In Southwest Center for Biological Diversity v. United States Department of Energy, 2000 U.S. App. LEXIS 29509 (Nov. 20, 2000), the Ninth Circuit Court of Appeals approved the sale of Elk Hills (an oil field operated by the Department of Energy) to Occidental Petroleum, without requiring the Department of Energy or Occidental to further consult with the Fish and Wildlife Service regarding the Endangered Species Act.
Elk Hills is the seventh largest oil field in the United States and the Department of Energy had explored and developed it. During its development, the Department of Energy had three times consulted with the Fish and Wildlife Service, as required by the Endangered Species Act. The last consultation resulted in the Department of Energy agreeing to various mitigating measures regarding impact on endangered species. The Fish and Wildlife Service then issued an "incidental take statement" implementing these measures.
After the Department of Energy’s last consultation with the Fish and Wildlife Service, Congress passed the National Defense Authorization Act of 1996 (“Defense Authorization Act”), which directed the Department of Energy to sell Elk Hills within two years. The Defense Authorization Act specifically gave the Department of Energy special permission to transfer the incidental take statement, which would “cover the identical activities, and . . . be subject to the same terms and conditions, as apply to the [incidental take statement] at the time of the transfer.” In October 1997, the Department of Energy accepted a purchase offer from Occidental, which agreed to accept a transfer of the incidental take statement.
Before the sale to Occidental closed, Southwest and other plaintiffs filed a lawsuit to stop the sale. The federal district court granted judgment to the Department of Energy and Occidental, finding that (1) Southwest’s lawsuit was moot (the issues presented were no longer alive) because the sale to Occidental had been completed and (2) the Defense Authorization Act waived the consultation requirement of the Endangered Species Act.
With regard to the issue of mootness, the Ninth Circuit Court of Appeals determined the lawsuit was not moot, because the mere conveyance of property to another generally does not moot a dispute regarding the legality of the conveyance.
With regard to the issue of whether the Defense Authorization Act had waived the consultation requirement under the Endangered Species Act, the Court of Appeals noted that the Act specifically permits the transfer of the incidental take statement. According to the Court, Congress intended to permit the purchaser to continue operating under the same terms and conditions applicable to the Department of Energy without requiring the Department of Energy to reinitiate consultation with the Fish and Wildlife Service and without requiring the purchaser to first obtain a permit pursuant to the Endangered Species Act. In other words, Congress intended to permit the purchaser to step into the shoes of the Department of Energy and continue operating Elk Hills without additional consultation. The Court, however, also noted that the transferred incidental take statement would remain in effect only as long as Occidental’s activities were the same as the Department of Energy’s activities when the incidental take statement was made.
The Court of Appeals concluded that, by passing the Defense Authorization Act, Congress waived the Department of Energy’s duty to reinitiate consultation under the Endangered Species Act.
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