Auditor Jan Jutte says the state Department of Natural Resources had the authority to grant the shoreline lease. An independent appraisal valued the 50-year lease at $1.68 million, while the state accepted a $720,000 offer from the Navy.

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The acting state auditor has turned down a request by two state senators asking for an audit of a Hood Canal land-lease deal between the Department of Natural Resources (DNR) and the Navy.

As her reason, Auditor Jan Jutte cited a Jefferson County Superior Court judge’s opinion in May that said DNR had authority to grant the shoreline lease and that the way the agency determined its $720,000 value “was not arbitrary, capricious or unlawful.”

The Seattle Times earlier reported that an independent, state-approved appraisal valued the 50-year lease of 4,804 acres of Hood Canal seafloor at $1.68 million. DNR later accepted a $720,000 offer from the Navy.

Because of the lower value, the Navy avoided congressional oversight of the deal. State law required DNR to obtain fair-market value for the seafloor.

The 100-foot-wide seafloor easement puts the shoreline off-limits to Thorndyke Resource, developer of a pier project on the Hood Canal’s western shoreline.

The Navy viewed the proposed pier as an “encroachment threat” that could hamper “national defense.”

Thorndyke has sued the Navy and DNR over the restriction, and is appealing the Jefferson County judge’s decision.

The Navy has asked a U.S. district judge to dismiss a lawsuit brought against it by Thorndyke in federal court.

A spokeswoman for DNR, Sandra Kaiser, said “a major reason” for agreeing to the easement was to protect “prime Puget Sound ecosystem.”

Asked why Public Lands Commissioner Peter Goldmark accepted the lower valuation, she said “There’s a lot of different ways to accept different valuations” and he did what was best to protect natural resources.

State Sen. Tim Sheldon, D-Potlatch, Mason County, in a letter to the auditor’s office more than a week ago, wrote: “As reported by The Times, Commissioner Goldmark agreed to an artificially low price on a lease of state aquatic bedlands in the Hood Canal.”

State Sen. Mark Miloscia, R-Federal Way, also signed the letter.

“I’m disappointed she wouldn’t take a stronger stand,” Sheldon said of Jutte.

“The facts are pretty evident. They just adjusted the price to make the deal.”

Miloscia, chairman of the Senate Accountability & Reform Committee, said reviewing a contract to see if best practices were followed “is well within the auditor’s authority.” He said he may hold hearings about the lease.