[No. 36374-7-II. Division Two. March 25, 2008.]
[1] Certiorari Constitutional Review Review Appellate Review Scope. An agency decision reviewed by a superior court by constitutional writ of certiorari is reviewed by an appellate court de novo, standing in the same position as the superior court. The appellate court's review is limited to determining whether the agency's decision is contrary to law or arbitrary and capricious. [2] Certiorari Constitutional Review Contrary to Law What Constitutes. For purposes of judicial review by constitutional writ of certiorari, an agency action or decision is contrary to law if it is contrary to statutory authority or the agency violates rules governing its exercise of discretion. [3] Statutes Construction Unambiguous Language Plain Meaning Statutory Language. The meaning of a plain and unambiguous statute is determined solely from the wording of the statute itself. A statute that is clear on its face is not subject to judicial interpretation. [4] Statutes Construction Administrative Construction Deference to Agency Agency Expertise In General. The courts generally give substantial weight to an agency's view of the law if it falls within the agency's expertise in that special field of law. [5] Statutes Construction Administrative Construction Deference to Agency Ambiguity Effect. Where the legislature charges an agency with the administration and enforcement of an ambiguous statute, the courts will give the agency's interpretation of the statute great weight in determining legislative intent. [6] Statutes Construction Harmonious Construction. Whenever possible, a statute must be interpreted so that all of its provisions are harmonized. The preferred interpretation of a statute is the interpretation that gives effect to all of its provisions. [7] Statutes Construction Rational Interpretation Avoiding Absurdity. A court must avoid interpretations of a statute that are unlikely or absurd. [8] Public Lands Waters Aquatic Lands State-Owned Parcels Lease Rental Rate Calculation Consideration of Alternate Upland Parcel Devaluation of Adjacent Upland Parcel Toxic Contamination. Under former RCW 79.90.480 (2004), the Department of Natural Resources may properly determine the rental rate for the lease of state-owned aquatic land based on the value of an alternate upland parcel and not on the value of the adjacent upland parcel used in conjunction with the leased area if the assessed value of the adjacent upland parcel has been so greatly reduced because of toxic contamination on the site that a calculation based thereon would result in a nominal rental rate that would be grossly inconsistent with the nature of the lessee's use of the leased land and absurdly incongruent with rental rates paid by other similarly situated lessees. In such a case, the devaluation of the adjacent upland property is "inconsistent with the purposes of the lease" within the meaning of the statute, thereby permitting the department to consider an alternate comparable upland parcel for determining the rental rate, even though contamination-based devaluation does not fall within any of the six situations set forth in former WAC 332-30-123(3) (2004) for determining when an adjacent upland tax parcel's assessed value will be considered inconsistent with the purposes of the lease so as to allow the department to consider an alternate parcel in the rental rate calculation. The rule does not preclude a situation that clearly falls within the statutory authority. [9] Waters Public Access Public Trust Doctrine State's Duty In General. Under the public trust doctrine, the State holds state shorelines and waters in trust for the people of Washington and can no more convey or give away this jus publicum interest than it can abdicate its police powers in the administration of government and the preservation of the peace. [10] Waters Public Access Public Trust Doctrine Commercial Use of Land Almost No Rent. The State would violate its responsibility under the public trust doctrine by allowing a commercial business to occupy state-owned aquatic land virtually rent-free. Nature of Action: A lessee of State-owned aquatic land sought judicial review of an increase in the monthly rental rate by the Department of Natural Resources. The department's calculation was based on the value of an alternate upland tax parcel rather than on the value of the lessee's tax parcel upland from the leased aquatic land that had been devalued by the county assessor because of its toxic contamination. Were the rental rate to be based on the value of the lessee's devalued upland property, the rental rate would be reduced to a nominal sum and be grossly disproportionate to rental rates for neighboring aquatic lands put to similar uses. Superior Court: The Superior Court for Thurston County, No. 06-2-01385-6, Richard D. Hicks, J., on May 18, 2007, entered a judgment upholding the modified rental rate and ordering the business to pay rent due. Court of Appeals: Holding that the department acted within the scope of its statutory authority by setting the rental rate based on the value of an alternate upland parcel, the court affirms the judgment. Eric R. McVittie- and Markus B.G. Oberg- (of Legros Buchanan & Paul), for appellant. Robert M. McKenna-, Attorney General, and Janis L. Snoey-, Assistant, for respondent. Ά1 HUNT, J. Lake Union Drydock Company, Inc., appeals the trial court's affirmance of the Department of Natural Resources' (DNR) administrative decision to use an alternative upland tax parcel to calculate its rental rate for land it leases to Lake Union Drydock. Lake Union Drydock argues that the DNR's action was contrary to law, or arbitrary and capricious. We disagree and affirm. FACTS I. LEASE BACKGROUND Ά2 Lake Union Drydock Company, Inc., leases Ά3 The DNR is responsible for management and oversight of state-owned aquatic lands, including the property Lake Union Drydock leases. Former RCW 79.90.245 (2004). Former RCW 79.90.480 (2003) prescribes the manner for determining annual rent rates for the lease of state-owned aquatic lands for water-dependent uses: (1) The statute contains a formula for calculating rent based on assessed value of a parcel upland from the leased property, former RCW 79.90.480(3)(a) (2003), (3)(b) (2003), and (2) it also requires the DNR to reevaluate the rental rate every four years and to substitute the value of an alternate upland parcel if the assessed value of the upland parcel used in conjunction with the leased parcel is "inconsistent with the purposes of the lease." Former RCW 79.90.480(4) (2003). Ά4 In 1999, the King County Assessor's Office determined that, because the "environmental impact [was] immense," the cost to cure contamination on Lake Union Drydock's leased land exceeded the land's value. Because of the heavy contamination, the county assessor concluded that, for tax purposes, the value of Lake Union Drydock's upland parcel was no longer $5.14 million, but instead was a nominal $1,000. It is undisputed, however, that this contamination has no adverse effect on Lake Union Drydock's shipyard business operations on the property. II. RENT CALCULATION Ά5 Reevaluating rental rates in 2001, the DNR informed Lake Union Drydock that its rent would increase incrementally over the next four years from $12,970.29 to $35,360.61. Reevaluating rental rates in 2005, however, the DNR discovered it had not billed Lake Union Drydock for rent due since 2001. Acknowledging that it had failed to bill Lake Union Drydock the increased amount reflecting the 2001 rent reevaluation, the DNR accepted Lake Union Drydock's payments for 2001-02 as paid in full even though the amounts reflected the pre-2001 rental rate. Ά6 In 2005, however, the DNR also (1) billed Lake Union Drydock $55,503.96 for back rent from 2003-05, based on its upland property's $5.14 million county-assessed value in 2001, before discounting for contamination, and (2) prospectively adjusted Lake Union Drydock's annual rental rate to $46,399.63, based on its upland property's approximately $8.57 million assessed value in 2005, before discounting for contamination. A. Administrative Appeal Ά7 Following several communications and failed informal requests for recalculation, Lake Union Drydock administratively appealed the DNR's rent reevaluation to the rental dispute officer. Lake Union Drydock argued that the DNR should have based the rent on "the assessed value as determined by the county assessor." Ά8 Based on similar waterfront characteristics, zoning, and present use, the DNR chose an alternate parcel leased by Seattle City Light. Lake Union Drydock appealed, claiming that the selected alternate parcel was not in the same "use class" as Lake Union Drydock's property. Though the DNR believed the Seattle City Light parcel was "the most comparable alternative parcel," it acknowledged that it "may not have sufficient physical characteristics" and substituted another parcel in the same use class. Lake Union Drydock appealed the DNR's selection of this alternative parcel to the rental dispute appeal officer, who declined review. B. Recalculation Ά9 The DNR informed Lake Union Drydock that, based on the alternative parcel, its recalculated annual rental rate was $29,512.92. Lake Union Drydock paid the back rent due, but it preserved its right to appeal the DNR's decision. III. SUPERIOR COURT WRIT Ά10 Lake Union Drydock petitioned the Thurston County Superior Court for either a statutory writ of review under RCW 7.16.030 or a constitutional writ of certiorari. The superior court dismissed Lake Union Drydock's petition for statutory writ, but it issued the constitutional writ to review DNR's administrative decision. Ά11 Both parties conceded that the assessor's devaluation of the property due to contamination did not conform to any of the six circumstances in former WAC 332-30-123(3) (1984). Lake Union Drydock argued that the list in former WAC 332-30-123(3) (1984) was exclusive and that the DNR should have used the land's value after adjusting for contamination, $1,000, to calculate Lake Union Drydock's rental rate. The DNR argued that the situations listed in former WAC 332-30-123(3) (1984) were nonexclusive and interpreted the rule as allowing the DNR to substitute an upland parcel whenever "an assessed land value is inconsistent with the purposes of the lease, even when the rule does not expressly describe the situation in question." Clerk's Papers (CP) at 139-40. Ά12 On May 18, 2007, the superior court ruled that the six circumstances listed in former WAC 332-30-123(3) (1984) were nonexclusive. Emphasizing that Lake Union Drydock's proposed rental rate would be less than $6 a year for the entire parcel, Ά13 Lake Union Drydock sought review by constitutional writ of certiorari, which we granted. ANALYSIS Ά14 Lake Union Drydock argues that the DNR's decision to use an alternative upland tax parcel to calculate its rental rate was both contrary to law and arbitrary and capricious. The DNR counters that using an alternative parcel to calculate the rent complied with both former RCW 79.90.480(4) (2003) and former WAC 332-30-123(3) (1984) and, thus, was not contrary to law, or arbitrary or capricious. I. NOT CONTRARY TO LAW A. Statutory Construction B. Former RCW 79.90.480 (2003) [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 . . . as determined by the county assessor, of the upland tax parcel used in conjunction with the leased area . . . . . . . . (4) If 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. (Emphasis added.) This language in former RCW 79.90.480(4) (2003) is unambiguous insofar as it provides that, for purposes of rent calculation, the DNR may substitute an alternate upland parcel for the leased parcel if the "assessed value [of the leased parcel is] inconsistent with the purposes of the lease." (Emphasis added.) Ά21 Although former RCW 79.90.480 (2003) does not specify when a parcel's assessed value is "inconsistent" with the purposes of the lease, the facts here clearly demonstrate such inconsistency without the need for further elaboration. The administrative record reveals that during the disputed rental period, from 2005 to 2006, the median rental rate for land along the shore of Lake Union was $26,512.92 per acre. Calculating an annual rental rate based on the county's assessed value of the land, greatly diminished because of heavy contamination, would have resulted in a nominal rent of $6 per year for 2.8 acres of property along Lake Union's shoreline. Such a de minimus rent is clearly inconsistent C. Former WAC 332-30-123 (1984) Ά22 The legislature directed the DNR to adopt an administrative rule to define when "an abutting upland parcel has been inappropriately assessed and for determining the nearest comparable upland parcel used for water-dependent uses." Former RCW 79.90.540 (1984). Following this directive, the DNR administratively adopted former WAC 332-30-123(3) (1984), listing six situations in which an alternative upland tax parcel's assessed value "will be considered inconsistent" with the purposes of the water-dependent-use lease for purposes of calculating rent. Former WAC 332-30-123(3) (1984) Ά23 [T]he following situations will be considered inconsistent . . . (a) The upland tax parcel is not assessed. . . . ; (b) Official date of assessment is more than four years old. . . .; (c) The "assessment" results from a special tax classification not reflecting fair market value. Examples include classifications under: State-regulated utilities (chapter 84.12 RCW), Reforestation lands (chapter 84.28 RCW), Timber and forest lands (chapter 84.33 RCW), and Open space (chapter 84.34 RCW). This inconsistency may be corrected by substituting the full value for the parcel if such value is part of the assessment records; (d) If the assessed valuation of the upland tax parcel to be used is under appeal as a matter of record before any county or state agency . . . ; (e) The majority of the upland tax parcel area is not used for a water-dependent purpose. . . . ; (f) The size of the upland tax parcel in acres or square feet is not known or its small size results in a nominal valuation. (Emphasis added.) Both parties agree that the county tax assessor's contamination-based devaluation of the DNR property leased to Lake Union Drydock does not fall within any of these six enumerated situations in former WAC 332-30-123(3)(a)-(f) (1984). The assessed value reflects the presence of contamination on the uplands, when the contamination on the uplands does not impair the use of the leasehold. This inconsistency may be corrected by substituting the full value for the upland parcel as if there were no contamination, if such value is part of the assessment records. WAC 332-30-123(3)(g). But because Lake Union Drydock filed its original appeal before this amendment, we use the pre-2005 amendment version, which lacks this seventh situation as well as the express notation that the list is not exclusive. Ά24 Thus, Lake Union Drydock argues that the DNR acted contrary to law because (1) the six situations in former WAC 332-30-123(3) (1984) comprise an exclusive list and (2) therefore, the DNR acted outside the bounds of its statutory authority when it substituted the value of an upland parcel based on a situation not included in the list, namely that the contamination-discounted assessed value of Lake Union Drydock's upland property was "nominal." The DNR counters that (1) former WAC 332-30-123(3) (1984)'s list of situations are nonexclusive and (2) thus, the DNR acted within the scope of its rule, and its legislatively delegated authority, when it used an alternate upland parcel for calculating Lake Union Drydock's rental rate because the assessed value of Lake Union Drydock's upland parcel was "inconsistent" with the purpose of the lease. Ά25 In light of the expanded, expressly nonexclusive list in the 2005-amended version of WAC 332-30-123(3), [T]he following situations are examples, but are not an exclusive list, of what the department will consider inconsistent and shall either require adjustment as specified, or selection of an alternative upland tax parcel under subsection (4) of this section. The DNR's 2005 amendment to former WAC 332-30-123(3) (1984) also added a seventh situation: An "assessed value [that] reflects the presence of contamination on the uplands, when the contamination on the uplands does not impair the use of the leasehold," will be considered "inconsistent." WAC 332-30-123(3)(g). Ά26 We reject Lake Union Drydock's reading of former WAC 332-30-123(3) (1984), as providing an exclusive list, because it contravenes both the express language of former RCW 79.90.480 (2003) and the legislature's delegation of rule-making authority to the DNR. Instead, we look to the plain meaning of the statute: former RCW 79.90.480(4) (2003) provides that the DNR must use an alternative upland parcel to calculate rent for leased land if the assessed value of the lessee's upland parcel is "inconsistent with the purposes of the lease." Although the rule does not specifically include "devaluation due to contamination" in its list, we note that an annual rental rate of $6 for 2.8 acres of property along Lake Union's shoreline is blatantly inconsistent Ά27 That other similarly situated marinas on Lake Union paid a median annual rental rate of $19,340.63 per acre in 2005 contrasts starkly with Lake Union Drydock's proposed annual rental rate of $1.93 per acre, based on the county's contamination-based reassessment of its upland parcel. Lake Union Drydock's proposed rental rate is absurdly incongruent, particularly where the contamination that caused the discounted reassessment of its upland parcel does not negatively impact the operation of its shipyard business. See Alderwood Water Dist., 62 Wn.2d at 321 ("[A] statute should be construed as a whole in order to ascertain legislative purpose, and thus avoid unlikely, strained, or absurd consequences."). Ά29 We hold, therefore, that the DNR acted within the scope of its statutory authority and consistently with the legislature's statutory intent to establish predictable, fair rents, when (1) the DNR determined that Lake Union Drydock's upland property's assessed value was clearly inconsistent with the purpose of its lease and (2) substituted the assessed value of an alternative upland parcel to calculate Lake Union Drydock's rental rate for the leased DNR land. II. NOT ARBITRARY AND CAPRICIOUS Ά30 Lake Union Drydock fails to persuade us to put aside traditional deference to the administering agency's interpretation and application of its rules. In light of our holding, we need not address Lake Union Drydock's additional argument that the DNR's use of an alternative upland parcel to calculate rental rate on the leased property was arbitrary and capricious based on internal DNR communications in which employees interpreted the former WAC 332-30-123(3) (1984) situations as exclusive. Ά31 Affirmed. HOUGHTON, C.J., and ARMSTRONG, J., concur.