Lower oil prices are bad news for pollution cleanup

Prices at the pump these days are good for drivers – and not so good for Washington’s more than 5,000 contaminated sites in need of cleanup.

Much of the money to clean toxic zones and prevent new ones from forming comes from a voter-approved state tax on petroleum products and other “hazardous substances.”

But lower oil prices combined with state lawmakers’ demands to spread tax revenue around have left a shortfall of more than $40 million for cleanups.

“That has really thrown a wrench in the port’s work,” said Alex Smith, director of environmental programs for the Port of Olympia, one agency hoping for cleanup money.

The Port of Olympia had been slated for a grant of more than $6 million as it tries to figure out how to remove sediment tainted with dioxin from beneath Budd Inlet.

A byproduct of industrial processes and of burning various substances, dioxin can work its way up the food chain from dirt-dwelling critters to humans, Smith said.

Even with help from anyone else who might share liability, the port could still come up short on a cleanup expected to top $50 million and perhaps reach $100 million, she said. Those price tags include the expense of removing Swantown Marina, dredging the dirt beneath it and replacing the marina.

“It’s just such a big amount,” Smith said. “It’s probably no less than $50 million to clean up the area just in the vicinity of the port peninsula, and it’s just not something that the port has the wherewithal to do.”

Before fuel ever makes it into a car, it’s subject to not only 63-cents-a-gallon federal and state gas taxes but also the hazardous-substances tax of $7 for every $1,000 in wholesale value.

Because it’s charged by price rather than by the gallon, the hazardous-substances tax fluctuates with gas prices. This fiscal year’s tax collections are projected to be down by more than a third from a peak two years earlier.

Funding the Legislature handed out last summer for contamination cleanups would be gone if lawmakers hadn’t authorized a loan from the fund handling Washington’s share of the 2009 Asarco bankruptcy settlement.

Even with the $13 million loan, the decline in revenue has wiped out more than three-quarters of the $57 million the Department of Ecology said is needed in the current two-year period to maintain cleanup plans.

Gov. Jay Inslee’s budget proposals call for issuing about $26 million in state bonds and using that borrowed money to pay for cleanups, enough to cover more than two-thirds of the scheduled work.

That still leaves in doubt authorized spending such as on the Budd Inlet project or to reimburse the Port of Tacoma for two major cleanups it has completed on the former Arkema chemical and Kaiser Aluminum sites.

“We’re putting a lot of stuff on hold that we thought was going to be able to move ahead,” said Seth Preston, an Ecology spokesman.

“The state is unfortunately turning into an unreliable partner when it comes to these cleanups because the money’s not there at the end of the day” said Sean Eagan, a Port of Tacoma lobbyist.

Eagan said uncertainty makes the port less likely to move ahead with new projects such as another cleanup on the old Arkema chemical plant site. This one is on a 43-acre piece of land on the Hylebos Waterway that the port said may cost as much as $40 million or more to remove a smorgasbord of contaminants including arsenic, metals and petroleum.

The port took on environmental liability as part of buying the property at a discount, and says it could be the future site of a terminal, perhaps for barges.

MONEY MOVED AROUND

Voters approved the tax as part of a 1988 initiative that declared, “The main purpose of this act is to raise sufficient funds to clean up all hazardous waste sites and to prevent the creation of future hazards due to improper disposal of toxic wastes into the state’s land and waters.”

The shortfall masks the fact that more money is expected to pour in from the tax this fiscal year than in any year before 2007. Gas prices have dropped to about $2.50 a gallon in Washington, but those prices are not unprecedented. A gallon cost less than $1 when voters created the tax in 1988, or less than $2 in today’s dollars.

But the tax has also become the funding source for a slew of state programs and pass-through grants.

Cleanup of polluted sites is part of the work, but much of the money goes to preventing pollution in various ways.

In the two-year budget period that ended in mid-2013, the most recent with information in a detailed report, the two funds supplied by the hazardous-substance tax spent $287 million.

As much as $112 million of that money was spent on the Department of Ecology’s toxics cleanup program and a related program helping local governments manage waste.

Some of the rest, $53 million, went to Ecology’s water-quality program, funding low-impact development and other strategies to help clean stormwater runoff before it heads down the drain. Rainwater picks up hazardous wastes as it flows over pavement and roofs on its way to lakes, rivers and Puget Sound.

But various other Ecology operations also received shares - including administration, air pollution programs and shoreline management - much of which had previously been paid for out of the state’s general fund. Lawmakers of both parties say use of the funds has strayed from the original intent.

The Legislature also raided about $250 million from the funds to balance Great Recession-era budgets, replacing only about half of that money with bonds, according to Ecology’s report.

While the raids were temporary, some of the shifts in uses remain.

“Now that the general fund is improving, we need to start pulling back those dollars,” said Sen. Doug Ericksen, R-Ferndale and chairman of the Senate environmental committee.

A similar sentiment comes from Rep. Hans Dunshee, the new top House budget writer, who said he would like to pay for Ecology operations with the general fund and align the toxics funds more closely with the intent of the initiative.

But any source of money will have many “hungry mouths” trying to eat it up, said Dunshee, D-Snohomish. He sees a need to raise the tax rate temporarily.

“This all has to do with the Saudis trying to break the frackers,” Dunshee said, alluding to Middle East oil exporters driving prices low in hopes of making North American shale oil production unprofitable. He expects oil prices won’t stay low.

Republicans who control the Senate are unlikely to agree to an increase, which would be fought by the oil industry. Ericksen said fluctuations in the taxes are normal and the answer is to put money where it’s supposed to go.

He wants a tight focus on cleanups, and said some programs at Ecology may need to end.

“Why am I going to be funding those as opposed to important toxic cleanup sites that are going to lead to economic redevelopment when they’re done?” Ericksen said.

Dunshee said both cleanup and prevention are important. Cleanup “sucks up significant amounts of money” because of “good-old-boy political power” on behalf of ports, but it shouldn’t come at the cost of preventing stormwater from entering waterways, he said.

“That’s our No. 1 pollution,” he said.

This story was originally published January 5, 2016 at 3:06 AM with the headline "Lower oil prices are bad news for pollution cleanup."