Oil spill response tax and oil spill administration tax

As of April 1, 2018, owners of crude oil or petroleum products that are delivered via pipeline in Washington may have to pay oil spill response and oil spill administration taxes (E2SSB 6269, Chapter 262, Laws of 2018).

What are the oil spill taxes?

Oil spill response and oil spill administration taxes apply when a marine terminal or bulk oil terminal receives crude oil or petroleum products in Washington from a:

• vessel or barge;
• rail tank car; or
• pipeline.

How do I pay the tax?

The owner of the crude oil or petroleum products pays the tax directly to:

• the marine terminal operator or bulk oil terminal operator, or
• the Department of Revenue, but only if the crude oil or petroleum products owner possesses a direct pay permit.

What is the tax rate?

The oil spill response tax rate is 1 cent per 42-gallon barrel of crude oil or petroleum product.
The oil spill administration tax rate is 4 cents per 42-gallon barrel.

When funds in the oil spill response account fall to $8 million, owners of crude oil or petroleum products must pay the oil spill response tax. Once the account balance exceeds $9 million, the department turns the tax off until the account balance dips below $8 million again.

What are the funds used for?

The state uses the oil spill tax revenues as follows:

• The oil spill response tax pays for oil spills that have clean-up costs of more than $50,000.
• The oil spill administration tax pays for oil spill prevention, response, and habitat restoration.

Is there a credit?

Taxpayers may claim a credit against oil spill tax paid on crude oil or petroleum products subsequently exported or sold for export from the state. The tax only applies to products consumed within the state.