ELR Citation: ELR 20864
No(s). 92-35568 (9th Cir. Jan 20, 1995)

The court holds that the Farmers Home Administration (FmHA) violated §1813(h)(1) of the Food, Agriculture, Conservation, and Trade Act of 1990 (FACTA) when it transferred inventoried property to a bank without imposing wetland conservation easements. After receiving the property, the bank sold it to a couple who graze cattle on the wetlands portions of the property. The court first holds that plaintiff environmental groups have standing. The court next holds that the FmHA's conveyance of the property to the bank clearly constituted a "disposal" within the meaning of §1813(h)(1). The FmHA offered title to the bank in exchange for forgiveness of a debt totalling over $206,000, and the bank accepted the FmHA's quitclaim deed as payment of that debt in full. The court holds that the FmHA did not abandon its property interest, but transferred that interest to the bank in return for significant consideration. The court next holds that although the inventoried property was burdened by a prior lien, the FmHA's decision whether to impose the easements was not discretionary. Congress used mandatory language in §1813(h)(1). The court next holds that the district court erred in concluding that state law limited its power to grant the declaratory and injunctive relief the groups seek. Section 706(1) and (2)(C) of the Administrative Procedure Act (APA) authorizes the district court, in the exercise of its jurisdiction under FACTA, to void a property transaction and to order a transfer of title where necessary. The court notes that although the district court has the power to set aside unlawful agency action, principles of equity control its decision to grant or deny injunctive or declaratory relief under the APA.

The court next holds that the FmHA was not required to prepare an environmental impact statement under the National Environmental Policy Act before disposing of the property, because the transfer of title will not alter the property's use or status quo. The court next holds that the couple to whom the bank conveyed the property was properly joined in the action, because the groups satisfied Fed. R. Civ. P. 19's joinder requirements. The groups cannot obtain complete relief unless the couple is prevented from harming the wetlands; the couple's absence would impair its ability to defend the interest it claims in the property; and if the couple was not bound by the outcome of this case and sought relief at variance with the judgment in this case, the FmHA would face a substantial risk of inconsistent obligations. Moreover, if the district court ordered re-transfer of title to the FmHA, the FmHA would be required to bring suit against the couple if necessary to protect the wetlands from unrestricted grazing.

On remand, the district court must determine whether the equitable relief the groups seek is appropriate and, in particular, should consider whether the couple was on notice before they bought the property that it was the subject of a wetlands easement dispute.

Counsel for Plaintiffs
Thomas M. France
National Wildlife Federation
240 N. Higgins St., Missoula MT 59802
(406) 721-6705

Counsel for Defendants
Andrea N. Ward
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Before Browning, Norris, and O'Scannlain, JJ.: