ARTICLE
18 August 2025

U.S. Supreme Court Narrows Scope Of Federal Agency Review Under NEPA

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Sive, Paget & Riesel

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For over sixty years, Sive, Paget & Riesel has been a recognized leader in environmental law and litigation, municipal and land use law. The firm has unparalleled experience assisting clients in environmental review, brownfield cleanup and redevelopment, environmental permitting, and supporting corporate transactions with due diligence reviews and risk assessments.
On May 29, 2025, the U.S. Supreme Court issued a unanimous decision in Seven County Infrastructure Coalition v. Eagle County, Colorado, reversing a D.C. Circuit ruling that vacated federal approval...
United States Environment

On May 29, 2025, the U.S. Supreme Court issued a unanimous decision in Seven County Infrastructure Coalition v. Eagle County, Colorado, reversing a D.C. Circuit ruling that vacated federal approval for the Uinta Basin Railway in Utah. The Court held that the National Environmental Policy Act (NEPA) does not require federal agencies to evaluate the environmental impacts of separate, indirectly related projects that fall outside the scope of the agency's jurisdiction or decision-making authority; the Court also called for a "course correction" to reign in judicial review under the statute. Justice Kavanaugh wrote for the Court; Justice Gorsuch was recused. Justices Sotomayor, Kagan, and Jackson concurred in the judgment but joined a separate opinion that sought to narrow the implications of the decision.

We previously discussed this case when certiorari was granted in our November 2024 blog post, "Two Federal Cases Have Potential to Affect Implementation of NEPA."

Background

The case involved a challenge to the U.S. Surface Transportation Board's approval of a new, 88-mile rail line into Utah's remote Uinta Basin that would connect to the national rail network and facilitate the transport of crude oil from the Basin to refineries on the Gulf Coast, where it would be processed and sold on national and international markets. The project required approval by the Board, which has jurisdiction over new railroad construction under 49 U.S.C. § 10901.

In 2021, the Board issued an environmental impact statement (EIS) that analyzed the direct impacts of constructing and operating the rail line, including effects on wildlife, air quality, and land use. However, it declined to analyze in detail the environmental effects of (i) increased oil drilling in the Basin that might result from the project (so-called "upstream" impacts), or (ii) increased oil refining activities on the Gulf Coast ("downstream" impacts)—activities that are regulated by other agencies.

Eagle County and the Center for Biological Diversity argued that the Board's NEPA analysis failed to sufficiently consider the project's potential indirect effects. In response, the Board argued that it did not need to analyze the indirect effects that may come about as the result of the proposed railroad development, because those effects fell outside its regulatory authority. The Board's argument relied on the Supreme Court's 2004 decision in Department of Transportation v. Public Citizen, which held that "where an agency has no ability to prevent a certain effect due to its limited statutory authority over the relevant actions," it need not analyze that effect in its NEPA review.

In August of 2023, the U.S. Court of Appeals for the D.C. Circuit vacated the Board's EIS and subsequent approval of the project, holding that because the Board could prevent the project's indirect effects by denying the application, it was required to consider those effects under NEPA. The D.C. Circuit cited regulations from the White House Council on Environmental Quality (CEQ) that (at the time) required agencies to evaluate both direct and indirect impacts of a proposed action and defined indirect impacts as those that "are caused by the action and are later in time or farther removed in distance, but are still reasonably foreseeable."

The Supreme Court's Decision

The Court reversed the D.C. Circuit, emphasizing two holdings with implications for how federal agencies comply with NEPA—and how courts review that compliance— going forward.

First, the Court confirmed that NEPA's focus is the "proposed action"—here, the construction and operation of the rail line—not other projects falling outside the agency's regulatory authority. While NEPA allows agencies to consider a proposed action's indirect effects, the Court held that the statute does not require agencies to assess impacts from future activities by third parties or from projects "separate in time or place" from the proposed action, particularly where the agency has no regulatory control. For example, the Court explained that in considering the impacts of a highway project, the agency would not need to consider the impacts of separate projects that might reasonably be expected to result from that highway project, such as the construction or expansion of nearby housing developments. Here, because the Board does not have regulatory authority over oil drilling or refining, the Court held that it was not required to analyze those activities under NEPA.

Second, the Court reiterated the deferential nature of judicial review under NEPA. Writing for the majority, Justice Kavanaugh lamented that some courts have taken an "aggressive role in policing agency compliance with NEPA," and have not applied NEPA with "the level of deference demanded by the statutory text and [the Supreme] Court's cases." The Court rejected this approach, describing its decision as a "course correction...to bring judicial review under NEPA back in line with the statutory text and common sense." In its decision, the Court emphasized that "the central principle of judicial review in NEPA cases is deference," and where a party argues that an agency action was arbitrary and capricious under the Administrative Procedure Act (APA) due to a deficient NEPA review, "the only role for a court is to confirm that the agency has addressed environmental consequences and feasible alternatives as to the relevant project." Finally, the Court cautioned that NEPA's requirements are governed by a "rule of reason," and that even a flawed EIS does not necessarily require vacatur unless the deficiencies are material to the agency's decision.

Writing separately for the Court's three Democratic appointees, Justice Sotomayor criticized the majority for "unnecessarily grounding its analysis largely in matters of policy," suggesting that the commentary on the burdens of NEPA litigation was unnecessary to resolve the case. Instead, she argued that the case could have been resolved more narrowly under the Court's Public Citizen precedent, on the grounds that the Board lacked authority under its organic statute to deny approval for the project based on upstream or downstream activities—like oil drilling and refining—that it does not regulate.

Implications for Future NEPA Review

The Court's decision may ultimately encourage federal agencies to take a narrower view of their NEPA obligations. Indeed, since the Trump administration recently rescinded CEQ's NEPA regulations, many agencies have revised their own NEPA regulations to clarify the extent of their obligation to consider indirect impacts, with specific reference to Seven County Infrastructure Coalition.1 Also, in limiting the types of effects that agencies are required to consider, the decision will likely aid recent efforts by Congress and the administration to speed up the NEPA and permitting processes, particularly for extractive energy projects.

The decision does seem to support efforts by the current administration to limit agencies' consideration of the climate impacts of major actions, as those impacts are often remote in time and place, sector-wide, and indirect.

Finally, it is notable that the Supreme Court's opinion in Seven County Infrastructure never mentions the CEQ regulations that the lower court relied on, and which the Trump administration rescinded in April of 2025. The Court also sidestepped the opportunity to weigh in on a recent D.C. Circuit decision in Marin Audubon Society v. Federal Aviation Administration holding that the CEQ regulations were ultra vires and beyond CEQ's legal authority to issue in the first place. After our blog post on the Marin Audubon Society decision, the D.C. Circuit denied rehearing of the case en banc, with Chief Judge Srinivasan (who drafted the dissent in the original opinion) explaining that en banc review was unnecessary because the ultra vires issue was dicta that did not change the outcome of the case. The Supreme Court thus avoided addressing the issue of whether President Carter's executive order directing CEQ to promulgate NEPA regulations (which E.O. was also rescinded by President Trump) was a sufficient grant of authority. In a separate case, State of Iowa et al. v. CEQ et al., the U.S. Court of Appeals for the Eight Circuit recently vacated another federal district court decision holding that the CEQ regulations were ultra vires, siding with appellant blue states and environmental groups who had argued that their appeals were moot given the rescission of the regulations, but that vacatur was warranted given the importance of the issue and the fact that the ruling would otherwise not be appealable if it stood. As a result, the question of whether CEQ has authority to issue binding NEPA regulations will remain unresolved, at least for now.

Footnote

1 See, e.g., 90 FR 29465, 29472 (July 3, 2025) (notice for the U.S. Army Corps of Engineers' revised NEPA regulations).

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