The U.S. Supreme Court has ruled that agencies preparing an Environmental Impact Statement (EIS) under the guidance of the National Environmental Policy Act (NEPA) need only to consider the environmental effects of the “project at hand” and not those that are “separate in time and place.”
The 8-0 decision handed down May 29 in Seven Cnty. Infrastructure Coal. v. Eagle County — of which Justice Gorsuch did not take part — further held that courts should “defer to an agency’s reasonable choices regarding the scope and contents of the EIS.”
At the center of the case was a proposed 88-mile railroad line to connect Utah’s oil basin to the national freight nail network, which would allow for increased transportation of gasoline. Under federal law, the new railroad construction must be approved by the U.S. Surface Transportation Board.
In seeking the board’s approval for the railroad line, a group of seven Utah counties prepared a lengthy EIS of more than 3,600 pages of analysis. Included in the EIS was analysis of the “significant and adverse impacts that could occur as a result” of the construction of the railroad line, “disruptions to local wetlands, land use, and recreation” and “minor impacts” including “air pollution” and “big game movement.”
The EIS, however, did not fully analyze “the potential effects of increased upstream oil drilling” and “increased downstream refining of crude oil.” It also did not fully address these issues as the board did not have authority to control any of these potential oil and gas projects in the future. Also, any specific destinations “would depend on the ability and willingness of refineries in other markets to receive rail cars carrying Uinta Basin crude oil and process the oil in their refineries.”
During the pendency of the board’s final approval of the project, a Colorado county and several environmental organizations filed petitions for review in the U.S. Court of Appeals for the D.C. Circuit. The Court of Appeals vacated the EIS and the board’s final approval order, holding that the environmental effects from these potential future oil and gas developments “were reasonably foreseeable impacts” that required more detailed analysis in the EIS.
The Supreme Court reversed the Court of Appeals holding, underscoring that NEPA, which was once a “modest procedural requirement,” has transformed from a “legislative “acorn” into a “judicial oak that has hindered infrastructure development.” Specifically, that the textually mandated focus of NEPA is the “proposed action” i.e. “the project at hand” and not “other future or geographically separate projects.”
The Supreme Court distinguished these developments as “separate projects,” finding that but for causation and “mere foreseeability” are not a sufficient basis for courts to order agencies to conduct further analysis on separate projects. Thus, in the instant case, the board did not need to evaluate the potential future oil and gas developments. Last, but most significantly, the Supreme Court emphasized that courts “should afford substantial deference to the agency as to the scope and contents of the EIS.”
This holding has significant impacts for the energy and infrastructure industries and beyond. First, this ruling significantly narrows the scope of EIS reports, particularly for energy and infrastructure projects, as the holding establishes that for the effects of upstream or downstream pollution caused by fuel production and transportation are separate and distinct projects — the impact of which does not need to be included in an EIS report, among other things.
Further, by narrowing the scope of EIS reports, the costs associated with developing these reports will decrease due to the reduced need for additional specialized expertise from scientists, engineers, and others to study impacts outside of a specific project. The overall costs with the EIS report preparation itself will also decrease as their length will likely be shortened. This will impact any projects seeking agency approval across various industries.
Second, this ruling will make it more difficult to challenge future developments based on potential environmental impacts in the lower courts due to the “substantial deference” that must be shown to an agency’s decision. Reduced litigation will likely further drive down development costs and reduce the length of the approval process itself, overall. This also may attract more risk-adverse developers due to the decreased threat of litigation.
Although the exact impact of this case remains to be seen, there are clear and significant implications for the development of future projects and for future litigation concerning NEPA regulations.