughout the state to arrest on sight any person known to have committed a violation of the provisions of this chapter.

The department or its authorized representative is hereby empowered to examine the books, papers, records and equipment of any ((special fuel dealer, special fuel user,)) licensee or any person dealing in, transporting, or storing special fuel as defined in this chapter and to investigate the character of the disposition which any person makes of such special fuel in order to ascertain and determine whether all taxes due hereunder are being properly reported and paid. The fact that such books, papers, records and equipment are not maintained in this state at the time of demand shall not cause the department to lose any right of such examination under this chapter when and where such records become available.

The department or its authorized representative is further empowered to investigate the disposition of special fuel by any person where the department has reason to believe that untaxed special fuel has been diverted to a use subject to the taxes imposed by this chapter without said taxes being paid in accordance with the requirements of this chapter.

For the purpose of enforcing the provisions of this chapter it shall be presumed that all special fuel delivered to service stations as well as all special fuel otherwise received ((by a special fuel dealer or a special fuel user)) into storage and dispensing equipment designed to fuel motor vehicles is delivered ((by the special fuel dealer or special fuel user)) into the fuel supply tanks of motor vehicles and consumed in the propulsion of motor vehicles on the highways of this state, unless the contrary is established by satisfactory evidence.

The department shall, upon request from the officials to whom are entrusted the enforcement of the special fuel tax law of any other state, the District of Columbia, the United States, its territories and possessions, the provinces or the Dominion of Canada, forward to such officials any information which he or she may have relative to the receipt, storage, delivery, sale, use, or other disposition of special fuel by any ((special fuel dealer or special fuel user, provided such)) licensee if the other state or states furnish like information to this state.

Returns required by this chapter, exclusive of schedules, itemized statements and other supporting evidence annexed thereto, shall at all reasonable times be open to the public.

NEW SECTION. Sec. 82. It is intended that the ultimate liability for the tax imposed under this chapter be upon the user, regardless of the manner in which collection of the tax is provided for in this chapter. However, this section does not apply to agreements between the department and federally recognized Indian tribes entered into under RCW 82.38.310, nor does it apply to the consent decrees entered in Confederated Tribes of the Colville Reservation v. Washington Department of Licensing, No. CS-92-248-JLQ (E.D. Wash.) and Teo v. Steffenson, No. CY-93-3050-AAM (E.D. Wash.).

NEW SECTION. Sec. 83. A special fuel distributor who incurs liability in December 1998 for the special fuel tax imposed under this chapter shall report the liability and pay the tax in January 1999 in the manner required by this chapter as it existed before January 1, 1999.

A special fuel distributor or special fuel user shall inventory all special fuel, including dyed special fuel, that is on hand or in the person's possession as of 12:01 a.m. on January 1, 1999, and is not in the bulk transfer-terminal system and shall report the results of the inventory to the department no later than the last business day of February 1999. The report of inventory must be made on a form prescribed by the department.

A special fuel distributor may pay the tax due on special fuel in inventory any time before February 28, 2000, but at least one-twelfth of the amount due must be paid by the last day of each month starting with February 1999. Payments not received in accordance with this section are late and are subject to the interest and penalty provisions of this chapter. Payments made after February 2000 are late and are subject to the interest and penalty provisions of this chapter.

A special fuel user shall pay the tax due on fuel in inventory in accordance with the filing frequency assigned to the user before the effective date of this section. Payments not received in accordance with the filing frequency are late and are subject to the interest and penalty provisions of this chapter.

NEW SECTION. Sec. 84. (1) An international fuel tax agreement licensee who meets the qualifications in subsection (2) of this section may be given special authorization by the department to purchase special fuel delivered into bulk storage without payment of the special fuel tax at the time the fuel is purchased. The special authorization applies only to full truck-trailer loads filled at a terminal rack and delivered directly to the bulk storage facilities of the special authorization holder. The licensee shall pay special fuel tax on the fuel at the time the licensee files their international fuel tax agreement tax return and accompanying schedule with the department. The accompanying schedule shall be provided in a form and manner determined by the department and shall contain information on purchases and usage of all nondyed special fuel purchased during the reporting period. In addition, by the fifteenth day of the month following the month in which fuel under the special authorization was purchased, the licensee must report to the department, the name of the seller and the number of gallons purchased for each purchase of such fuel, and any other information as the department may require.

(2) To receive or maintain special authorization under subsection (1) of this section, the following conditions regarding the international fuel tax agreement licensee must apply:

(a) During the period encompassing the four consecutive calendar quarters immediately preceding the fourth calendar quarter of the previous year, the number of gallons consumed outside the state of Washington as reported on the licensee's international fuel tax agreement tax returns must have been equal to at least twenty percent of the nondyed special fuel gallons, including fuel used on-road and off-road, purchased by the licensee in the state of Washington, as reported on the accompanying schedules required under subsection (1) of this section;

(b) The licensee must have been licensed under the provisions of the international fuel tax agreement during each of the four consecutive calendar quarters immediately preceding the fourth calendar quarter of the previous year; and

(3) A special fuel distributor who sells special fuel under the special authorization provisions of this section is not liable for the special fuel tax on the fuel. By the fifteenth day of the month following the month in which the fuel was sold, the special fuel distributor shall report to the department, the name and special authorization number of the purchaser and the number of gallons sold for each purchase of such special fuel, and any other information as the department may require. The special fuel supplier will report such sales, in a manner prescribed by the department, at the time the special fuel supplier submits the monthly tax report.

(4) A supplier selling special fuel under the provisions of this section shall not be responsible for taxes due for special fuel purchased under the provisions of this section.

(5) An international fuel tax agreement licensee who qualifies for a special authorization under this section for calendar year 1999 is not subject to the special fuel user requirements of section 83 of this act.

Sec. 85. RCW 43.05.110 and 1995 c 403 s 612 are each amended to read as follows:

The department of agriculture, fish and wildlife, health, licensing, or natural resources may issue a civil penalty provided for by law without first issuing a notice of correction if: (1) The person has previously been subject to an enforcement action for the same or similar type of violation of the same statute or rule or has been given previous notice of the same or similar type of violation of the same statute or rule; or (2) compliance is not achieved by the date established by the department in a previously issued notice of correction, if the department has responded to any request for review of such date by reaffirming the original date or establishing a new date; (3) the violation has a probability of placing a person in danger of death or bodily harm, has a probability of causing more than minor environmental harm, or has a probability of causing physical damage to the property of another in an amount exceeding one thousand dollars; or (4) the violation was committed by a business that employed fifty or more employees on at least one day in each of the preceding twelve months. In addition, the department of fish and wildlife may issue a civil penalty provided for by law without first issuing a notice of correction for a violation of any rule dealing with seasons, catch or bag limits, gear types, or geographical areas for fish or wildlife removal, reporting, or disposal.

This section does not apply to the civil penalties imposed under RCW 82.38.170(13).

Sec. 86. RCW 82.47.010 and 1991 c 173 s 2 are each amended to read as follows:

The definitions set forth in this section shall apply throughout this chapter unless the context clearly requires otherwise.

(1) "Motor vehicle fuel" has the meaning given in RCW 82.36.010(((2))).

(2) "Special fuel" has the meaning given in RCW 82.38.020(((5))).

(3) "Motor vehicle" has the meaning given in RCW 82.36.010(((1))).

Sec. 87. RCW 82.80.010 and 1991 c 339 s 12 are each amended to read as follows:

(1) Subject to the conditions of this section, any county may levy, by approval of its legislative body and a majority of the registered voters of the county voting on the proposition at a general or special election, additional excise taxes equal to ten percent of the state-wide motor vehicle fuel tax rate under RCW 82.36.025 on each gallon of motor vehicle fuel as defined in RCW 82.36.010(((2))) and on each gallon of special fuel as defined in RCW 82.38.020(((5))) sold within the boundaries of the county. Vehicles paying an annual license fee under RCW 82.38.075 are exempt from the county fuel excise tax. An election held under this section must be held not more than twelve months before the date on which the proposed tax is to be levied. The ballot setting forth the proposition shall state the tax rate that is proposed. The county's authority to levy additional excise taxes under this section includes the incorporated and unincorporated areas of the county. The additional excise taxes are subject to the same exceptions and rights of refund as applicable to other motor vehicle fuel and special fuel excise taxes levied under chapters 82.36 and 82.38 RCW. The proposed tax shall not be levied less than one month from the date the election results are certified by the county election officer. The commencement date for the levy of any tax under this section shall be the first day of January, April, July, or October.

(2) Every person subject to the tax shall pay, in addition to any other taxes provided by law, an additional excise tax to the director of licensing at the rate levied by a county exercising its authority under this section.

(3) The state treasurer shall distribute monthly to the levying county and cities contained therein the proceeds of the additional excise taxes collected under this section, after the deductions for payments and expenditures as provided in RCW 46.68.090 (1) and (2) and under the conditions and limitations provided in RCW 82.80.080.

(4) The proceeds of the additional excise taxes levied under this section shall be used strictly for transportation purposes in accordance with RCW 82.80.070.

(5) The department of licensing shall administer and collect the county fuel taxes. The department shall deduct a percentage amount, as provided by contract, for administrative, collection, refund, and audit expenses incurred. The remaining proceeds shall be remitted to the custody of the state treasurer for monthly distribution under RCW 82.80.080.

NEW SECTION. Sec. 88. The department of licensing shall adopt rules necessary to implement this act and shall seek the assistance of the fuel tax advisory committee in developing and adopting the rules.

NEW SECTION. Sec. 89. The department of licensing may enter into a fuel tax cooperative agreement with another state or Canadian province for the administration, collection, and enforcement of each state's or Canadian province's fuel taxes.

NEW SECTION. Sec. 90. The following acts or parts of acts are each repealed:

(1) RCW 82.36.030 and 1996 c 104 s 1, 1994 c 262 s 18, 1993 c 54 s 2, 1991 c 339 s 14, 1990 c 42 s 202, 1987 c 174 s 2, & 1961 c 15 s 82.36.030;

(2) RCW 82.36.038 and 1987 c 174 s 3;

(3) RCW 82.36.220 and 1963 ex.s. c 22 s 20, 1961 ex.s. c 21 s 31, & 1961 c 15 s 82.36.220;

(4) RCW 82.38.040 and 1990 c 250 s 81, 1973 1st ex.s. c 156 s 2, & 1971 ex.s. c 175 s 5;

(5) RCW 82.38.082 and 1987 c 294 s 1; and

(6) RCW 82.38.086 and 1981 c 342 s 6.

NEW SECTION. Sec. 91. (1) Sections 8 through 12, 14, 15, 29, 35, 43, and 47 through 49 of this act are each added to chapter 82.36 RCW.

(2) Sections 52 through 57, 59, 69, 72, 73, 74, 82 through 84, and 89 of this act are each added to chapter 82.38 RCW.

NEW SECTION. Sec. 92. This act takes effect January 1, 1999."

The President declared the question before the Senate to be the motion by Senator Prince that the Committee on Transportation striking amendment to Substitute House Bill No. 2659 not be adopted.

The motion by Senator Prince carried and the committee striking amendment to Substitute House Bill No. 2659 was not adopted.

MOTION

On motion of Senator Prince, the rules were suspended, Substitute House Bill No. 2659 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 Betti Sheldon, Senators Loveland, Spanel and Snyder were excused.

The President declared the question before the Senate to be the roll call on the final passage of Substitute House Bill No. 2659.

ROLL CALL

The Secretary called the roll on the final passage of Substitute House Bill No. 2659 and the bill passed the Senate by the following vote: Yeas, 45; Nays, 0; Absent, 1; Excused, 3.

Voting yea: Senators Anderson, Bauer, Benton, Brown, Deccio, Fairley, Finkbeiner, Franklin, Fraser, Goings, Hale, Hargrove, Haugen, Heavey, Hochstatter, Jacobsen, Johnson, Kline, Kohl, Long, McAuliffe, McCaslin, McDonald, Morton, Newhouse, Oke, Patterson, Prentice, Prince, Rasmussen, Roach, Rossi, Schow, Sellar, Sheldon, B., Sheldon, T., Stevens, Strannigan, Swecker, Thibaudeau, West, Winsley, Wojahn, Wood and Zarelli - 45. Absent: Senator Horn - 1. Excused: Senators Loveland, Snyder and Spanel - 3. SUBSTITUTE HOUSE BILL NO. 2659, 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. 2830 and the pending amendment by Senators Benton, Horn and Wood on page 5, after line 26, to the Committee on Government Operations striking amendment, deferred March 6, 1998.

MOTION

On motion of Senator Benton, and there being no objection, the amendment on page 5, after line 26, to the committee striking amendment was withdrawn.

The President declared the question before the Senate to be the adoption of the Committee on Government Operations striking amendment to Engrossed Substitute House Bill No. 2830.

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

MOTIONS

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

On page 1, line 2 of the title, after "commission;" strike the remainder of the title and insert "amending RCW 35.13.182, 36.70A.020, 36.70A.060, and 36.70A.070; amending 1995 c 347 s 433 (uncodified); amending 1995 c 347 s 411 (uncodified); amending 1995 c 347 s 412 (uncodified); adding new sections to chapter 35.13 RCW; and adding a new section to chapter 36.70A RCW."

On motion of Senator McCaslin, the rules were suspended, Engrossed Substitute House Bill No. 2830, 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 Engrossed Substitute House Bill No. 2830, as amended by the Senate.

ROLL CALL

The Secretary called the roll on the final passage of Engrossed Substitute House Bill No. 2830, as amended by the Senate, and the bill passed the Senate by the following vote: Yeas, 42; Nays, 1; Absent, 3; Excused, 3.

Voting yea: Senators Anderson, Bauer, Benton, Brown, Deccio, Fairley, Finkbeiner, Franklin, Fraser, Goings, Hale, Hargrove, Heavey, Hochstatter, Jacobsen, Johnson, Kline, Kohl, Long, McAuliffe, McCaslin, McDonald, Morton, Oke, Patterson, Prentice, Prince, Rasmussen, Roach, Rossi, Schow, Sheldon, B., Sheldon, T., Stevens, Strannigan, Swecker, Thibaudeau, West, Winsley, Wojahn, Wood and Zarelli - 42. Voting nay: Senator Haugen - 1. Absent: Senators Horn, Newhouse and Sellar - 3. Excused: Senators Loveland, Snyder and Spanel - 3. ENGROSSED SUBSTITUTE HOUSE BILL NO. 2830, 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.

There being no objection, the President returned the Senate to the fourth order of business.

MESSAGE FROM THE HOUSE

March 10, 1998

MR. PRESIDENT:

The House refuses to grant the request of the Senate for a conference on SUBSTITUTE SENATE BILL NO. 6253 and insists on its position and asks the Senate to concur therein, and the same are herewith transmitted.

TIMOTHY A. MARTIN, Chief Clerk

MOTION

Senator Schow moved that the Senate concur in the House amendment(s) to Substitute Senate Bill No. 6253.

Debate ensued.

The President declared the question before the Senate to be the motion by Senator Schow that the Senate concur in the House amendment(s) to Substitute Senate Bill No. 6253.

The motion by Senator Schow carried and the Senate concurred in the House amendment(s) to Substitute Senate Bill No. 6253.

The President declared the question before the Senate to be the roll call on the final passage of Substitute Senate Bill No. 6253, as amended by the House.

ROLL CALL

The Secretary called the roll on the final passage of Substitute Senate Bill No. 6253, as amended by the House, and the bill passed the Senate by the following vote: Yeas, 40; Nays, 4; Absent, 2; Excused, 3.

Voting yea: Senators Bauer, Benton, Brown, Deccio, Fairley, Finkbeiner, Franklin, Fraser, Goings, Hale, Hargrove, Haugen, Heavey, Hochstatter, Horn, Jacobsen, Johnson, Kline, Kohl, McAuliffe, McCaslin, McDonald, Morton, Patterson, Prentice, Prince, Rasmussen, Roach, Rossi, Schow, Sheldon, B., Sheldon, T., Strannigan, Swecker, Thibaudeau, West, Winsley, Wojahn, Wood and Zarelli - 40. Voting nay: Senators Anderson, Long, Oke and Stevens - 4. Absent: Senators Newhouse and Sellar - 2. Excused: Senators Loveland, Snyder and Spanel - 3. SUBSTITUTE SENATE BILL NO. 6253, as amended by the House, 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.

MESSAGE FROM HOUSE

March 4, 1998

MR. PRESIDENT:

The House has passed ENGROSSED SUBSTITUTE SENATE BILL NO. 6497 with the following amendment(s):

Strike everything after the enacting clause and insert the following:

"Sec. 1. RCW 36.70A.370 and 1991 sp.s. c 32 s 18 are each amended to read as follows:

(1) It is the public policy of the state of Washington that state agencies and local governments, in planning and carrying out governmental actions, anticipate, be sensitive to, and account for the obligations imposed by the fifth and the fourteenth amendments of the United States Constitution and Article I, section 16 of the state Constitution. It is the purpose of this section to reduce the risk of undue or inadvertent burdens on private property rights resulting from certain lawful governmental actions.

(2) The state attorney general shall establish by October 1, 1991, an orderly, consistent process, including a checklist if appropriate, that better enables state agencies and local governments to evaluate proposed regulatory or administrative actions to assure that such actions do not result in an unconstitutional taking of private property. It is not the purpose of this section to expand or reduce the scope of private property protections provided in the state and federal Constitutions. The attorney general shall review and update the process at least on an annual basis to maintain consistency with changes in case law.

(((2))) (3) For any governmental action concerning the regulation of private real property by local or state government requiring a public hearing, the local or state government shall address in its public hearing the guidelines of the state attorney general under subsection (2) of this section. The local or state government shall prepare written findings and conclusions available to the public, using the state attorney general's guidelines, on whether the governmental action may result in an unconstitutional taking of private real property.

(4) Local governments that are required or choose to plan under RCW 36.70A.040 and state agencies shall utilize the process established by subsections (((1))) (2) and (3) of this section to assure that proposed regulatory or administrative actions do not result in an unconstitutional taking of private property.

(((3) The attorney general, in consultation with the Washington state bar association, shall develop a continuing education course to implement this section.

(4))) (5) The process used by government agencies shall be protected by attorney client privilege. Nothing in this section grants a private party the right to seek judicial relief requiring compliance with the provisions of this section."

Correct the title., and the same are herewith transmitted.

TIMOTHY A. MARTIN, Chief Clerk

MOTION

Senator McCaslin moved that the Senate concur in the House amendment to Engrossed Substitute Senate Bill No. 6497.

Debate ensued.

The President declared the question before the Senate to be the motion by Senator McCaslin that the Senate concur in the House amendment to Engrossed Substitute Senate Bill No. 6497.

The motion by Senator McCaslin carried and the Senate concurred in the House amendment to Engrossed Substitute Senate Bill No. 6497.

The President declared the question before the Senate to be the roll call on the final passage of Engrossed Substitute Senate Bill No. 6497, as amended by the House.

ROLL CALL

The Secretary called the roll on the final passage of Engrossed Substitute Senate Bill No. 6497, as amended by the House, and the bill passed the Senate by the following vote: Yeas, 29; Nays, 14; Absent, 2; Excused, 4.

Voting yea: Senators Anderson, Bauer, Benton, Deccio, Finkbeiner, Goings, Hale, Hargrove, Hochstatter, Horn, Johnson, Long, McCaslin, McDonald, Morton, Oke, Rasmussen, Roach, Rossi, Schow, Sellar, Sheldon, T., Stevens, Strannigan, Swecker, West, Winsley, Wood and Zarelli - 29. Voting nay: Senators Brown, Fairley, Franklin, Fraser, Haugen, Jacobsen, Kline, Kohl, McAuliffe, Patterson, Prentice, Sheldon, B., Thibaudeau and Wojahn - 14. Absent: Senators Newhouse and Prince - 2. Excused: Senators Heavey, Loveland, Snyder and Spanel - 4. ENGROSSED SUBSTITUTE SENATE BILL NO. 6497, as amended by the House, 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 President advanced the Senate to the sixth order of business.

SECOND READING

ENGROSSED SECOND SUBSTITUTE HOUSE BILL NO. 2935, by House Committee on Appropriations (originally sponsored by Representatives Dyer, Cody, Huff and Backlund)

Adopting a new system for establishing nursing home payment rates.

The bill was read the second time.

MOTION

Senator West moved that the following Committee on Ways and Means amendment not be adopted:

Strike everything after the enacting clause and insert the following:

"Sec. 1. RCW 74.46.010 and 1980 c 177 s 1 are each amended to read as follows:

This chapter may be known and cited as the "nursing ((Homes Auditing and Cost Reimbursement Act of 1980)) facility medicaid payment system."

The purposes of this chapter are to specify the manner by which legislative appropriations for medicaid nursing facility services are to be allocated as payment rates among nursing facilities, and to set forth auditing, billing, and other administrative standards associated with payments to nursing home facilities.

Sec. 2. RCW 74.46.020 and 1995 1st sp.s. c 18 s 90 are each amended to read as follows:

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

(1) "Accrual method of accounting" means a method of accounting in which revenues are reported in the period when they are earned, regardless of when they are collected, and expenses are reported in the period in which they are incurred, regardless of when they are paid.

(2) (("Ancillary care" means those services required by the individual, comprehensive plan of care provided by qualified therapists.

(3))) "Appraisal" means the process of estimating the fair market value or reconstructing the historical cost of an asset acquired in a past period as performed by a professionally designated real estate appraiser with no pecuniary interest in the property to be appraised. It includes a systematic, analytic determination and the recording and analyzing of property facts, rights, investments, and values based on a personal inspection and inventory of the property.

(((4))) (3) "Arm's-length transaction" means a transaction resulting from good-faith bargaining between a buyer and seller who are not related organizations and have adverse positions in the market place. Sales or exchanges of nursing home facilities among two or more parties in which all parties subsequently continue to own one or more of the facilities involved in the transactions shall not be considered as arm's-length transactions for purposes of this chapter. Sale of a nursing home facility which is subsequently leased back to the seller within five years of the date of sale shall not be considered as an arm's-length transaction for purposes of this chapter.

(((5))) (4) "Assets" means economic resources of the contractor, recognized and measured in conformity with generally accepted accounting principles.

(((6))) (5) "Audit" or "department audit" means an examination of the records of a nursing facility participating in the medicaid payment system, including but not limited to: The contractor's financial and statistical records, cost reports and all supporting documentation and schedules, receivables, and resident trust funds, to be performed as deemed necessary by the department and according to department rule.

(6) "Bad debts" means amounts considered to be uncollectible from accounts and notes receivable.

(7) (("Beds" means the number of set-up beds in the facility, not to exceed the number of licensed beds.

(8))) "Beneficial owner" means:

(a) Any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares:

(i) Voting power which includes the power to vote, or to direct the voting of such ownership interest; and/or

(ii) Investment power which includes the power to dispose, or to direct the disposition of such ownership interest;

(b) Any person who, directly or indirectly, creates or uses a trust, proxy, power of attorney, pooling arrangement, or any other contract, arrangement, or device with the purpose or effect of divesting himself or herself of beneficial ownership of an ownership interest or preventing the vesting of such beneficial ownership as part of a plan or scheme to evade the reporting requirements of this chapter;

(c) Any person who, subject to ((subparagraph)) (b) of this subsection, has the right to acquire beneficial ownership of such ownership interest within sixty days, including but not limited to any right to acquire:

(i) Through the exercise of any option, warrant, or right;

(ii) Through the conversion of an ownership interest;

(iii) Pursuant to the power to revoke a trust, discretionary account, or similar arrangement; or

(iv) Pursuant to the automatic termination of a trust, discretionary account, or similar arrangement;

except that, any person who acquires an ownership interest or power specified in ((subparagraphs)) (c)(i), (ii), or (iii) of this ((subparagraph (c))) subsection with the purpose or effect of changing or influencing the control of the contractor, or in connection with or as a participant in any transaction having such purpose or effect, immediately upon such acquisition shall be deemed to be the beneficial owner of the ownership interest which may be acquired through the exercise or conversion of such ownership interest or power;

(d) Any person who in the ordinary course of business is a pledgee of ownership interest under a written pledge agreement shall not be deemed to be the beneficial owner of such pledged ownership interest until the pledgee has taken all formal steps necessary which are required to declare a default and determines that the power to vote or to direct the vote or to dispose or to direct the disposition of such pledged ownership interest will be exercised; except that:

(i) The pledgee agreement is bona fide and was not entered into with the purpose nor with the effect of changing or influencing the control of the contractor, nor in connection with any transaction having such purpose or effect, including persons meeting the conditions set forth in ((subparagraph)) (b) of this subsection; and

(ii) The pledgee agreement, prior to default, does not grant to the pledgee:

(A) The power to vote or to direct the vote of the pledged ownership interest; or

(B) The power to dispose or direct the disposition of the pledged ownership interest, other than the grant of such power(s) pursuant to a pledge agreement under which credit is extended and in which the pledgee is a broker or dealer.

(((9))) (8) "Capitalization" means the recording of an expenditure as an asset.

(((10))) (9) "Case mix" means a measure of the intensity of care and services needed by the residents of a nursing facility or a group of residents in the facility.

(10) "Case mix index" means a number representing the average case mix of a nursing facility.

(11) "Case mix weight" means a numeric score that identifies the relative resources used by a particular group of a nursing facility's residents.

(12) "Contractor" means ((an)) a person or entity ((which contracts)) licensed under chapter 18.51 RCW to operate a medicare and medicaid certified nursing facility, responsible for operational decisions, and contracting with the department to provide services to ((medical care)) medicaid recipients residing in ((a)) the facility ((and which entity is responsible for operational decisions)).

(((11))) (13) "Default case" means no initial assessment has been completed for a resident and transmitted to the department by the cut-off date, or an assessment is otherwise past due for the resident, under state and federal requirements.

(14) "Department" means the department of social and health services (DSHS) and its employees.

(((12))) (15) "Depreciation" means the systematic distribution of the cost or other basis of tangible assets, less salvage, over the estimated useful life of the assets.

(((13))) (16) "Direct care" means nursing care and related care provided to nursing facility residents. Therapy care shall not be considered part of direct care.

(17) "Direct care supplies" means medical, pharmaceutical, and other supplies required for the direct ((nursing and ancillary)) care of ((medical care recipients)) a nursing facility's residents.

(((14))) (18) "Entity" means an individual, partnership, corporation, limited liability company, or any other association of individuals capable of entering enforceable contracts.

(((15))) (19) "Equity" means the net book value of all tangible and intangible assets less the recorded value of all liabilities, as recognized and measured in conformity with generally accepted accounting principles.

(((16))) (20) "Facility" or "nursing facility" means a nursing home licensed in accordance with chapter 18.51 RCW, excepting nursing homes certified as institutions for mental diseases, or that portion of a multiservice facility licensed as a nursing home, or that portion of a hospital licensed in accordance with chapter 70.41 RCW which operates as a nursing home.

(((17))) (21) "Fair market value" means the replacement cost of an asset less observed physical depreciation on the date for which the market value is being determined.

(((18))) (22) "Financial statements" means statements prepared and presented in conformity with generally accepted accounting principles including, but not limited to, balance sheet, statement of operations, statement of changes in financial position, and related notes.

(((19))) (23) "Generally accepted accounting principles" means accounting principles approved by the financial accounting standards board (FASB).

(((20) "Generally accepted auditing standards" means auditing standards approved by the American institute of certified public accountants (AICPA).

(21))) (24) "Goodwill" means the excess of the price paid for a nursing facility business over the fair market value of all ((other)) net identifiable((,)) tangible((,)) and intangible assets acquired, as measured in accordance with generally accepted accounting principles.

(((22))) (25) "Grouper" means a computer software product that groups individual nursing facility residents into case mix classification groups based on specific resident assessment data and computer logic.

(26) "Historical cost" means the actual cost incurred in acquiring and preparing an asset for use, including feasibility studies, architect's fees, and engineering studies.

(((23))) (27) "Imprest fund" means a fund which is regularly replenished in exactly the amount expended from it.

(((24))) (28) "Joint facility costs" means any costs which represent resources which benefit more than one facility, or one facility and any other entity.

(((25))) (29) "Lease agreement" means a contract between two parties for the possession and use of real or personal property or assets for a specified period of time in exchange for specified periodic payments. Elimination (due to any cause other than death or divorce) or addition of any party to the contract, expiration, or modification of any lease term in effect on January 1, 1980, or termination of the lease by either party by any means shall constitute a termination of the lease agreement. An extension or renewal of a lease agreement, whether or not pursuant to a renewal provision in the lease agreement, shall be considered a new lease agreement. A strictly formal change in the lease agreement which modifies the method, frequency, or manner in which the lease payments are made, but does not increase the total lease payment obligation of the lessee, shall not be considered modification of a lease term.

(((26))) (30) "Medical care program" or "medicaid program" means medical assistance, including nursing care, provided under RCW 74.09.500 or authorized state medical care services.

(((27))) (31) "Medical care recipient," "medicaid recipient," or "recipient" means an individual determined eligible by the department for the services provided ((in)) under chapter 74.09 RCW.

(((28))) (32) "Minimum data set" means the overall data component of the resident assessment instrument, indicating the strengths, needs, and preferences of an individual nursing facility resident.

(33) "Net book value" means the historical cost of an asset less accumulated depreciation.

(((29))) (34) "Net invested funds" means the net book value of tangible fixed assets employed by a contractor to provide services under the medical care program, including land, buildings, and equipment as recognized and measured in conformity with generally accepted accounting principles, plus an allowance for working capital which shall be five percent of the product of the per patient day rate multiplied by the prior calendar year reported total patient days of each contractor.

(((30))) (35) "Operating lease" means a lease under which rental or lease expenses are included in current expenses in accordance with generally accepted accounting principles.

(((31))) (36) "Owner" means a sole proprietor, general or limited partners, members of a limited liability company, and beneficial interest holders of five percent or more of a corporation's outstanding stock.

(((32))) (37) "Ownership interest" means all interests beneficially owned by a person, calculated in the aggregate, regardless of the form which such beneficial ownership takes.

(((33))) (38) "Patient day" or "resident day" means a calendar day of care provided to a nursing facility resident, regardless of payment source, which will include the day of admission and exclude the day of discharge; except that, when admission and discharge occur on the same day, one day of care shall be deemed to exist. A "((client day)) medicaid day" or "recipient day" means a calendar day of care provided to a ((medical care)) medicaid recipient determined eligible by the department for services provided under chapter 74.09 RCW, subject to the same conditions regarding admission and discharge applicable to a patient day or resident day of care.

(((34))) (39) "Professionally designated real estate appraiser" means an individual who is regularly engaged in the business of providing real estate valuation services for a fee, and who is deemed qualified by a nationally recognized real estate appraisal educational organization on the basis of extensive practical appraisal experience, including the writing of real estate valuation reports as well as the passing of written examinations on valuation practice and theory, and who by virtue of membership in such organization is required to subscribe and adhere to certain standards of professional practice as such organization prescribes.

(((35))) (40) "Qualified therapist" means:

(a) ((An activities specialist who has specialized education, training, or experience as specified by the department;

(b) An audiologist who is eligible for a certificate of clinical competence in audiology or who has the equivalent education and clinical experience;

(c))) A mental health professional as defined by chapter 71.05 RCW;

(((d))) (b) A mental retardation professional who is ((either a qualified therapist or)) a therapist approved by the department who has had specialized training or one year's experience in treating or working with the mentally retarded or developmentally disabled;

(((e) A social worker who is a graduate of a school of social work;

(f))) (c) A speech pathologist who is eligible for a certificate of clinical competence in speech pathology or who has the equivalent education and clinical experience;

(((g))) (d) A physical therapist as defined by chapter 18.74 RCW;

(((h))) (e) An occupational therapist who is a graduate of a program in occupational therapy, or who has the equivalent of such education or training; and

(((i))) (f) A respiratory care practitioner certified under chapter 18.89 RCW.

(((36) "Questioned costs" means those costs which have been determined in accordance with generally accepted accounting principles but which may constitute disallowed costs or departures from the provisions of this chapter or rules and regulations adopted by the department.

(37))) (41) "Rate" or "rate allocation" means the medicaid per-patient-day payment amount for medicaid patients calculated in accordance with the allocation methodology set forth in part E of this chapter.

(42) "Real property," whether leased or owned by the contractor, means the building, allowable land, land improvements, and building improvements associated with a nursing facility.

(43) "Rebased rate" or "cost-rebased rate" means a facility-specific component rate assigned to a nursing facility for a particular rate period established on desk-reviewed, adjusted costs reported for that facility covering at least six months of a prior calendar year designated as a year to be used for cost rebasing payment rate allocations under the provisions of this chapter.

(((38))) (44) "Records" means those data supporting all financial statements and cost reports including, but not limited to, all general and subsidiary ledgers, books of original entry, and transaction documentation, however such data are maintained.

(((39))) (45) "Related organization" means an entity which is under common ownership and/or control with, or has control of, or is controlled by, the contractor.

(a) "Common ownership" exists when an entity is the beneficial owner of five percent or more ownership interest in the contractor and any other entity.

(b) "Control" exists where an entity has the power, directly or indirectly, significantly to influence or direct the actions or policies of an organization or institution, whether or not it is legally enforceable and however it is exercisable or exercised.

(((40))) (46) "Related care" means only those services that are directly related to providing direct care to nursing facility residents. These services include, but are not limited to, nursing direction and supervision, medical direction, medical records, pharmacy services, activities, and social services.

(47) "Resident assessment instrument," including federally approved modifications for use in this state, means a federally mandated, comprehensive nursing facility resident care planning and assessment tool, consisting of the minimum data set and resident assessment protocols.

(48) "Resident assessment protocols" means those components of the resident assessment instrument that use the minimum data set to trigger or flag a resident's potential problems and risk areas.

(49) "Resource utilization groups" means a case mix classification system that identifies relative resources needed to care for an individual nursing facility resident.

(50) "Restricted fund" means those funds the principal and/or income of which is limited by agreement with or direction of the donor to a specific purpose.

(((41))) (51) "Secretary" means the secretary of the department of social and health services.

(((42))) (52) "Support services" means food, food preparation, dietary, housekeeping, and laundry services provided to nursing facility residents.

(53) "Therapy care" means those services required by a nursing facility resident's comprehensive assessment and plan of care, that are provided by qualified therapists, or support personnel under their supervision, including related costs as designated by the department.

(54) "Title XIX" or "medicaid" means the 1965 amendments to the social security act, P.L. 89-07, as amended and the medicaid program administered by the department.

(((43) "Physical plant capital improvement" means a capitalized improvement that is limited to an improvement to the building or the related physical plant.))

Sec. 3. RCW 74.46.040 and 1985 c 361 s 4 are each amended to read as follows:

(1) Not later than March 31st of each year, each contractor shall submit to the department an annual cost report for the period from January 1st through December 31st of the preceding year.

(2) Not later than one hundred twenty days following the termination or assignment of a contract, the terminating or assigning contractor shall submit to the department a cost report for the period from January 1st through the date the contract was terminated or assigned.

(3) Two extensions of not more than thirty days each may be granted by the department upon receipt of a written request setting forth the circumstances which prohibit the contractor from compliance with a report due date; except, that the ((secretary)) department shall establish the grounds for extension in rule ((and regulation)). Such request must be received by the department at least ten days prior to the due date.

Sec. 4. RCW 74.46.050 and 1985 c 361 s 5 are each amended to read as follows:

(1) If the cost report is not properly completed or if it is not received by the due date, all or part of any payments due under the contract may be withheld by the department until such time as the required cost report is properly completed and received.

(2) The department may impose civil fines, or take adverse rate action against contractors and former contractors who do not submit properly completed cost reports by the applicable due date. The department is authorized to adopt rules addressing fines and adverse rate actions including procedures, conditions, and the magnitude and frequency of fines.

Sec. 5. RCW 74.46.060 and 1985 c 361 s 6 are each amended to read as follows:

(1) Cost reports shall be prepared in a standard manner and form, as determined by the department((, which shall provide for an itemized list of allowable costs and a preliminary settlement report)). Costs reported shall be determined in accordance with generally accepted accounting principles, the provisions of this chapter, and such additional rules ((and regulations as are)) established by the ((secretary)) department. In the event of conflict, rules adopted and instructions issued by the department take precedence over generally accepted accounting principles.

(2) The records shall be maintained on the accrual method of accounting and agree with or be reconcilable to the cost report. All revenue and expense accruals shall be reversed against the appropriate accounts unless they are received or paid, respectively, within one hundred twenty days after the accrual is made. However, if the contractor can document a good faith billing dispute with the supplier or vendor, the period may be extended, but only for those portions of billings subject to good faith dispute. Accruals for vacation, holiday, sick pay, payroll, and real estate taxes may be carried for longer periods, provided the contractor follows generally accepted accounting principles and pays this type of accrual when due.

Sec. 6. RCW 74.46.080 and 1985 c 361 s 7 are each amended to read as follows:

(1) All records supporting the required cost reports, as well as trust funds established by RCW 74.46.700, shall be retained by the contractor for a period of four years following the filing of such reports at a location in the state of Washington specified by the contractor. ((All records supporting the cost reports and financial statements filed with the department before May 20, 1985, shall be retained by the contractor for four years following their filing.))

(2) The department may direct supporting records to be retained for a longer period if there remain unresolved questions on the cost reports. All such records shall be made available upon demand to authorized representatives of the department, the office of the state auditor, and the United States department of health and human services.

(((2))) (3) When a contract is terminated or assigned, all payments due the terminating or assigning contractor will be withheld until accessibility and preservation of the records within the state of Washington are assured.

Sec. 7. RCW 74.46.090 and 1985 c 361 s 8 are each amended to read as follows:

The department will retain the required cost reports for a period of one year after final settlement or reconciliation, or the period required under chapter 40.14 RCW, whichever is longer. Resident assessment information and records shall be retained as provided elsewhere in statute or by department rule.

Sec. 8. RCW 74.46.100 and 1985 c 361 s 9 are each amended to read as follows:

((The principles inherent within RCW 74.46.105 and 74.46.130 are)) (1) The purposes of department audits under this chapter are to ascertain, through department audit of the financial and statistical records of the contractor's nursing facility operation, that:

(((1) To ascertain, through department audit, that the)) (a) Allowable costs for each year for each medicaid nursing facility are accurately reported((, thereby providing a valid basis for future rate determination));

(((2) To ascertain, through department audits of the cost reports, that)) (b) Cost reports ((properly)) accurately reflect the true financial condition, revenues, expenditures, equity, beneficial ownership, related party status, and records of the contractor((, particularly as they pertain to related organizations and beneficial ownership, thereby providing a valid basis for the determination of return as specified by this chapter));

(((3) To ascertain, through department audit that compliance with the accounting and auditing provisions of this chapter and the rules and regulations of the department as they pertain to these accounting and auditing provisions is proper and consistent)) (c) The contractor's revenues, expenditures, and costs of the building, land, land improvements, building improvements, and movable and fixed equipment are recorded in compliance with department requirements, instructions, and generally accepted accounting principles; and

(((4) To ascertain, through department audits, that)) (d) The responsibility of the contractor has been met in the maintenance and disbursement of patient trust funds.

(2) The department shall examine the submitted cost report, or a portion thereof, of each contractor for each nursing facility for each report period to determine if the information is correct, complete, reported in conformance with department instructions and generally accepted accounting principles, the requirements of this chapter, and rules as the department may adopt. The department shall determine the scope of the examination.

(3) If the examination finds that the cost report is incorrect or incomplete, the department may make adjustments to the reported information for purposes of establishing component rate allocations or in determining amounts to be recovered in direct care, therapy care, and support services under section 10 (3) and (4) of this act or in any component rate resulting from undocumented or misreported costs. A schedule of the adjustments shall be provided to the contractor, including dollar amount and explanations for the adjustments. Adjustments shall be subject to review if desired by the contractor under the appeals or exception procedure established by the department.

(4) Examinations of resident trust funds and receivables shall be reported separately and in accordance with the provisions of this chapter and rules adopted by the department.

(5) The contractor shall:

(a) Provide access to the nursing facility, all financial and statistical records, and all working papers that are in support of the cost report, receivables, and resident trust funds. To ensure accuracy, the department may require the contractor to submit for departmental review any underlying financial statements or other records, including income tax returns, relating to the cost report directly or indirectly;

(b) Prepare a reconciliation of the cost report with (i) applicable federal income and federal and state payroll tax returns; and (ii) the records for the period covered by the cost report;

(c) Make available to the department's auditor an individual or individuals to respond to questions and requests for information from the auditor. The designated individual or individuals shall have sufficient knowledge of the issues, operations, or functions to provide accurate and reliable information.

(6) If an examination discloses material discrepancies, undocumented costs, or mishandling of resident trust funds, the department may open or reopen one or both of the two preceding cost report or resident trust fund periods, whether examined or unexamined, for indication of similar discrepancies, undocumented costs, or mishandling of resident trust funds.

(7) Any assets, liabilities, revenues, or expenses reported as allowable that are not supported by adequate documentation in the contractor's records shall be disallowed. Documentation must show both that costs reported were incurred during the period covered by the report and were related to resident care, and that assets reported were used in the provision of resident care.

(8) When access is required at the facility or at another location in the state, the department shall notify a contractor of its intent to examine all financial and statistical records, and all working papers that are in support of the cost report, receivables, and resident trust funds.

(9) The department is authorized to assess civil fines and take adverse rate action if a contractor, or any of its employees, does not allow access to the contractor's nursing facility records.

(10) Part B of this chapter, and rules adopted by the department pursuant thereto prior to January 1, 1998, shall continue to govern the medicaid nursing facility audit process for periods prior to January 1, 1997, as if these statutes and rules remained in full force and effect.

NEW SECTION. Sec. 9. (1) The department shall reconcile medicaid resident days to billed days and medicaid payments for each medicaid nursing facility for the preceding calendar year, or for that portion of the calendar year the provider's contract was in effect.

(2) The contractor shall make any payment owed the department, determined by the process of reconciliation, by the process of settlement at the lower of cost or rate in direct care, therapy care, and support services component rate allocations, as authorized in this chapter, within sixty days after notification and demand for payment is sent to the contractor.

(3) The department shall make any payment due the contractor within sixty days after it determines the underpayment exists and notification is sent to the contractor.

(4) Interest at the rate of one percent per month accrues against the department or the contractor on an unpaid balance existing sixty days after notification is sent to the contractor. Accrued interest shall be adjusted back to the date it began to accrue if the payment obligation is subsequently revised after administrative or judicial review.

(5) The department is authorized to withhold funds from the contractor's payment for services, and to take all other actions authorized by law, to recover amounts due and payable from the contractor, including any accrued interest. Neither a timely filed request to pursue any administrative appeals or exception procedure that the department may establish in rule, nor commencement of judicial review as may be available to the contractor in law, to contest a payment obligation determination shall delay recovery from the contractor or payment to the contractor.

NEW SECTION. Sec. 10. (1) Contractors shall be required to submit with each annual nursing facility cost report a proposed settlement report showing underspending or overspending in each component rate during the cost report year on a per-resident day basis. The department shall accept or reject the proposed settlement report, explain any adjustments, and issue a revised settlement report if needed.

(2) Contractors shall not be required to refund payments made in the operations, property, and return on investment component rates in excess of the adjusted costs of providing services corresponding to these components.

(3) The facility will return to the department any overpayment amounts in each of the direct care, therapy care, and support services rate components that the department identifies following the audit and settlement procedures as described in this chapter, provided that the contractor may retain any overpayment that does not exceed 1.0% of the facility's direct care, therapy care, and support services component rate. However, no overpayments may be retained in a cost center to which savings have been shifted to cover a deficit, as provided in subsection (4) of this section. Facilities that are not in substantial compliance, as defined by federal survey regulations during the period for which settlement is being calculated, will not be allowed to retain any amount of overpayment in the facility's direct care, therapy care, and support services component rate.

(4) Determination of unused rate funds, including the amounts of direct care, therapy care, and support services to be recovered, shall be done separately for each component rate, and neither costs nor rate payments shall be shifted from one component rate or corresponding service area to another in determining the degree of underspending or recovery, if any. However, in computing a preliminary or final settlement, savings in the support services cost center may be shifted to cover a deficit in the direct care or therapy cost centers up to the amount of any savings. Not more than twenty percent of the rate in a cost center may be shifted.

(5) Total and component payment rates assigned to a nursing facility, as calculated and revised, if needed, under the provisions of this chapter and those rules as the department may adopt, shall represent the maximum payment for nursing facility services rendered to medicaid recipients for the period the rates are in effect. No increase in payment to a contractor shall result from spending above the total payment rate or in any rate component.

(6) RCW 74.46.150 through 74.46.180, and rules adopted by the department prior to the effective date of this section, shall continue to govern the medicaid settlement process for periods prior to October 1, 1998, as if these statutes and rules remained in full force and effect.

(7) For calendar year 1998, the department shall calculate split settlements covering January 1, 1998, through September 30, 1998, and October 1, 1998, through December 31, 1998. For the period beginning October 1, 1998, rules specified in this chapter shall apply. The department shall, by rule, determine the division of calendar year 1998 adjusted costs for settlement purposes.

Sec. 11. RCW 74.46.190 and 1995 1st sp.s. c 18 s 96 are each amended to read as follows:

(1) The substance of a transaction will prevail over its form.

(2) All documented costs which are ordinary, necessary, related to care of medical care recipients, and not expressly unallowable under this chapter or department rule, are to be allowable. Costs of providing ((ancillary)) therapy care are allowable, subject to any applicable ((cost center)) limit contained in this chapter, provided documentation establishes the costs were incurred for medical care recipients and other sources of payment to which recipients may be legally entitled, such as private insurance or medicare, were first fully utilized.

(3) ((Costs applicable to services, facilities, and supplies furnished to the provider by related organizations are allowable but at the cost to the related organization, provided they do not exceed the price of comparable services, facilities, or supplies that could be purchased elsewhere.

(4) Beginning January 1, 1985,)) The payment for property usage is to be independent of ownership structure and financing arrangements.

(((5) Beginning July 1, 1995,)) (4) Allowable costs shall not include costs reported by a ((nursing care provider)) contractor for a prior period to the extent such costs, due to statutory exemption, will not be incurred by the nursing facility in the period to be covered by the rate.

(5) Any costs deemed allowable under this chapter are subject to the provisions of section 18 of this act. The allowability of a cost shall not be construed as creating a legal right or entitlement to reimbursement of the cost.

Sec. 12. RCW 74.46.220 and 1980 c 177 s 22 are each amended to read as follows:

(1) Costs applicable to services, facilities, and supplies furnished by a related organization to the contractor shall be allowable only to the extent they do not exceed the lower of the cost to the related organization or the price of comparable services, facilities, or supplies purchased elsewhere.

(2) Documentation of costs to the related organization shall be made available to the ((auditor at the time and place the records relating to the entity are audited)) department. Payments to or for the benefit of the related organization will be disallowed where the cost to the related organization cannot be documented.

Sec. 13. RCW 74.46.230 and 1993 sp.s. c 13 s 3 are each amended to read as follows:

(1) The necessary and ordinary one-time expenses directly incident to the preparation of a newly constructed or purchased building by a contractor for operation as a licensed facility shall be allowable costs. These expenses shall be limited to start-up and organizational costs incurred prior to the admission of the first patient.

(2) Start-up costs shall include, but not be limited to, administrative and nursing salaries, utility costs, taxes, insurance, repairs and maintenance, and training; except, that they shall exclude expenditures for capital assets. These costs will be allowable in the ((administrative)) operations cost center if they are amortized over a period of not less than sixty months beginning with the month in which the first patient is admitted for care.

(3) Organizational costs are those necessary, ordinary, and directly incident to the creation of a corporation or other form of business of the contractor including, but not limited to, legal fees incurred in establishing the corporation or other organization and fees paid to states for incorporation; except, that they do not include costs relating to the issuance and sale of shares of capital stock or other securities. Such organizational costs will be allowable in the ((administrative)) operations cost center if they are amortized over a period of not less than sixty months beginning with the month in which the first patient is admitted for care.

Sec. 14. RCW 74.46.270 and 1983 1st ex.s. c 67 s 13 are each amended to read as follows:

(1) The contractor shall disclose to the department:

(a) The nature and purpose of all costs which represent allocations of joint facility costs; and

(b) The methodology of the allocation utilized.

(2) Such disclosure shall demonstrate that:

(a) The services involved are necessary and nonduplicative; and

(b) Costs are allocated in accordance with benefits received from the resources represented by those costs.

(3) Such disclosure shall be made not later than September ((30, 1980,)) 30th for the following calendar year ((and not later than September 30th for each year thereafter)); except that a new contractor shall submit the first year's disclosure ((together with the submissions required by RCW 74.46.670. Where a contractor will make neither a change in the joint costs to be incurred nor in the allocation methodology, the contractor may certify that no change will be made in lieu of the disclosure required in subsection (1) of this section)) at least sixty days prior to the date the new contract becomes effective.

(4) The department shall ((approve such methodology not later than)) by December 31st, ((1980, and not later than December 31st for each year thereafter)) for all disclosures that are complete and timely submitted, either approve or reject the disclosure. The department may request additional information or clarification.

(5) Acceptance of a disclosure or approval of a joint cost methodology by the department may not be construed as a determination that the allocated costs are allowable in whole or in part. However, joint facility costs not disclosed, allocated, and reported in conformity with this section and department rules are unallowable.

(6) An approved methodology may be revised or amended subject to approval as provided in rules and regulations adopted by the department.

Sec. 15. RCW 74.46.280 and 1993 sp.s. c 13 s 4 are each amended to read as follows:

(1) Management fees will be allowed only if:

(a) A written management agreement both creates a principal/agent relationship between the contractor and the manager, and sets forth the items, services, and activities to be provided by the manager; and

(b) Documentation demonstrates that the services contracted for were actually delivered.

(2) To be allowable, fees must be for necessary, nonduplicative services.

(3) A management fee paid to or for the benefit of a related organization will be allowable to the extent it does not exceed the lower of the actual cost to the related organization of providing necessary services related to patient care under the agreement or the cost of comparable services purchased elsewhere. Where costs to the related organization represent joint facility costs, the measurement of such costs shall comply with RCW 74.46.270.

(4) A copy of the agreement must be received by the department at least sixty days before it is to become effective. A copy of any amendment to a management agreement must also be received by the department at least thirty days in advance of the date it is to become effective. Failure to meet these deadlines will result in the unallowability of cost incurred more than sixty days prior to submitting a management agreement and more than thirty days prior to submitting an amendment.

(5) The scope of services to be performed under a management agreement cannot be so extensive that the manager or managing entity is substituted for the contractor in fact, substantially relieving the contractor/licensee of responsibility for operating the facility.

Sec. 16. RCW 74.46.300 and 1980 c 177 s 30 are each amended to read as follows:

Rental or lease costs under arm's-length operating leases of office equipment shall be allowable to the extent the cost is necessary and ordinary. The department may adopt rules to limit the allowability of office equipment leasing expenses.

Sec. 17. RCW 74.46.410 and 1995 1st sp.s. c 18 s 97 are each amended to read as follows:

(1) Costs will be unallowable if they are not documented, necessary, ordinary, and related to the provision of care services to authorized patients.

(2) Unallowable costs include, but are not limited to, the following:

(a) Costs of items or services not covered by the medical care program. Costs of such items or services will be unallowable even if they are indirectly reimbursed by the department as the result of an authorized reduction in patient contribution;

(b) Costs of services and items provided to recipients which are covered by the department's medical care program but not included in ((care services)) the medicaid per-resident day payment rate established by the department under this chapter;

(c) Costs associated with a capital expenditure subject to section 1122 approval (part 100, Title 42 C.F.R.) if the department found it was not consistent with applicable standards, criteria, or plans. If the department was not given timely notice of a proposed capital expenditure, all associated costs will be unallowable up to the date they are determined to be reimbursable under applicable federal regulations;

(d) Costs associated with a construction or acquisition project requiring certificate of need approval, or exemption from the requirements for certificate of need for the replacement of existing nursing home beds, pursuant to chapter 70.38 RCW if such approval or exemption was not obtained;

(e) Interest costs other than those provided by RCW 74.46.290 on and after January 1, 1985;

(f) Salaries or other compensation of owners, officers, directors, stockholders, partners, principals, participants, and others associated with the contractor or its home office, including all board of directors' fees for any purpose, except reasonable compensation paid for service related to patient care;

(g) Costs in excess of limits or in violation of principles set forth in this chapter;

(h) Costs resulting from transactions or the application of accounting methods which circumvent the principles of the ((cost-related reimbursement)) payment system set forth in this chapter;

(i) Costs applicable to services, facilities, and supplies furnished by a related organization in excess of the lower of the cost to the related organization or the price of comparable services, facilities, or supplies purchased elsewhere;

(j) Bad debts of non-Title XIX recipients. Bad debts of Title XIX recipients are allowable if the debt is related to covered services, it arises from the recipient's required contribution toward the cost of care, the provider can establish that reasonable collection efforts were made, the debt was actually uncollectible when claimed as worthless, and sound business judgment established that there was no likelihood of recovery at any time in the future;

(k) Charity and courtesy allowances;

(l) Cash, assessments, or other contributions, excluding dues, to charitable organizations, professional organizations, trade associations, or political parties, and costs incurred to improve community or public relations;

(m) Vending machine expenses;

(n) Expenses for barber or beautician services not included in routine care;

(o) Funeral and burial expenses;

(p) Costs of gift shop operations and inventory;

(q) Personal items such as cosmetics, smoking materials, newspapers and magazines, and clothing, except those used in patient activity programs;

(r) Fund-raising expenses, except those directly related to the patient activity program;

(s) Penalties and fines;

(t) Expenses related to telephones, televisions, radios, and similar appliances in patients' private accommodations;

(u) Federal, state, and other income taxes;

(v) Costs of special care services except where authorized by the department;

(w) Expenses of an employee benefit not in fact made available to all employees on an equal or fair basis, for example, key-man insurance and other insurance or retirement plans ((not made available to all employees));

(x) Expenses of profit-sharing plans;

(y) Expenses related to the purchase and/or use of private or commercial airplanes which are in excess of what a prudent contractor would expend for the ordinary and economic provision of such a transportation need related to patient care;

(z) Personal expenses and allowances of owners or relatives;

(aa) All expenses of maintaining professional licenses or membership in professional organizations;

(bb) Costs related to agreements not to compete;

(cc) Amortization of goodwill, lease acquisition, or any other intangible asset, whether related to resident care or not, and whether recognized under generally accepted accounting principles or not;

(dd) Expenses related to vehicles which are in excess of what a prudent contractor would expend for the ordinary and economic provision of transportation needs related to patient care;

(ee) Legal and consultant fees in connection with a fair hearing against the department where a decision is rendered in favor of the department or where otherwise the determination of the department stands;

(ff) Legal and consultant fees of a contractor or contractors in connection with a lawsuit against the department;

(gg) Lease acquisition costs ((and)), goodwill, the cost of bed rights, or any other ((intangibles not related to patient care)) intangible assets;

(hh) All rental or lease costs other than those provided in RCW 74.46.300 on and after January 1, 1985;

(ii) Postsurvey charges incurred by the facility as a result of subsequent inspections under RCW 18.51.050 which occur beyond the first postsurvey visit during the certification survey calendar year;

(jj) Compensation paid for any purchased nursing care services, including registered nurse, licensed practical nurse, and nurse assistant services, obtained through service contract arrangement in excess of the amount of compensation paid for such hours of nursing care service had they been paid at the average hourly wage, including related taxes and benefits, for in-house nursing care staff of like classification at the same nursing facility, as reported in the most recent cost report period;

(kk) For all partial or whole rate periods after July 17, 1984, costs of land and depreciable assets that cannot be reimbursed under the Deficit Reduction Act of 1984 and implementing state statutory and regulatory provisions;

(ll) Costs reported by the contractor for a prior period to the extent such costs, due to statutory exemption, will not be incurred by the contractor in the period to be covered by the rate;

(mm) Costs of outside activities, for example, costs allocated to the use of a vehicle for personal purposes or related to the part of a facility leased out for office space;

(nn) Travel expenses outside the states of Idaho, Oregon, and Washington and the province of British Columbia. However, travel to or from the home or central office of a chain organization operating a nursing facility is allowed whether inside or outside these areas if the travel is necessary, ordinary, and related to resident care;

(oo) Moving expenses of employees in the absence of demonstrated, good-faith effort to recruit within the states of Idaho, Oregon, and Washington, and the province of British Columbia;

(pp) Depreciation in excess of four thousand dollars per year for each passenger car or other vehicle primarily used by the administrator, facility staff, or central office staff;

(qq) Costs for temporary health care personnel from a nursing pool not registered with the secretary of the department of health;

(rr) Payroll taxes associated with compensation in excess of allowable compensation of owners, relatives, and administrative personnel;

(ss) Costs and fees associated with filing a petition for bankruptcy;

(tt) All advertising or promotional costs, except reasonable costs of help wanted advertising;

(uu) Outside consultation expenses required to meet department-required minimum data set completion proficiency;

(vv) Interest charges assessed by any department or agency of this state for failure to make a timely refund of overpayments and interest expenses incurred for loans obtained to make the refunds;

(ww) All home office or central office costs, whether on or off the nursing facility premises, and whether allocated or not to specific services, in excess of the median of those adjusted costs for all facilities reporting such costs for the most recent report period; and

(xx) Tax expenses that a nursing facility has never incurred.

NEW SECTION. Sec. 18. A new section, to be codified as RCW 74.46.421, is added to chapter 74.46 RCW to read as follows:

(1) The purpose of part E of this chapter is to determine nursing facility medicaid payment rates that, in the aggregate for all participating nursing facilities, are in accordance with the biennial appropriations act.

(2)(a) The department shall use the nursing facility medicaid payment rate methodologies described in this chapter to determine initial component rate allocations for each medicaid nursing facility.

(b) The initial component rate allocations shall be subject to adjustment as provided in this section in order to assure that the state-wide average payment rate to nursing facilities is less than or equal to the state-wide average payment rate specified in the biennial appropriations act.

(3) Nothing in this chapter shall be construed as creating a legal right or entitlement to any payment that (a) has not been adjusted under this section or (b) would cause the state-wide average payment rate to exceed the state-wide average payment rate specified in the biennial appropriations act.

(4)(a) The state-wide average payment rate for any state fiscal year under the nursing facility medicaid payment system, weighted by patient days, shall not exceed the annual state-wide weighted average nursing facility payment rate identified for that fiscal year in the biennial appropriations act.

(b) If the department determines that the weighted average nursing facility payment rate calculated in accordance with this chapter is likely to exceed the weighted average nursing facility payment rate identified in the biennial appropriations act, then the department shall adjust all nursing facility payment rates proportional to the amount by which the weighted average rate allocations would otherwise exceed the budgeted rate amount. Any such adjustments shall only be made prospectively, not retrospectively, and shall be applied proportionately to each component rate allocation for each facility.

NEW SECTION. Sec. 19. (1) Effective October 1, 1998, nursing facility medicaid payment rate allocations shall be facility-specific and shall have six components: Direct care, therapy care, support services, operations, property, and return on investment. The department shall establish and adjust each of these components, as provided in this section and elsewhere in this chapter, for each medicaid nursing facility in this state.

(2) All component rate allocations shall be based upon a minimum facility occupancy of eighty-five percent of licensed beds, regardless of how many beds are set up or in use. That portion of a facility's costs associated with or calculated on an occupancy lower than eighty-five percent shall be unallowable.

(3) Information and data sources used in determining medicaid payment rate allocations, including formulas, procedures, cost report periods, resident assessment instrument formats, resident assessment methodologies, and resident classification and case mix weighting methodologies, may be substituted or altered from time to time as determined by the department.

(4)(a) Direct care component rate allocations shall be established using adjusted cost report data covering at least six months. Adjusted cost report data from 1996 will be used for October 1, 1998, through June 30, 2001, direct care component rate allocations; adjusted cost report data from 1999 will be used for July 1, 2001, through June 30, 2004, direct care component rate allocations.

(b) Direct care component rate allocations based on 1996 cost report data shall be adjusted annually for economic trends and conditions by a factor or factors defined in the biennial appropriations act. A different economic trends and conditions adjustment factor or factors may be defined in the biennial appropriations act for facilities whose direct care component rate is set equal to their adjusted June 30, 1998, rate, as provided in section 25(5)(k) of this act.

(c) Direct care component rate allocations based on 1999 cost report data shall be adjusted annually for economic trends and conditions by a factor or factors defined in the biennial appropriations act. A different economic trends and conditions adjustment factor or factors may be defined in the biennial appropriations act for facilities whose direct care component rate is set equal to their adjusted June 30, 1998, rate, as provided in section 25(5)(k) of this act.

(5)(a) Therapy care component rate allocations shall be established using adjusted cost report data covering at least six months. Adjusted cost report data from 1996 will be used for October 1, 1998, through June 30, 2001, therapy care component rate allocations; adjusted cost report data from 1999 will be used for July 1, 2001, through June 30, 2004, therapy care component rate allocations.

(b) Therapy care component rate allocations shall be adjusted annually for economic trends and conditions by a factor or factors defined in the biennial appropriations act.

(6)(a) Support services component rate allocations shall be established using adjusted cost report data covering at least six months. Adjusted cost report data from 1996 shall be used for October 1, 1998, through June 30, 2001, support services component rate allocations; adjusted cost report data from 1999 shall be used for July 1, 2001, through June 30, 2004, support services component rate allocations.

(b) Support services component rate allocations shall be adjusted annually for economic trends and conditions by a factor or factors defined in the biennial appropriations act.

(7)(a) Operations component rate allocations shall be established using adjusted cost report data covering at least six months. Adjusted cost report data from 1996 shall be used for October 1, 1998, through June 30, 2001, operations component rate allocations; adjusted cost report data from 1999 shall be used for July 1, 2001, through June 30, 2004, operations component rate allocations.

(b) Operations component rate allocations shall be adjusted annually for economic trends and conditions by a factor or factors defined in the biennial appropriations act.

(8) For July 1, 1998, through September 30, 1998, a facility's property and return on investment component rates shall be the facility's June 30, 1998, property and return on investment component rates, without increase. For October 1, 1998, through June 30, 1999, a facility's property and return on investment component rates shall be rebased utilizing 1997 adjusted cost report data covering at least six months of data.

(9) Total payment rates under the nursing facility medicaid payment system shall not exceed facility rates charged to the general public for comparable services.

(10) Medicaid contractors shall pay to all facility staff a minimum wage of the greater of five dollars and fifteen cents per hour or the federal minimum wage.

(11) The department shall establish in rule procedures, principles, and conditions for determining component rate allocations for facilities in circumstances not directly addressed by this chapter, including but not limited to: The need to prorate inflation for partial-period cost report data, newly constructed facilities, existing facilities entering the medicaid program for the first time or after a period of absence from the program, existing facilities with expanded new bed capacity, existing medicaid facilities following a change of ownership of the nursing facility business, facilities banking beds or converting beds back into service, facilities having less than six months of either resident assessment, cost report data, or both, under the current contractor prior to rate setting, and other circumstances.

(12) The department shall establish in rule procedures, principles, and conditions, including necessary threshold costs, for adjusting rates to reflect capital improvements or new requirements imposed by the department or the federal government. Any such rate adjustments are subject to the provisions of section 18 of this act.

NEW SECTION. Sec. 20. The department shall disclose to any member of the public all rate-setting information consistent with requirements of state and federal laws.

Sec. 21. RCW 74.46.475 and 1985 c 361 s 13 are each amended to read as follows:

(1) The department shall analyze the submitted cost report or a portion thereof of each contractor for each report period to determine if the information is correct, complete, ((and)) reported in conformance with department instructions and generally accepted accounting principles, the requirements of this chapter, and such rules ((and regulations)) as the ((secretary)) department may adopt. If the analysis finds that the cost report is incorrect or incomplete, the department may make adjustments to the reported information for purposes of establishing ((reimbursement)) payment rate((s)) allocations. A schedule of such adjustments shall be provided to contractors and shall include an explanation for the adjustment and the dollar amount of the adjustment. Adjustments shall be subject to review and appeal as provided in this chapter.

(2) The department shall accumulate data from properly completed cost reports, in addition to assessment data on each facility's resident population characteristics, for use in:

(a) Exception profiling; and

(b) Establishing rates.

(3) The department may further utilize such accumulated data for analytical, statistical, or informational purposes as necessary.

NEW SECTION. Sec. 22. (1) The department shall employ the resource utilization group III case mix classification methodology. The department shall use the forty-four group index maximizing model for the resource utilization group III grouper version 5.10, but the department may revise or update the classification methodology to reflect advances or refinements in resident assessment or classification, subject to federal requirements.

(2) A default case mix group shall be established for cases in which the resident dies or is discharged for any purpose prior to completion of the resident's initial assessment. The default case mix group and case mix weight for these cases shall be designated by the department.

(3) A default case mix group may also be established for cases in which there is an untimely assessment for the resident. The default case mix group and case mix weight for these cases shall be designated by the department.

NEW SECTION. Sec. 23. (1) Each case mix classification group shall be assigned a case mix weight. The case mix weight for each resident of a nursing facility for each calendar quarter shall be based on data from resident assessment instruments completed for the resident and weighted by the number of days the resident was in each case mix classification group. Days shall be counted as provided in this section.

(2) The case mix weights shall be based on the average minutes per registered nurse, licensed practical nurse, and certified nurse aide, for each case mix group, and using the health care financing administration of the United States department of health and human services 1995 nursing facility staff time measurement study stemming from its multistate nursing home case mix and quality demonstration project. Those minutes shall be weighted by state-wide ratios of registered nurse to certified nurse aide, and licensed practical nurse to certified nurse aide, wages, including salaries and benefits, which shall be based on 1995 cost report data for this state.

(3) The case mix weights shall be determined as follows:

(a) Set the certified nurse aide wage weight at 1.000 and calculate wage weights for registered nurse and licensed practical nurse average wages by dividing the certified nurse aide average wage into the registered nurse average wage and licensed practical nurse average wage;

(b) Calculate the total weighted minutes for each case mix group in the resource utilization group III classification system by multiplying the wage weight for each worker classification by the average number of minutes that classification of worker spends caring for a resident in that resource utilization group III classification group, and summing the products;

(c) Assign a case mix weight of 1.000 to the resource utilization group III classification group with the lowest total weighted minutes and calculate case mix weights by dividing the lowest group's total weighted minutes into each group's total weighted minutes and rounding weight calculations to the third decimal place.

(4) The case mix weights in this state may be revised if the health care financing administration updates its nursing facility staff time measurement studies. The case mix weights shall be revised, but only when direct care component rates are cost-rebased as provided in subsection (5) of this section, to be effective on the July 1st effective date of each cost-rebased direct care component rate. However, the department may revise case mix weights more frequently if, and only if, significant variances in wage ratios occur among direct care staff in the different caregiver classifications identified in this section.

(5) Case mix weights shall be revised when direct care component rates are cost-rebased every three years as provided in section 19(4)(a) of this act.

NEW SECTION. Sec. 24. (1) From individual case mix weights for the applicable quarter, the department shall determine two average case mix indexes for each medicaid nursing facility, one for all residents in the facility, known as the facility average case mix index, and one for medicaid residents, known as the medicaid average case mix index.

(2)(a) In calculating a facility's two average case mix indexes for each quarter, the department shall include all residents or medicaid residents, as applicable, who were physically in the facility during the quarter in question (January 1st through March 31st, April 1st through June 30th, July 1st through September 30th, or October 1st through December 31st).

(b) The facility average case mix index shall exclude all default cases as defined in this chapter. However, the medicaid average case mix index shall include all default cases.

(3) Both the facility average and the medicaid average case mix indexes shall be determined by multiplying the case mix weight of each resident, or each medicaid resident, as applicable, by the number of days, as defined in this section and as applicable, the resident was at each particular case mix classification or group, and then averaging.

(4)(a) In determining the number of days a resident is classified into a particular case mix group, the department shall determine a start date for calculating case mix grouping periods as follows:

(i) If a resident's initial assessment for a first stay or a return stay in the nursing facility is timely completed and transmitted to the department by the cutoff date under state and federal requirements and as described in subsection (5) of this section, the start date shall be the later of either the first day of the quarter or the resident's facility admission or readmission date;

(ii) If a resident's significant change, quarterly, or annual assessment is timely completed and transmitted to the department by the cutoff date under state and federal requirements and as described in subsection (5) of this section, the start date shall be the date the assessment is completed;

(iii) If a resident's significant change, quarterly, or annual assessment is not timely completed and transmitted to the department by the cutoff date under state and federal requirements and as described in subsection (5) of this section, the start date shall be the due date for the assessment.

(b) If state or federal rules require more frequent assessment, the same principles for determining the start date of a resident's classification in a particular case mix group set forth in subsection (4)(a) of this section shall apply.

(c) In calculating the number of days a resident is classified into a particular case mix group, the department shall determine an end date for calculating case mix grouping periods as follows:

(i) If a resident is discharged before the end of the applicable quarter, the end date shall be the day before discharge;

(ii) If a resident is not discharged before the end of the applicable quarter, the end date shall be the last day of the quarter;

(iii) If a new assessment is due for a resident or a new assessment is completed and transmitted to the department, the end date of the previous assessment shall be the earlier of either the day before the assessment is due or the day before the assessment is completed by the nursing facility.

(5) The cutoff date for the department to use resident assessment data, for the purposes of calculating both the facility average and the medicaid average case mix indexes, and for establishing and updating a facility's direct care component rate, shall be one month and one day after the end of the quarter for which the resident assessment data applies.

(6) A threshold of ninety percent, as described and calculated in this subsection, shall be used to determine the case mix index each quarter. The threshold shall also be used to determine which facilities' costs per case mix unit are included in determining the ceiling, floor, and price. If the facility does not meet the ninety percent threshold, the department may use an alternate case mix index to determine the facility average and medicaid average case mix indexes for the quarter. The threshold is a count of unique minimum data set assessments, and it shall include resident assessment instrument tracking forms for residents discharged prior to completing an initial assessment. The threshold is calculated by dividing the count of unique minimum data set assessments by the average census for each facility. A daily census shall be reported by each nursing facility as it transmits assessment data to the department. The department shall compute a quarterly average census based on the daily census. If no census has been reported by a facility during a specified quarter, then the department shall use the facility's licensed beds as the denominator in computing the threshold.

(7)(a) Although the facility average and the medicaid average case mix indexes shall both be calculated quarterly, the facility average case mix index will be used only every three years in combination with cost report data as specified by sections 19 and 25 of this act, to establish a facility's allowable cost per case mix unit. A facility's medicaid average case mix index shall be used to update a nursing facility's direct care component rate quarterly.

(b) The facility average case mix index used to establish each nursing facility's direct care component rate shall be based on an average of calendar quarters of the facility's average case mix indexes.

(i) For October 1, 1998, direct care component rates, the department shall use an average of facility average case mix indexes from the four calendar quarters of 1997.

(ii) For July 1, 2001, direct care component rates, the department shall use an average of facility average case mix indexes from the four calendar quarters of 1999.

(c) The medicaid average case mix index used to update or recalibrate a nursing facility's direct care component rate quarterly shall be from the calendar quarter commencing six months prior to the effective date of the quarterly rate. For example, October 1, 1998, through December 31, 1998, direct care component rates shall utilize case mix averages from the April 1, 1998, through June 30, 1998, calendar quarter, and so forth.

NEW SECTION. Sec. 25. (1) The direct care component rate allocation corresponds to the provision of nursing care for one resident of a nursing facility for one day, including direct care supplies. Therapy services and supplies, which correspond to the therapy care component rate, shall be excluded. The direct care component rate includes elements of case mix determined consistent with the principles of this section and other applicable provisions of this chapter.

(2) Beginning October 1, 1998, the department shall determine and update quarterly for each nursing facility serving medicaid residents a facility-specific per-resident day direct care component rate allocation, to be effective on the first day of each calendar quarter. In determining direct care component rates the department shall utilize, as specified in this section, minimum data set resident assessment data for each resident of the facility, as transmitted to, and if necessary corrected by, the department in the resident assessment instrument format approved by federal authorities for use in this state.

(3) The department may question the accuracy of assessment data for any resident and utilize corrected or substitute information, however derived, in determining direct care component rates. The department is authorized to impose civil fines and to take adverse rate actions against a contractor, as specified by the department in rule, in order to obtain compliance with resident assessment and data transmission requirements and to ensure accuracy.

(4) Cost report data used in setting direct care component rate allocations shall be 1996 and 1999, for rate periods as specified in section 19(4)(a) of this act.

(5) Beginning October 1, 1998, the department shall rebase each nursing facility's direct care component rate allocation as described in section 19 of this act, adjust its direct care component rate allocation for economic trends and conditions as described in section 19 of this act, and update its medicaid average case mix index, consistent with the following:

(a) Reduce total direct care costs reported by each nursing facility for the applicable cost report period specified in section 19(4)(a) of this act to reflect any department adjustments, and to eliminate reported resident therapy costs and adjustments, in order to derive the facility's total allowable direct care cost;

(b) Divide each facility's total allowable direct care cost by its adjusted resident days for the same report period, increased if necessary to a minimum occupancy of eighty-five percent; that is, the greater of actual or imputed occupancy at eighty-five percent of licensed beds, to derive the facility's allowable direct care cost per resident day;

(c) Adjust the facility's per resident day direct care cost by the applicable factor specified in section 19(4) (b) and (c) of this act to derive its adjusted allowable direct care cost per resident day;

(d) Divide each facility's adjusted allowable direct care cost per resident day by the facility average case mix index for the applicable quarters specified by section 24(7)(b) of this act to derive the facility's allowable direct care cost per case mix unit;

(e) Divide nursing facilities into two peer groups: Those located in metropolitan statistical areas as determined and defined by the United States office of management and budget or other appropriate agency or office of the federal government, and those not located in a metropolitan statistical area;

(f) Array separately the allowable direct care cost per case mix unit for all metropolitan statistical area and for all nonmetropolitan statistical area facilities, and determine the median allowable direct care cost per case mix unit for each peer group;

(g) Except as provided in (k) of this subsection, from October 1, 1998, through June 30, 2000, determine each facility's quarterly direct care component rate as follows:

(i) Any facility whose allowable cost per case mix unit is less than eighty-five percent of the facility's peer group median established under (f) of this subsection shall be assigned a cost per case mix unit equal to eighty-five percent of the facility's peer group median, and shall have a direct care component rate allocation equal to the facility's assigned cost per case mix unit multiplied by that facility's medicaid average case mix index from the applicable quarter specified in section 24(7)(c) of this act;

(ii) Any facility whose allowable cost per case mix unit is greater than one hundred fifteen percent of the peer group median established under (f) of this subsection shall be assigned a cost per case mix unit equal to one hundred fifteen percent of the peer group median, and shall have a direct care component rate allocation equal to the facility's assigned cost per case mix unit multiplied by that facility's medicaid average case mix index from the applicable quarter specified in section 24(7)(c) of this act;

(iii) Any facility whose allowable cost per case mix unit is between eighty-five and one hundred fifteen percent of the peer group median established under (f) of this subsection shall have a direct care component rate allocation equal to the facility's allowable cost per case mix unit multiplied by that facility's medicaid average case mix index from the applicable quarter specified in section 24(7)(c) of this act;

(h) Except as provided in (k) of this subsection, from July 1, 2000, through June 30, 2002, determine each facility's quarterly direct care component rate as follows:

(i) Any facility whose allowable cost per case mix unit is less than ninety percent of the facility's peer group median established under (f) of this subsection shall be assigned a cost per case mix unit equal to ninety percent of the facility's peer group median, and shall have a direct care component rate allocation equal to the facility's assigned cost per case mix unit multiplied by that facility's medicaid average case mix index from the applicable quarter specified in section 24(7)(c) of this act;

(ii) Any facility whose allowable cost per case mix unit is greater than one hundred ten percent of the peer group median established under (f) of this subsection shall be assigned a cost per case mix unit equal to one hundred ten percent of the peer group median, and shall have a direct care component rate allocation equal to the facility's assigned cost per case mix unit multiplied by that facility's medicaid average case mix index from the applicable quarter specified in section 24(7)(c) of this act;

(iii) Any facility whose allowable cost per case mix unit is between ninety and one hundred ten percent of the peer group median established under (f) of this subsection shall have a direct care component rate allocation equal to the facility's allowable cost per case mix unit multiplied by that facility's medicaid average case mix index from the applicable quarter specified in section 24(7)(c) of this act;

(i) From July 1, 2002, through June 30, 2004, determine each facility's quarterly direct care component rate as follows:

(i) Any facility whose allowable cost per case mix unit is less than ninety-five percent of the facility's peer group median established under (f) of this subsection shall be assigned a cost per case mix unit equal to ninety-five percent of the facility's peer group median, and shall have a direct care component rate allocation equal to the facility's assigned cost per case mix unit multiplied by that facility's medicaid average case mix index from the applicable quarter specified in section 24(7)(c) of this act;

(ii) Any facility whose allowable cost per case mix unit is greater than one hundred five percent of the peer group median established under (f) of this subsection shall be assigned a cost per case mix unit equal to one hundred five percent of the peer group median, and shall have a direct care component rate allocation equal to the facility's assigned cost per case mix unit multiplied by that facility's medicaid average case mix index from the applicable quarter specified in section 24(7)(c) of this act;

(iii) Any facility whose allowable cost per case mix unit is between ninety-five and one hundred five percent of the peer group median established under (f) of this subsection shall have a direct care component rate allocation equal to the facility's allowable cost per case mix unit multiplied by that facility's medicaid average case mix index from the applicable quarter specified in section 24(7)(c) of this act;

(j) Beginning July 1, 2004, determine each facility's quarterly direct care component rate by multiplying the facility's allowable direct care cost per case mix unit by that facility's medicaid average case mix index from the applicable quarter as specified in section 24(7)(c) of this act.

(k)(i) Between October 1, 1998, and June 30, 2000, the department shall compare each facility's direct care component rate allocation calculated under (g) of this subsection with the facility's nursing services component rate in effect on June 30, 1998, less therapy costs, plus any exceptional care offsets as reported on the cost report, adjusted for economic trends and conditions as provided in section 19 of this act. A facility shall receive the higher of the two rates;

(ii) Between July 1, 2000, and June 30, 2002, the department shall compare each facility's direct care component rate allocation calculated under (h) of this subsection with the facility's direct care component rate in effect on June 30, 2000. A facility shall receive the higher of the two rates.

(6) The direct care component rate allocations calculated in accordance with this section shall be adjusted to the extent necessary to comply with section 18 of this act. If the department determines that the weighted average rate allocations for all rate components for all facilities is likely to exceed the weighted average total rate specified in the state biennial appropriations act, the department shall adjust the rate allocations calculated in this section proportional to the amount by which the total weighted average rate allocations would otherwise exceed the budgeted level. Such adjustments shall only be made prospectively, not retrospectively.

NEW SECTION. Sec. 26. (1) The therapy care component rate allocation corresponds to the provision of medicaid one-on-one therapy provided by a qualified therapist as defined in this chapter, including therapy supplies and therapy consultation, for one day for one medicaid resident of a nursing facility. The therapy care component rate allocation for October 1, 1998, through June 30, 2001, shall be based on adjusted therapy costs and days from calendar year 1996. The therapy component rate allocation for July 1, 2001, through June 30, 2004, shall be based on adjusted therapy costs and days from calendar year 1999. The therapy care component rate shall be adjusted for economic trends and conditions as specified in section 19(5)(b) of this act, and shall be determined in accordance with this section.

(2) In rebasing, as provided in section 19(5)(a) of this act, the department shall take from the cost reports of facilities the following reported information:

(a) Direct one-on-one therapy charges for all residents by payer including charges for supplies;

(b) The total units or modules of therapy care for all residents by type of therapy provided, for example, speech or physical. A unit or module of therapy care is considered to be fifteen minutes of one-on-one therapy provided by a qualified therapist or support personnel; and

(3) The department shall determine for all residents the total cost per unit of therapy for each type of therapy by dividing the total adjusted one-on-one therapy expense for each type by the total units provided for that therapy type.

(4) The department shall divide medicaid nursing facilities in this state into two peer groups:

(a) Those facilities located within a metropolitan statistical area; and

(b) Those not located in a metropolitan statistical area.

Metropolitan statistical areas and nonmetropolitan statistical areas shall be as determined by the United States office of management and budget or other applicable federal office. The department shall array the facilities in each peer group from highest to lowest based on their total cost per unit of therapy for each therapy type. The department shall determine the median total cost per unit of therapy for each therapy type and add ten percent of median total cost per unit of therapy. The cost per unit of therapy for each therapy type at a nursing facility shall be the lesser of its cost per unit of therapy for each therapy type or the median total cost per unit plus ten percent for each therapy type for its peer group.

(5) The department shall calculate each nursing facility's therapy care component rate allocation as follows:

(a) To determine the allowable total therapy cost for each therapy type, the allowable cost per unit of therapy for each type of therapy shall be multiplied by the total therapy units for each type of therapy;

(b) The medicaid allowable one-on-one therapy expense shall be calculated taking the allowable total therapy cost for each therapy type times the medicaid percent of total therapy charges for each therapy type;

(c) The medicaid allowable one-on-one therapy expense for each therapy type shall be divided by total adjusted medicaid days to arrive at the medicaid one-on-one therapy cost per patient day for each therapy type;

(d) The medicaid one-on-one therapy cost per patient day for each therapy type shall be multiplied by total adjusted patient days for all residents to calculate the total allowable one-on-one therapy expense. The lesser of the total allowable therapy consultant expense for the therapy type or a reasonable percentage of allowable therapy consultant expense for each therapy type, as established in rule by the department, shall be added to the total allowable one-on-one therapy expense to determine the allowable therapy cost for each therapy type;

(e) The allowable therapy cost for each therapy type shall be added together, the sum of which shall be the total allowable therapy expense for the nursing facility;

(f) The total allowable therapy expense will be divided by the greater of adjusted total patient days from the cost report on which the therapy expenses were reported, or patient days at eighty-five percent occupancy of licensed beds. The outcome shall be the nursing facility's therapy care component rate allocation.

(6) The therapy care component rate allocations calculated in accordance with this section shall be adjusted to the extent necessary to comply with section 18 of this act. If the department determines that the weighted average rate allocations for all rate components for all facilities is likely to exceed the weighted average total rate specified in the state biennial appropriations act, the department shall adjust the rate allocations calculated in this section proportional to the amount by which the total weighted average rate allocations would otherwise exceed the budgeted level. Such adjustments shall only be made prospectively, not retrospectively.

NEW SECTION. Sec. 27. (1) The support services component rate allocation corresponds to the provision of food, food preparation, dietary, housekeeping, and laundry services for one resident for one day.

(2) Beginning October 1, 1998, the department shall determine each medicaid nursing facility's support services component rate allocation using cost report data specified by section 19(6) of this act.

(3) To determine each facility's support services component rate allocation, the department shall:

(a) Array facilities' adjusted support services costs per adjusted resident day for each facility from facilities' cost reports from the applicable report year, for facilities located within a metropolitan statistical area, and for those not located in any metropolitan statistical area and determine the median adjusted cost for each peer group;

(b) Set each facility's support services component rate at the lower of the facility's per resident day adjusted support services costs from the applicable cost report period or the adjusted median per resident day support services cost for that facility's peer group, either metropolitan statistical area or nonmetropolitan statistical area, plus ten percent; and

(c) Adjust each facility's support services component rate for economic trends and conditions as provided in section 19(6) of this act.

(4) The support services component rate allocations calculated in accordance with this section shall be adjusted to the extent necessary to comply with section 18 of this act. If the department determines that the weighted average rate allocations for all rate components for all facilities is likely to exceed the weighted average total rate specified in the state biennial appropriations act, the department shall adjust the rate allocations calculated in this section proportional to the amount by which the total weighted average rate allocations would otherwise exceed the budgeted level. Such adjustments shall only be made prospectively, not retrospectively.

NEW SECTION. Sec. 28. (1) The operations component rate allocation corresponds to the general operation of a nursing facility for one resident for one day, including but not limited to management, administration, utilities, office supplies, accounting and bookkeeping, minor building maintenance, minor equipment repairs and replacements, and other supplies and services, exclusive of direct care, therapy care, support services, property, and return on investment.

(2) Beginning October 1, 1998, the department shall determine each medicaid nursing facility's operations component rate allocation using cost report data specified by section 19(7)(a) of this act.

(3) To determine each facility's operations component rate the department shall:

(a) Array facilities' adjusted general operations costs per adjusted resident day for each facility from facilities' cost reports from the applicable report year, for facilities located within a metropolitan statistical area and for those not located in a metropolitan statistical area and determine the median adjusted cost for each peer group;

(b) Set each facility's operations component rate at the lower of the facility's per resident day adjusted operations costs from the applicable cost report period or the adjusted median per resident day general operations cost for that facility's peer group, metropolitan statistical area or nonmetropolitan statistical area; and

(c) Adjust each facility's operations component rate for economic trends and conditions as provided in section 19(7)(b) of this act.

(4) The operations component rate allocations calculated in accordance with this section shall be adjusted to the extent necessary to comply with section 18 of this act. If the department determines that the weighted average rate allocations for all rate components for all facilities is likely to exceed the weighted average total rate specified in the state biennial appropriations act, the department shall adjust the rate allocations calculated in this section proportional to the amount by which the total weighted average rate allocations would otherwise exceed the budgeted level. Such adjustments shall only be made prospectively, not retrospectively.

NEW SECTION. Sec. 29. (1) The property component rate allocation for each facility shall be determined by dividing the sum of the reported allowable prior period actual depreciation, subject to RCW 74.46.310 through 74.46.380, adjusted for any capitalized additions or replacements approved by the department, and the retained savings from such cost center, by the greater of a facility's total resident days for the facility in the prior period or resident days as calculated on eighty-five percent facility occupancy. If a capitalized addition or retirement of an asset will result in a different licensed bed capacity during the ensuing period, the prior period total resident days used in computing the property component rate shall be adjusted to anticipated resident day level.

(2) A nursing facility's property component rate allocation shall be rebased annually, effective July 1st or October 1st as applicable, in accordance with this section and this chapter.

(3) When a certificate of need for a new facility is requested, the department, in reaching its decision, shall take into consideration per-bed land and building construction costs for the facility which shall not exceed a maximum to be established by the secretary.

(4) For the purpose of calculating a nursing facility's property component rate, if a contractor elects to bank licensed beds or to convert banked beds to active service, under chapter 70.38 RCW, the department shall use the facility's anticipated resident occupancy level subsequent to the decrease or increase in licensed bed capacity. However, in no case shall the department use less than eighty-five percent occupancy of the facility's licensed bed capacity after banking or conversion.

(5) The property component rate allocations calculated in accordance with this section shall be adjusted to the extent necessary to comply with section 18 of this act. If the department determines that the weighted average rate allocations for all rate components for all facilities is likely to exceed the weighted average total rate specified in the state biennial appropriations act, the department shall adjust the rate allocations calculated in this section proportional to the amount by which the total weighted average rate allocations would otherwise exceed the budgeted level. Such adjustments shall only be made prospectively, not retrospectively.

NEW SECTION. Sec. 30. (1) The department shall establish for each medicaid nursing facility a return on investment component rate allocation composed of two parts: A financing allowance and a variable return allowance. The financing allowance part of a facility's return on investment component rate shall be rebased annually, effective July 1st, in accordance with the provisions of this section and this chapter.

(a) The financing allowance shall be determined by multiplying the net invested funds of each facility by .10, and dividing by the greater of a nursing facility's total resident days from the most recent cost report period or resident days calculated on eighty-five percent facility occupancy. If a capitalized addition or retirement of an asset will result in a different licensed bed capacity during the ensuing period, the prior period total resident days used in computing the financing and variable return allowances shall be adjusted to the anticipated resident day level.

(b) In computing the portion of net invested funds representing the net book value of tangible fixed assets, the same assets, depreciation bases, lives, and methods referred to in RCW 74.46.330, 74.46.350, 74.46.360, 74.46.370, and 74.46.380, including owned and leased assets, shall be utilized, except that the capitalized cost of land upon which the facility is located and such other contiguous land which is reasonable and necessary for use in the regular course of providing resident care shall also be included. Subject to provisions and limitations contained in this chapter, for land purchased by owners or lessors before July 18, 1984, capitalized cost of land shall be the buyer's capitalized cost. For all partial or whole rate periods after July 17, 1984, if the land is purchased after July 17, 1984, capitalized cost shall be that of the owner of record on July 17, 1984, or buyer's capitalized cost, whichever is lower. In the case of leased facilities where the net invested funds are unknown or the contractor is unable to provide necessary information to determine net invested funds, the secretary shall have the authority to determine an amount for net invested funds based on an appraisal conducted according to RCW 74.46.360(1).

(i) For the October 1, 1998, rate setting, the department, without utilizing peer groups, shall first rank all facilities in numerical order from highest to lowest according to their per resident day adjusted or audited, or both, allowable costs for nursing services, food, administration, and operational costs combined for the 1996 calendar year cost report period.

(ii) The department shall then compute the variable return allowance by multiplying the appropriate percentage amounts, which shall not be less than one percent and not greater than four percent, by the sum of the facility's nursing services, food, administrative, and operational rate components. The percentage amounts will be based on groupings of facilities according to the rankings prescribed in (c)(i) of this subsection. Those groups of facilities with lower per diem costs shall receive higher percentage amounts than those with higher per diem costs.

(d) The sum of the financing allowance and the variable return allowance shall be the return on investment rate for each facility, and shall be added to the prospective rates of each contractor as determined in sections 19 through 29 of this act.

(e) In the case of a facility that was leased by the contractor as of January 1, 1980, in an arm's-length agreement, which continues to be leased under the same lease agreement, and for which the annualized lease payment, plus any interest and depreciation expenses associated with contractor-owned assets, for the period covered by the prospective rates, divided by the contractor's total resident days, minus the property component rate allocation determined according to section 29 of this act, is more than the return on investment rate determined according to (d) of this subsection, the following shall apply:

(i) The financing allowance shall be recomputed substituting the fair market value of the assets as of January 1, 1982, as determined by the department of general administration through an appraisal procedure, less accumulated depreciation on the lessor's assets since January 1, 1982, for the net book value of the assets in determining net invested funds for the facility. A determination by the department of general administration of fair market value shall be final unless the procedure used to make such a determination is shown to be arbitrary and capricious.

(ii) The sum of the financing allowance computed under (e)(i) of this subsection and the variable allowance shall be compared to the annualized lease payment, plus any interest and depreciation associated with contractor-owned assets, for the period covered by the prospective rates, divided by the contractor's total resident days, minus the property component rate determined according to section 29 of this act. The lesser of the two amounts shall be called the alternate return on investment rate.

(iii) The return on investment rate determined according to (d) of this subsection or the alternate return on investment rate, whichever is greater, shall be the return on investment rate for the facility and shall be added to the prospective rates of the contractor as determined in sections 19 through 29 of this act.

(f) In the case of a facility that was leased by the contractor as of January 1, 1980, in an arm's-length agreement, if the lease is renewed or extended under a provision of the lease, the treatment provided in (e) of this subsection shall be applied, except that in the case of renewals or extensions made subsequent to April 1, 1985, reimbursement for the annualized lease payment shall be no greater than the reimbursement for the annualized lease payment for the last year prior to the renewal or extension of the lease.

(2) For the purpose of calculating a nursing facility's return on investment component rate, if a contractor elects to bank beds or to convert banked beds to active service, under chapter 70.38 RCW, the department shall use the facility's anticipated resident occupancy level subsequent to the decrease or increase in licensed bed capacity. However, in no case shall the department use less than eighty-five percent occupancy of the facility's licensed bed capacity after banking or conversion.

(3) Each biennium the secretary shall review the adequacy of return on investment rates in relation to anticipated requirements for maintaining, reducing, or expanding nursing care capacity. The secretary shall report the results of a such review to the legislature and make recommendations for adjustments in the return on investment rates utilized in this section, if appropriate.

(4) The return or investment component rate allocations calculated in accordance with this section shall be adjusted to the extent necessary to comply with section 18 of this act. If the department determines that the weighted average rate allocations for all rate components for all facilities is likely to exceed the weighted average total rate specified in the state biennial appropriations act, the department shall adjust the rate allocations calculated in this section proportional to the amount by which the total weighted average rate allocations would otherwise exceed the budgeted level. Such adjustments shall only be made prospectively, not retrospectively.

NEW SECTION. Sec. 31. (1) The department may adjust component rates for errors or omissions made in establishing component rates and determine amounts either overpaid to the contractor or underpaid by the department.

(2) A contractor may request the department to adjust its component rates because of:

(a) An error or omission the contractor made in completing a cost report; or

(b) An alleged error or omission made by the department in determining one or more of the contractor's component rates.

(3) A request for a rate adjustment made on incorrect cost reporting must be accompanied by the amended cost report pages prepared in accordance with the department's written instructions and by a written explanation of the error or omission and the necessity for the amended cost report pages and the rate adjustment.

(4) The department shall review a contractor's request for a rate adjustment because of an alleged error or omission, even if the time period has expired in which the contractor must appeal the rate when initially issued, pursuant to rules adopted by the department under RCW 74.46.780. If the request is received after this time period, the department has the authority to correct the rate if it agrees an error or omission was committed. However, if the request is denied, the contractor shall not be entitled to any appeals or exception review procedure that the department may adopt under RCW 74.46.780.

(5) The department shall notify the contractor of the amount of the overpayment to be recovered or additional payment to be made to the contractor reflecting a rate adjustment to correct an error or omission. The recovery from the contractor of the overpayment or the additional payment to the contractor shall be governed by the reconciliation, settlement, security, and recovery processes set forth in this chapter and by rules adopted by the department in accordance with this chapter.

(6) Component rate adjustments approved in accordance with this section are subject to the provisions of section 18 of this act.

Sec. 32. RCW 74.46.610 and 1983 1st ex.s. c 67 s 33 are each amended to read as follows:

(1) A contractor shall bill the department each month by completing and returning a facility billing statement as provided by the department ((which shall include, but not be limited to:

(a) Billing by cost center;

(b) Total patient days; and

The statement shall be completed and filed in accordance with rules ((and regulations)) established by the ((secretary)) department.

(2) A facility shall not bill the department for service provided to a recipient until an award letter of eligibility of such recipient under rules established under chapter 74.09 RCW has been received by the facility. However a facility may bill and shall be reimbursed for all medical care recipients referred to the facility by the department prior to the receipt of the award letter of eligibility or the denial of such eligibility.

(3) Billing shall cover the patient days of care.

Sec. 33. RCW 74.46.620 and 1980 c 177 s 62 are each amended to read as follows:

(1) The department will ((reimburse)) pay a contractor for service rendered under the facility contract and billed in accordance with RCW 74.46.610.

(2) The amount paid will be computed using the appropriate rates assigned to the contractor.

(3) For each recipient, the department will pay an amount equal to the appropriate rates, multiplied by the number of ((patient)) medicaid resident days each rate was in effect, less the amount the recipient is required to pay for his or her care as set forth by RCW 74.46.630.

Sec. 34. RCW 74.46.630 and 1980 c 177 s 63 are each amended to read as follows:

(1) The department will notify a contractor of the amount each medical care recipient is required to pay for care provided under the contract and the effective date of such required contribution. It is the contractor's responsibility to collect that portion of the cost of care from the patient, and to account for any authorized reduction from his or her contribution in accordance with rules ((and regulations)) established by the ((secretary)) department.

(2) If a contractor receives documentation showing a change in the income or resources of a recipient which will mean a change in his or her contribution toward the cost of care, this shall be reported in writing to the department within seventy-two hours and in a manner specified by rules ((and regulations)) established by the ((secretary)) department. If necessary, appropriate corrections will be made in the next facility statement, and a copy of documentation supporting the change will be attached. If increased funds for a recipient are received by a contractor, an amount determined by the department shall be allowed for clothing and personal and incidental expense, and the balance applied to the cost of care.

(3) The contractor shall accept the ((reimbursement)) payment rates established by the department as full compensation for all services provided under the contract, certification as specified by Title XIX, and licensure under chapter 18.51 RCW. The contractor shall not seek or accept additional compensation from or on behalf of a recipient for any or all such services.

Sec. 35. RCW 74.46.640 and 1995 1st sp.s. c 18 s 112 are each amended to read as follows:

(1) Payments to a contractor may be withheld by the department in each of the following circumstances:

(a) A required report is not properly completed and filed by the contractor within the appropriate time period, including any approved extension. Payments will be released as soon as a properly completed report is received;

(b) State auditors, department auditors, or authorized personnel in the course of their duties are refused access to a nursing facility or are not provided with existing appropriate records. Payments will be released as soon as such access or records are provided;

(c) A refund in connection with a ((preliminary or final)) settlement or rate adjustment is not paid by the contractor when due. The amount withheld will be limited to the unpaid amount of the refund and any accumulated interest owed to the department as authorized by this chapter;

(d) Payment for the final sixty days of service ((under)) prior to termination or assignment of a contract will be held in the absence of adequate alternate security acceptable to the department pending ((final)) settlement of all periods when the contract is terminated or assigned; and

(e) Payment for services at any time during the contract period in the absence of adequate alternate security acceptable to the department, if a contractor's net medicaid overpayment liability for one or more nursing facilities or other debt to the department, as determined by ((preliminary settlement, final)) settlement, civil fines imposed by the department, third-party liabilities or other source, reaches or exceeds fifty thousand dollars, whether subject to good faith dispute or not, and for each subsequent increase in liability reaching or exceeding twenty-five thousand dollars. Payments will be released as soon as practicable after acceptable security is provided or refund to the department is made.

(2) No payment will be withheld until written notification of the suspension is provided to the contractor, stating the reason for the withholding, except that neither a timely filed request to pursue ((the)) any administrative appeals or exception procedure that the department may establish((ed)) by ((the department in)) rule nor commencement of judicial review, as may be available to the contractor in law, shall delay suspension of payment.

Sec. 36. RCW 74.46.650 and 1980 c 177 s 65 are each amended to read as follows:

All payments to a contractor will end no later than sixty days after any of the following occurs:

(1) A contract ((expires,)) is terminated, assigned, or is not renewed;

(2) A facility license is revoked; or

(3) A facility is decertified as a Title XIX facility; except that, in situations where the ((secretary)) department determines that residents must remain in such facility for a longer period because of the resident's health or safety, payments for such residents shall continue.

Sec. 37. RCW 74.46.660 and 1992 c 215 s 1 are each amended to read as follows:

In order to participate in the ((prospective cost-related reimbursement)) nursing facility medicaid payment system established by this chapter, the person or legal ((organization)) entity responsible for operation of a facility shall:

(1) Obtain a state certificate of need and/or federal capital expenditure review (section 1122) approval pursuant to chapter 70.38 RCW and Part 100, Title 42 CFR where required;

(2) Hold the appropriate current license;

(3) Hold current Title XIX certification;

(4) Hold a current contract to provide services under this chapter;

(5) Comply with all provisions of the contract and all ((application)) applicable regulations, including but not limited to the provisions of this chapter; and

(6) Obtain and maintain medicare certification, under Title XVIII of the social security act, 42 U.S.C. Sec. 1395, as amended, for a portion of the facility's licensed beds. ((Until June 1, 1993, the department may grant exemptions from the medicare certification requirements of this subsection to nursing facilities that are making good faith efforts to obtain medicare certification.))

Sec. 38. RCW 74.46.680 and 1985 c 361 s 2 are each amended to read as follows:

(1) On the effective date of a change of ownership the department's contract with the old owner shall be ((terminated)) automatically assigned to the new owner, unless: (a) The new owner does not desire to participate in medicaid as a nursing facility provider; (b) the department elects not to continue the contract with the new owner for good cause; or (c) the new owner elects not to accept assignment and requests certification and a new contract. The old owner shall give the department sixty days' written notice of such ((termination)) intent to change ownership and assign. When certificate of need and/or section 1122 approval is required pursuant to chapter 70.38 RCW and Part 100, Title 42 CFR, for the new owner to acquire the facility, and the new owner wishes to continue to provide service to recipients without interruption, certificate of need and/or section 1122 approval shall be obtained before the old owner submits a notice of ((termination)) intent to change ownership and assign.

(2) If the new owner desires to participate in the ((cost-related reimbursement)) nursing facility medicaid payment system, it shall meet the conditions specified in RCW 74.46.660 ((and shall submit a projected budget in accordance with RCW 74.46.670 no later than sixty days before the date of the change of ownership)). The facility contract with the new owner shall be effective as of the date of the change of ownership.

Sec. 39. RCW 74.46.690 and 1995 1st sp.s. c 18 s 113 are each amended to read as follows:

(1) When ((a facility contract is terminated)) there is a change of ownership for any reason, ((the old contractor shall submit)) final reports shall be submitted as required by RCW 74.46.040.

(2) Upon a notification of ((a contract termination)) intent to change ownership, the department shall determine by ((preliminary or final settlement calculations)) settlement or reconciliation the amount of any overpayments made to the assigning or terminating contractor, including overpayments disputed by the assigning or terminating contractor. If ((preliminary or final)) settlements are unavailable for any period up to the date of ((contract termination)) assignment or termination, the department shall make a reasonable estimate of any overpayment or underpayments for such periods. The reasonable estimate shall be based upon prior period settlements, available audit findings, the projected impact of prospective rates, and other information available to the department. The department shall also determine and add in the total of all other debts and potential debts owed to the department regardless of source, including, but not limited to, interest owed to the department as authorized by this chapter, civil fines imposed by the department, or third-party liabilities.

(3) ((The old)) For all cost reports filed after December 31, 1997, the assigning or terminating contractor shall provide security, in a form deemed adequate by the department, equal to the total amount of determined and estimated overpayments and all ((other)) debts and potential debts from any source, whether or not the overpayments are the subject of good faith dispute including but not limited to, interest owed to the department, civil fines imposed by the department, and third-party liabilities. Security shall consist of one or more of the following:

(a) Withheld payments due the assigning or terminating contractor under the contract being assigned or terminated; ((or))

(b) ((A surety bond issued by a bonding company acceptable to the department; or

(c))) An assignment of funds to the department; ((or

(d) Collateral acceptable to the department; or

(e) A purchaser's)) (c) The new contractor's assumption of liability for the prior contractor's ((overpayment)) debt or potential debt;

(d) An authorization to withhold payments from one or more medicaid nursing facilities that continue to be operated by the assigning or terminating contractor;

(((f))) (e) A promissory note secured by a deed of trust; or

(((g) Any combination of (a), (b), (c), (d), (e), or (f) of this subsection)) (f) Other collateral or security acceptable to the department.

(4) ((A surety bond or)) An assignment of funds shall:

(a) Be at least equal ((in)) to the amount ((to)) of determined or estimated ((overpayments, whether or not the subject of good faith dispute,)) debt or potential debt minus withheld payments or other security provided; and

(b) ((Be issued or accepted by a bonding company or financial institution licensed to transact business in Washington state;

(c) Be for a term, as determined by the department, sufficient to ensure effectiveness after final settlement and the exhaustion of any administrative appeals or exception procedure and judicial remedies, as may be available to and sought by the contractor, regarding payment, settlement, civil fine, interest assessment, or other debt issues: PROVIDED, That the bond or assignment shall initially be for a term of at least five years, and shall be forfeited if not renewed thereafter in an amount equal to any remaining combined overpayment and debt liability as determined by the department;

(d) Provide that the full amount of the bond or assignment, or both, shall be paid to the department if a properly completed final cost report is not filed in accordance with this chapter, or if financial records supporting this report are not preserved and made available to the auditor; and

(e))) Provide that an amount equal to any recovery the department determines is due from the contractor from ((settlement or from)) any ((other)) source of debt to the department, but not exceeding the amount of the ((bond and assignment)) assigned funds, shall be paid to the department if the contractor does not pay the ((refund and)) debt within sixty days following receipt of written demand for payment from the department to the contractor.

(5) The department shall release any payment withheld as security if alternate security is provided under subsection (3) of this section in an amount equivalent to the determined and estimated ((overpayments)) debt.

(6) If the total of withheld payments((, bonds,)) and ((assignments)) assigned funds is less than the total of determined and estimated ((overpayments)) debt, the unsecured amount of such ((overpayments)) debt shall be a debt due the state and shall become a lien against the real and personal property of the contractor from the time of filing by the department with the county auditor of the county where the contractor resides or owns property, and the lien claim has preference over the claims of all unsecured creditors.

(7) ((The contractor shall file)) A properly completed final cost report shall be filed in accordance with the requirements of ((this chapter)) RCW 74.46.040, which shall be ((audited)) examined by the department in accordance with the requirements of RCW 74.46.100. ((A final settlement shall be determined within ninety days following completion of the audit process, including completion of any administrative appeals or exception procedure review of the audit requested by the contractor, but not including completion of any judicial review available to and commenced by the contractor.))

(8) ((Following determination of settlement for all periods,)) Security held pursuant to this section shall be released to the contractor after all ((overpayments, erroneous payments, and)) debts ((determined in connection with final settlement, or otherwise)), including accumulated interest owed the department, have been paid by the ((contractor)) old owner.

(9) If, after calculation of settlements for any periods, it is determined that overpayments exist in excess of the value of security held by the state, the department may seek recovery of these additional overpayments as provided by law.

(10) Regardless of whether a contractor intends to ((terminate its medicaid contracts)) change ownership, if a contractor's net medicaid overpayments and erroneous payments for one or more settlement periods, and for one or more nursing facilities, combined with debts due the department, reaches or exceeds a total of fifty thousand dollars, as determined by ((preliminary settlement, final)) settlement, civil fines imposed by the department, third-party liabilities or by any other source, whether such amounts are subject to good faith dispute or not, the department shall demand and obtain security equivalent to the total of such overpayments, erroneous payments, and debts and shall obtain security for each subsequent increase in liability reaching or exceeding twenty-five thousand dollars. Such security shall meet the criteria in subsections (3) and (4) of this section, except that the department shall not accept an assumption of liability. The department shall withhold all or portions of a contractor's current contract payments or impose liens, or both, if security acceptable to the department is not forthcoming. The department shall release a contractor's withheld payments or lift liens, or both, if the contractor subsequently provides security acceptable to the department. ((This subsection shall apply to all overpayments and erroneous payments determined by preliminary or final settlements issued on or after July 1, 1995, regardless of what payment periods the settlements may cover and shall apply to all debts owed the department from any source, including interest debts, which become due on or after July 1, 1995.))

(11) Notwithstanding the application of security measures authorized by this section, if the department determines that any remaining debt of the old owner is uncollectible from the old owner, the new owner is liable for the unsatisfied debt in all respects. If the new owner does not accept assignment of the contract and the contingent liability for all debt of the prior owner, a new certification survey shall be done and no payments shall be made to the new owner until the department determines the facility is in substantial compliance for the purposes of certification.

(12) Medicaid provider contracts shall only be assigned if there is a change of ownership, and with approval by the department.

Sec. 40. RCW 74.46.770 and 1995 1st sp.s. c 18 s 114 are each amended to read as follows:

(1) ((For all nursing facility medicaid payment rates effective on or after July 1, 1995, and for all settlements and audits issued on or after July 1, 1995, regardless of what periods the settlements or audits may cover,)) If a contractor wishes to contest the way in which a rule relating to the medicaid payment ((rate)) system was applied to the contractor by the department, it shall pursue ((the)) any appeals or exception procedure ((established by)) that the department may establish in rule authorized by RCW 74.46.780.

(2) If a contractor wishes to challenge the legal validity of a statute, rule, or contract provision or wishes to bring a challenge based in whole or in part on federal law, ((including but not limited to issues of procedural or substantive compliance with the federal medicaid minimum payment standard for long-term care facility services, the)) any appeals or exception procedure ((established by)) that the department may establish in rule may not be used for these purposes. This prohibition shall apply regardless of whether the contractor wishes to obtain a decision or ruling on an issue of validity or federal compliance or wishes only to make a record for the purpose of subsequent judicial review.

(3) If a contractor wishes to challenge the legal validity of a statute, rule, or contract provision relating to the medicaid payment rate system, or wishes to bring a challenge based in whole or in part on federal law, it must bring such action de novo in a court of proper jurisdiction as may be provided by law.

Sec. 41. RCW 74.46.780 and 1995 1st sp.s. c 18 s 115 are each amended to read as follows:

((For all nursing facility medicaid payment rates effective on or after July 1, 1995, and for all audits completed and settlements issued on or after July 1, 1995, regardless of what periods the payment rates, audits, or settlements may cover,)) The department shall establish in rule, consistent with federal requirements for nursing facilities participating in the medicaid program, an appeals or exception procedure that allows individual nursing care providers an opportunity to submit additional evidence and receive prompt administrative review of payment rates with respect to such issues as the department deems appropriate.

Sec. 42. RCW 74.46.800 and 1980 c 177 s 80 are each amended to read as follows:

(1) The department shall have authority to adopt, ((promulgate,)) amend, and rescind such administrative rules and definitions as ((are)) it deems necessary to carry out the policies and purposes of this chapter and to resolve issues and develop procedures that it deems necessary to implement, update, and improve the case mix elements of the nursing facility medicaid payment system. ((In addition, at least annually the department shall review changes to generally accepted accounting principles and generally accepted auditing standards as approved by the financial accounting standards board, and the American institute of certified public accountants, respectively. The department shall adopt by administrative rule those approved changes which it finds to be consistent with the policies and purposes of this chapter.))

(2) Nothing in this chapter shall be construed to require the department to adopt or employ any calculations, steps, tests, methodologies, alternate methodologies, indexes, formulas, mathematical or statistical models, concepts, or procedures for medicaid rate setting or payment that are not expressly called for in this chapter.

Sec. 43. RCW 74.46.820 and 1985 c 361 s 14 are each amended to read as follows:

(1) Cost reports and their final audit reports filed by the contractor shall be subject to public disclosure pursuant to the requirements of chapter 42.17 RCW. ((Notwithstanding any other provision of law, cost report schedules showing information on rental or lease of assets, the facility or corporate balance sheet, schedule of changes in financial position, statement of changes in equity-fund balances, notes to financial statements, and any accompanying schedules summarizing the adjustments to a contractor's financial records, reports on review of internal control and accounting procedures, and letters of comments or recommendations relating to suggested improvements in internal control or accounting procedures which are prepared pursuant to the requirements of this chapter shall be exempt from public disclosure.

This)) (2) Subsection (1) of this section does not prevent a contractor from having access to its own records or from authorizing an agent or designee to have access to the contractor's records.

(((2))) (3) Regardless of whether any document or report submitted to the secretary pursuant to this chapter is subject to public disclosure, copies of such documents or reports shall be provided by the secretary, upon written request, to the legislature and to state agencies or state or local law enforcement officials who have an official interest in the contents thereof.

Sec. 44. RCW 74.46.840 and 1983 1st ex.s. c 67 s 42 are each amended to read as follows:

If any part of this chapter ((and)) or RCW 18.51.145 ((and)) or 74.09.120 is found by an agency of the federal government to be in conflict with federal requirements ((which)) that are a prescribed condition to the receipts of federal funds to the state, the conflicting part of this chapter ((and)) or RCW 18.51.145 ((and)) or 74.09.120 is ((hereby)) declared inoperative solely to the extent of the conflict and with respect to the agencies directly affected, and such finding or determination shall not affect the operation of the remainder of this chapter ((and)) or RCW 18.51.145 ((and)) or 74.09.120 in its application to the agencies concerned. In the event that any portion of this chapter ((and)) or RCW 18.51.145 ((and)) or 74.09.120 is found to be in conflict with federal requirements ((which)) that are a prescribed condition to the receipt of federal funds, the secretary, to the extent that the secretary finds it to be consistent with the general policies and intent of chapters 18.51, 74.09, and 74.46 RCW, may adopt such rules as to resolve a specific conflict and ((which)) that do meet minimum federal requirements. In addition, the secretary shall submit to the next regular session of the legislature a summary of the specific rule changes made and recommendations for statutory resolution of the conflict.

Sec. 45. RCW 74.09.120 and 1993 sp.s. c 3 s 8 are each amended to read as follows:

The department shall purchase necessary physician and dentist services by contract or "fee for service." The department shall purchase nursing home care by contract and payment for the care shall be in accordance with the provisions of chapter 74.46 RCW and rules adopted by the department under the authority of RCW 74.46.800. ((The department shall establish regulations for reasonable nursing home accounting and reimbursement systems which shall provide that)) No payment shall be made to a nursing home which does not permit inspection by the department of social and health services of every part of its premises and an examination of all records, including financial records, methods of administration, general and special dietary programs, the disbursement of drugs and methods of supply, and any other records the department deems relevant to the ((establishment of such a system)) regulation of nursing home operations, enforcement of standards for resident care, and payment for nursing home services.

The department may purchase nursing home care by contract in veterans' homes operated by the state department of veterans affairs((. The department shall establish rules for reasonable accounting and reimbursement systems for such care)) and payment for the care shall be in accordance with the provisions of chapter 74.46 RCW and rules adopted by the department under the authority of RCW 74.46.800.

The department may purchase care in institutions for the mentally retarded, also known as intermediate care facilities for the mentally retarded. The department shall establish rules for reasonable accounting and reimbursement systems for such care. Institutions for the mentally retarded include licensed nursing homes, public institutions, licensed boarding homes with fifteen beds or less, and hospital facilities certified as intermediate care facilities for the mentally retarded under the federal medicaid program to provide health, habilitative, or rehabilitative services and twenty-four hour supervision for mentally retarded individuals or persons with related conditions and includes in the program "active treatment" as federally defined.

The department may purchase care in institutions for mental diseases by contract. The department shall establish rules for reasonable accounting and reimbursement systems for such care. Institutions for mental diseases are certified under the federal medicaid program and primarily engaged in providing diagnosis, treatment, or care to persons with mental diseases, including medical attention, nursing care, and related services.

The department may purchase all other services provided under this chapter by contract or at rates established by the department.

NEW SECTION. Sec. 46. (1) Payment for direct care at the pilot nursing facility in King county designed to meet the service needs of residents living with AIDS, as defined in RCW 70.24.017, and as specifically authorized for this purpose under chapter 9, Laws of 1989 1st ex. sess., shall be exempt from case mix methods of rate determination set forth in this chapter and shall be exempt from the direct care metropolitan statistical area peer group cost limitation set forth in this chapter.

(2) Direct care component rates at the AIDS pilot facility shall be based on direct care reported costs at the pilot facility, utilizing the same three-year, rate-setting cycle prescribed for other nursing facilities, and as supported by a staffing benchmark based upon a department-approved acuity measurement system.

(3) The provisions of section 18 of this act and all other rate-setting principles, cost lids, and limits, including settlement as provided in section 10 of this act shall apply to the AIDS pilot facility.

(4) This section applies only to the AIDS pilot nursing facility.

NEW SECTION. Sec. 47. (1) By December 1, 1998, the department of social and health services shall study and provide recommendations to the chairs of the house of representatives appropriations and health care committees, and the senate ways and means and health and long-term care committees, concerning options for changing the method for paying facilities for capital and property related expenses.

(2) The department of social and health services shall contract with an independent and recognized organization to study and evaluate the impacts of chapter 74.46 RCW implementation on access, quality of care, quality of life for nursing facility residents, and the wage and benefit levels of all nursing facility employees. The department shall require, and the contractor shall submit, a report with the results of this study and evaluation, including their findings, to the governor and legislature by December 1, 2001.

(3) The department of social and health services shall study and, as needed, specify additional case mix groups and appropriate case mix weights to reflect the resource utilization of residents whose care needs are not adequately identified or reflected in the resource utilization group III grouper version 5.10. At a minimum, the department shall study the adequacy of the resource utilization group III grouper version 5.10, including the minimum data set, for capturing the care and resource utilization needs of residents with AIDS, residents with traumatic brain injury, and residents who are behaviorally challenged. The department shall report its findings to the chairs of the house of representatives health care committee and the senate health and long-term care committee by December 12, 2002.

(4) By December 12, 2002, the department of social and health services shall report to the legislature and provide an evaluation of the fiscal impact of rebasing future payments at different intervals, including the impact of averaging two years' cost data as the basis for rebasing. This report shall include the fiscal impact to the state and the fiscal impact to nursing facility providers.

NEW SECTION. Sec. 48. By December 12, 1998, the department of social and health services shall study and provide recommendation to appropriate committees of the legislature on the appropriateness of extending case-mix reimbursement to home and community services providers, as defined in chapter 74.39A RCW. The department shall invite stakeholders to participate in this study.

Sec. 49. RCW 72.36.030 and 1993 sp.s. c 3 s 5 are each amended to read as follows:

All of the following persons who have been actual bona fide residents of this state at the time of their application, and who are indigent and unable to support themselves and their families may be admitted to a state veterans' home under rules as may be adopted by the director of the department, unless sufficient facilities and resources are not available to accommodate these people:

(1)(a) All honorably discharged veterans of a branch of the armed forces of the United States or merchant marines; (b) members of the state militia disabled while in the line of duty; ((and)) (c) Filipino World War II veterans who swore an oath to American authority and who participated in military engagements with American soldiers; and (d) the spouses of these veterans, merchant marines, and members of the state militia. However, it is required that the spouse was married to and living with the veteran three years prior to the date of application for admittance, or, if married to him or her since that date, was also a resident of a state veterans' home in this state or entitled to admission thereto;

(2)(a) The spouses of: (i) All honorably discharged veterans of the United States armed forces; (ii) merchant marines; and (iii) members of the state militia who were disabled while in the line of duty and who were residents of a state veterans' home in this state or were entitled to admission to one of this state's state veteran homes at the time of death; (b) the spouses of: (i) All honorably discharged veterans of a branch of the United States armed forces; (ii) merchant marines; and (iii) members of the state militia who would have been entitled to admission to one of this state's state veterans' homes at the time of death, but for the fact that the spouse was not indigent, but has since become indigent and unable to support himself or herself and his or her family. However, the included spouse shall be at least fifty years old and have been married to and living with their husband or wife for three years prior to the date of their application. The included spouse shall not have been married since the death of his or her husband or wife to a person who is not a resident of one of this state's state veterans' homes or entitled to admission to one of this state's state veterans' homes; and

(3) All applicants for admission to a state veterans' home shall apply for all federal and state benefits for which they may be eligible, including medical assistance under chapter 74.09 RCW.

NEW SECTION. Sec. 50. A new section is added to chapter 70.38 RCW to read as follows:

(1) A change in bed capacity at a residential hospice care center shall not be subject to certificate of need review under this chapter if the department determined prior to June 1994 that the construction, development, or other establishment of the residential hospice care center was not subject to certificate of need review under this chapter.

(2) For purposes of this section, a "residential hospice care center" means any building, facility, place, or equivalent that opened in December 1996 and is organized, maintained, and operated specifically to provide beds, accommodations, facilities, and services over a continuous period of twenty-four hours or more for palliative care of two or more individuals, not related to the operator, who are diagnosed as being in the latter stages of an advanced disease that is expected to lead to death.

NEW SECTION. Sec. 51. (1) A facility's nursing services, food, administrative, and operational component rates, existing on June 30, 1998, weighted by medicaid resident days, and adjusted by a factor specified in the biennial appropriations act, shall be the facility's nursing services, food, administrative, and operational component rates for the period July 1, 1998, through September 30, 1998.

(2) A facility's return on investment and property component rates existing on June 30, 1998, or as subsequently adjusted or revised, shall be the facility's return on investment and property component rates for the period July 1, 1998, through September 30, 1998, with no increase for the period July 1, 1998, through September 30, 1998.

NEW SECTION. Sec. 52. The following acts or parts of acts are each repealed:

(1) RCW 74.46.105 and 1995 1st sp.s. c 18 s 91, 1985 c 361 s 10, & 1983 1st ex.s. c 67 s 5;

(2) RCW 74.46.115 and 1995 1st sp.s. c 18 s 92 & 1983 1st ex.s. c 67 s 6;

(3) RCW 74.46.130 and 1985 c 361 s 11, 1983 1st ex.s. c 67 s 7, & 1980 c 177 s 13;

(4) RCW 74.46.150 and 1983 1st ex.s. c 67 s 8 & 1980 c 177 s 15;

(5) RCW 74.46.160 and 1995 1st sp.s. c 18 s 93, 1985 c 361 s 12, 1983 1st ex.s. c 67 s 9, & 1980 c 177 s 16;

(6) RCW 74.46.170 and 1995 1st sp.s. c 18 s 94, 1983 1st ex.s. c 67 s 10, & 1980 c 177 s 17;

(7) RCW 74.46.180 and 1995 1st sp.s. c 18 s 95 & 1993 sp.s. c 13 s 2;

(8) RCW 74.46.210 and 1991 sp.s. c 8 s 14 & 1980 c 177 s 21; and

(9) RCW 74.46.670 and 1983 1st ex.s. c 67 s 35 & 1980 c 177 s 67.

NEW SECTION. Sec. 53. RCW 74.46.595 and 1995 1st sp.s. c 18 s 98 are each repealed effective July 2, 1998.

NEW SECTION. Sec. 54. The following acts or parts of acts are each repealed, effective June 30, 1999:

(1) 1998 c . . . s 29 (section 29 of this act) (uncodified); and

(2) 1998 c . . . s 30 (section 30 of this act) (uncodified).

NEW SECTION. Sec. 55. Sections 1 through 37, 40 through 49, and 52 through 54 of this act take effect July 1, 1998.

NEW SECTION. Sec. 56. 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. 57. (1) Sections 9, 10, 19, 20, 22 through 28, 31, and 46 of this act are each added to chapter 74.46 RCW.

(2) Sections 19, 20, 22 through 28, and 31 of this act shall be codified in part E of chapter 74.46 RCW.

NEW SECTION. Sec. 58. Section 51 of this act takes effect July 1, 1998, and expires October 1, 1998.

NEW SECTION. Sec. 59. Sections 38 and 39 of this act take effect October 1, 1998."

The President declared the question before the Senate to be the motion by Senator West that the Committee on Ways and Means striking amendment to Engrossed Second Substitute House Bill No. 2935 not be adopted.

The motion by Senator West carried and the striking committee amendment was not adopted.

MOTION

Senator West moved that the following amendment be adopted: