Court’s NEPA Ruling Casts Doubt On CEQ Authority
The D.C. Circuit Court of Appeals dropped a bombshell this week that could reshape how federal agencies implement environmental laws. In Marin Audubon Society v. FAA, the court ruled that the White House Council on Environmental Quality (CEQ) lacks authority to issue binding regulations implementing the National Environmental Policy Act (NEPA). While some are celebrating this as a win against bureaucratic overreach, the ruling creates considerable uncertainty around permitting reform. It also sets a precedent that could limit future presidents’ oversight of public employees, potentially constraining their ability to reform the administrative state.
NEPA itself primarily places obligations on federal agencies, not the private sector. It requires agencies to consider environmental impacts before making major decisions, like issuing permits. The case at hand centered around air tours over national parks near San Francisco, but the court went beyond the immediate dispute to declare CEQ’s entire regulatory framework unlawful.
According to the majority opinion, CEQ derives its rulemaking authority from executive orders rather than statute, violating separation of powers principles. As the court stated, “No statutory language states or suggests that Congress empowered CEQ to issue rules binding on other agencies—that is, to act as a regulatory agency rather than as an advisory agency.”
The timing is particularly disruptive for CEQ’s recently adopted “Phase 2” NEPA regulations. The Biden administration finalized these sweeping changes in May, adding new NEPA requirements around climate change and environmental justice, among other items. Critics argued these changes would further slow the permitting process down and increase litigation risk. Now, the entire regulatory structure governing NEPA implementation has been thrown into question.
But those cheering the demise of CEQ’s regulations should be careful what they wish for. Federal agencies comply with NEPA by, among other things, producing environmental impact statements (EISs) or less burdensome environmental assessments (EAs) before issuing permits or taking other significant actions. CEQ’s regulations actually help streamline this process in some important ways.
For instance, CEQ rules establish categorical exclusions that exempt many actions from NEPA review. CEQ rules also created the EA as the shorter alternative to the full EIS. EAs are used in cases where actions are unlikely to have significant environmental impacts. The numbers tell the story. Agencies produce more than 10,000 EAs annually, compared to about 200 EISs. Without this framework, agencies may default to more lengthy reviews to avoid legal challenges.
More fundamentally, presidents do not need explicit Congressional authority to direct agencies’ procedural compliance with existing laws. Further, they can delegate authority to manage federal employees to an entity like the Office of Management and Budget (OMB) or the CEQ. The D.C. Circuit court opinion casts doubt on whether CEQ has any rulemaking authority under this kind of delegation however.
It is clear CEQ does not have rulemaking authority that would be binding on the public. But internal rules of procedure involving government employees are a different matter entirely. This is an important distinction, because rulemakings are judicially enforceable whereas executive orders are not. Thus, an agency can’t be taken to court by a member of the public for failing to comply with an executive order, but it can for failing to comply with a regulation.
These principles have implications far beyond environmental review. Consider future regulatory reform efforts. President-elect Trump is now in the process of creating a government efficiency commission. That commission can’t issue binding directives to agencies to streamline their regulations. As a result, it has no teeth.
However, the president could task OMB with issuing regulations that mandate agencies follow some of the commission’s recommendations. Similar regulatory mandates could come from OMB in other areas, for example requiring agencies to conduct cost-benefit analysis or to improve transparency through measures like online guidance document portals.
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