U.S. Supreme Court Holds Courts Must Defer to Agency Environmental Reviews under NEPA

In Seven County Infrastructure Coalition v. Eagle County,[1] the United States Supreme Court held courts must defer to agency environmental reviews under the National Environmental Policy Act (“NEPA”).  This is noteworthy because the court recently overruled Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. in 2024.[2]  Chevron was a long‑standing deference doctrine under a related statute.

Seven Utah counties proposed to construct 88 miles of railroad in northeastern Utah to connect the oil-rich Uinta Basin to the national rail network (the “Project”).  The Project’s primary purpose was to enable local oil producers to transport crude oil to the Gulf Coast.

Under federal law, the Surface Transportation Board (the “Board”) must approve proposed railroad construction and operation projects.  As part of its process, the Board considers whether federal law also requires review under NEPA.  Under NEPA, the Board first conducts an Environmental Assessment.  If a proposed project will have significant environmental impact, the Board prepares an environmental impact statement (“EIS”) addressing those impacts and alternatives to mitigate them.  

The Board produced an EIS that spanned hundreds of pages analyzing the proposed railroad’s environmental effects.  The EIS noted—but did not fully analyze—the potential effects of increased upstream drilling in the Uinta Basin and downstream refining in Louisiana and Texas resulting from the new railroad. 

The EIS determined a full analysis of drilling and refining projects was outside the scope of the report because the Project at issue was the proposed railroad line.  The EIS further explained that, as a transportation authority, the Board had no control over refining and drilling activities.

The Board approved the Project.  It concluded the Project’s benefits outweighed the environmental impacts.  One Colorado county and multiple environmental organizations challenged the approval in the United States Court of Appeals for the District of Columbia Circuit.  The plaintiffs alleged the NEPA review was inadequate and thus the approval was illegal.

The United States Court of Appeals for the District of Columbia vacated the Board’s approval.  The court held the Board did not adequately consider the environmental effects of the increased upstream drilling and downstream refining.

The United States Supreme Court unanimously reversed the Court of Appeals’ decision.  Justice Brett Kavanaugh, writing for the court, cited two reasons for the reversal.

First, “[c]ourts should afford substantial deference” to the “fact-dependent, context‑specific, and policy-laden choices” an agency makes regarding the scope of an EIS.  The EIS adequately addressed the Project’s environmental effects, and the Board determined a detailed examination of the drilling and refining projects was outside the scope of the EIS.  Therefore, the lower court should have deferred to the Board’s determination regarding the scope of that assessment.

Second, the court held NEPA only mandates the Board consider environmental effects of the “proposed action” and not potential effects of separate projects that might later materialize.  42 U.S.C. § 4332(2)(C).  Here, the “proposed action” was the rail line and not the drilling or refining projects.  Therefore, NEPA did not require the Board to address effects of those separate upstream or downstream projects.

Justice Sonia Sotomayor concurred.  Justices Elena Kagan and Ketanji Brown Jackson joined.  

These justices advocated for a two-step analysis where courts first consider whether the agency has the statutory authority to address a given environmental impact.  If not, the agency may set aside the impact for purposes of its NEPA review.  But if the agency does have the authority and chooses not to review a given impact because the impact is too attenuated from a project, courts must next ask “whether the agency ‘acted arbitrarily’ in doing so.”  Here, the Board did not have the statutory authority to address the environmental impact of the drilling and refining activities, so NEPA did not require the Board to review the activities’ impacts.

Though Loper Bright formally set aside Chevron deference, this case instructs lower courts to continue deferring to agency action in at least some instances.  For projects that require an EIS, this case narrows objectors’ ability to second-guess agency review.

Attorneys at Baird Holm specialize in various subject matter areas including land use, environmental law and real estate development and litigation.  Please contact us with any questions.

Hannes D. Zetzsche
Christopher G. Thorpe, Summer Associate