Supreme Court to Consider Whether Agency Required to Consider Downstream GHG Emissions Beyond Agency Control in NEPA Review

On June 24, 2024, the Supreme Court granted a petition for certiorari Seven County Infrastructure Coalition v. Eagle County, CO, (23-975), a Case challenging the scope of an environmental assessment conducted by the Surface Transportation Board (“Board”) under the National Environmental Policy Act (“NEPA”) for a proposed 88-mile rail line in Utah. The issue before the Court is whether NEPA requires federal agencies to study the environmental impacts of proposed projects beyond the immediate effects of action that an agency does not have the authority to regulate. Petitioners argue that the D.C. Circuit’s decision directing the Board to study the downstream effects of approval of the rail line on the expansion of oil production from oil wells and refineries, which are outside the Board’s regulatory authority, was erroneous and contrary to the Supreme Court’s interpretation of the scope of the agency’s authority in Department of Transportation v. Public Citizen541 US 752 (2004). This case will provide the Supreme Court with an opportunity to further clarify the scope of agency NEPA review, particularly in the context of analyzing the downstream effects of greenhouse gas (“GHG”) emissions from oil and gas infrastructure projects. A Supreme Court decision emphasizing the limits of an agency’s NEPA review could help avoid sweeping NEPA reviews that extend beyond the agency’s action at issue and reduce delays associated with NEPA review timelines.

Regulatory context

NEPA imposes procedural requirements for major federal actions, including the issuance of federal permits and approvals such as those required for the rail line at issue in the challenged decision. Federal agencies are required to assess the reasonably foreseeable environmental effects of major federal actions—whether direct, cumulative, or indirect—and to consider reasonable alternatives. NEPA requires only that agency decision-makers make informed decisions, not that an agency select the most environmentally preferable alternative.

Determining the scope of a “reasonably foreseeable” indirect effect is often controversial. In the NEPA decision, which set a precedent before the Supreme Court, Public citizenThe Supreme Court has held that “when an agency lacks the ability to prevent a certain effect because of its limited statutory authority over the relevant actions, the agency cannot be considered a legally relevant ’cause’ of the effect,” and therefore the agency need not consider that effect for purposes of NEPA review. 541 U.S. 770, 752 (2004). The circuit courts of appeals, however, are divided on the interpretation of this decision. The D.C. Circuit (in the case under consideration here) and the Ninth Circuit have held that the agency must consider “reasonably foreseeable” effects regardless of the agency’s authority. In contrast, the Third, Fourth, Sixth, Seventh, and Eleventh Circuits agree on a narrower interpretation: agencies may limit their review to effects proximately caused by the specific activities within the agencies’ regulatory authority.

Seven County Infrastructure Coalition v. Eagle County, CO

The Council approved a $1.5 billion project for an 88-mile rail line that would transport crude oil. In the Council’s environmental impact statement for the project, the Council determined that the resulting oil and gas development did not constitute an “indirect effect” for purposes of NEPA because the Council does not have authority over downstream oil and gas development. Eagle County, Colorado, and environmental public interest groups filed a petition with the DC Circuit for review. The DC Circuit rejected the Council’s interpretation and directed it to study the local effects of oil wells and refineries that are outside the Council’s jurisdiction.

Petitioners before the Supreme Court argue that the D.C. Circuit misinterpreted Public citizen arguing that the Board should consider GHG emissions and other downstream impacts of oil and gas development as a reasonably foreseeable indirect effect of the rail line in its NEPA analysis despite the Board’s lack of authority to prevent, control, or mitigate those effects. In support of their argument, petitioners argue that the Board’s review was sufficient and consistent with the five circuit courts that have held that agencies are not required to study the environmental effects of activities they do not regulate. For example, petitioners cite the Eleventh Circuit’s opinion in Ctr. for Biological Diversity v. US Army Corps of Eng’rs, which rejected the DC Circuit’s interpretation of Public citizen and held that it was reasonable “for the agency to draw the line at the limits of its own jurisdiction, leaving the effects () to () regulators.” 941 F.3d, 1288, 1295–96. Petitioners argue that the D.C. Circuit’s broader interpretation would allow “environmental policy czars” to deny permits based on matters outside their authority and expertise.(1)

Defendants, for their part, disagree that the D.C. Circuit departed from the Court’s precedent and argue that petitioners’ interpretation is “irreconcilable with the purpose of NEPA.”(2) Respondents instead argue that the question posed is factual and that the agency must consider the full range of impacts of the project, including impacts on environmental justice communities located near Gulf Coast refineries. They argue that, consistent with Public citizenThe downstream GHG effects of the proposed project fall squarely within the Council’s preventive powers.

The Supreme Court’s decision in this case could have important implications for future NEPA analyses, including the scope of the White House Council on Environmental Quality. new rulesissued in May 2024, directing agencies to quantify, where possible, a proposed project’s reasonably foreseeable GHG emissions. A decision to overturn the D.C. Circuit in this case would avoid sweeping NEPA reviews and allow an agency to focus on effects that are more closely related to the permitted activity. Such clarification from the Court could help avoid the delays often associated with sweeping NEPA reviews that are not constrained by the agency’s action at issue.

The Supreme Court will hear the case in the fall of 2024.

(1) Petition for Certiorari, No. 23-975, p. 23.

(2) Brief of Respondents Eagle County Colorado et al in Opposition, No. 23-975, at p. 14.