National Wildlife Federation v. Espy

• Decision Date: 20 January 1995
• Docket Number: No. 92-35568,92-35568
• Citation: 45 F.3d 1337
• Parties: , 31 Fed.R.Serv.3d 1075, 25 Envtl. L. Rep. 20,864 NATIONAL WILDLIFE FEDERATION; Idaho Wildlife Federation, Plaintiffs-Appellants, v. Mike ESPY, * Secretary of the U.S. Department of Agriculture; La Verne Ausman, Administrator of Farmers Home Administration; Tracy L. Baxter, and Sharon L. Baxter, Defendants-Appellees, and Farm Credit Bank of Spokane, Defendant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1337

45 F.3d 1337

40 ERC 1129, 31 Fed.R.Serv.3d 1075,

25 Envtl. L. Rep. 20,864

NATIONAL WILDLIFE FEDERATION; Idaho Wildlife Federation Plaintiffs-Appellants, v. Mike ESPY, ^* Secretary of the U.S. Department of Agriculture; La Verne Ausman, Administrator of Farmers Home Administration; Tracy L Baxter, and Sharon L. Baxter Defendants-Appellees and Farm Credit Bank of Spokane, Defendant.

No. 92-35568.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Dec. 14, 1993.

Submission Vacated Feb. 4, 1994.

Resubmitted Oct. 11, 1994.

Decided Jan. 20, 1995.

Thomas M. France, Nat. Wildlife Federation, Missoula, MT and Marion Yoder, Nat. Wildlife Federation, Bismark, ND, for plaintiffs-appellants.

Andrea Nervi Ward, U.S. Dept. of Justice, Washington, DC, for defendants-appellees.

Stephen C. Hardesty, Hawley, Troxell, Ennis & Hawley, Boise, ID, for defendants-appellees.

Appeal from the United States District Court for the District of Idaho.

Before: BROWNING, NORRIS, and O'SCANNLAIN, Circuit Judges.

JAMES R. BROWNING, Circuit Judge:

Farmers Home Administration ("FmHA") took title to the Lazy C-H Ranch in Bear Lake County, Idaho, from a delinquent borrower, subject to a mortgage held by Farm Credit Bank of Spokane. The mortgage covered 2,135 acres of the 4,704 acre Ranch, including approximately 730 acres of wetlands.

After making payments to the Bank for a number of years, FmHA apparently concluded the debt exceeded the value of the property and quitclaimed the Ranch to the Bank in satisfaction of the debt. The Bank sold the Ranch to Tracy and Sharon Baxter, who currently graze cattle on the Ranch, including the wetlands.

The National Wildlife Federation and Idaho Wildlife Federation brought this action against the Secretary of Agriculture, FmHA officials, the Bank, and the Baxters under the Administrative Procedure Act ("APA"), 5 U.S.C. Secs. 701-706, alleging FmHA's transfer of the property to the Bank without creating easements to protect the wetlands violated Section 1813(h)(1) of the Food, Agriculture, Conservation and Trade Act of 1990 ("the 1990 Act"), 7 U.S.C. Sec. 1985(g), and Executive Order 11990, 42 Fed.Reg. 26,961 (1977). ¹ The complaint also alleged FmHA's failure to draft an environmental impact statement before transferring the property violated the National Environmental Policy Act (NEPA), 42 U.S.C. Sec. 4332(2)(C).

The district court dismissed the action for failure to state a claim, holding: (1) the transfer of the Ranch to the Bank did not trigger FmHA's obligations under the 1990 Act, and even if it did, the court could not provide effective relief; (2) the transfer required no action under NEPA because use of the Ranch did not change; and (3) no cause of action was stated against the Baxters because the APA and other federal statutes invoked by plaintiffs applied only to governmental action. Plaintiffs appeal. We affirm in part and reverse in part.

I

We decide de novo whether the complaint states a cause of action and if so whether plaintiffs had standing to assert it. Oscar v. University Students Co-operative Ass'n, 965 F.2d 783, 785 (9th Cir.1992) (en banc) (failure to state a claim); Ellis v. City of La Mesa, 990 F.2d 1518, 1523 (9th Cir.1993) (standing). Allegations of fact are taken as true and construed in the light most favorable to the plaintiff. Buckey v. County of Los Angeles, 968 F.2d 791, 794 (9th Cir.1992) (failure to state a claim); Lujan v. Defenders of Wildlife, --- U.S. ----, ----, 112 S.Ct. 2130, 2137, 119 L.Ed.2d 351 (1992) (standing).

II

Although the district court did not consider whether plaintiffs have standing, we must do so. FW/PBS, Inc. v. Dallas, 493 U.S. 215, 231, 110 S.Ct. 596, 607-08, 107 L.Ed.2d 603 (1990). The complaint sufficiently alleges each element of standing. See Lujan, 112 S.Ct. at 2136-38. ² The allegations that several of plaintiffs' members enjoy the aesthetic value of the wetlands and the opportunities they afforded for hiking, hunting, and bird-watching, asserts a legally protected interest sufficient for standing. Id. (citing Sierra Club v. Morton, 405 U.S. 727, 734-35, 92 S.Ct. 1361, 1365-66, 31 L.Ed.2d 636 (1972)); National Wildlife Federation v. ASCS, 941 F.2d 667, 670-71 (8th Cir.1991). Injury to this interest and causation are reflected in allegations that (1) "FmHA declined to establish conservation easements on the property conveyed to the Bank," (2) "[the Baxters] are now grazing cattle in the wetland areas without observing the restrictions [which conservation easements would have imposed]," (3) "[i]n the absence of conservation easements, the Baxters will continue to graze cattle in the wetlands on the Lazy C-H Ranch," and (4) "[u]nrestricted grazing will degrade the fragile riparian wetlands and injure plaintiffs' members." Complaint, pp 21-23. ³ Redressability is asserted in an allegation that "[a]n order rescinding the conveyance of the [Ranch] to the [Bank] (and its subsequent sale to the Baxters) and compelling FmHA to establish conservation easements as required by Executive Order 11990 and 7 U.S.C. Sec. 1985(g) will prevent wetland destruction and irreparable injury to plaintiffs." Complaint, p 24. ⁴

III

Section 1813(h)(1) of the 1990 Act provides:

[I]n the disposal of real property under this section, the Secretary [of Agriculture] shall establish perpetual wetland conservation easements to protect and restore wetlands or converted wetlands that exist on inventoried property....

7 U.S.C. Sec. 1985(g)(1).

The parties do not dispute that the Ranch was "inventoried property" within the meaning of Sec. 1985(g), and that it contains "wetlands." They differ only as to whether FmHA's conveyance of the Ranch to the Bank in satisfaction of the debt constituted a "disposal" of the property. If the conveyance was a "disposal," FmHA violated Sec. 1985(g) by failing to impose wetland conservation easements before transferring title.

FmHA argues that "disposal" of real property refers only to sale or lease of the property. The district court agreed. The court held FmHA's transfer of title to the Bank was an "abandonment" of the Ranch rather than a "disposal," and FmHA therefore had no obligation to establish wetland conservation easements.

Even accepting FmHA's premise that "disposal" under Sec. 1985(g) is limited to sales and leases, FmHA's conveyance of the Ranch to the Bank clearly constituted a "disposal." FmHA offered title to the Ranch to the Bank in exchange for forgiveness of a debt totaling $206,222.50, and the Bank accepted FmHA's quitclaim deed as payment of that debt in full. FmHA did not abandon its property interest in the Ranch; it transferred that interest to the Bank in return for significant consideration. FmHA agrees there would have been a "disposal" of the property within the meaning of Sec. 1985(g) if FmHA had sold the Ranch to a third party and repaid the debt to the Bank with the proceeds. The actual transaction was in substance no different. FmHA simply bypassed the third party and exchanged the Ranch directly with the Bank for forgiveness of the debt. Under any rational definition of "sale," FmHA sold the Ranch to the Bank. ⁵

FmHA argues that when inventoried property is burdened by a prior lien, FmHA's decision as to whether to impose wetland conservation easements under Sec. 1985(g) is discretionary and therefore not subject to judicial review. See 5 U.S.C. Sec. 701(a)(2). FmHA notes that as a practical matter it could not impose wetland conservation easements on the Ranch without first repaying the Bank's prior lien. See E.J. Friedman Co., Inc. v. United States, 6 F.3d 1355, 1356 (9th Cir.1993) (foreclosure by a superior lienholder eliminates junior interests). FmHA argues the decision to expend government funds to repay a prior lienholder is committed to agency discretion, and therefore FmHA is not required to establish wetland conservation easements on any inventoried property that is burdened by a lien.

Congress used mandatory language in directing FmHA to impose wetland conservation easements on inventoried property. 7 U.S.C. Sec. 1985(g). FmHA's discretion to weigh the economic value of inventoried property against the environmental value of establishing wetland conservation easements on such property is limited by this express command of the statute. ⁶ FmHA must impose wetland conservation easements on inventoried property in disposing of the property, even if it must repay a prior lien to do so. ⁷

IV

Plaintiffs seek an order rescinding FmHA's conveyance of the Ranch, restoring title to the Ranch to FmHA, and forbidding FmHA from disposing of the property without imposing wetland conservation easements pursuant to Sec. 1985(g). The district court concluded Idaho statutes regarding rights and duties under conservation easements, see Idaho Code Sec. 55-2102, precluded the court from granting the relief sought. The district court erred in concluding its power to grant relief was limited by state law. Plaintiffs seek declaratory and injunctive relief under a federal statute which empowers a federal court to "compel agency action unlawfully withheld," and to "hold unlawful and set aside agency action ... in excess of statutory jurisdiction, authority, or limitations, or short of statutory right...." 5 U.S.C. Sec. 706(1), (2)(C). These provisions authorize the district court, in the exercise of its jurisdiction under the federal statute, to void a property transaction and order a transfer of title where necessary. Burbank Anti-Noise Group v. Goldschmidt, 623 F.2d 115, 116 (9th Cir.1980).

In Goldschmidt a citizens' group brought suit under NEPA to enjoin the federally-financed sale of an airport until an environmental impact statement could be completed. The district court entered summary judgment against plaintiffs, and the sale was completed. On appeal, defendants argued completion of the sale rendered the case moot because the court could no longer fashion an...