Today, we’re diving into everyone’s favorite Statecraft topic: administrative law. Before you tune out, give us a chance: the two court cases we’re discussing could have huge ramifications for how we build things in America.
We brought three of our favorite administrative law professors together for an admin law party. Talking to them felt like opening the door to the faculty break room and overhearing today’s gossip. Do they agree on everything? No, as you’ll see.
Brief intros: James Coleman is a professor at the University of Minnesota, specializing in energy infrastructure, transport, and trade. He has testified before Congress on how to speed up energy infrastructure permits.
Adam White is the Executive Director of the Gray Center for the Study of the Administrative State at George Mason University. He has practiced constitutional and regulatory law in D.C., with a special focus on energy infrastructure regulation. Several years ago, we were colleagues at the American Enterprise Institute.
Nicholas Bagley is a professor at the University of Michigan and was Chief General Counsel to Michigan Governor Gretchen Whitmer. We’ve discussed a law review article he wrote called The Procedure Fetish, about the problems with the procedures we’ve created for federal agencies. He recently joined Statecraft to discuss How Bureaucracy is Breaking Government.
We discussed:
Why the National Environmental Policy Act is a problem
How a small White House office grew to wield power Congress never gave it
Why a seemingly simple environmental case has thrown environmental regulations into doubt
Why D.C. appellate lawyers don’t challenge laws they believe are wrong
The potential for reforming environmental review
This transcript has been lightly edited for clarity by Harry Fletcher-Wood.
Santi Ruiz: We're going to be talking about a recent case before the D.C. Circuit Court of Appeals, Marin Audubon Society v. FAA. To explain that case, I have a word bank in my notes. James, will you explain what “NEPA” is?
James Coleman: The National Environmental Policy Act is America’s principal environmental review law. It was signed on January 1st, 1970, so it's been in place for over 50 years. NEPA says the government is supposed to consider the environmental consequences of any project that it permits or funds.
NEPA has developed over time to require more and more review. When it was passed, it was supposed to be a relatively simple “look before you leap” kind of statute.
The United States grew tremendously after the end of World War II, and built most of the infrastructure that we still rely on to this day. If you look at the interstates we use, most of them were built in that 25-year post-war period. The crude oil pipelines that we still use are more than 50 years old on average: most of them were built in that post-war period.
There was a concern that all of that construction had impacts on the communities that it went through. As an example, my grandmother grew up in a predominantly African American neighborhood in St. Paul called the Rondo neighborhood. It was bulldozed to bring I-94 through the middle of St. Paul. So the NEPA idea was, we need some kind of “look before we leap” statute that says the federal government has to consider these environmental impacts before it goes forward.
Over time, with a series of decisions in the ‘70s and into the ‘80s, the federal courts dramatically expanded what was required under NEPA. Environmental groups found that this was an amazing tool to potentially stop new infrastructure projects: If the federal government had not considered some environmental issue to the extent that the courts thought it should be considered, the court would issue an injunction and stop the whole project. That could delay a project for years, because not only would it have to wait for its initial environmental review, but then that review would be stopped by the courts until it was fixed by the agency.
Then, to avoid injunctions from the courts, the federal government started to take longer and longer to do more comprehensive reviews. They were initially done in a matter of months, but eventually took over five years on average.
Santi: To clarify, as a private citizen or a non-profit, I could point to the NEPA review that your agency did, and — even though I'm not the owner of the land being built on — I could bring a case under NEPA?
James: That's right. There still is a standing requirement. You have to show some kind of injury, but that injury could be to some environmental benefit: you enjoy birdwatching in these woods, for example.
Those standing requirements are typically relaxed in the context of these procedural statutes. Congress wanted everybody to be able to take advantage of asking for more consideration of these issues. The courts have been relatively generous in that context.
One thing it's very important to keep in mind is that even as the district courts and federal courts of appeals have been very generous in interpreting this statute to benefit people who want to stop infrastructure projects, the Supreme Court has not been. SCOTUS has only taken 17 cases, and it's about to hear another case on the National Environmental Policy Act. That's less than one case every three years. But there've been hundreds of NEPA cases every year in the lower courts that tend to interpret it very broadly, whereas the federal government has won in every Supreme Court decision. The Supreme Court has said that the federal government did plenty of review here.
In fact, in many of those decisions, most of which were unanimous, the Supreme Court has said, “Lower courts, knock it off. Stop requiring so much from the federal government. We need some of these projects to go through.”
So there's been a bit of a disconnect between the way the National Environmental Policy Act is generally interpreted: very aggressively in the district courts and circuit courts, and more reasonably, or aligned with the original intent of the law, by SCOTUS.
Santi: What's the layman's explanation for that? Why have lower courts been so much more generous with their reading of the law than the Supreme Court?
James: If you read those early decisions, they're very clear that they want to implement the policy of the National Environmental Policy Act, which — they say — is designed to be protective. In fact, if you go back and read the National Environmental Policy Act, some parts of it are almost anti-civilization, concerned about human population growth. But the [lower] courts seemed to want to interpret that very aggressively. And it's partly about a disconnect that opened up between the Supreme Court, which was focusing in that period more on ideas like textualism [interpreting the law based on its text, rather than legislators’ intentions or the problem it was intended to address] and limiting to what the law actually said. The lower courts were still inspired by the Warren Supreme Court in the ‘50s and ‘60s, and were focusing more on implementing the statute’s purpose by interpreting the National Environmental Policy Act very broadly.
Santi: Adam, let me ask you to explain the Council on Environmental Quality (CEQ) and how it came up in this recent case.
Adam White: The Council on Environmental Quality is, broadly speaking, part of the White House. It's actually across the street in a nice little townhouse office in Lafayette Square. It has been the White House unit responsible for implementing NEPA for a long time.
The crux of the D.C. Circuit case is that CEQ's power is not a function of statute, at least not in terms of administering NEPA. Yes, CEQ was created by NEPA. But its power to create the rules governing the implementation of NEPA by the agencies is the product of an executive order.
I think it's important to put CEQ's founding in the context of the 1960s and 1970s. You saw the rise of broad, cross-agency environmental statutes: NEPA, the Clean Water Act, Clean Air Act, Coastal Zone Management Act. You also saw a building out of the White House structure, partly by the White House and partly by Congress. Around the same time as CEQ was created in 1969, you saw the rise of the Office of Management and Budget, which had roots way back in the FDR administration, but came into its modern form in the second half of the 20th century. You saw the White House building out or refining things like the Office of Information and Regulatory Affairs, the National Security Council, and the National Economic Council.
CEQ is not quite the same as those: it is, in its origin, a creature of statute. But you've seen its form and function change over time as more authority was layered onto it, formally through executive orders, but also informally. I remember during the Obama administration when you had the blackouts in New York, suddenly you had CEQ in the middle of the response, trying to help keep the lights on. Above all, with the rise of climate change as a major policy subject, CEQ's authority and its influence has grown exponentially, because of its cross-agency power and its literal and legal proximity to the presidency.
Santi: Up until this Marin Audubon case, which has thrown CEQ's role into question, what has its managerial function over other agencies been?
Adam: One is the promulgation of regulations that implement NEPA administration-wide. But downstream of that, CEQ has promulgated guidance, or sometimes draft guidance, trying to further explain and refine the application of NEPA and the regulations in particular contexts, especially in climate. I would consider those its most important powers. A lot of it is the soft power of having a centralized traffic cop on these issues so close to the presidency.
Santi: Can you give me an example of how that might work? Let's say I'm an agency working on some major action and you're CEQ. Talk me through that dynamic.
Adam: Nick might be better at that. He's actually served in government whereas I just sit outside and complain about it.
But let’s distinguish CEQ from agencies like OIRA. CEQ is not as directly related in as many specific agency actions. NEPA applies anytime an agency wants to do anything that could have a major, reasonably foreseeable impact on the environment, or when the agency is granting or denying a permit for private infrastructure projects that could have those environmental impacts.
CEQ does not actually dig into every specific application the way OIRA does. CEQ's role has been much more at the across-the-board lawmaking level: it creates regulations or proposes guidance documents that will inform all agencies’ work. But I don't think it actually gets deeply involved in discrete infrastructure permitting decisions. CEQ is more of a planning body, planning the broad regulatory process.
Nicholas Bagley: Starting in about 1977, CEQ started to issue those rules of the road through what in administrative law circles we call “legislative rules.” What that means is that the guidance CEQ issued would go through notice and comment [the formal rulemaking procedure required by the Administrative Procedure Act, requiring the agency to respond to comments on the proposed rules] and would be published in the Federal Register.
That gave the rules a veneer of formality. These rules looked not just like, “Hey, this is how CEQ thinks about NEPA, agencies should take that into account when they act.” Now, the big step was that courts saw them as formally binding the agencies and enforceable in court.
CEQ regulations have grown increasingly complex over time. They require, among other things, notice and comment and extensive analysis of alternatives. They lay out a bunch of categorical exclusions [categories of action considered to have limited impact on the environment. These actions receive streamlined review].
They're also used to advance the sitting administration's priorities. Under the Biden administration, CEQ regulations have required agencies to take into account environmental justice and indigenous knowledge.
CEQ has been blamed for contributing to the punitive length of environmental impact statements, which are now many hundreds of pages long and take many years to complete. Whether CEQ is in fact the primary driver of most of the NEPA work agencies do is contested. But they've certainly contributed to the burdens.
Adam: I would just add: CEQ isn't the only agency that's making regulations under NEPA. FERC, the Federal Energy Regulatory Commission, is responsible for regulating electricity markets, interstate natural gas pipelines, and certain interstate electricity corridors. FERC has its own body of regulations implementing NEPA at an even more granular level, tailored towards FERC's substantive jurisdiction. The other agencies, the Army Corps of Engineers and others all have their own body of NEPA regs.
Santi: So any federal agency dealing with NEPA has its own internal regulatory system that it's working through, as well as this overarching, theoretically binding CEQ framework.
Nicholas: I'll turn that up a ratchet. If you're an executive branch agency, the CEQ regulations are not “theoretically binding.” They are binding on you, as a matter of executive branch internal governance. When the White House says to its agencies, “We want you to do X, Y, or Z,” that's a direct order from the president. If you serve at the pleasure of the president, you follow through on that. That's true whether or not these CEQ regulations are legislative rules that apply in the courts.
Santi: I think most of us non-lawyers will be very confused by that last sentence.
Nicholas: This is one you have to really try to wrap your head around. One of the reasons that NEPA has become so fearsome is because it is enforceable in the courts. An environmental group, for example, will sue an agency that's trying to get a development off the ground. They will say that the agency has “failed to consider an alternative that would have mitigated the environmental consequences,” or failed to examine an alternative deeply enough.
If a court agrees that the agency has failed to take into account an important aspect of the problem, the court will blow up the agency action and send the agency back to the drawing board. That can be immensely disruptive to what an agency wants to do. In response, agencies spend a lot of time trying to cover their butts so that they can withstand eventual court review.
The issue in the Marin County case is whether the CEQ regulations are binding in court. What I mean is, when environmental groups bring these lawsuits, they sometimes say, “Look, the agency failed to abide by the CEQ regulations, and that is part of the reason we think that their action should be stopped.” Because those CEQ regulations are on the books and look pretty formal, over the past 45 years or so, courts have looked at those and said, “Hey, we can enforce those CEQ regulations. They're regulations, after all.” The issue in the Marin County case is, is it appropriate for the courts to enforce the CEQ rules?
But that's an entirely separate question from whether agencies must follow the CEQ regulations as a matter of what the executive branch says they have to do. When the president gives you an order, you have to follow that order. That's true whether or not the courts are going to enforce it. So you want to keep those two things distinct:
a set of CEQ regulations that are going to bind the agencies as a matter of internal executive branch governance, no matter what, and
CEQ regulations that would be enforceable by the courts if agencies fail to live up to them.
One of the ironies of NEPA is that it doesn't even mention judicial review. It was meant as an internal executive branch management tool, in the late 1960s, before the courts took a hard look at what agencies did. When Congress adopted it, there was no expectation that the courts would change their practice. But it was adopted as the D.C. Circuit was intensifying judicial scrutiny. So the D.C. Circuit takes this law, which was meant to be about internal executive branch management, and retrofits it to suit the needs of the time. This was really not the original understanding of what NEPA was all about.
Santi: Let's go back to the Marin Audubon case with all that in mind. What happened there?
Nicholas: The case involves what are called Air Tour Management Plans. If you have a national park, you want to make sure you're setting appropriate rules for flights that go over the park: tours to see parts of the park you otherwise couldn't see, by airplane or by helicopter. These tours have a lot of noise implications and may have pollution implications. You want to make sure that whenever they're going over the park, they're abiding by certain rules to protect sensitive wildlife and environmental areas. The Air Tour Management Plan in question involves four national park areas in the San Francisco area. This plan authorized about 2,500 commercial airline and helicopter flights to pass over four national park areas.
When the Federal Aviation Administration developed the Air Tour Management Plan, it said, '’NEPA is on the books, but we actually don't need to do an environmental impact statement to consider the effects of these flights.” Why? Because there's a CEQ regulation that says that any changes or amendments to an existing sort of state of affairs don’t need to go through NEPA if they only have minimal environmental impacts. CEQ regulations say agencies don't need to consider anything that has minimal environmental impact through the whole NEPA process.
A bunch of environmentalists out west sued the FAA and said, “You can't just ignore your NEPA obligations by saying you've currently got 2,500 flights going through those areas and you're not making any changes, therefore you don't need to do an environmental impact statement.” They said, “The right baseline is thinking about the question from scratch. What's the consequence of allowing any flights to go through those areas and how do you think about that problem? We don't think it was appropriate for you to use that categorical exclusion to avoid your NEPA obligations here.”
Santi: And the D.C. Circuit Court dodged that small question and answered a much bigger question.
James: This is the question that has been implicit for almost 50 years. CEQ issued these regulations in 1978, and they have often been treated as binding regulations by the court. If you look at all those aggressive court decisions that said, “Now the agencies have to consider this and that and this other factor,” they often cited CEQ regulations, because some of the most prominent regulations say, “Not only do you have to consider the impacts of this federally-approved or funded project, you also have to consider the indirect impacts and the cumulative impacts of that project.”
Typically, CEQ regulations and all the decisions that have been based on them cite these three kinds of impacts.
Direct impacts: you're bulldozing a neighborhood for a highway project. Indirect impacts are less well-defined. Presumably, it means something beyond what the actual project or the part that is approved is doing directly.
If you're approving a power line to cross a specific stream, maybe the indirect impact is all of the rest of the power line that's going to be enabled by this project, or all the new wind turbines that are going to be built as a result. It could extend to all industrial activity that's enabled by all the electricity produced by those wind turbines.
To identify the cumulative impacts, you take those direct and indirect impacts, and then consider how they relate to other ones. Maybe there'll be other power lines being built, and we don't have one big opportunity to approve all of those projects. So maybe in this one environmental impact statement for a single water crossing, we should consider all of the power lines that will ever be built in this state or will be built over the next 10 years in this state, and all of the wind turbines and power that will enable over multiple states.
Those ramifications can get very intense.
Santi: And that's why you have thousand-page NEPA review documents.
James: Exactly. Those decisions are all based on these terms that CEQ just came up with in 1978.
Often in the legal realm, we think about what impacts are caused by some other thing. There are standards in tort law about proximate cause that you’d learn about if you took a year of law school. But CEQ just came up with an entirely separate causal analysis. What the court here said is, “Hold up! Why are we following the CEQ regulations as binding, because CEQ was never given authority to issue regulations that would be binding in court?”
To Nick's point, it may well have the ability to issue guidelines to say, “Hey agencies, this is how we want you to do things.” Ultimately, if the president doesn't like how agencies are doing their environmental reviews, he can fire the head of the agency.
But courts have been treating this as binding for almost 50 years. And in this decision, the court said, “No, they're not binding, they never had the authority to issue those regulations.” Since those regulations were issued, the courts have become more clear about when agencies have the authority to issue regulations. Often it's got to be in the statute that created them. People have realized, “Wait a second, it never was clear that CEQ had this authority.”
I filed an amicus brief in the Supreme Court case that's going to be heard tomorrow, arguing that the Supreme Court should recognize that CEQ never had the authority to issue these regulations. That was written and filed before this decision came out from the D.C. Circuit. So we knew this issue was out there. Some of us were hoping the courts might address it, but the D.C. Circuit addressed it, as a surprise to all of us, because neither of the parties to the case asked it to address this issue.
Santi: James, fill me in here on a legal-philosophical matter. How does an issue like this persist for so long? You filed a brief, but has no one else thought about this before?
James: I think a lot of people have thought about it. Previously, the courts have said, ”We'll keep applying this because the parties say we should apply.” In this case, the litigants didn't ask for CEQ’s authority to be constrained.
If you spend time in D.C. appellate practice, it's surprising how often both sides want to continue applying whatever rules have been applied over the last decades. They say, “Maybe you don't like these, but we can argue our case under these.” As a litigant, it can be hard to get your D.C. lawyer to say, “I don't think any of this is valid.”
The reason why this doesn't get raised by any party I think has to do with D.C. liking to continue following the regulations that D.C. does. If you've ever read Anna Karenina, Levin, one of the main characters, is trying to get the agricultural workers to try a different way of doing something because it's way more efficient. They won't. The same thing is true of professors. If you try to get professors to teach a class a new way, they will not do it. There's an inherent human conservatism that says, “We've been doing it this way for years. Let's not mess with it.” I think that's partially responsible for why those CEQ regulations continue to be applied, even after people started to recognize maybe they weren't valid.
Santi: Adam and Nick, you're both laughing along. I want to hear from both of you.
Adam: This might get too far into the trivia, but Judge Randolph, who wrote the D.C. Circuit decision blowing this whole thing up, has a very long memory. As the D.C. Circuit case says, this all started with an executive order from President Carter in 1977, after a Supreme Court case the year before where the Justice Department told the Supreme Court that the CEQ only proposes guidelines, it doesn't have rulemaking authority. Judge Randolph would remember that, because he was in the Solicitor General's Office when that case was argued. More specifically, Judge Randolph was the Deputy Solicitor General who argued that case and told the Supreme Court in 1976, “CEQ only does guidelines, it doesn't do rules.”
Santi: So far from being a new point, this issue was raised at CEQ’s inception.
Nicholas: And it’s one Judge Randolph has cared about for a long time. He's been trying to get this issue presented squarely. One of the things that's super anomalous about this Marin County case is how the judge reached out to decide this issue, even though no party had presented it, and it wasn't necessary to resolving the case.
Santi, you said earlier that the court avoided the narrow question, about the proper baseline against which to measure the environmental impact statement. It actually didn't avoid that issue. It went on to say, “Hey, FAA, you picked the wrong baseline. You can't use the existing flights as your baseline and then decide there were no effects from a similar plan. You’ve got to use a baseline of zero and think from there.” So they could have decided the case on that basis.
Instead, Judge Randolph, joined by Judge Henderson, reached out to decide this issue that has been irritating him for a very long time. What that has done is create a vulnerability for the decision. Chief Judge Srinivasan, who dissented on this point, said, “Look, no party has raised this. There's no particular reason for us to wade in here.” It's total dicta, which is legal talk for [opinions expressed by the judge which are] unnecessary to the outcome of the case.
Now we've got two en banc petitions: this is when the parties are upset about a panel decision at a circuit court, they can go to that circuit court and say, “The three judges who decided our case were out to lunch. We think if the whole court heard this case, you'd side with us. It's a really important issue. So please, whole court — all the members of the court — re-hear this case.” Both the environmental petitioners and the FAA have gone to the D.C. Circuit and said, “You know that part of Judge Randolph's opinion where he was talking about things that really bother him, where nobody raised the issue? Could you just eliminate that part of the decision? Because neither of us likes it very much.”
I think the D.C. Circuit is reasonably likely to take up that invitation, given just how hard Judge Randolph had to work to get this issue into focus in this case.
Adam: Since I brought that up, let me say a word in defense of Judge Randolph, because I don't see it quite as negatively as Nick does. I do agree: neither party raised this issue, to say the least. As the D.C. Circuit points out, neither the environmentalists nor the federal agency would want this issue raised.
I clerked on the D.C. Circuit for another good judge there, and they do have a long history of being very careful to stick to the arguments raised by the parties. This really is a strange situation. It's further complicated by the fact that the Supreme Court has said in passing over the years, arguably in dicta, that the CEQ does have binding rulemaking authority. Normally the D.C. Circuit considers itself bound even by the dicta of the Supreme Court. So this really is a mess. I don't think it's entirely a mess of Judge Randolph's own making. There's a lot of history here where nobody poked this particular regulatory bear.
Nicholas: I think all three of us, on the merits, think Judge Randolph is right. I don't think CEQ has rulemaking authority, and I think the courts have erred in applying CEQ rules in the past. I don't even think the question's that close. I know that that's a controversial opinion amongst environmental lawyers, but I think James's amicus brief is just correct.
James: And the dissent doesn't even disagree. It just says, “This issue wasn't raised.” So you could understand why judges potentially don't like the idea that they keep applying this invalid law because we both asked for it. It's a very unsatisfying argument.
Santi: That's the Marin Audubon case. We're recording on Monday, December 9th. On Tuesday 10th, tomorrow morning, the Supreme Court hears oral arguments for a case with similar NEPA ramifications, Seven County Infrastructure Coalition v. Eagle County. What's the relationship between these cases?
James: The issue in both Marin Audubon Society at the D.C. Circuit and the Seven County Infrastructure case at the Supreme Court is: Are these regulations valid? Nick has expressed the concern that we should keep these regulations, even if they may be invalid, because they help order the environmental review process, as lengthy as it is. In my Supreme Court brief, I’ve argued that these regulations are invalid and that [striking them down] will speed up the environmental review process.
Nicholas: Even if you agree with Judge Randolph and say the CEQ regulations are non-binding in court, they're still going to be binding on the agencies. Whether that's good or bad, it has nothing to do with this case. The only question at issue in this case is whether the CEQ regulations ought to be enforced in court. I think the answer is no.
Now, does that help streamline CEQ NEPA review? It may, it may not. And the reason I say that is because first, agencies already have to abide by the CEQ regulations. They're going to have to walk through that lengthy process regardless of whether it's judicially enforceable.
Second, the CEQ process, as you say, does help structure how agencies move through that NEPA process. A lot of the NEPA-specific rules on the books explicitly say “We're building off of CEQ regulations.” If you look at the Army Corps of Engineers’ NEPA regulations, for example, they say, “This is all a riff on what CEQ has already said.” The question is judicial enforceability.
Whether or not we apply the CEQ regulations, I'm not sure it's going to have that big an effect on agency practice. Agencies are already worried about getting held up in court because they failed to consider a particular part of the problem. You can recast all of those legal arguments either in terms of “You failed to abide by CEQ regulations,” or “You failed to consider an important aspect of the problem underneath.” Either way, courts have proved receptive in the past to those arguments. So I'm not sure it changes the incentives for agencies on the ground.
If you're a risk-averse agency, you're still going to spend time chasing down every alternative, because you're not sure what some random judge is going to decide was an issue that you needed to have considered. Let's say during your environmental impact statement process, you have an environmental petitioner who raises an alternative you should consider. That's a comment, much like parties comment on agency rules all the time. If the agency fails to respond thoughtfully to that comment, that could create a vulnerability for the project, much in the same way that failing to respond to a comment in a rulemaking can create a vulnerability for a rule.
So I’m not sure that saying CEQ regulations are no longer enforceable in court changes your risk-averse analysis if you're an agency thinking through how to respond to input from environmental groups.
James: I think this is exactly where there is some disagreement. I agree with Nick that striking down these CEQ regulations, at least for the purposes of the courts, might not do very much, for a couple of reasons:
One, if the president continues to insist that agencies follow those regulations, the reviews are going to be very similar.
Two, the courts may say, “Although we were doing that under CEQ regulations, which are no longer valid, we were actually applying the statute, which continues to apply, so we're going to require you to jump through all the same hoops to approve a project.”
If those two things happen, then striking down the CEQ regulations doesn't do much except make it more difficult to figure out how to argue in court.
That said, I do think it presents an Etch-a-Sketch opportunity to change things. There's increasing bipartisan recognition that our environmental reviews have gotten too long. There might be some momentum to use this opportunity to speed them up. That could take two forms.
One, the president could not require so much of the agency. We've had a lot of back and forth about what should be required under the CEQ regulations between the Trump and Biden administrations, with the Trump administration requiring less, the Biden administration requiring more, and then Congress asking for some changes to the regulations. I anticipate that the new administration, with its focus on building new infrastructure in the US, will not impose similar requirements to those required under the CEQ regulations. The regulations are struck down, at least currently: that might be addressed by the Supreme Court. Who knows what's going to happen with the en banc petition? There's a lot of uncertainty about what kind of CEQ regulations we're going to have going forward.
Secondly, we're getting new judges on the courts. Even if the judges from 10 years ago might want to apply the same cases they've been applying for decades, it allows judges to say, “This old case was based on CEQ regulations that are no longer supposed to apply. I'm going to address this as a matter of first impression.” So it allows circuit courts like the D.C. Circuit to make their jurisprudence on NEPA more aligned with Supreme Court jurisprudence, which has been more forgiving of shorter, less formal reviews.
That's the reason I'm optimistic it creates an opportunity for change. But I do agree with Nick that it doesn't necessarily mean we will see faster reviews.
When you look at some of the reform proposals, the President, working with Congress, may make some changes so that NEPA doesn't hold up infrastructure projects so much. A lot of the most important proposals focus on judicial review. A number have said, “Maybe we will get rid of the use of injunctions for judicial review, so even if there's a dispute about how much review has been done, the government can go do its review, but in the meantime, the project will be allowed to go ahead.”
Another proposal is the need for stronger time limits for when you can judicially challenge a project. Often, projects that Congress really has wanted to be built have been exempted from judicial review. You can think about the Trans-Alaska Pipeline or the Mountain Valley Pipeline. To the extent that Congress is serious about addressing this challenge of NEPA holding up infrastructure, you'll see them focus on limiting judicial review. As Nick said, maybe that goes back more to the original meaning of the National Environmental Policy Act.
Nicholas: I think you and I are on pretty much the same page. I'm a little more skeptical that the decision by itself will prompt enough uniform reconsideration in the courts to adjust agency incentives. Agencies are still going to be afraid that maybe those newer judges you talk about, who might be less inclined to apply NEPA to the hilt, would not be receptive to a thinner EIS. They're just not going to know.
But the broader point, that this decision provides an Etch-a-Sketch moment, a chance for everybody to take a deep breath, look at what we've been doing, and maybe take a different path: I think that's exactly right. The Trump administration has an opportunity here, potentially working with Congress, to meaningfully adjust how NEPA is practiced in the agencies and how the courts go about reviewing NEPA compliance.
Adam: I think that's crucial for Congress. There has to be a conversation about NEPA itself and whether it's time to modernize and clarify terms like foreseeable environmental impacts and reasonable alternatives. Or we will have to consider project-specific statutes to say to agencies, “We're going to reduce the regulatory load for this one project because we think it's particularly important.”
But the more projects you see that get a fast pass through the NEPA regulatory process, the more questions it raises about the burdens of the NEPA process for all the other projects. But I completely agree. It's going to be an Etch-a-Sketch moment in the executive branch, the courts, and Congress.
Santi: What possible verdicts could the Supreme Court provide on this question? They hear oral arguments now, and then they don’t give their decision until the summer. What's possible here?
Adam: One possibility, going back to the taxonomy James noted of direct environmental impacts, indirect environmental impacts, and cumulative impacts, is the Supreme Court drawing a harder line between, say, direct impacts and indirect impacts. This would be a significant decision. I don't know if the Supreme Court would go all the way, but you could, in theory, see the Supreme Court say, “NEPA was only created to deal with the direct impacts — the bulldozer impacts, or the impacts of runoff into rivers and streams — and not the upstream or downstream effects of — actually, that’s a bad metaphor here.
Santi: There are literal downstream effects.
Adam: Yeah, that's right. Let’s say the second and third-order effects of a project.
Anyway, that would have enormous effects on how agencies think about climate impacts. But it would be of a piece with the Supreme Court's recent decisions under the major questions doctrine [a principle of administrative law which limits agencies’ ability to make decisions outside those which Congress has explicitly authorized them to make] and other areas where the Supreme Court has said to agencies, “Agency, you're in charge of a discrete, limited issue. You are not the free-floating, macro policymaker for the economy or politics at large.”
An interpretation of NEPA that limits the agency's purview to what's happening on the ground and in the air in the specific vicinity of a given project would significantly limit the regulatory burdens of NEPA, but would be an extremely consequential decision.
Nicholas: I think the likeliest outcome is that the D.C. Circuit will strip the portion of Judge Randolph's opinion saying that CEQ regulations are non-binding and that the Supreme Court won't weigh in on the question. Then we're going to proceed with some judicial uncertainty on that precise issue.
All that said, I think James's point about the Etch-a-Sketch moment still applies even if the decision is overturned. That's why it's such an interesting moment. Judge Randolph put this argument on the radar screen of people who are thinking about NEPA going forward. It's a moment where NEPA compliance is a contested question and there is bipartisan interest in trying to reduce burdens on agencies. If that's the case, I don't think it matters all that much what the courts decide in the near term about the binding status of CEQ regulations.
Santi: I’m still stuck on this question: As a matter of legal culture, how can something like this be practiced by the courts for 50 years? Everyone understands that CEQ doesn't necessarily have statutory authority, but how does it take 50 years for someone like Judge Randolph to say, “Wait a minute”?
Nicholas: Some of it has to do with how these cases normally get presented. Usually, you've got an outside challenger who says, “The agency did not do enough.” The agency defends by saying, “We did.” Sometimes the challengers say, “You didn't do enough because you failed to abide by CEQ regulations.”
The agency can't come back and say, “Those regulations don't bind us. Those regulations are irrelevant.” So they tend not to make that argument. Because the argument is never squarely presented, the courts generally don't have an opportunity to address it.
Beyond that, when NEPA was adopted, it was before the era of strong Chevron deference [which gives agencies latitude to interpret ambiguous statutes]. It was a loosey-goosey time of administrative law where the court said, “CEQ thinks about these questions. We'll listen to what it has to say.” It didn't harden into the rule that what CEQ says is the law until the Chevron revolution took hold and agencies with responsibility over statutes were given a great deal more deference. There's been an underlying shift in the way we think about deference, and a lack of incentives to raise the question just the right way, which has contributed to this weird lurking issue.
Adam: From the private sector side, when a big project is getting built, the agency is in a conversation first and foremost with the project proponent. When I was an energy infrastructure lawyer, my office was a library of environmental impact statements from old projects. For each new project, I'd create a binder (back in the days when you had binders) with all the rules: the CEQ rules, FERC's NEPA rules, FERC's rules under all the other statutes that would apply, the EPA [Environmental Protection Agency] and Army Corps of Engineers rules, the Department of Commerce's rules for the Coastal Zone Management Act, and on and on and on, and all the state regulations.
As with any big project, it becomes a project of checklists and structuring a procedure to cover everything. Not even just in a cynical way, in a good faith way, of “What's the way these projects are done and reviewed, how do we make sure the project succeeds and is also safe?” When push comes to shove, there's a lot of negotiation around where to draw lines. But the projects start by taking for granted the entire body of rules and trying to get the project done under those rules.
At some point, you might start pushing back against a specific rule or interpretation, but for the most part you've got the agency, the environmental groups, and even the private sector taking for granted that the legal infrastructure is sound.
We're in a different era now. In other areas of law, you see things like the financial industry, pushing back against the regulators in a way they never did before. Maybe you'll see a similar dynamic in the energy industry.
James: You have a client that says, “I want to build this power line, how do I get my federal approvals for the water crossing?” If you say, “Here's the CEQ process, but I've got this great legal theory that's been mentioned in a lot of concurrences [written opinions in a court case that agree with the court's judgment but differ in their legal rationale from the majority opinion] about why we could completely rip up this process and start fresh.” Most clients are just like, “Let's just stick to the checklist.”
As lawyers and law professors, we know that law students want to hear “What are the rules?” If you start giving them, “Here's the theoretical reasons why maybe the rules are invalid,” they get very frustrated. Think of clients like law students: everybody wants to know what the process is and follow it. If there's going to be a reform moment, we'll want to pretty quickly get to that new process, because there's only limited tolerance for having the rules in flux.
I did want to say two things. It's important to understand the context in the Seven County Infrastructure case. This is why we keep talking about upstream and downstream impacts. This is a case about a piece of railroad in Utah. When the federal government approved this little railroad in Utah, the courts required it to analyze all the oil production that might happen across Utah. There’s not a lot of oil production in Utah, but they said, “In theory, this railroad would enable it. You should consider all of that. Secondly, you should consider all of the impact if there is new oil that comes in this railroad, then maybe that would eventually reach the Gulf Coast and go to refineries there and what would happen at the refineries there, etc.” It really is this butterfly-beats-its-wings idea that you should consider all those impacts. The court pursued all these upstream and downstream ideas to the nth degree. That's the issue there.
The final thing we should mention is that an Etch-a-Sketch is a toy. You do a picture and then you shake it and the picture goes away. I know Etch-a-Sketch moment has entered the political lexicon through Romney's campaign for president, but maybe there are folks who weren't around for that.
Nicholas: James, are you calling us old?
Santi: I actually do remember that. That was part of my political awakening.
Adam: Part of the complication of these issues is 50 years of technological and scientific progress. It was one thing to say in 1970, “Think about the environmental impacts of a project.” You're building 88 miles of rail line in Utah. You would look around and say, “What are we bulldozing here? What's the runoff?” Even 50 years ago, you could come up with theories: the railroad might throw sparks that cause fires and so on. That's still a pretty limited set of impacts.
But now, because of our scientific expertise and technology, we can project far into the future and at great distances. Over the last 50 years, we've become aware that sometimes you do have low-probability, high-impact effects due to complex energy infrastructure projects.
When the Deepwater Horizon oil well blowout in the Gulf of Mexico spilled oil everywhere, an executive said, “That was practically unthinkable.” When you go through, anytime you have some very low probability thing that goes wrong on a complex energy infrastructure project, there'll always be someone who says, “No one could have seen that coming.”
Now we can project a lot more of what could possibly go wrong. The old book in the ‘80s about NEPA by Serge Taylor was called Making Bureaucracies Think. I've always admired that headline. You do need a process to help force decision-makers, both in the private sector and in the public sector, to think hard and think creatively about extremely hard-to-imagine consequences. Now we have technology that allows us to do more and more of that. The downside is when it all gets bogged down in court and people are spitballing alternatives and possible effects and there's no clear line between what's reasonable and unreasonable.
Santi: It's ironic that you talk about the role of NEPA in making agencies think about unintended consequences, because one of the throughlines in this conversation seems to be that NEPA itself has all these unintended consequences. The original architects did not foresee this outcome.
Adam: Years ago, when I was still a lawyer, I was meeting with a favorite law professor of mine, and I described NEPA stuff. He says, “When I was a clerk on the DC Circuit, I worked on a NEPA case. It was kind of interesting.” And I thought to myself, “Richard, you clerked for Judge Skelly Wright in like 1970… so you were the clerk on this case famous among lawyers called Calvert Cliffs.” That's the case that really made NEPA a big, judicially-enforceable thing.
I said, “Did you work on the Calvert Cliffs case?” He goes, “That was it, the nuclear regulatory case! It seemed like a pretty straightforward case to me. How did it work out?”
I open up my briefcase and pull out four volumes of environmental impact statements that I was traveling with for work. I dump them on the table, the table shakes, and I said, “Richard, it's no way to run a country, but it's the Adam White full employment plan.”
The judges in 1970 were well-intentioned and looking at specific projects, and they wanted to bend over backward and force the government to think creatively about this. But it's no way to run a country when you can't build anything anymore, to the point that it's so hard to build power lines that we might recommission the Three Mile Island reactor to power these data centers.
We're going to see so many fights in the next administration and for years to follow. There’s so much need for power in the mid-Atlantic; so many hard questions about environmental impacts and property rights for these power lines, that judges in the 1970s, let alone even Senator Scoop Jackson [author of NEPA], could never have foreseen. Our great technological progress makes both these projects and the regulatory process more complex.
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