Unexpected Court Ruling Raises Substantial Questions About National Environmental Policy Act (NEPA) Regulations

In a surprise monumental decision, the U.S. Court of Appeals for the D.C. Circuit held that the White House Council on Environmental Quality (CEQ) has no authority to issue regulations implementing NEPA and that CEQ’s NEPA regulations are, therefore, invalid and of no effect. (Marin Audubon Society v. Federal Aviation Administration, No. 23-1067 (D.C. Cir. Nov. 12, 2024).) This unexpected ruling pulls the rug out from under nearly five decades of federal agencies’ NEPA practice and is likely to cause substantial confusion for agencies and project developers.

Background

NEPA generally applies to actions carried out by federal agencies, as well as private actions that receive federal financial assistance or require an approval (such as a permit or license) from a federal agency. The crux of NEPA is the statute’s requirement that federal agencies prepare an environmental impact statement for “major Federal actions significantly affecting the quality of the human environment.” (42 U.S.C. § 4332(C).)

NEPA itself is a rather barebones statute. For much of the time since NEPA was enacted in 1970, NEPA practice has been guided by regulations adopted by CEQ and other agencies, as well as a large body of case law interpreting those regulations.

CEQ first issued NEPA regulations (published at 40 C.F.R. parts 1500–1508) in 1978 pursuant to a directive in President Carter’s Executive Order 11991. Many common features of NEPA practice — such as environmental assessments, categorical exclusions, programmatic environmental documents, supplemental environmental documents, lead and cooperating agencies, required analysis of a no-action alternative, and required analysis of mitigation measures — are creatures of CEQ’s 1978 NEPA regulations (some were eventually codified by Congress’s 2023 amendments to NEPA).

CEQ’s regulations have always purported to be “applicable to and binding on all Federal agencies.” (40 C.F.R. § 1500.3 (1978); 40 C.F.R. § 1500.3(a) (2020); 40 C.F.R. § 1500.3(a) (2024).) While CEQ’s authority to issue binding regulations has been a lingering open question since the 1970s, courts and agencies have largely ignored it and taken for granted that CEQ has regulatory authority.

Marin Audubon Society

The case involved a joint decision by the Federal Aviation Administration and the National Park Service, who share jurisdiction over tourist flights inside national parks, to approve an air tour management plan for several parks in the San Francisco Bay Area. Petitioners challenged the agencies’ decision to rely on a categorical exclusion in lieu of preparing an environmental impact statement or environmental assessment to comply with NEPA. The petitioners claimed, among other arguments, that the agencies’ analysis of the plan’s environmental effects was flawed because the agencies treated tourist flights conducted under an interim authority as part of the existing conditions baseline, thus artificially lowering the agencies’ reported impacts of the plan. Notably, neither petitioners nor the agencies argued that CEQ lacks the authority to promulgate NEPA regulations. In fact, both parties relied on CEQ’s regulations in advancing their arguments.

Nevertheless, the court concluded that CEQ’s NEPA regulations were invalid and had no binding effect because Congress did not confer rulemaking authority on CEQ. The court explained that constitutional separation-of-powers principles did not allow for executive orders to grant CEQ authority to issue binding regulations in the absence of a clear congressional authorization to do so. In other words, CEQ is merely an advisory agency, not a regulatory agency. This portion of the opinion was written by Judge Randolph and joined by Judge Henderson. (Judge Randolph had previously raised questions about CEQ’s authority to issue binding regulations. (See Food & Water Watch v. U.S. Department of Agriculture, 1 F.4th 1112, 1118–19 (D.C. Cir. 2021) (Randolph, J., concurring).))

In the remainder of its opinion, the court agreed with the petitioners’ argument that the agencies’ analytical baseline was unreasonable and, therefore, held that the agencies’ approval of the air tour management plan was arbitrary and capricious under the Administrative Procedure Act. The court ordered the air tour management plan vacated.

Judge Srinivasan joined the portion of the opinion holding that the agencies violated NEPA. Judge Srinivasan wrote a dissenting opinion disagreeing with the court’s conclusion that CEQ lacks rulemaking authority as well as the court’s remedy of vacating the plan.

Implications

The D.C. Circuit’s unanticipated ruling in Marin Audubon Society creates yet more upheaval in what may be the most tumultuous five-year period in NEPA’s 55-year history: CEQ adopted sweeping revisions of its NEPA regulations in 2020 and 2024 (the first and second substantive revisions to CEQ’s regulations since 1986); Congress passed substantial statutory amendments in the Fiscal Responsibility Act in 2023 (the first substantive amendments to the statute since 1975); and this term, the Supreme Court will consider a case (Seven County Infrastructure Coalition v. Eagle County) involving the scope of impacts that agencies must consider (the Supreme Court’s first NEPA case since 2004).

The Marin Audubon Society decision raises a number of significant questions for NEPA practitioners:

• To what extent will courts continue to treat CEQ’s NEPA regulations as binding? The D.C. Circuit’s decision in Marin Audubon Society is binding only on the D.C. Circuit Court of Appeals and the D.C. District Court. Other federal district and appellate courts outside the D.C. Circuit are not required to follow Marin Audubon Society. In addition, an argument might be made that the court’s ruling on the validity of CEQ’s NEPA regulations was not part of its holding because, as noted in Judge Srinivasan’s dissent, it was not necessary to the court’s decision. As a result, lower courts may reach conflicting decisions on the validity and binding effect of CEQ’s NEPA regulations. Further complicating the legal landscape is that venue for NEPA cases is often proper in both the D.C. District Court (where most federal agencies are headquartered) and in one or more district courts covering the location where the challenged project will occur. If a split were to exist among lower federal courts on this issue, plaintiffs may consider how the CEQ’s NEPA regulations would affect their case when selecting which forum to file their case in, and defendants may consider the same issue in deciding whether to move to transfer venue to a different forum. An initial answer to this question may arrive soon: In a case challenging CEQ’s 2024 NEPA regulations, the plaintiffs have already notified the court of the D.C. Circuit’s decision in Marin Audubon Society (although they did not argue that CEQ lacked authority to issue binding regulations in their summary judgment briefing); a hearing on the parties’ cross-motions for summary judgment is scheduled for November 20, with a merits decision expected in the coming weeks. (See Iowa v. CEQ, No. 1:24-cv-89 (D.N.D.).)
• To what extent will federal agencies continue to follow CEQ’s regulations? Notably, the D.C. Circuit did not vacate CEQ’s NEPA regulations. Going forward, other federal agencies might continue to follow CEQ’s NEPA regulations, both because of uncertainty as to how other courts might rule on the binding effect of CEQ’s NEPA regulations (see prior paragraph) and because they might consider CEQ’s NEPA regulations to be useful guidance even if not binding. In the absence of any government-wide guidance or directive issued by the White House or CEQ, agency practices may vary.
• What will happen to CEQ’s NEPA regulations in the incoming Trump administration? Prior to the D.C. Circuit’s decision in Marin Audubon Society, the incoming Trump administration had been expected to rescind the Biden administration’s 2024 CEQ NEPA regulations and, most likely, reinstate much or all of the first Trump administration’s 2020 CEQ NEPA regulations (at least to the extent they are consistent with the 2023 statutory amendments to NEPA in the Fiscal Responsibility Act). In the aftermath of Marin Audubon Society, the incoming Trump administration might instead rescind CEQ’s NEPA regulations without adopting any replacement regulations.
• What will become of other agencies’ NEPA regulations? The D.C. Circuit’s opinion acknowledged that other agencies can adopt their own regulations implementing NEPA (to the extent other agencies have statutory authority to do so). As the court noted, many agencies have adopted NEPA implementing regulations that are intended to supplement CEQ’s regulations. In the short term, agencies should be expected to continue to follow their own NEPA regulations. Over the next four years of the incoming Trump administration, agencies might adopt substantial revisions to their regulations that may include new provisions to fill gaps left in the absence of CEQ’s NEPA regulations, as well as other provisions consistent with the Trump administration’s policies and priorities. In the long term, Marin Audubon Society may result in greater variability in NEPA practice among agencies. This could prove particularly challenging for project sponsors who need approvals from multiple agencies.
• How will this decision affect the Supreme Court’s pending Seven County case? Several amicus briefs filed with the Supreme Court in the pending Seven County case assert that CEQ lacks authority to issue binding regulations. Those arguments may carry more weight in the aftermath of Marin Audubon Society. Oral arguments in the Seven County case, scheduled for December 10, may provide hints of whether any justices are inclined to adopt that position.
• Will the agency defendants in Marin Audubon Society seek review of this decision? The D.C. Circuit has not yet issued a mandate in the case. The Federal Aviation Administration and National Park Service have 45 days to request panel rehearing and/or rehearing en banc in the D.C. Circuit, and 90 days to file a petition for certiorari with the Supreme Court.

Some of these questions may be answered in the coming weeks and months, while others may remain for longer. In light of the present uncertainty, NEPA practitioners should look to the NEPA statute as providing the only sure source of authority.