DOE and PNNL are working to strengthen the technical defensibility of the groundwater flow and transport model at the Hanford Site and to incorporate uncertainty into the model. One aspect of the initiative is developing and using a three-dimensional transient inverse model to estimate the hydraulic conductivities, specific yields, and other parameters using data from Hanford since 1943. The focus of the alternative conceptual model (ACM-2) inverse modeling initiative documented in this report was to address limitations identified in the ACM-1 model, complete the facies-based approach for representing the hydraulic conductivity distribution in the Hanford and middle Ringold Formations, develop the approach and implementation methodology for generating multiple ACMs based on geostatistical data analysis, and develop an approach for inverse modeling of these stochastic ACMs. The primary modifications to ACM-2 transient inverse model include facies-based zonation of Units 1 (Hanford ) and 5 (middle Ringold); an improved approach for handling run-on recharge from upland areas based on watershed modeling results; an improved approach for representing artificial discharges from site operations; and minor changes to the geologic conceptual model. ACM-2 is the first attempt to fully incorporate the facies-based approach to represent the hydrogeologic structure. Further refinement and additional improvements to …