A recent decision by the D.C. Circuit and a case pending before the U.S. Supreme Court have the potential to significantly affect implementation of the National Environmental Policy Act (NEPA), which requires federal agencies to consider the environmental impacts of major actions.

Marin Audubon Society v. Federal Aviation Administration

On Tuesday, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit issued a 2-1 per curiam decision in Marin Audubon Society v. Federal Aviation Administration holding, sua sponte, that NEPA did not grant the White House Council on Environmental Quality (CEQ) the authority to promulgate binding regulations, upending nearly a half-century of administrative practice.

Congress enacted NEPA in 1969, requiring federal agencies to consider whether any major federal action would have a significant impact on the human environment and, if so, to prepare a detailed statement assessing those impacts along with potential alternative courses of action.  NEPA also established CEQ as a three-member commission within the White House to review the executive branch’s compliance with the statute.  While CEQ initially issued nonbinding guidelines, a 1977 executive order by President Carter directed CEQ to issue regulations and directed agencies to comply with those regulations to the extent allowed by law.  Since the Carter administration, CEQ has issued numerous, purportedly binding regulations under both Republican and Democratic administrations, including most recently in July of this year.  Federal courts have upheld CEQ’s regulations, with the Supreme Court stating that they are “entitled to substantial deference,”[1] and that CEQ was “established by NEPA with authority to issue regulations interpreting it.”[2]

Notably, CEQ’s authority to issue binding regulations was not initially an issue in the case before the D.C. Circuit, which involved a challenge to a plan by the Federal Aviation Administration (FAA) and the National Park Service governing tourist flights over national parks near San Francisco.  In the NEPA review, the agencies compared the environmental impacts of flights authorized by the plan against a baseline defined as the status quo of existing flights allowed under temporary operating authority, concluding that the plan’s impacts would be low enough to qualify for a “categorical exclusion” under CEQ’s NEPA regulations; such a designation would relieve the agencies of their obligation to conduct an environmental assessment or more detailed environmental impact statement.  Petitioners challenged the agencies’ use of the status quo as the baseline, but no party questioned the validity of the CEQ regulations at issue, let alone CEQ’s authority to issue binding regulations in the first place.

While the court unanimously agreed that the agencies had acted arbitrarily and capriciously in “treat[ing] the existing air tours in the Parks as the status quo for purposes of conducting their NEPA analysis” (due to the inclusion of temporary flights), the two-judge majority declined to reach the issue of whether the plan qualified for a categorical exclusion under the CEQ regulations.  Instead, the court held that the “CEQ regulations, which purport to govern how all federal agencies must comply with the National Environmental Policy Act, are ultra vires.”  While CEQ had long relied on the 1977 executive order to issue binding regulations, regulatory authority must be conferred by statute, and the court held that nothing in NEPA explicitly or impliedly empowered CEQ with that authority.  The court also explained that it was not bound by the Supreme Court’s previous statements seemingly approving of CEQ’s exercise of regulatory authority, reasoning that they were not legal holdings and that, in any event, previous references to judicial deference could not withstand the Supreme Court’s recent decision in Loper Bright Enterprises v. Raimondo overturning the doctrine of Chevron deference.

The impact of this decision remains unclear.  While the court vacated and remanded the challenged plan, it did not expressly vacate any specific CEQ regulations, nor did it decide whether other agencies could adopt CEQ’s regulations through their own rulemaking processes (as many have).  The parties could petition for rehearing en banc from the full D.C. Circuit or appeal to the Supreme Court, but neither side may be interested in having the Supreme Court consider the issue.  Finally, it remains to be seen how this decision might affect future federal agency NEPA review under the incoming Trump administration and Republican Congress, considering that administrations of both parties have long relied on CEQ’s regulations to further their respective environmental regulatory agendas.[3]

Seven County Infrastructure Coalition v. Eagle County, Co.

The D.C. Circuit’s decision in Marin Audubon might also affect a major NEPA case that is currently pending before the U.S. Supreme Court.  In Seven County Infrastructure Coalition v. Eagle County, Co., the Court is expected to decide the proper scope of federal agency review under NEPA – specifically, whether NEPA requires agencies to study environmental impacts beyond the proximate effects of the action over which the agency has regulatory authority.  The case involves interpretation of CEQ regulations that require agencies to consider the indirect effects of agency actions, including those impacts the agency has no authority to regulate but that are reasonably foreseeable.

Seven County involves a challenge to the Surface Transportation Board’s approval of a new rail line into Utah’s Uinta Basin that would connect to the national rail network and carry crude oil to refineries on the Gulf Coast.  Eagle County, Colorado and the Center for Biological Diversity argue that the Board’s NEPA analysis failed to consider the project’s potential effects on increased oil drilling in Utah and Colorado, as well as on oil refining activities on the Gulf Coast.  In response, the Board has asserted that it did not need to analyze the indirect effects of railroad development, because those effects fell outside its regulatory authority.  The Board’s argument relies on the Supreme Court’s 2004 decision in Department of Transportation v. Public Citizen, holding that “where an agency has no ability to prevent a certain effect due to its limited statutory authority over the relevant actions,” it need not analyze that effect in its NEPA review.

In August of 2023, the D.C. Circuit held that the Board had violated NEPA, finding that because the Board could prevent the project’s indirect effects by denying the application, it was required to consider those effects.  The court cited CEQ regulations requiring agencies to evaluate both direct and indirect impacts of a proposed action and defining indirect impacts as those that “are caused by the action and are later in time or farther removed in distance, but are still reasonably foreseeable.”  Granting the petition for certiorari allows the Supreme Court to resolve a circuit split on the correct reading of the 2004 Public Citizen decision.  The Court’s decision may also have broad implications for federal agencies’ obligation to consider global climate impacts, which are almost always indirect and outside agencies’ regulatory jurisdiction, but which may nonetheless be foreseeable and preventable.

Like in Marin Audubon, no party in Seven County has challenged CEQ’s authority to promulgate the underlying regulations, though a brief by amici law professors argues that CEQ’s NEPA regulations are judicially unenforceable.  If the Court is similarly willing to consider the issue sua sponte, the implications for federal agency review under NEPA could be even more sweeping than originally anticipated.

[1] Andrus v. Sierra Club, 442 U.S. 347, 358 (1979).

[2] Dep’t of Treasury v. Public Citizen, 541 U.S. 752, 757 (2004).

[3] As described in previous SPR blog posts, the Biden administration’s CEQ regulations were in part designed to overhaul the Trump administration’s CEQ regulations, which themselves were the first comprehensive revision of NEPA regulations since 1978.