Twenty States Sue Biden Administration Over NEPA Phase 2 Revisions

On May 21, 2024, 20 states filed a lawsuit in the U.S. District Court for the District of North Dakota against the White House Council on Environmental Quality (CEQ) to block its Phase 2 National Environmental Policy Act (NEPA) rulemaking.

CEQ published the final Phase 2 Revisions to NEPA on May 1, 2024, at 89 FR 35442. As we explained previously, some of the new regulatory provisions are intended to improve efficiency and timing of the federal permitting process, such as streamlining multiple reviews, minimizing discussion of unimportant issues, and limiting time and length of the review process. Others, however, may increase the regulatory burden for review, such as expanding requirements for assessing climate change, environmental justice, and global effects; requiring supplemental reviews for certain incomplete or ongoing actions; and increasing agency review for environmental assessments (EAs) and Findings of No Significant Impact.

The Phase 2 Rule becomes effective July 1, 2024, and will apply to all project reviews commencing after that date as well as supplemental reviews for certain incomplete or ongoing actions. The Phase 2 Rule also allows agencies to apply the regulations to ongoing activities and environmental documents under development.

Attorneys general from Iowa and North Dakota are leading the lawsuit, with Alaska, Arkansas, Florida, Georgia, Idaho, Kansas, Kentucky, Louisiana, Missouri, Montana, Nebraska, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia and Wyoming joining the challenge.

The lawsuit pleads four counts alleging that the rule, which was promoted to potentially speed up permitting for renewable energy and other infrastructure projects, has the effect of “stymying development of certain projects and resources …” and violates NEPA and the Administrative Procedure Act (APA). Specifically:

• Count One alleges that the Phase 2 Rule impermissibly transforms NEPA from a procedural statute to a substantive statute, making it harder to use categorical exclusions for NEPA review, placing “outsized importance on climate change and environmental justice considerations,” and elevating “Indigenous Knowledge” as a new area of expertise despite its not being scientific.
• Count Two alleges that the final rule is arbitrary and capricious in violation of the APA because it reverses course from the Trump administration’s 2020 updates to the NEPA implementing regulations without requisite detail or evidence, and the changes will impose substantial burdens on states, project proponents, landowners, and other stakeholders.
• Count Three alleges that CEQ violated NEPA in conducting a “special,” abbreviated NEPA EA for the rule itself because NEPA does not authorize special EAs and the rule cannot rely on the authority granted under the new section (40 C.F.R. 1507.3(b)(3)) as the rule is not effective until July 1, 2024.
• Count Four alleges that the final rule violates the major questions doctrine, a principle set forth by the U.S. Supreme Court in West Virginia v. EPA, 142 S. Ct. 2587 (2022), because the final rule lacks “clear congressional authorization” and has major economic and political significance, including favoring some projects over others so as to reshape national policy.

Courts have been reluctant to turn over NEPA rules in past challenges. See Wild Virginia v. Council on Environmental Quality, No. 21-1839 (4th Cir. 2022): The court held it lacked jurisdiction to hear challenges to the Trump administration’s 2020 updates to the NEPA where the alleged harm was not yet sufficiently evident. We will continue to monitor this lawsuit.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.