Executive Summary: WDFW is developing a proposed rule that would codify existing design standards for diversion screens and fish passage, introduce a climate-adapted design standard for water crossings, and outline procedures for supporting and achieving compliance with the regulatory requirements. This SBEIS was developed in accordance with the Regulatory Fairness Act (RFA), chapter 19.85 RCW to determine whether the rule would result in a disproportionate cost impact on small businesses.

Background: Governor Inslee's southern resident orca (orca) task force identified lack of prey as a major threat to recovery of the orcas within its 2018 report, and recommended that WDFW create rules describing how chapter 77.57 RCW (the fishways, flow, and screening statues) will be implemented and enforced as one part of broader recovery efforts.1 WDFW's fish passage and screening authority has existed for many decades; however, WDFW has never created a rules chapter describing implementation of the authority. This rule making seeks to fill that gap. In addition to clarifying fish passage and screening design standards, the proposed rule incorporates a requirement for new and replacement water crossing designs to account for projected changes to hydrology as a result of climate change, so that water crossing structures built today will be capable of accommodating stream conditions (and equivalently, providing fish passage) throughout their designed lifespan.

Finally, although chapter 77.57 RCW establishes WDFW's authority to correct structures that are inadequate in terms of fish passage or protection, some of the compliance actions contained in the statute are not considered practical by today's standards and there needs to be a strategic approach to achieving compliance with this law.2 Accordingly, the proposed rule includes a process and options for WDFW to support and achieve compliance with the proposed rule.

Summary of Proposed Rule: The proposed rule includes three major components as follows:

Summary of Regulatory Baseline: Although there are a large number of privately owned fish passage structures, diversions and fish screens, and culverts and stream crossings across Washington (over 50,000 according to WDFW data),3 many of these structures would not be affected by the proposed rule for the following reasons:

Despite the existing baseline requirements for fish passage and screening, WDFW is aware that a subset of the regulated population is not currently complying with, or not aware of, the existing regulatory requirements. WDFW will help the regulated community understand how to voluntarily comply through education and technical assistance. WDFW's intentions are to strategically consider existing noncompliant structures and approach compliance reasonably by considering the nature of fish resources impacted by existing noncompliant structures as well as the quality and quantity of habitat to be gained. Thus, the focus of WDFW's proposed rule is on supporting and enforcing compliance across this population.

Changes in Behavior Generated by The Proposed Rule: Given the existing requirements and practices in developing and upgrading fish passage and screening structures in the baseline, this analysis finds that the proposed rule is most likely to affect behavior and, therefore, potentially generate costs under the following circumstances:

Potentially Affected Businesses: The proposed rule regulates structures on the landscape, rather than a particular industry or sector. WDFW maintains a database of known structures. However, it is likely that many structures exist on the landscape that are currently unknown to WDFW and ownership information provided in the database is insufficient to identify potentially affected businesses.

The structures regulated by the proposed rule are owned and managed by a broad mix of federal, state, and local governments, residential landowners, as well as businesses. While businesses owning land may belong to a wide variety of industries, commercial and industrial, businesses from certain industries may be more likely than others to own particular structure types due to the nature of their operations or scale of landholdings. For example, agricultural businesses are more likely to own diversions and crossings; forestry businesses are more likely to own crossings; and homeowner associations (HOAs, to the extent that they are incorporated and considered a business) may own diversions and crossings in residential landscapes. Nonetheless, this SBEIS provides information on potential costs to small businesses acknowledging that any businesses impacted by the proposed rule could theoretically belong to any industry.

Cost of Compliance: In situations where the proposed rule generates costs, the potential costs can range widely, mainly depending on structure type, nature of the violation, and site-specific characteristics. At the low end, a small intake pump may require an off-the-shelf screen. At the other end of the violation spectrum, a severe fish passage violation at a water crossing could necessitate installation of a replacement structure. Because of the high degree of situational variation, our analysis concluded that the compliance costs can range from around $100 to several million dollars. However, the structures most likely owned by small businesses are unlikely to be on a scale sufficient to generate costs at the higher end. For example, exceptionally large screens costing several million dollars to replace are most likely associated with hydropower production, which are categorically exempt from the proposed rule as federally regulated. Exhibit ES-1 contains a range of cost estimates for replacing each structure type.

Exhibit ES-1. Conceptual Cost Ranges for Replacing Relevant Structures: It is important to note that not all violations will require full replacement of the structure. Additionally, many grant and cost-sharing opportunities exist that can potentially offset some portion of the compliance costs borne by owners, such as the fish barrier removal board, family forest fish passage program, and salmon recovery funding board. For these reasons, the costs provided in Exhibit ES-1 should be considered as contextual information rather than as compliance costs borne by owners.

Summary Findings: The assessment of the magnitude of costs borne by businesses and the potential for disproportionate impacts to small businesses is subject to significant data limitations and uncertainty. For any businesses that incur compliance costs, the costs may exceed the minor cost threshold, depending on the project type and specifications, as well as the industry classification of the affected business. Within any industry and for any particular project, however, the costs are expected to disproportionately impact small businesses. This is because no known relationship exists between drivers of project costs and business size, so cost per $100 of revenue, cost per employee, or cost per labor hour will almost certainly be higher for small businesses.

As the potential exists for more-than-minor costs to be incurred by businesses as a result of the proposed rule, and because small businesses are expected to be disproportionately impacted in cases where costs are incurred, WDFW has identified several mitigation options to defray the impacts to small businesses. These include a strategic approach to technical assistance or compliance visits based on fish life concerns and the quality and quantity of potential habitat gains, and allowing the possibility for WDFW to defer compliance actions until a later date following identification of a violation. WDFW will also continue development of a robust technical assistance program for owners, additionally being able to identify relevant grant and cost-sharing opportunities as appropriate.

CHAPTER 1 - INTRODUCTION: This report evaluates the potential costs to businesses of compliance with a WDFW proposed rule that codifies existing design standards for diversion screens and fish passage, introduces a climate-adapted design standard for culverts and crossings, and outlines procedures for achieving voluntary and nonvoluntary compliance. This SBEIS was developed in accordance with RFA to determine whether the proposed rule would result in more-than-minor and disproportionate cost impact on small businesses. The primary sources of information for this analysis include the following:

1.1 NEED FOR THE RULE: Governor Inslee's orca task force identified lack of prey as a major threat to recovery within its 2018 report.4 One set of recommendations focused on improving habitat for prey species, recommendation number three in particular, suggested that WDFW create rules describing how chapter 77.57 RCW (the fishways, flow, and screening statues) will be implemented and enforced. Subsequently, the state legislature passed ESHB 1109 on July 28, 2019, directing WDFW to initiate the rule-making process through changes to the operating budget. WDFW's fish passage and screening authority has existed for many decades; however, WDFW has never created a rules chapter describing implementation of the authority. The proposed rule seeks to fill that gap.

In addition, WDFW intends to incorporate new standards for developing climate-adapted water crossings. WDFW has invested in research to understand how streams in Washington are likely to change as a result of climate change.5 The new standards seek to act upon this knowledge to ensure that culverts and other water crossing structures built today will accommodate stream conditions throughout their designed lifespan. The climate-adapted design standard codified in the proposed rule is also in alignment with a cooperative management agreement between WDFW and tribes established in 2019.

Finally, although chapter 77.57 RCW establishes WDFW's authority to correct structures that are inadequate in terms of fish passage or screening, imposing a correction (and potentially a lien on property) through compulsory process is not WDFW's preferred approach. The proposed rule lays out a process for WDFW to work with the regulated community to bring relevant structures into compliance before utilizing the full range of their authority.

To summarize, WDFW's objectives for this rule making include:

1. Creating a new WAC chapter describing implementation of chapter 77.57 RCW to improve fish passage and safety throughout the state;

2. Incorporating a new climate-adapted standard for culverts and other water crossing structures to ensure that they remain functional throughout their designed lifespan; and

3. Outlining a process intended to enhance compliance with the fish passage and screening standards.

1.2 REQUIREMENTS FOR DEVELOPING AN SBEIS: Chapter 19.85 RCW requires that the relevant agency prepare an SBEIS if the proposed rule "will impose more than minor costs on businesses in an industry."6 "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 $100, whichever is greater, or one percent of annual payroll.7 The guidelines for preparing an SBEIS are included in RCW 19.85.040.8 This analysis also utilizes the more specific guidance and resources provided by Washington state's office for regulatory innovation and assistance (ORIA).9 Per the SBEIS Frequently Asked Questions guidance, agencies are required to consider "costs imposed on businesses and costs associated with compliance with the proposed rules."10 Agencies are not required under chapter 19.85 RCW to consider indirect costs not associated with compliance with the rule.

1.3 SUMMARY OF THE PROPOSED RULE: WDFW is proposing a new WAC chapter to describe implementation of the fish, flow, and screening authority (chapter 77.57 RCW). One aspect of the rule is to clarify the applicability of existing standards, ensuring that they are applied at all existing and new fishways and diversions governed by chapter 77.57 RCW. The proposed rule achieves this goal by carefully defining "fishway" and "watercourse" (and equivalently, "river" and "stream"). In addition, the proposed rule requires new and replacement water crossing designs to consider future projected bankfull width and 100-year peak flows. Climate change impacts stream width and flows heterogeneously throughout Washington, so the consideration of future change should be specific to the project site. Finally, the rule defines a process for WDFW to encourage and enforce compliance among owners. In this section, we summarize how the proposed rule differs from the baseline requirements in Washington regulating fish passage and screening, design of fishways and water diversions, and enforcement (i.e., the "incremental effects" of the proposed rule).

1.3.1 FISH PASSAGE AND SCREENING STANDARDS: The proposed rule does not introduce any new or different standards for fish passage or diversion screening. The existing standards for compliant structures are currently described in the WDFW Fish Passage Inventory, Assessment, and Prioritization Manual and also partially codified in the state hydraulic code rules (chapter 220-660 WAC). The existing hydraulic code rules only apply to new hydraulic projects that "use, divert, obstruct, or change the natural flow or bed of any salt or fresh waters of the state."11 The hydraulic code was designed to protect fish life in the face of construction projects. It also included standards about fish passage and protection for many years but does not apply to structures not actively being built, replaced, or rehabilitated. This leaves out a subset of structures which fall under WDFW's Fishway, Flow, and Screening statutory authority (chapter 77.57 RCW) but are not subject to the hydraulic code.

The proposed rule clarifies that the existing standards apply to the full set of structures subject to chapter 77.57 RCW by: (1) Defining "fishway" to include both fish passage improvement structures (e.g., fish ladders) and all structures that span over, through, or under a watercourse; and (2) defining "watercourse," "river," or "stream" to include all surface-water-connected wetlands that provide or maintain habitat that supports fish life.

The main implication of this clarification is that all aspects of water diversions that incorporate an artificial waterway will be subject to the fish passage and screening standards (e.g., the fish screen and fish bypass channel in Exhibit 1-1). Most other structures on the landscape are already subject to the standards included in the proposed rule through the state hydraulic code, except where hydraulic code authority does not apply, such as wholly artificial waterways.

1.3.2 CLIMATE-ADAPTED CULVERTS AND CROSSINGS REQUIREMENT: The proposed rule requires new and replacement water crossing designs to consider future climate conditions. As mentioned, existing design standards for water crossing structures are codified in chapter 220-660 WAC. The existing code requires bridge designs capable of passing 100-year flood flows and accounting for expected lateral stream migration. For culverts, the existing code requires a stream simulation design with the bed width determined by any WDFW-approved design methodology or with an approved alternative plan on a case-by-case basis.

The proposed rule requires consideration of projected future bankfull width and 100-year peak flow. Projected changes to bankfull width and peak flows can be obtained using the culverts and climate change web application located on the WDFW website,12 or any comparable method. For a user-provided point on the landscape (i.e., a culvert or crossing site), the tool calculates the upstream watershed and outputs an expected percentage change to bankfull width and 100-year peak flows based on hydrologic analysis of 10 climate model projections.13 14 Importantly, climate impacts vary across the state. Some areas are expected to experience large increases to bankfull width and peak flow, while others are expected to experience decreases. If the tool projects anything less than a five percent increase, no further consideration of climate is required. For sites expected to experience greater than five percent increases to bankfull width or peak flow, the projected values for those parameters should be considered as inputs into the overall design process.

Culverts and crossings installed prior to the adoption of the proposed rule will not be subject to the climate adaptation requirement, as long as they are functioning as originally intended, and meet the existing fish passage requirements.

Additionally, outreach to professional firms performing the design and engineering of culverts and bridges generally indicated some degree of baseline consideration for future climate impacts. Some firms reported already using the culverts and climate change tool, while others applied some rule of thumb, such as the Washington state department of transportation (WSDOT) standard of increasing current bankfull width by 20 percent and adding two feet. Such rules of thumb may meet the climate-adapted standard in the proposed rule for some, but not all cases. The baseline for this requirement, therefore, is project specific.

1.3.3 COMPLIANCE PROCEDURES: The fishways, flow, and screening statute (chapter 77.57 RCW) grants WDFW the authority to enforce compliance with fish passage and screening standards by requiring correction. This can involve WDFW taking possession of a diversion device and closing it until properly equipped, removing an obstruction, or installing a fishway at the owner's expense.

The proposed rule seeks to enhance the rate of compliance with existing fish passage standards through three main avenues: (1) By raising awareness for the issue through the rule-making process itself, (2) by providing technical assistance and directing owners toward grant and other cost-sharing opportunities, and (3) by exercising legal authority in extreme cases when other voluntary compliance measures fail. If in such an extreme case WDFW exercises authority to impose a fish passage or screening correction, any costs incurred by WDFW to bring a site into compliance with the fish passage and screening standards would then constitute the value of a lien on the structure or the property on which it is located, with some exceptions. By creating voluntary compliance and technical assistance avenues, the rule seeks to minimize the likelihood of incidents where WDFW would have no choice but to resort to the existing statutory remedies.

The specific enforcement protocols are similar to those in the hydraulic code compliance program, essentially outlining a series of protocols for WDFW to operationalize the authority granted in chapter 77.57 RCW to ensure compliance with fish passage standards. The compliance and enforcement provisions included in the proposed rule are as follows:

1.4 CONCEPTUAL MODELS OF RULE IMPACTS: As described in the previous section, the standards for fish passage contained in the proposed rule are not new. Therefore, structures on the landscape may already comply, and thus be unaffected by the proposed rule. We developed conceptual models to more precisely identify situations in which the proposed rule would generate changes in behavior that generate costs. We present separate conceptual models for: (1) Dams, diversions, and fish passage improvement structures; and (2) culverts and crossings, as these structures have an additional climate-adapted design requirement in addition to the existing fish passage standards.

1.4.1 DAMS, DIVERSIONS, AND FISH PASSAGE IMPROVEMENT STRUCTURES: Exhibit 1-2 considers how the proposed rule would affect any particular dam, diversion, or fish passage structure that exists on the landscape. Generally, the logic of the model flows from the fact that the proposed rule does not impose new standards for fish passage and screening beyond what is already partially codified in the hydraulic code and described in WDFW's assessment guidance document.

First, exempt structures are not affected. Second, it is possible that an owner would plan to achieve compliance with the existing standard regardless of whether the proposed rule is adopted or not. Third, some structures are already in compliance, and others will not be prioritized by WDFW for correction.

Accordingly, the rule is most likely to generate costs for owners of dams, diversions, and fish passage improvement structures under the following circumstances:

The conceptual model reveals two main conclusions. First, only a portion of the noncompliant dams, diversions, and fish passage improvement structures on the landscape will experience added costs as a result of the proposed rule. Second, the costs associated with the proposed rule include all aspects of bringing a noncompliant structure into compliance (e.g., permitting, design, construction). As described in Section 2.2, the nature and magnitude of these costs will be site specific, depending on the structure type and nature of the violation, among other things.

*While costs of noncompliance are not part of the analysis required for the RFA, they are mentioned here to provide a complete picture of the compliance and rule enforcement process given that a focus of the proposed rule is to clarify WDFW's existing authority to address noncompliance through enforcement.

1.4.2 CULVERTS AND CROSSINGS: The proposed rule affects water crossings similarly to dams, diversions, and fish passage improvement structures in terms of fish passage requirements (i.e., those already codified in the hydraulic code and WDFW assessment guidance). Therefore, the two circumstances identified in the previous section apply to water crossings as well. However, the climate-adapted standard introduces additional factors that complicate the conceptual model (Exhibit 1-3), leading to one additional circumstance where the proposed rule is most likely to generate costs to owners.

Two details from the proposed rule are relevant. First, water crossings installed prior to adoption of the proposed rule are not subject to the climate-adapted requirement as long as they are compliant in terms of fish passage and are within their designed lifespan. Second, only culverts and crossings located in areas where bankfull width or 100-year peak flows are expected to increase by at least five percent are required to consider incorporating climate projections into the design process.

For water crossings, the rule is most likely to generate costs to owners in the following circumstance (in addition to those identified in the prior section):

This conceptual model reveals that only a portion of the noncompliant water crossings on the landscape will generate costs as a result of the proposed rule. This is because some structures are exempt, some are already compliant, and some noncompliant structures would have been replaced to the standards included in the proposed rule even in its absence, or will not be prioritized by WDFW for correction. Second, the costs associated with the proposed rule for this category of structures includes all aspects of bringing a noncompliant structure into compliance (e.g., permitting, design, construction). As described in Section 2.2, the nature and magnitude of these costs is site specific, depending on the structure type and nature of the violation, among other things.

*While costs of noncompliance are not part of the analysis required for the RFA, they are mentioned here to provide a complete picture of the compliance and rule enforcement process given that a focus of the proposed rule is to clarify WDFW's existing authority to address noncompliance through enforcement.

CHAPTER 2 - SMALL BUSINESS IMPACTS:This chapter evaluates the potential economic impacts of the proposed rule on small businesses in Washington state. As outlined in the RFA and in accordance with other guidance and best practices, this SBEIS addresses the following questions.16 17 18

The sections that follow address each of these questions.

2.1 POTENTIALLY AFFECTED SMALL BUSINESSES: As the proposed rule is directed toward regulating structures on the landscape, it does not target a particular sector or industry. However, the rule could potentially affect individual businesses that own a noncompliant structure, or a property on which a noncompliant structure is located, subject to the following three circumstances identified in Section 1.4: (1) New information from the rule prompts the owner to comply, (2) WDFW identifies the noncompliant structure and requests a correction, or (3) the owner was modifying (or building) a water crossing and not considering future climate conditions in the design.

The best available information regarding the universe of structures potentially subject to the rule is contained in WDFW's geodatabase of known fish passage barriers (henceforth, the "inventory").19 However, there are several issues with using the inventory to identify particular small businesses that would be impacted. First, the compliance status of barriers in the Inventory is unknown. Second, it is impractical to identify the specific businesses or relevant economic sectors that own structures. The inventory identifies which structures are privately owned, and in some cases the name of the owner, but it does not indicate whether the owner is a business or provide any information about the industry. Finally, the inventory is updated on an ongoing basis as barrier inventorying efforts progress. Therefore, the full extent of relevant structures on the landscape is unknown.

Given the nature of the proposed rule and the data limitations that exist, we take a conservative approach to identifying potentially affected businesses. We acknowledge that aside from the exemptions noted below, any business that owns property in Washington with a diversion, obstruction, or crossing on a fish bearing stream could incur costs as a result of the proposed rule, and such businesses could theoretically belong to any industry. At the same time, businesses within a few industries may be more likely to own certain types of structures based on the nature of their operations and/or the size of their landholdings.

2.1.1 NONEXEMPT STRUCTURES IN THE INVENTORY: The inventory identifies five types of structures potentially subject to the rule as follows:20

There are a total of 50,367 structures in these categories within the inventory (Exhibit 2-1). However, the rule incorporates specific exemptions that reduce the number of structures subject to the rule, either because they fall outside of WDFW authority, or because they are grandfathered in. The following categories of structures are exempt from all provisions of the proposed rule:

Of the relevant structures in the inventory, one or more exemption applies to 15,653 (31 percent) structures. Of the 34,714 remaining structures, 15,682 (45 percent) are privately owned. Exhibit 2-2 demonstrates the spatial distribution of known nonexempt and privately owned structures throughout the state. Of these, a substantial portion (67 percent) are culverts, 17.5 percent are other types of crossings, eight percent are dams, six percent are diversions, and about one percent are fish passage improvement structures.23

The inventory provides useful information, but it should not be considered a complete assessment of the situation that exists on the landscape. It provides sufficient data to perform coarse analysis based on structure location and owner type, but it is known to be incomplete. Washington state department of ecology, for example, has identified 49,430 points of water surface diversion, compared to the 1,550 diversions contained in the inventory.24 It is unknown, however, what portion of the points identified by ecology represent active points of diversion that require screening, what portion would be exempt from the proposed rule, and what portion is privately owned. Therefore, we maintain that the inventory represents the best available information for performing SBEIS analysis but note that it likely underestimates the scale of the problem for diversions in particular.

Regardless of the true number of privately owned, nonexempt structures on the landscape, only a portion are expected to be both impacted by the rule and owned by a business (i.e., those that are the focus of this SBEIS). Considering the estimates in the inventory, a subset of the approximately 16,000 relevant structures are owned by residential property owners that are not businesses. Additionally, a subset of the structures that are owned by businesses likely already comply with the design standards incorporated into the proposed rule or would comply with existing regulations in the future and would therefore not experience additional costs resulting from the proposed rule. However, both the universe of structures and the portion that would experience added costs due to the proposed rule are uncertain.

2.1.2 IDENTIFICATION OF POTENTIALLY AFFECTED BUSINESSES: As noted, businesses that may be impacted by the proposed rule can potentially belong to any industry that exists in Washington. For example, some individual businesses owning relevant structures that were mentioned during interviews include a shopping mall, a football field, an Amazon facility, hunting clubs, gas stations, and general contractors. Accordingly, this SBEIS provides contextual industry-scale information about the businesses that could potentially be affected by the proposed rule (Exhibit 2-3). This information should not be interpreted as identifying the universe of businesses that may or are likely to be affected by the rule. In fact, most businesses in these industries are unlikely to be affected by the rule making. However, given the uncertainty regarding the specific universe of entities that will experience costs of the rule, this analysis errs on the side of transparency to ensure due consideration of the full scope of potentially affected small businesses.

Exhibit 2-3 includes information relevant to the SBEIS analysis. First, it identifies the total number of businesses in Washington belonging to each industry, and the proportion considered "small." In addition, it provides the industry-wide average annual payroll and revenues, which are used to calculate the minor cost threshold. For an SBEIS, the threshold is used to determine whether the compliance costs of a proposed rule are considered "more than minor." As defined in RCW 19.85.020, the minor cost threshold is the greatest of $100, one percent of annual payroll, or three-tenths of one percent of annual revenues.25

Depending on the industry, the likelihood that any business impacted by the proposed rule would be considered small varies. Within some industries, such as gasoline stations North American Industry Classification System (NAICS Code 447), a very large proportion (99 percent) are considered small. In other industries, such as general merchandise stores (NAICS Code 452), a much lower proportion are considered small (55 percent).

There is also wide variation across industries in the minor cost threshold. It ranges from as low as $423 for private households employing workers such as cooks or house cleaners (NAICS Code 814), up to nearly $1 million ($915,976) for hospitals (NAICS Code 622).

Although businesses potentially impacted by the proposed rule can theoretically belong to any industry, some industries may be more likely to be affected than others. Outreach efforts consistently identified three main industries they felt were the most likely to be impacted: agriculture, forestry, and HOAs. Agricultural businesses rely on stream diversions for irrigation, forestry businesses for their haul road crossings, and HOAs for irrigation diversions (e.g., for lawn watering) and for culverts and crossings along privately owned roadways.

In addition to the association between these industries and particular structures they use in normal business operations, agriculture and forestry businesses may be more likely than businesses in other industries to own structures on the landscape simply due to their large landholdings. Washington has a total land area of 45.7 million acres, of which roughly 19.8 million are publicly owned and about six million are owned by tribes.26 27 Of the remaining 19.9 acres of generally privately owned land, about four million (20 percent) are privately owned forestland and about 8.37 million (42 percent) are devoted to agriculture.28 29

2.2 COST OF COMPLIANCE: Consistent with RCW 19.85.040(1), this analysis evaluates the relevance of the following potential categories of costs to comply with the proposed rule:

The range of costs for complying with the proposed rule will generally vary according to the structure type and the nature of the violation. For example, the violation could be caused by a buildup of debris, which could potentially be corrected with a few hours of labor (or less). At the higher end, situations could exist where a culvert requires replacement with a bridge due to inadequate fish passage and large expected changes from climate change. Here we provide cost estimates for replacing (or in the case of dams, removing) five types of structures, though we acknowledge that full replacement (or removal) may not be necessary in every case. At the same time, many projects of this type receive at least partial funding through some grant or cost-sharing program. We highlight some of these programs in a subsequent section but note here that the cost estimates do not necessarily reflect the costs ultimately borne by an owner.

We collected project cost estimates from seven firms for five types of projects: (1) Installing diversion screens, (2) removing dams, (3) installing fish passage improvement structures, (4) installing culverts, and (5) installing bridges. For diversion screening, we learned that it is appropriate to consider two subcategories (small and large). Requested costs for each project type fell in three broad categories, or project phases: (1) permitting, (2) engineering and design, and (3) construction. Not all firms were able to provide estimates for each project and/or phase, and some firms combined permitting with design and engineering. For consistency, therefore, the summarized estimates presented in Exhibit 2-4 combine permitting with design and engineering into a single cost category. Full (anonymized) results from each firm are provided in Attachment C.

The ranges in project cost estimates reported in Exhibit 2-4 reflect two types of variation: variation between firms and variation due to project-specific characteristics. Firm-level variation is provided in Attachment C. Some comparisons between firms are possible in cases where multiple firms provide estimates for a project-phase combination. These are generally in agreement, with a few notable exceptions. One firm provided estimates for diversion screening that were several orders of magnitude larger than others, and another firm did the same for bridges. Differences of these type are most likely indicative of the firm's clientele (e.g., public utility diversions and state highway bridges versus privately owned structures).

Aside from firm-level variation, significant variation exists due to project-specific characteristics (summarized in Exhibit 2-5). Some factors apply to projects across many of the categories. These include things like the number of jurisdictions involved, which can complicate permitting, difficulties moving heavy equipment around more urban environments, and increased transportation costs to more remote locations.

Other cost drivers are more specific to particular project types. For diversions, the largest driver of variation is the flow rate at the point of diversion or intake. Smaller pump screens, for example, require a self-cleaning apparatus at flows beyond three cubic feet per second, which can increase the cost by several thousand dollars or more. Larger gravity diversion screens need custom fabrication and construction and require more permitting and complicated installation processes, driving the cost into the tens of thousands or even millions for a small number of very large projects.

Dam removal costs are highly dependent on project scale (i.e., dimensions) and the extent of sediment buildup in the reservoir. If the sediment is determined to contain contaminants, sediment disposal can represent a substantial portion of overall costs.

Costs for culverts and bridges are also highly dependent on scale. Other key factors include the vertical profile of the surrounding road, the designed speed of the roadway, and the need to manage traffic during construction.

Lacking detailed information about the project-specific characteristics (and ownership) of each structure in the inventory, it is impossible to determine the compliance costs for any particular business or even the distribution of compliance costs. However, published data containing costs of completed projects provides some information to characterize the likely distribution, and to ground the cost estimates more generally.

The National Oceanic and Atmospheric Association (NOAA) collects data for projects that received grant funds from the Pacific Coastal Salmon Recovery Fund, including fish screens and culverts.30 The database identifies 69 completed "fish screen" projects. Median cost for these projects is $72,236 and median is $202,489. The database does not identify culvert replacement as a unique project type. However, a recent study utilized the database to analyze culvert project costs within Washington and Oregon.31 Among the 1,236 culvert projects analyzed, mean cost was $82,600.

A few studies report dam removal costs. One found a median cost of $150,000 and mean cost of $1.8 million based on a national survey of project managers for 317 completed dam removal projects.32 Another analyzed a subset of projects contained in American Rivers' database of dam removals in the United States for which cost information was available, reporting a median of $116,283 and a mean of $440,448.33

The completed projects reported above do not perfectly match the projects relevant to this rule. However, they provide useful contextual information. First, all of the reported summary statistics fall within the range for each project type obtained from firms as part of this analysis (Exhibit 2-4), supporting the validity of our estimates. Second, they suggest that the likely compliance cost for most affected businesses in Washington will be at the lower end of the range. The mean and median empirical cost estimates for completed screen, dam removal, and culvert replacement projects cited above are all well below the midpoints of the respective ranges in Exhibit 2-4. In addition, where both means and medians are reported, mean project costs exceed medians. These facts both suggest that values at the high end of the range are less common than those at the lower end (i.e., the distribution is skewed left, and higher-cost projects are outliers).

As a final note about costs, in particular situations, the only compliance cost will be the incremental cost of the climate-adapted crossing requirement versus the full cost of replacing a crossing to comply with fish passage and the climate requirement. Therefore, it would be beneficial to understand how these individual components contribute to overall costs. Regarding this question, firms included in outreach efforts generally indicated two things: (1) Any cost differential associated with constructing bridges and culverts on fish-bearing versus non-fish-bearing streams is negligible, and (2) their existing culvert and crossing design processes tend to already incorporate climate adaptation to some degree. As described in Section 1.3.2, some firms are aware of and already using WDFW's culverts and climate change web application, while others use either a rule of thumb for upsizing or the Washington state department of transportation (WSDOT) standard of increasing current bankfull width by 20 percent and adding two feet.

The culverts and climate change application predicts increases to bankfull width or peak flow will exceed five percent for roughly two-thirds of the state by area, which applies to about 97 percent of known culvert and crossing sites.34 Some areas have projected increases as high as 42.6 percent for bankfull width and 203.5 percent for peak flow. Existing rules of thumb or the WSDOT standard may align with the culvert and climate change application when projected changes are modest, but current practices are unlikely to be sufficient in extreme cases. Unfortunately, there is no way to quantify a threshold when existing practices become insufficient. In addition, there is a large degree of site specificity affecting the incremental cost of upsizing a structure. For example, even minimal upsizing may trigger the need to purchase additional land, raise the vertical profile of the surrounding road, or relocate utilities, all of which can add significant costs. On the other hand, the incremental cost of upsizing may be restricted to the cost of any additional materials required, since permitting, design, and engineering often represent fixed costs. To summarize, the incremental cost of the climate adaptation requirement ranges from zero in cases where sufficient upsizing would occur absent the rule, to a substantial portion of the overall budget in complex cases where things like raising the roadbed, relocating utilities, or shifting from a culvert to bridge design may be necessary.

2.3 ASSESSMENT OF MINOR COST:As summarized in Exhibit 2-4, the likely cost of complying with the rule ranges from $100 for a small pump diversion screen to $6 million or higher for a complex bridge construction. Uncertainty in the compliance cost arising from project and site specificity, coupled with uncertainty about the industry classification of any business incurring costs, suggests that the compliance costs will be minor in some situations and more than minor in others. For example, a relatively low compliance cost (e.g., $500) would be below the minor cost threshold for businesses within most, but not all, industries (see Exhibit 2-3 for the minor cost threshold for each industry). As compliance costs are expected to exceed the minor cost threshold in at least some situations, however, this analysis finds that the proposed rule could impose more-than-minor costs on businesses.

2.4 DISPROPORTIONATE ECONOMIC IMPACT ANALYSIS:When proposed rule changes impose more-than-minor costs to businesses, 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. RCW 19.85.040(1) describes the following formula for determining disproportionate impacts:

Where:

If the analysis finds that the inequality condition is met, the proposed rule is considered to have a disproportionate impact on small businesses. As described in Section 2.1.2, data limitations prevent precise identification of sectors, industries, or particular businesses that may be affected. Therefore, there is no way to empirically perform the analysis. However, insight can be gained from simple reasoning.

As described in Section 2.3, C depends on the type and size of the structure as well as site-specific characteristics. These factors have no known or hypothesized relationship with business size within a particular industry or sector. Therefore, it is reasonable to assume that CS = CL (i.e., there is no difference between the expected cost of compliance for small and large businesses). All three potential adjustment factors, on the other hand, are expected to directly correlate with business size within an industry (i.e., AS < AL). It follows that for any industry, compliance costs are likely to be disproportionately borne by small businesses. Accordingly, this SBEIS identifies and documents cost mitigation strategies.35

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, where legal and feasible in meeting the stated objectives of the statutes upon which the rule is based. 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. This section outlines existing and proposed opportunities for offsetting compliance costs, as well as the steps WDFW has taken to limit the costs of the proposed rule to businesses.

The compliance costs presented in Section 2.2.3 represent estimates for the full cost of each relevant service. However, outreach to owners, owner representatives, and firms performing the services indicated that most relevant project types that have been completed to date received at least some grant funding. Exhibit 2-7 highlights these grant programs.

Additionally, RCW 19.85.030(2) specifies particular options that the agency must consider in mitigating rule costs. Exhibit 2-8 identifies each type of cost mitigation opportunity and how WDFW has considered them during this rule-making process.

Many remaining costs associated with the rule, including costs to small businesses, do not readily lend themselves to legal or feasible reductions that are consistent with the clear objectives of chapter 77.57 RCW. The statutes on which the rules are based require fish passage and appropriate screening of diversions, which will impose some unavoidable costs notwithstanding these mitigation efforts.

2.6 INVOLVEMENT OF SMALL BUSINESSES IN RULE-MAKING PROCESS: This section describes how WDFW has sought to engage affected parties, including small businesses, in the rule-making process, and how small businesses were involved in the development of the SBEIS.

2.6.1 INVOLVEMENT IN THE PRESENT RULE MAKING:The proposed rule targets fish passage and screening activities throughout Washington state and does not directly regulate a specific industry or group of businesses. Additionally, the rule does not target specific landowners. Due to the rule's broad nature and numerous fish passage and water diversion structures throughout the state, identifying small business owners has been difficult, especially with available data. To ensure due consideration of potential effects on small businesses, WDFW took a broad approach to outreach, communicating the objectives of the rule proposal and soliciting input through virtual presentations. News releases and social media notifications were also used to publicize rule-making activities. This provided opportunities for potentially affected small businesses to be involved in the rule proposal process. The outreach activities and events to date are summarized in Exhibit 2-9.

In addition, WDFW has attempted to identify and directly contact affected industries for engagement. For example, employees at the Washington Forest Protection Association were emailed regarding the October 25, 2022, policy webinar and were encouraged to provide feedback regarding the draft rule language. More recently, WDFW has engaged with the department of agriculture (DOA) to work with their affected stakeholders. WDFW has accepted public comments via email, phone, fax, and mail since the first news release on July 20, 2020. In 2021, WDFW began to offer a dedicated public input website for additional comments and feedback. There has been minimal engagement from self-identified business owners.

2.6.2 INVOLVEMENT IN SBEIS DEVELOPMENT: As described previously, because this rule making does not regulate a specific industry or group of businesses, it was not possible to systematically identify and target outreach activities at businesses in general, and small businesses in particular, that may incur costs as a result of the rule. IEc did, however, conduct several interviews with state agencies and other groups who interact directly and regularly with the two industries most likely to own structures based on the scale of their landholdings (agriculture and forestry). These included representatives from conservation districts, DOA, Washington state department of natural resources, and the Washington state water resources association. A complete description of the outreach activities conducted to support this analysis is included in Attachment A.

2.7 JOBS CREATED OR LOST:Increased compliance will drive an increase in demand for all services related to replacing or modifying diversion screens and fishways (e.g., permitting, engineering, design, construction). For example, several interviewees mentioned firms manufacturing precast concrete structures (i.e., box culverts) as potential beneficiaries. To the extent that increased demand for these products and services results in firms hiring additional staff, that 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. On a related note, several interviewees also indicated that there is currently a lack of professional capacity in the state to perform the relevant services. The effect of the proposed rule on job losses is also uncertain. Compliance costs are highly variable, but they can potentially be significant. Imposing significant costs on any business carries a risk of job loss. At the same time, WDFW has taken many steps and identified many opportunities to mitigate the costs to owners. Coupled with WDFW's stated intention of prioritizing the highest impact projects, it is unlikely that the proposed rule will result in significant job losses.

2.8 SUMMARY CONCLUSIONS: The proposed rule targets structures on the landscape posing an impediment to fish passage and safety. These structures can theoretically be owned by businesses from any industry, although businesses within some industries (e.g., agriculture and forestry) are more likely to own relevant structures due to the nature of their business and their large landholding. Regardless, only a portion of any structures owned by businesses will be impacted by the rule.

Compliance costs stemming from the rule are expected to range widely depending on a number of factors. They may be as low as $100 for a small pump diversion screen to over $6 million for a complicated bridge design. Compliance cost variation, coupled with variation between industry in the minor cost threshold, suggests that the costs are likely to be more than minor in some but not all cases.

Finally, within any industry and for any particular project, the costs are expected to disproportionately impact small businesses. This is because no known relationship exists between drivers of project costs and business size, so cost per $100 of revenue, cost per employee, or cost per labor hour will almost certainly be higher for small businesses. Given the findings outlined above, WDFW has identified several actions intended to mitigate the impacts to small businesses.

REFERENCES:LEGAL AND POLICY DOCUMENTS: Chapters 19.85, 76.09, 77.55, 77.57, 87.03 RCW and chapter 220-660 WAC.

Washington v. United States, 584 U.S. ___ (2018)

Bernhardt E.S., et al. 2007. "Restoring Rivers One Reach at a Time: Results from a Survey of U.S. River Restoration Practitioners." Restoration Ecology.

Van Deynze, B., et al. 2022. "What influences spatial variability in restoration costs? Econometric cost models for inference and prediction in restoration planning." Biological Conservation.

Wilhere, G., et al. 2017." Incorporating climate change into culvert design in Washington State, USA." Ecological Engineering.

Blachly, B. and E. Uchida. 2017. "Estimating the marginal cost of dam removal." Environmental and Natural Resource Economics Working Papers. University of Rhode Island.

Cascadia Consulting Group. 2018. "Southern Resident Orca Task Force: Report and Recommendations." Accessed October 20, 2022 at: https://www.governor.wa.gov/sites/default/files/OrcaTaskForce_reportandrecommendations_11.16.18.pdf.

Wilhere, G., et al. 2017." Incorporating Climate Change into the Design of Water Crossing Structures – Final Project Report." Washington Department of Fish and Wildlife.

A copy of the statement may be obtained by contacting Gabrielle Stilwater, P.O. Box 43200, Olympia, WA 98504-3200, phone 564-999-0768, fax 360-902-2946, Attn: Gabrielle Stilwater, TTY 360-902-2207, email FishPassageRules@dfw.wa.gov, https://wdfw.wa.gov/species-habitats/habitat-recovery/fish-passage/rule-making.

July 17, 2023

Scott Bird

Rules Coordinator

OTS-4699.3

Chapter 220-670 WAC