Filed
Washington State
Court of Appeals
Division Two
September 29, 2026
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II
BOYER TOWING, INC., No. 60992-4-II
Appellant,
v.
PUBLISHED OPINION
STATE OF WASHINGTON DEPARTMENT
OF NATURAL RESOURCES, a state agency;
STATE OF WASHINGTON DEPARTMENT
OF NATURAL RESOURCES-BOARD OF
NATURAL RESOURCES, a state agency;
STATE OF WASHINGTON DEPARTMENT
OF NATURAL RESOURCES-OFFICE OF
THE COMMISSIONER OF PUBLIC LANDS,
a state agency; and THE HONORABLE
HILARY S. FRANZ, in her capacity as
Washington State Commissioner of Public
Lands,
Respondents.
VELJACIC, C.J. — Boyer Towing, Inc. appeals the trial court’s decision invalidating WAC
332-30-122(1)(b)(ii) and affirming the Washington State Department of Natural Resources’
(DNR) upland parcel selection to calculate the rent Boyer owed for its mooring buoy lease. On
appeal, Boyer argues DNR incorrectly interpreted WAC 332-30-122(1)(b)(ii) in determining the
lease area, which impacted its rent calculation. Boyer also argues DNR acted arbitrarily and
capriciously in choosing the upland parcel to use in its rent calculation formula. 60992-4-II
Because DNR did not err in its interpretation of WAC 332-30-122(1)(b)(ii), we affirm the
Board of Natural Resources’ (Board) determination of the lease area. Because Boyer’s argument
regarding DNR’s selection of the residential parcel as the upland parcel and the commercial parcel
as the “landward” parcel is not properly before us, we decline to address it. Further, we conclude
that DNR did not act arbitrarily and capriciously in determining that the commercial parcel could
not serve as the upland parcel. Accordingly, we affirm the Board. Finally, because there is no
inconsistency between RCW 79.105.240(1)(b) and WAC 332-30-122(1)(b)(ii), we reverse the trial
court’s order invalidating WAC 332-30-122(1)(b)(ii).
FACTS
I. BACKGROUND
Among its other duties, DNR manages state-owned aquatic lands, that is, lands under the
waters of the state. RCW 79.105.010. In managing these lands, DNR sometimes enters into leases
with entities dictating use of the land. RCW 79.105.210(4). The DNR lease at issue here allows
Boyer to moor its barges to an anchor point on the floor of the Puget Sound, just off the coast of
Bainbridge Island. The relevant lease is a lease for aquatic lands, and like other leases of its
category, its annual rent rate is governed by RCW 79.105.240 and associated regulations found
under chapter 332-30 WAC. In particular, with regard to Boyer’s first assignment of error, WAC
332-30-122 governs how DNR is to determine the lease area of a leasehold.
Regarding Boyer’s second assignment of error, WAC 332-30-123 provides a formula for
DNR to follow in calculating the amount of rent to charge a renter. The rental rate formula in
WAC 332-30-123 provides that the annual rent owed equals:
[t]he per unit assessed value of the upland tax parcel, exclusive of improvements,
multiplied by the units of lease area multiplied by thirty percent multiplied by the
real rate of return.
2
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Accordingly, DNR must decide what upland parcel to utilize in making this calculation,
which ultimately influences the amount of rent owed.
In this appeal, Boyer challenges DNR’s decisions regarding the variables input in the rental
rate formula, including decisions about the “lease area” and which “upland” parcel was most
appropriate for use in the formula.
II. LEASE APPLICATION
In 1942, Boyer installed a commercial mooring buoy in Port Madison Bay for vessel and
barge mooring. Since then, Boyer has utilized the buoy on an intermittent basis.
DNR notified Boyer that its use of state-owned aquatic lands was unauthorized, and in
2011, Boyer submitted an application to lease the lands that were used for the mooring buoy.
Through the application process, Boyer identified a parcel located at 8324 NE Hidden Cove
Road, Bainbridge Island, Washington (Parcel No. 342602-3-035-2007) (residential parcel) and a
parcel without a street address (Parcel No. 032502-2-002-2006) (commercial parcel).1 A shop was
built on the commercial property and used “to store engines and parts for the tugboats, and rigging
and supplies for the barges and log tows that use the Port Madison Bay buoy.” Clerk’s Papers
(CP) at 237. The commercial parcel also had a wetland with a stream that passed through a culvert
to the residential parcel where it emptied into Port Madison Bay. The residential parcel was
“waterfront” and contained a home and a dock that Boyer leased a portion of from DNR. Boyer
used the dock to “transport [employees] and materials to and from the [c]ommercial [p]arcel to the
Port Madison Bay buoy.” CP at 195, 239, 327. The residential and commercial parcels, which
1
“Residential” and “commercial” is how Boyer refers to these properties in its appeal. These terms are utilized here for clarity.
3
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are relevant for purposes of Boyer’s appeal, are presented for illustrative purposes in figure 1
below.2
CP at 534.
During negotiations between Boyer and DNR about which upland parcel would be selected
to be used in conjunction with the lease, both the residential and commercial parcels were
considered.
2
This image is from Boyer’s brief before the trial court.
4
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A. DNR’s Initial Position Regarding the Residential Parcel
Initially, DNR’s position was that the residential parcel was inappropriate for rent
calculation purposes. In 2014, in the rent appeal for the lease application, DNR took the position
that the residential parcel could not be used as the upland parcel in the rental rate formula because
its value was inconsistent with the purpose of the lease due to the majority of its use as a single
family residence. According to WAC 332-30-123(3)(e), if the value of the dock could be
segregated from the tax assessment records, the parcel’s assessed value could still be used, but
DNR took the position that such a segregation was not possible.
DNR concluded that the residential parcel did not meet the criteria for use as the upland
parcel in the formula.3 Instead, DNR determined that a different parcel, “[t]he City of Bainbridge
public park waterfront property at Eagle Harbor (Kitsap County tax #4114-002-001-0000)”, did
meet the criteria for use as the upland parcel in the rental rate formula. CP at 325. DNR stated
that the annual rent owed (including the leasehold tax) under this proposal would be $60,729.50.
This parcel is not discussed further in subsequent proposals in the record.
B. DNR’s Revised Position Regarding the Residential Parcel
Boyer requested reconsideration of DNR’s decision and submitted additional information.
After a site visit to three upland tax parcels, DNR revised its decision and stated that the residential
parcel was appropriate.
3
WAC 332-30-123(3) provides that
the upland tax parcel’s assessed value must be consistent with the purposes of the
lease. . . . [T]he following situations are examples, but are not an exclusive list, of
what the department will consider inconsistent . . . (e) The majority of the upland
tax parcel area is not used in conjunction with a water-dependent use. This
inconsistency may be corrected by using the value and area of the portion of the
upland tax parcel that is used in conjunction with water-dependent use if this
portion can be segregated from the assessment records.”
5
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Referring to another of the criteria for upland parcels, DNR determined that the residential
parcel was “in close proximity to the proposed leasehold and include[d] a large dock with capacity
to provide moorage for vessels.” CP at 327. To show that the residential parcel was “used in
conjunction” with the leasehold, as required by WAC 332-30-123(2)(a), DNR pointed out that
“Boyer Towing maintain[ed] a business license for the tax parcel . . . , maintain[ed] a commercial
lease with DNR, and acknowledge[d] using the dock on this parcel occasionally to transport
employees and materials off-site.” CP at 327. Accordingly, DNR concluded it could accept this
residential parcel as the upland tax parcel for the rental rate formula.4 However, DNR stated that
Boyer’s proposed upland parcel, the commercial parcel, did not meet the requirements for rent
calculation purposes because it was not waterfront and was “across the street from a waterfront
parcel with no direct connection or easement.” CP at 328.
Relative to Boyer’s first assignment of error, DNR also declined to consider calculating
rent using only the area occupied by a vessel at a specific point in time, stating, instead, that it
would calculate the rent “based on the expected swing of the vessel on the mooring.” CP at 328.
Between 2011 to 2018, while the lease was being negotiated, Boyer paid DNR a total of
$170,000 in “use and occupancy fee[s].” CP at 323.
III. THE LEASE AND INITIAL RENT CALCULATION
After a State Environmental Policy Act (SEPA) review and extensive negotiations, in 2018,
Boyer and DNR entered into a lease for the state-owned land.5 The lease had a term of 12 years
4
DNR stated that the annual rent owed (including the leasehold tax) under this proposal would be $40,011.33.
5
Aquatics Land Lease No. 20-089892.
6
60992-4-II
with an initial annual rent of $24,334.80.6 Under the terms of the lease, pursuant to RCW
79.105.200-.360, DNR was required to revalue the rent owed every four years. The residential
parcel was selected as the upland parcel for use in conjunction with the lease.
An exhibit incorporated in the lease agreement specified that the legal description of the
bedlands being leased consisted of “[a] circle with a radius [from the buoy] of 400 feet” that
contained “11.54 acres.” CP at 63. An additional exhibit described the permitted uses for the lease
as:
One (1) metal commercial peg top buoy secured with a 25,000 pound navy style
anchor and approximately 90 feet of heavy chain. The buoy accommodates
concurrent moorage of two (2) large 300-ft barges or three (3) approximat[e]ly 150-ft vessels. The buoy is used year round for intermittent, non-scheduled, temporary
moorage of commercial barges and vessels.
CP at 64.
IV. RENT RECALCULATION AND SUBSEQUENT REVIEW
The event giving rise to this appeal occurred in 2022, when DNR notified Boyer that it was
recalculating the rent owed pursuant to RCW 79.105.240. This resulted in Boyer owing a total
annual base rent of $79,306.83.7 The notice stated that because this was an increase greater than
50 percent from the previous year, pursuant to RCW 79.105.260, the rent would “be stair-stepped
and adjusted for inflation annually until the base rent is reached.” CP at 147. Accordingly, with
the leasehold tax included, the total amount owed was $41,381.53. Boyer requested review of
DNR’s decision by a rental dispute officer (RDO).
6
Neither the lease nor the attached exhibits specify which upland parcel was used in the formula to calculate the rent owed. Further, it is unclear exactly how this figure is calculated based on the lease. The only documents in the record specifying which upland parcel was used in the formula is the Rental Dispute Officer (RDO) and Rental Dispute Appeals Officer (RDAO) decisions and Boyer’s petitions.
7
This letter did not state which upland parcel was being used to calculate the rent owed.
7
60992-4-II
Boyer argued, in relevant part, that it had insufficient information to ascertain how DNR
recalculated the rent and that DNR erred in interpreting WAC 332-30-122(1)(b)(ii) to require
calculation of the rent owed using the entire expected swing of the vessel. In response, DNR
ordered a conference between Boyer and the “Land Manager.” CP at 170.
Boyer supplemented its request for an RDO, arguing again, in relevant part, that DNR erred
in interpreting WAC 332-30-122(1)(b)(ii) to require calculation of the rent owed using the entire
expected swing of the vessel and erred in rejecting the commercial parcel as the upland parcel for
rent calculation.
Boyer argued that the presence of wetlands on the commercial parcel as well as hydraulic
connection and culvert between the commercial and residential parcels was sufficient to classify
the commercial parcel as “waterfront” and therefore make it suitable for selection as the upland
parcel. Boyer also requested that a different parcel (No. 342401-3-039-2008) (Fritts parcel) “used
for three separate commercial buoy leases in Sinclair Inlet, including Boyer” be selected as an
alternate upland parcel for use in the rental rate formula. CP at 190.
A. RDO Decision
The RDO stated that DNR interpreted WAC 332-30-122(1)(b)(ii)8 “to mean the entirety of
the area within the leasehold as that is the area being ‘encumbered’ by the lease.” CP at 196.
Therefore, the RDO concluded that the full circle of the expected swing of the vessel encompassing
8
WAC 332-30-122(1) provides that:
(b) Determination of the area encumbered by an authorization for use shall be made
by the department based on the impact to public use and subsequent management
of any remaining unencumbered public land. . . . (ii) Areas for individual mooring
buoys will be a circle with a radius equal to the expected swing of the vessel or
object moored. Only the area encumbered at any given point in time shall be used
to calculate any rentals due.
8
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11.54 acres, as agreed to in the lease, would continue to be used for rent calculation purposes.
Further, the RDO reiterated that the residential parcel was the most appropriate upland parcel
because it was a “landward parcel with upland characteristics, used in conjunction with the
leasehold, [with an] assessed value [] consistent with the purpose of the lease.” CP at 195.
Specifically, “Boyer [] maintain[ed] a business license for the tax parcel, and “acknowledge[d]
using the dock on [that] parcel occasionally to transport employees and materials off-site.” CP at
195.9 The RDO also stated that the commercial parcel and Fritts parcel did not meet the
requirements to be the upland parcel in the rental rate formula. The RDO explained that the
commercial parcel was
inconsistently valued with other parcels in the area in part because it has a special
land use classification. WAC 332-30-123 (3) states, “The upland tax parcel’s
assessed value must be consistent with the purposes of the lease.” Furthermore,
subsection C lists examples of what the department will consider inconsistent, and
states “The ‘assessment’ results from a special tax classification or other adjustment
by the county assessor not reflecting fair market value as developable upland
property”. While we recognize that the “Commercial Parcel” is used in conjunction
with this leasehold as a storage facility, it is inconsistently valued with other parcels
in the area and is classified as a parcel of “183—sheds and garages” on the Kitsap
County Assessor website.[10]
CP at 195-96. Further, the Fritts parcel was not closest in proximity to the leased area as required
under WAC 332-30-123(2)(c)(iii).
In April 2023, Boyer petitioned for review of the RDO’s decision with the rental dispute
appeals officer (RDAO). Boyer argued, relying on its communications with the Kitsap County
Assessor’s Office, that DNR was incorrect and that the “Commercial Parcel was not inconsistently
9
The assessed land value of the residential parcel in 2018 was $740,680 and, in 2022, it was $1,038,530. The assessed land value of the commercial parcel in 2022 was $477,870. 10
This explanation was different than the reasoning provided in previous communications between DNR and Boyer that stated the commercial parcel was not suitable because it was not “waterfront.” See CP at 328.
9
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valued with other parcels in the area, [and did] not have a special use classification.” CP at 431
(emphasis in original). Boyer also reiterated its position that DNR’s interpretation of WAC 332-30-122(1)(b)(ii) regarding the lease area rendered the second sentence of the rule superfluous
because it would always calculate rent owed using the entire expected swing of the vessel instead
of only the “area encumbered ‘at any given point in time.’” CP at 431 (quoting WAC 332-30-122(1)(b)(ii)).
B. RDAO Decision
The RDAO appeared to agree that DNR was incorrect in its most recent explanation for
why the commercial parcel was not suitable as the upland parcel for use in the formula. Instead,
the RDAO reverted back to DNR’s original position that the commercial parcel was not
“waterfront’ and therefore unsuitable for selection. CP at 27. The RDAO stated: “While DNR
understands that the ‘Commercial Parcel’ is not inconsistently valued based on a special tax
classification, the ‘Commercial Parcel’ remains an inappropriate selection for an upland parcel.
The criteria for upland parcel selection delineated in WAC 332-30-123 (2)(a) clearly states[,] ‘The
upland tax parcel shall be waterfront.’” CP at 27.
The RDAO explained that pursuant to WAC 332-30-106(76), “‘waterfront’” meant “‘a
parcel of property with upland characteristics which includes within its boundary, a physical
interface with the existing shoreline of a body of water.’” CP at 27. Relying on a West Sound
Engineering survey and the City of Bainbridge Island Critical Areas webmap, the RDAO reiterated
that while the commercial property was a wetland, it did not meet the definition of “waterfront”
because the “physical interface with the existing shoreline ends on the [r]esidential [p]arcel.” CP
at 27 (internal quotation marks omitted). In reaching its decision, the RDAO had before it a
10
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contrary position favoring Boyer in the form of the declaration from Boyer’s expert, John Small,
who stated that:
the stream on the Commercial Parcel is a body of water that has a shoreline and
associated wetlands and that this Type F stream flows directly to [the residential
parcel]. My review of the photographic documentation clearly shows that the
Ordinary High Water Mark of this waterbody extends through the culvert and onto
the Commercial Parcel. Therefore, the Commercial Parcel meets the definition of
“waterfront” under WAC 332-30-106(76).
CP at 479.
The RDAO also reiterated its interpretation of WAC 332-30-122(1)(b)(ii) regarding the
lease area.
[I]n determining rent of a mooring buoy, the “encumbered” land refers to Boyer’s
right to occupy any portion of the swing circle around the buoy at any given time,
not just the specific space taken up by the vessel/barge at a specific point in time.
This is further confirmed by the fact that DNR is unable to grant any other use
within the area of the swing circle while the lease is in effect. Rent is not calculated
based on how many vessels/barges can be moored at the buoy at a time.
CP at 27. The RDAO affirmed the RDO’s decision.
Boyer then petitioned for review of the RDAO’s decision, but the Board declined review.
Accordingly, the Board adopted the RDAO’s decision.
C. Judicial Review
Pursuant to RCW 79.02.030, Boyer sought judicial review of the Board’s decision. Upon
review of the agency record, the trial court affirmed DNR’s selection of the upland parcel.
However, the trial court invalidated WAC 332-30-122(1)(b)(ii) because it determined that the
regulation required rent to be calculated “using an area that is less than the full area encumbered
by the lease,” which the court found to be inconsistent with RCW 79.105.240(1)(b).11 CP at 661.
11
Neither party asked the trial court to invalidate the rule.
11
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The court remanded the matter to DNR to calculate the rent owed without utilizing WAC 332-30-122(1)(b)(ii).
Boyer filed a motion for reconsideration, but it was denied.
Boyer appeals.
ANALYSIS
I. STANDARD OF REVIEW
A. Which Decision Should be Reviewed
Boyer assigns error to the trial court’s decision to invalidate WAC 332-30-122(1)(b)(ii)
instead of ordering DNR to calculate the rental rate using its interpretation of WAC 332-30-122(1)(b)(ii). Boyer also assigns error to the trial court’s decision to affirm DNR’s selection of
the residential parcel instead of the commercial parcel. 12 However, Boyer’s arguments pertain to
DNR’s application of WAC 332-30-122(1)(b)(ii) and selection of the upland parcel. For the
reasons explained below, we review the Board’s decision and not the trial court’s. Based on the
substance of Boyer’s arguments, we interpret Boyer’s claims as directed at the Board’s decisions.
Pursuant to RCW 70.02.030,
[a]ny applicant to . . . lease[] any public lands of the state . . . feeling aggrieved by
any order or decision of the board . . . concerning the same, may appeal therefrom
to the superior court of the county in which such lands or materials are situated. . .
. [T]he secretary of the board, or the commissioner, shall certify, under official
seal, a transcript of all entries in the records of the board, or the commissioner,
together with all processes, pleadings and other papers relating to and on file in the
case, except evidence used in such proceedings, and file such transcript and papers
. . . with the clerk of the court to which the appeal is taken. The hearing and trial
of said appeal in the superior court shall be de novo before the court, without a jury,
upon the pleadings and papers so certified. . . . Any party feeling aggrieved by the
judgment of the superior court may seek appellate review as in other civil cases.
12
DNR also couches its counterstatement of the issues in terms of what the trial court did.
12
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Under RCW 79.02.030, when a party appeals to the trial court, the court “defers to the
factual findings of the commissioner and limits its review to the application of law to the admitted
facts.” Nw. Alloys, Inc. v. Dep’t of Nat. Res., 10 Wn. App. 2d 169, 183, 447 P.3d 620 (2019).
“[W]here the record consists only of affidavits, memoranda of law, and other documentary
evidence[,]” this court “stands in the same position as the trial court.” Progressive Animal Welfare
Soc. v. Univ. of Wash., 125 Wn.2d 243, 252, 884 P.2d 592 (1994); see e.g., Nw. Alloys, 10 Wn.
App. 2d at 183 (holding that in an appeal under RCW 72.09.030, we review the decision of DNR
de novo).
Here, because the trial court made no factual findings and left only its conclusions of law
for review, we sit in the same position as the trial court and review the Board’s decision with no
deference to the trial court.13 As explained below, when reviewing the Board’s decision, we apply
de novo review to some issues and arbitrary and capricious review to others.
B. Standard of Review of the Board’s Decision
Here, both parties appear to agree that DNR’s interpretation of WAC 332-30-122(1)(b)(ii)
should be reviewed de novo, and its decision to select the upland parcel should be reviewed to
determine if it was arbitrary and capricious or contrary to law.14 We agree.
1. Legal Principles
“[D]e novo review of an administrative agency’s decision is only permissible when the
agency acts in a quasi-judicial manner.” Yaw v. Walla Walla Sch. Dist. No. 140, 106 Wn.2d 408,
413, 722 P.2d 803 (1986). Alternatively, “[i]n cases in which the agency acted in its administrative
13
Pursuant to RCW 43.30.030, the Board is a part of DNR.
14
Boyer appears to suggest that part of the analysis regarding the parcel selection should be reviewed de novo, however, it never specifies what part that is and only applies the arbitrary and capricious/contrary to law standard.
13
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function, review is limited to whether the agency acted arbitrarily, capriciously, or contrary to
law.” Nw. Alloys, 10 Wn. App. 2d at 184. Limiting this court’s review of administrative decisions
“‘serves an important policy purpose in protecting the integrity of administrative decisionmaking.’” Id. (internal quotation marks omitted) (quoting Residents Opposed to Kittitas Turbines
v. State Energy Fac. Site Evaluation Council, 165 Wn.2d 275, 295, 197 P.3d 1153 (2008)).
To determine if an agency action is quasi-judicial or administrative, we apply a four-part
test to determine if:
(1) the court could have been charged in the first instance with the responsibility of
making the decision; (2) the function of the agency is one that courts have
historically performed; (3) the agency performs functions of inquiry, investigation,
declaration and enforcement of liabilities as they stand on present or past facts
under existing laws; and (4) the agency’s action is comparable to the ordinary
business of courts.
Id.
2. Analysis
Here, DNR acted in a quasi-judicial capacity in interpreting WAC 332-30-122(1)(b)(ii).
The interpretation of statutes and administrative rules is something with which the court could
have been charged, and that function is typically one that courts perform. See Edelman v. State ex
rel. Pub. Disclosure Comm’n, 152 Wn.2d 584, 590, 99 P.3d 386 (2004) (“Courts retain the ultimate
authority to interpret a statute.”). DNR was not enforcing liabilities. And interpreting WAC 332-30-122(1)(b)(ii) is comparable to the ordinary business of courts. See Wash. Cedar & Supply Co.,
Inc. v. Dep’t of Lab. & Indus., 137 Wn. App. 592, 598, 154 P.3d 287 (2007) (“We interpret agency
regulations as if they were statutes.”). Therefore, the correct standard of review of DNR’s
interpretation of WAC 332-30-122(1)(b)(ii) is de novo.
14
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Comparatively, DNR acted in an administrative capacity when selecting the upland parcel.
The selection of an upland parcel for calculating rent is not something with which the court could
have been charged, and that function is not typically one that courts perform. “Through the aquatic
lands statutes, the State granted sovereign powers to DNR for protection of the State’s interest in
the [public] trust.” Nw. Alloys, 10 Wn. App. 2d at 185.
Courts have not “historically managed aquatic lands held in public trust because that is a
function DNR performs.” Id. at 186. Further, DNR was not declaring and enforcing liabilities by
simply selecting an upland parcel. And selecting the most appropriate parcel to be used in
conjunction with the lease is not comparable to the ordinary business of courts as DNR is vested
with the discretionary, administrative responsibility to fashion the terms and conditions for leases
of state-owned aquatic lands. See RCW 79.105.210(4). Therefore, the correct standard of review
of DNR’s selection of the upland parcel is whether it was arbitrary and capricious.
II. INTERPRETATION OF WAC 332-30-122(1)(b)(ii)
Boyer argues WAC 332-30-122(1)(b)(ii) is unambiguous and the plain language means
that rent should be calculated using only the area occupied by a vessel at a specific point in time.
DNR argues that the plain language of WAC 332-30-122(1)(b)(ii) shows that rent should
be calculated using the entire expected swing radius of the vessel because the leasehold encumbers
all the land it occupies.
We agree that WAC 332-30-122(1)(b)(ii) requires calculation of rent using the entire swing
radius and not a specific portion occupied by a vessel at a set point in time.
A. Legal Principles
We give deference to an agency’s interpretation of its own regulations. Port of Tacoma v.
Sacks, 19 Wn. App. 2d 295, 304, 495 P.3d 866 (2021). But we are “not bound by the agency’s
15
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interpretation because the courts have ‘the ultimate authority to interpret a statute [or regulation].”
Id. (quoting Bostain v. Food Express, Inc., 159 Wn.2d 700, 716, 153 P.3d 846 (2007)).
“The rules of statutory [interpretation] ‘apply equally to administrative rules and
regulations.’” Odyssey Healthcare Operating BLP v. Dep’t of Health, 145 Wn. App. 131, 141,
185 P.3d 652 (2008) (quoting Children’s Hosp. and Med. Ctr. v. Dep’t of Health, 95 Wn. App.
858, 864, 975 P.2d 567 (1999)).
We “interpret[] a WAC provision to ascertain and give effect to its underlying policy and
intent.” Dep’t of Licensing v. Cannon, 147 Wn.2d 41, 56, 50 P.3d 627 (2002). To ascertain that
intent, we “look[] first to the language of the provision.” Id. “If an administrative rule or
regulation is clear on its face, its meaning is to be derived from the plain language of the provision
alone.” Id. We “avoid rendering any portion meaningless or superfluous.” Am. Fed’n of Tchrs.,
Loc. 1950 v. Pub. Emp’t. Relations Comm’n, 18 Wn. App. 2d 914, 923, 493 P.3d 1212 (2021).
We “will not add to or subtract from the clear language of a . . . rule[] or regulation even if [we]
believe[] the . . . [agency] intended something else but did not adequately express it.” Cannon,
147 Wn.2d at 57.
An administrative rule is unclear “if it can be reasonably interpreted in more than one way.”
Id. But an administrative rule is “not ambiguous simply because different interpretations are
conceivable.” Id. Further, we are not “‘obliged to discern any ambiguity by imagining a variety
of alternative interpretations.’” Id. at 56-57 (quotation marks omitted in original) (quoting State
v. Keller, 143 Wn.2d 267, 277, 19 P.3d 1030)).
We “read . . . provisions in relation to each other and in harmony where possible.” State
v. Abrams, 6 Wn.3d 481, 488, 588 P.3d 381 (2026). To determine the plain meaning of a rule, we
consider context, related provisions, and the entire scheme. See Swinomish Indian Tribal Cmty. v.
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Dep’t of Ecology, 178 Wn.2d 571, 582, 311 P.3d 6 (2013). Further, we “give[] rules and
regulations promulgated by administrative bodies a rational and sensible interpretation.” Quinault
Indian Nation v. Imperium Terminal Servs., LLC, 187 Wn.2d 460, 474, 387 P.3d 670 (2017).
If a rule is unambiguous, it is “not subject to judicial construction.” Cannon, 147 Wn.2d
at 57. Only if the rule is ambiguous do we then “resort[] to principles of . . . construction, [drafting]
history, and relevant case law to assist in interpreting it. Id.
RCW 79.105.240 provides the statutory formula for calculating rent rates for aquatic land
leases. RCW 79.105.240 provides is pertinent part that:
[A]nnual rent rates for the lease of state-owned aquatic lands for water-dependent
uses shall be determined as follows:
(1)(a) The assessed land value . . . of the upland tax parcel used in
conjunction with the leased area or, if there are no such uplands, of the nearest
upland tax parcel used for water-dependent purposes divided by the parcel area
equals the upland value.
(b) The upland value times the area of leased aquatic lands times thirty
percent equals the aquatic land value.
(3) The annual rent shall be:
(a) Determined . . . by multiplying the aquatic land value times the real
capitalization rate.
WAC 332-30-122(1)(a) specifies that “aquatic land activities that interfere with the use by the
general public of an area will require authorization from the department by way of agreement,
lease, permit, or other instrument.” Then WAC 332-30-122(1)(b) is the regulatory provision that
specifies how DNR determines what area is encumbered.
B. Analysis
Applying the rules of interpretation explained above, we look to the plain language of the
regulation at issue.
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WAC 332-30-122(1) provides that:
(b) Determination of the area encumbered by an authorization for use shall
be made by the department based on the impact to public use and subsequent
management of any remaining unencumbered public land.
(ii) Areas for individual mooring buoys will be a circle with a radius equal
to the expected swing of the vessel or object moored. Only the area encumbered
at any given point in time shall be used to calculate any rentals due.
(Emphasis added.) Boyer argues that DNR’s interpretation of the rule renders the second sentence
in WAC 332-30-122(b)(ii) superfluous because it only gives effect to the first sentence in
calculating rent using the entire circle of the expected swing of the vessel. However, reading this
rule in context with the surrounding provisions avoids such an interpretation.
WAC 332-30-122(1)(b)(i), which comes directly before the subsection at issue, provides
that: “Operations involving fixed structures will include the area physically encumbered plus the
open water area needed to operate the facility.” (Emphasis added.) Similarly, WAC 332-30-122(1)(b)(iii), which comes directly after the subsection at issue, provides that: “Areas for utility
line easements will normally be ten feet wider than the overall width of the structure(s) placed in
the right of way.” (Emphasis added.)
Read in context, the purpose of the second sentence in WAC 332-30-122(1)(b)(ii) is to
distinguish it from other related rules which direct DNR to increase the area being encumbered
depending on the type of use. Compare WAC 332-30-122(1)(b)(ii) with WAC 332-30-122(1)(b)(i), (iii). As WAC 332-30-122(1)(b)(i) explains, for operations involving fixed
structures, the area must encompass more than just the area physically encumbered to include
whatever area is utilized to actually perform that use. Likewise, WAC 332-30-122(1)(b)(iii)
explains that utility line easements must have 10 feet added to the width of the structure in the
right of way.
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Therefore, the second sentence is not superfluous; rather, it stands to distinguish the rule
from the surrounding text to explain that the area for an individual mooring buoy is “a circle with
a radius equal to the expected swing of the vessel or object moored” and that only this area and no
extra is used to calculate rent, unlike WAC 332-30-122(1)(b)(i) and WAC 332-30-122(1)(b)(iii).
Further, the plain language of WAC 332-30-122(2)(b)(ii) supports the interpretation that
the leasehold encumbers all the land it occupies.
WAC 332-30-122(1)(a) provides that:
[A]quatic land activities that interfere with the use by the general public of an area
will require authorization from the department by way of agreement, lease, permit,
or other instrument.
WAC 332-30-122(1) provides that:
(b) Determination of the area encumbered by an authorization for use shall
be made by the department based on the impact to public use and subsequent
management of any remaining unencumbered public land.
(ii) Areas for individual mooring buoys will be a circle with a radius equal
to the expected swing of the vessel or object moored. Only the area encumbered at
any given point in time shall be used to calculate any rentals due.
(Emphasis added.) Subsection (a) of WAC 332-30-122(1) explains that aquatic land uses that
interfere with public use require some kind of authorization from DNR, such as a lease. Then,
subsection (b) specifies that DNR must determine what area is encumbered by such a lease. The
area encumbered by a lease for a mooring buoy is the entire area that a vessel could take up at any
given point in time, not at a specific point in time, because that is the area that DNR has authorized
for use. Accordingly, the area encumbered for individual mooring buoys would be the entire
circular expected swing of the vessel because DNR has authorized that entire area for use.
Further, Boyer’s argument that WAC 332-30-122(1)(b)(ii) means the area occupied by a
vessel at a specific, set point in time is inconsistent with the rules of statutory interpretation
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requiring us to interpret regulations in a rational and consistent manner. If DNR were to calculate
the area using the space occupied by a vessel at a set point in time, DNR would have to recalculate
at an unworkable rate—i.e. based on whether there are multiple vessels, how long they are moored,
how frequently the position of the moored vessel changes based on wind, currents, and tides, which
would not be sensible and would be absurd. Alternatively, Boyer’s suggestion that DNR could
calculate the area using the maximum area the vessels specified in the lease would occupy at a set
point in time is unpersuasive. This type of calculation is not contemplated anywhere in the plain
language of the statute, and, on this interpretation, there would be no need to calculate the expected
swing of the vessel, as it would not matter. Because we must not “render[] any portion [of the
regulation] meaningless or superfluous,” we should not adopt such an interpretation. Am. Fed’n
of Tchrs., Loc. 1950, 18 Wn. App. 2d at 923.
This interpretation provides harmony to the regulatory provision at issue, avoids rendering
part of the rule superfluous, and is consistent with RCW 79.105.240(1)(b). Because the rule is
clear on its face, we need not resort to extrinsic sources to aid interpretation.
Accordingly, we conclude that DNR did not err in interpreting WAC 332-30-122(1)(b)(ii)
to require calculation of Boyer’s rent using the entire circle of the expected swing of the vessel.
Therefore, we affirm the Board.
III. UPLAND PARCEL SELECTION
Boyer makes three arguments for why the commercial parcel should have been selected by
DNR: (1) DNR’s use of the residential parcel as the upland parcel was arbitrary and capricious
because its assessed value as a residential parcel is inconsistent with the commercial purposes of
the lease and therefore, under WAC 332-30-123(2)(a), the “landward” parcel (the commercial
parcel) should have been used. Boyer also argues (2) that under WAC 332-30-123(2)(b)(i), the
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shop on the commercial parcel is a local upland facility associated with the leased area and
therefore the commercial parcel should have been selected. Boyer further argues that (3) the
commercial parcel was “waterfront” and therefore should have been selected as the upland parcel.
DNR responds: (1) that selection of the residential parcel was appropriate because it is
‘waterfront” and is used in conjunction with the leased area. DNR also asserts that Boyer did not
raise the argument below that the commercial parcel was a “landward” parcel under WAC 332-30-123(2)(a). On the merits of Boyer’s first argument, DNR argues Boyer cannot show that “the
assessed value of the [residential] parcel is inconsistent with the purposes of the Lease, especially
where the parcel is used in conjunction with the Lease” and therefore, DNR would not have
proceeded to select a landward parcel as an alternative. Br. of Resp’t at 62. DNR next argues (2)
that there are also upland facilities associated with the residential parcel under WAC 332-30-123(2)(b)(i), so the fact that there is a shed on the commercial parcel does not compel DNR to
select that parcel over the residential parcel. DNR also argues that (3) the commercial parcel does
not meet the criteria for an upland parcel because it is not “waterfront.”
We conclude that Boyer’s first argument alleging that DNR’s selection of the residential
parcel instead of the “landward” (commercial) parcel was arbitrary and capricious/contrary to law
should not be considered on appeal.
We further conclude that DNR did not act arbitrarily and capriciously in not selecting the
commercial parcel under WAC 332-30-123(2)(b)(i) and in determining that the commercial parcel
was not “waterfront.”
A. Legal Principles
“Agency action is arbitrary and capricious if it is willful, unreasoned, and taken without
regard to the attending facts or circumstances.” Nw. Alloys, 10 Wn. App. 2d at 187. “If there is
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room for differing opinions, agency action taken after due consideration is not arbitrary and
capricious even if a reviewing court may believe it to be erroneous.” Id. Deference is given to the
administrative agency’s “specialized knowledge and expertise.” Id. Further, “‘neither the
existence of contradictory evidence nor the possibility of deriving conflicting conclusions from
the evidence renders an agency decision arbitrary and capricious.’” Squaxin Island Tribe v. Dep’t
of Ecology, 177 Wn. App. 734, 742, 312 P.3d 766 (2013) (quoting Rios v. Dep’t of Lab. & Indus.,
145 Wn.2d 483, 504, 39 P.3d 961 (2002)). Therefore, the party challenging “an agency action
under this standard carries a heavy burden.” Nw. Alloys, 10 Wn. App. 2d at 187.
As explained above, calculating rent for leased aquatic land requires DNR to determine
“the upland tax parcel used in conjunction with the leased area” to calculate “the upland value.”
RCW 79.105.240(1)(a).
RCW 79.105.240(4) provides that
[i]f the upland parcel used in conjunction with the leased area is not assessed or has
an assessed value inconsistent with the purposes of the lease, the nearest
comparable upland parcel used for similar purposes shall be substituted and the
lease payment determined in the same manner as provided in this section.
WAC 332-30-123(2) states,
(a) The upland tax parcel used shall be used in conjunction with the leased
area and have some portion with upland characteristics. The upland tax parcel shall
be waterfront, except that if the waterfront parcel’s assessed value is inconsistent
with the purposes of the lease as described in subsection (3) of this section, and
there is a landward parcel also used in conjunction with the leased area that meets
all the criteria in this subsection (2) and is consistent with the purposes of the lease
as described in subsection (3) of this section, then such landward parcel shall be
used. . . .
(b) For leases without a physical connection with upland property (for
example, open water moorage and anchorage areas, or mitigation or conservation
sites not abutting the shoreline), the upland tax parcel used shall:
(i) If the lease is associated with a local upland facility, be an appropriate
parcel at the facility.
(Emphasis added.)
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1. Boyer’s First Argument is Not Properly Before This Court
Boyer did not argue before the Board that the residential parcel had an assessed value that
was inconsistent with the purposes of the lease and that the commercial parcel was a “landward”
parcel consistent with the requirements of WAC 332-30-123(2)(a).15, 16 Boyer raised these
arguments for the first time in briefing to the trial court and in briefing to this court.
Before issues can be raised on appeal, “‘[o]ur cases require issues to be first raised at the
administrative level.’”17 ABC Holdings, Inc. v. Kittitas County, 187 Wn. App. 275, 282, 348 P.3d
1222 (2015) (quoting Citizens for Mt. Vernon v. City of Mt. Vernon, 133 Wn.2d 861, 869, 947 P.2d
1208 (1997)). “‘[F]or an issue to be properly raised before an administrative agency, there must
be more than simply a hint or a slight reference to the issue in the record.’” Id. at 282-83 (quoting
King County v. Wash. State Boundary Rev. Bd. for King County, 122 Wn.2d 648, 670, 860 P.2d
1024 (1993)).
15
According to WAC 332-30-123(2)(a), the upland tax parcel that is selected must possess the following characteristics: (1) the parcel must be used in conjunction with the leased area (2) have some portion with upland characteristics and (3) be waterfront. The only way to circumvent these required physical characteristics is if the following two criteria are met: (1) the waterfront parcel has an assessed value that is inconsistent with the purposes of the lease and (2) a landward parcel used in conjunction with the lease meets the criteria above as laid out in WAC 332-30-123(2) and is consistent with the purposes of the lease.
16
To the extent that Boyer Halvorsen, the president of Boyer, alluded to this argument in his declaration, this slight reference was insufficient to properly raise the issue before the Board. See ABC Holdings, Inc. v. Kittitas County, 187 Wn. App. 275, 282-83, 348 P.3d 1222 (2015). Further, at oral argument, Boyer conceded that this issue was not raised before the Board. See Wash. Court of Appeals oral argument, Boyer Towing, Inc. v. DNR, No. 60992-4-II (June 25, 2026), at 27 min., 22 sec. through 27 min., 39 sec. (on file with court).
17
But see Aho Constr. I, Inc. v. City of Moxee, 6 Wn. App. 2d 441, 468, 430 P.3d 1131 (2018) (“This court may review an issue not adequately raised before the administrative agency if the petitioner lacked an opportunity to raise the issue below.”). Boyer, however, had ample opportunity to properly raise these arguments before the Board but did not do so.
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We note that while the claims in ABC Holdings, for example, were not brought under RCW
79.02.030, which is at issue here, its reasoning should be applicable here where we are reviewing
an administrative decision. As the Washington Supreme Court has explained:
[R]eversal of an agency on grounds not raised before the agency could have a
seriously demoralizing effect on administrative conduct. Knowing that even
decisions made with the utmost care might be reversed on heretofore undisclosed
grounds, administrative agencies could become careless in their decisionmaking.
Wash. State Boundary Rev. Bd. for King County, 122 Wn.2d at 669.
Accordingly, we conclude that Boyer’s argument (that the residential parcel had an
inconsistent use value and that the commercial parcel should have been selected under WAC 332-30-123(2)(a) as a “landward” parcel) is not properly before us. We decline to address it on appeal.
2. Selection of the Commercial Parcel Under WAC 332-30-123(2)(b)(i)
Next, Boyer argues that DNR acted arbitrarily and capriciously in not selecting the
commercial parcel because it met the criteria under WAC 332-30-123(2)(b)(i) as having a local
upland facility associated with the lease. Because the residential parcel also met the criteria under
WAC 332-30-123(2)(b)(i) and is prioritized by WAC 332-30-123(2)(c)(iii), Boyer’s argument
fails.
WAC 332-30-123(2) provides that,
(b) For leases without a physical connection with upland property (for
example, open water moorage and anchorage areas, or mitigation or conservation
sites not abutting the shoreline), the upland tax parcel used shall:
(i) If the lease is associated with a local upland facility, be an appropriate
parcel at the facility.
Boyer argues that under this provision, the commercial parcel should have been selected
because it is the only upland parcel with a facility (the shop) that is used in conjunction with the
lease. However, this argument overlooks the fact that the dock on the residential parcel is also
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used in conjunction with the lease to “transport [employees] and materials to and from the
Commercial Parcel to the Port Madison Bay buoy.” CP at 195, 239, 327.
Further, under WAC 332-30-123(2)(c)(iii), if more than one upland tax parcel meets the
required criteria, the one closest in distance to the leased area takes priority. Therefore, the
residential parcel would take priority, and DNR did not act arbitrarily and capriciously in declining
to select the commercial parcel on this basis.
3. DNR’s “Waterfront” Determination
Lastly, Boyer argues DNR acted arbitrarily and capriciously in determining that the
commercial parcel was not “waterfront.” Because such a determination falls within the expertise
of the agency, this argument fails.
Under WAC 332-30-123(2)(a),
[t]he upland tax parcel used [for calculating rent] shall be used in conjunction with
the leased area and have some portion with upland characteristics. The upland tax
parcel shall be waterfront, except that if the waterfront parcel’s assessed value is
inconsistent with the purposes of the lease as described in subsection (3) of this
section, and there is a landward parcel also used in conjunction with the leased area
that meets all the criteria in this subsection (2) and is consistent with the purposes
of the lease as described in subsection (3) of this section, then such landward parcel
shall be used. If no upland tax parcel meets these criteria, then an alternative shall
be selected under the criteria of subsection (4) of this section.
“Waterfront” is defined as “a parcel of property with upland characteristics which includes within
its boundary, a physical interface with the existing shoreline of a body of water.” WAC 332-30-106(77).
Here, the Board, referencing the West Sound Engineering survey and the City of
Bainbridge Island Critical Areas webmap in the record before it, explained that the commercial
parcel was not “waterfront” because the “physical interface with the existing shoreline ends on the
Residential Parcel.” CP at 27 (internal quotation marks omitted).
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While “shoreline” is not defined in the regulatory provisions, “shore” is defined as “that
space of land which is alternately covered and left dry by the rising and falling of the water level
of a lake, river or tidal area.” RCW 332-30-106(68). The precise location of a shoreline is a
factual determination squarely within the purview of DNR’s “specialized knowledge and
expertise.” Nw. Alloys, 10 Wn. App. 2d at 187. Accordingly, we defer to DNR’s evaluation of
what is considered a “shoreline.” Further, evidence of the existence of the wetland stream
connecting the commercial parcel to the residential parcel was in the record before the Board. So,
while the Board considered Boyer’s evidence, it ultimately disagreed with Boyer’s assessment.
Accordingly, DNR did not act arbitrarily and capriciously for declining to consider the commercial
property as “waterfront.”
CONCLUSION
Accordingly, we affirm the Board’s interpretation of WAC 332-30-122(1)(b)(ii). We
affirm the Board’s acceptance of DNR’s selection of the residential parcel as the upland parcel.
Necessarily, because the Board’s interpretation of WAC 332-30-122(1)(b)(ii) is not erroneous, and
therefore the rule does not conflict with the governing statute, we also reverse the trial court’s
invalidation of WAC 332-30-122(1)(b)(ii).
Veljacic, C.J.
We concur:
Glasgow, J.
Che, J.
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