Unpublished Disposition, 852 F.2d 571 (9th Cir. 1983)

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US Court of Appeals for the Ninth Circuit - 852 F.2d 571 (9th Cir. 1983)

KEN WARREN OUTDOORS, INC., Plaintiff-Appellant,v.UNITED STATES DEPARTMENT OF the INTERIOR, Dick Tobin, andDick Schwab, Defendants-Appellees.

No. 87-3691.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 9, 1988.Decided July 5, 1988.

Before HUG, FLETCHER, and NELSON, Circuit Judges.


Ken Warren Outdoors, Inc. ("KWO") appeals from the district court's judgment affirming the decision of the Interior Board of Land Appeals ("IBLA"). The IBLA affirmed the decision of the Bureau of Land Management ("BLM") denying reissuance of a commercial outfitter permit to David Farley, Inc., and revoking David Farley, Inc.'s authorized outfitter status on the Rogue River. Our jurisdiction is based on 28 U.S.C. § 1291 (1982). Because the district court's decision involved solely a determination of law, we review the decision de novo. United States v. McConney, 728 F.2d 1195, 1201 (9th Cir.) (en banc), cert. denied, 469 U.S. 824 (1984). In so doing, we must determine whether the IBLA's decision was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.1  5 U.S.C. § 706(2) (A). Our review is limited, and we will not substitute our judgment for that of the IBLA. Baker v. United States, 613 F.2d 224, 226 (9th Cir.), cert. denied, 449 U.S. 932 (1980).

On February 23, 1981, the Farleys incorporated their business and requested the BLM to transfer the permit from David Farley to David Farley, Inc. The BLM did so. On May 1, 1981, the Farleys executed a Purchase Agreement with KWO in which the Farleys sold all of the stock in David Farley, Inc. (100 shares) to KWO. The BLM determined that the Purchase Agreement not only transferred to KWO the ownership of the business but was also designed to transfer the commercial Outfitter-Guide Permit held by David Farley, Inc. BLM had not approved any permit transfer from David Farley, Inc. to KWO. Accordingly, BLM determined the transfer of the permit was in violation of the permit conditions and federal regulations.

The Recreational Use Controls established in 1978 provide that commercial outfitters must obtain a permit to operate in the wild section of the Rogue River, and state:

An authorized outfitter's authorization to conduct float trips is not a salable commodity. Commercial operations on the river must be understood as being a privilege, not a right. Any transfer of authorized use in conjunction with the sale of a business must be approved by the managing agencies prior to such a transfer. Disapproval may be based upon the lack of qualifications of the proposed transferee, the inability of the river and land resources to sustain the use, or other just cause.

43 Fed.Reg. 12093. (Emphasis added.) Moreover, the Recreational Use Controls provide for termination of a permit upon the "breach of any of the ... conditions of [the] permit or at the discretion of the managing agencies." Id.

The 1980 and 1981 permits issued to Dave Farley (or David Farley, Inc.) specifically stated:

No transfer or assignment by the Permittee of this permit or of any part thereof or interest therein directly or indirectly, voluntary or involuntary, including but not limited to the assignment or transfer of stock, shall be made. In the event of default on any mortgage or other indebtedness, the creditor may succeed to the interest of the Permittee in Permittee assets, but shall not thereby acquire operating rights or privileges.

(Emphasis added.)

In view of the language in the Recreational Use Controls authorizing termination of a permit upon breach of the permit's conditions, the BLM was justified in terminating David Farley, Inc.'s permit if there occurred a sale of the permit to KWO absent prior approval by the BLM.

We find that the record contains ample evidence that David Farley sold his business to KWO in 1981 and, along with it, the value of his permit, thereby violating the terms of the permit. In November, 1980, David Farley sent a letter to Ken Warren, stating, "Pursuant to your request, here is a listing of the major pieces of equipment we will be selling to the purchaser of our Rogue River dates." The Purchase Agreement executed between David Farley and KWO confirms that the purchase price of the business included the value of the permits. Section 2(f) of the Agreement states: "Sellers jointly and severally represent and warrant to Buyer as follows: ... The Company owns and Sellers have transferred the permit described in Exhibit 'B' to Company and is entitled to use of the name 'David Farley, Inc.' " The permit described in Exhibit B is the 1981 commercial Outfitter-Guide Permit. If the permit were not a part of the sale, there would be no reason to warrant that the Company (David Farley, Inc.) owned the permit.2 

Moreover, Section 9 of the Agreement states:

9. Notwithstanding anything herein to the contrary, if at any time Buyer, or its counsel, determines or is notified that the permit described in Exhibit "B" is not valid, or has been or will be cancelled or terminated, or cannot be renewed by reason of the sale of Stock under this Agreement, or that necessary approval of the sale of Stock under this Agreement by the United States government or any of its Departments or agencies will not be given, Buyer may, (at its option, within one year from the date of this Agreement,) give notice in writing to Sellers declaring this Agreement to be null and void; whereupon Sellers shall at once refund to Buyer all sums previously paid by Buyer under this Agreement; provided however, in no event shall Buyer be entitled to a refund in the event Buyer or any of its agents or employees are intentionally or negligently responsible for the revocation of the permit.

Though the Purchase Agreement avoids explicitly stating that the permit is included within the sale, this language indicates as much. KWO asserts that Paragraph 9 does not indicate a transfer contemporaneous with the execution of the Purchase Agreement, but rather a transfer at some future time. However, we interpret the language of Paragraph 9 to reflect an attempted transfer between the parties at the time of the agreement. The paragraph provides that, if the permit cannot be renewed by reason of the sale of stock under the agreement, the agreement could be declared null and void at Buyer's option, and Buyer would be entitled to a refund. Far from indicating a future sale of the permit predicated upon BLM's prior approval, the language indicates that the purchase price tendered at the time of the agreement included the value of the permit.

Finally, a letter from David Farley to Ken Warren confirms this interpretation. The letter states that it is "in response to [Ken Warren's] request for the details of the May 1, 1981 purchase of ... David Farley, Inc. by Ken Warren Outdoors, Ltd." The letter lists the components of the $22,500 purchase price. Among the components is "1981 dates sold" which was valued at $5,000.

This documentary evidence, alone, clearly demonstrates that a sale of the permit occurred in 1981. In addition, however, there is also other evidence supporting the IBLA's decision. For example, there is evidence that David Farley requested the BLM to change his mailing address to that of Ken Warren; that KWO was advertising commercial trips on the wild section of the Rogue in 1982; that the filing fee for David Farley, Inc.'s 1982 permit was paid by Ken Warren, and the certificate of insurance was in Ken Warren's name; and that Ken Warren's wife told a BLM employee that Ken Warren had purchased the business and the permit in 1981. ER 27.

Because the record is replete with evidence supporting the IBLA's decision, we cannot find it arbitrary, capricious, or otherwise not in accordance with the law. Nor do we find the IBLA's denial of a hearing improper. KWO acknowledges that federal law does not entitle it to a hearing as a matter of right. In light of the clear documentary evidence supporting the IBLA's decision, a hearing was unnecessary. KWO argues that a hearing was necessary to receive testimony concerning the conversations referred to in Farley's June 30, 1982 letter and Dew's December 8, 1983 letter. KWO's theory appears to be that, in conversations between the BLM and Farley, the BLM told Farley how to structure his arrangement with KWO so as to operate incompliance with the permit. Even if KWO's theory is true, Farley had already violated the permit condition by the time he received advice from the BLM if, indeed, he received any at all. The Purchase Agreement indicates the business was sold in 1981. The conversation to which Farley refers in his June 30, 1982 letter to BLM took place on June 28, 1982. If any advice was rendered by the BLM on structuring the business relationship with KWO, it came long after Farley had violated the permit.

We affirm the district court's judgment.



This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3


Though KWO also asks us to determine whether the agency decision is supported by substantial evidence, that standard of review is appropriate only when a hearing was held by the agency. See 5 U.S.C. § 706(2) (E). In this case, a hearing was not required by statute or regulation (as KWO readily concedes) and none was held. Thus, the substantial evidence standard is inapplicable. We note, however, that we would reach the same result in this case even under that standard


We recognize that the reference to "Company" means David Farley, Inc., and not KWO. See Purchase Agreement at 1