Supreme Court to Clarify NEPA's Scope: The Uinta Basin Railway Case and Its “Reasonably Foreseeable” Implications

Supreme Court to Clarify NEPA's Scope: The Uinta Basin Railway Case and Its “Reasonably Foreseeable” Implications
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Originally published for customers September 25, 2024.

 

What's the issue?

The Supreme Court has agreed to resolve a circuit split over the scope of environmental reviews required under the National Environmental Policy Act (NEPA). The case, involving the Uinta Basin Railway project, highlights a fundamental disagreement among circuits about how to interpret the Court's 2004 ruling in Department of Transportation v. Public Citizen regarding the extent of environmental effects agencies must consider in their NEPA analyses.

Why does it matter?

The Court's decision could have significant implications for infrastructure projects nationwide, particularly in the energy sector. A broader interpretation of NEPA’s requirements could lead to more extensive, time-consuming, and costly environmental reviews, potentially delaying or derailing major projects. Conversely, a narrower interpretation could streamline the approval process for infrastructure development but might limit consideration of certain environmental impacts.

What's our view?

The Supreme Court's decision to grant certiorari underscores the importance of resolving this circuit split and providing clear guidance on the proper scope of NEPA reviews. Its recent overturning of “Chevron deference” shows a willingness to rein in expansive agency interpretations of statute, and could indicate a similar willingness to narrow the scope of agency NEPA reviews.

 


 

The Supreme Court has agreed to resolve a circuit split over the scope of environmental reviews required under the National Environmental Policy Act (NEPA). The case, involving the Uinta Basin Railway project, highlights a fundamental disagreement among circuits about how to interpret the Court's 2004 ruling in Department of Transportation v. Public Citizen regarding the extent of environmental effects agencies must consider in their NEPA analyses.

The Court's decision could have significant implications for infrastructure projects nationwide, particularly in the energy sector. A broader interpretation of NEPA’s requirements could lead to more extensive, time-consuming, and costly environmental reviews, potentially delaying or derailing major projects. Conversely, a narrower interpretation could streamline the approval process for infrastructure development but might limit consideration of certain environmental impacts.

The Supreme Court's decision to grant certiorari underscores the importance of resolving this circuit split and providing clear guidance on the proper scope of NEPA reviews. Its recent overturning of “Chevron deference” shows a willingness to rein in expansive agency interpretations of statute, and could indicate a similar willingness to narrow the scope of agency NEPA reviews.

 

What a Train Wreck — Public Citizen Circuit Split and the Uinta Basin Railway

As we discussed in our article Rules, Laws, Reviews - Three Chevrons of Government - Will Changing Deference Further Divide?, the recent overturning of Chevron deference has significant implications for how agencies interpret and implement ambiguous statutes. This shift in the judicial landscape forms a crucial backdrop to the Uinta Basin Railway case, as it indicates the Supreme Court’s willingness to upend well established agency procedure and rein in agency discretion.

The concept at issue is the "reasonable foreseeability” standard in Section 102(2)(C) of NEPA — that agencies must study any "reasonably foreseeable adverse environmental effects which cannot be avoided should a proposal be implemented.” The problem is one of scope, and the courts are split in their interpretation of a Supreme Court case — Department of Transportation v. Public Citizen (Public Citizen) — that attempted to answer what types of effects are reasonably foreseeable. Another key concept in this section of NEPA is that it requires this analysis “except where compliance would be inconsistent with other statutory requirements.”

In Public Citizen, the Court held that the Federal Motor Carrier Safety Administration (FMCSA) did not need to consider the environmental effects of increased Mexican truck traffic in the U.S. when it issued safety regulations for those trucks. The Court reasoned that the FMCSA had no ability to prevent Mexican trucks from entering the U.S., as that decision was made by the president, and thus the environmental effects were not a result of the FMCSA's action.

Five circuits, the Third, Fourth, Sixth, Seventh, and Eleventh, have interpreted Public Citizen to mean that agencies need only consider environmental effects within their regulatory purview. In contrast, the D.C. and Ninth Circuits (which hear the majority of NEPA cases) have taken a broader view based on the concept of “reasonable foreseeability” in the NEPA statute and the regulations promulgated by the Council on Environmental Quality (CEQ) — that agencies must study any “reasonably foreseeable adverse environmental effects which cannot be avoided should the proposal be implemented.”

Enter the Unita case currently before the Court. The case stems from the Surface Transportation Board's (STB) approval of the Uinta Basin Railway, an 88-mile rail line in Utah designed to connect the isolated Uinta Basin to the national rail network. The project, which would primarily transport waxy crude oil, was challenged in the D.C. Circuit. Based on its interpretation of Public Citizen the court vacated the STB’s approval, ruling that the agency should have considered the environmental impacts of increased oil production and refining, despite these activities falling outside the STB’s regulatory authority.

In sum, one side reads Public Citizen to emphasize each agency’s statutory authority, the other would argue that NEPA applies equally to every agency, and its statute requires agencies to consider even environmental effects they don’t directly regulate, so long as they are reasonably foreseeable and not inconsistent with other law. The approaches also differ in sequencing. One side starts the analysis with the agency’s primary authority based on Public Citizen, then proceeds to NEPA; the other elevates NEPA reasonable foreseeability first, then proceeds to Public Citizen. This debate is also as political as it is substantive. The Trump era CEQ NEPA regulations codified the holding in Public Citizen, which the Biden Administration reversed in its regulations, again elevating reasonable foreseeability.

In essence, the petitioners, supported by amicus curiae briefs like that of NextDecade LNG, LLC (NextDecade) argue that the D.C. Circuit’s approach misinterprets Public Citizen and improperly relies on CEQ regulations to expand NEPA’s requirements beyond what Congress intended. In their view, Public Citizen was intended to create a manageable limit on the scope of NEPA analysis, tying it to an agency’s statutory authority, something that the D.C. Circuit continues to get wrong, particularly in the Uinta Basin Railway case. They see the D.C. Circuit’s interpretation as turning agencies into “de facto environmental-policy czars,” forcing them to consider impacts far beyond their expertise or authority.

 

CEQ’s Authority and NextDecade’s Interest

There is also a secondary issue in these cases, although it is not the primary focus of the Uinta Railway case — the extent to which CEQ possesses the authority to issue binding NEPA regulations on agencies. NextDecade’s involvement in this case as amicus curiae (means "friend to the court,” not a party to the case but voluntarily offering information relevant to it) is particularly notable for this issue, in light of recent events. As we discussed in Another Significant Ruling From the DC Circuit — Rio Grande and Texas LNG Projects Vacated, the D.C. Circuit recently vacated FERC’s reauthorization of NextDecade’s Rio Grande LNG project.

In its amicus brief, NextDecade argues that Congress did not confer rulemaking authority to CEQ. It highlights CEQ’s advisory role to the president and argues that Executive Order 11991 (issued by President Carter in 1977), which directed CEQ to issue NEPA regulations and required federal agencies to comply with these regulations, is questionable, given that NEPA does not explicitly grant such power to CEQ or the president. NextDecade asks the Court to clarify that “the CEQ-informed standards applied by the D.C. Circuit are not properly treated as binding authority.” It reminds the Court of its recent decision that overturned Chevron deference, Loper Bright Enterprises v. Raimondo, and argues that “prior court rulings” that treated CEQ’s rules as binding were in error. It also refers to the CEQ NEPA regulations’ emphasis on environmental justice as “extra-statutory,” highlighting its origins in President Clinton’s Executive Order 12898.

The argument contrary to NextDecade’s is that NEPA broadly charges CEQ with overseeing and guiding NEPA implementation across the federal government, which includes developing procedures, and that CEQ initially issued interim guidelines in April 1970 and revised the guidelines in 1971 and 1973, well before President Carter’s executive order.

In practice, agencies develop their own NEPA procedures in consultation with CEQ. Many agencies like FERC, for example, use the CEQ NEPA regulations as a base and then modify them for consistency with their statutory mandates. FERC’s regulations state explicitly that its regulations “supplement” the CEQ regulations and that it “will comply with” them “except where those regulations are inconsistent with the statutory requirements of the Commission.”

While the scope of NEPA review was not directly at issue in the Rio Grande LNG vacatur because FERC’s procedural error in failing to conduct an official supplemental environmental impact statement was the main issue, the subject matter of this supplemental analysis is related to debatable questions of NEPA scope: FERC’s environmental justice and connected actions analysis. This decision, which could halt ongoing construction activities on the Rio Grande project, exemplifies the complex and comprehensive implications of NEPA requirements and their interpretation. It also underscores why NextDecade has a vested interest in the Uinta Basin Railway case, as it could impact the future of their project and similar energy infrastructure developments.

 

Impacts for the Decision and Schedule

The broad impacts of the decision are not difficult to imagine and will have far-reaching consequences for infrastructure projects across the country: a narrowed scope of environmental review would lead to more narrowly tailored environmental analysis that would likely be easier for agencies to prepare and defend, especially if the Court adopts a bright line rule that agencies need not look at environmental impacts beyond their own regulatory purview. For context, the environmental analysis of FERC projects has varied over time as you can see below.

 

Time

 

The Supreme Court’s schedule for the case is as follows:

  • The joint appendix and petitioners' brief on the merits are due by August 28, 2024.
  • Respondents' briefs on the merits are due by October 18, 2024.

This timeline suggests oral arguments could occur during the term following the briefing deadline, so in late 2024 or early 2025, with a decision potentially by June 2025, before the summer recess. However, the actual timeline can vary significantly depending on the Court’s docket, the complexity of the case, and other factors.

As we noted in our article on the overturning of Chevron deference, the impact of such shifts in judicial interpretation can be significant but may not immediately change industry approaches to developing and operating infrastructure. Effective legislation will continue to be crucial, and litigation is likely to remain prevalent. However, a clear ruling from the Supreme Court on the scope of NEPA analysis could provide much-needed guidance for agencies, project developers, and courts alike.

As the case progresses, stakeholders across industries will be watching closely. The outcome could reshape how federal agencies approach environmental reviews, potentially altering the landscape for infrastructure development in the United States for years to come.

 

If you would like to discuss this decision or litigation trends in greater detail, please contact us.

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