Supreme Court Makes Major Course Correction, Limiting Scope of NEPA Reviews and Demanding Judicial Deference to Agency in Uinta Basin Rail Case

In Seven County Infrastructure Coalition v. Eagle County, Colorado, the Supreme Court held that under the National Environmental Policy Act (NEPA), an agency evaluating a particular project is not required to consider the effects of other future or geographically separate projects that may be built or expanded if the proposed project were approved, thus closing the door to the expansive NEPA analyses demanded by project opponents in many cases. The Court also separately stressed that the “central principle of judicial review in NEPA cases is deference,” underscoring that NEPA grants agencies discretion to determine the scope of the review and that their discretionary decisions should not be extensively second-guessed by a court. The cumulative impact of these holdings are much more than a minor course correction and should both significantly limit the scope of future NEPA analyzes and strengthen the defensibility of such analyzes in court.

Before the Court was a D.C. Circuit decision vacating the Surface Transportation Board’s (STB) approval of a proposed 88-mile rail line that would deliver crude oil from Utah’s Uinta Basin to interchange with other railroads for eventual delivery to oil refineries along the Gulf Coast. Citing a number of prior decisions, the D.C. Circuit held that the STB violated NEPA by not analyzing the environmental effects of upstream oil production and downstream refining of the oil carried on the rail line — effects that the circuit court thought were reasonably foreseeable indirect effects of the new rail connection.

The Supreme Court reversed. Justice Kavanaugh, writing for the majority, concluded that “a course correction” is needed “to bring judicial review back in line with the statutory text and with common sense.” Pointing to NEPA’s “textually mandated focus” on the “proposed action,” the Court concluded NEPA only requires an agency to review the environmental effects of the proposed action, not the effects of “future or geographically separate projects” that would occur either as a result of or in the wake of the proposed action under consideration. Thus, the requisite Environmental Impact Statement (EIS), or any other NEPA analysis, needed only to address the effects of the new rail line — i.e., the “project at hand.”

The Court clarified, however, that both the direct and, potentially, indirect effects of a project may fall within the scope of a NEPA review even if they occur beyond the geographical territory of the project or might materialize later in time — such as run-off into a river affecting fish populations downstream. But these effects do not include the effects of a separate project that acts to break “the chain of proximate causation between the project at hand and the environmental effects of the separate project.” Another key factor is whether the reviewing agency has regulatory authority over the separate project. Here, the STB had no authority to regulate oil drilling, oil wells, oil and gas leases, or oil refineries, and NEPA does not require agencies to analyze the effects of projects over which they do not exercise regulatory authority.

Beyond that, agencies have discretion and broad latitude to draw a “manageable 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 or place from the project at hand. The Court noted that this discretion applies not only to the scope of the EIS but also the range of alternatives considered, and can be informed by “fact-dependent, context-specific, and policy-laden choices about the depth and breadth of its inquiry.”

More broadly, the Court emphasized the importance of disaggregating the “agency’s role from the court’s role” in determining the scope and detail of an EIS. “The bedrock principle of judicial review in NEPA cases can be stated in a word: Deference.” Although NEPA says that an EIS must be “detailed” and must identify “significant environmental impacts” and “feasible alternatives,” the Court held that these are not questions of law for a court to resolve de novo under last Term’s decision in Loper Bright. They are instead factual questions that require the agency to make predictive and scientific judgments for which judicial review is highly deferential under the Administrative Procedure Act’s arbitrary-and-capricious standard.

Of critical practical importance, the Court also reiterated that the rule of harmless error applies to NEPA: An agency’s analysis, even if inadequate in some respects, does not necessarily require vacatur of the agency’s decision if the revised analysis would not alter the agency’s decision. This aspect of the opinion should give agencies comfort that they do not have to always err on the side of undertaking more extensive analysis than they would otherwise undertake to ensure the project they are approving can move forward.

The decision should substantially curtail the ability of litigants to use NEPA to block projects that would otherwise pass muster under the relevant substantive governing statutory standards. The Court expressed disapproval of the fact that NEPA has grown from a “legislative acorn” into “a judicial oak that has hindered infrastructure development under the guise of just a little more process.” The Court has sent a clear signal to lower courts that they should defer to agencies’ NEPA review, and not allow project opponents to use NEPA as a tool to hamstring new infrastructure and development projects. That message should provide real benefits for project applicants and agencies alike in future litigation. That said, in some instances, opponents of infrastructure projects will be able to argue that the applicable substantive standards governing consideration of a project will require the agency to consider broader environmental effects.

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