Defendant found criminal guilty for failing to have a federal permit to operate on a lake owned by United States Army Corps of Engineers (USACE)

If you are on Federal land or Federal water making money you have to have a Federal Permit

United States v. Warman, 23-MJ-02-EBA, Violation 1062808 (E.D. Ky. Mar 15, 2023)

State: Kentucky; United States District Court, E.D. Kentucky, Northern Division

Plaintiff: UNITED STATES OF AMERICA

Defendant: HEATHER WARMAN

Plaintiff Claims:

Defendant Defenses: She did not own the business and she was out of the country on the day the ticket was issued.

Holding: Defendant was found guilty

Year: 2023

Summary

Defendant Heather Warman is a self-attested “CEO,” “Owner,” “Representative,” and “Manager” of SUP Kentucky. On its website, SUP Kentucky advertises kayak rentals and tours on-site at Grayson Grotto, which is situated on Grayson Lake in Olive, Kentucky. Critically, Grayson Lake is federal property, so a commercial business license issued by the United States Army Corps of Engineers (USACE) is required to lawfully solicit or conduct business on the lake. See 36 C.F.R. § 327.18(a). Warman was advised of the requirement multiple times over the course of several months by USACE Project and Resource Manager Francis Jeffrey. Nonetheless, she never applied for a commercial business license nor ceased her operations on the lake. So, on July 23, 2022, Warman was issued a notice for violating 36 C.F.R. § 327.18(a).

Facts

The United States accuses Warman of engaging in or soliciting business activities on Grayson Lake without authorization from the USACE in violation of 36 C.F.R. § 327.18(a). The regulation prohibits the “engaging in or solicitation of business on project land or waters without the express written permission of the District Commander.” Id. A violator “may be punished by a fine of not more than $5,000 or imprisonment for not more than six months or both[.]” 36 C.F.R. § 327.25. For Warman to be adjudged guilty by this Court, the United States must show beyond a reasonable doubt that Warman knowingly engaged in or solicited business on federal project land or waters, such as Grayson Lake, without the express written permission of the District Commander.

On March 28, 2022, Warman called Jeffrey to inquire about expanding certain mountain bike trails onto federal project land surrounding Grayson Lake. These bike trails were associated with her business, Grayson Getaways. During the conversation, Warman advised Jeffrey that she was also “the owner and CEO of SUP Kentucky, a guided kayak company” which seeks to expand its operations “on Grayson Lake[.]”Jeffrey informed Warman that it is illegal to operate a commercial business on federal project lands or waters without express consent from the District Commander in the form of a written permit. Warman, however, contended that a permit from the District Commander was unnecessary because she already held a permit from the Commonwealth of Kentucky which allowed her to operate a guided kayak business on “any lake in the state.” Jeffrey assured Warman, though, that she needed a permit from the District Commander and explained to her the difference between federal and state lands.

On May 13, 2022, Warman again contacted Jeffrey about expanding Grayson Getaways’ bike trails onto federal project land surrounding Grayson Lake. [Id.]. During the conversation, Jeffrey “reminded her . . . that a permit is needed to continue” her kayak rental and touring operations on Grayson Lake. This constituted her second verbal warning. Once again, Warman “disagreed.”

Five days later, on May 17, 2022, the USACE’s Real Estate Division served a cease-and-desist letter on Warman. The letter advised Warman that she was in violation of 36 C.F.R. § 327.18 for “advertising for and performing guided kayak and standup paddleboard tours on Grayson Lake . . . without the expressed written permission of the District Commander[.]”Warman acknowledged receipt via email, writing “Thank You.”

Thereafter, Warman communicated with the USACE’s Real Estate Division concerning the permit requirements. An in-person meeting was scheduled for May 27, 2022, but was later cancelled. [Id.]. On May 27, 2022, Jeffrey was contacted by Warman’s attorney about the permit requirements and application process.

On July 5, 2022, the USACE’s Real Estate Division informed Jeffrey that Warman’s company continued to operate and advertise tours on Grayson Lake. After investigating, Jeffrey concluded that Warman was, in fact, engaging in or soliciting business on project lands without a permit, in violation of 36 C.F.R. § 327.18(a). So, Jeffrey and Natural Resource Specialist Justine Smith cited Warman for violating the regulation. On September 7, 2022, Jeffrey chronicled his investigation into a Memorandum for Record, which the United States offered as an exhibit at trial.

Analysis: making sense of the law based on these facts.

This is a criminal case, meaning a State or the Federal Government has charged the defendant with committing a crime. If you are found guilty of a crime you can be forced to pay a fine or spend time in jail. In this case, it is a crime to operate a business on Federal Land without a Federal Permit.

Each of the Federal Agencies that have land available to use for recreation has similar requirements for obtaining a permit to operate on federal land. Those agencies include the US Forest Service which is part of the Department of Agriculture, the Bureau of Land Management, the National Park Service, and the Fish and Wildlife Service which is part of the Department of the Interior. And as in this case the Army Corps of Engineers, part of the Department of the Army. Each agency has different rules and regulations on how to obtain permits, how you must operate under the permit, and what the charges and fees are for the permit.

You have to have permission to “be” on proper, real estate, that you don’t own. If you are attempting to make money by using that property, you not only have to have permission to be on the real estate, but if owned by the Federal Government, you must have additional paperwork saying you have the right to make money using the Federal Government’s property.

Here the defendant was operating a SUP (Stand Up Paddleboard) business on a lake owned and controlled by the Army Corporation of Engineers. The defendant first claimed that since she had a permit to operate in Kentucky she did not need an Army Corp of Engineers Permit.

She did not use this argument in court. An analogy would be you can’t stand on your neighbor’s land without their permission and argue that the neighbor across the street told you it was OK to be there.

The Federal Regulation in question is:

§ 327.18 Commercial activities.

(a) The engaging in or solicitation of business on project land or waters without the express written permission of the District Commander is prohibited.

(b) It shall be a violation of this part to refuse to or fail to comply with any terms, clauses or conditions of any lease, license or agreements issued by the District Commander.

At trial the defendant attempted two different legal arguments.

Warman’s defense is two-fold. First, she says she doesn’t “own” SUP Kentucky, so she argues it’s impossible for her to have operated a business on federal project lands or waters without a permit in violation of 36 C.F.R. § 327.18(a). (“Warman did not and has not ever owned the Web-Site presented as evidence by the United States of America and as detailed on the Kentucky Secretary of State official records Mrs. Warman does not and has never owned Sup Kentucky.”). Second, because the citation was issued on July 23, 2022-when she was out of the country, at sea, on her way to Grenada-it was impossible for her to “solicit business or even communicate with anyone other than those physically on board her ship.”

The court went through the first defense quickly noticing all of the times she had told the Army Corp of Engineers that she was operating a SUP business on the lake.

Given Warman’s admissions, Jeffrey’s detailed chronology of his conversations with Warman, and the fact that only Jeffrey’s account has evidentiary support, the Court concludes that Jeffrey’s account of the facts is inherently more credible than Warman’s.

The second argument went down in a similar fashion. The citation was not for operating a business without a permit on one day, but multiple days. Again, the records of the Corp of Engineers and statements made by the defendant shot this argument down.

Through the testimony of Jeffrey, the United States proved that Warman is interested in the success of SUP Kentucky. See Also through the testimony of Jeffrey, and implicitly through the testimony of Warman herself, the United States proved that Warman solicited and conducted guided kayak and standup paddle tours on Grayson Lake without a commercial business license.

The judge found the defendant guilty of violating the federal statute.

Heather Warman was cited with violating 36 C.F.R. § 327.18(a) for soliciting for and operating her guided tour and kayak rental business on Grayson Lake without written permission from the District Commander. Warman pled not guilty. However, the Court concludes beyond a reasonable doubt that Warman violated 36 C.F.R. § 327.18(a). That is, she knowingly engaged in or solicited business on Grayson Lake without the express written permission of the District Commander, despite receiving two prior oral warnings and a formal, written cease-and-desist letter. Therefore, IT IS ORDERED AND ADJUDGED that Heather Warman is GUILTY of violating 36 C.F.R. § 327.18(a).

IT IS FURTHER ORDERED that Heather Warman shall appear for SENTENCING on April 13, 2023 at 10:00 A.M. in the United States District Courthouse at Ashland, Kentucky. On or before Monday, April 10, 2023, the parties shall file memoranda presenting matters that should be considered by the court in calculating an appropriate sentence.

So Now What?

In most of the US this would be called a trespassing case. Someone was on someone’s land without the landowner’s permission. However, when messing with Federal Land Owners the types of cases, damages and jail time escalate.

No matter whose land you are on, if the land is not yours, you need a lease or a permit to be there.

And remember, this is a Federal Criminal Case. It is going to effect the rest of her life.

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What do you think? Leave a comment.

James H. “Jim” Moss

Jim Moss is an attorney specializing in the legal issues of the outdoor recreation community. He represents guides, guide services, outfitters both as businesses and individuals and the products they use for their business. He has defended Mt. Everest guide services, summer camps, climbing rope manufacturers, avalanche beacon manufactures and many more manufacturers and outdoor industries. Contact Jim at Jim@Rec-Law.us

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