Big Oil wins in state legislature, in an apparent quid pro quo for estate tax fix

[Revised and corrected. 2013/06/23]

Thursday night the state legislature passed a bill, SB 5296, that weakened the Model Toxic Control Act. I got email from Washington Conservation Voters asking me to thank legislators who opposed the bill. See Support our kids; end the Big Oil Tax Loophole.

According to Washington Environmental Council, the weakening allows private companies to potentially use public funds to do cleanups. It also creates an “alpha” account that overlaps an existing account. Kerry McHugh, Communications Directory of WEC, explains:

• SB 5296 weakens one of our state’s most important environmental laws on toxic cleanup – the Model Toxics Control Act, which was passed by the voters through initiative almost 25 years ago.
• One concerning implication is that developers may receive MTCA funds for clean up, even if a privately liable party is responsible. (See section 9 and section 10).
• Despite the stated goal of the bill, the changes proposed in E2SSB 5296 will not accelerate cleanups nor prevent sweeping MTCA funds for the General Fund or for other unrelated purposes.

SB 5295 passed the House by a vote of 67-18 — indicating that many Democrats voted for it. Here’s why.

Concurrently, lawmakers passed a bill to fix the estate tax. The state Supreme Court had ruled that due to a technical problem with the estate tax law, the state Department of Revenue would have to begin sending out refund checks totaling up to $160,000,000. Just in the nick of time, before the DOR was to begin sending out checks, the legislature passed a bill, HB 2075, to close the loophole, and the governor signed it. See Wash. Gov. Inslee signs estate tax fix into law, Wash . House OKs change to state estate tax, and State House, Senate offer estate tax measures.

The Seattle Times article says, “The agreement on the estate tax measure was the first significant agreement between the House and Senate on budget issues.”

So, our lawmakers closed one loophole and opened another one.

A state legislator confirmed to me that there was a handshake, a quid pro quo, for the estate tax fix and the weakening of the MTCA.

Deputy state insurance commissioner and former legislator Brendan Williams describes the bills as follows: “Huge win for Big Oil last night in ‘bipartisan’ bill to modify voter-passed Model Toxic Control Act. Will of the people (MTCA) sacrificed to save another expression of people’s will (estate tax). Grateful to all who voted no; will be frightful to see what other ‘compromises’ come slouching forth.”

What perplexes me is: if there was a deal between the House and the Senate leadership to pass these two bills (allowing them to be brought up for a vote), why did so many Democrats vote aye for the bad environmental bill?    Perhaps the Democrats who voted for the bill want to go on record as helping Big Oil, so they can get campaign donations from the fossil fuel industry.

On the other hand, a deal is a deal, and to save the estate tax perhaps the Democrats were forced to agree to give a gift to Big Oil.  If so, then maybe the nay votes by Democrats were symbolic. I suppose the caucus leadership doesn’t have absolute control over lawmakers, who are given freedom to vote their conscience, or otherwise, on bills.

If anyone knows more about what happened, please explain in comments below, or email me.

The Senate approved the estate tax bill 30-19; presumably the Republicans who voted for the bill wanted to go on record as supporting kids over millionaires.

Speaking of loopholes, the state House passed a bill, ESHB 2038 to close a loophole that benefits Big Oil.  “Investing in the education legacy trust account for K-12 basic education and higher education by narrowing or eliminating tax preferences and extending taxes set to expire.”  According to Washington Environmental Council, the “accidental” loophole was created in the 1940s to benefit the timber industry, before there were oil refineries in Washington State. Now 98% of the benefit goes to the oil industry.   Kerry McHugh says, “When reviewed by the Joint Legislative Audit and Review Committee (JLARC) in 2011, no public policy goal could be determined for the loophole.      Sightline Institute has a great series of blog posts on this loophole: http://daily.sightline.org/blog_series/big-oils-accidental-tax-loophole/.”

The state could save $41 million per biennium if it closed the loophole. So far the senate, under control of the “bipartisan” coalition led by Rodney Tom and the Republicans, has refused to go along with the House.

According to the email from the Washington Conservation Voters, the legislators who voted no on SB 5296 and who deserve thanks are:

Senators: Chase, Conway, Darneille, Eide, Fraser, Frockt, Hasegawa, Keiser, Kline, Kohl-Welles, McAuliffe, Murray, and Nelson.

Representatives: Bergquist, Carlyle, Fey, Fitzgibbon, Hunt, Jinkins, Kagi, Liias, Maxwell, Morrell, Pedersen, Pollet, Reykdal, Ryu, Sawyer, Stanford, Tarleton, and Tharinger.

The email also says there is still hope that the Big Oil loophole can be fixed: “By closing this loophole, $41 million will be freed up to directly fund education. Tell your legislator to choose kids over Big Oil.”

Of course, the Republicans are mostly to blame for this mess. Ultimately the problem is money in politics.

The quid pro quo and the weakening of the Model Toxic Control Act were completely missed by the Daily Journal’s Associated Press article on the environmental bill, Washington state Gov. Jay Inslee signs environmental cleanup fund bill into law.  The wording of that article gives the impression that SB 5296 strengthened environmental cleanup.

The Seattle Times article hints at the quid pro quo:

 The Senate majority has been seeking movement on a handful of policy bills, and during passage of its budget last week, lawmakers said on the Senate floor that revenue-related bills, including the estate tax, would not pass without some of those bills, including one dealing with workers’ compensation settlements. The Senate took the vote on the estate tax after the House quickly passed a measure dealing with environmental cleanup funds. That measure was also signed by Inslee Friday morning. The Senate also passed a wide-ranging education reform [sic] bill Thursday night that is now being considered by the House.

Addendum 1: Sen. Rodney Tom’s explanation of the SB 5296 (from the Senator’s email to constituents):

New law: Changes to state’s toxic-cleanup program aimed at creating jobs, improving environment 

In broad bipartisan votes the Senate and House of Representatives approved a bill – subsequently signed into law by the governor – designed to create jobs and improve Washington’s environment by improving the state’s toxic-cleanup program.

The state’s toxic-cleanup program and the hazardous-substance tax that supports it were created by voters through a 1988 initiative. Tax dollars flowing into the account have in recent years become a frequent target of diversions to the general fund. Meanwhile cleanups have lagged, leaving as many as 5,000 sites around the state awaiting action.

Senate Bill 5296 increases the number of toxic sites that can be cleaned and promotes job creation through those cleanup projects. It also generates long-term economic growth by renewing contaminated lands and making them suitable for re-development.

Funds generated by the hazardous-substance tax in excess of $140 million per year will be directed to the newly-created Environmental Legacy Stewardship Account to be appropriated on capital projects that meet innovation and efficiency standards. Appropriations from the account would have to be approved by the Legislature to ensure transparency and accountability.

Addendum 2

A state legislator confirmed to me that there was a handshake, a quid pro quo, for the estate tax fix and the weakening of the MTCA.  Furthermore, the legislator said that Republican Senator Doug Eriksen, who is “owned” by Big Oil, was behind SB 5296. Indeed, on his website, Senator Eriksen acknowledges leading on the issue: NEWS: Whatcom County senators broker landmark agreement on toxic-cleanup reform.

In Report: Ferndale lawmaker accepts most free meals from lobbyists, the Bellingham Herald reports that

From those documents, the biggest beneficiary of lobbyist expense accounts was Sen. Doug Ericksen, R-Ferndale, who recently rose to lead the Senate’s committee focused on the environment. In the first four months of this year, Ericksen had at least 62 occasions where he benefited from free meals, drinks or golf, according to records. That’s about every other day over the first four months of the year — and even more frequent if weekends are excluded.

Many of the lobbyists who treated Ericksen represented energy and oil companies, such as BP. Through the legislative session, Ericksen pushed ahead with a major overhaul in the state’s environmental cleanup laws that the industry supported. And he used his position in the Senate to drive changes to Gov. Jay Inslee’s top legislative priority, altering a bill to strip symbolic language that would have blamed climate change on humans. He also gave a climate change skeptic a rare block of time to tout his unconventional views.