Federal Court Dismisses NEPA Challenge, Leaving Trump-Era Regulations in Effect, but Stalled During Biden Reconsideration

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On June 21, 2021, a federal district court in Virginia dismissed a lawsuit filed by environmental groups against the Trump-era overhaul of regulations under the National Environmental Policy Act ("NEPA"). Our prior article discussed some of the more hotly contested aspects of those regulations, which were finalized by the White House Council on Environmental Quality ("CEQ") in July 2020 ("2020 Rules"). While the CEQ denied that it was precluding federal agency consideration of climate change impacts in the 2020 Rules, implementation of those rules would likely reduce the extent to which climate change impacts must be considered under NEPA.

Environmentalists and numerous states filed lawsuits against the 2020 Rules last year. These cases include Wild Virginia v. CEQ, No. 3:20-cv-00045-JPJ-PMS (W.D. Va., dismissed June 21, 2021); Alaska Community Action on Toxics v. CEQ, No. 3:20-cv-05199-RS (N.D. Cal., stayed Feb. 12, 2021); California v. CEQ, No. 3:20-cv-06057 (N.D. Cal., stayed Feb. 12, 2021); Environmental Justice Health Alliance v. CEQ, No. 3:20-cv-06143-CM (S.D.N.Y., stayed Feb. 16, 2021); and Iowa Citizens for Community Improvement v. CEQ, No. 1:20-cv-02715-TJK (D.D.C., stayed Feb. 9, 2021). Most of those actions were stayed in connection with President Biden's executive order directing federal agencies to reconsider certain Trump-era regulations, including the 2020 Rules. However, the court in the Virginia lawsuit denied a request by the Biden administration for a stay of proceedings. Considering that the parties fully briefed and argued cross-motions for summary judgment, the case had been watched closely for its potential to invalidate the 2020 Rules and reinstate the prior, 40-year-old version of the CEQ's regulations while the Biden administration decides its own approach to assessing climate change impacts under NEPA.

In dismissing the lawsuit, the Virginia court agreed with the Biden administration that the plaintiffs' claims were not ripe for judicial review and that the plaintiffs lacked standing. For both conclusions, the court relied heavily on the fact that other federal agencies have not yet adopted their own procedures to conform to the CEQ's 2020 Rules, let alone applied any such regulatory or procedural changes to specific projects involving major federal action. Because the Virginia court dismissed the challenge to the 2020 Rules on procedural grounds, the court did not reach the merits of the plaintiffs' claims and did not in any way restrict the Biden administration's path forward.

Shortly after the court's ruling, the CEQ postponed by two years (to September 14, 2023) the deadline for federal agencies to adopt changes in conformance with the 2020 Rules, expressed "substantial concerns about the legality of the 2020 Rule[s]," and predicted further rulemaking to revise them. The CEQ also recently issued a notice directing federal agencies to "consider all available tools and resources in assessing [greenhouse gas] emissions and climate change effects," including specifically an Obama-era NEPA guidance document on greenhouse gas emission impacts ("2016 GHG Guidance").

The combined result of these developments is that the Trump administration's 2020 Rules are still in effect following the Virginia court's ruling, but are largely not being implemented by the federal agencies that conduct NEPA reviews of energy and infrastructure projects. Moving forward, companies with interests in federally approved or funded projects are wise to (i) screen for changes in each relevant agency's rules or guidance on climate change assessments under NEPA in light of the recent CEQ developments; (ii) in the absence of specific agency response, plan for the 2016 GHG Guidance to have significant influence in the near-term; and (iii) actively participate in the Biden administration's reconsideration of the 2020 CEQ Rules and updates to the 2016 GHG Guidance.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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