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National Wildlife Federation v. Espy



The Farmers Home Administration (FmHA) took title to a ranch in Idaho as a result of delinquent payments by the borrower. A bank in Spokane, Washington held a mortgage on a portion of the 4,704 acre ranch, including about 730 acres of wetland. After determining that the debt exceeded the value of the property, FmHA transferred the ranch to the bank in satisfaction of the mortgage. The bank in turn sold the ranch to the Baxters, who graze cattle on the ranch, including the wetlands.

Environmental groups brought suit under the Administrative Procedure Act against the Secretary of Agriculture, FmHA officials, the bank, and the Baxters, alleging that FmHA’s transfer of 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 (FACTA)[1]. The complaint also alleged FmHA’s failure to draft an environmental impact statement (EIS) before transferring the property violated the National Environmental Policy Act (NEPA).

The district court dismissed the action for failure to state a claim. The court held that the transfer of the property did not trigger the wetland easement requirements of FACTA; NEPA was not violated by a failure to prepare an EIS; no cause of action was stated against the Baxters because all of the alleged violations applied to government agencies, not individuals; and the court had no power to grant relief when state law governed the disposition of property. The environmental groups appealed.

The Ninth Circuit held that the environmental groups had standing to file suit. Further, it reversed the decision of the district court by holding that the conveyance of the ranch from FmHA to the bank constituted a “disposal” under section 1813(h)(1) of FACTA, and therefore the requirement to establish easements protecting the wetlands prior to the transfer did apply. Rejecting FmHA’s argument that when property is burdened by a prior lien the decision whether to impose wetland conservation easements is discretionary, the Ninth Circuit held the mandatory language used by Congress mandated the easements.

The Ninth Circuit also rejected the district court’s holding that its power to grant relief was restricted because of the applicability of state property law. The Ninth Circuit reasoned that since the district court was exercising jurisdiction under a federal statute it had the authority to void a property transaction and order a transfer of title if necessary.

The Ninth Circuit upheld the district court’s holding that FmHA had not violated NEPA by not issuing an EIS. Since the wetlands had been used for grazing before FmHA acquired the ranch, and the Baxters were now using it in the same way, FmHA’s transfer of title did not alter the status quo. The Ninth Circuit had previously held that discretionary agency action that does not alter the status quo does not require an EIS.[2]

Even though the alleged violations did apply to the federal agencies and not individuals, the Ninth Circuit held that it was proper to include the Baxters as parties in the suit because they were required in order for the plaintiffs to gain relief. The plaintiffs could not obtain complete relief unless the Baxters were prevented from further harming the wetlands.

The Ninth Circuit directed on remand that the district court determine whether the equitable relief sought by the plaintiffs is appropriate. In particular, the Ninth Circuit directed the district court to consider whether the Baxters knew about the dispute over the wetland conservation easements prior to buying the ranch and therefore had notice.

[1]7 U.S.C. § 1985(g)(1) (1994).

[2]Upper Snake River Chapter of Trout Unlimited v. Hodel, 921 F.2d 232, 235 (9th Cir. 1990).

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