U.S. Supreme Court Instructs Courts to Provide "Substantial Deference" to Agencies in NEPA Cases

Background

NEPA, unlike other environmental statutes such as the Clean Air Act, imposes no substantive environmental obligations or restrictions. Rather, NEPA is purely procedural. It requires federal agencies to prepare an EIS when constructing, funding, or approving certain projects, such as highways, railroads, and other infrastructure projects. An EIS "must address the significant environmental effects of a proposed project and identify feasible alternatives that could mitigate those effects."

Seven County involves a challenge to a U.S. Surface Transportation Board EIS for the construction of a new railroad. Seven Utah counties sought approval to build an 88-mile railroad connecting the oil-rich Uinta Basin to the national railroad network. The Board approved the project after completing a lengthy EIS that considered the project's environmental impacts. The Board noted, but did not fully analyze, the project's potential upstream and downstream effects—namely, increased oil drilling in the Uinta Basin and increased oil refining along the Gulf Coast.

A Colorado county and environmental organizations challenged the Board's EIS and approval at the U.S. Court of Appeals for the D.C. Circuit. That court found "numerous NEPA violations arising from the EIS," holding the Board impermissibly limited its analysis of the upstream and downstream effects of the project, and vacated the Board's decision. The Supreme Court granted certiorari.

The Decision

The Supreme Court unanimously reversed, with five justices joining the majority opinion and three justices concurring in the judgment. Justice Gorsuch did not participate.

1. Justice Kavanaugh, writing for five Justices, explained that courts must afford "substantial judicial deference" to agencies' substantive judgments in NEPA cases. Such deference is appropriate, the Court explained, because NEPA is "purely procedural" and only requires agencies to follow a statutorily prescribed environmental-review process and to "prepare an adequate report." Given that deference, reviewing courts "should not micromanage" an agency's decisions "about the depth and breadth of its [NEPA] inquiry" or "about the length, content, and level of detail of the resulting EIS" as long as "they fall within a broad zone of reasonableness."

The majority admonished courts that "have strayed and not applied NEPA with the level of deference demanded by the statutory text and this Court's cases," which has "slowed down or blocked many projects" and "caused litigation-averse agencies to take ever more time and to prepare ever longer EISs for future projects." The Court found a "course correction" "appropriate to bring judicial review under NEPA back in line with the statutory text and common sense."

The majority contrasted its holding affording agencies deference under NEPA with Loper Bright Enterprises v. Raimondo, which held that courts should not afford deference to agencies' legal interpretations. It explained that "[a]s a general matter, when an agency interprets a statute, judicial review of the agency's interpretation is de novo"; however, "when an agency exercises discretion granted by a statute" like NEPA, "judicial review is typically conducted under the Administrative Procedure Act's deferential arbitrary-and-capricious standard." 

The Court further emphasized that an inadequate EIS does not necessarily require a court to vacate agency approval of a project. Instead, vacatur is only warranted if there is "reason to believe that the agency might disapprove the project if it added more to the EIS." 

2. Applying that legal framework, the Court reversed the D.C. Circuit. 

The Court explained that the Board's decision not to analyze the environmental impacts of upstream drilling or downstream refining was proper because those impacts would result from "future or geographically separate projects that may be built" outside of the railroad "project at hand." While such indirect environmental impacts may sometimes fall within NEPA's ambit, they need not be analyzed if they are better characterized as the result of a separate project, rather than the indirect consequence of the project at hand. 

Separately, the Court explained that agencies need not "analyze the effects of projects over which they do not exercise regulatory authority." Because the Board here lacked regulatory authority over drilling and refining, the Court held that the Board did not err in declining to analyze the impacts of those theoretical collateral projects.

3. Justice Sotomayor, joined by Justices Kagan and Jackson, concurred in the Court's judgment, but offered a narrower rationale. They favored resolving the case solely on the ground that the Board would not be legally "responsible" for the environmental impacts of upstream drilling or downstream refining because it lacked statutory authority to regulate those actions. 

Immediate Impact

The immediate impact is that the railroad connecting the Uinta Basin to the national railroad network will receive the approval the Board initially granted. Additionally, courts hearing challenges to agency approval of infrastructure and construction projects will need to afford substantial deference to agency NEPA decisions.