In a sweeping decision issued yesterday in Marin Audubon Society v. Federal Aviation Administration, the U.S. Court of Appeals for the D.C. Circuit ruled that the “[Council on Environmental Quality (CEQ)] regulations, which purport to govern how all federal agencies must comply with the National Environmental Policy Act, are ultra vires” – meaning that the regulations were enacted in excess of legal authority and are accordingly invalid.  The Court’s opinion creates considerable uncertainty for project proponents and NEPA practitioners as to what procedures and regulations apply to ongoing or recently completed NEPA reviews.

Petitioners in the case argued that the Federal Aviation Administration (FAA) and the National Park Service (NPS) violated the National Environmental Policy Act (NEPA) by not preparing an environmental assessment or environmental impact statement to support their issuance of an Air Tour Management Plan governing tour flights over four national park units near San Francisco, California.  In defending their decision, the two agencies relied on CEQ’s NEPA regulations as justification for using a categorical exclusion providing that “changes or amendments to an approved action when such changes would cause no or only minimal environmental impacts” do not require the preparation of a more robust environmental decision document under NEPA. 

While none of the parties questioned the validity of CEQ’s regulations in their arguments, the Court nevertheless decided to address the issue.  In a divided opinion, the Court noted that CEQ’s rulemaking authority is not grounded in any statute adopted by Congress, but rather in an Executive Order of the President.  Because “[n]o statutory language states or suggests that Congress empowered CEQ to issue rules binding on other agencies, i.e., to act as a regulatory agency rather than as an advisory agency,” the majority concluded that CEQ’s regulations do not have the force and effect of law.  The effect is dramatic because, as the court itself acknowledged, the CEQ regulations have been used as the foundation for the administration of NEPA for over four decades, based on the essentially undisputed assumption that the CEQ regulations were binding.

While the full impact of this decision is not yet clear, several initial conclusions can be made:

• NEPA, as set forth in statute (42 U.S.C. § 4331, et seq.), is still in full effect, and federal agencies must still conduct appropriate environmental reviews for federal actions that may impact the environment.
• Agencies can no longer rely on CEQ’s regulations to demonstrate compliance with NEPA; likewise, individuals or organizations can no longer rely on CEQ’s regulations to challenge agency decisions. 
• The Court’s opinion that CEQ is strictly an advisory agency does not apply to other federal agencies with delegated rulemaking authority.  In fact, the Court expressly clarified that NEPA requires “all federal agencies” to develop procedures implementing NEPA.  Nevertheless, while the Court’s opinion does not invalidate such agencies’ guidance, procedures, and regulations, agencies must now consider whether those measures were properly adopted pursuant to their own respective authority, rather than the mere adoption of CEQ’s regulations.   
• Interested stakeholders will want to keep an eye on the possibility of further proceedings in the D.C. Circuit.

For additional questions, please contact Katie van Heuven, Nate Hunt, Matt Adams, or any other Kaplan Kirsch attorney with whom you normally work.