On May 29, 2025, in a 8-0 ruling (Justice Gorsuch recused himself from the case), the Supreme Court held that the U.S. Court of Appeals for the D.C. Circuit erred in requiring federal regulators to evaluate the potential environmental impacts on Gulf Coast communities of an 88-mile rail line in Utah. As discussed in more detail below, the Court concluded that the Board was not required to evaluate the upstream and downstream environmental impacts of a federal action where these alleged impacts were beyond the federal agency’s regulatory authority. In reaching this decision, the Court’s majority discussed in some detail its view that NEPA has become an impediment to federal actions, stating that “NEPA has transformed from a modest procedural requirement into a blunt and haphazard tool employed by project opponents … to try to stop or at least slow down new infrastructure and construction projects.”
In Seven County Infrastructure Coalition et al. v. Eagle Count Colorada, the U.S. Surface Transportation Board (the “Board”) was called on to approve the construction of a railroad line that would connect Utah’s oil-rich Uinta Basin to a national rail network. The 88-mile rail line would allow crude oil from the Uinta Basin to be transported to refineries located in, among other states, Louisiana and Texas. In considering the proposed rail line, the Board prepared a 3,600-page Environmental Impact Statement (“EIS”) as required by the National Environmental Policy Act (“NEPA”). The Board’s EIS was challenged on several grounds, including that the EIS failed to sufficiently consider the environmental effects of projects separate from the rail line itself, including the environmental effects attributable to increased oil drilling upstream of the rail line and increased oil refining downstream along the Gulf Coast. The D.C. Circuit vacated the Board’s EIS and certiorari was granted by the Supreme Court.
In evaluating the potential impacts of both increased drilling and downstream refining as part of its EIS, the Board specifically noted that (i) it had no authority or control over upstream future oil and gas development or downstream refining and (ii) the crude oil would be transported to a variety of markets to be refined (and not specifically to Gulf Coast refineries). As such, the Board did not conduct a detailed analysis of upstream impacts of increased oil production or downstream impacts of refining in Gulf States. The D.C. Circuit however concluded that these effects were “reasonably foreseeable impacts” and should have been considered by the Board as part of its EIS.
In the main opinion (written by Justice Kavanaugh and joined by Justices Roberts, Alito and Barrett with Justice Gorsuch not participating in the decision), the Court disagreed with the D.C. Circuit’s decision for two reasons: (1) the D.C. Circuit did not afford the Board the substantial judicial deference required in NEPA cases and (2) the D.C. Circuit incorrectly interpreted NEPA to require the Board to consider the environmental effects of upstream and downstream projects that were separate in time and place from the rail line.
With respect to the deference afforded an agency’s EIS, the Court acknowledged that as a general matter, when an agency interprets a statute, judicial review of the agency interpretation is de novo, referencing the Court’s earlier decision in Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024). However, where an agency exercises discretion that is specifically granted to it by the statute, judicial review is under the more deferential arbitrary and capricious standard. Because NEPA is a purely procedural statute which grants specific deference to a federal agency, Justice Kavanaugh noted that “when determining whether an agency’s EIS complied with NEPA, a court should afford substantial deference to the agency.”
When preparing an EIS, it is the agency that must determine the scope of the environmental effects that it will address. In making this determination, the Court noted that it was “critical to disaggregate the agency’s role from the court’s role”. So long as the EIS addresses environmental effects from the project at issue, “courts should defer to the agencies’ decisions about where to draw the line—including (i) how far to go in considering indirect environmental effects from the project at hand and (ii) whether to analyze environmental effects from other projects separate in time and place from the project at hand.” In reviewing these determinations, a reviewing court may not substitute its judgment for that of the agency as to the environmental consequences of its actions. As Justice Kavanaugh acknowledged, “[t]he bedrock principle of judicial review in NEPA cases can be stated in a word: Deference.”
This part of the Court’s decision was not joined by Justices Sotomayor, Kagan, and Jackson but the Court’s decision provides useful insights into how the Court’s views agency deference in the post-Lopez-Bright era.
Notwithstanding the D.C. Circuit’s failure to afford sufficient deference to the Board’s EIS, the Court further found that the D.C. Circuit erred on the merits by holding that the Board was required to address environmental effects from projects that were separate in time or place from the project at hand—installation of an 88-mile rail line. The Court acknowledged that there could be indirect project effects that are outside of the geographic territory of a project or that might materialize at some future point in time—such as runoff impacting downstream wildlife–that might still fall within the scope of NEPA. However, just because a project might lead to future construction or increased use as part of a separate project, the agency need not consider the environmental effects of that future construction or increases use. That separate project breaks the chain of proximate causation between the project at hand and the environmental effects of the separate project even if the effects of the separate project are factually foreseeable.
Another important factor considered by the Court was that the Board possessed no regulatory authority over the separate projects (i.e., increased drilling and the need to refine the crude oil in Gulf States). Justices Sotomayor, Kagan and Jackson generally concurred with this part of the Court’s opinion. As the Court had previously held in Department of Transportation v. Public Citizen, where an agency lacks the ability to prevent a certain effect due to its limited statutory authority over the relevant actions, the agency cannot be considered to be a legally relevant cause of effect. The Court specifically states that “agencies are not required to analyze the effects of projects over which they do not exercise regulatory authority.”
This Supreme Court decision has important implications both with respect to agency deference generally and as to NEPA specifically, the degree to which agencies must consider downstream and upstream environmental effects during NEPA reviews. The Court reiterated what it had previously noted in Loper Bright—where Congress specifically grants an agency discretion in connection with the implementation of a statute, the Court’s review of that decision is limited to determining whether the agency’s exercise of that discretion was arbitrary or capricious. The Court also provided additional clarity to agencies called upon to conduct NEPA reviews—the agencies need focus only on the project at hand and can decline to evaluate speculative environmental effects both upstream and downstream of the project at hand, especially where the particular agency lacks regulatory authority over those effect.
We will continue to follow the impact of this decision on NEPA reviews at the Corporate Environmental Lawyer.
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