Last week, in the first major National Environmental Policy Act (NEPA) case to reach the Supreme Court in two decades, the Supreme Court handed down a decision that could significantly constrain both the scope of effects that an agency considers in their environmental reviews as well as how courts review agency decisions.  

The unanimous decision in Seven County Infrastructure Coalition v. Eagle County overturned a prior decision by the D.C. Circuit Court of Appeals, which had held that NEPA requires agencies to consider upstream and downstream environmental effects, even when they are separate in time or place from the project under review. The Supreme Court made clear in their ruling that the D.C. Circuit’s interpretation of NEPA’s requirements was incorrect—agencies don’t need to consider those indirect effects and courts shouldn’t second guess an agency’s decision of what to evaluate or even whether or not the agency’s final decision was correctly decided. NEPA requires only that the agency clearly explain their decision. 

The case has been hailed as a win for infrastructure developers and agencies and has the potential to significantly reduce the level of analysis an agency conducts in their NEPA analysis. Agencies may feel confident embracing a much briefer review not only as a result of the opinion’s explicit limits on consideration of indirect effects but also because greater court deference may reduce agencies’ fears of litigation risks, which can lead to excess litigation-proofing of NEPA documents. It is all but certain that climate effects will receive less discussion as part of NEPA analyses because of the ruling’s new approach to indirect effects.  

On the other hand, the ruling leaves a good number of questions unanswered and doesn’t directly address the background context and changes of recent years. That swirl of background includes other court rulings on NEPA and the recent rescission of the Council on Environmental Quality (CEQ) regulations. It also includes the amendments to NEPA directing agencies to use “One Federal Decision” among other changes, that were passed after the NEPA document in this case was issued and not comprehensively addressed in the ruling. While the ruling attempts to make NEPA more manageable, it avoids answering certain fundamental questions, and therefore could end up functioning less like a true reset and more like a patch on an increasingly complicated structure that at some point may be harder to keep repairing than to just tear down and rebuild. 

Seven Counties Background 

At issue in this case is the Surface Transportation Board’s (STB) approval of an 88-mile railroad line to be constructed and operated by the Seven County Infrastructure Coalition. The proposed rail line would provide a common-carrier rail connection between the existing interstate rail network and the Uinta Basin, an isolated area in northeast Utah with limited transportation access, which is rich in deposits of waxy crude.  

The primary purpose of the railroad, as stated in the STB’s Environmental Impact Statement (EIS) Purpose and Need section, “would be to provide common carrier rail service connecting the Basin to the interstate common carrier rail network” which “the Coalition anticipates that shippers would use… primarily to transport crude oil from the Basin to markets across the United States.” Some crude oil is already being transported from the Uinta Basin via truck, but the STB assumes in their EIS that all the oil shipped out on the rail line would be new oil from wells that have yet to be developed. Although the rail line could end up carrying cars of certain other goods alongside crude, the EIS was clear that “the volume of those products would likely not be large enough to require dedicated trains.” 

The STB’s Environmental Impact Statement (EIS) acknowledged that the railroad would have upstream effects (e.g. drilling oil wells in the Uinta Basin), as well as the downstream effects (e.g. the refining of crude oil in Louisiana). These facts were relevant to the STB decision because the Board had to determine whether the railroad project would be financially viable or not by explicitly estimating the amount of oil to be drilled and refined. The earlier D.C. Circuit decision found that since the agency was approving a railroad for the purpose of transporting oil to be refined, and that the drilling and refining of that oil is what would enable the project to be economically viable, then the STB had to consider the environmental consequences of that oil refining. The Supreme Court reversed this finding. 

One aspect particular to STB’s organic statute came up repeatedly in the Supreme Court oral arguments. According to the D.C. Circuit’s ruling, the Board’s “exclusive jurisdiction over the construction and operation of the railway, includ[es] authority to deny the exemption petition if the environmental harm caused by the railway outweighs its transportation benefits.”  But on the other hand, the STB’s common carrier mandate to railroads prevents railroads from declining to provide transportation based on the cargo to be carried. As a result of their common carrier mandate, the STB had argued in their EIS that they were “not required to analyze impacts related to the destinations or end uses of any such products or commodities”. Justice Sotomayor, drafting a concurring opinion in which she was joined by Justices Kagan and Jackson, grounded her somewhat narrower opinion on this basis that the STB lacks the authority “to reject petitioners’ application on account of the harms third parties would cause with products transported on the proposed railway.” 

Indirect and other Effects under NEPA 

NEPA’s statutory requirements for environmental review are that agencies prepare a “detailed statement” for proposed major Federal actions that will significantly affect the human environment. As originally passed in 1970, NEPA required EISes to assess “the environmental impact of the proposed action” and “any adverse environmental effects which cannot be avoided should the proposal be implemented.”  

Historically, CEQ interpreted this statutory language to mean three types of effects: direct, indirect, and cumulative effects. Indirect effects were those that are caused by the proposed action that are “later in time or farther removed in distance but are still reasonably foreseeable.” Both terms –indirect effects and cumulative effects— were removed in the CEQ regulations during President Trump’s first term in office, and then replaced in President Biden’s “Phase 1” CEQ regulations. Following Marin County v FAA, CEQ regulations were fully rescinded earlier this year.  

In 2023, amendments to NEPA in the Fiscal Responsibility Act limited the consideration of environmental effects to those that are “reasonably foreseeable”.  But even with that limitation, considering anything outside of immediate direct effects appears to be still a source of challenge to infrastructure project developers. As Paul Clement argued in front of the Supreme Court in this case “if you think about [an effect] even a little bit, then it’s foreseeable, then you have to study it to death. That creates all the wrong incentives.” 

The concept of indirect effects is particularly significant for consideration of climate change impacts. While few federal actions will directly result in significant increases in greenhouse gas emissions, many federal actions will indirectly lead to significant increases in the combustion of fossil fuels and the increase of GHG emissions. For example, an oil pipeline may result in a small amount of direct emissions of methane, but indirectly it will enable a much larger amount of GHGs to be emitted at the point of combustion. Most likely that combustion will take place as part of a separate project, at a distant time and place, and if there is a federal action subject to NEPA at all, it will be under the purview of a separate federal agency. According to research by the National Association of Environmental Professionals, in 2022 there were three substantive decisions issued by the U.S. Courts of Appeals that addressed indirect effects under NEPA, and all three of those involved challenges about climate change. 

SCOTUS Ruling 

In the majority decision written by Justice Kavanaugh, and joined by Justices Roberts, Thomas, Alito, and Barrett, the court ruled that NEPA does not require the STB to address the effects of the upstream drilling or the downstream oil refining, finding that “there is no “‘reasonably close causal relationship’” between the project at hand and the environmental effects of those other projects” and moreover that the STB “possesses no regulatory authority over those separate projects.” Even if the effects from a separate project are foreseeable, and even if it’s the case that but for the federal action those effects would not occur, the justices ruled that the agency need not be held responsible for those effects.  

The ruling narrows the environmental review to exclude two major types of effects: effects of future projects that are separate in time and place, even if that future project may foreseeably be built or expanded in the wake of the current project, and effects of projects over which the agency does not exercise regulatory authority.  

A significant portion of the majority’s ruling is devoted to guiding courts in response to what Justice Kavanaugh describes as “the continuing confusion and disagreement in the Courts of Appeals over how to handle NEPA cases.” The ruling cuts through that confusion with all the nuance of a sledgehammer, writing “the bedrock principle of judicial review in NEPA cases can be stated in a word:  Deference.”  

Specifically, per this ruling, courts must defer to agencies on “the length, content, and level of detail” of their analysis; “what facts are relevant to the agency’s own decision;” “what qualifies as significant or feasible” regarding effects or alternatives; and “where to draw the line” in considering indirect effects. “The adequacy of an EIS is relevant only to the question of whether an agency’s final decision… was reasonably explained.” Beyond this deference on agency choices of how to scope and evaluate an environmental analysis, the ruling goes further to state that “even if an EIS falls short in some respects, that deficiency may not necessarily require a court to vacate the agency’s ultimate approval of a project, at least absent reason to believe that the agency might disapprove the project if it added more to the EIS.” 

Notably, agencies already win the majority of NEPA cases: the NAEP study from 2022 found agencies won 78% of the cases; a Breakthrough institute study found agencies won 80% of appeals cases. With this ruling, those rates may increase further. 

Context and Additional Implications 

Not addressed directly in the court’s opinion is the significant backdrop against which this case was heard, which is the upheaval in the world of NEPA. The Supreme Court’s decision did not address the separate D.C. Circuit ruling that the Council on Environmental Quality lacks authority to issue regulations; CEQ has rescinded its regulations and issued guidance that agencies should each update their own NEPA implementing regulations to integrate changes in law.  

The case was also heard and decided amidst the national “abundance” conversation and it does appear clear from the tone of the ruling that the Supreme Court was motivated by this backdrop to some degree. Justice Kavanaugh describes a bloating effect of NEPA analyses and litigation leading to delays, cost increases, job impacts and describes NEPA as a tool “that has hindered infrastructure development.” The opinion clearly appears intended to cut through that process, with Justice Kavanaugh explicitly writing that “a course correction of sorts is appropriate to bring judicial review under NEPA back in line with the statutory text and common sense.” 

Part of the confusion underlying NEPA though is the distinction between the concept of “project” and the concept of a “Federal action” and this ruling may actually add to that confusion. In NEPA, a single project (e.g. approval to construct a railroad) may require multiple federal actions from multiple federal agencies, each with responsibility to conduct NEPA on their action—hence the ongoing interest in unifying reviews into a single document. However this ruling barely uses the term “action” –it appears primarily only in quotes of prior court precedents. Instead, the ruling refers to “projects” which is a commonsense way to think about it, but not technically accurate or aligned with statute. The opinion equates these concepts directly, stating “the textual focus of NEPA is the “proposed action”—the project at hand—not other separate projects.” 

The ruling also does not speak comprehensively to the amendments made to NEPA as part of the Fiscal Responsibility Act’s (FRA) “BUILDER Act” title. The EIS at issue was decided prior to those NEPA amendments, and the regulations implementing those changes have since been rescinded, but the decision does not speak to how the amendments affect the implementation or should be interpreted. The only reference to those amendments is in a footnote that states “That [BUILDER] Act strongly reinforces the basic principles that NEPA, correctly interpreted, already embodied but that have been too often overlooked. The analysis in this opinion thus applies to NEPA as amended by the BUILDER Act.”  

One element of those amendments to NEPA was to direct agencies to use unified federal reviews where there are multiple agencies with separate actions on a project. In such a case, all agencies must use the evaluation prepared by the lead agency to the extent practicable, yet this ruling directs agencies to narrowly scope the “project” to a “manageable line”, to constrain their reviews to those issues solely within their jurisdiction, and to narrowly consider only the direct effects of their own action. Will agencies decide to each narrowly scope their own actions as separate “projects”, despite the projects being closely interrelated? Agencies will have significant deference on how to proceed, but uncertainty typically does not speed up agency decisionmaking. 

Another issue that may arise for practitioners as they seek to implement this decision will be what this case means for the question of segmentation and whether an action has independent utility. These concepts are highly relevant to this case but the terms did not come up in oral arguments or in the final ruling. If actions are functionally interdependent and each individual action lacks independent utility, then agencies have previously faced litigation claims for improperly segmenting the action and reviewing it separately from the connected actions. This ruling appears to invite agencies to use segmentation but doesn’t give agencies clear direction, especially because of the muddling of the terms “project” and “action”. The ruling discusses circumstances when “other projects may be interrelated and close in time and place to the project at hand” and rules that “the question then is whether that is a single project within the authority of the agency in question.” As Justice Kavanaugh concedes “there may be a gray area in defining the project at hand.” 

What seemed notable to me is how much the ruling relied on and reinforced the last major Supreme Court ruling on NEPA: DOT v. Public Citizen, which was decided in 2004, and which also provided deference to agencies to not evaluate environmental effects when the agency lacks discretion to prevent those effects. Yet as the history of the last two decades indicates, the issue has remained a challenge and source of confusion in agencies and courts despite that ruling. 

In that context, it’s not clear how much the ruling will alleviate pressure in Congress to consider permitting reform. And on that note, this week the Senate Environment and Public Works Committee released their budget reconciliation text, and did include the House provisions to allow developers to pay optional fees to fast-track NEPA reviews, meaning that idea has taken a step closer to becoming law.