Supreme Court Curtails Sweeping Environmental Impact Studies (3)

The US Supreme Court reined in the scope of environmental impact studies and in doing so said courts must defer to agencies when considering if they’re detailed enough.

The decision Thursday reversed a lower court ruling that said regulators didn’t go far enough in considering the environmental impact that a planned rail line in Utah for shipping crude would have on Gulf Coast refining communities.

Any “environmental effects from highly regulated oil refineries along the Gulf Coast are well outside the scope of the 88-mile railroad project in rural Utah,” the 8-0 ruling authored by Justice Brett Kavanaugh said.

The case centered on the National Environmental Policy Act was remanded to the US Court of Appeals for the District of Columbia Circuit for further consideration.

The decision could boost US efforts to expedite environmental permitting for projects such as data centers, pipelines, and large energy projects.

President Donald Trump has prioritized scaling up fossil fuel and other energy projects and his administration has already take steps to soften NEPA reviews.

Investors say those reviews have grown beyond what Congress intended. The result is often unexpected delays that can drag out project approval process for years or even decades.

Justice Sonia Sotomayor, joined by Justices Elena Kagan and Ketanji Brown Jackson agreed with the result but for a different reason.

Justice Neil Gorsuch was recused, making the ruling 8-0. Gorsuch didn’t give a reason for his recusal but he did so after Rep. Hank Johnson (D-Ga.) and other members of Congress urged Gorsuch to step away due to ties with Colorado businessman Philip Anschutz, whom they said had an interest in the outcome. Gorsuch represented Anschutz and his companies while in private practice.

Agency Deference

The decision may seem contradictory to its landmark ruling last term in Loper Bright Enterprises v. Raimondo, which curtailed the power of federal regulators, legal scholars say the opinion isn’t a new guardrail on that decision because this case presents a unique situation.

The “decision is a great example of why Loper Bright isn’t about the full universe of cases,” said University of Minnesota law professor James Coleman.

Loper Bright limited the deference owed to agencies when interpreting ambiguous statutes. It’s the job of courts, not agencies, to interpret federal law, the justices said last June.

But the statute at issue in Thursday’s case, the 1969 NEPA law, specifically grants discretion to the US Surface Transportation Board, the court said.

“The bedrock principle of judicial review in NEPA cases can be stated in a word: Deference,” Justice Brett Kavanaugh wrote for the court.

While curtailing agency deference generally, Loper Bright noted that there are some situations in which it’s still warranted.

“As a general matter, when an agency interprets a statute, judicial review of the agency’s interpretation is de novo,” the court said Thursday, meaning that a court interprets the statute from scratch.

“But when an agency exercises discretion granted by a statute, judicial review is typically conducted under the Administrative Procedure Act’s deferential arbitrary-and-capricious standard,” it said.

That’s the case with NEPA.

The D.C. Circuit didn’t give the agency the deference it was entitled to, the justices said. Instead, the D.C. Circuit went too far when it required regulators to look at potential effects on Gulf Coast communities when considering approval of a rail line in Utah to ship crude oil that will eventually end up in those communities.

In doing so, the court emphasized that the law was intended to assist federal agencies in decision making. In deciding what factors are relevant, “courts should defer to agencies’ decisions about where to draw the line,” the court said.

Sambhav Sankar, senior vice president for programs at Earthjustice, said this case shouldn’t be read as encouraging agency discretion.

“This isn’t a decision in which the court is saying trust agencies more broadly,” Sankar said. “The court is attacking NEPA by saying ‘trust the government when it ignores environmental consequences,’” he said. Earthjustice represented the environmental and public health groups that defended the law in the case.

The ruling laments that the law had morphed beyond what Congress intended.

“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,” the justices said.
“Citizens may not enlist the federal courts” in that way.

Future Litigation

The ruling clarifies the difference between deference in a question of law and deference to an agency’s factual expertise, said Venable partner Jay Johnson, who represented the coalition of Utah counties that sought the board’s approval of the railroad project.

‘When you’re dealing with a factual issue, agencies are in a better position than courts to decide the question,” he said. “I think the exact reverse is true in Loper Bright where you’re dealing with a legal issue and interpretation of a statute, courts are in a better position than agencies.”

Emily Hammond, a George Washington University law professor, said future litigation is likely to center on these “all-or-nothing categories.” Parties will argue either “that a matter is purely about statutory interpretation, or that it is purely about policy and expertise, according to their hoped-for outcomes,” Hammond said.

The case is Seven County Infrastructure Coalition v. Eagle County, Colorado, U.S., No. 23-975, 5/29/25.