On February 3, 2025, the District Court for the District of North Dakota ruled in favor of 20 Republican-led states in their challenge against the Council on Environmental Quality’s (CEQ) Phase II National Environmental Policy Act (NEPA) regulations, finalized in 2024. See State of Iowa v. Council on Envtl. Quality, 1:24-cv-089 (D.N.D. Feb. 3, 2025). The court vacated the Phase II rule, stating that the CEQ did not have the authority to issue binding regulations under NEPA. The Court rejected arguments that Congress had ratified CEQ’s authority through the Fiscal Responsibility Act and dismissed the claim that NEPA allowed the President to delegate regulatory authority to CEQ.

The Court held that the entire Phase II rule exceeded CEQ’s authority and could not be severed. While the Court acknowledged that its holding calls all CEQ rules into question, the Court also stated it was effectively restoring the status quo prior to the rule’s implementation on June 30, 2024. While the legality of CEQ’s earlier Phase I and 2020 rules was not addressed, the ruling reinstated the 2020 regulations, and federal agencies remain bound by existing NEPA rules for the time being.

With the CEQ regulations now vacated, federal agencies processing major permit applications face uncertainty about what level of environmental analysis is required under NEPA. This lack of guidance, compounded by the absence of a confirmed CEQ director, means that federal agencies may have wide variations in the quality and scope of their NEPA analysis, depending on their approach.

Until new guidance is provided, it is uncertain how Courts will assess challenges to NEPA analyses conducted under now-invalid regulations. Most NEPA case law has developed within the framework of CEQ regulations, and it remains to be seen whether this case law will still apply, especially with the Trump administration’s directive for future guidance to align with the recently amended statutory language.