(1) The policy of the pollution liability insurance agency is to avoid or mitigate adverse environmental impacts that may result from agency actions or approvals. This policy results from:

(a) The legislated duties of the agency with respect to protection of human health and the environment; and

(b) Recognition of the fact that each person has a fundamental and inalienable right to a healthful environment and that each person has a responsibility to contribute to the preservation and enhancement of the environment (RCW 43.21C.020(3)).

(2) If an action is subject to SEPA, and the proposed activity requires an action, approval or permit from the agency, and is reasonably likely to have an adverse environmental impact as identified in an environmental document, the agency may:

(a) Require reasonable alternatives to the action, approval or permit and/or proven measures which will mitigate or eliminate the identified potential adverse impact, and make such alternatives and/or proven mitigation measures conditions of the agency's approval; or

(b) Deny the proposal if significant adverse impacts as identified in a final or supplemental environmental impact statement prepared under chapter 197-11 WAC are not satisfactorily avoided or mitigated by proven techniques.