WAILUKU » A vacation rental group said it is disappointed with a federal court decision denying its members the opportunity to continue operating their businesses while their applications are pending with Maui County.

But David Dantes, a spokesman for the Maui Vacation Rental Association, said his group was encouraged by the Maui County Council's effort to pass an ordinance broadening the operation of bed-and-breakfast rentals.

The Council bill is scheduled for final reading next Friday.

“;The association has been working with the county to develop better regulations,”; Dantes said. “;I think that's a very positive development.”;

The U.S. 9th Circuit Court of Appeals denied the group's appeal against the county Wednesday and upheld a Maui circuit judge's ruling.

The appeals court said the association had no right to operate transient vacation rentals without the required permits while the county processed permit applications.

The association had argued that a planning director under former Mayor Alan Arakawa's administration had assured its members that they could continue operating while applications were pending.

But Mayor Charmaine Tavares' administration decided to enforce the law that banned vacation rentals operating without permits.

The county estimated there were about 400 vacation rentals on Maui, Lanai and Molokai before the administration began enforcing the law.

The appeals court ruled that the association's members could not require the county to “;indefinitely maintain”; enforcement policies put in place by previous administrations.

The court said association members were on notice that their conduct was unlawful, and the county retained discretionary authority to enforce permit applications.

“;I'm pleased that once again the county's policies are validated before a high court that recognizes our responsibility to enforce existing laws,”; Tavares said.

Tavares said her administration has been working with the Council to review and adopt “;appropriate legislation.”;

“;We have maintained that the proper way to change county laws is through a public legislative process rather than by ignoring them altogether.”;