DC Circuit rules White House CEQ lacks statutory authority to issue binding regulations under NEPA

A split panel for the US Court of Appeals for the District of Columbia Circuit (DC Circuit) ruled on November 12, 2024, in Marin Audubon Society, et al. v. Federal Aviation Administration, et al. (Marin Audubon Society), that the White House Council on Environmental Quality (CEQ) lacks statutory authority to promulgate regulations implementing the National Environmental Policy Act (NEPA). The DC Circuit’s ruling forecasts increased scrutiny of agency rulemaking and regulations, resulting in NEPA compliance uncertainties for federal agencies that rely on CEQ’s NEPA regulations and regulated stakeholders.

Background

Enacted in 1969, NEPA requires federal agencies and private project proponents that receive federal funding or approvals to evaluate the potential environmental impacts of their proposed actions through environmental assessments and more detailed environmental impact statements where qualifying actions may significantly impact the environment. NEPA also established CEQ within the Executive Office of the President, which is tasked by the statute to “review and appraise” federal agencies’ compliance with NEPA, to “make recommendations to the President with respect thereto,” and to “develop and recommend to the President national policies to foster and promote the improvement of environmental quality.”

In 1970, President Richard Nixon issued Executive Order No. 11514, which directed CEQ to “[i]ssue guidelines to [f]ederal agencies for the preparation of detailed statements on proposals for legislation and other [f]ederal actions affecting the environment.” President Jimmy Carter further amended and expanded this order in 1977 via Executive Order 11991, which directed CEQ to issue binding regulations to implement NEPA.

Marin Audubon Society: The dispute

Environmental activist groups challenged the Federal Aviation Administration (FAA) and National Park Service (NPS)’s (together, the Agencies) NEPA review and conclusion arising from their plan for managing tourist flights over four national parks in the San Francisco Bay Area (the Plan). The Agencies determined that neither an environmental assessment nor impact statement was needed under NEPA because the Plan would cause minimal or no environmental impacts when compared to existing air tours flying under interim operating authority. The Agencies instead determined that the impacts of the Plan would be beneficial compared to current conditions as the Plan would maintain the number of existing flights and include additional mitigation measures.

Petitioners argued that the Agencies’ NEPA determination violated CEQ’s NEPA regulations; that the Agencies improperly relied on the existing level of flights under interim operating authority as their baseline for assessing environmental effects instead of a circumstance with no flights at all; and that the Agencies’ determination was arbitrary for two additional reasons: (i) the Agencies had previously decided to prepare an environmental assessment for the Plan and abandoned it, and (ii) they have prepared, or are planning to prepare, environmental assessments for other similar parks.

The ruling

Despite neither party challenging the validity of CEQ’s authority, the panel majority focused their analysis on the scope of CEQ’s authority to issue binding NEPA regulations, concluding that, because there is no statute conferring rulemaking authority on CEQ, CEQ's implementing regulations are “ultra vires” (ie, beyond their legal authority). The Agencies’ reliance on CEQ's regulations is, therefore, improper.

In a partial dissent, Chief DC Circuit Judge Sri Srinivasan stated that the majority should not have addressed CEQ’s statutory authority, as neither party argued that the rules were invalid. By doing so, Judge Srinivasan argued that the panel contravened the established principle of party presentation, which stands for the notion that appellate courts should only address the legal questions presented and argued by the parties.

All members of the panel agreed that, notwithstanding CEQ regulations, the Agencies otherwise acted arbitrarily and capriciously by inappropriately relying on the existing level of flights under interim operating authority as the baseline for assessing the Plan's environmental effects. By using existing flights as a starting point, the Agencies failed to fully consider the Plan's environmental effects and turned a temporary measure – the interim operating authority – into a permanent part of the Plan without ever analyzing it under NEPA.

Implications of the ruling

The DC Circuit’s decision raises uncertainty about the future of CEQ’s implementing regulations for NEPA. Petitioners in this case may appeal, and industry groups have already sought to expand this ruling via the DC Circuit’s en banc review and the currently pending indirect greenhouse gas emissions-related NEPA challenge before the US Supreme Court. Courts in other jurisdictions may reach different conclusions about the validity of CEQ’s regulations.

Federal agencies may also continue to follow CEQ’s regulations or attempt to implement their own regulations. Moreover, the incoming Trump Administration may opt to limit or rescind CEQ’s NEPA regulations in light of this decision.

DLA Piper’s Environmental practice group

DLA Piper’s Environmental practice group continues to assist clients with navigating the constantly evolving environmental legal landscape. For any further questions or assistance, please contact the authors.