Original Notice.

     Preproposal statement of inquiry was filed as WSR 99-03-097.

     Title of Rule: Wetland mitigation banks.

     Purpose: The purpose of the rule is to provide a predictable, efficient, regulatory framework for the review of bank proposals and the certification of environmentally responsible wetland mitigation banks consistent with existing federal guidance on compensatory wetland mitigation banks.

     Other Identifying Information: The proposed rule applies to both public and private wetland mitigation banks. Credits from certified wetland mitigation banks may be used to compensate for unavoidable wetland impacts authorized under state or local permits.

     Statutory Authority for Adoption: Chapter 90.84 RCW, Wetlands mitigation banking.

     Statute Being Implemented: Chapter 90.84 RCW, Wetlands mitigation banking.

     Summary: The rule outlines procedures for the certification, operation, monitoring and implementation of compensatory wetland mitigation banks. The rule contains procedures for certification and technical requirements for the implementation of wetland mitigation banks. The rule outlines compliance procedures and the appeals process for wetland mitigation bank certifications.

     Reasons Supporting Proposal: The legislature required the department, in chapter 90.84 RCW to adopt rules for the "certification, operation and monitoring of wetland mitigation banks." The statute also directed that the rule provide a "predictable, efficient, regulatory framework" for the certification of wetland mitigation banks.

     Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Lauren C. Driscoll, SEA Program, Headquarters, Lacey, Washington, (360) 407-6861.

     Name of Proponent: Washington State Department of Ecology, governmental.

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

     Explanation of Rule, its Purpose, and Anticipated Effects: The rule sets out the procedures and requirements for certification of wetland mitigation banks. The legislature, in chapter 90.84 RCW directed the Department of Ecology to adopt rules for the certification of wetland mitigation banks. The rule is intended to provide an efficient and predictable regulatory framework for applicants voluntarily seeking state certification for a wetland mitigation bank. It is anticipated that the regulatory streamlining provide under the draft rule will reduce applicant costs for obtaining approvals on wetland mitigation banks as well as ensuring that wetland mitigation banks established will be environmentally sound. Additional streamlining and cost reductions should be realized by project applicants using certified bank credits in lieu of developing their own compensatory wetland mitigation.

     Proposal does not change existing rules.

     A small business economic impact statement has been prepared under chapter 19.85 RCW.

     Compliance requirements: The compliance requirements for a bank sponsor are considerable and are summarized in WAC 173-700-700. The major responsibilities are: Creation of the bank instrument; construction of the bank; provision of financial assurances; operation and maintenance of the bank; monitoring of the bank's progress and success; crafting of contingency plans; implementation of contingency plans if the department determines that to be necessary; tracking, accounting and reporting of credit transactions; and long-term protection and management of the bank site(s).

     A complete list of responsibilities with references to relevant sections of the proposed rule can be found at the end of this document.

     Areas of possible disproportionate effect on small businesses: There are three ways in which the proposed rule will likely affect small and large businesses differently. Two of them are negative impacts, but they are not imposed on any party and therefore are not covered by the Regulatory Fairness Act. The third is likely to be a disproportionate positive impact on small businesses.

     (1) Disproportionate costs of complex requirements: As described above and documented more fully at the end of this analysis, the compliance requirements of the proposed rule are considerable. As with any complicated regulation, it may well be easier for a large entity to comply than for a small one. However, this possibility is not relevant because of the voluntary nature of the proposed rule. The Regulatory Fairness Act directs agencies to examine whether "the proposed rule will impose more than minor costs on businesses in an industry." (RCW 19.85.030 (1)(a)) (emphasis added). Furthermore, the SBEIS "shall analyze the costs of compliance for businesses required to comply with the proposed rule..." (RCW 19.85.040(1)) (emphasis added). While firms must comply with wetlands regulation in general, they are only subject to chapter 173-700 WAC if they choose to establish a wetlands mitigation bank. The new regulation does not require any entity to create a bank, but allows it as a way of complying with existing wetlands protections or profiting from others' need to comply with those protections. (Wetlands regulations are contained in Section 404 of the Clean Water Act, local regulations protecting critical areas and the state's Water Pollution Control Act, chapter 90.48 RCW.) It follows that no costs are imposed on any business as a result of the regulation. Businesses will choose to accept the costs of chapter 173-700 WAC if, in their private judgment, this is preferable to other ways of meeting the requirements of federal, state or local wetland regulations.

     (2) Loss of business to environmental firms: Environmental firms contracted to carry out site-by-site mitigation may lose business as mitigation efforts are concentrated in banks, and a disproportionate number of these firms may be small. By changing the regulatory regime so that a firm receives less business is not the same as imposing costs on that business. The possible hardship to these firms is not the result of their own difficulty in complying with the new rule, but of other firms' reduced difficulty in complying with other rules because of the new one. The Regulatory Fairness Act is concerned with the way a disproportionate impact of regulation "reduces competition, innovation, employment, and new employment opportunities, and threatens the very existence of some small businesses." (RCW 19.85.011.) While there is a chance that the existence of some small businesses may be threatened by others no longer being forced to use their services, the law's overall concern is clearly with rules that are a drag on the economy. The proposed rule, in creating new ways of complying with existing rules, at worst will have no effect, and at best will lessen the overall impact of regulation on firms.

     (3) Small firms' gain from mitigation banking: The proposed rule is likely to have a disproportionate benefit for small firms that must comply with existing wetlands rules. If chapter 173-700 WAC is used, it can only be because it has reduced the overall cost of complying with controls on wetlands. This in turn is a disproportionate benefit for small businesses. Just as a small entity may have a harder time complying with the reporting requirements of the mitigation banking rules, they are even more likely to be disproportionately disadvantaged in complying with existing wetlands regulations. In buying credits from a mitigation bank, however, big firms and small will compete on a level playing field, so that a disproportionate share of the efficiency gains from mitigation banking are likely to fall to small businesses.

     Necessity of costs: The costs entailed in the rule are necessary to meet the goal of no overall net loss of wetlands outlined in the "Federal Guidance."¹ Wetland mitigation banking is a form of trading, where one party in essence sells a wetland to a second party, in order to allow that second party to fill a different wetland or portion of one. If wetlands were homogeneous, having identical properties acre for acre, regardless of their type or location, there would be no chance of social benefits being harmed by such trades. But an acre of estuary in one place has a different value to society than an acre of hardwood wetlands elsewhere. Similarly, an acre of poorly constructed or poorly maintained wetland is an inadequate substitute for an acre of properly functioning natural wetland. Therefore, regulations allowing trading in wetlands must include extensive provisions to prevent trades that, while beneficial to the parties directly involved, would violate the goal of no net loss of wetlands. The responsibilities of a bank sponsor spelled out in the proposed rule are necessary and reasonable to meet that goal; exceptions to them entail a high risk of allowing net loss of wetlands.

     Conclusion: In summary, the proposed rule does not impose costs on anyone, but specifies the requirements of engaging in wetlands banking which entities can choose to accept, should they consider that to be preferable to any existing alternative. Furthermore, the costs are necessary to fulfill the purpose of the rule.

     Compliance responsibilities of a bank sponsor: Preapplication (submission of prospectus), WAC 173-700-202(2), 173-700-220, and 173-700-223.

     Certification application, WAC 173-700-202(6) and 173-700-230.

     The bank instrument and its components, WAC 173-700-240 and 173-700-241.

     Assessment of wetland functions, WAC 173-700-330.

     Description of what bank credits represent in the bank instrument, WAC 173-700-350.

     Financial assurances, WAC 173-700-391.

     Levels of financial assurances, WAC 173-700-392.

     Financial assurances for construction, WAC 173-700-393.

     Financial assurances for short-term management, WAC 173-700-394.

     Financial assurances for long-term management, WAC 173-700-395.

     Obtaining necessary permits, WAC 173-700-700(3).

     Constructing the bank, WAC 173-700-700(5).

     Securing adequate funds for operation and maintenance of the bank, WAC 173-700-700(6).

     Provision for permanent protection of the site, WAC 173-700-700(7).

     Monitoring, WAC 173-700-400, 173-700-401 and 173-700-403 (duration).

     Contingency plan, WAC 173-700-402.

     Monitoring reports, WAC 173-700-404.

     As-built reporting, WAC 173-700-405.

     Petition for credit release, WAC 173-700-410.

     Recording credit transactions, WAC 173-700-411.

     Accounting and tracking of credit transactions, WAC 173-700-412.

     Credit-tracking ledger, WAC 173-700-413.

     Annual account reporting, WAC 173-700-414.

     Random audits, WAC 173-700-416.

     Permanent protection, WAC 173-700-422.

¹ "Federal guidance for the establishment, use and operation of mitigation banks." Federal Register, Vol. 60, No. 228, November 28, 1995, pp 58605-58614, at B.6, p. 58607

     A copy of the statement may be obtained by writing to Lauren Driscoll, Shorelands and Environmental Assistance Program, Department of Ecology, P.O. Box 47600, Olympia, WA 98504-7600, phone (360) 407-6861, fax (360) 407-6902.

     RCW 34.05.328 applies to this rule adoption. While the establishment of a compensatory wetland mitigation bank is voluntary, certified wetland banks could be subject to compliance enforcement if they are not in compliance with the terms of their certification. This could include suspension of the use of the bank's credits and/or use of financial assurances posted by the bank's sponsor.

     Hearing Location: Washington State Department of Ecology, 300 Desmond Drive, Lacey, WA, on January 23, 2002, at 7 p.m.; and at the Best Western Hallmark Inn, 3000 Marine Drive, Moses Lake, WA, on January 30, 2002, at 7 p.m.

     Assistance for Persons with Disabilities: Contact Mary Lynum by January 16, 2002, TDD (360) 407-6006, or (360) 407-6206.

     Submit Written Comments to: Lauren Driscoll, Shorelands and Environmental Assistance Program, Department of Ecology, P.O. Box 47600, Olympia, WA 98504-7600, fax (360) 407-6902 postmarked by February 15, 2002.

     Date of Intended Adoption: April 17, 2002.

December 17, 2001

Linda Hoffman

Deputy Director

OTS-4654.1

OVERVIEW
NEW SECTION
WAC 173-700-010   Background.   (1) The Wetlands Mitigation Banking Act, chapter 90.84 RCW, sets forth fundamental elements of a mitigation banking policy to ensure that a predictable, statewide process exists for certifying environmentally sound wetland mitigation banks.

     (2) The act finds wetland mitigation banking an important regulatory tool for providing compensatory mitigation for unavoidable impacts to wetlands and declares it the policy of the state to support wetland mitigation banking. The act directs the department of ecology (the department) to adopt rules establishing a statewide process for certifying wetland mitigation banks.

     (3) The department anticipates that wetland mitigation banks will provide some compensatory mitigation in advance of impacts to wetlands and will consolidate compensatory mitigation into larger contiguous areas for regionally significant ecological benefits.

     (4) Wetland mitigation banks (banks) prioritize restoration of wetland functions and as such should be complementary to the restoration of ecosystems and ecosystem processes as identified in state or locally adopted science-based watershed management plans.

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     (a) Provide a systematic approach for reviewing and approving environmentally sound wetland mitigation banks;

     (b) Provide for the timely review of bank proposals;

     (c) Establish coordination among state and local agencies involved in the certification and approval of banks;

     (d) Avoid duplication with federal processes by encouraging early involvement with federal agencies; and

     (e) Provide incentives to encourage bank sponsors to locate and design banks that provide the greatest ecological benefits.

     (2) The purpose of this rule is to support the establishment of wetland mitigation banks as an important tool for providing compensatory wetland mitigation by authorizing state agencies, local governments and private entities to achieve the goals of the authorizing statute, chapter 90.84 RCW.

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     (2) Local and state agencies are encouraged to use wetland mitigation banks as a useful tool for implementing watershed management plans. Wetland banks can restore habitats and functions that are priorities within the watershed.

     (3) Wetland banks should experience an expedited review process when they are established as part of a science-based resource management program, which has been endorsed by state and federal resource agencies.

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DEFINITIONS
NEW SECTION
WAC 173-700-100   Definitions.   "Aquatic resources" means those areas where the presence and movement of water is a dominant process affecting their development, structure, and functioning. Aquatic resources may include, but are not limited to, vegetated and nonvegetated wetlands or aquatic sites (e.g., mudflats, deepwater habitats, lakes and streams).

     "As-built plans" means a document, that describes the physical, biological and, if required, the chemical condition of a compensatory bank site after complete implementation of each phase of an approved construction plan.

     "Available credits" means those credits that have been released by the department and can be used. Available credits do not include credits that have been debited (used for a permit requirement) from the bank.

     "Bank" or "wetland mitigation bank" means a site where wetlands are restored, created, enhanced, or in exceptional circumstances, preserved, expressly for the purpose of providing compensatory mitigation in advance of authorized impacts to aquatic resources.

     "Bank instrument" means the documentation of agency and bank sponsor concurrence on the objectives and administration of the bank. The "bank instrument" describes in detail the physical and legal characteristics of the bank, including the service area, and how the bank will be established and operated.

     "Bank sponsor" means any public or private entity responsible for establishing and, in most circumstances, operating a bank.

     "Buffer" means those areas surrounding a bank site that enhance and protect a wetland's functions and values by maintaining adjacent habitat and reducing adverse impacts from adjacent land-uses.

     "Compensatory mitigation" means the restoration, creation, enhancement or in exceptional circumstances, preservation of wetlands or other aquatic resources, or both, for the purpose of compensating for unavoidable adverse impacts to wetlands or other aquatic resources which remain after all appropriate and practicable avoidance and minimization has been achieved.

     "Consensus" means a process by which a group synthesizes its ideas and concerns to form a common collaborative agreement acceptable to all members. While the primary goal of consensus is to reach agreement on an issue by all parties, unanimity may not always be possible.

     "Contingency actions" means actions taken during the operational life of a bank site to correct any deficiencies on the site in order for the site to attain the required performance standards.

     "Cowardin class" means the classification of a wetland area as described in Classification of Wetlands and Deepwater Habitats of the United States USFWS publication FWS/OBS 79/31.

     "Creation" means the establishment of wetland area, functions, and values in an area where none previously existed.

     "Credit" means a unit of trade representing the increase in the ecological value of the site, as measured by acreage, functions, and values, or by some other assessment method.

     "Debit project" means those projects that use credits from a wetland mitigation bank to fulfill regulatory requirements for compensation of impacts to aquatic resources. A debit project may require more than one regulatory approval under federal, state and local rules.

     "Department" means the department of ecology.

     "Ecoregions" means those areas that are considered to be regions of relative homogeneity in ecological systems or in relationships between organisms and their environments.

     "Enhancement" means actions taken within an existing degraded wetland or other aquatic resource to increase or augment one or more functions or values. Enhancement can also include actions taken to improve the functions provided by a buffer or upland area.

     "Financial assurance" means the money or other form of financial instrument (for example surety bonds, trust funds, escrow accounts, proof of stable revenue sources for public agencies) required of the sponsor to ensure that the functions of the subject bank are achieved and maintained over the long-term in accordance with the terms and conditions of the bank instrument.

     "Function assessment" means an assessment of the degree to which a wetland is performing, or is capable of performing, specific wetland functions. Function assessments include the use of scientifically based quantitative and qualitative methods developed for assessing functions, as well as the use of best professional judgment for determining the degree to which a wetland or other habitat is performing, or is capable of performing, specific functions.

     "Hydrogeomorphic (HGM) classification" means a wetland classification scheme that groups wetlands based on their geomorphic setting and water regime.

     "Local jurisdiction" means any local government such as a town, city, or county.

     "Mitigation" means sequentially avoiding impacts, minimizing impacts, and compensating for remaining unavoidable impacts to wetlands.

     "Mitigation bank review team" or "MBRT" means an interagency group of federal, state, tribal and local regulatory and resource agency representatives that are invited to participate in negotiations with the bank sponsor on the terms and conditions of the bank instrument.

     "Mitigation bank review team process" or "MBRT process" means a process in which the department strives to reach consensus with the MBRT members on the terms, conditions, and procedural elements of the bank instrument.

     "Operational life" or "operational life of a bank" means the period during which the terms and conditions of the bank instrument are in effect. With the exception of arrangements for the long-term management, permanent protection, and financial assurances, the operational life of a mitigation bank terminates at the point when:     

     • Compensatory mitigation credits have been exhausted and the debited bank is determined to be functionally mature and self-sustaining to the degree specified in the bank instrument; or

     • The bank sponsor voluntarily terminates the banking activity with written notice to the department.

     "Performance standards" are measurable benchmarks for a specific project objective. Performance standards are usually designed to allow evaluation of the development of ecological characteristics associated with specific wetland functions.

     "Potential credits" mean the credits anticipated to be provided at a bank site, but which are not available for use. Once potential credits are released by the department, they convert to available credits.

     "Practicable" means available and capable of being done after taking into consideration cost, existing technology, and logistics in light of overall project purposes.

     "Preservation" means the permanent protection of ecologically important wetlands or other aquatic resources through the implementation of appropriate legal and physical mechanisms. Preservation may include protection of upland areas adjacent to wetlands as necessary to ensure protection or enhancement of the aquatic systems, or both.

     "Prospectus" is the conceptual proposal for a mitigation bank project.

     "Restoration" means actions taken to intentionally reestablish wetland area, function and values at a site where wetlands previously existed, but are no longer present because of the lack of water or hydric soils. Restoration can also include the reestablishment of historic wetland HGM classes on sites that have been altered due to human activities to a different HGM class, and which are significantly degraded with low levels of functions and values.

     "Service area" means the designated geographic area in which a bank can reasonably be expected to provide appropriate compensation for unavoidable impacts to wetlands.

     "Signatories" means those entities that have documented their approval of the terms and conditions of the bank instrument through their signature on the bank instrument.

     "Sustainability" means the ability of the aquatic system to be self-maintaining and self-regulating. Sustainable bank sites must have sufficient buffer areas to protect the site from degradations due to activities on adjacent lands.

     "Unavoidable" means adverse impacts that remain after all appropriate and practicable avoidance and minimization have been achieved.

     "Water resource inventory areas" or "WRIA" refers to the sixty-two water resource divisions of the state as described in chapter 173-500 WAC, Water resources management program established pursuant to the Water Resources Act of 1971, as amended.

     "Wetland" or "wetlands" means areas that are inundated or saturated by surface water or ground water at a frequency and duration sufficient to support, and that under normal circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil conditions. Wetlands generally include swamps, marshes, bogs, and similar areas.

     "Wetland mitigation bank" or "bank" means a site where wetlands are restored, created, enhanced, or in exceptional circumstances, preserved, expressly for the purpose of providing compensatory mitigation in advance of authorized impacts to aquatic resources.

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CERTIFICATION PROCESS
NEW SECTION
WAC 173-700-200   How does certification relate to other rules?   (1) Many federal, state and local laws and rules and treaty rights relate to the establishment of a compensatory wetland mitigation bank.

     (2) Mitigation banks certified under this rule must be consistent with existing federal, state and local laws and rules.

     (3) Certification of a wetland bank does not serve as authorization for other federal, state or local permits or approvals.

     (4) Mitigation bank review team (MBRT) members shall advise the bank sponsor of pertinent federal, state or local rules that may apply to a specific bank proposal and that may delay the certification process.

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     (2) The preapplication process begins when a bank sponsor submits a prospectus to the department.

     (3) The department convenes a mitigation bank review team (MBRT) after determining that the prospectus contains sufficient information.

     (4) The MBRT reviews and evaluates the bank prospectus and provides comments to the bank sponsor on the proposed bank.

     (5) The bank sponsor develops a bank instrument using the comments provided by the MBRT on the prospectus.

     (6) The formal application process begins when the bank sponsor submits a certification application and bank instrument to the department.

     (7) The department determines if the application is complete.

     (8) The department reconvenes the MBRT to review the complete application.

     (9) The department begins the public comment period under WAC 173-700-232.

     (10) The department issues a certification decision and notifies the local jurisdiction(s) in which the bank is located of that decision.

     (11) The local jurisdiction(s) reviews the certification decision and determines whether it concurs with the department's decision.

     (12) Certification is complete when the department, the local jurisdiction(s), and the bank sponsor all sign the bank instrument.

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     (2) The MBRT shall strive to achieve consensus on the terms and conditions of bank instruments.

     (3) If the department determines that consensus cannot otherwise be reached on any term, condition, or procedural element of the bank instrument within a reasonable time frame, the department shall be responsible for making final decisions regarding the terms and conditions of the bank instrument.

     (4) Advisory members of the mitigation bank review team may participate in MBRT discussions, however they may not participate in the decision making of the MBRT. See WAC 173-700-732.

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     (2) The department shall make every effort to resolve disputes within the MBRT forum before the conflict is elevated to the program manager of the department's shorelands and environmental assistance program.

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     (1) The MBRT member(s) who has concerns with a particular decision or element of a bank certification shall submit the concern and accompanying rationale in writing to the chair(s) of the MBRT.

     (2) The chairs(s) of the MBRT shall outline the majority position on the area of concern and shall work with the MBRT member(s) to develop potential solutions to the member's concerns.

     (3) The chair(s) of the MBRT shall present potential solutions to the MBRT and the MBRT shall work to resolve the concern.

     (4) In the event that the MBRT is unable to resolve the concern, the MBRT member with the concern shall secure and pay for a facilitator to assist the MBRT in resolving the conflict.

     (5) In the event that the MBRT is still unable to reach consensus, the MBRT member with the concern may request, through written notification, that the department's program management reviews the issue. Such a notification must include:

     (a) A detailed description of the issue; and

     (b) Recommendations for resolution.

     (6) The written notification must be directed to the program manager of the shorelands and environmental assistance program or the program manager's designee. Within twenty days of receipt of a notification, the program manager, or its designee, shall contact the MBRT member and shall make a final decision. The resolution shall be forwarded to the other MBRT members.

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     (2) The department must determine whether the prospectus contains enough information to form a mitigation bank review team (MBRT).

     (a) If the department determines that the prospectus is not sufficient, the department shall notify the bank sponsor and identify any additional information necessary to complete the prospectus.

     (b) If the department determines that the prospectus is sufficient, the department shall notify the local jurisdiction(s) and invite it to cochair the MBRT.

     (c) If the prospectus is sufficient, the department must invite representatives from the appropriate federal, state and local regulatory and resource agencies, and tribes to participate on the MBRT. The department may invite advisory members to the MBRT under WAC 173-700-732.

     (3) The bank sponsor must send the department enough copies of the prospectus for all of the members of the MBRT.

     (4) At least two weeks before a MBRT meeting, the department must send the prospectus to all agencies and tribes participating on the MBRT.

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     (2) The MBRT must meet to evaluate the technical and regulatory feasibility of a prospectus.

     (3) The members of the MBRT shall provide comments to the department and the bank sponsor on the bank prospectus. Comments should include:

     (a) The technical feasibility of the bank proposal;

     (b) Its compliance with existing rules and ordinances;

     (c) Any applicable permits or authorizations necessary for bank construction; and

     (d) Any additional information necessary for the draft bank instrument, such as supporting studies and other documentation.

     (4) The bank sponsor must use the comments received from the MBRT to develop a bank instrument, which is consistent with the requirements in WAC 173-700-240 and 173-700-241.

     (5) After completing the bank instrument, the sponsor may formally apply for wetland bank certification under WAC 173-700-230.

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     (2) The prospectus initiates dialogue with the department and MBRT members on a proposed bank.

     (3) A prospectus must contain sufficient information to allow the department and the MBRT to provide feedback to the bank sponsor on whether the bank project is technically feasible and complies with existing state and local rules. Necessary information includes discussions of the proposed goals and objectives, the construction, and operation of the proposed bank.

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     (1) The goals and objectives of the project;

     (2) Site location information, including a detailed map with sufficient information to accurately identify site location, such as legal description and proximity to existing roads;

     (3) The rationale for site selection addressing the considerations listed in WAC 173-700-320;

     (4) A description of existing conditions of the proposed site(s) including, but not limited to:

     (a) Land ownership;

     (b) The landscape position of the site;

     (c) Site size;

     (d) Wetlands present on the site;

     (e) Other habitat types present on the site;

     (f) Available information on water sources, soils, and vegetation; and

     (g) A preliminary analysis of functions provided by on-site wetlands;

     (5) Conceptual site design, including, but not limited to:

     (a) Proposed types and approximate sizes of wetlands;

     (b) Other proposed habitat types to be provided on the site; and

     (c) Proposed functions that the bank is anticipated to provide;

     (6) Potential adverse impacts to aquatic resources or other habitats from bank construction;

     (7) Proposed service area and accompanying rationale that demonstrates that the service area is ecologically appropriate;

     (8) Anticipated potential credits to be generated by the bank;

     (9) Discussion of whether water rights have been applied for or secured for the site, if needed;

     (10) Demonstration of adequate financial resources for the construction, operation, and long-term management of the bank site; and

     (11) Description of proposed permanent protection mechanism, such as a conservation easement.

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     (2) If additional meetings are requested, the bank sponsor must submit to the department a draft bank instrument, consistent with the requirements of WAC 173-700-241, and sufficient copies of the instrument for distribution to the MBRT members.

     (3) The department must reconvene the MBRT if:

     (a) The sponsor requests another meeting with the MBRT;

     (b) The bank sponsor submits a complete draft bank instrument with sufficient copies for the MBRT members to the department; and

     (c) The department determines that the new draft bank instrument warrants another meeting with the MBRT.

     (4) The MBRT shall provide comments to the department and the bank sponsor regarding any terms and conditions required for the bank instrument.

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     (2) A complete application consists of the following:

     (a) A completed wetland bank certification application form;

     (b) A draft bank instrument consistent with the requirements of WAC 173-700-241;

     (c) A completed checklist under chapter 43.21C RCW, the State Environmental Policy Act;

     (d) A joint aquatic resources permit application (JARPA), if necessary; and

     (e) Other supporting information as required by the department through the MBRT process. This supporting information may include, but is not limited to:

     (i) Financial assurance documents;

     (ii) Legal mechanisms for the permanent protection of the bank site; and

     (iii) Hydrologic and other ecological studies.

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     (a) If the department determines that the application is not complete, the department shall notify the bank sponsor of its determination and identify any additional information that is necessary to complete the application.

     (b) If the department determines that the application is complete, the department shall notify the bank sponsor of its determination and assign a bank application number to the application.

     (2) After the department notifies the bank sponsor that the application is complete, the bank sponsor must submit to the department sufficient copies of the draft bank instrument for distribution to MBRT members.

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     (2) After determining that the application is complete, the department must also initiate the public notification, review, and comment process under WAC 173-700-252 through WAC 173-700-255.

     (3) The MBRT shall review the draft bank instrument and provide comments to the department and the bank sponsor on the technical requirements, terms, and conditions of the proposed certification.

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     (a) Notify the bank sponsor of all recommendations and comments received from the MBRT and the public;

     (b) Identify any additional information that the sponsor must submit in order for the department to make a certification decision; and

     (c) Identify additional terms and conditions required as part of the certification.

     (2) If the department requests additional information:

     (a) The certification process shall stop until the information is received and approved by the department; and

     (b) The department may reconvene the MBRT or reopen the public comment period if the department determines that the bank instrument has changed substantially.

     (3) After review of the application is complete, the department shall issue a certification decision.

     (4) The department shall indicate its approval of certification by signing the bank instrument. After signing the bank instrument, the department must notify the local jurisdiction and request its concurrence on the certification.

     (5) If the application is denied, the department must send a notification to the bank sponsor and to the local jurisdiction in which the proposed bank is located. The notification must state the reasons for denial.

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     (2) If the local jurisdiction(s) concurs with the bank certification, it must sign the bank instrument.

     (3) If the local jurisdiction(s) does not concur with the certification, the local jurisdiction must send a notification to the bank sponsor and the department of its decision. The notification must state the reasons for the local jurisdiction's nonconcurrence.

     (4) If the local jurisdiction(s) does not concur with the certification, the department may not certify the bank.

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     (2) No agency, except for the department and the local jurisdiction in which the bank is located, is required to sign a bank instrument in order for certification to be complete. However, MBRT member agencies and tribes are encouraged to sign a bank instrument to document their concurrence with the terms and conditions of the certification.

     (3) If any other agency or tribe signs the bank instrument, it shall signify that entity's concurrence with the terms of the bank instrument.

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     (2) Requirements for bank instruments vary based on the specific conditions of the bank site and should be developed in cooperation with the MBRT.

     (3) The bank sponsor must develop the bank instrument using feedback from the MBRT on the prospectus and, if applicable, MBRT comments on a preliminary draft bank instrument.

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     (1) A statement of bank goals and objectives;

     (2) Documentation of the ownership of bank lands, including a legal description and map of the bank site and surrounding areas;

     (3) A detailed description of bank sponsor responsibilities for construction implementation, monitoring and reporting, maintenance, and credit tracking and reporting;

     (4) A description and map of the geographic service area;

     (5) The potential number of credits to be generated by the bank and a credit description consistent with WAC 173-700-350;

     (6) A description of the types of impacts to wetlands or other aquatic resources suitable for compensation and any restrictions on uses of credits;

     (7) A detailed description of the proposed bank including, but not limited to:

     (a) The bank size;

     (b) The landscape position of the site;

     (c) The Cowardin and HGM classes and sizes of wetlands and aquatic resources proposed for the bank;

     (d) A description of the buffers for the site and any other habitats provided on the site;

     (e) The functions and values to be provided by the bank;

     (f) Detailed site design plans and specifications to include grading plans, planting plans, and specifications for any structures; and

     (g) Construction timing and schedules;

     (8) A description of existing ecological baseline conditions at the bank site, including supporting documentation requested by the department, through the MBRT process. The description must include, at a minimum:

     (a) Technical data on water sources and soils;

     (b) Wetlands present on the site;

     (c) Other habitat types present on the site;

     (d) Existing vegetation communities; and

     (e) Analysis of functions provided by on-site wetlands;

     (9) Documentation of water rights for the proposed bank, if required;

     (10) Credit tracking and accounting procedures, including reporting requirements;

     (11) Performance standards for determining credit release and bank success, including a schedule for the phased release of credits;

     (12) Reporting protocols and monitoring plan, including a clear statement of responsibility for conducting monitoring and for reporting;

     (13) A contingency plan and statement of responsibility for contingency actions;

     (14) Appropriate financial assurances;

     (15) Provisions for short-term and long-term management and maintenance, including a description of anticipated management and maintenance activities;

     (16) Provisions for permanent protection of the property on which the bank will be located; and

     (17) Force Majeure Clause (identification of sponsor responsibilities in the event of catastrophic events that are beyond the sponsor's control).

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     (2) The public notice for bank certification must include the information under WAC 173-700-253 and 173-700-254.

     (3) When an existing public notification process for the proposal is not available, the department shall issue a public notice on the proposed bank certification under WAC 173-700-253 through 173-700-255.

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     (1) Name and address of the department staff contact for information on the certification application;

     (2) Name and address of the bank sponsor;

     (3) A description of the bank proposal including, but not limited to, the following information:

     (a) The location of the proposed bank site;

     (b) The types of wetlands to be restored, enhanced, created or preserved on the bank site;

     (c) The number and types of credits proposed;

     (d) The service area proposed for the bank; and

     (e) The credit release schedule proposed for the bank;

     (4) Name, address, and telephone number of a person from whom interested persons may obtain further information, such as copies of the application, the draft bank instrument and supporting materials; and

     (5) A brief description of the comment procedures, including:

     (a) The time and place of any hearings scheduled for the certification;

     (b) Where comments should be sent;

     (c) The closing date for receiving comments; and

     (d) The procedures to request a hearing.

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     (1) Local and tribal governments located within the proposed service area, other interested persons and organizations that have requested information on wetland bank certifications, and all others deemed appropriate by the department;

     (2) The latest recorded real property owners located within three hundred feet of the boundaries of the property upon which the wetland bank site is proposed, as shown by the records of the county treasurer; and

     (3) The general public within a bank's proposed service area through:

     (a) A published notice in a newspaper of general circulation in the service area of the proposed bank and in other counties as deemed appropriate; and

     (b) A notice posted in a conspicuous manner on the property upon which the proposed bank is to be located.

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     (2) Wetland banks that require an environmental impact statement may need longer comment periods.

     (3) The comment period may be extended if the department holds a public hearing for a wetland bank proposal.

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     (2) The request must be received by the department before the end of the comment period specified on the public notice.

     (3) Any request for a public hearing shall indicate the interest of the party filing it and why a hearing is warranted.

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     (2) The department shall provide at least fourteen calendar days prior notice of any hearing.

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     (2) The department shall keep a record of the comments received by the department and issues raised during the public participation process on the bank certification. Those records are available to the public.

     (3) The department may not render a certification decision until the public comment period is complete.

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BANK ESTABLISHMENT - TECHNICAL REQUIREMENTS
NEW SECTION
WAC 173-700-300   Ecological design incentives.   (1) One of the goals of the wetland banking certification program is to encourage banks that provide significant ecological benefits. In order to achieve this, incentives have been built into the certification and bank establishment process to encourage the siting and designing of banks that provide significant ecological benefits.

     (2) The incentives include, but are not limited to, more favorable credit conversion rates, higher releases of credits, and larger service areas. For each of these elements, banks that satisfy more of the decision-making criteria or that satisfy those criteria to a higher degree generally receive more favorable conditions. The department, through the MBRT process, shall make decisions regarding the application of specific incentives on a case-by-case basis.

     (3) Bank sponsors should consult the following sections of this rule for criteria that the department shall use for its decision making:

     (a) Determining the amount of credit generated by a bank site under WAC 173-700-355 and 173-700-357;

     (b) The designation of service areas under WAC 173-700-311; and

     (c) The scheduling of credit releases under WAC 173-700-372 through 173-700-375.

     (4) The department shall encourage, with better credit conversion rates, banks that include restoration of wetland systems and banks that provide significant habitat value because they provide connections or corridors to other natural areas.

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     (2) The bank sponsor must describe and include a map of the bank's proposed service area in the draft bank instrument.

     (3) The extent of the service area must be based on the functions provided by the bank and the distance from the bank site that the ecological functions can reasonably be expected to compensate for impacts to wetlands. The department must consider the hydrologic and biotic criteria as identified in WAC 173-700-311 when designating a service area.

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     (1) The functions provided by the bank;

     (2) Whether and how far the ecological and hydrological benefits of the bank extend beyond the bank site location;

     (3) The landscape position of the bank site within the watershed;

     (4) The WRIA in which the bank is located;

     (5) The ecoregion in which the requested service area is located;

     (6) The ecological sustainability of the bank site;

     (7) The quality, diversity, and regional significance of the habitats provided;

     (8) Local needs and requirements, such as consistency with land-use or watershed management plans;

     (9) Consideration of the types of impacts to wetlands or other aquatic resources that may be compensated through the use of credits from the banks; and

     (10) Available information on baseline conditions in the requested service area such as that found in watershed management plans, function assessments, wetland mapping or inventories, storm water management plans, and comprehensive land use plans.

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     (2) Considerations shall include, but are not limited to:

     (a) Whether the site includes areas that can be restored to wetland conditions;

     (b) Whether the site possesses the physical, chemical and biological characteristics to support the bank goals and objectives;

     (c) Whether the size and location of the bank is appropriate relative to the ecological features found at the site, such as sources of water;

     (d) If the bank sponsor has obtained any necessary water rights for the site, if necessary;

     (e) The wetland functions and values that the site has the potential to provide;

     (f) Whether the bank site can provide increased or improved wetland functions and restore ecological processes within the basin or the watershed;

     (g) If the bank site has a high potential to connect or complement existing wetlands;

     (h) The types of unavoidable impacts that are anticipated to use bank credits for compensatory mitigation;

     (i) Whether the site and bank objectives are compatible with surrounding land uses lying both up and down gradient;

     (j) Whether the bank site can be protected over time from direct, indirect, and cumulative impacts due to current and foreseeable future land uses;

     (k) Whether the bank site is consistent with existing planning documents, such as watershed, zoning, or comprehensive land-use plans and critical areas rules;

     (l) Whether the bank site contributes to the improvement of identified management problems within the drainage basin or watershed, such as sedimentation, water quality degradation, or flood control;

     (m) What the historical land uses were at that site;

     (n) The presence and quantity of invasive species on the site;

     (o) The existence of a native seed bank on the site;

     (p) Whether the process of establishing the bank at the site will compromise ecologically significant aquatic or upland resources, cultural sites, or habitat for threatened, endangered, or candidate species; and

     (q) The degree of long-term maintenance necessary for the site.

     (3) The establishment and use of mitigation banks in or adjacent to areas of national, state, or regional ecological significance is encouraged if the establishment and operation of the mitigation bank does not compromise the protection or functioning of the ecologically significant areas.

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     (2) The department may require a sponsor to use either a "best professional judgment" method for assessing wetland functions or a "specific regional function assessment" method.

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     (2) The department must consider the following criteria when it determines a minimum buffer for a bank:

     (a) The quality of the wetlands in the bank and the level of sensitivity of the wetlands to off-site activities;

     (b) The functions to be provided by the bank;

     (c) The quality of the buffer (existing conditions and proposed conditions);

     (d) The functions that the buffer needs to provide; and

     (e) The intensity of adjacent land uses.

     (3) Minimum buffers shall generally range between fifty and three hundred feet in width.

     (4) The minimum buffer does not generate credit.

     (5) The bank sponsor must provide at least the minimum buffer required by the department.

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     (1) For credits determined using a conversion rate under WAC 173-700-353, the bank sponsor shall describe the credits in terms of acreage of: The wetland rating category; hydrogeomorphic (HGM) class, and Cowardin class of wetland. The credit description must list the ecological functions provided by the bank.

     (2) For credits determined using an alternative method under WAC 173-700-359, the bank sponsor shall describe, in the bank instrument, the method used to determine the credits and what the credits represent.

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     (a) Potential credit;

     (b) Available credit; and

     (c) Debited credit.

     (2) Credits are initially called potential credits because while they are anticipated to be generated by the bank, they do not actually exist until the bank meets specific performance standards. After a bank attains the performance standards specified in the bank instrument and the department releases a potential credit, then that credit becomes an available credit.

     (3) Only available credits can be used to meet permit requirements.

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     (2) Preservation alone may generate credits under WAC 173-700-360.

     (3) Buffer areas, beyond the minimum required under WAC 173-700-340, and upland habitats may generate credits to the extent that those areas contribute to the overall ecological functioning and sustainability of the bank.

     (4) The department must give priority to the restoration of degraded or former wetlands when determining credits.

     (5) The method for credit determination must be the same for the life of the bank.

     (6) Debits and credits must be determined using the same method and be in the same unit of "currency."

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     (2) The department, through the MBRT process, shall determine the number of potential credits at a bank using a credit conversion rate.

     (3) The credit conversion rate uses a ratio of acre-credits generated at the bank site to acres of activity such as restoration, creation, enhancement or preservation:

     (Acre-credit: Acres of activity).

     (4) Except as provided in WAC 173-700-358, the department must determine the credit conversion rates for individual banks from within the ranges specified in this subsection.

     (5) This section and WAC 173-700-354 through 173-700-358 do not apply to banks using an alternative method to determine credits under WAC 173-700-359.

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If the mitigation activity is:	The conversion rate can range from: Acre-credit : Acre mit. activity
Restoration	1:1 to 1:2
Creation	1:1 to 1:5
Enhancement	1:2 to 1:6
Preservation: In combination with restoration or creation of wetlands	1:2 to 1:10
Preservation alone	1:5 to 1:20

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     (1) The anticipated net gains in wetland functions at the bank site;

     (2) The quality of the wetlands and habitats at the bank site;

     (3) The rarity of the wetlands and habitats at the bank site;

     (4) The degree to which the bank provides functions that are degraded or limited in a watershed;

     (5) The habitat value of the bank site;

     (6) The site's contribution to the protection or recovery, or both, of state or federally listed threatened or endangered species, protection of state priority species and habitats, and locally significant habitats;

     (7) The size, quality, and functioning of the buffers for the site;

     (8) The degree of connectivity to other habitats and open space areas;

     (9) The likelihood of the successful implementation of the site design and successful performance of the targeted wetland functions;

     (10) The quality of supporting information provided; and

     (11) Public education and access, if ecologically appropriate.

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     (2) Eligible buffers and other upland habitats may generate credits at a conversion rate from 1:5 to 1:20.

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     (1) Degree of contribution to the ecological functioning of the bank;

     (2) The adequacy of the area to perform the desired function(s);

     (3) Adjacent land uses including foreseeable future land uses; and

     (4) Connectivity to other habitats and open space areas.

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     (2) All exceptions for credit conversion rates authorized by the department must be:

     (a) Made on a case-by-case basis, considering the specific circumstances of a bank; and

     (b) Based on ecological considerations.

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     (1) The department, through the MBRT process, approves of the method;

     (2) The method is applicable and appropriate for the Pacific Northwest;

     (3) The method is applicable for use on projects debiting from the bank; and

     (4) The same method is applied to the bank throughout the operational life of the bank.

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     (2) Preservation of wetlands as the sole means of generating credits may be approved in exceptional circumstances by the department, through the MBRT process if:

     (a) The area proposed for preservation is a high quality system; and

     (b) The area proposed for preservation is at risk because the wetland is under demonstrable threat of loss, or substantial degradation, due to human activities that might not otherwise be expected to be restricted.

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     (2) The factors that the department must consider in making this determination include whether the wetland:

     (a) Has a Category I or II wetland rating (Category III only in exceptional cases);

     (b) Is a rare wetland type;

     (c) Provides habitat for threatened or endangered species;

     (d) Is located in a floodway, or in a portion of a floodplain that is documented as a frequently flooded area, or is providing flood retention and storage;

     (e) Provides biological or hydrological connectivity or both;

     (f) Is of high regional or watershed importance, such as listed as a priority site in a watershed plan; or

     (g) Contains high native species diversity.

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     (2) The department, through the MBRT process, shall determine a schedule for the release of credits at individual banks.

     (3) The department must determine the number of credits to be released when the bank attains specific performance standards.

     (4) The department shall base the number of credits to be released on, but not limited to, the following criteria:

     (a) The amount of ecological gain at the time of the release;

     (b) The bank sponsor's experience and success with similar types of wetland projects;

     (c) The expected length of time necessary to achieve project goals for wetland function performance and wetland types; and

     (d) The possibility of design failure.

     (5) The bank sponsor shall include in the bank instrument the schedule for release of credits at the attainment of specific performance standards, and the amount of credit available for each release.

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     (2) The department must release credits when it concurs that the bank has attained all of the performance standards required for a specific release.

     (3) The maximum percentages of credits able to be released under WAC 173-700-372 through 173-700-374 do not include credits generated by preservation of wetlands.

     (4) The department, through the MBRT process, may release potential credits generated by the preservation of existing wetlands or aquatic resources after the minimum requirements specified in WAC 173-700-372 have been met.

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     (2) Initial physical and biological improvements must be completed within one year following the initial release of credits.

     (3) The following criteria must be met prior to any release of credits:

     (a) The bank instrument is signed and approved;

     (b) The permanent protection mechanism and financial assurances are established; and

     (c) Ownership of the bank site is secured.

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     (a) The complete implementation of construction plans; and

     (b) The as-built condition of the bank.

     (2) Approval of the as-built condition of a bank includes the following steps:

     (a) The bank sponsor must submit, to the department, the final as-built plans that reflect the final grading and planting of the bank site, and sufficient copies of the final as-built plans for the bank's signatories;

     (b) The department must review the final as-built plans;

     (c) The department, or its designee, must inspect the as-built condition of the bank. The department shall invite the bank's signatories and other interested members of the MBRT to inspect the as-built condition of the bank; and

     (d) If the department approves of the as-built plans and the constructed condition of the site, then the department must release the amount of credit specified in the bank instrument.

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     (2) The department, through the MBRT process, may require that additional performance standards be met prior to releasing up to fifty percent of the total potential credits.

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     (2) After a bank site has successfully attained all of its performance standards and the department concurs that all performance standards have been attained, the department must release all remaining potential credits.

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     (2) Earlier releases of credits may be warranted if the department, in consultation with the signatories, requests the sponsor to perform actions beyond those identified in the bank instrument in order to increase the projected functions of the site. Implementation of management activities that are necessary to attain the performance standards required in the bank instrument are not included.

     (3) An addendum to the bank instrument shall document any deviation from the credit release schedule.

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     (2) Performance standards must be based on the objectives and goals of the bank identified in the bank instrument and linked to a specific objective.

     (3) Performance standards must identify measurable values for variables linked to specific objectives.

     (4) The department, through the MBRT process, may require multiple years of monitoring data to document the sustainable attainment of specific performance standards, particularly hydrologic performance standards.

     (5) A bank is considered fully successful when all of the performance standards specified in the bank instrument have been attained.

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     (2) Bank sponsors are responsible for conducting any financial studies prior to implementation of a bank instrument to determine the financial risks and potential economic viability of the bank.

     (3) The department may not consider the economic standing or condition of a bank when implementing mitigation sequencing, determining unavoidable impacts, or evaluating compensation alternatives for debit projects.

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     (2) The department must determine the amount of financial assurances required on a bank-specific basis.

     (3) The amount of financial assurances required by the department must be commensurate with the degree of risk of bank failure and the nature and extent of site alteration and development.

     (4) The department may reduce the amounts of posted financial assurances over the operational life of the bank as the bank matures and the risk of failure is reduced.

     (5) The bank instrument and the financial assurance mechanisms must specify the financial requirements and conditions, and the entity responsible for the release or cashing of the financial assurances.

     (6) The department must determine the adequacy of the proposed financial assurances prior to certification.

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     (1) Financial assurances for construction of the bank site;

     (2) Financial assurances for short-term management of the bank (see WAC 173-700-420); and

     (3) Financial assurances for long-term management of the bank (see WAC 173-700-421).

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     (2) The amount of the financial assurance must be sufficient to cover the estimated costs for construction plus the costs for contract administration and overhead.

     (3) Construction cost estimates must be based on the costs of having an independent contractor perform the construction of the bank. The sponsor must provide the department with two written estimates from qualified contractors.

     (4) The department shall authorize the release of the financial assurance mechanism for bank construction after the department has approved the as-built condition of the bank.

     (5) Banks may be developed in phases as specified in the bank instrument. If any credits are released prior to the construction of the bank or a phase of the bank, the department must require a financial assurance sufficient to cover the costs of construction of that phase plus administrative costs incurred by the department.

     (6) The department may not require a financial assurance for construction if the first release of credits for a bank after the bank has been constructed and the department has approved the as-builts.

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     (2) The amount of the financial assurance must be sufficient to cover all short-term maintenance activities under WAC 173-700-420 for the operational life of the bank.

     (3) The cost estimates for short-term management must be based on the costs to have the applicable work in subsection (5) of this section performed by an independent contractor.

     (4) The sponsor shall provide the department with two written estimates from qualified contractors.

     (5) Monitoring and maintenance expenses used to determine the amount of the short-term management financial assurance may include, but are not limited to:

     (a) Estimated costs for a contractor to implement the contingency actions identified in the bank instrument;

     (b) Estimated costs of all monitoring activities required in the monitoring plan for the bank as specified in the bank instrument;

     (c) Costs to implement the site plan, such as irrigation, control of invasive species, or phased planting; and

     (d) Estimated costs for management activities required during the operational life of the bank as specified in the bank instrument (e.g., control of invasive vegetation or phased plantings), plus department costs for contract administration and overhead.

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     (2) The bank sponsor must secure sufficient funds for the anticipated long-term management costs as required by the department.

     (3) The purpose of the long-term financial assurance is to ensure that the long-term manager or owner of a bank site has the financial resources available to perform the minimum responsibilities of any real property owner and ensure that the bank site remains in its natural condition.

     (4) These responsibilities may include, but are not limited to:

     (a) Payment of property taxes;

     (b) Control of noxious weeds;

     (c) Maintenance of structures such as water control structures, fences, trails or signs; and

     (d) Other long-term management activities required in the bank instrument.

     (5) The bank sponsor must provide the department with two estimates for the costs of annual maintenance of the bank site.

     (6) If the ownership of the site is transferred in the future, the financial mechanism for long-term management must remain with the entity responsible for the long-term management of the bank.

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OPERATION OF BANKS
NEW SECTION
WAC 173-700-400   Monitoring.   The goals of monitoring bank sites are to:

     (1) Document the postconstruction baseline conditions at the bank site;

     (2) Document the condition of the bank site as it develops over time;

     (3) Document the attainment of performance standards; and

     (4) Provide early identification of problems in the site's development to trigger potential contingency actions.

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     (2) The monitoring plan must include:

     (a) A list of the bank's performance standards;

     (b) A description of the variables that will be monitored and how they will be evaluated;

     (c) A description of the methods or protocols used to monitor the identified variables;

     (d) A schedule of monitoring including details regarding the time of year, frequency, and duration;

     (e) A description of proposed photo documentation of the site; and

     (f) A detailed contingency plan as outlined in WAC 173-700-402.

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     (2) The contingency plan for a bank site must include the following elements:

     (a) Identification of potential causes for site failure;

     (b) Alternatives for contingency actions that may be required if the monitoring indicates that the site will not achieve specific performance standards; and

     (c) The bank sponsor's responsibilities in reporting and implementing contingency actions.

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     (2) The department, through the MBRT process, shall determine a monitoring schedule for the bank that is of sufficient duration to show that the bank is progressing toward ecological success and sustainability. For example, longer monitoring periods may be required for banks that contain wetland systems that require more time to reach a stable condition (e.g., forested wetlands and estuarine restoration).

     (3) The department may require additional monitoring at bank sites where contingency actions have been undertaken.

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     (2) The monitoring report must identify by name and qualification the persons and organizations conducting the monitoring and must contain all data necessary to document compliance with performance standards and the bank instrument.

     (3) The report must include, but is not limited to:

     (a) Photo points or referenced locations where photographs of the site are taken periodically to document site progress;

     (b) Data collected during the monitoring;

     (c) A narrative summary of the results of the monitoring;

     (d) Discussion of whether applicable performance standards were attained;

     (e) Discussion of recommended management activities to improve attainment of performance standards or performance of functions at the site;

     (f) Identification of any probable causes for failure of the bank to attain any performance standards; and

     (g) Recommendations for contingency actions, if applicable.

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     (2) The bank sponsor must identify in the as-built report any variations from the site design plan approved in the bank instrument.

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     (2) The bank sponsor must send the department the petition and must include supporting documentation that the required performance standards have been met.

     (3) The department must respond to the petition within thirty days of receipt of the written petition and supporting documents.

     (4) The department, or its designee, may conduct an on-site inspection to verify that performance standards have been met. Bank signatories and members of the MBRT are encouraged to participate in the on-site visits.

     (5) The bank sponsor must allow the department access to the site and to all documentation relevant to the requested credit release.

     (6) The department must grant the release of credits upon its approval of the attainment of the required performance standards.

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     (2) Any recording fees or other costs are the responsibility of the sponsor.

     (3) Each credit withdrawal transaction must include the following:

     (a) The wetland mitigation bank application number assigned by the department;

     (b) Name of the person or entity purchasing credits;

     (c) Location of the debit project that is approved to use bank credits as compensation;

     (d) Debit project permit numbers and types;

     (e) Debit project impact acreage and wetland types; and

     (f) Date and number of credits sold or used.

     (4) The bank sponsor must submit a copy of the recorded transaction to the department within thirty days of the auditor's office recording of each withdrawal transaction.

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     (2) The bank sponsor must document all credit transactions in the credit-tracking ledger and maintain copies of all credit withdrawal transactions.

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     (1) Bank sponsor or owner name and contact information;

     (2) Wetland mitigation bank application number assigned by the department;

     (3) Legal description of the bank location;

     (4) Construction date of the bank;

     (5) Wetland types and target functions of the bank;

     (6) Dates and amounts of all petitions for release of credits;

     (7) A balance of all potential credits;

     (8) A balance of all available credits; and

     (9) Dates, amounts, and supporting information as listed in WAC 173-700-411 for all withdrawal transactions.

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     (2) The annual transaction report must include a complete copy of the credit-tracking ledger and, if requested by the department, copies of all credit transactions from the previous calendar year.

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     (2) The department must notify the bank sponsor within sixty days of receipt of the sponsor's annual report if that report conflicts with the master ledger.

     (3) The bank sponsor is responsible for reconciling any discrepancies between the bank sponsor's credit-tracking ledger and the department's master ledger. If the bank sponsor fails to resolve any discrepancies, the department may suspend the further use of available credits under WAC 173-700-630.

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     (2) The audit may include the department contacting the local jurisdiction(s) and the county auditor's office to verify all transactions listed in a bank's credit-tracking ledger.

     (3) In the event of an audit, the bank sponsor must provide all supporting documentation requested by the department in order to verify transactions listed in the bank's credit-tracking ledger.

     (4) Unexplainable discrepancies between the public records and the bank's credit-tracking ledger may result in the department initiating compliance actions under WAC 173-700-600 through 173-700-630.

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     (2) The period of short-term maintenance includes the entire operational life of the bank.

     (3) Short-term management includes, but is not limited to, the following activities:

     (a) Actions necessary to implement the site plan such as, but not limited to, irrigation, control of invasive species, and phased plantings;

     (b) Regular monitoring of the site as described in the monitoring plan for the bank under WAC 173-700-401;

     (c) Ongoing maintenance activities required during the operational life of the bank as specified in the bank instrument. For example, a bank may require regular control of invasive species or maintenance of a water control structure; and

     (d) Implementation of contingency actions, if required.

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     (2) The bank sponsor must describe in the bank instrument any anticipated management and maintenance activities.

     (3) The long-term maintenance and management activities may include, but are not limited to:

     (a) Noxious weed control and removal of invasive species as needed;

     (b) Repair and maintenance of any structures on the site;

     (c) Repair due to vandalism; and

     (d) Tax assessments, utility fees, or other costs for the property on which the wetland bank is located.

     (4) The sponsor must identify the long-term manager of the wetland bank either in the bank instrument or the conservation easement, or both.

     (5) The department shall require a signed contract or agreement between the department and the long-term manager for the bank. That contract must specify the role and responsibilities of the long-term manager of the site(s).

     (6) The owner of a wetland bank may not complete any conveyance of title, easement, lease, or other interest directly related to the wetland bank without adequate and complete provision for the continued management of the wetland bank in a natural state.

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     (2) Institution controls include:

     (a) Legal and administrative mechanisms to limit site activities that are incompatible with the goals and purposes of the site. Examples include, but are not limited to, placing a conservation easement on the bank site and designating a long-term manager or steward for the bank;

     (b) Physical measures to minimize adverse impacts to the wetland and its biotic community such as erecting signs, fencing, vehicle barriers, and designated trails; and

     (c) Establishment of an endowment or trust for the long-term management of the site.

     (3) Real estate arrangements must be approved by the department and secured prior to any release of credits. The real estate arrangements must transfer with the property.

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     (1) Prohibit alterations to the wetland bank that may interfere with the ecological functioning of the bank;

     (2) Require the long-term manager of the wetland bank to notify the department if the owner conveys any interest in the wetland bank;

     (3) Require the long-term manager of the wetland bank to notify the department and receive approval from the department for any proposal to use the wetland bank in a manner that is inconsistent with the conservation easement;

     (4) Grant the department and its designated representatives the right to enter the wetland bank at reasonable times for the purpose of evaluating compliance with the terms of the bank instrument and the conservation easement; and

     (5) Require the owner to include in any instrument conveying any interest in any portion of the wetland bank, notice of the conservation easement under this section.

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USE OF WETLAND BANK CREDITS
NEW SECTION
WAC 173-700-500   Available credits.   (1) Potential credits at a bank site that have been released by the department are referred to as "available credits."

     (2) An available credit may be used to provide compensation for unavoidable wetland impacts authorized under a federal, state, or local permit in accordance with the conditions of the bank certification and approved bank instrument.

     (3) Permitting agencies for debit projects are responsible for determining if the use of available credits from a bank provides appropriate compensation for the debit project's unavoidable impacts.

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     (2) The replacement ratios for debit projects should take into consideration that credit conversion rates for wetland banks include adjustments for the site's overall ecological benefit. Therefore, one acre-credit at a bank is not necessarily equal to one acre on the ground. In many cases one acre-credit from a bank represents more than one acre at the bank site.

     (3) Replacement ratios for debit projects should reflect:

     (a) The existing risk of failure at the time credits are debited;

     (b) Any temporal losses;

     (c) Out-of-kind considerations; and

     (d) Compensation for the distance from the affected wetland to the bank site.

     (4) Recommended replacement ratios for debit projects may be specified in a bank instrument.

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     (2) Generally, impacts to salmonid fish habitat and hydrologic functions should be mitigated in the same stream reach or subbasin, respectively, as the impact site.

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     (2) When a debit project located outside of the bank's designated service area requests to use bank credits as compensation for an authorized wetland impact, the bank sponsor must:

     (a) Provide written notice of the proposed use of credits and a request for comments to the department and the bank's signatories;

     (b) Convene a meeting of the signatory agencies, if necessary;

     (c) Obtain written approval from the department and the bank's signatories on the proposed use of credits;

     (d) Send copies of the approvals to the department; and

     (e) Include the approval documents as an addendum to the bank instrument.

     (3) Linear projects, such as roadways, transmission lines, distribution lines, pipelines, or railways, may be eligible to use a bank even though all of the projects' impacts are not located within the bank's service area. However, the following conditions must be met:

     (a) At least one impact from the project must lie within the bank's service area;

     (b) The bank must provide appropriate compensation for the impacts; and

     (c) The determination to allow use of bank credits for impacts lying outside of a bank's service area must take into consideration the elements used in determining the bank's service area as listed in WAC 173-700-311.

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     (2) Some debit projects may require authorization under more than one regulatory program (e.g., section 404 authorization, local grading permit and a hydraulic project approval). A credit can be used to compensate for one impact that requires multiple authorizations for the same impact.

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COMPLIANCE WITH CERTIFICATION
NEW SECTION
WAC 173-700-600   Compliance with the terms of certification.   It is the department's goal to ensure that the establishment and operation of a mitigation bank is consistent with the terms and conditions of the certification as specified in the bank instrument. The department may use one or more of the methods provided for in WAC 173-700-610 through 173-700-630 to gain compliance of certified banks.

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     (2) Upon the bank sponsor's determination that the bank is not or will not attain performance standards, the bank sponsor shall notify the department and the bank's signatories that the bank site will not attain the required performance standards.

     (3) Any agency, entity, or person may also notify the department if it has supporting documentation that a bank site is not successfully meeting the required performance standards.

     (4) The notification must include:

     (a) A clear statement of the problem;

     (b) Supporting documentation of the problem, such as photographic evidence, documentation from field reviews, the submitted monitoring report or the credit release petition; and

     (c) Recommendations for contingency actions or other alternatives to address the problem.

     (5) The department, with recommendations from the bank's signatories, shall evaluate and determine the appropriate contingency actions required for the site. The department's determination for contingency action(s) must include:

     (a) A description of the contingency action(s) that must be undertaken;

     (b) A schedule for the sponsor to implement the required contingency action(s);

     (c) Any additional monitoring and reporting requirements for the bank, if applicable; and

     (d) Any adjustments to the credits in the wetland bank and the credit release schedule.

     (6) Interested signatories of the bank shall notify the department if they have comments on the proposed contingency actions as specified in WAC 173-700-740.

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     (2) This determination must be attached as an addendum to the bank instrument.

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     (2) The department must send the notification of noncompliance by certified mail with return receipt requested and must require a written response from the sponsor.

     (3) The sponsor must respond in writing to the department within fifteen days of receipt of the noncompliance notification. The response shall include an explanation of why the sponsor has not implemented the required contingency actions and a schedule for when the sponsor will complete the required contingency actions.

     (4) The department, in consultation with interested signatories of the bank, shall determine whether the reasons provided by the sponsor constitute extenuating circumstances and shall determine whether to extend the schedule for instituting contingency actions.

     (5) If the department determines that the schedule should not be extended, the department must notify the sponsor by certified mail with return receipt requested that it intends to either:

     (a) Use the posted financial assurances to have the required contingency actions completed; or

     (b) Adjust the total number of potential credits at the bank under WAC 173-700-620.

     (6) The department shall send a copy of the noncompliance notification to the bank's signatories.

     (7) Thirty days after the date of the bank sponsor's receipt of the department's notification in subsection (5) of this section, the department may initiate the actions specified in the notification.

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     (2) The department shall consult with a bank's signatories to determine whether the number of credits at a bank should be adjusted at the time of the final release of credits.

     (3) The department may adjust the number of credits at a bank in the following ways:

     (a) The department, in consultation with the bank signatories, may reduce total number of credits at a bank site if all of the required performance standards cannot be attained;

     (b) The department, in consultation with the bank signatories, may increase the number of credits available at a bank site if:

     (i) All of the required performance standards are met; and

     (ii) The department determines that the site provides higher levels of function than was originally projected; or

     (c) After the department concurs that all of the required performance standards have been met, the department may recalculate the remaining available restoration and creation credits to achieve a conversion rate of one to one. The revised conversion rates for restoration or creation credits should be based on the criteria listed in WAC 173-700-355.

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     (2) The suspension shall include all available credits at a bank.

     (3) The department may suspend the use of available credits for the following reasons:

     (a) If the department determines that a bank is out of compliance with the terms of its certification and the sponsor has not implemented the contingency actions required by the department;

     (b) If the department determines that a bank is not in compliance with the terms of its certification and that the sponsor has not made reasonable efforts to bring the bank into compliance; or

     (c) If the department determines that there is documented fraudulent use of the bank.

     (4) If credit use is suspended by the department, the department must notify the bank sponsor by certified mail with return receipt requested that further use of credits has been suspended.

     (5) The department shall maintain the suspension until compliance is achieved.

     (6) The use of credits shall remain suspended until the department notifies the bank sponsor in writing that credit use may be resumed.

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ROLES AND RESPONSIBILITIES
NEW SECTION
WAC 173-700-700   Responsibilities of the bank sponsor.   (1) The bank sponsor must meet the requirements of these rules.

     (2) It is the responsibility of the bank sponsor to provide the wetland mitigation prospectus and bank instrument consistent with WAC 173-700-223 and 173-700-241, respectively.

     (3) It is the bank sponsor's responsibility to incorporate specific elements required by the department and the MBRT into the final bank instrument.

     (4) The bank sponsor is responsible for obtaining all required federal, state, and local permits and approvals for the construction and establishment of the wetland mitigation bank.

     (5) The bank sponsor is responsible for assuring the success of the restoration, creation, enhancement, or preservation activities, or a combination of these activities, at the mitigation bank.

     (6) The bank sponsor is responsible for the construction, operation, maintenance, permanent protection, and all costs including contingency actions, if required, and financial assurances for the mitigation bank in accordance with the bank instrument and this rule.

     (7) The bank sponsor must secure adequate funds for the operation and maintenance of the bank during its operational life and the long-term management and permanent protection of the bank sites.

     (8) The bank sponsor must secure real estate arrangements that will permanently protect the property on which the bank is located.

     (9) The bank sponsor is responsible for the evaluation and protection of historic, cultural, and archeological resources of the bank site.

     (10) The bank sponsor must monitor the development of the bank site and report findings to the department under WAC 173-700-404.

     (11) The bank sponsor is responsible for submitting written petitions for releases of credits under WAC 173-700-410.

     (12) The bank sponsor is responsible for the accounting and maintenance of ledgers regarding the deposit and withdrawal of credits from the mitigation bank under WAC 173-700-412 and 173-700-413.

     (13) The bank sponsor is responsible for obtaining all approvals for the bank's signatories when proposing to use credits in a manner that is inconsistent with the terms and conditions of the bank instrument.

     (14) The bank sponsor may request the program manager of the shorelands and environmental assistance program to review actions taken to develop the bank instrument if the sponsor believes that a particular decision raises concern regarding the application of this rule, or that inadequate progress has been made by the MBRT on the bank instrument.

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     (2) The department must fully consider recommendations from the MBRT and public comments submitted as part of the certification process.

     (3) The department is responsible for inviting members to and convening the MBRT. The department must serve as chair of the MBRT and shall invite the local jurisdiction to serve as cochair.

     (4) The department is responsible for maintaining master ledgers on certified banks and authorizing the release of credits as specified in bank instruments under WAC 173-700-415 and 173-700-410, respectively.

     (5) The department shall be responsible for approving financial assurances, and releasing financial assurances or cashing posted financial assurances to ensure compliance with the terms of a bank instrument.

     (6) The department shall implement the compliance procedures as described in WAC 173-700-600 through 173-700-630 if a bank is determined to be out of compliance with the terms of its certification.

     (7) The department must determine the requirements for implementation of contingency actions when a bank is unable to attain its performance standards.

     (8) If the sponsor does not achieve compliance with the terms of the bank instrument within the time frame specified by the department, the department may suspend the use of credits as described in WAC 173-700-630.

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     (2) The local jurisdiction(s) shall be invited by the department to participate on the MBRT.

     (3) The local jurisdiction(s) may participate as cochair of the MBRT with the department.

     (4) After receipt of the department's decision to approve certification, the local jurisdiction(s) must review the certification and if it concurs with the decision, the local jurisdiction(s) must sign the bank instrument to indicate its concurrence with the bank certification.

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     (a) Assist in the development of bank instruments;

     (b) Facilitate the review of wetland mitigation bank proposals; and

     (c) Avoid duplicative processes for bank certification and approval.

     (2) It is the role of the MBRT to help ensure that certified wetland banks are technically feasible and ecologically desirable.

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     (2) The MBRT shall review certification applications, and propose recommendations to the department, and the local jurisdiction(s) where the bank is located, on the certification of individual mitigation banks.

     (3) MBRT representatives are responsible for notifying the department if they have comments for the department to consider on the requirements for contingency actions or on the release of credits.

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     (2) Entities typically invited include, but are not limited to, the U.S. Army Corps of Engineers, the Environmental Protection Agency, U.S. Fish and Wildlife Service, National Marine Fisheries Service, Natural Resource Conservation Service, Washington department of fish and wildlife, Washington department of natural resources, tribes, and local jurisdictions within the proposed bank's service area.

     (3) The department may invite interested members of the public or nongovernmental organizations to participate on the MBRT as advisory members.

     (4) The department shall serve as chair of the MBRT and shall invite the local jurisdiction(s) where the bank is located to serve as cochair. For bank proposals seeking federal approvals in addition to state certification, the U.S. Army Corps of Engineers representative may also cochair the MBRT.

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     (2) Signatory agencies must notify the department if they determine that the bank is out of compliance with the terms of its certification and recommend whether compliance actions are warranted to bring the bank into compliance.

     (3) Signatory agencies are encouraged to participate in field reviews of the bank site for determining:

     (a) Whether the as-built condition of the bank is correct;

     (b) Whether contingency actions need to be initiated on a bank site and what those actions should include; and

     (c) Whether a credit release petition should be granted.

     (4) Signatory agencies shall notify the department if they have any comments regarding the department's proposed contingency actions required under WAC 173-700-610.

     (5) Signatory agencies should review and provide comments to the department on any proposed uses of bank credits that are inconsistent with the terms of the certification.

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     (2) The purpose of the documentation is to ensure that the intent of the authorizing statute is met. The authorizing statute states that bank credits should only be used for remaining "unavoidable" impacts after all practicable avoidance and minimization has been implemented.

     (3) The rationale used to conclude that the actions are unavoidable should be included in the permit file for the debit project using bank credits for compensation.

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APPEALS
NEW SECTION
WAC 173-700-800   Appeals process.   A decision to issue, deny, or modify a final certification may be appealed to the pollution control hearings board under chapter 43.21B RCW.

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