WSR 22-19-081

PROPOSED RULES

DEPARTMENT OF

FISH AND WILDLIFE

[Filed September 20, 2022, 12:34 p.m.]

Original Notice.

Preproposal statement of inquiry was filed as WSR 22-11-094.

Title of Rule and Other Identifying Information: 2022 Hydraulic project approval (HPA) marine shoreline stabilization rule amendment. The rule will amend WAC 220-660-370.

Hearing Location(s): On October 28-29, 2022, at 8:00 a.m., in-person at Spokane Community College, 985 South Elm Street, Colville, WA 99114; and webinar/teleconference. Visit our website at https://wdfw.wa.gov/about/commission/meetings or contact the commission office at 360-902-2267 (email commission@dfw.wa.gov) for instructions on how to join the meeting.

Date of Intended Adoption: On or after November 18, 2022.

Submit Written Comments to: Theresa Nation, P.O. Box 43200, Olympia, WA 98504-3200, email ShorelineStabilizationRule@PublicInput.com, fax 360-902-2946 Attn: Theresa Nation, submit comments online at https://publicinput.com/ShorelineStabilizationRule or by phone at 855-925-2802, project code 2265, by October 31, 2022.

Assistance for Persons with Disabilities: Contact Washington department of fish and wildlife (WDFW) ADA coordinator, phone 360-902-2349, fax 360-902-2946 Attn: Theresa Nation, TTY 360-902-2207, email ADAProgram@dfw.wa.gov, by October 31, 2022.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: WDFW proposes to amend WAC 220-660-370 Bank protection. The agency's purpose for this rule amendment is to implement SSB 5273, passed by the legislature in 2021. Rule changes will:

Hydraulic code rules in chapter 220-660 WAC, implementing chapter 77.55 RCW, are significant legislative rules under RCW 34.05.328.

Reasons Supporting Proposal: WDFW is proposing rule amendments implementing SSB 5273 (chapter 279, Laws of 2021). SSB 5273 added new requirements for HPA permitting. Many of the proposed changes directly incorporate language or requirements from SSB 5273. The new requirements are similar to those already in WAC 220-660-370 that apply to new shoreline stabilization and waterward replacement or rehabilitation of existing shoreline stabilization. SSB 5273 specifically applies those requirements to replacement of residential shoreline stabilization. In addition, WDFW has developed procedural language regarding how emergency and expedited projects are handled in order to achieve the least impacting technically feasible alternative, as already required in statute and in rule. This new language will help provide clarity for both HPA applicants and agency staff.

Statutory Authority for Adoption: RCW 77.04.012, 77.12.047, 77.55.021, 77.55.231, 34.05.328; and SSB 5273 (chapter 279, Laws of 2021).

Statute Being Implemented: Chapter 77.55 RCW, Construction projects in state waters.

Rule is not necessitated by federal law, federal or state court decision.

Name of Proponent: WDFW, habitat program, protection division, governmental.

Name of Agency Personnel Responsible for Drafting and Implementation: Theresa Nation, 1111 Washington Street S.E., Olympia, WA 98501, 360-902-2562; Enforcement: Kelly Still, 1111 Washington Street S.E., Olympia, WA 98501, 360-902-2605.

A school district fiscal impact statement is not required under RCW 28A.305.135.

A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Theresa Nation, 1111 Washington Street S.E., Olympia, WA 98501, phone 360-902-2562, fax 360-902-2946 Attn: Theresa Nation, email HPArules@dfw.wa.gov. The preliminary cost-benefit analysis can be found at https://wdfw.wa.gov/about/regulations/development/shoreline-stabilization-hpa-rule.

This rule proposal, or portions of the proposal, is exempt from requirements of the Regulatory Fairness Act because the proposal:

Is exempt under RCW 19.85.025(3) as the rules only correct typographical errors, make address or name changes, or clarify language of a rule without changing its effect; rule content is explicitly and specifically dictated by statute; and rules adopt, amend, or repeal a procedure, practice, or requirement relating to agency hearings; or a filing or related process requirement for applying to an agency for a license or permit.

Explanation of exemptions: Some aspects of the rule proposal that correct or clarify language without changing its effect are exempt. Other aspects are dictated by statute or related to process requirements for applying for an HPA permit.

Scope of exemption for rule proposal:

Is partially exempt:

Explanation of partial exemptions: This rule proposal amends only one section of WAC. Aspects of the proposal that incorporate requirements dictated by RCW 77.55.231 are exempt under RCW 34.05.310 (4)(e). Aspects that modify terms or wording for consistency without changing the effect of the rule are exempt under RCW 34.05.310 (4)(d). Aspects that specify the process for applying for an emergency or expedited HPA are exempt under RCW 34.05.310 (4)(g). The portion of the rule that is not exempt is the requirement that a qualified professional must prepare a site assessment, alternatives analysis and design rationale report when applying for an HPA permit for replacement or rehabilitation of residential marine shoreline stabilization.

The proposed rule does impose more-than-minor costs on businesses.

CHAPTER 1 INTRODUCTION: This report evaluates the potential costs to businesses of compliance with a WDFW proposed rule that updates Washington state's hydraulic code to clarify how residential shoreline property owners should comply with recent legislation regarding residential marine shoreline stabilization.1 This SBEIS was developed in accordance with the Regulatory Fairness Act (RFA), 19.85 RCW to determine whether the proposed rule would result in more-than-minor and disproportionate cost impacts on small businesses. The primary sources of information for this analysis include the following:

1.1 BACKGROUND: Washington state's hydraulic code (WAC 220-660-370) outlines requirements for shoreline bank protection in saltwater (i.e., marine) waters of the state in order to protect fish life from the habitat alteration that can result from certain types of shoreline protection. The existing requirements specify that a person wishing to place new shoreline protection, or replace existing protection with protection that extends waterward of the existing protection, utilize the least impacting technically feasible protection technique, and include a site assessment, alternatives analysis, and design rationale completed by a qualified professional in their permit application. In 2021, the state legislature passed SSB 5273, which amends RCW 77.55.231 to extend these requirements to the replacement of existing shoreline stabilization on residential properties. WDFW is now updating WAC 220-660-370 to be consistent with RCW 77.55.231, and to provide additional clarification with respect to the requirements.

1.2 SCOPE OF PROPOSED RULE: The proposed rule affects activities occurring on residential properties along Washington's marine shorelines, including the shorelines of Puget Sound, the Strait of Juan de Fuca, the outer coast, and along coastal estuaries. It does not change existing requirements with respect to commercial or other types of properties, nor does it affect activities occurring on residential properties along nonmarine shorelines (e.g., rivers, ponds, or inland lakes). The proposed rule specifically addresses the requirements related to the replacement or rehabilitation of existing shoreline stabilization, and does not change the requirements for installation of new structures or replacement of existing structures where the replacement occurs waterward of the existing structure.

1.3 BASELINE FOR THE SBEIS: RCW 77.55.231 requires that residential property owners on all marine shorelines of Washington state that wish to replace existing shoreline stabilization use the least impacting technically feasible alternative and submit a site assessment and alternatives analysis as part of their permit application package. In certain jurisdictions, county and municipal SMPs already specify that a qualified professional must be used to develop those reports. Although the requirement to use a qualified professional is not specified for all jurisdictions, interviews with county and municipal planners conducted in July and August 2022 suggest that it would be impossible or very challenging for an individual without the relevant professional background to fulfill the necessary requirements.2 Therefore, residential applicants looking to replace their shoreline stabilization in the counties where SMPs do not describe that a qualified professional must be hired for the analyses are still likely to hire qualified professionals for this purpose.

1.4 PROPOSED RULE REQUIREMENTS: The proposed rule would update WAC 220-660-370 to implement the RCW 77.55.231 requirement for HPA permit applicants for residential marine shoreline stabilization or armoring replacement or rehabilitation projects. Specifically, the proposed rule includes the following:

As previously described, RCW 77.55.231 constitutes a preexisting requirement regarding replacement of residential shoreline stabilizations; that is, the requirements of RCW 77.55.231 are part of the baseline of this analysis. Thus, any costs resulting from the requirements specified in RCW 77.55.231, which include the requirement that any person wishing to replace residential marine shoreline stabilization "use the least impacting technically feasible bank protection alternative for the protection of fish life" and "must conduct a site assessment to consider the least impactful alternatives … and should propose a hard armor technique only after considering site characteristics such as the threat to major improvements, wave energy, and other factors in an analysis of alternatives," are baseline costs of compliance with these preexisting requirements. The procedural language on the processing of emergency and expedited permits is exempt from RFA analysis in RCW 34.05.210 (4)(g). The focus of this analysis is on the incremental costs of the proposed rule that are above and beyond the baseline costs.

The proposed rule is focused specifically on replacement or rehabilitation projects for protecting residential shoreline properties. Accordingly, the rule making applies only to residential property shoreline owners with existing shoreline stabilization in place. The new requirement specified in the proposed rule is that, when existing stabilization requires replacement or rehabilitation, the permit applicants must hire a qualified professional to complete the site assessment and alternatives analysis. Importantly, the requirement to conduct a site assessment and alternatives analysis is a baseline requirement for these sites; however, RCW 77.55.231 does not specify the need to rely on a qualified professional for the analysis and reporting. Thus, the requirement in the proposed rule to employ a qualified professional may generate incremental compliance costs.

CHAPTER 2 SMALL BUSINESS IMPACTS: 2.1 POTENTIALLY AFFECTED SMALL BUSINESSES: Absent detailed data on businesses that own residential properties along marine shorelines of Washington, we rely upon the best available information regarding the potential extent of businesses affected by the rule. We begin by describing the extent of shoreline properties that may be affected by the proposed rule, and then describe the universe of businesses that could incur costs as a result of the rule.

Owners of marine shoreline property in Washington, whether individuals or businesses, are only affected by the proposed rule under the following circumstances:

Available data suggest 64.3 percent of Washington's marine shoreline parcels (31,823 tax parcels) are affirmatively identified as residential tax parcels, most of which are single-family residential.4,5 Exhibit ES-1 identifies the tax parcels along the marine shoreline identified as residential. For residential property owners, costs are only incurred when and if there is shoreline stabilization on their property that needs to be repaired or replaced. Of the 31,823 residential tax parcels along the Washington's marine shorelines, 8,260 (26 percent) are identified as being 100 percent modified by some type of anthropogenic intervention, while another 20,683 are identified as having some "non-zero" extent of modification.6 Finally, even in cases where residential property has existing shoreline stabilization that may require replacement, a substantial portion of Washington's marine shoreline is already subject to the requirements that are being clarified in the proposed rule (i.e., the requirement for use of a qualified professional to develop the site assessment and alternatives analysis). Specifically, five counties and 13 municipalities require that a qualified professional be used to develop the requisite analyses. Residential property owners located in these jurisdictions are not expected to incur costs due to the rule.

While nine counties and 33 municipalities do not specify this requirement, interviews with county and municipal planners conducted in July and August 2022 suggest that it would be impossible or very challenging for an individual without the relevant professional background to fulfill the necessary requirements. Therefore, residential applicants looking to replace their shoreline stabilization in the counties where SMPs do not describe that a qualified professional must be hired for the analyses are still likely to hire qualified professionals for this purpose. Residential property owners (potentially including small businesses) within these jurisdictions needing to repair or rehabilitate shoreline stabilization are unlikely to, but could potentially, incur costs as a result of the rule.

Costs of residential shoreline stabilization projects are generally borne by the property owners, which are frequently residents (i.e., households) and not businesses. However, in some cases, businesses may own residential properties or otherwise bear costs for replacing or rehabilitating residential shoreline stabilizations. Specifically, businesses that may incur costs as a result of the proposed rule may include those within the following North American Industry Classification System (NAICS) codes defining economic sectors:

Additionally, businesses that are run out of an individual's residence may be affected by the rule. There are a wide range of business types that may fit this description and data are not available identifying the numbers and types of businesses associated with residential shoreline properties.

Data limitations do not allow for a specific enumeration and identification of the potentially affected businesses. Specific limitations include:

As described previously, most residential property owners with existing shoreline stabilization are likely already using qualified professionals to develop site assessments and alternatives analyses and are unlikely to incur costs as a result of the proposed rule. Nonetheless, there is some potential that individual property owners outside of areas where qualified professionals are required may incur the costs of utilizing a professional as a result of the proposed rule, and these property owners may include businesses.

Data limitations preclude the specific identification of businesses that have the potential to incur costs as a result of the rule. Within the counties with marine shorelines, including those where use of a qualified professional for site assessment and alternatives analysis is explicitly already required, there are 12,279 businesses representing NAICS 813990 (organizations including HOAs) and 4,547 representing NAICS 531110 (lessors of residential properties).9 Of this universe of businesses in counties with marine shorelines, over 99 percent of those businesses are small (i.e., employ fewer than 50 people). Importantly, these businesses may be located anywhere within the county, are not specifically located on the marine shoreline, and are not specifically located on residential property. Data on home-based businesses are not available. This analysis conservatively assumes that all home-based businesses employ fewer than 50 individuals and are small.

"Minor cost" is defined in RCW 19.85.020 as "a cost per business that is less than 0.3 percent of annual revenue or income or one hundred dollars, whichever is greater, or one percent of annual payroll." Data limitations prevent identification of the average annual revenues for the potentially affected businesses. As such, this analysis conservatively assumes a minor cost threshold of $100, which is more likely to underestimate than overestimate the minor cost threshold for a given business.

2.2 COST OF COMPLIANCE: Consistent with RCW 77.55.040, this analysis evaluates the relevance of the following potential categories of costs to comply with the proposed rule:

The proposed rule would only generate additional costs to residential shoreline property owners, including businesses, if, absent the rule, they would comply with existing requirements without the use of a qualified professional (e.g., by having a construction firm submit a report to document slope instability). Most residential property owners with existing shoreline stabilization are likely already using qualified professionals to develop site assessments and alternatives analyses and are unlikely to incur costs as a result of the proposed rule. To the extent that a residential shoreline property owner's use of a qualified professional results specifically from the proposed rule, this analysis identifies the costs associated with having a qualified professional complete this report.

The cost of employing a qualified professional to complete the site assessment and alternatives analysis ranges from $3,000 to $10,000.10 This range of costs represents estimates from industry representative interviews and email communications. This range of costs is relevant to multiple project types (new armoring structure project, rehabilitation or replacement shoreline stabilization project), proposed armoring types (e.g., hard armoring, hybrid armoring, soft-shore armoring), number of considered alternatives, and residential property shoreline length. This is because the base level of geotechnical analysis and reporting is unchanged across these metrics. For the same reasons, costs are also similar whether a residential applicant is applying for a general HPA, emergency, or expedited permit.11 The range of costs is also unlikely to differ between residential property owners who operate their property as a business and property owners who simply reside within their property.

2.3 ASSESSMENT OF MINOR COST: Given data limitations, the minor cost threshold for businesses potentially incurring costs due to the proposed rule (i.e., located on a residential, marine-facing parcel, having existing shoreline stabilization that requires replacement, and not already required to engage a qualified professional to develop a site assessment and alternatives analysis due to local ordinances) is assumed to be $100. Because the minor cost threshold is the greater of $100 or 0.3 percent of average annual revenues, this assumption is more likely to understate than overstate the minor cost threshold for these businesses.12 As noted above, the cost of engaging a qualified professional to develop the requisite report could range, on average, from $3,000 to $10,000. As described previously, it is unlikely that businesses will experience new costs as a result of this rule. To the extent that a business will incur costs as a result of the proposed rule, those costs are likely to be more than minor.

2.4 DISPROPORTIONATE ECONOMIC IMPACT ANALYSIS: When proposed rule changes cause more-than-minor costs to small businesses, RFA (RCW 19.85.040) requires an analysis that compares the cost of compliance for small businesses with the cost of compliance for the 10 percent of businesses that are the largest businesses required to comply with the proposed rules to determine whether the costs are considered disproportionate. As described in section 2.1, over 99 percent of the businesses operating within the counties with marine shorelines in the relevant NAICS code categories are small, and the analysis assumes that most home-based businesses are also small. As such, this analysis finds that, to the extent that businesses will incur costs associated with the rule, the proposed rule is likely to disproportionately impact small businesses. Accordingly, this SBEIS identifies and documents cost mitigation strategies.13

2.5 COST MITIGATION STRATEGIES: RCW 19.85.030 requires that, when a rule is expected to disproportionately impact small businesses, the agency consider several methods for reducing the impact of the rule on small businesses. These methods may include decisions that were made in determining the provisions of the rule itself or opportunities to reduce the costs of implementing the rule as written. WDFW has considered the following opportunities to limit the costs of the rule to businesses.

WDFW acknowledges that the pool of qualified professionals who possess the skills to prepare site assessments and alternatives analysis reports is limited. WDFW has partnered with sea grant and the shore friendly program to develop the Alternatives to Bulkheads training series. The series is geared toward shoreline planners, consultants, and marine contractors. It is WDFW's hope that training more practitioners will increase industry capacity and minimize costs by reducing the potential for project delays and/or increased costs that may result from high demand and low supply of qualified professionals. The first two units of the series were launched through the coastal training program in the spring of 2022.

WDFW has chosen to apply new rule requirements only to residential shoreline stabilization replacement, mirroring the legislative changes in SSB 5273. However, the ecological impacts of replacing shoreline stabilization are accrued for all such projects, including commercial and industrial properties, and not just residential projects. Commercial and industrial shorelines are much more likely to have small business landowners than residential sites. By not expanding the rule to include commercial and industrial shorelines at this time, WDFW is taking the potential effects on small businesses into consideration.

RCW 19.85.030(2) specifies particular options that the agency must consider in mitigating rule costs. Exhibit 2 identifies each type of cost mitigation opportunity and how WDFW has considered them during this rule-making process.

2.6 INVOLVEMENT OF SMALL BUSINESSES IN RULE-MAKING PROCESS: The proposed rule targets shoreline stabilization activities on residential properties and does not directly regulate a specific industry or group of businesses. While residential property owners may be businesses, this is generally not the case. In order to ensure due consideration of potential effects on small businesses, WDFW is taking a broad approach to outreach, communicating the objectives of the rule making and capturing input from diverse stakeholders. This provided opportunities for potentially affected small businesses to be involved in the rule-making process. The outreach activities and events as of September 1, 2022, are summarized in Exhibit 3.

2.7 JOBS CREATED OR LOST: Through the requirement that residential property owners wishing to replace or rehabilitate existing marine shoreline stabilization utilize a qualified professional to develop a site assessment and alternatives analysis, the rule has the potential to impose costs on small businesses operating on residential marine parcels. These costs would only be incremental costs of the proposed rule if the requirement to use a qualified professional to develop a site assessment and alternatives analysis is not already in place through the local government's SMP and would only be incurred in the event that existing shoreline stabilization requires replacement or rehabilitation. As repair and replacement for a given shoreline stabilization project occurs infrequently, these costs are generally anticipated to be incurred one time, or infrequently (rather than being ongoing costs). Although the costs are more-than-minor, they are relatively low and would occur only infrequently, and it is thus unlikely that the costs incurred would result in job loss.

A requirement that a qualified professional be used to develop a site assessment and alternatives analysis may result in an increased demand for those services. Several individuals interviewed identified that a relatively limited pool of qualified individuals exists to perform these services in the region. To the extent that increased demand for these services results in qualified professional firms hiring additional staff, creation of jobs could be considered an indirect effect of the rule. However, whether this would occur, and the number of businesses or jobs affected, is uncertain.

2.8 SUMMARY CONCLUSIONS: This rule making applies specifically to residential shoreline property owners who need to replace existing shoreline stabilization. The rule making requires this population, which may include small businesses, to employ a qualified professional in developing site assessments and alternatives analyses. It is unlikely that this rule will generate costs, and if it does, the costs to small businesses are likely to be very limited for the following reasons:

Available data do not allow for a specific identification of the number of small businesses operating on marine shoreline residential properties that may experience costs as a result of the rule, or the extent to which those businesses are small. Employment data for businesses potentially operating on residential parcels within the affected counties suggest 99 percent of these businesses are small. It is unlikely that residential property owners, including small businesses, will incur costs as a result of this rule. However, to the extent that businesses do incur these costs, the costs would be borne disproportionately by small businesses, and are likely to be more-than-minor.

A copy of the statement may be obtained by contacting Theresa Nation, 1111 Washington Street S.E. Olympia, WA 98501, phone 360-902-2562, fax 360-902-2946 Attn: Theresa Nation, email HPArules@dfw.wa.gov. Please refer to the full SBEIS document with appendices found at https://wdfw.wa.gov/about/regulations/development/shoreline-stabilization-hpa-rule.

September 20, 2022

Annie Szvetecz

Rules Coordinator

OTS-4064.2