On Feb. 3, 2025, the District Court for the District of North Dakota granted several states’ motion for summary judgment in a facial challenge to CEQ’s Phase II NEPA implementing regulations that were finalized in 2024. The Phase II rule responded to Congress’s 2023 amendments to NEPA under the Fiscal Responsibility Act, adjusted key factors that define agencies’ level and scope of environmental analysis, and integrated environmental justice considerations. In its decision vacating the Phase II rule, the district court first determined that states had standing to challenge the regulations based on evidence that “essential projects” would be delayed by the Phase II rule. The court then vacated CEQ’s Phase II rule as ultra vires.

The court determined that a plain text reading of NEPA does not provide CEQ with authority to issue binding regulations. In reaching this conclusion, Judge Traynor rejected the arguments made by CEQ and other intervenors that Congress can implicitly ratify, and has ratified, CEQ’s regulations, including in 2023 when Congress enacted the Fiscal Responsibility Act. The court also rejected the argument that NEPA authorizes the President to issue regulations and that President Carter sub-delegated that authority to CEQ via Executive Order. The court also held that Executive Order 11991, issued by President Carter authorizing CEQ to issue binding regulations, was not a valid exercise of the President’s power under the Take Care clause of the U.S. Constitution. Thus, the court held that “CEQ had no authority to issue a binding rule, therefore the entire 2024 rule exceeded its authority.”

The court also determined that even if CEQ had authority to issue its 2024 Rule, specific changes made in the Phase II rule were arbitrary and capricious in violation of the APA. The court found that the following changes exceeded CEQ’s statutory authority under NEPA: revised language to the rule’s purpose statement, requirements to consider the global effects of proposed actions, the deletion of language stating that NEPA does not mandate the form or adoption of mitigation measures, and requirements that agencies reevaluate their CEs every ten years. The court also held as arbitrary and capricious the rule’s approach for indigenous knowledge. Although the final rule made clear that agencies could consider indigenous knowledge, the court concluded that such consideration was required, despite contrary language in CEQ’s preamble to the final Phase II rule.

After finding that CEQ did not have authority to issue the Phase II rule, the court determined that the Phase II rule could not be severed because all provisions were without authority and void. The court then vacated the Phase II rule. While the court acknowledged that this holding also calls all CEQ rules into question, the court nevertheless held that vacating the Phase II rule restores the “status quo,” i.e., “the version of NEPA in place on June 30, 2024, the day before the [Phase II] rule took effect.” However, the court did not address the legality of CEQ’s Phase I rule or the 2020 rule, and indicated that the result of vacatur is the reinstatement of the 2020 rule. Federal agencies also continue to be bound by their current NEPA regulations.