D.C. Circuit Stokes the Flames By Finding CEQ Regulations Ultra Vires

“[W]here there is so much smoke, there must be a fair amount of fire, and we would do well to analyze the causes.” – Senior Circuit Judge A. Raymond Randolph’s majority opinion

The D.C. Circuit, in a surprising and splintered decision, held that the Council on Environmental Quality (CEQ) had no legal authority to promulgate the National Environmental Policy Act (NEPA) implementing regulations that have applied federal government-wide for over 45 years. Although the question was not raised or briefed by the parties, the D.C. Circuit ruled in a 2-1 opinion that CEQ’s regulations are ultra vires. Judge Sri Srinivasan dissented. See Marin Audubon Society, et al. v. Federal Aviation Administration et al., No. 23-1067, U.S Court of Appeals for the District of Columbia.

The decision’s long-term implications are far from certain, as the opinion raises a host of questions. At the outset, it seems likely the Department of Justice will seek rehearing, although such a move will be subject to review in the new administration. But even aside from the possibility of rehearing, the court’s statement that “no statute confers rulemaking authority on CEQ” is likely to reverberate throughout the permitting universe. Federal agencies (and courts) have relied on these regulations for decades to evaluate NEPA compliance. The opinion leaves open the possibility that CEQ could recast its regulations as non-binding guidance for actions agencies, and that these other agencies could retain their authority to adopt their own NEPA regulations. Regardless, the D.C. Circuit’s decision amplifies the uncertainty already surrounding NEPA.

The Decision

Plaintiffs in Marin Audubon Society challenged the National Park Service and Federal Aviation Administration’s decision to complete NEPA review of a plan for tourist flights over national parks with a categorical exclusion determination. The three judge panel unanimously agreed the FAA’s determination was arbitrary and capricious for factual reasons. But the court also answered a legal question that neither party asked — whether the CEQ NEPA regulations were legally promulgated. Dismissing Supreme Court precedent affirming CEQ’s authority to issue the regulations as dicta, the court found the regulations to be ultra vires (i.e., promulgated without legal authority) because they were issued pursuant to executive authority (i.e., Executive Orders 11,514 (1970) and 11,991 (1977)) rather than legislative authority. The court observed that agency-specific NEPA regulations could cure this issue if they adopted or incorporated the CEQ NEPA regulations. However, none of the agency-specific NEPA regulations in this case did. They all treated the CEQ regulations as a distinct body of law — consistent with direction in the CEQ NEPA regulations.

The Potential Next Steps and Impacts

Most immediately, this decision may be a good candidate for rehearing en banc based on procedural issues raised in Judge Srinivasan’s dissent. As explained in that dissent, reaching finding the regulations ultra vires may have been procedurally improper, as neither party actually raised this argument.

In any event, the decision’s precedential impact remains unclear. Given that the basis for the judgment was the finding of a NEPA violation, without reliance on the CEQ regulations, some parties may question whether the court’s discussion of the regulations’ validity is dicta. Moreover, the remedy issued by the court vacated the agency action under review, but did not purport to vacate the regulations. In addition, the D.C. Circuit’s decision is not binding on the other U.S. Circuit Courts of Appeals around the country, which is where the majority of NEPA cases are decided (most notably in the Ninth Circuit). If other courts reject Judge Randolph’s reasoning in future opinions, that could create a direct circuit split and increase the chances of the Supreme Court wading into this issue, but this could take years to unfold. Meanwhile, it is unlikely the Supreme Court will resolve this issue in Seven County Infrastructure Coalition v. Eagle County, the NEPA case it will decide this term. Though the issue could be raised during oral argument scheduled for December 10, 2024, the validity of CEQ’s regulations was not expressly addressed in the questions presented.

Nonetheless, those interested in reforming NEPA to expedite project development may seek to capitalize on this opportunity. In Congress, as part of permitting reform efforts, Republicans might seek to expressly prohibit CEQ from promulgating NEPA regulations. Democrats might seek to provide CEQ the necessary authority to promulgate regulations.

In the new Trump administration, it is not impossible that CEQ would entirely eliminate its NEPA regulations as part of the broader deregulatory agenda. However, it seems more likely that they would revise the regulations (possibly recasting them as guidance), while also directing agencies to revise their agency-specific NEPA regulations. During its rulemaking overhauling the CEQ regulations, the first Trump administration rejected comments raising this ultra vires argument by relying on the very Supreme Court precedent dismissed by the D.C. Circuit in Marin Audubon Society. Whether the next administration will reach the same conclusion now is unclear. Relying on the D.C. Circuit’s decision to eliminate the CEQ NEPA regulations could provide an efficient path for the new Trump administration to roll back the Biden administration’s changes to the regulations. However, doing so could leave agencies without uniform guidance and potentially more vulnerable to litigation challenges — including for projects the Trump administration supports.

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© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.