Great American Houseboat Co. v. U.S., 84-2434

• Decision Date: 09 January 1986
• Docket Number: No. 84-2434,84-2434
• Citation: 780 F.2d 741
• Parties: The GREAT AMERICAN HOUSEBOAT COMPANY, a California corporation, Plaintiff-Appellant, v. The UNITED STATES of America, (U.S. Forest Service), Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 741

780 F.2d 741

The GREAT AMERICAN HOUSEBOAT COMPANY, a California

corporation, Plaintiff-Appellant, v. The UNITED STATES of America, (U.S. Forest Service),

Defendant-Appellee.

No. 84-2434.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 9, 1985.

Decided Jan. 9, 1986.

Joshua Tropper, Gaston, Snow, Ely & Bartlett, Palo Alto, Cal., for plaintiff-appellant.

Sandra L. Willis, Asst. U.S. Atty., San Francisco, Cal., for defendant-appellee.

Appeal from the United States District Court for the Northern District of California.

Before SKOPIL, FLETCHER, and WIGGINS, Circuit Judges.

SKOPIL, Circuit Judge:

This case arises from the United States Forest Service's ("Forest Service") refusal to grant Great American Houseboat Company's ("GAHC") applications for permits to operate eight houseboats on Shasta Lake. GAHC brought this action for declaratory and injunctive relief alleging the Forest Service's permit regulations and conditions are unconstitutionally vague and were applied to them in a discriminatory manner in violation of the equal protection clause. GAHC also alleged that the Forest Service revised its application form and houseboat use permit conditions without appropriate authority. The Forest Service's Rule 41(b) motion for involuntary dismissal was granted following a trial to the court. GAHC appeals. We affirm.

FACTS AND PROCEEDINGS BELOW

GAHC is a California corporation in the business of managing and selling houseboats, including timeshare/interval ownership houseboat programs. GAHC sold eight houseboats to eight individuals ("owner-investors"), who made their own arrangements for financing. Each owner-investor entered into a houseboat lease arrangement, leasing the houseboats back to GAHC for a five-year term. GAHC then created a partnership which transferred timeshares of its interest in the houseboats to individual users ("interval owners"). GAHC planned to transfer seventeen total timeshares in the houseboats to individual users who would be allotted two weeks of use per season.

GAHC's timeshare program was structured to provide the owner-investor a substantial tax benefit. The lease agreement provided that GAHC could at the end of the lease, upon 180 days' prior written notice, exercise an option to renew the lease, purchase the houseboat, or return the houseboat to the owner-investor. The options to purchase the houseboats were revocable by the owner-investors. At the time it applied for permits, GAHC had not exercised the revocable options to purchase.

During the five-year lease arrangement, title and registration to the houseboats were maintained in the name of the lessor (owner-investor). All rents or lease payments received by GAHC were deposited in escrow. Distributions from escrow were made according to each owner-investor's prearranged payment schedule. Some owner-investors personally received the payments while others had payments made Regarding the sale or lease of timeshare interests, each interval owner signed a partnership agreement and an addendum to that agreement stating that he or she was one of several partners who owned the use and enjoyment of the houseboat. GAHC provided the financing for each of the interval owners' purchase of a timeshare interest. Payments received by GAHC from the interval owners were deposited into the escrow set up to receive rent or lease payments from GAHC to the owner-investor. The payments from the interval owners were used in large part to pay off the owner-investors.

to the banks holding the liens on the houseboats.

In November 1982 the Forest Service became aware of GAHC's timeshare plan and advised it against proceeding with the plan until the Forest Service had an opportunity to review and promulgate a policy on multiple ownership of houseboats. The Forest Service was concerned that GAHC's timeshare plan was a commercial venture forbidden by the private permit system. In that same month the Forest Service's District Ranger established a moratorium on the issuance of all houseboat permits until a policy on multiple ownership houseboat programs could be formulated.

In January 1983, during the moratorium on permit issuance, District Ranger Fitch advised GAHC that its timeshare proposal was being evaluated by counsel to determine compliance with the private permit system. Ranger Fitch also expressed concern that GAHC continued to represent to the public that its timeshare program was in complete compliance with the Forest Service's permit system.

On February 11, 1983 GAHC representatives met with Forest Service personnel to discuss GAHC's timeshare program. Forest Service personnel made no representations as to whether GAHC's program was in compliance with existing houseboat use permit regulations. Shortly thereafter, GAHC was advised that a revised application form had been approved and that revised conditions embodying Forest Service policy on multiple ownership had been promulgated. GAHC was advised that it should comply with several conditions before a houseboat permit could be granted. GAHC did not supply all the information requested nor did it comply with all the conditions.

On April 22, 1983 the District Ranger issued a decision letter stating that no permit would be issued to a new multiple use houseboat until the anticipated use of the houseboat was determined. The District Ranger reaffirmed Forest Service policy prohibiting commercial use of houseboats through the sale of time alone without evidence of proportionate ownership. On that same day the District Ranger lifted the moratorium for issuing permits and began processing all applications. GAHC had submitted applications for eight separate owners. ¹ The registered owners were the various owner-investors. The legal owners of the houseboats were the various banks or lienholders. Some of the registered owners indicated that they were not members of the interval-owner partnership created by GAHC for sale of timeshare interests. Some of the registered owners did not know whether or not they were members of that partnership, and some of the registered owners indicated that they did not use their houseboats, but purchased those houseboats for the purpose of renting them.

The Forest Service rejected GAHC's permit applications on the basis of the conditions embodying the commercial use ban

and the Forest Service policy with respect to multiple ownership of houseboats. Because GAHC had not been issued permits, it was notified that its houseboats would be impounded unless removed from the Lake. GAHC filed its complaint in this matter seeking to prevent that action. The district court denied plaintiff's application for preliminary injunctive relief. Following a trial on the merits, the court granted the defendant's Rule 41(b) motion for involuntary dismissal.

FOREST SERVICE PERMIT SYSTEM

Congress has granted the Secretary of Agriculture the authority to manage the recreational resources at the Whiskeytown-Shasta-Trinity National Recreational Area. 16 U.S.C. Secs. 460q-460q-9 (1982). The Secretary has duly delegated his authority to the Forest Service. 29 Fed.Reg. 16,210 (Dec. 3, 1964). Shasta Lake is part of this National Recreational Area. All uses of National Recreational Area land or resources must be authorized. 36 C.F.R. Sec. 251.50 (1984). Permits and special use authorizations are defined in Forest Service regulations, 36 C.F.R. Sec. 251.51(h) and (m) (1984), as are application procedures and permit terms and conditions. 36 C.F.R. Secs. 251.54-.64 (1984).

To assist in the overall management of multiple recreational activities and in response to public concern, the Forest Service adopted a management plan for the Whiskeytown-Shasta-Trinity National Recreational Area ("the 1976 Plan"). Pursuant to the 1976 Plan, the Forest Service adopted Forest Service Order 14-58-2 (July 20, 1978), requiring houseboats on Shasta Lake to have special use permits issued from the Forest Service for one-year terms. Authority to regulate permits is duly delegated to the Regional Forester, Forest Supervisor, District Ranger, or other Forest officer. 36 C.F.R. Sec. 251.52 (1984).

From July 20, 1978 until February 22, 1983 Forest Service policy on multiple ownership of houseboats was set forth in a set of standard houseboat use permit conditions ("Old Conditions"). Old Condition 11 prohibited commercial use of houseboats, defined to include rental or offers to rent on a commercial or business basis or as compensation or remuneration for commercial or business activities. Old Condition 13 allowed houseboats to be owned by partnerships provided the permit was issued in the name of one qualified individual who would be responsible for compliance with permit regulations and conditions.

On April 20, 1982 the Forest Service revised the 1976 Plan. Under the 1982 amendments, the existing houseboat use permit system remained in effect. Neither the 1976 Plan nor the 1982 amendments specified the requisite elements for receipt of a private houseboat use permit. Establishment of a houseboat use permit system and regulation of the issuance of permits remained responsibilities duly delegated to the Forest Supervisor, the Regional Forester, the District Ranger, or other Forest Officer. 36 C.F.R. Sec. 251.52 (1984).

Since 1976 practically all the private houseboat permits allowed by the 1976 Plan had been issued. To secure a private permit, it was necessary to file an application with the Forest Service. The Forest Service insisted on knowing at all times who owned the houseboats and who was responsible for complying with their regulations. Each owner or permittee must agree to be bound by all permit terms and conditions. The permit application form states that the person applying for the permit agrees to be bound by permit terms and conditions including such new conditions and stipulations as circumstances may warrant.

In 1982 Forest Service personnel became concerned about...