CEQ’s Wings Clipped: D.C. Circuit Invalidates CEQ’s Binding Regulations

By Sukhmani Singh and Sean M. Sherlock

In a significant ruling, the D.C. Circuit in Marin Audubon Society v. Federal Aviation Administration held that the Council on Environmental Quality (CEQ) lacks the statutory authority to issue binding regulations under the National Environmental Policy Act (NEPA).¹ The decision calls into question the legal basis for key aspects of NEPA compliance, including the use of categorical exclusions, which have long been central to streamlining environmental reviews.

This case arose from the development of an Air Tour Management Plan (ATMP) for four prominent national parks in California’s Bay Area: Golden Gate National Recreation Area, Muir Woods National Monument, San Francisco Maritime National Historical Park, and Point Reyes National Seashore.² The growth of commercial air tours raised concerns about their impact on wildlife, visitor experiences, and cultural heritage.³

Under the National Parks Air Tour Management Act of 2000, the Federal Aviation Administration (FAA) and National Park Service (NPS) are required to jointly develop ATMPs to mitigate or prevent adverse impacts on park resources, visitor experiences, and tribal lands.⁴ These plans must also comply with NEPA’s environmental review requirements, typically through Environmental Assessments (EA) or Environmental Impact Statements (EIS).⁵ Due to years of agency inaction and “infighting,” many parks — including those in the Bay Area — operated without formal ATMPs for over two decades.⁶ The D.C. Circuit previously issued a writ of mandamus to compel the FAA and NPS to expedite compliance.⁷ In January 2023, the agencies finally issued the ATMP, relying on a categorical exclusion under the CEQ’s regulations⁸ to bypass the need for a full EA or EIS.⁹ They argued that the plan, which capped flights at an average of 2,548 per year, maintained historical levels while introducing mitigation measures to reduce environmental impacts.¹⁰

Environmental groups, including the Marin Audubon Society and Public Employees for Environmental Responsibility (PEER), challenged the ATMP in the D.C. Circuit.¹¹ They argued that the FAA and NPS improperly invoked a categorical exclusion without conducting a thorough environmental review as required by NEPA.¹²

The D.C. Circuit Court of Appeals invalidated CEQ’s NEPA-implementing regulations, ruling that CEQ lacks the statutory authority to issue binding rules.¹³ The majority opinion emphasized that Congress did not delegate rulemaking power to CEQ, which was created as an advisory body.¹⁴ This decision directly undermines the validity of categorical exclusions issued under CEQ regulations. The court vacated the FAA and NPS’s ATMP, finding that the agencies improperly relied on CEQ’s invalid regulations.¹⁵ A critical component of the court’s decision was its reliance on foundational separation of powers principles. The majority opinion cited the Supreme Court’s landmark decision in Youngstown Sheet & Tube Co. v. Sawyer, which held that the President cannot “promulgate . . . rules and regulations” absent explicit congressional authorization.¹⁶ The court reiterated this point in Chrysler Corp. v. Brown, stating: “The legislative power of the United States is vested in the Congress, and the exercise of quasi-legislative authority by government departments and agencies must be rooted in a grant of such power by the Congress and subject to the limitations which that body imposes.”¹⁷ Applying these principles, the D.C. Circuit found CEQ’s regulations — issued under an executive order rather than congressional statute — lacked the necessary legal foundation to bind federal agencies.¹⁸

Notably, none of the parties in the action challenged the validity of the CEQ regulations. To the contrary, the parties’ arguments focused on whether the agencies’ action complied with the CEQ regulations. Chief Judge Srinivasan, writing in dissent,  argued that the court unnecessarily decided issues not raised by the parties.¹⁹ He emphasized that no party in the case challenged the CEQ’s regulatory authority, and the court had consistently refrained from addressing this issue in similar circumstances.²⁰ The majority, however, argued that “[d]espite the parties’ acquiescence in CEQ’s regulatory authority, we ‘retain[] the independent power to identify and apply the proper construction of governing law,’ and that is especially true when ‘the proper construction is that a law does not govern because it is not in force’ or is not legally binding.” Citing U.S. Nat’l Bank v. Indep. Ins. Agents of Am., Inc. 508 U.S. 439, 446 (1993).

While the court invalidated CEQ’s regulations, it noted an important caveat.²¹ Many federal agencies have issued their own NEPA regulations, some of which adopt CEQ’s rules or incorporate them by reference.²² However, it explicitly declined to address whether this practice would constitute a permissible exercise of the agencies’ independent rulemaking authority.²³ The opinion leaves the validity of such NEPA regulations or categorical exclusion when adopted through independent agency rulemaking an open question.

Given the decision’s vast implications, stakeholders should closely monitor potential en banc review or an appeal to the Supreme Court. These proceedings could either restore regulatory certainty of further disrupt NEPA jurisprudence. With an impending administration change, there is uncertainty about whether the government will continue defending CEQ’s regulations or use the ruling as a basis for rolling them back entirely.²⁴ In the meantime, business and agencies involved in environmental reviews are advised to consult legal counsel to navigate the evolving regulatory landscape and mitigate potential risks.