The Department of Ecology says the move would protect sensitive shellfish beds, marine life and swimming beaches from harmful bacteria, but some boat groups have raised concerns about costly retrofits.
"This is a pollution source that we can prevent," said Amy Jankowiak, the project lead with the Department of Ecology.
The proposed "no discharge zone" was one of many strategies identified in the Puget Sound Partnership's ambitious plan to improve and protect water quality in the region.
"Everyone who lives here has a vested interest in a healthy Puget Sound," Ecology Director Maia Bellon said in a statement.
The designation would cover Puget Sound from Sequim to south Puget Sound to Bellingham, and include Lake Washington, Lake Union and the Lake Washington Ship Canal. It would not apply to the Columbia River or the Strait of Juan de Fuca.
More than two dozen states have established no-discharge zones, which must be approved by the U.S. Environmental Protection Agency.
Ecology has been considering the idea for two years. The agency said Wednesday it is taking public comment on a draft proposal, before it submits a formal petition to the EPA. If approved, it would be the first zone established in the Northwest.
Currently, boaters are allowed to pump treated sewage overboard anywhere in Puget Sound. Vessels can only dump raw sewage in ocean waters more than 3 miles from the coast.
Many vessel owners currently pump out toilet waste at stationary facilities, hold waste in tanks, or treat the waste.
But most commonly used MSDs don't treat sewage adequately to more stringent state water quality standards, Ecology officials said, because they don't effectively treat solids, toxics and nutrients.
"Although the total volume of vessel discharge is small compared to other sources of wastewater, the ability to discharge near or in shellfish beds with little or no treatment presents a significant public health risk," Jankowiak said.
Charlie Costanzo, vice-president of the Pacific region for The American Waterways Operators, said the proposal will be costly for many tug boat operators.
"It's seems like an easy community to target, but I don't think it is delivering added benefits to Puget Sound," he said. He said it would cost at least $125,000 to add a holding tank, not including other costs.
Costanzo said Ecology hasn't shown that treated discharge from vessels is having a negative impact on Puget Sound, and he pointed to several other sewage sources.
Jankowiak said there's "enough evidence that vessel discharges compound Puget Sound's existing health problems."
Most recreational boaters already have holding tanks or can comply with the rule by using pump out facilities, she noted.
The proposal would be phased in to allow vessels time to meet the requirements.
Doug Levy, state lobbyist for the Recreational Boating Association of Washington, said his group was concerned that the entire Puget Sound would be designated off limits, rather than certain targeted, shallow areas where shellfish beds are prevalent.