D.C. Circuit Answers Unasked Question to Invalidate 50 Years of Environmental Regulatory Framework as Ultra Vires

Yesterday, the Court of Appeals for the D.C. Circuit issued a 2–1 decision in Marin Audubon Society, et al. v. Federal Aviation Administration (FAA), et al., vacating a plan by the FAA and National Park Service governing tourist flights over national parks for failure to comply with the National Environmental Policy Act (NEPA) and the National Parks Air Tour Management Act of 2000. While much of the analysis is based on the particular facts of the plan at issue, the court made one very notable holding: The NEPA regulations promulgated by the White House Council on Environmental Quality (CEQ) are ultra vires and unenforceable. Consequently, this decision is likely to provide a basis for challenging NEPA reviews in the future. 

In the case, several environmental organizations and a San Francisco area resident challenged the agencies’ evaluation of the potential environmental effects of tourist flights over national parks near San Francisco. In their NEPA review, the agencies treated the existing air tours in the parks as the baseline against which to evaluate the impact of the tours authorized by the plan. The agencies then concluded that the effects of the plan were low enough to qualify the plan for a “categorical exclusion” under the CEQ’s NEPA regulations — meaning that the agencies did not need to conduct an environmental assessment or environmental impact statement. 

Although all three judges on the panel agreed with the petitioners that the agencies used an improper baseline, the per curiam opinion joined by Judge Henderson and senior Judge Randolph did not decide whether the plan qualified for a categorical exclusion under the CEQ regulations. Instead, the opinion held that the “CEQ regulations, which purport to govern how all federal agencies must comply with the National Environmental Policy Act, are ultra vires.” That is a surprising result because, as Chief Judge Srinivasan explained in dissent, no party challenged the CEQ’s authority to issue binding NEPA regulations. The court nevertheless determined that it has the independent power to identify the governing law and held that the question of CEQ’s authority is a separation of powers issue.

The problem, according to the court, was that NEPA requires federal agencies to develop implementing procedures and makes it CEQ’s job to review agencies’ compliance with NEPA and make recommendations to the President. In issuing rules, CEQ had long relied on an executive order issued by President Jimmy Carter in 1977. But the President cannot give an agency rulemaking authority by issuing an executive order. Rulemaking authority must be conferred by a statute, and the court found nothing in NEPA that authorizes CEQ to issue binding regulations. The court acknowledged that the Supreme Court has said that CEQ’s regulations are “entitled to substantial deference”¹  and that CEQ was “established by NEPA with authority to issue regulations interpreting it”.²  But the court dismissed those statements because those decisions did not contain legal analysis, and the references to deference cannot survive the Supreme Court’s recent Loper Bright decision overturning Chevron deference.³

The holding that CEQ’s NEPA regulation are ultra vires is likely to create uncertainty about the scope of agencies’ NEPA obligations when they authorize infrastructure projects, timber harvesting or grazing on federal land, onshore and offshore leasing, and more. To the extent that the 2023 amendments were intended to adopt and codify requirements that were in the CEQ regulations, those requirements will still be binding and enforceable through NEPA itself. Agencies may also be able to adopt CEQ regulations as their own. The court noted that the agencies here had neither adopted the content of the CEQ regulations nor incorporated those rules by reference. The court also queried whether under the Administrative Procedures Act, each agency would be required to hold a separate notice and comment rulemaking proceeding before incorporating by reference any CEQ regulations. Looking ahead, this distinction may prove useful for federal agencies that have held a separate notice and comment rulemaking to promulgate NEPA regulations that mirror CEQ’s regulations. We will be watching to see if the parties file petitions for rehearing from the full DC Circuit or for certiorari to the Supreme Court, and we look forward to helping clients navigate the changes the ruling may bring.

¹Andrus v. Sierra Club, 442 U.S. 347, 358 (1979)
²Dep’t of Treasury v. Public Citizen, 541 U.S. 752, 757 (2004)
³Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024)