CITY OF SEATTLE
ORDINANCE __________________
COUNCIL BILL __________________
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AN ORDINANCE relating to heating oil; imposing a tax on heating oil service providers; directing the expenditure of heating oil tax revenues; directing relevant City departments to create a plan for regulating the use of heating oil tanks; adding a new Chapter 5.47 to the Seattle Municipal Code; and amending Sections 5.30.010, 5.30.060, 5.55.010, 5.55.040, 5.55.060, 5.55.150, 5.55.165, 5.55.220, 5.55.230, and 6.208.020 of the Seattle Municipal Code.
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WHEREAS, The City of Seattle (“City”) has a goal to become a carbon-neutral city by 2050 and has adopted a strategy for achieving this goal through Resolution 31447, adopting the 2013 Seattle Climate Action Plan; and
WHEREAS, as part of its 2013 Seattle Climate Action Plan, the City set a 2030 goal for reducing emissions from residential buildings by 32 percent from 2008 levels; and
WHEREAS, emissions tracking from 2008 to 2016 through a citywide greenhouse gas inventory shows the City is not currently on track in per-year carbon emission reductions to meet these targets; and
WHEREAS, since the City adopted the 2013 Climate Action Plan in 2011, the dangers posed by climate change have become clearer and more alarming, as revealed in the 2018 report released by the United Nations Intergovernmental Panel on Climate Change, which synthesized over 6,000 peer-reviewed studies and predicted the collapse of natural ecosystems and catastrophic climate change unless climate pollution is eliminated globally by 2050; and
WHEREAS, recognizing the climate crisis as a moral imperative, the City Council adopted Resolution 31895 in August 2019, establishing the goals for a Green New Deal for Seattle and identifying actions necessary to meet these goals, which include eliminating climate pollution by 2030, addressing current and historical injustices, and creating stable, well-paying jobs; and
WHEREAS, in keeping with the Green New Deal for Seattle’s commitment to a just transition for workers whose jobs currently depend on the fossil fuel industry, if the shift away from the use of oil heat results in substantial job losses, the City commits to finding additional resources to support worker training and other investments, as necessary; and
WHEREAS, the use of heating oil in the City emits carbon pollution that would be substantially lessened if heating oil users converted from oil-fired heating systems to electric systems; and
WHEREAS, refrigerants used in electric heating systems typically contain hydrofluorocarbons (HFCs) that, if not disposed of properly, contribute to global warming and the City Council commits to advocating for statewide legislation to expedite the reduction of HFCs with high global warming potential in consumer appliances, such as electric heat pumps; and
WHEREAS, underground heating oil tanks should be analyzed for the risk they pose, as many could be beyond their useful life, posing an environmental hazard to soil, surface water, groundwater and property as a result of leaking tanks; and
WHEREAS, to reduce future hazards of heating oil tank leaks, The City of Seattle intends to develop a plan to regulate heating oil tanks that will require owners to decommission or replace with a modern tank by December 31, 2028; and
WHEREAS, the City Council recognizes that the requirement to replace or decommission heating oil tanks may pose a financial burden to middle-income and fixed-income households, renters, and seniors, and commits to reducing the financial burden of converting from oil to electric heat; and
WHEREAS, the Washington State Pollution Liability Protection Act (chapter 70.149 RCW) protects tank owners from the financial hardship related to damaged heating oil tanks expires on July 1, 2030, and may require additional resources to fulfill claims from Seattle as a result of implementing this requirement; and
WHEREAS, promoting the use of biodiesel allows for a bridge option for the approximately 17.000 heating oil customers that helps to protect nearly one hundred high-wage, local union jobs for Teamsters Joint Council 28 and IBEW Local 46; and
WHEREAS, The City of Seattle intends to exercise its taxing authority, as granted by the Washington State Constitution and as authorized by the Washington State Legislature, to tax the business of selling heating oil in the City;
WHEREAS, a tax on businesses selling heating oil in Seattle will finance conversions from oil heating systems to electric heating systems for low-income households, including those participating the City’s Utility Discount Program; NOW, THEREFORE,
BE IT ORDAINED BY THE CITY OF SEATTLE AS FOLLOWS:
Section 1. A new Chapter 5.47 is added to the Seattle Municipal Code as follows:
CHAPTER 5.47 HEATING OIL TAX
5.47.010 Administrative provisions
All of the provisions contained in Chapter 5.55 shall have full force and application with respect to taxes imposed under this Chapter 5. 47 except as may be expressly stated to the contrary herein.
5.47.020 Definitions
The definitions contained in Chapter 5.30 shall be fully applicable to this chapter except as may be expressly stated to the contrary herein. The following additional definitions shall apply throughout this Chapter 5.47:
“Biodiesel” means monoalkyl esters of long chain fatty acids derived from plant or animal matter that meet the registration requirements for fuels and fuel additives established by the United States Environmental Protection Agency and standards established by ASTM International. Biodiesel feedstocks include non-palm-based vegetable oils, yellow grease, used cooking oil, or animal fats. For the purposes of this Chapter 5.47, biodiesel does not include fuel made with palm oil.
“Heating oil” means any petroleum product used for space and water heating in oil-fired furnaces, heaters, and boilers, including stove oil, diesel fuel, or kerosene. “Heating oil” does not include petroleum products used as fuels in motor vehicles, marine vessels, trains, buses, aircraft, or any off-highway equipment not used for space heating, or for industrial processing or the generation of electrical energy.
“Heating oil service provider” means any person engaging in the business of making retail sales of heating oil.
5.47.030 Tax imposed; rates
A. There is imposed a tax on every person engaging within the City in the business of making retail sales of heating oil. The amount of the tax due shall be $.236 per gallon of heating oil sold at retail and delivered to the buyer or the buyer’s representative within the City.
B. The sale of biodiesel is exempt from the tax and the heating oil service provider shall separately report to the City the heating oil and any biodiesel sales, if applicable. The tax shall apply only to the portion of petroleum-based product when the heating oil contains a blend of biodiesel.
C. If the heating oil service provider chooses to pass along the tax to its customer, then the tax must be identified and stated as a separate line item on a customer invoice.
5.47.040 Heating oil tax - When due
The heating oil tax imposed by this Chapter 5.47 shall be due and payable in accordance with Section 5.55.040. The heating oil tax shall be due and payable in quarterly installments. The Director may use discretion to assign businesses to a monthly or annual reporting period. Forms for such filings shall be prescribed by the Director. Persons discontinuing their business activities in Seattle shall report and pay the heating oil tax at the same time as they file their final business license tax return.
5.47.050 Tax revenue expenditures
A. The Director of Finance shall create a Heating Oil Tax account, to which revenues collected under this Chapter 5.47 shall be deposited, and from which associated expenditures may be paid.
B. The Heating Oil Tax account shall receive all revenues related to the tax imposed by this Chapter 5.47. The Director of Finance is authorized to create other accounts or subaccounts as may be needed to implement the Heating Oil Tax under this Chapter 5.47. Revenues shall be used in accordance with subsection 5.47.050.C and to supplement existing General Fund support for subsidizing conversions to electric heating systems, and may not be used to supplant General Fund appropriations.
C. The funds in the Heating Oil Tax account shall be spent on programs and activities to reduce carbon emissions caused by the sale and use of heating oil, including but not limited to the following:
1. Financial assistance to households to encourage conversion of an oil-fired heating system to an electric system.
2. Grants to low-income households at or below 80 percent of area median income, as most recently determined by the United States Department of Housing and Urban Development for the Seattle metropolitan statistical area, with priority given to households participating in the Utility Discount Program, meeting eligibility requirements outlined in Chapter 21.49.040. The Director and the Director of Housing are authorized to enter into an agreement to implement a low-income program, on terms and conditions deemed appropriate by the Director and Director of Housing.
3. Administrative costs to manage incentive programs, deliver services to low-income households, and oversee program compliance.
4. Workforce development support for oil service providers to gain skills and capacity for the sale and installation of clean heating technology.
5. Education and outreach to households heating with oil, including but not limited to brochures, mailings, online information, and direct community outreach.
E. The Director of the Office of Sustainability and Environment, or designee, may grant low-income households that use heating oil a reimbursement up to $120 annually. The reimbursement may be distributed as a credit on the homeowner’s or tenant’s City Light account, or as a check on an annual basis.
Section 2. Section 5.30.010 of the Seattle Municipal Code, last amended by Ordinance 125324, is amended as follows:
5.30.010 Definition provisions
The definitions contained in this Chapter 5.30 shall apply to the following chapters of the Seattle Municipal Code: Chapters 5.32 (Amusement Devices), 5.35 (Commercial Parking Tax), 5.40 (Admission Tax), 5.45 (Business License Tax), 5.46 (Square Footage Tax), 5.47 (Heating Oil Tax), 5.48 (Business Tax-Utilities), 5.50 (Firearms and Ammunition Tax), 5.52 (Gambling Tax), 5.53 (Sweetened Beverage Tax), and 5.55 (General Administrative Provisions) unless expressly provided for otherwise therein, and shall also apply to other chapters and sections of the Seattle Municipal Code in the manner and to the extent expressly indicated in each chapter or section. Words in the singular number shall include the plural and the plural shall include the singular. Words in one gender shall include the other genders.
Section 3. Subsection 5.30.060.C of the Seattle Municipal Code, which section was last amended by Ordinance 125324, is amended as follows:
5.30.060 Definitions, T-Z
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C. “Taxpayer” means any “person,” as herein defined, required by Chapter 5.55 to have a business license tax certificate, or liable for any license, tax, or fee, or for the collection of any tax or fee, under Chapters 5.32 (Revenue Code), 5.35 (Commercial Parking Tax), 5.40 (Admission Tax), 5.45 (Business License Tax), 5.46 (Square Footage Tax), 5.47 (Heating Oil Tax), 5.48 (Business Tax-Utilities), 5.50 (Firearms and Ammunition Tax), 5.52 (Gambling Tax), and 5.53 (Sweetened Beverage Tax), or who engages in any business or who performs any act for which a tax or fee is imposed under those chapters.
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Section 4. Section 5.55.010 of the Seattle Municipal Code, last amended by Ordinance 125324, is amended as follows:
5.55.010 Application of chapter stated
Unless expressly stated to the contrary in each chapter, the provisions of this Chapter 5.55 shall apply with respect to the licenses and taxes imposed under this Chapter 5.55 and Chapters 5.32 (Amusement Devices), 5.35 (Commercial Parking Tax), ((5.37 (Employee Hours Taxes),)) 5.40 (Admission Tax), 5.45 (Business License Tax), 5.46 (Square Footage Tax), 5.47 (Heating Oil Tax), 5.48 (Business Tax-Utilities), 5.50 (Firearms and Ammunition Tax), 5.52 (Gambling Tax), 5.53 (Sweetened Beverage Tax), and under other titles, chapters, and sections in such manner and to such extent as indicated in each such title, chapter, or section.
Section 5. Subsection 5.55.040.A of the Seattle Municipal Code, which section was last amended by Ordinance 125324, is amended as follows:
5.55.040 When due and payable-Reporting periods-Monthly, quarterly, and annual returns-Threshold provisions-Computing time periods-Failure to file returns
A. Other than any annual license fee or registration fee assessed under this Chapter 5.55, the taxes imposed by Chapters 5.32 (Amusement Devices), 5.35 (Commercial Parking Tax), 5.40 (Admission Tax), 5.45 (Business License Tax), 5.46 (Square Footage Tax), 5.47 (Heating Oil Tax), 5.48 (Business Tax-Utilities), 5.50 (Firearms and Ammunition Tax), 5.52 (Gambling Tax), and 5.53 (Sweetened Beverage Tax) shall be due and payable in quarterly installments. The Director may use discretion to assign businesses to a monthly or annual reporting period depending on the tax amount owing or type of tax. Taxes imposed by subsections 5.52.030.A.2 and 5.52.030.B.2 for punchboards and pulltabs shall be due and payable in monthly installments. Tax returns and payments are due on or before the last day of the next month following the end of the assigned reporting period covered by the return.
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Section 6. Subsection 5.55.060.A of the Seattle Municipal Code, which section was last amended by Ordinance 125324, is amended as follows:
5.55.060 Records to be preserved-Examination-Inspection-Search warrants-Estoppel to question assessment
A. Every person liable for any fee or tax imposed by this Chapter 5.55 and Chapters 5.32, 5.35, 5.40, 5.45, 5.46, 5.47, 5.48, 5.50, 5.52, and 5.53 shall keep and preserve, for a period of five years after filing a tax return, such records as may be necessary to determine the amount of any fee or tax for which the person may be liable; which records shall include copies of all federal income tax and state tax returns and reports made by the person. All books, records, papers, invoices, ticket stubs, vendor lists, gambling games, and payout information, inventories, stocks of merchandise, and other data, including federal income tax and state tax returns, and reports needed to determine the accuracy of any taxes due, shall be open for inspection or examination at any time by the Director or a duly authorized agent. Every person’s business premises shall be open for inspection or examination by the Director or a duly authorized agent. For the purposes of this Section 5.55.060, for the tax imposed by Chapter 5.53, “business premises” means wherever the person’s business records and tax documents are maintained and does not mean every site owned or operated by the person.
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Section 7. Subsection 5.55.150.E of the Seattle Municipal Code, which section was last amended by Ordinance 125324, is amended as follows:
5.55.150 Appeal to the Hearing Examiner
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E. The Hearing Examiner shall ascertain the correct amount of the tax, fee, interest, or penalty due either by affirming, reversing, or modifying an action of the Director. Reversal or modification is proper if the Director’s assessment or refund denial violates the terms of this Chapter 5.55, or Chapters 5.30, 5.32, 5.35, ((5.37,)) 5.40, 5.45, 5.46, 5.47, 5.48, 5.50, 5.52, or 5.53.
Section 8. Section 5.55.165 of the Seattle Municipal Code, last amended by Ordinance 125324, is amended as follows:
5.55.165 Director of Finance and Administrative Services to make rules
The Director of Finance and Administrative Services shall have the power and it shall be the Director’s duty, from time to time, to adopt, publish, and enforce rules and regulations not inconsistent with this Chapter 5.55, with Chapters 5.30, 5.32, 5.35, 5.40, 5.45, 5.46, 5.47, 5.48, 5.50, 5.52, or 5.53, or with law for the purpose of carrying out the provisions of such chapters, and it shall be unlawful to violate or fail to comply with any such rule or regulation.
Section 9. Subsections 5.55.220.A and 5.55.220.B of the Seattle Municipal Code, which section was last amended by Ordinance 125324, are amended as follows:
5.55.220 Unlawful actions-Violation-Penalties
A. It shall be unlawful for any person subject to the provisions of this Chapter 5.55 or Chapters 5.32, 5.35, 5.40, 5.45, 5.46, 5.47, 5.48, 5.50, 5.52, and 5.53:
1. To violate or fail to comply with any of the provisions of this Chapter 5.55, or Chapters 5.32, 5.35, 5.40, 5.45, 5.46, 5.47, 5.48, 5.50, 5.52, and 5.53, or any lawful rule or regulation adopted by the Director;
2. To make or manufacture any license required by this Chapter 5.55 except upon authority of the Director;
3. To make any false statement on any license, application, or tax return;
4. To aid or abet any person in any attempt to evade payment of a license fee or tax;
5. To refuse admission to the Director to inspect the premises and/or records as required by this Chapter 5.55, or to otherwise interfere with the Director in the performance of duties imposed by Chapters 5.32, 5.35, 5.40, 5.45, 5.46, 5.47, 5.48, 5.50, 5.52, and 5.53;
6. To fail to appear or testify in response to a subpoena issued pursuant to Section 3.02.120 in any proceeding to determine compliance with this Chapter 5.55 and Chapters 5.32, 5.35, 5.40, 5.45, 5.46, 5.47, 5.48, 5.50, 5.52, and 5.53;
7. To testify falsely in any investigation, audit, or proceeding conducted pursuant to this Chapter 5.55;
8. To continue to engage in any business activity, profession, trade, or occupation after the revocation of or during a period of suspension of a business license tax certificate issued under Section 5.55.030; or
9. In any manner, to hinder or delay the City or any of its officers in carrying out the provisions of this Chapter 5.55 or Chapters 5.32, 5.35, 5.40, 5.45, 5.46, 5.47, 5.48, 5.50, 5.52, and 5.53.
B. Each violation of or failure to comply with the provisions of this Chapter 5.55, or Chapters 5.32, 5.35, ((5.37,)) 5.40, 5.45, 5.46, 5.47, 5.48, 5.50, 5.52, or 5.53 shall constitute a separate offense. Except as provided in subsection 5.55.220.C, any person who commits an act defined in subsection 5.55.220.A is guilty of a gross misdemeanor, punishable in accordance with Section 12A.02.070. The provisions of Chapters 12A.02 and 12A.04 apply to the offenses defined in subsection 5.55.220.A, except that liability is absolute and none of the mental states described in Section 12A.04.030 need be proved.
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Section 10. Subsection 5.55.230.A of the Seattle Municipal Code, which section was last amended by Ordinance 125324, is amended as follows:
5.55.230 Denial, revocation of, or refusal to renew business license tax certificate
A. The Director, or the Director’s designee, has the power and authority to deny, revoke, or refuse to renew any business license tax certificate or amusement device license issued under the provisions of this Chapter 5.55. The Director, or the Director’s designee, shall notify such applicant or licensee in writing by mail in accordance with Section 5.55.180 of the denial of, revocation of, or refusal to renew the license and on what grounds such a decision was based. The Director may deny, revoke, or refuse to renew any business license tax certificate or other license issued under this Chapter 5.55 on one or more of the following grounds:
1. The license was procured by fraud or false representation of fact.
2. The licensee has failed to comply with any provisions of this Chapter 5.55.
3. The licensee has failed to comply with any provisions of Chapters 5.32, 5.35, 5.40, 5.45, 5.46, 5.47, 5.48, 5.50, 5.52, or 5.53.
4. The licensee is in default in any payment of any license fee or tax under Title 5 or Title 6.
Section 11. Subsection 6.208.020.A of the Seattle Municipal Code, which section was last amended by Ordinance 125627, is amended as follows:
6.208.020 Denial, revocation of, or refusal to renew business license
A. In addition to any other powers and authority provided under this Title 6, the Director, or the Director's designee, has the power and authority to deny, revoke, or refuse to renew any business license issued under the provisions of this Chapter 6.208. The Director, or the Director's designee, shall notify such applicant or licensee in writing by mail of the denial, revocation of, or refusal to renew the license and on what grounds such a decision was based. The Director may deny, revoke, or refuse to renew any license issued under this Chapter 6.208 on one or more of the following grounds:
1. The license was procured by fraud or false representation of fact.
2. The licensee has failed to comply with any provisions of this Chapter 6.208.
3. The licensee has failed to comply with any provisions of Chapters 5.32, 5.35, 5.40, 5.45, 5.46, 5.47, 5.48, 5.50, or 5.52.
4. The licensee is in default in any payment of any license fee or tax under Title 5 or Title 6.
5. The property at which the business is located has been determined by a court to be a chronic nuisance property as provided in Chapter 10.09.
6. The applicant or licensee has been convicted of theft under subsection 12A.08.060.A.4 within the last ten years.
7. The applicant or licensee is a person subject within the last ten years to a court order entering final judgment for violations of chapters 49.46, 49.48, or 49.52 RCW, or 29 U.S.C. 206 or 29 U.S.C. 207, and the judgment was not satisfied within 30 days of the later of either: a. The expiration of the time for filing an appeal from the final judgment order under the court rules in effect at the time of the final judgment order; or b. If a timely appeal is made, the date of the final resolution of that appeal and any subsequent appeals resulting in final judicial affirmation of the findings of violations of chapters 49.46, 49.48, or 49.52 RCW, or 29 U.S.C. 206 or 29 U.S.C. 207.
8. The applicant or licensee is a person subject within the last ten years to a final and binding citation and notice of assessment from the Washington Department of Labor and Industries for violations of chapters 49.46, 49.48, or 49.52 RCW, and the citation amount and penalties assessed therewith were not satisfied within 30 days of the date the citation became final and binding.
9. Pursuant to subsections 14.16.100.A.4, 14.17.075.A, 14.19.100.A.4, 14.20.080.A.4, 14.22.115.A.4, and 14.23.115.A.4, the applicant or licensee has failed to comply, within 30 days of service of any settlement agreement, with any final order issued by the Director of the Office of Labor Standards, or any final order issued by the Hearing Examiner under Chapters 14.16, 14.17, 14.19, 14.20, 14.22, and 14.23 for which all appeal rights have been exhausted, and the Director of the Office of Labor Standards has requested that the Director deny, refuse to renew, or revoke any business license held or requested by the applicant or licensee. The denial, refusal to renew, or revocation shall remain in effect until such time as the violation(s) under Chapters 14.16, 14.17, 14.19, 14.20, 14.22, and 14.23 are remedied.
10. The business is one that requires an additional license under this Title 6 and the business does not hold that license.
11. The business has been determined under a separate enforcement process to be operating in violation of law.
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Section 12. If any section or subsection of the Seattle Municipal Code affected by this ordinance is amended by ordinance without reference to amendments made by this ordinance, each ordinance shall be given effect to the extent that the amendments do not conflict in purpose, and the code reviser may publish the section or subsection in the official code with all amendments incorporated therein.
Section 13. The provisions of this ordinance are declared to be separate and severable. The invalidity of any clause, sentence, paragraph, subdivision, section, or portion of this ordinance, or the invalidity of its application to any person or circumstance, does not affect the validity of the remainder of this ordinance or the validity of its application to other persons or circumstances.
Section 14. By July 1, 2020, the Office of Sustainability and Environment, the Seattle Fire Department, the Seattle Department of Construction and Inspections, and other relevant departments shall complete an implementation plan to address the prevention of future environmental hazards from leaking heating oil tanks with the intent that all heating oil storage tanks in Seattle are either decommissioned or replaced with a modern tank no later than December 31, 2028. The plan shall include but not be limited to residential and stakeholder outreach, necessary code updates or code authority, tank replacement, risk assessment, racial equity analysis, and decommissioning requirements and specifications. The residential outreach plan should include presenting residents with financing options for converting from an oil heating system to an electric heating system. Additionally, the plan should consider: an exemption for residents over the age of 65 who use heating oil systems from the requirement to replace or decommission their heating oil tanks; and strategies for fully funding conversions from oil-fired heating systems to electric systems for all households that qualify under subsection 5.47.050.C.2. A copy of the implementation plan should be submitted to the City Clerk, the Chair of the Sustainability and Transportation Committee, or successor committee, and the Green New Deal Oversight Board.
Section 15. The Council requests that the Office of Sustainability and Environment (OSE):
A. Provide a status update on outreach efforts to date regarding the new heating oil tax by July 1, 2020. The update should include the number of households contacted; any changes in the number of low-income households with oil heat enrolled in the City’s Utility Discount Program following outreach efforts; a summary of feedback from residents, labor unions, and heating oil service providers, received during outreach efforts, including a description of challenges encountered during the outreach process; and proposed strategies for overcoming these challenges, if applicable; and
B. Report annually on Heating Oil Tax program status, including the number of homes the City has helped convert from oil heat to electricity and outcomes of workforce development support, and collaborate with the Office of Economic Development, Seattle Department of Construction and Inspections, and the Office of Housing to determine a methodology to assess the following potential impacts of the Heating Oil Tax:
1. Job losses, gains, and retention in the Seattle area’s home heating, ventilation, and air conditioning industry, with a focus on workers represented by labor unions and family-wage jobs, and what additional investments are necessary to support workers in the event of net job losses; and
2. Rates of conversion from oil heating systems to electric systems in homes occupied by renters enrolled in the Utility Discount Program, including identifying who is paying the costs of conversion and whether additional measures are necessary to alleviate the costs if renters are overly burdened.
3. Analysis of the viability to extend the heating oil tax reimbursement to households whose income is between 70 percent state median income and 80 percent area median income.
OSE is requested to report to Council by July 1, 2021, and every year thereafter up to 2028.
Section 16. Sections 1 through 13 of this ordinance shall take effect on September 1, 2020.
Section 17. This ordinance shall take effect and be in force 30 days after its approval by the Mayor, but if not approved and returned by the Mayor within ten days after presentation, it shall take effect as provided by Seattle Municipal Code Section 1.04.020.
Passed by the City Council the ________ day of _________________________, 2019, and signed by me in open session in authentication of its passage this _____ day of _________________________, 2019.
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President ____________ of the City Council
Approved by me this ________ day of _________________________, 2019.
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Jenny A. Durkan, Mayor
Filed by me this ________ day of _________________________, 2019.
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Monica Martinez Simmons, City Clerk
(Seal)