Wa Restaurant Assoc, V Wa State Liquor Control Bd ( 2017 )

Filed
Washington State
Court of Appeals
Division Two
August 8, 2017
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II
WASHINGTON RESTAURANT No. 48807-8-II
ASSOCIATION, a Washington non-profit
Organization; NORTHWEST GROCERY
ASSOCIATION, a non-profit organization;
and COSTCO WHOLESALE
CORPORATION, a Washington corporation,
Appellants/Cross Respondents,
v.
WASHINGTON STATE LIQUOR CONTROL
BOARD, a state agency; CHRIS MARR,
SHARON FOSTER, and RUTHANN
KUROSE, in their official capacities as
members of the Washington State Liquor PUBLISHED OPINION
Control Board,
Respondents,
ASSOCIATION OF WASHINGTON
SPIRITS AND WINE DISTRIBUTORS,
Intervenor-Respondent/Cross Appellant.
WORSWICK, J. — The parties in this case ask us to decide whether the Washington State
Liquor and Cannabis Board (Board) appropriately promulgated certain rules implementing
Initiative Measure No. 1183, now codified in Title 66 RCW.1 The Initiative provided for the
1
The legislature has amended Title 66 RCW a number of times since the passage of Initiative
Measure No. 1183. The amendments did not alter the statutes in any way relevant to this case;
accordingly, we cite the current versions of the statutes.
No. 48807-8-II
privatization of the distribution and sale of liquor in the state. The rules at issue here are the 10
percent license fee rules,2 which impose a fee on the spirits revenue of certain private distillers,
the sell-and-deliver rules,3 which require certain distributors to sell and deliver spirits from their
licensed premises, and the 24-liter rules,4 which impose daily limits for selling wine and spirits
to certain retailers. The Washington Restaurant Association, Northwest Grocery Association,
and Costco Wholesale Corporation (Association) brought a petition for judicial review of these
rules before the superior court. The Association of Washington Spirits and Wine Distributors
(Distributors) intervened to defend the Board’s rules.
The superior court granted in part and denied in part the Association’s petition, ruling
that the 10 percent license fee rules and the sell-and-deliver rules were valid but that the 24-liter
rules were invalid. The Association appeals, arguing that (1) the 10 percent license fee rules are
invalid because the Board exceeded its statutory rule-making authority in adopting the rules and
(2) the sell-and-deliver rules are invalid because they are arbitrary and capricious. On cross-
appeal, the Distributors argue that the superior court erred in determining that the Board
exceeded its statutory rule-making authority by adopting the 24-liter rules.
We hold that the 10 percent license fee rules are invalid but otherwise affirm the superior
court’s order.
2
WAC 314-23-030(3)(b); WAC 314-28-070(3).
3
WAC 314-23-020(2); WAC 314-24-180(2).
4
Former WAC 314-02-103(2) (2012); former WAC 314-02-106(1)(c) (2012).
2
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FACTS
Following the repeal of Prohibition, Washington adopted the Washington State Liquor
Act, Title 66 RCW. Ass’n of Wash. Spirits & Wine Distribs. v. Wash. State Liquor Control Bd.,
182 Wash. 2d 342, 346, 340 P.3d 849 (2015). Under the Liquor Act, Washington regulated the sale
and distribution of spirits through state-owned liquor stores and distribution centers. See Wash.
Ass’n for Substance Abuse & Violence Prevention v. State, 174 Wash. 2d 642, 647, 278 P.3d 632
(2012).
In November 2011, Washington voters passed Initiative No. 1183, which privatized the
distribution, sale, and promotion of spirits in the state and created new licenses for private
distributors to sell and distribute spirits. The Initiative imposed license fees on private
distributors and distillers who sell and distribute spirits. Ass’n of Wash. Spirits & Wine Distribs.,
182 Wash. 2d at 347. The Initiative also imposed a limit on the retail-to-retail sale of wine and
spirits and allowed for retailers to sell liquor either at its licensed premises or at its warehouse
facilities. The Initiative is now codified in Title 66 RCW.
Title 66 provides four different licenses that allow for the distribution of spirits and
prescribes the licensing fees for each license. 182 Wash. 2d at 347. One such license is a spirits
distributor license. RCW 66.24.055. Licensed spirits distributors may purchase spirits from in-
state and out-of-state distillers, manufacturers, and suppliers and may directly resell the spirits to
other retailers. RCW 66.24.055(1)(a).
Another, more specific, license that provides for the distribution of spirits is a distiller’s
license. RCW 66.24.140, .640. Under RCW 66.24.140, a distiller’s license permits an in-state
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distiller to blend, rectify, and bottle distilled spirits. Distillers must pay an annual license fee of
$2,000. RCW 66.24.140(1). Additionally, a licensed in-state distiller may distribute its own
spirits directly to retailers. RCW 66.24.140(2)(a)-(b), .640. Out-of-state distillers may distribute
their own spirits by obtaining a spirits certificate of approval. RCW 66.24.140, .640. A spirits
certificate of approval allows out-of-state distillers and importers to distribute their spirits
directly to in-state retailers. Ass’n of Wash. Spirits & Wine Distribs., 182 Wash. 2d at 348.
Licensed distillers and spirits certificate of approval holders distributing their own spirits under
RCW 66.24.640 are required to “comply with the applicable laws and rules relating to
distributors.” RCW 66.24.640.
Title 66 also governs the manner in which liquor is sold in the state. RCW 66.24.630(1)
and RCW 66.24.360(2) limit the quantity of spirits and wine that a licensed retailer can sell to
another retailer. Under RCW 66.24.630(1) and RCW 66.24.360(2), “no single sale [of spirits or
wine] may exceed twenty-four liters.”
Title 66 provides the Board with the power to prescribe fees associated with licenses and
to regulate the sale of liquor. RCW 66.08.030(4), (6). Accordingly, the Board promulgated a
number of rules to implement Title 66. These rules include WAC 314-23-030(3)(b) and WAC
314-28-070(3)5 (the “10 percent license fee rules”). The 10 percent license fee rules impose a 10
5
WAC 314-23-030(3)(b) provides that spirits certificate of approval holders must “[p]ay to the
board a fee of ten percent of the total revenue from all sales of spirits to retail licensees.” WAC
314-28-070(3) provides that a “distillery . . . must pay ten percent of their gross spirits revenue to
the board on sales to a licensee.”
4
No. 48807-8-II
percent fee on the spirits revenue of distillers and spirits certificate of approval holders who
choose to distribute their own spirits. WAC 314-28-070(3). The Board also promulgated WAC
314-23-020(2) and WAC 314-24-180(2)6 (the “sell-and-deliver rules”) and former WAC 314-02-
103(2) (2012) and former WAC 314-02-106(1)(c) (2012)7 (the “24-liter rules”). Clerk’s Papers
(CP) at 120-21. The sell-and-deliver rules provide that wine and spirits distributors must sell and
deliver their products from their licensed premises. Former WAC 314-23-020(2); former WAC
314-24-180(2). The 24-liter rules impose a limit under which off-premises retailers, like a
grocery store, may sell only 24 liters of wine or spirits to an on-premises retailer, like a hotel or
restaurant, each day. Former WAC 314-02-103(2); former WAC 314-02-106(1)(c).
Following the adoption of these rules, the Association filed a petition for judicial review
in superior court. The Association argued that the 10 percent license fee rules, sell-and-deliver
rules, and 24-liter rules were invalid because they exceeded the Board’s statutory rule-making
authority and because the rules were arbitrary and capricious. The Distributors intervened to
defend the Board’s rules. The superior court determined that the 10 percent license fee rules and
the sell-and-deliver rules were valid because they were made within the Board’s broad regulatory
6
WAC 314-23-020(2) states that “[s]pirits distributors must sell and deliver product from their
licensed premises. Similarly, WAC 314-24-180(2) provides that “[w]ine distributors must sell
and deliver product from their licensed premises.”
7
Former WAC 314-02-103(2) provides that “[n]o single sale to an on-premises liquor licensee
may exceed twenty-four liters. Single sales to an on-premises licensee are limited to one per
day.” Former WAC 314-02-106(1)(c) states that the holder of a spirits retailer license may
“[s]ell spirits . . . for resale at their licensed premises, although no single sale may exceed
twenty-four liters, and single sales to an on-premises licensee are limited to one per day.”
5
No. 48807-8-II
authority. However, the superior court determined that the 24-liter rules were invalid because
they exceeded the Board’s statutory rule-making authority. The Association appeals, and the
Distributors cross-appeal.
ANALYSIS
I. LEGAL PRINCIPLES
Our review of a challenge to an agency rule is governed by the Washington
Administrative Procedure Act (APA), chapter 34.05 RCW. Ass’n of Wash. Spirits & Wine
Distribs., 182 Wash. 2d at 350. Under the APA, an agency rule may be invalidated only if it (1)
violates constitutional provisions, (2) exceeds the agency’s statutory rule-making authority, (3)
was adopted without complying with statutory rule-making procedures, or (4) is arbitrary and
capricious. RCW 34.05.570(2)(c). The validity of an agency rule is a question of law we review
de novo. Kabbae v. Dep’t of Soc. & Health Servs., 144 Wash. App. 432, 439, 192 P.3d 903
(2008).
II. THE 10 PERCENT LICENSE FEE RULES
The Association argues that the Board exceeded its statutory rule-making authority by
adopting the 10 percent license fee rules because Title 66 does not provide for a 10 percent
license fee on distillers. We hold that the Board exceeded its statutory rule-making authority in
adopting the 10 percent license fee rules, and therefore, the rules are invalid.8
8
Because we hold that that the 10 percent license fee rules are invalid because the Board
exceeded its statutory rule-making authority, we do not address the Association’s arguments that
the 10 percent license fee rules are also invalid because the Board’s justification for the rules was
invalid and because the rules are arbitrary and capricious.
6
No. 48807-8-II
“Administrative agencies have only those powers expressly granted by statute or are
necessarily implied from the legislature’s statutory delegation of authority.” Lenander v. Dep’t
of Ret. Sys., 186 Wash. 2d 393, 404, 377 P.3d 199 (2016). When an agency rule is reasonably
consistent with the statutes the rule implements, an agency acts within its statutory rule-making
authority, and the rule is presumed to be valid. Wash. State Hosp. Ass’n v. Dep’t of Health, 183
Wash. 2d 590, 595, 353 P.3d 1285 (2015). However, an agency cannot promulgate rules that
amend or change legislative enactments. 183 Wash. 2d at 595. Rules that are inconsistent with the
statutes they implement are beyond the agency’s authority and are therefore invalid. 183 Wash. 2d
at 595.
“When the people approve an initiative measure, they exercise the same power of
sovereignty as the Legislature does when it enacts a statute.” McGowan v. State, 148 Wash. 2d
278, 288, 60 P.3d 67 (2002). Accordingly, we interpret an initiative according to the rules of
statutory interpretation. 148 Wash. 2d at 288. Our primary goal is to determine the collective
intent of the people who enacted the initiative measure. 148 Wash. 2d at 288. We discern “intent
from the plain language enacted by the [people], considering the text of the provision in
question, the context of the statute in which the provision is found, related provisions,
amendments to the provision, and the statutory scheme as a whole.” Ass’n of Wash. Spirits &
Wine Distribs., 182 Wash. 2d at 350. We do not add words to a statute. Birgen v. Dep’t of Labor
& Indus., 186 Wash. App. 851, 858, 347 P.3d 503, review denied, 184 Wash. 2d 1012 (2015).
If a statute is unambiguous, we apply the statute’s plain language as an expression of
legislative intent and do not consider other sources of such intent. 186 Wash. App. at 857-58.
7
No. 48807-8-II
However, if a statute is subject to multiple reasonable interpretations, the statute is ambiguous.
186 Wash. App. at 858.
Title 66 creates licenses permitting the distribution of spirits and establishes the fees
associated with each license. Ass’n of Wash. Spirits & Wine Distribs., 182 Wash. 2d at 347.
Additionally, the Board has the power to make regulations that extend to “[p]rescribing the fees
payable in respect of permits and licenses issued under [Title 66] for which no fees are
prescribed in [Title 66], and prescribing the fees for anything done or permitted to be done under
the regulations.” RCW 66.08.030(4).
As described above, under RCW 66.24.140,9 Title 66 provides for a distiller’s license.
Under RCW 66.24.140(1), licensed in-state distillers are permitted to blend, rectify, and bottle
spirits and generally must pay an annual licensing fee of $2,000. Under RCW 66.24.640,10 a
9
RCW 66.24.140 states:
(1) There shall be a license to distillers, including blending, rectifying, and bottling;
fee two thousand dollars per annum, unless provided otherwise . . .
....
(2) Any distillery licensed under this section may:
(a) Sell spirits of its own production for consumption off the premises. A distillery
selling spirits under this subsection must comply with the applicable laws and rules
relating to retailers;
(b) Contract distilled spirits for, and sell contract distilled spirits to, holders of
distillers’ or manufacturers’ licenses . . .
(c) Provide free or for a charge one-half ounce or less samples of spirits of its own
production to persons on the premises of the distillery. . . .
10
RCW 66.24.640 provides:
8
No. 48807-8-II
licensed distiller “may act as a retailer and/or distributor to retailers selling for consumption on
or off the licensed premises of spirits of its own production.” A licensed distiller “operating as a
distributor and/or retailer under [RCW 66.24.640] must comply with the applicable laws and
rules relating to distributors and/or retailers.” RCW 66.24.640.
Title 66 also establishes a spirits certificate of approval. RCW 66.24.140, .640; see also
RCW 66.28.290(2). A spirits certificate of approval permits an out-of-state distiller or importer
to distribute its own spirits to Washington retailers. RCW 66.24.640. A spirits certificate of
approval holder may also “act as a . . . distributor to retailers selling for consumption on or off
the licensed premises of spirits of its own production.” RCW 66.24.640. Because the 10 percent
license fee rules treat distillers and spirits certificate of approval holders similarly, we refer to
distillers and spirits certificate of approval holders collectively as “distillers.”
Under Title 66, the Board has the power to make regulations prescribing the fees required
for permits and licenses. RCW 66.08.030(4).11 Under this provision, the Board adopted the 10
percent license fee rules, providing that distillers must pay a 10 percent fee on “their gross spirits
Any distiller licensed under [Title 66] may act as a retailer and/or distributor to
retailers selling for consumption on or off the licensed premises of spirits of its own
production, and any manufacturer, importer, or bottler of spirits holding a
certificate of approval may act as a distributor of spirits it is entitled to import into
the state under such certificate. The board must by rule provide for issuance of
certificates of approval to spirits suppliers. An industry member operating as a
distributor and/or retailer under this section must comply with the applicable laws
and rules relating to distributors and/or retailers . . . .
11
RCW 66.08.030(4) provides that the power of the board to make regulations under the APA
extends to “[p]rescribing the fees payable in respect of permits and licenses issued under [Title
66] for which no fees are prescribed . . . and prescribing the fees for anything done or permitted
to be done under the regulations.”
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revenue to the board on sales to a licensee . . . during the first two years of licensure and five
percent of their gross spirits revenues to the board in year three and thereafter.” WAC 314-28-
070(3); see WAC 314-23-030(3)(b).
RCW 66.24.640 expressly provides that a distiller licensed under RCW 66.24.140 may
act as a distributor under either its distiller’s license or a certificate of approval. Ass’n of Wash.
Spirits & Wine Distribs., 182 Wash. 2d at 357. Read together with RCW 66.24.140, a distiller that
obtains a license at a rate of only $2,000 per year is permitted to distribute its own spirits under
that license. RCW 66.24.640 does not require a licensed distiller to obtain a spirits distributor
license or pay an additional licensing fee to distribute its own spirits. Because the people chose
not to add additional fee or licensure requirements, we do not add them here. See Birgen, 186
Wash. App. at 858. RCW 66.24.140 and RCW 66.24.640 precisely define the scope of the
distiller’s license and the fees associated with that license. As a result, the statutes are
unambiguous. See W. Telepage, Inc. v. City of Tacoma Dep’t of Fin., 140 Wash. 2d 599, 609, 998
P.2d 884 (2000).
The Board argues that RCW 66.08.030(4) and RCW 66.24.640 authorize it to impose
additional license fees. However, the Washington Supreme Court rejected this argument in
Ass’n of Washington Spirits and Wine Distributors v. Washington State Liquor Control Board.
182 Wash. 2d at 354. Moreover, the Board’s argument is contrary to the statutory scheme of Title
66.
In Ass’n of Washington Spirits and Wine Distributors, the Distributors argued that the
Board exceeded its statutory authority by requiring spirits distributors to pay at least $150
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million in licensing fees (the “$150 million shortfall fee”) but not requiring distillers distributing
their own spirits to pay the fee. 182 Wash. 2d at 353-54. The Distributors argued that RCW
66.28.030(4) and RCW 66.24.640 required distillers to comply with statutes and regulations
relating to distributors and, therefore, required that distillers pay the $150 million shortfall fee.
182 Wash. 2d at 354.
The Washington Supreme Court held that the general statutory provisions in RCW
66.08.030(4) and RCW 66.24.640 did not authorize the Board to require that distillers pay the
$150 million shortfall fee because it was not specifically provided for in Title 66. 182 Wash. 2d at
356. The Washington Supreme Court reasoned that Title 66 specifically provided that only
spirits distributors, and not distillers, must pay the additional fee. 182 Wash. 2d at 357. Because
Title 66 specifically provided for the licensing fees that apply only to spirits distributors, that
specific provision prevailed over the general provision stating that the Board may impose
additional license fees. 182 Wash. 2d at 357. As a result, the Washington Supreme Court
concluded that the additional fee did not apply to distillers. 182 Wash. 2d at 357-58.
Here, RCW 66.24.140 specifically provides the scope and fees associated with a
distiller’s license. While the Board has the general authority to “[p]rescrib[e] the fees payable in
respect of permits and licenses issued under [Title 66] for which no fees are prescribed in [Title
66],” the specific license fee provision in RCW 66.24.140 prevails over this general provision.
RCW 66.08.030(4). Moreover, although RCW 66.08.030(4) permits the Board to require a fee
where no fee is prescribed in Title 66, RCW 66.24.140 imposes a $2,000 license fee for
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No. 48807-8-II
distillers, and it does not require any additional licensing fees. RCW 66.24.140(1). As a result,
the Board is not authorized to impose an additional fee on licensed distillers.
The 10 percent license fee rules provide that distillers distributing their own spirits must
pay 10 percent of their gross spirits revenue. As discussed above, the plain language of RCW
66.24.640 states that a distiller may distribute its own spirits pursuant to its RCW 66.24.140
distiller’s license. RCW 66.24.140 imposes only one fee for licensed distillers. Because the 10
percent license fee rules are inconsistent with their implementing statutes, the Board exceeded its
statutory rule-making authority in adopting the rules. Therefore, the 10 percent license fee rules
are invalid.
III. THE SELL-AND-DELIVER RULES
The Association next argues that the sell-and-deliver rules are invalid because they are
arbitrary and capricious because the Board has not provided any explanation or justification for
the rules. We disagree and hold that the Association fails to meet its burden in showing that the
sell-and-deliver rules are arbitrary and capricious.
An agency rule is arbitrary and capricious if it is willful, unreasoned, and taken without
regard to the attending facts and circumstances. Ass’n of Wash. Spirits & Wine Distribs., 182
Wash. 2d at 358. The party challenging an agency rule has the burden of demonstrating that the
rule is arbitrary and capricious. Wash. Indep. Tel. Ass’n v. Wash. Utils. & Transp. Comm’n, 148
Wash. 2d 887, 903, 64 P.3d 606 (2003).
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No. 48807-8-II
Title 66 provides that the Board’s goal in promulgating its rules is to protect the public
interest, advance public safety, and promote the efficient collection of taxes. RCW 66.28.280.
To give effect to these goals, the Board is given the power to fashion rules that regulate the sale
of liquor. RCW 66.08.030(6). The sell-and-deliver rules provide that wine and spirits
distributors “must sell and deliver product from their licensed premises.” WAC 314-23-020(2);
WAC 314-24-180(2). As a result, wine and spirits distributors may not sell and deliver their
products without first storing their products in its licensed premises within the state. See WAC
314-23-020(2); see also WAC 314-24-180(2).
In adopting the sell-and-deliver rules, the Board prepared a concise explanatory statement
(CES) that addressed the comments it received after providing notice of its intent to adopt the
rules. The Board noted that because it had the broad power to regulate and control the sale of
liquor, it clearly had the authority to regulate where liquor must be stored before delivery. Later,
the Board reasoned that the sell-and-deliver rules were necessary to promote the Board’s goal in
efficiently collecting taxes because they enabled the Board to track liquor that was distributed
within the state and to ensure that distributors did not circumvent the collection of taxes by
failing to store liquor in their in-state licensed premises.
The Association cites Puget Sound Harvesters Ass’n v. Dep’t of Fish and Wildlife, 157
Wash. App. 935, 239 P.3d 1140 (2010), to support its proposition that an agency rule is arbitrary
and capricious when the agency does not provide an explanation for the rule. But Puget Sound
Harvesters Ass’n does not stand for this proposition. In Puget Sound Harvesters Ass’n, we
determined that a Department of Fish and Wildlife rule was arbitrary and capricious because the
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No. 48807-8-II
Board adopted the rule without considering its effect on the agency’s stated goals. 157 Wash. App.
at 950-51. In promulgating a rule that calculated harvesting opportunity, the Department
disregarded evidence that was vital in promoting the Department’s goal of maintaining the
economic wellbeing of the fishing industry, and it did not provide a rational basis for the
discrepancy. 157 Wash. App. at 949-51. Accordingly, the Department’s rule was taken without
regard to attending facts and circumstances. 157 Wash. App. at 949.
Here, the Association does not argue that the Board did not consider attending facts and
circumstances, such as evidence pertinent to the Board’s goal of regulating liquor within the
state. Instead, the Association suggests that there is no justification or reasoning for the sell-and-
deliver rules in the administrative record. The Board’s CES for the sell-and-deliver rules and the
administrative record reveal that the Board justified adopting the rules to give effect to its stated
goal in promoting the efficient collection of taxes and to utilize its broad authority to regulate the
sale of liquor. The Association does not address these justifications and does not show that the
Board disregarded attending facts and circumstances in adopting the sell-and-deliver rules.
Therefore, the Association failed to meet its burden in showing that the sell-and-deliver rules are
invalid.
IV. CROSS-APPEAL—THE 24-LITER RULES
On cross-appeal, the Distributors argue that the superior court erred in determining that
the Board exceeded its statutory rule-making authority by adopting the 24-liter rules.12 The
12
The Association argues that this issue is moot because the Board recently amended the
language of the 24-liter rules and the rules no longer contain the “one per day” language at issue
14
No. 48807-8-II
Association argues that the Distributors are not an aggrieved party under RAP 3.1. We consider
this issue on the merits and hold that the 24-liter rules are invalid.
A. Aggrieved Party
As an initial matter, the Association argues that we should dismiss the Distributors’
cross-appeal because an intervenor is not an aggrieved party under RAP 3.1 when an agency
does not defend its own rules. We disagree.
Under RAP 3.1, only an “aggrieved party” may seek appellate review. “An aggrieved
party is one whose proprietary, pecuniary, or personal rights are substantially affected.” Aguirre
v. AT&T Wireless Servs., 109 Wash. App. 80, 85, 33 P.3d 1110 (2001). Parties to an action are
aggrieved parties under RAP 3.1. See 109 Wash. App. at 85. Intervenors are parties to an
underlying action. See State v. Mendez, 157 Wash. App. 565, 577, 238 P.3d 517 (2010).
The Distributors filed a motion to intervene in this action, and the superior court granted
it. Because the Distributors were an intervening party to the underlying action, they are an
“aggrieved party” for purposes of RAP 3.1. Therefore, the Distributors may seek appellate
review of the superior court’s order.13
in the Distributors’ cross-appeal. The Distributors argue that the issue is not moot because they
would be precluded from making this argument in the future under the doctrine of res judicata.
We address the Distributors’ argument in the interests of justice.
13
The Association cites Terrill v. City of Tacoma, 195 Wash. 275, 80 P.2d 858 (1938), in
arguing that the Distributors are not an aggrieved party for purposes of RAP 3.1. However,
Terrill is distinguishable. In Terrill, the Washington Supreme Court determined that an
intervenor did not have standing to appeal because she did not have an interest in the subject
matter of the suit. 195 Wash. at 276-77. Terrill did not address whether an intervenor is an
“aggrieved party.”
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B. The Board’s Statutory Rule-Making Authority
On cross-appeal, the Distributors argue that the superior court erred in determining that
the Board exceeded its statutory rule-making authority by imposing the 24-liter rules,
promulgated under former WAC 314-02-103(2) and former WAC 314-02-106(1). We agree.
In determining whether the Board had the authority to impose the 24-liter rules, we must
review the implementing statutes. See Wash. Fed’n of State Emps. v. State Pers. Bd., 54 Wn.
App. 305, 309, 773 P.2d 421 (1989). Accordingly, we must interpret the meaning of those
statutes. See 54 Wash. App. at 309. We interpret an initiative according to the rules of statutory
interpretation. McGowan, 148 Wash. 2d at 288. “We recognize that the legislature intends to use
the words it uses and intends not to use words it does not use.” State v. Nelson, 195 Wash. App.
261, 266, 381 P.3d 84 (2016).
RCW 66.24.630(1) provides for a spirits retail license and states that “no single sale may
exceed twenty-four liters.”14 RCW 66.24.360(2) provides a wine retailer reseller endorsement of
a grocery store’s license to sell wine to retailers and similarly states, “no single sale may exceed
twenty-four liters.”15
14
RCW 66.24.630(1) provides that
[t]here is a spirits retail license to: Sell spirits in original containers to consumers
for consumption off the licensed premises and to permit holders; sell spirits in
original containers to retailers licensed to sell spirits for consumption on the
premises, for resale at their licensed premises according to the terms of their
licenses, although no single sale may exceed twenty-four liters.
15
RCW 66.24.360(2) states:
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The 24-liter rules were adopted to implement RCW 66.24.630(1) and RCW 66.24.360(2).
Former WAC 314-02-106(1); former WAC 314-02-103(2). The 24-liter rules provide that a
licensee may sell wine or spirits to an on-premises retailer “although no single sale may exceed
twenty-four liters, and single sales to an on-premises licensee are limited to one per day.”
Former WAC 314-02-106(1)(c) (emphasis added); see also former WAC 314-02-103(2).
RCW 66.24.630(1) and RCW 66.24.360(2) clearly provide that no single sale of a spirit
retailer or wine retailer reseller endorsement can exceed 24 liters. The statutes do not include a
daily limit on the number of single sales that can be made. We recognize that the people do not
intend to use the words they do not use. See Nelson, 195 Wash. App. at 266. Therefore, the plain
language of RCW 66.24.630(1) and RCW 66.24.360(2) shows that the people intended to
impose only a “single sale” limit on the retail-to-retail sale of wine and spirits and not a daily
limit on single sales.
The Distributors argue that RCW 66.24.630(1) and RCW 66.24.360(2) are ambiguous
because the term “sale” could refer to multiple transactions over any period of time. “Sale” is
defined as the “distribution (as of goods or services) by selling.” WEBSTER’S THIRD NEW
INTERNATIONAL DICTIONARY 2003 (2002). While a “sale” can also be considered a deal or
transaction, the term “sale” is not modified or quantified. It is clear from the language of RCW
66.24.630(1) and RCW 66.24.360(2) that no single sale can exceed 24-liters. That RCW
There is a wine retailer reseller endorsement of a grocery store license, to sell wine
at retail in original containers to retailers licensed to sell wine for consumption on
the premises, for resale at their licensed premises according to the terms of the
license. However, no single sale may exceed twenty-four liters.
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No. 48807-8-II
66.24.630(1) and RCW 66.24.360(2) do not state the time frame in which a single sale can occur
does not render the use of “sale” ambiguous. While the statutes may be subject to multiple
interpretations, it is unreasonable to read a daily limit into a statute where no such limit is
provided for or alluded to. Because the 24-liter rules are inconsistent with RCW 66.24.630(1)
and RCW 66.24.360(2), the Board exceeded its statutory rule-making authority by adopting the
rules. Therefore, the 24-liter rules are invalid.
CONCLUSION
We hold that the 10 percent license fee rules are invalid, but we otherwise affirm the
superior court’s order.
Worswick, J.
We concur:
Johanson, J.
Bjorgen, C.J.
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