Appeals Court Rules that Federal Agencies and Courts Have Misinterpreted NEPA

A federal appeals court ruled that the White House does not have the authority to implement binding environmental regulations under the National Environmental Policy Act (NEPA). NEPA, a federal law, mandates that government agencies assess the environmental consequences of their actions before making decisions and submit a “detailed statement” of this analysis. In a split decision, the D.C. Circuit Court of Appeals concluded that the White House Council on Environmental Quality (CEQ), created to guide agencies in complying with NEPA, lacks the power to issue regulations on other federal agencies—a responsibility it has held for over 40 years.

NEPA, signed into law by President Richard Nixon on January 1, 1970, established environmental safeguards for federal agencies to follow in their operations. When these agencies develop or revise federal regulations, NEPA requires them to evaluate the potential environmental impact. Agencies must also conduct Environmental Impact Statements (EIS) for “major federal actions,” such as issuing certain federal permits. NEPA created the CEQ, a White House council that works with other branches of the executive to draft environmental impact assessments and evaluate their policy implications. The CEQ is headed by a three-member commission, whose members are appointed by the president and confirmed by the Senate.

In 1977, President Jimmy Carter signed an executive order allowing CEQ to begin issuing “regulations” rather than “guidelines” to federal agencies. Carter’s order stated that federal agencies had to “comply” with “regulations” issued by CEQ to the extent allowed by law, citing NEPA and other environmental laws. Since then, for almost a half-century, CEQ has been issuing regulations of its own that bind other federal agencies. The regulations are submitted via the notice-and-comment process, similar to other federal regulations, and are published in the Federal Register. Courts have relied on these regulations to settle legal disputes regarding an agency’s actions and to determine whether and when they align with NEPA requirements.

The D.C. Circuit Court of Appeals, however, concluded that the CEQ had been issuing binding regulations without legal basis since the Carter executive order. It ruled that NEPA did not grant rulemaking authority to the CEQ. The appeals court panel said it was surprised “…that this issue has remained largely undetected and undecided for so many years in so many cases.” Even the Supreme Court has upheld CEQ’s authority to produce the regulations, operating under the presumption that CEQ had the lawful authority to issue them. The justices said in one case that CEQ had been “established by NEPA with authority to issue regulations interpreting it.”

The Appeals Court ruling was part of the case Marin Audubon Society v. Federal Aviation Administration. A coalition of environmental groups from the San Francisco Bay Area filed a lawsuit against the FAA over its plans to permit tour flights over four national parks in the region. The FAA argued that it was not required to conduct an environmental impact assessment under NEPA when approving the flight plan. The central issue was whether the FAA was right in asserting a “categorical exemption” from NEPA or if the environmental groups were correct in arguing that the plan did not qualify for this exemption under CEQ’s regulations. The case did not address the validity of NEPA regulations or the authority that the CEQ claimed under the law.

While judges in the lower federal courts are bound by Supreme Court precedent at all times, the panel majority, in this case, concluded it was not bound by this description or other stray remarks in the high court’s rulings over the years. “The statement appeared without any accompanying legal analysis,” the panel noted, quoting from past rulings. “We must obey ‘carefully considered language of the Supreme Court, even if technically dictum.’ But we are not bound by every stray remark on an issue the parties [in those cases] neither raised nor discussed in any meaningful way.” That is because the Supreme Court had never directly considered CEQ’s authority, the panel was not bound by its assumption that it existed, or by off-handed (Obiter dicta) remarks by Justices.

Judge Sri Srinivasan, who dissented in part from the court’s ruling, criticized his colleagues for ruling on CEQ’s authority even though no party had asked for it. He pointed to a doctrine known as the party-presentation principle, which generally holds that judges are only supposed to decide legal questions that are raised by litigants and briefed and argued by them. “Time and again, we have refrained from questioning the CEQ’s authority to adopt binding NEPA regulations because the parties did not raise the challenge,” he noted, pointing to past D.C. Circuit cases where they had assumed CEQ’s authority was valid.

The ruling can be appealed. The FAA could appeal the ruling to be reviewed by the entire D.C. Circuit, where Democratic appointees hold a majority. The judges who ruled against CEQ’s authority were appointed by Republican presidents. The environmental groups could also ask the entire D.C. Circuit to review the remedy. If the D.C. Circuit reverses the panel’s ruling, the next step would be the Supreme Court.

The Supreme Court will hear oral arguments in Seven County Infrastructure Coalition v. Eagle County, Colorado, a NEPA case about when and how federal agencies must consider environmental impacts, next month. Neither party in that case questioned CEQ’s rulemaking authority.

Conclusion

A D.C. Court of Appeals panel ruled that the CEQ does not have the authority to issue binding environmental regulations under NEPA, an environmental review law. NEPA established the CEQ to provide guidelines. CEQ has, however, issued regulations since Carter’s executive order in 1977– for almost a half-century–without question from any of the courts. The Court of Appeals panel made the ruling despite CEQ’s authority not being at issue in the case being considered, which is not the norm, and despite the Supreme Court seemingly accepting CEQ’s authority to provide regulations. The court’s conclusions could affect how the federal government writes new regulations regarding environmental issues and it could provoke a flurry of reviews of regulations adhering to CEQ’s direction. It also raises concerns about other assumed powers by federal regulators and whether they are operating under pretenses.

Overturning CEQ’s regulatory power would not eliminate NEPA or its environmental impact requirements for federal agencies. Instead, each federal agency could adopt its practices and procedures for following the law, as they did before Carter’s executive order in 1977.