Environmental and Land Use Department Update
Winter 2003
Amending the Watershed Planning Act
By Peter G. Scott
Introduction
In 2003, the Washington State
Legislature will consider at least three
bills aimed at the Watershed Planning
Act (the “Act”), RCW 90.82.005 et
seq. Much of that effort is directed at
implementing watershed plans once
they are locally approved. This article
discusses the Act, some of the related issues and outlines
the proposed legislation.
Background
Washington’s watershed planning effort, or the “25-14”
process as it is often referred to, got underway with
legislative authorization in 1998. The Watershed Planning
Act is an unusual, and so far untested, law with two stated
purposes. The first is to “develop a more thorough and
cooperative method” for evaluating the state’s current
water resource situation. The other purpose of the Act is to
“provide local citizens with the maximum possible input
concerning their goals and objectives for water resource
management and development.”
There are three phases to the existing statutory process:
1) formation and organization of a “planning unit”; 2) data
collection and review; and 3) resource evaluation and plan
approval.
The basic idea is for local initiating governments
(counties, municipalities, utilities and tribes) to get
together with local water users and interest groups in a
planning unit to study the watershed and develop plans for
the future use of water and related resources.
The planning process is optional. If the initiating
governments decide to form a planning unit, it may then
apply to the state for grant funding through a designated
lead agency. The Act also requires state agencies with
jurisdiction to provide requested technical assistance.
Presently, there are 33 active planning units,
encompassing 42 of the state’s 62 “water resource
inventory areas” or WRIA. See WAC 173-500.
Once funded, a planning unit must complete the water
quantity component. In the simplest of terms, a water
budget is prepared, accounting for the volume of water
present in the planning
area and the amount that
Amending the Watershed Planning Act . . .1
has been spoken for in
one form or another. The
Do Treaties Require Habitat
Protection? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
planning unit must also
estimate how much water
ABA Approves Asbestos Litigation
Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
is needed for future use
Drews to Speak at GOSH Conference . . . . .4
and identify strategies for
increasing water supplies.
It’s Getting Easier to Be Green . . . . . . . . . . . . .6
Planning units may
New Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
also elect to complete up
to three other planning components, covering water quality,
instream flow and habitat for which additional funding is
available.
Completed watershed plans must be approved first by
the planning unit and then by the legislative body of each
county that intersects the planning area. County approval
requires public hearings, after which each county may
accept or reject the plan without modification. Plan
components may be approved individually. Rejected
components may only be modified by the planning unit.
Importantly, no obligation can be validly imposed on a
government entity unless the obligated entity participates
as a voting member of the planning unit and votes on the
record to accept the obligation. Obligations on state
agencies are made binding through rulemaking. County
obligations require passage of an ordinance.
It is widely believed that the Watershed Planning Act
effectively accomplishes its first stated purpose — to
“develop a more thorough and cooperative method” — for
evaluating water resources. Questions arise, however, about
whether the law provides a meaningful opportunity for local
input in future resource management and development.
Inside This Issue:
What Is (or Is Not) Being Done to Address Public Concerns
Perhaps the most prevalent concern is that once the water
budget and related work is done, the state will use the data
to make allocation or enforcement decisions, but will not
have to consider the wishes of the local government as
articulated in the plan. Stated another way, many planners
are fearful that once the state has the information it wants,
the watershed plans will languish on the shelf instead of
fulfilling the promise of local input.
Continued on Page 5
Page 2
Environmental and Land Use Department Update
Do Treaties Require Habitat Protection?
By Bart J. Freedman
United States v.
Washington, a case
currently pending before
federal district court in
Seattle, will determine
whether treaties
between the United
States and several
Indian tribes require the State of
Washington to protect salmon habitat
from environmental degradation due to
development. The plaintiff tribes allege
that culverts owned by the State impair
salmon runs and seek an injunction to
force the State to fix the culverts.
Background
In 1970, the United States, on behalf of
treaty tribes, filed an action against the
State of Washington based on the
Stevens Treaties of 1854 and 1855. The
Stevens Treaties were negotiated by
Governor Isaac Stevens as part of a
government effort to induce Washington
tribes to voluntarily move onto
reservations. Each of the treaties contain
the provision that “the right of taking
fish, at all usual and accustomed grounds
and stations, is further secured to said
Indians, in common with all citizens of
the Territory . . . .” Among other things,
the lawsuit sought a “fair share” of the
salmon harvest, which the federal
government alleged to be fifty percent,
and protection of the habitat upon which
the salmon populations depended. After
four years of litigation, the court reached
“The judge further reasoned
that the ‘moderate living’
standard, rather than acting
as a potential limitation on
tribal salmon harvest, actually
guaranteed to the tribes
enough fish to maintain a
livelihood.”
only the first issue, determining that the
tribes were entitled to half of the
available salmon harvest. The United
States Supreme Court eventually
affirmed, holding that this “equal
sharing” doctrine was subject only to a
“moderate living” limitation, which allows
the Indian share of the salmon harvest to
be reduced if a share of less than fifty
percent will support a moderate living for
tribal members.
Whether and to what extent the
treaties require the state to prevent
degradation of the salmon habitat was
not decided in the first round of United
States v. Washington. In 1980, however,
another federal judge in Washington
addressed the issue in a related
proceeding. He ruled that the State must
not degrade or authorize the degradation
of salmon habitat if it would interfere
with the tribes’ “moderate living” needs.
The judge further reasoned that the
“moderate living” standard, rather than
acting as a potential limitation on tribal
salmon harvest, actually guaranteed to
the tribes enough fish to maintain a
livelihood.
The treaties reserve to the tribes a
sufficient quantity of fish to satisfy their
moderate living needs, subject to a
ceiling of 50 percent of the harvestable
run. That is the minimal need which
gives rise to an implied right to
environmental protection of the fish
habitat. Therefore, the correlative duty
imposed upon the State (as well as the
United States and third parties) is to
refrain from degrading the fish habitat to
an extent that would deprive the tribes of
their moderate living needs.
The court also made clear that it
would be very difficult to show that
habitat-damaging development would not
interfere with a tribe’s moderate living
needs.
The State appealed this decision to
the United States Circuit Court of
Appeals for the Ninth Circuit. The Ninth
Circuit first replaced the “moderate
living” analysis with a “reasonableness”
test, under which all parties were to take
“reasonable steps commensurate with the
resources and abilities of each to
preserve and enhance the fishery . . . .”
When the Ninth Circuit reconsidered en
banc, it reversed its earlier decision. The
panel declined to rule on the scope of
the treaty right without concrete facts,
stating that such a ruling would be
“imprecise in definition and uncertain in
dimension.”
New Litigation Regarding Treaty Fishing Rights
On January 16, 2001, the United States,
on behalf of several tribes, filed a new
proceeding in the U.S. District Court for
the Western District of Washington. The
suit likely includes the “concrete facts”
necessary for the court to define in the
“The court also made clear
that it would be very difficult
to show that habitat-damaging
development would not
interfere with a tribe’s
moderate living needs.”
context of culverts the scope of the
Stevens Treaties’ rights and the
concomitant burdens upon public and
private entities within Washington.
In the suit, the tribes claim that
culverts illegally harm salmon habitat.
Because the State failed to correctly
design and reasonably maintain the
culverts, the tribes claim that their treaty
fishing rights have been violated. The
tribes further claim that the State has
violated its duty to construct and
maintain culverts that do not diminish
salmon populations. The lawsuit seeks
injunctive relief directing the State to
identify and retrofit for several hundred
culverts that allegedly impair fish
passage. The suit also seeks
determination of the State’s duty under
the treaties so that the State can
construct and maintain culverts in
accordance with that duty.
In early 2002, the State, the United
States and the plaintiff tribes began
negotiating an agreement “wherein
federal agencies and state agencies could
work in tandem to repair their fishblocking culverts.” The court directed the
parties to negotiate:
(a) the development of a plan to
identify and repair State culverts, and
culverts located within the National
Forests and on other federally or tribally
Page 3
owned or controlled property;
(b) the means and methods to assure
any plan is enforceable; and
(c) the legal basis for any plan,
including whether the right “of taking
fish” contained in the Stevens Treaties
imposes a duty on any party to this case.
To accomplish these goals,
negotiations were divided into two parts:
technical and policy/legal. The technical
negotiations, which “would seek to
develop a proposed approach for
repairing all state, federal and tribal fishblocking culverts within the U.S. v.
Washington case area in a coordinated
fashion” include discussions about,
among other things, “[w]hat to do when
fish-blocking culverts not owned by the
parties are interspersed with the parties’
culverts in the same watersheds.” The
policy/legal discussions include, among
other things, “[h]ow to secure funding for
culvert repair, and from what sources.”
As of this writing, the parties have not
reached a settlement. The parties set
February 21, 2003, as the final date to
reach settlement. The final deadline for
summary judgment motions is tentatively
set for September 2003 and trial is
tentatively set for December 2003.
Potential Impact of the Current Litigation on
Public Entities within Washington
The current litigation could have a
significant impact on public entities
within Washington. Any resolution in the
case, whether through settlement or
court ruling, may affect existing and
planned culverts owned by public and
private entities within Washington. Any
resolution may also further define the
scope of the Stevens Treaties’ rights and
create a precedent for future claims
against public entities in the State, erect
“The current litigation could
have a significant impact on
public entities within
Washington.”
hurdles to construction of buildings,
seawalls, bridges, and docks alongside
streams, bays, and other waters, and
require existing structures to be
retrofitted.
Although the suit seeks relief only in
regards to State-owned culverts, culverts
owned by public and private entities
within Washington may be affected by
any resolution in the case. The parties
are negotiating how to fund culvert
repairs and what to do if culverts not
owned by the parties impair salmon runs.
These negotiations may result in changes
in State policy and legislation affecting
all culverts within the State, whether
owned by the State or other parties. A
court ruling may also necessitate such
changes.
If the court issues an opinion holding
that the treaties impose an environmental
servitude within Washington, non-culvert
projects may be scrutinized for any
potential salmon habitat degradation.
Planned developments may need to
include provisions for mitigating their
effect on salmon habitat. The extent of
those developments may be restricted
and some developments may be
precluded. Existing developments may
also need to be retrofitted to mitigate
their effect on salmon habitat.
On the other hand, it is far from clear
that the Ninth Circuit or the U.S.
Supreme Court will grant a broad ruling
to the tribe on any appeal. The Ninth
Circuit could reinstitute its
“reasonableness test” for determining
whether habitat degradation violated
treaty rights. In the alternative, the court
could force the state to fix some culverts,
but structure the ruling narrowly, such
that the decision would not establish an
effective foothold for additional claims.
Litigation Department
Seattle
bartf@prestongates.com
ABA Approves Asbestos Litigation Resolution
By John C. Bjorkman
At the recently
concluded American
Bar Association midyear meetings in
Seattle, the ABA’s
House of Delegates
approved a revised
Resolution 302
supporting certain
federal legislative changes to national
asbestos litigation. The explosive growth
of asbestos filings throughout the United
States is well known. See Trends in
Northwest Asbestos Litigation, by G.
William Shaw and Cabrelle M. Abel,
Environmental Litigation Update: 2002
in Review, at www.prestongates.com. In
November 2002, Dennis Archer, the
ABA’s President-Elect, requested a
Commission to study the problem. The
Commission’s February 2003 report and
Resolution 302 were designed to express
the ABA’s view on this important issue
and to assist the incoming 108th
Congress as it considers any proposed
legislation.
The Problem
Throughout the early 1990s the number
of new asbestos claims was relatively
stable. The Rand Institute estimated
plaintiffs filed between 15,000 and
20,000 new cases per year. By 2000 to
2002, the Johns Manville Trust alone
received 200,000 new claims. The
recent explosion of filings involves largely
asymptomatic claimants with no
malignancies or functional impairment.
The Rand Institute again estimates that
66% to 90% of the new cases involve
Continued on Page 4
Page 4
Environmental and Land Use Department Update
ABA Approves Asbestos Litigation Resolution (cont’d)
plaintiffs who have some detectable
changes in their lungs that are
“consistent with” asbestos-related
disease but are at present experiencing
no impairment.
Preston Gates’ David Tang and
Bill Neukom are members of
the ABA’s House of Delegates.
bankrupt due to asbestos-related
liabilities, over twenty in the last two
years. None has claimed an inability to
pay fair compensation to truly sick
claimants.”
The financial impact to the employees
of those companies is significant,
representing an average loss of $25,000
to $50,000 in lifetime wages and up to
25% reduction in the value of certain
retirement benefits.
Resolution 302
The Commission identified
inconsistencies in how for-profit litigation
screening companies review x-rays and
the conclusions drawn from them. Some
of these companies achieved positive
readings in as high as 94% of the cases
reviewed – independent audits by
reviewers with no financial interest have
generally been unable to verify these
results.
The report highlights the dilemma in
which claimants find themselves. In
many states, the statute of limitations
may begin to run upon receipt of such
screening information. Without a lawsuit,
the plaintiff could later be barred from
suing even if he or she should later
develop asbestos-related disease.
Finally, the Commission noted the
deleterious effect on business:
“The financial impact of this flood of
non-impairment claims has been
profound … more than sixty otherwise
financially viable companies have gone
In developing its recommendations, the
Commission sought out the assistance of
the American Medical Association and
ten of the nation’s most prominent
physicians in the area of pulmonary
function. The proposal sought to protect
the right of the truly sick asbestos
claimant, to protect the sources of
payment for his or her claims, to protect
unimpaired but exposed claimants whose
claims might otherwise expire during the
disease’s latency period, and at the same
time free American business from the
unfair burden of responding to
unimpaired claims.
Resolution 302 as originally proposed
contained objective medical criteria
embodied in a recommended Standard
that plaintiffs must meet before filing a
claim. A claimant must (1) show a history
of occupational or other exposure and
reveal his or her smoking history; (2)
demonstrate a minimum latency period of
15 years before exposure and disease; (3)
Drews to Speak at GOSH
Conference
present x-ray evidence meeting a certain
standard level of lung irregularity; and (4)
present pulmonary function test results
showing decreased lung function and
ruling out the probability that it results
from other causes. The Resolution further
requires a report from a diagnosing
medical doctor.
In adopting a revised Resolution 302,
the House of Delegates accepted the
Standard but coupled it with “similar
medical standards.” Thus, the ABA will
support federal legislative remedies that
limit claims to those individuals who can
meet the proposed impairment Standard
or similar medical standards.
The Resolution as adopted included
the proposed changes to the applicable
statute of limitations. Any mandatory
time period in which claimant must file
his or her claim or else be barred from
bringing suit would not start to run until
the required level of diagnosis is met.
The Future
This spring, Congress will likely begin
consideration of some or all of the above
proposed legislative solutions to the
problems present by the recent trends in
asbestos litigation. Preston’s ELUD
Update will continue to report on
developments as they occur.
Litigation Department
Seattle
johnb@prestongates.com
Save The Date!
June 11 & 12, 2003: Environmental Conference Washington
at the Washington State Trade & Convention Center, Seattle
Catherine Drews, Seattle, will be
speaking at the GOSH Conference
(Oregon Governer’s Occupational
Safety & Health Conference) on
March 6, 2003 in Portland, OR at
the Oregon Convention Center. Under
the section of What Does Homeland
Security Mean to You, subsection
Legal Aspects of Security
Vulnerability Assesments, she will be discussing the
liabilities associated with performing a security
vulnerability assessment, the Freedom of Information
Act, and typical privacy concerns in the workplace.
Topics Include:
• Water issues
• Air issues
• Endangered Species Act
• Sediments
• Homeland Security
• Permitting
• Hazardous Waste
• Energy
• Land Use
• And much more!!
Presented by:
Association of Washington Business
NW Environmental Business Council
Preston Gates & Ellis LLP
For conference updates, please visit: www.ecwashington.org
Page 5
Amending the Watershed Planning Act (cont’d from page 1)
Watershed planners most often
identify three reasons for this concern.
First, there is no provision in the Act for
the implementation of plans that are
accepted. Next, state agencies are not
bound by the plans unless they vote to
be obligated and pass a rule. Finally, the
approval process is politically
complicated.
In 2002, the Legislature
commissioned a report to address the
issue of implementation. More than a
dozen water professionals from across
the state participated in preparing a
report that was submitted to the
legislature in January 2003. In short,
the Committee concluded that the Act
should be amended to include a fourth
“implementation” phase.
In response to the Phase IV
committee’s report, the Governor’s office
has submitted request legislation that
seeks to adopt many of the committee’s
recommendations. Briefly, the proposed
amendments would provide additional
state funding to support the
development of an implementation plan,
the establishment of an oversight body,
and the preparation of interlocal
agreements. That funding would be
phased out over five years with the
expectation that local funding sources
will be used thereafter.
One of the things Governor Locke
made clear in a speech last fall in
Tacoma is the importance of watershed
planning in setting funding priorities for
future project development. Thus,
planning units that are seeking state
support for water-related projects must
demonstrate both a need and an ability
to generate matching funds.
A seemingly complimentary bill (SB
5073) would allow up to 10% of water
generated revenue to be used in support
of watershed planning and related
project work. The bill would also
authorize the various government entities
to enter in to watershed management
agreements and would amend numerous
statutes for consistency.
Together, these bills would provide
some of the tools needed by local
government to implement water
management and project development
plans. They do not, however, adequately
address concerns about state obligation.
Nor do they do anything to alleviate the
unusual and politically complicated
approval process.
Correctly or not, watershed planning
is seen as a locally driven initiative, and
there is an undeniable tension between
planning units and jurisdictional state
agencies over how plans should be used
once adopted.
A simple hypothetical illustrates the
problem. Suppose a resident in a county
that has adopted a watershed plan
applies for the right to use water from an
available source. Suppose further that
the applicant’s intended use is not
consistent with the local watershed plan.
By what authority does the Department
of Ecology accept or reject the water
right application?
“Correctly or not, watershed
planning is seen as a locally
driven initiative, and there is
an undeniable tension
between planning units and
jurisdictional state agencies
over how plans should be
used once adopted.”
If Ecology voted for the plan, and
agreed by rule to be obligated, the
county might justifiably expect a denial.
One concern is that state agencies will
use rulemaking to alter the spirit of the
plan. A third bill (SB 5027) would
address this concern by requiring
jurisdictional agencies to engage in
negotiated rulemaking and to produce a
draft rule before the plan is formally
accepted. Regardless, the applicant in
the above scenario is likely to feel
differently and the legal force of a
watershed plan remains unclear under
the state’s water code.
Nor is there any effort presently to
simplify the politically difficult plan
approval process. Most planning areas
include parts of two or more counties.
Similarly, many counties are in two or
more planning units. The difficulty in
achieving consistency between and
among the various entities is obvious.
Not only must most plans be consistent
with the ordinances of multiple counties
(including presumably zoning
requirements), but counties will have to
devote resources to approving and
coordinating multiple plans.
Other difficulties exist. For example,
many of the planning areas include large
tracts of federal or tribal lands, many of
which retain unquantified federal
reserved water rights. In some cases
federal agencies are participating. For
the most part the tribes are not, electing
to plan independently instead.
Also superimposed over the process
is the question of instream flow
requirements for salmon and other
species listed under the Endangered
Species Act. Other planning efforts, both
state and regional, are directed at this
question. Though the Governor’s request
legislation encourages coordination of
these efforts, there is no clear direction
or incentive to do so.
Conclusion
The effectiveness of local watershed
planning as a tool for managing and
developing water resources in
Washington State remains to be seen. As
many as eight watershed plans are
expected to be submitted for approval in
the coming year. It is apparent, however,
that counties are not rushing to expend
limited resources on an untested
statutory program without assurances
that watershed plans, once adopted, will
be followed by the jurisdictional state
agencies responsible for managing water
and related resources.
Given the many issues and the very
different expectations and inherent
difficulties associated with comanagement by state and local
government, it is quite clear that
legislative attention is necessary if the
objectives of the Watershed Planning Act
are to be met. One might reasonably
question whether the current legislative
efforts go far enough toward protecting
the investment that has already been
made.
Environmental and Land Use Department
Spokane
pscott@prestongates.com
Page 6
Environmental and Land Use Department Update
It’s Getting Easier to Be Green
by Claire M. Jackson and Denise M. Lietz
What is “green” power,
and how is it purchased? What incentives
exist to develop a
renewable power generation source? What is a
“green tag,” exactly? As
the profile of renewable
or “green” energy grows,
it becomes increasingly
important for businesses
and municipalities to
understand and consider both regulatory and
financial considerations
associated with renewable energy. This article
provides a few pointers regarding “green”
legislation and terminology, as well as
financial incentives for developing, operating, and consuming renewable energy.
What is “Green” Power?
Currently, there is no nationwide standard
for qualifying an energy resource as
“green,” but generally wind, solar, and
geothermal are considered the renewable
mainstays. Wind and landfill gas projects
are particularly popular—but a number of
other technologies may soon be viable,
including “wave” energy and hydrogen
fuel cells. State governments provide
increasing support for use and development of renewable energy through policymaking. The 2001 Washington State
Legislature adopted legislation requiring
all electric utilities except “small” utilities to offer their retail customers the
option to purchase qualified alternative
energy resources. RCW § 19.29A.090.
Oregon has a similar provision. (Details
regarding various Washington and Oregon
utilities’ “green tariff” programs may be
viewed on the Preston Gates & Ellis website, where the full version of this article
may be found.) These programs have contributed to the growth of the “Green Tag”
market, discussed further below. These
programs are voluntary and self-supporting; customers who choose not to participate do not fund the program. However,
Washington State now must consider a
proposed Energy Portfolio Standard
(“EPS”), which would require utilities’
portfolios to include a certain percentage
of renewable power resources for retail
loads. A similar program may be considered as part of federal energy legislation.
Bonneville Environmental Foundation and the
“Green Tag”
The Bonneville Environmental Foundation
(BEF) is a nonprofit organization founded
to fund new renewable energy resources
and watershed restoration projects.
Several Northwest utilities have partnered
with BEF to fulfill their obligation to provide a “green energy choice” to retail customers. For example, a retail customer in
Washington might wish to sign up for its
utility’s green program. While the utility
cannot arrange for electrons from a wind
or biomass project to flow directly to the
customer, it can purchase an equivalent
number of Green Tags, which could represent energy from a wind installation as far
away as Wyoming.
BEF developed the “Green Tag,” and
continues to be one of the leading retail
providers of Green Tags in the United
States. Green Tags, or green credits, are
created when wind power or other renewable energy is substituted for traditional
power. Green Tags allow the environmental and public health benefits of clean
electricity to be unbundled from the electricity itself, and sold to the environmentally-conscious consumer. One Green Tag
equals the environmental benefit associated with 1,000 kWh of renewable energy. Typically, purchase of Green Tags is
less expensive and permits more flexibility than direct purchase of green power.
Green Tag revenues go directly to development of renewable energy sources,
making it easier for power consumers to
support renewable energy and to earn a
“green” reputation. Green Tags or other
forms of green credits also may present
an opportunity for teaming with BEF (or
similar organizations), the Bonneville
Power Administration (BPA), and regional
utilities to develop and operate wind and
other renewable generation projects.
Currently, BEF sources for Green Tags
and green power include: Solar Ashland;
Hanford/White Bluffs Solar; Foote Creek
(or Wyoming) Wind; Condon Wind;
Blackfeet Wind; Stateline Wind; Roosevelt
Landfill Gas Project; and two low-impact
hydropower projects in Washington and
Idaho.
Because they stem from “green” energy sources, Green Tags displace carbon
dioxide and other emissions generated
from traditional energy plants. BEF and
the Climate Trust have entered into a tenyear joint purchase of pollution-offsetting
green power worth over $200,000. The
Green Tags will be purchased from BPA
and will come from the new wind project
at Condon, Oregon, or another Oregon
wind project. The Green Tag revenue
received by BPA will be reinvested in the
next generation of wind or another renewable energy project to serve Northwest
electricity users.
Easier to Be Green--Financial Incentives for
Renewable Energy Sources
Federal
Renewable Energy Production Incentive
(REPI). REPI, authorized under the Energy
Policy Act of 1992 and administered by
the Department of Energy, provides incentive payments for electricity produced by
new renewable energy plants; however,
the payments are dependent upon appropriations and have not been fully funded
in recent years. The production facilities
that qualify for this incentive are municipal utilities and non-profit cooperatives
that use solar, wind, geothermal, or biomass generation technology and begin
operation prior to September 30, 2003.
Solar and Geothermal Business Energy
Tax Credit. Also authorized by the Energy
Policy Act of 1992, this credit is available to businesses that invest in or buy
solar or geothermal energy properties. The
corporate tax credit is 10%, has a maximum limit, and may be carried back
three years or forward fifteen years.
Solar, Wind, and Geothermal Modified
Accelerated Cost Recovery System
(MACRS). This program gives businesses
investing in solar, wind, and geothermal
properties a depreciation deduction.
Under the Job Creation and Worker
Assistance Act of 2002, an additional
30% first year depreciation may be taken
for solar, wind and geothermal property
purchased between September 10, 2001
Page 7
properties a depreciation deduction.
Under the Job Creation and Worker
Assistance Act of 2002, an additional
30% first year depreciation may be
taken for solar, wind and geothermal
property purchased between September
10, 2001 and September 10, 2004 and
placed in service before January 15,
2005.
Wind and Biomass Renewable Energy
Production Credit (REPC). Also called the
Wind Energy Production Tax Credit, this
credit provides a credit of 1.8 cents per
kWh (2002, adjusted annually for
inflation) for energy produced using
wind, biomass, or poultry waste
technologies for the first 10 years of
facility operation. Initially authorized by
the Energy Policy Act of 1992, the
credit, which expired at the end of
2001, was extended through 2003 by
the Job Creation and Worker Assistance
Act.
Washington State
Sales and Use Tax Exemption for
Renewable Generation Equipment and
Installation. Sales of machinery and
equipment used directly in generating
electricity using fuel cells, wind, sun, or
landfill gas as the principal source of
power are exempt from Washington state
sales and use tax, as are sales of or
charges made for labor and services
rendered in respect to installing such
machinery and equipment. RCW §§
82.08.02567 and 82.12.02567.
Machinery and equipment qualifying
for the exemption include industrial
fixtures, devices, and support facilities
that are integral and necessary to the
generation of electricity using wind, sun,
or landfill gas as the principal source of
power, with certain exceptions. Id. The
exemption applies to all systems that
have a generating capacity of at least
200 watts (lowered from at least 200
kW as a result of recent legislation). The
exemption sunsets on June 30, 2009.
Absent this exemption, a developer
would be required to pay sales tax at the
rate of 6.5 to 8.8 percent on the
constructed cost of the generating plant
(excluding permitting, financing, and
other development costs that are not
invoiced as part of the constructed
cost), depending upon project location
and the corresponding local sales and
use tax. If the constructed cost of the
plant were $260 million, the applicable
sales tax would range from $16.9
million to $22.9 million. To the extent
that these costs fall within the statutory
exemption, the developer would realize
corresponding savings. In addition,
various structuring alternatives can be
pursued to realize sales, use, and other
tax savings.
High Technology Product
Manufacturers Excise Tax Exemption.
Authorized under RCW 82.63, qualified
high technology manufacturers,
including manufacturers of alternative
energy resources, are 100% exempted
from the corporate excise tax. This
exemption ends on January 1, 2004.
Oregon
Business Energy Tax Credit. This
corporate tax credit is available for a
large variety of alternative energy
investments. It is a 35% credit that is
taken over five years. Unused credit may
be carried forward over eight years and
certain non-profit organizations and
government entities may transfer their
credits for a lump-sum payment to a
partner with tax liability.
Oregon’s Energy Loan Program.
Oregon’s Energy Loan Program (also
known as SELP) is intended to help
promote energy conservation and
renewable energy resource development.
The program offers low-interest loans for
a variety of energy projects including
projects that produce energy from
renewable resources such as water,
wind, geothermal, solar, biomass, waste
materials or waste heat. The Energy
Loan Program will make loans to almost
any type of entity, including private
businesses, if the project being financed
is located in the State of Oregon.
Environmental and Land Use Department
Seattle
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denisel@prestongates.com
New Partners
Preston Gates & Ellis is pleased to announce Marnie Allen and Matthew D. Wells have been promoted to Partner.
Marnie Allen, Portland
Marnie is general counsel and land use counsel for an array of clients, including cities,
school districts, housing authorities and special districts. She concentrates her practice on
complex, controversial and innovative public projects with an emphasis in governmental
affairs and community partnerships.
Matthew D. Wells, Seattle
Matt’s practice centers around environmental and land use law counseling and litigation,
and emphasizes marine and fresh water issues. He regularly represents clients on issues
related to water rights and water quality, the Endangered Species Act (ESA), State &
Federal Superfund, as well as the National and State Environmental Policy Acts (NEPA and
SEPA).
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