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  • February 14, 2025
Analysis: This Supreme Court case could impact how federal agencies consider environmental and climate impacts

Analysis: This Supreme Court case could impact how federal agencies consider environmental and climate impacts

In the 1993 movie “Jurassic Park”, explains Dr. Ian Malcolm, a fictional mathematical genius specializing in chaos theory, explains the ‘butterfly effect’, which means that small actions can lead to big results. ‘In Beijing a butterfly flaps its wings,’ says Malcolm, ‘and in Central Park you get rain instead of sunshine.’

What about when a federal agency flaps its wings? Should bureaucrats be required to consider the wide-ranging implications of decisions such as financing a highway intersection or approving an offshore wind farm?

Congress opened the door to this issue in 1969 when it passed the law National Environmental Policy Actknown as NEPA. This law requires federal agencies to do this analyze the environmental impacts of major proposed actions before decisions are made.

READ MORE: The Supreme Court weakens federal regulators and overturns Chevron’s decades-old decision in victory for corporate interests

The Supreme Court will hold oral arguments on December 10, 2024 Seven County Infrastructure Coalition v. Eagle County, Coloradothe first major NEPA dispute in court in twenty years. The Supreme Court’s ruling could have a significant impact on how NEPA is applied in the future, especially with regard to climate change.

The ‘rule of reason’ test

Under NEPA, federal agencies considering major actions must prepare an environmental impact statement – ​​a detailed analysis of the “reasonably foreseeable environmental impacts” of the proposed activity. The Council for Environmental Qualitya White House office that advises the president has adopted rules that divide possible outcomes into three categories:

  • Direct impacts, such as cutting down trees to build a highway;
  • Indirect effects that occur later in time or further away, such as development stimulated by highway construction; And
  • Cumulative effects of the action when added to the effects of other past, current and reasonably foreseeable actions, such as building multiple highways in a region.

The Supreme Court last unanimously addressed NEPA reigned in 2004 that an agency need only consider effects that have a “reasonably close causal relationship” with the proposed action. The court also explained that when an agency lacks the legal authority to prevent a particular effect, the agency cannot legally be deemed to have caused that effect.

Together, these limitations are known as the NEPA “rule of reason” standard. The tricky issue is defining how far out in time, location, and causality an agency should project when analyzing potential impacts.

Only a small percentage of federal actions require an environmental impact statement, but those assessments can take years in the timeline for approving major projects. Defining how wide they should be is thus a crucial question for industries such as transportation and energy production.

A railroad in Utah

The Eagle County case stems from a proposal by a coalition of railroad developers to build an 85-mile rail line in Utah to transport waxy crude oil from wells to the interstate rail network. The developers applied for a license from the Surface Transportation Councilan independent federal agency, which prepared an environmental impact report and ultimately approved the permit in 2021.

Officials in Eagle County, Colorado, along with several environmental groups, filed a lawsuit, arguing that the environmental impact statement was flawed. In their view, the Surface Transportation Board should have gone further in considering the “upstream” environmental impacts the railroad would cause, such as increased oil drilling, and “downstream” impacts from refining and consuming that additional oil.

This issue of upstream/downstream effects has been a hot topic in NEPA over the past decade, especially as it relates to greenhouse gas emissions from oil and natural gas pipelines. In 2023, the Council for Environmental Quality issued guidelines that answer this question. Lower federal courts have done so I’ve struggled with it too. Agency practice and judicial decisions since 2004 are more closely aligned with a broad analysis approach, even if the lines are not clearly drawn.

In their argument before the U.S. Court of Appeals for the District of Columbia Circuit, attorneys for the Surface Transportation Board argued that the agency did not have sufficient information to analyze in detail where oil development could increase as a result of the railroad’s construction , or how oil could be used. But the court ruled that the agency had done so failed to explain it adequately why it could not use “some degree of prediction” to map out those consequences.

The board had also decided that it was not obliged to consider the consequences of increased oil production and refining because it had no authority or jurisdiction over those activities. The D.C. Circuit rejected that argument, holding that the agency could avoid these consequences by exercising its authority to deny the license.

What should agencies take into account?

Now the Seven County Coalition is asking the Supreme Court to decide whether NEPA requires an agency to study environmental impacts”outside the direct consequences of the action‘ that the agency regulates.

This question unfolds two themes that determine how agencies should analyze the indirect effects of projects. First, to what extent tort law – the legal system that addresses wrongful acts done by one person to another – as a guide to the application of NEPA?

Under tort law, a person who claims that someone else wrongfully injured him must prove that the defendant could reasonably have foreseen the injury and that his action was the proximate cause of it. Until now, courts have expected that agencies would more broadly consider the consequences of their actions under NEPA, since a decision by a federal agency can affect many people and NEPA is intended to inform the public about the proposed action, and not to resolve personal injury claims.

By making the tort law approach standard for NEPA assessments, as the Seven County Coalition advocates, agencies could make that possible limits attention to indirect effects.

The second question concerns the scope of agencies’ powers. The Seven County Coalition argues that NEPA does not require regulators to examine indirect effects that are beyond the agency’s direct control and under their licensing authority. The coalition argues that the DC Circuit’s broad interpretation of the rule of reason threatens to saddle the Surface Transportation Board with “endless make-work far beyond the wheelhouse.”

Other interest groups, such as the American Chamber of CommerceHe said the broad-scope version gives agencies effective power to regulate well beyond their delegated licensing authority.

Conversely, Eagle County and environmental groups argue that the board has the power to deny the railroad a permit because of its indirect impacts, and thus the agency should be required to consider those impacts in its assessment. And in an amicus brief: the Howard University Law School Clinic states that the broad scope of NEPA’s indirect effects has proven to be an “essential civil rights tool that empowers those historically excluded from decision-making processes.”

Such concerns have led former federal officials And Leaders of the Council for Environmental Quality of Republican and Democratic administrations to side with opponents of the railroad. Members of Congress have also filed amicus briefs Democrats support the railroad’s opponents And Republicans support the developers.

Climate Change and NEPA Assessments

If the court supports the rail developers’ position on either of these two important issues, I believe that twenty years of NEPA practice and case law under the rule of reason test will be overturned and a new era of NEPA litigation will begin .

The conversation

Many pro-NEPA observers worry about this possibility for one very important policy area in particular: climate change.

If the court were to move the foreseeability standard for NEPA assessments closer to tort law doctrine, it would allow agencies to do little in their environmental impact statements to examine how proposed actions might contribute to climate change, beyond quantifying of their direct greenhouse gas emissions.
More bluntly, if the court rules that agencies do not have to consider indirect effects beyond their direct control, most agencies could simply ignore the indirect effects of climate changebecause they have no direct control over the sources of greenhouse gas emissions.

Although the Supreme Court has not directly addressed NEPA since 2004, many of its recent rulings appear intended to reduce the power of regulators. In my opinion, NEPA is unlikely to do well under that agenda.