D3K Interpretation

[FullCount]

Have been around fastpitch for many years as a dad, coach, and pitching instructor but now a new umpire. Would appreciate clarification and thoughts on D3K:

ASA ruleset, Rule 8.1.b.1 states:

"Fewer than two outs and first base is not occupied at the time of the pitch, or"

For purposes of this rule, how is "occupied" defined? This past week, my partner, the senior umpire in the game who says he has seventeen years umpiring experience, told a coach that if a runner on 1b broke for 2b on a steal that 1B was no longer occupied and that the BR could attempt to advance on D3K. This was the first I had heard of that interpretation so I reread the rule after the game and don't see how that can be. It says "occupied at the time of the pitch" and the runner cannot attempt a steal until the pitch, so I interpret the rule to say the base was occupied even on an attempted steal. Please help me understand this one better.