Case Overview

NEPA implementation is evolving. And change is dominating the conversation — as colleagues previously reported. Recently, in Seven County Infrastructure Coalition v. Eagle County, Colorado (Seven County), the U.S. Supreme Court reviewed a D.C. Circuit opinion. Factually, the Seven County Infrastructure Coalition sought to install 88 miles of new railroad construction from Utah oilfields to the national railway system. This kind of operation must first be approved by the U.S. Surface Transportation Board (STB). 49 U.S.C. § 10901. The Board approved the new rail segment after a full NEPA analysis, including an environmental impact statement. The D.C. Circuit’s’ opinion concluded that the STB violated many laws when it approved a rail line project. Those laws include the Administrative Procedure Act, the Endangered Species Act, the Interstate Commerce Commission Termination Act, and the National Environmental Policy Act (NEPA).

Leaving much of the decision below intact, the Supreme Court reversed the Court of Appeals’ NEPA analysis on two specific grounds. First, the Supreme Court directed the lower court to give the STB the deference due in NEPA cases. Second, the Supreme Court found the lower court misinterpreted NEPA to require the STB to evaluate environmental effects that were not “reasonably foreseeable” and were not within the agency’s control. The lower court decision was reversed on these limited grounds and remanded to the lower court.

The parties’ arguments began after the STB found the proposed project’s transportation and economic benefits outweighed its environmental impacts. Eagle County challenged the STB’s environmental review of the proposed rail line under NEPA. Specifically, the County argued that NEPA required the STB to analyze environmental impacts of upstream extraction and downstream combustion of the oil the rail line would transport because of concerns that a railway spill could cause significant damage to the County and others. The Supreme Court’s decision affirms the STB’s narrower interpretation of its NEPA obligations. The decision also encourages judicial deference to the reasonable, fact-driven, context-specific, and policy-laden choices federal agencies make when conducting NEPA reviews. Importantly, however, the decision did not reinstate the project’s approval by the STB, and it did not disturb the D.C. Circuit’s analysis under other statutes. The project’s approval remains vacated at this time, and it is expected that the Court of Appeals will conduct further proceedings consistent with the Supreme Court’s opinion.

Key Holdings

• Federal agencies need not assess upstream or downstream environmental impacts under NEPA if such impacts are indirect, speculative, or outside the agencies’ control.
• Courts in NEPA cases must defer to agencies’ factual and technical analysis, provided that such analysis is reasonable and reasonably explained.

Implications for Water Infrastructure Projects

The Supreme Court’s reasoning in Seven County encourages judicial restraint in NEPA cases. Thus, Seven County may prompt federal agencies to conduct NEPA reviews with less fear of judicial oversight than they may have had prior to the decision. For proponents of water infrastructure projects involving the U.S. Army Corps of Engineers (Corps), Bureau of Reclamation (Reclamation), or other federal agencies, this shift could create a less onerous permitting process.

However, these project proponents remain exposed to regulatory uncertainty — especially in projects involving multiple federal agencies — because of the recent rollback of the Council on Environmental Quality’s unified NEPA framework. The proponents also face litigation risk at the state level, and under statutes that, unlike NEPA, impose substantive constraints on development decisions. In fact, approval of the project at the heart of Seven County remains vacated under some such authorities at this time. Therefore, all stakeholders — project proponents and opposers alike — should proceed cautiously as this area of law continues to evolve.

Key Take Aways for Stakeholders

1. Potentially Streamlined NEPA Reviews: Agencies may exclude speculative or indirect environmental impacts. Careful consideration for framing impacts is warranted by project proponents and project opposers. This may or may not reduce the time and cost of environmental reviews for projects involving the Corps, Reclamation, or other federal entities.
2. Deference to Agency Judgment: Courts are more likely to more closely defer to agencies’ reasonable and reasonably explained judgment calls in NEPA cases.
3. Litigation Risk Remains: Although indirect impacts may be excluded under NEPA, direct impacts must still be analyzed and mitigated, and legal challenges to development projects may arise under state laws and federal statutes that, unlike NEPA, still may impose substantive constraints on development decisions.

For inquiries or additional information, please contact:

• Ramsey L. Kropf, rkropf@somachlaw.com
• Emily J. Lovell, elovell@somachlaw.com

Somach Simmons & Dunn provides the information in its Environmental Law & Policy Alerts and on its website for informational purposes only. This general information is not a substitute for legal advice, and users should consult with legal counsel for specific advice. In addition, using this information or sending electronic mail to Somach Simmons & Dunn or its attorneys does not create an attorney-client relationship with Somach Simmons & Dunn.