What Regulated Businesses Should Know About the Supreme Court’s Recent NEPA Decision

This term, the US Supreme Court issued a landmark decision that represents a win for the regulated community. In Seven County Infrastructure Coalition et al. v. Eagle County, Colorado, et al. the Court determined that federal agencies were entitled to substantial deference in how they decided to implement NEPA and to what extent they must consider the environmental effects of upstream and downstream projects separate from the proposed action. As we discuss below, the decision, which aligns with other recent cases including Loper Bright v. Raimondo, opens the door for federal NEPA processes to occur faster and with greater predictability for developers and other groups, a victory for all entities operating under time constraints.  

Case Background

The Seven County Infrastructure Coalition is a public entity created to help build public infrastructure in Utah. The Coalition sought approval from the US Surface Transportation Board (STB) to construct and operate an 88-mile railroad line in Utah’s Uinta Basin. The project aimed to connect the oil-rich region to the national rail network, facilitating the transport of crude oil from Utah to Gulf Coast refineries. NEPA required the Board to prepare a comprehensive Environmental Impact Statement (EIS) analyzing the project’s direct environmental effects. But the EIS did not fully analyze all attenuated potential environmental impacts from the project, particularly from increased upstream oil drilling in the Uinta Basin or downstream oil refining. The Board approved the project, and Eagle County, Colorado, and several environmental groups challenged the Board’s approval, arguing that NEPA required broader analysis. The DC Circuit agreed and vacated the EIS and project approval, prompting the Court’s review.

The Court’s holding in favor of the petitioners interprets the scope of a federal agency’s responsibility in implementing NEPA and clarifies courts’ role in reviewing that implementation.

Writing for a five-Justice majority, Justice Brett Kavanaugh reversed the DC Circuit and reinstated STB’s approval of the railroad project. The decision rejected the notion that the STB’s EIS was faulty for not sufficiently considering environmental effects of projects other than the railroad line itself, namely, the environmental effects of future increased oil drilling in the Uinta Basin and increased refining of crude oil that may occur once the railroad line is in place. The Court emphasized the substantial deference owed to federal agencies’ implementation of NEPA, including the extent to which agencies must consider the environmental effects of upstream and downstream projects separate from the proposed action.

Discussed more here, NEPA is a “purely procedural” statute that prescribes the necessary process for an agency’s review of environmental impacts of a proposed action. Because NEPA does not impose any substantive constraints, the Court emphasized that reviewing courts must confirm only that the agency has addressed environmental impacts and feasible alternatives of the project, and the adequacy of that analysis is relevant only to assess whether the agency adequately explained its final action. The Court determined that agencies are owed substantial deference because of their scientific and regulatory expertise on questions like the amount of detail required in the EIS, the relevant facts, and the environmental impacts and feasible alternatives the agency identified.

Critically, the Court instructed that courts should defer to an agency’s judgment about which indirect environmental effects to address and whether its assessment should include future projects, so long as those choices “fall within a broad zone of reasonableness.” Thus, going forward, NEPA does not compel agencies to analyze the environmental effects of other projects that are “separate in time or place” from the proposed action or that are outside the scope of the agency’s jurisdiction. The Court also suggested that, even if a court exercising the appropriate level of deference found an agency’s analysis in an EIS to be deficient, it should not automatically vacate the underlying agency approval. Rather, vacatur is appropriate only if the court is persuaded that the agency might disapprove, or materially alter, the project once it cures the deficiency. Applying those principles, the Court emphasized that the STB lacks regulatory authority over oil exploration or refining, and therefore upstream or downstream impacts stemming from the railroad project were not relevant to STB’s NEPA analysis.

Justice Sonia Sotomayor, joined by Justices Elena Kagan and Ketanji Brown Jackson, concurred in the judgment. The concurrence concluded that the STB was not required to analyze the upstream and downstream impacts identified by the DC Circuit because those oil drilling and refining activities were outside the scope of the STB’s jurisdiction, a principle that the Court’s precedents have long endorsed. (See, e.g. here.) As a result, the agency did not act arbitrarily by not reviewing a potential impact outside of the agency’s jurisdiction.

Key Takeaways

Deference After Loper Bright — A Nuanced Landscape

As we have discussed, Loper Bright ended Chevron deference — the principle that courts should defer to agencies’ decisions about the scope of their statutes. Seven County illustrates how Loper Bright applies in practice. The Court noted its holding that NEPA confers substantial discretion on federal agencies was “demanded by the statutory text,” evidently tracing back to the “purely procedural” function of the statute. In other words, NEPA presents an example of the exception to the Loper Bright rule that courts interpret statutes de novo and reinforces that agencies’ technical and scientific judgments are still owed substantial respect, if the agency provides a reasonable explanation.

Potential for More Streamlined Agency Processes

The Seven County decision could also speed up environmental reviews, reduce costs for agricultural product development and projects, reduce litigation risk, and offer more predictability and certainty. By narrowing the range of effects that agencies must analyze, and conferring significant discretion on agencies to determine the relevant facts and the level of detail required, the decision may streamline environmental reviews and expedite approval timelines.

Significantly, the Court’s discussion of remedy can also provide regulated entities more certainty on the durability of agency approvals. The Court clarified that an EIS is only one input into an agency’s ultimate approval. Thus, even if a court finds flaws in the environmental review of a particular action, it should not automatically vacate the underlying agency approval. This approach may reduce the risk that minor procedural missteps will derail innovations that take years and significant investment to develop. This reasoning may also challenge plaintiffs raising NEPA arguments in an effort to stymie agricultural and biotechnology innovations. Developers that rely on agency approvals should continually reassess their NEPA and litigation strategies in light of Seven County. While agencies retain broad discretion, maintaining a transparent record that ties each scoping decision to statutory authority and practical needs will be essential for developers to securing, and sustaining, approvals and withstanding legal challenges.

In line with the Court’s decision and as part of the Administration’s efforts to streamline environmental reviews, the White House Council on Environmental Quality recently released a detailed plan to accelerate NEPA reviews by implementing new technology standards, data sharing, and process automation across federal agencies.

If you have questions about this decision, please reach out. Members of the firm’s Agricultural Technology, Environmental, and Energy & Cleantech groups regularly monitor regulatory developments impacting agriculture and the environment.