On November 12, 2024, a divided (2-1) panel of the U.S. Court of Appeals for the D.C. Circuit issued a ruling invalidating the Council on Environmental Quality’s (CEQ) National Environmental Policy Act (NEPA) regulations because NEPA does not grant CEQ the authority to issue rules binding on other federal agencies. The Court’s ruling is likely to send shockwaves through the regulated and regulator communities alike and may result in no small degree of confusion as federal agencies, project proponents and courts grapple with the implications of the decision.
In Marin Audubon Society v. Federal Aviation Administration, a number of organizations challenged a plan adopted by the Federal Aviation Administration (FAA) and the National Park Service (NPS) pursuant to the National Parks Air Tour management Act of 2000 (Tour Act) that regulates tourist flights over four national parks near San Francisco, California (California Plan). The Tour Act requires the FAA and NPS to work together to develop such plans, which typically undergo some degree of NEPA review. With respect to the California Plan, the FAA and NPS determined that because the plan would cause minimal additional or no environmental impact compared to the current operating environment, the plan was categorically excluded from NEPA review.
The central issue raised by the parties in Marin Audubon was whether the decision by FAA and NPS to apply a categorical exclusion to the California Plan violated CEQ’s NEPA regulations. The Court declined to address this issue, however, and raised sua sponte (that is, on its own) the question of whether the CEQ regulations, themselves, were valid. In explaining this decision, the Court noted that it retains “independent power to identify and apply the proper construction of governing law” and that CEQ’s issuance of binding regulations without legislative authorization raised a separation of powers issue.
Focusing on the fact that CEQ traces its rulemaking authority to an Executive Order issued in 1977 by Jimmy Carter rather than to NEPA itself, the Court pointed to long-standing precedent of the United States Supreme Court that the President may not authorize a governmental official to promulgate rules and regulations. NEPA, the Court explained, requires federal agencies to develop procedures implementing NEPA and created the CEQ within the Executive Office of the President to review and appraise agencies’ NEPA compliance, to make recommendations to the President regarding the same, and to develop and recommend national policies to foster and promote environmental quality. In order for CEQ’s regulations to be legally binding on federal agencies and comply with separation of powers, the Court explained that there must be a clear nexus between the regulations and a delegation of requisite legislative authority by Congress.
Because neither NEPA nor any other statute specifically confers rulemaking authority on CEQ, the regulations failed the test. The Court was not bothered by previous rulings by the U.S. Supreme Court’s which gave “substantial deference” to CEQ’s NEPA regulations under the Chevron framework, instead pointing to the recent decision of the high court in Loper Bright Enterprises v. Raimond, which eliminated such deference. The Court declined to address what effect its ruling would have on NEPA regulations promulgated by individual federal agencies, noting that such was not the issue in this case.
Interestingly, despite invalidating CEQ’s NEPA regulations, the Court then held that it was arbitrary and capricious for the FAA and NPS to treat the current operating status quo as the environmental baseline for NEPA analysis purposes. As a result, the Court vacated the California Plan and indicated the parties could apply for a stay of the Court’s mandate if they desired to keep the current operating status in place while new NEPA review is conducted.
What’s Next?
In a word, uncertainty. Because the D.C. Circuit’s three-judge panel was divided in its decision, it is possible one or both parties could seek en banc review from the full panel of D.C. Circuit judges. Such review has the potential to result in a different outcome from the decision issued on November 12, but could also take time, as the parties likely would have to brief and argue the issues before the full slate of judges. Moreover, there are other, albeit different, challenges to CEQ’s NEPA regulations playing out in federal courts around the country, and a new presidential administration that may—or may not—seek to uphold CEQ’s rulemaking authority.
