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. §§ 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. § 1985(g), and Executive Order 11990, 42 Fed.Reg. 26,961 (1977).
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.
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).
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.
Section 1813(h)(1) of the 1990 Act provides:
7 U.S.C. § 1985(g)(1).
The parties do not dispute that the Ranch was "inventoried property" within the meaning of § 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 § 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 § 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 § 1985(g) if FmHA had sold the Ranch to a third party and repaid the debt to the Bank with the proceeds. The
FmHA argues that when inventoried property is burdened by a prior lien, FmHA's decision as to whether to impose wetland conservation easements under § 1985(g) is discretionary and therefore not subject to judicial review. See 5 U.S.C. § 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. § 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.
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 § 1985(g). The district court concluded Idaho statutes regarding rights and duties under conservation easements, see Idaho Code § 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. § 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 appropriate remedy. We rejected this argument:
Although the district court has power to do so, it is not required to set aside every unlawful agency action. The court's decision to grant or deny injunctive or declaratory relief under APA is controlled by principles of equity. Westlands Water Dist. v. Firebaugh Canal, 10 F.3d 667, 673 (9th Cir.1993); Sierra Pacific Industries v. Lyng, 866 F.2d 1099, 1111 (9th Cir.1989). The district court must weigh "the competing claims of injury ... and the effect on each party of the granting or withholding of the requested relief." Amoco Production Co. v. Village of Gambell, 480 U.S. 531, 542, 107 S.Ct. 1396, 1402, 94 L.Ed.2d 542 (1987). The competing claims of injury in this case include such factors as the effect of rescinding title on the expectations of future property buyers, the good faith or innocence of the Baxters, and the time that has elapsed since FmHA transferred title. The Baxters assert the first two factors preclude granting the relief plaintiffs seek. They assert they acted in good faith and purchased the Ranch free and clear of any wetland conservation easements and argue that granting the requested relief would require rescinding a transaction valid under Idaho property law and disrupting the expectations of those who rely on such law.
A federal court will not lightly employ the power of equity to disrupt good faith reliance on state property law. When reviewing a denial of a motion to dismiss, however, we must accept the facts alleged in the complaint as true. The plaintiffs allege "the Baxters were fully apprised of the controversy concerning wetland easements prior to the sale," and add in their papers that the Bank and the Baxters "forced the wetlands easement notice provisions to be removed from the title commitment papers prior to auction." If these allegations are true, the Baxters took title to the land with notice of FmHA's obligation under federal law to protect the wetlands. In these circumstances, granting the relief sought would not defeat the expectations of innocent parties or undermine state property law.
NEPA requires federal agencies to prepare a detailed environmental impact statement ("EIS") for "every recommendation or report on proposals for legislation and other major Federal actions significantly affecting the quality of the human environment." 42 U.S.C. § 4332(2)(C). "[W]here a proposed federal action would not change the status quo," however, "an EIS is not necessary." Upper Snake River v. Hodel, 921 F.2d 232, 235 (9th Cir.1990). FmHA alleges that because the wetlands were used for grazing before it acquired the Ranch and are now used for that purpose by the Baxters, FmHA's transfer of the title did not alter the status quo and therefore was not subject to requirements of NEPA. We agree. See Goldschmidt, 623 F.2d at 117 (agency's decision to finance an airport did not require an EIS since the airport already existed); City of San Francisco v. United States, 615 F.2d 498, 501 (9th Cir.1980) (Navy's decision to lease a shipyard did not require an EIS since the use of the facility did not change). Compare National Forest Preservation Group v. Butz, 485 F.2d 408, 411 (9th Cir.1973) (an agency must prepare an EIS before it grants empty land to a company that plans to build a recreational development).
Plaintiffs contend FmHA's decision to dispose of the Ranch was discretionary, and FmHA was required to prepare an EIS for this reason alone. An EIS is normally not required where agency action is mandatory, see Forelaws on Board v. Johnson, 743 F.2d 677, 681 (9th Cir.1984) (collecting
The Baxters insist plaintiffs cannot state a claim against them under APA, the 1990 Act, or NEPA because none of these statutes provides a cause of action by one private party against another. Plaintiffs argue that the Baxters were properly joined in this action under the reasoning of Sierra Club v. Hodel, 848 F.2d 1068 (10th Cir.1988).
In Hodel, the Sierra Club brought suit under APA against both the Bureau of Land Management ("BLM") and Garfield County, Utah, to prevent the County from widening a road running through federal land unless BLM approved the project under § 302(b) of the Federal Land Policy and Management Act, 43 U.S.C. § 1732(b). The Tenth Circuit held the County was properly joined in the action, because "[i]f Sierra Club had not joined Garfield County as a party, then this would be a paradigm case for applying Federal Rule of Civil Procedure 19 [providing for mandatory joinder of indispensable parties]." Hodel, 848 F.2d at 1077.
The Rule 19 factors are satisfied in this case as in Hodel. Plaintiffs cannot obtain complete relief unless the Baxters are prevented from harming the wetlands on the Ranch; the Baxters absence would impair their ability to defend the interest they claim in the Ranch by demonstrating that they purchased the Ranch in good faith; and if the Baxters were not bound by the outcome of this case and sought relief at variance with the judgment in this case, FmHA would face a substantial risk of inconsistent obligations. Moreover, if the district court ordered retransfer of title to FmHA, FmHA would be required to bring suit against the Baxters if necessary to protect the wetlands from unrestricted grazing. See 7 U.S.C. § 1997(g) (granting Secretary power to enforce easements); 7 C.F.R. § 1955.61 (requiring FmHA to protect inventoried property from trespassers and to file suit against such trespassers when necessary).
The Baxters urge us to follow Vieux Carre Property Owners v. Brown, 875 F.2d 453 (5th Cir.1989). In Vieux, a group of landowners brought suit under APA to enjoin a development project because the Army Corps of Engineers failed to issue a permit for the project. The landowners alleged claims under APA against both the Corps and the city officials who authorized the development. The court held the landowners could bring a claim against the Corps under APA but affirmed the dismissal of the claims against the city officials. It distinguished Hodel in part on the ground that "unlike the situation in [Hodel] as to the BLM, no statute requires the Corps to enforce the [statutory] provision the [landowners] claim was violated here. In fact, [the statute] explicitly vests that authority
Plaintiffs have properly alleged standing. The district court's dismissal of the NEPA claim is affirmed. Dismissal of the claim alleging a violation of the Food, Agriculture, Conservation and Trade Act is reversed. The Baxters are proper parties to this suit. On remand, the district court must determine whether the equitable relief sought by plaintiffs is appropriate. The court should consider in particular whether the Baxters were aware before they bought the Ranch that it was the subject of a wetlands easement dispute and therefore bought the property with notice.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
The Hodel court found that each of these factors was present.