Desert Citizens Against Pollution, Sierra Club, and Desert Protective Council (collectively "Desert Citizens") challenged the Bureau of Land Management's (BLM) decision to enter into a land exchange with Gold Fields Mining Corporation and its subsidiary, Arid Operations, Inc. (Gold Fields). Gold Fields intended to use the exchanged land as part of a regional landfill. Desert Citizens alleged that BLM failed to comply with section 206(b) of the Federal Land Policy and Management Act (FLPMA),[1] which requires that land exchanges be of equal value or made equal by cash payment, by relying on an outdated appraisal that undervalued the federal land. The district court dismissed the action, holding that Desert Citizens lacked standing and in the alternative, denied the request for a preliminary injunction because BLM was reasonable in relying on the appraisal.[2] The Ninth Circuit reversed, holding that Desert Citizens had established standing to bring the action and that BLM's failure to consider the use of the federal land as a landfill in determining its value was arbitrary and capricious.

The land exchange at issue involved 1745 acres of federal land in Imperial County, California, appraised in 1994 at $610,914 and transferred to Gold Fields (the "selected lands"). In return, BLM acquired from Gold Fields 2642 acres of land appraised at $609,995 and $919 in cash. The private lands included land located in the Santa Rosa Mountains Wilderness and National Scenic Areas in Riverside County and the Little Chuckwalla Mountains Wilderness Area in Imperial County (the "offered lands"). In June 1994, the private firm of Nichols & Gaston appraised the selected lands, determining that the highest and best use was open space or mine support, which valued the land at $350 an acre. Two years before this appraisal, Gold Fields had submitted an application to construct the Mesquite Regional Landfill on land that included the federal selected lands and proposed the land exchange to BLM. After dismissal of its administrative appeal, Desert Citizens filed this action requesting the court set aside BLM's Record of Decision (ROD) approving the land exchange and grant a preliminary injunction preventing BLM and Gold Fields from taking further steps to complete the land exchange based upon the ROD. The district court dismissed the case, holding that Desert Citizens lacked standing and alternatively, denied the request for a preliminary injunction. BLM and Gold Fields completed the land exchange the following day.

Reversing the district court, the Ninth Circuit determined that Desert Citizens did have standing to bring the action. Desert Citizens alleged that its members used the selected federal lands for aesthetic, recreational, and scientific purposes and that the exchange would prevent them from using and enjoying the lands in the future. The district court had determined that injury in fact was not established because Desert Citizens had alleged an environmental injury without alleging noncompliance with an environmental statute.[3] The Ninth Circuit found this reasoning "novel" and stated that "[n]othing in our jurisprudence requires citation of a so-called 'environmental' statute as a prerequisite to standing."[4] The court also repudiated the district court's analogy of Desert Citizens's challenge based on the equal value provision of FLPMA to a general taxpayer injury of loss of federal money. Rather, reasoned the Ninth Circuit, the challenge was "an effort by land users to ensure appropriate federal guardianship of the public lands which they frequent."[5] Thus, Desert Citizens established an injury in fact.

Desert Citizens also satisfied the causation and redressability prongs of Article III standing. The district court reasoned that Desert Citizens could not satisfy redressability because, regardless of the appraised value of the selected lands, the lands would ultimately be exchanged and Desert Citizens's inability to use and enjoy the lands could not be redressed.[6] Emphasizing that it was reviewing a motion to dismiss and not summary judgment, the Ninth Circuit determined that the relief Desert Citizens requested--that the ROD be declared unlawful and set aside--would "redress their injuries because the particular exchange would not go through."[7] The court stated that the redressability prong of Article III standing does not require Desert Citizens to establish that "adherence to the required procedures would necessarily change the agency's ultimate decision."[8]

The Ninth Circuit also determined that Desert Citizens was within the "zone of interests" of the equal value provisions of FLPMA section 206(b). FLPMA requires that "the public lands be managed in a manner that will protect the quality of scientific, scenic, historical, ecological, environmental, air and atmospheric, water resource, and archeological values."[9] The court determined that this policy and the stated goal of FLPMA to provide judicial review of public land adjudication decisions[10] encompassed Desert Citizens's interest in "seeking to invalidate an allegedly unlawful transfer of federal land."[11] The court also rejected BLM's argument that section 206(d), which allows parties to a land exchange to settle valuation disputes through arbitration, reflects a congressional intent to "promote efficiency and preclude third party challenges to the equal value provisions."[12] Therefore, the Ninth Circuit concluded that Desert Citizens satisfied the requirements of both Article III and prudential standing.

Additionally, the Ninth Circuit held that BLM's reliance on the Nichols & Gaston appraisal of the selected lands was arbitrary and capricious. The district court had determined that BLM did not need to consider the use of the lands as a landfill in assessing its valuation because the appraiser and BLM "were under no obligation to consider and discredit unmeritorious uses" that were not legally, physically, or financially feasible.[13] FLPMA's implementing regulations direct BLM to appraise exchange lands at market value, "based upon the 'highest and best use' of the appraised property, and estimate the market value 'as if in private ownership and available for sale on the open market.'"[14] This does not require BLM to consider speculative uses, but the highest and best use determination must consider uses that are "reasonably probable."

The Nichols & Gaston appraisal determined that the highest and best use of the selected lands was "open space" or "mine support." The Ninth Circuit reasoned that BLM's reliance on the Nichols & Gaston appraisal was not reasonable because prior to the appraisal, both the appraiser and BLM knew that the selected lands were expected to be used as a landfill and that Gold Fields had taken substantial steps in that direction. The existence of other landfill proposals in the area indicated a market for landfill development that made use of the selected lands as a landfill reasonably probable. In addition, the shelf life of the appraisal had expired long before BLM issued its ROD in 1996. Intervening events, such as Imperial County's rezoning of the land from "open space" to "heavy manufacturing," increased the likelihood that the selected lands would be used as a landfill. Therefore, the Ninth Circuit determined "[t]he BLM appraisal should have considered the landfill use as a possible highest and best use. Information available at the time of the appraisal made it reasonably probable that the property's potential use as a landfill was physically possible, legally permissible, and financially feasible."[15]

BLM's failure to consider use of the selected lands as a landfill resulted in an improper valuation of the selected lands. As a comparison to the $350 an acre value of the selected lands as "open space," the Ninth Circuit noted that a tax appraisal valued a 120 acre landfill site in Imperial County at $46,000 per acre. This evidence suggested that the value of the selected lands would be much higher if appraised as a landfill. Therefore, the Ninth Circuit held that BLM's action was arbitrary and capricious and that the land exchange must be set aside because the ROD did not consider landfill use as a potential highest and best use, even though this was the intended use of the selected lands by Gold Fields. Further, the court determined that "BLM and Gold Fields acted at their peril in transferring the land while on notice of the pendency of a suit seeking an injunction against them."[16] Despite the completion of the exchange, the court set it aside.