NEPA litigation over energy and infrastructure projects will soon get even more interesting.  On January 14, 2011, the U.S. Court of Appeals for the Ninth Circuit, sitting en banc, overturned its twenty-one year old “federal defendant rule” that had long served to bar the courthouse doors to people with substantial interests in cases brought under the National Environmental Policy Act (NEPA).  (Wilderness Society, et al. v. U.S. Forest Service, et al., 2011 U.S. App. LEXIS 734 (9th Cir.).) 

The decades-old federal defendant rule had prevented many state and local governments, environmental organizations, and businesses with direct property interests at stake from intervening in lawsuits that sought to overturn federal agency decisions under NEPA.  This new ruling promises a sea change in the way NEPA cases are litigated in the Ninth Circuit.

Since 1989, federal courts in the Ninth Circuit have treated NEPA cases differently than all other cases involving federal agency defendants.  The old federal defendant rule severely limited and often prevented holders and beneficiaries of federally issued permits and approvals, including many energy generation and transmission projects, from participating as a party in the merits of lawsuits challenging the very permits and approvals they obtained at great effort and expense. 

That limitation was inconsistent with the plain language of the federal intervention rules, ignored the significant investments and interests private parties have in seeking and obtaining federal authorizations for a vast array of projects, and conflicted with the Ninth Circuit’s test in favor of liberal intervention in all other cases. Most importantly, the limitation ignored the very real practical impairment that project proponents suffer when agency approvals are set aside.

That disparate treatment for NEPA cases has been overturned, with the Ninth Circuit now declaring that the same rules will apply to NEPA cases as apply to all other cases.  The test for intervention will now focus on whether the putative intervenor has a protectable interest in the litigation, and not on the nature of the legal claim itself.  That means that project proponents now have the opportunity to show that they have the requisite interests to participate in the merits of NEPA lawsuits brought against the federal government, and a greater ability to assist the government in defending project approvals while protecting their own interests. 

Wilderness Society will have important and immediate implications for energy and energy infrastructure litigation, most obviously by permitting intervention of right far more broadly in NEPA actions. In addition, Wilderness Society should stop and reverse the trend of district courts precluding intervention of right in suits involving other environmental statutes. 

Wilderness Society should therefore foster much broader participation by individuals and groups that are affected by litigation. This is critically important because, in many instances, this will allow the parties and counsel with the most familiarity with energy and infrastructure projects to be heard in the litigation. This, in turn, should lead to better judicial decision making, consistent with the purposes underlying Federal Rule of Civil Procedure 24.

All we can say is, it’s about time.

Jim Arnone, Janice Schneider, and Drew Ensign have drafted a client alert that discusses this important new case in greater depth.