Land Exchanges: Court Overturns Desert Land Swap to Accommodate Imperial Landfill
A federal appellate court has overturned a land exchange between the Bureau of Land Management and a private company that hoped to develop a regional landfill in Imperial County. A unanimous three-judge panel of the Ninth Circuit Court of Appeals said the BLM grossly underestimated the value of its land where the landfill was proposed.
The BLM relied on an appraisal that said the "highest and best use" of the 1,745 acres in question was open space or mine waste storage. The appraisal did not consider the property's value as a landfill, even though a number of agencies had issued permits for the proposed landfill. The difference in value could be in the tens of millions of dollars, the court suggested.
"The government must not wear blinders when it participates in a real estate transaction, particularly if the result, as here, is the transfer of a flagrantly undervalued parcel of federal land to a private party," Judge Procter Hug Jr. wrote for the court, which ordered the land exchange set aside.
In 1992, Arid Operations Inc., a subsidiary of Gold Fields Mining Corp., submitted an application to Imperial County to construct the Mesquite Regional Landfill on the BLM's 1,745 acres. As that permit went through the review process, Gold Fields pursued a land swap with BLM. In June 1994, the private firm of Nichols & Gaston determined the property's highest and best use was open space or mine support for the Mesquite Mine, which Gold Fields operates next to the site. Nichols & Gaston valued the land at $610,914. In early 1996, the BLM completed the deal, trading the Imperial County land for 2,642 acres of private property in the Santa Rosa Mountains Wilderness and National Scenic Areas in Riverside County, and in the Little Chuckwalla Mountains Wilderness Area in Imperial County, and $919 in cash.
Environmentalists led by a group called Desert Citizens Against Pollution challenged the land exchange administratively but got nowhere. In November 1996, Desert Citizens and two other groups filed a lawsuit seeking to set aside the deal. District Court Judge Rudi Brewster, however, ruled that Desert Citizens had no standing because the group alleged an environmental injury without challenging the government's compliance with an environmental statute. He also ruled there was no causal connection between the alleged injury — loss of aesthetic enjoyment of federal lands — and the purported undervaluation, and he threw out the suit. BLM and Gold Fields consummated the land exchange the next day, although the landfill still has not been developed.
On appeal, the Ninth Circuit determined Desert Citizens did in fact have standing. "The recreational or aesthetic enjoyment of federal lands is a legally protected interest whose impairment constitutes an actual, particularized harm sufficient to create an injury in fact for purposes of standing," Judge Hug wrote. "The district court constructed a novel rule by stating that injuries of an environmental or aesthetic nature can be shown only where plaintiffs allege noncompliance with an environmental statute or regulation. … Nothing in our jurisprudence requires citation of a so-called ‘environmental' statute as a prerequisite to standing." Moreover, Hug wrote, the Federal Land Policy and Management Act (FLMPA), 43 U.S.C. §1701 et seq., which governs vast tracts of federal land, is an environmental statute.
Getting to the merits of the case, the Ninth Circuit had little good to say about the Nichols & Gaston appraisal or the BLM's reliance on it. The court held that the appraisal did not meet Uniform Appraisal Standards for Federal Land Acquisitions, 43 U.S.C. §1716(f)(2), because it ignored market demand and land use trends in the vicinity.
"The appraisal determines the highest and best use to be utilization in conjunction with Gold Fields' current mining operation. Yet the appraiser well knew that Gold Fields and the BLM fully intended to utilize the land for the Mesquite Regional Landfill, and had taken substantial steps to do so," Hug wrote.
The court noted that an environmental impact report and an environmental impact statement were prepared for the landfill. Imperial County amended its general plan to allow the project, signed a development agreement with Gold Fields, and issued a conditional use permit. The Regional Water Quality Control Board issued discharge requirements and the BLM granted a right of way for rail access to the site. All this occurred before the land transfer.
"Here, the use of the land as a landfill was not only reasonable, it was the specific intent of the exchange that it be used for that purpose," Hug continued. "There is no principled reason why the BLM, or any federal agency, should remain willfully blind to the value of federal lands by acting contrary to the most elementary principles of real estate transactions."
The court pointed out that a different landfill site in Imperial Court was valued at $46,000 an acre for tax purposes, while the BLM valued its property at $350 an acre. Although the valuation standards are different, there was a potential a discrepancy of $80 million.
Furthermore, the Nichols & Gaston appraisal was too old when BLM used it as a basis for the Record of Decision, the court ruled. The BLM handbook says approved values are good only for six months, and the BLM in California typically presumes appraisals to be valid for one year, according to the court. Yet the Nichols & Gaston appraisal was 20 months old when the BLM issued its Record of Decision.
Desert Citizens Against Pollution v. Henri R. Bisson, No. 97-55429, 00 C.D.O.S. 8896, 2000 Daily Journal D.A.R. 11827, filed November 6, 2000.
For Desert Citizens: William Curtiss, Earthjustice Legal Defense Fund, (415) 954-4400.
For BLM: Ellen Durkee, Department of Justice, (202) 514-2000.
For Gold Fields, Charles Kaiser, Davis, Graham & Stubbs, (303) 892-9400.