US Supreme Court backs narrower NEPA environmental reviews

US federal courts must defer to agencies' decisions about where to draw the line when considering indirect environmental impacts under the National Environmental Policy Act, the US Supreme Court determined May 29. The decision could blunt some challenges to fossil fuel projects.

In an 8-0 decision, the Supreme Court said the US Court of Appeals for the District of Columbia Circuit incorrectly interpreted the act, known as NEPA, to require a federal regulator to consider the indirect environmental impacts of an 88-mile rail line planned to connect Utah's Uinta Basin to the national railway network.

Justice Neil Gorsuch recused himself from the case and did not participate.

The ruling could limit challenges to gas and energy projects under NEPA, a Nixon-era law that has been the bedrock of environmental litigation and regulation since its enactment in 1970. Under NEPA, federal agencies are required to draft an environmental impact statement before making decisions that would have significant effects on the environment.

"Congress did not design NEPA for judges to hamstring new infrastructure and construction projects," Justice Brett Kavanaugh wrote in the opinion of the court. "On the contrary," he added, pointing to past Supreme Court stances, courts "must defer to 'the informed discretion of the responsible federal agencies.'"

Kavanaugh wrote that agencies are not required to study the environmental effects of projects over which they do not exercise regulatory authority.

"When the effects of an agency action arise from a separate project — for example, a possible future project or one that is geographically distinct from the project at hand — NEPA does not require the agency to evaluate the effects of that separate project," he wrote.

The ruling could help ease the path for natural gas and other fossil fuel infrastructure, which face frequent litigation over the reach of the government's environmental reviews.

Facts of the case

The US Surface Transportation Board in 2021 determined that it did not need to study the local effects of oil wells and refineries that fall outside its jurisdiction when reviewing a proposed railroad expected to carry waxy crude oil. The DC Circuit in August 2023 overturned that decision, finding that the STB should have studied the upstream effects of increased oil development and downstream effects of refining the oil.

The Uinta Basin Railway and the Seven County Infrastructure Coalition, a group of Utah counties that supports the railway's development, appealed the DC Circuit's decision to the Supreme Court.

In the opinion overturning the ruling, the justices said the DC Circuit did not "afford the Board the substantial judicial deference required in NEPA cases." The high court said NEPA is a "purely procedural statute" that does not mandate specific results but "'simply prescribes the necessary process' for an agency's environmental review of a project."

Kavanaugh said lower courts have not given agencies the deference afforded by the statute, leading to unpredictable and overly broad NEPA reviews.

"Those rulings have slowed down or blocked many projects and, in turn, caused litigation-averse agencies to take ever more time and to prepare ever longer [environmental impact statements] for future projects," Kavanaugh wrote. "NEPA has transformed from a modest procedural requirement into a blunt and haphazard tool employed by project opponents (who may not always be entirely motivated by concern for the environment) to try to stop or at least slow down new infrastructure and construction projects."

Justice Sonia Sotomayor filed a concurrence, which was joined by the court's liberal justices. Sotomayor said which said that while she agreed with the majority's conclusion, the opinion unnecessarily grounded its analysis "in matters of policy."

Long-term impact

The ruling could have major implications for fossil fuel projects, including natural gas pipelines, which have faced persistent litigation from environmental groups challenging the scope of federal environmental reviews.

Some of those challenges have resulted in lengthier permitting processes and occasional adverse rulings from courts.

Litigation has sometimes turned to whether the agencies should have considered upstream impacts, such as gas production induced by building a pipeline, or downstream greenhouse gas emissions associated with a power plant that a pipeline would help fuel.

Bill Scherman, an energy regulation partner at Vinson & Elkins, said that the decision effectively overturned DC Circuit precedent in a decision involving the Sabal Trail Transmission pipeline that required the Federal Energy Regulatory Commission and other regulatory agencies to consider a wide range of "upstream" and "downstream" effects of their actions.

"Considering and addressing these potential effects no longer need to be part of FERC's NEPA review process," Scherman said. "Thus, agencies need not consider under NEPA other projects that are separate in time or place, or that fall within the jurisdiction of other agencies, such as a power plant that may receive gas from a pipeline, or upstream oil drilling that may follow from the approval of a new rail line."

Emily Hammond, a professor at George Washington University and a former deputy general counsel at the US Energy Department, said that the high court's deference to agency expertise could lead to more substantial policy shifts between administrations.

"The court didn't say that agencies may not consider [indirect environmental] effects," Hammond said. "So, what we can expect to see is even further swings from more conservative to more liberal administrations."

Hammond said that while they expected the decision to make litigation more difficult, environmental groups have other tools — including the Clean Air Act and the Clean Water Act — to challenge projects.

Industry reactions

The ruling was celebrated by natural gas industry officials, who said the decision would bring needed clarity to NEPA reviews and reduce unnecessary oversight.

"The court's decision clarified that where an agency has no ability to prevent a certain effect due to its limited statutory authority over the relevant actions, the agency cannot be considered a legally relevant 'cause' of the effect," Amy Andryszak, president and CEO of the Interstate Natural Gas Association of America, said in a statement. "This decision should provide federal agencies with a greater understanding of their obligations under NEPA."

Dena Wiggins, president and CEO of the Natural Gas Supply Association, similarly said that the association was "pleased" that the Supreme Court recognized NEPA as a procedural statute.

"We are hopeful that this gives greater clarity to the NEPA process going forward and provides all stakeholders with much-needed guidance concerning the appropriate scope of a NEPA review," Wiggins said in a statement.

Environmental groups blasted the ruling, calling it a giveaway to fossil fuel companies at the expense of public health.

"Fossil fuel infrastructure projects do not exist in a vacuum and have far-reaching impacts on communities, especially those on the frontlines of climate change or those who face serious health harms from increased pollution," Nathaniel Shoaff, senior attorney at the Sierra Club, said in a statement. "Today's decision will undoubtedly help the fossil fuel industry, but Sierra Club will not stop fighting projects that will have devastating consequences for people and the planet."

The case is Seven County Infrastructure Coalition v. Eagle County Colorado (23-975).