Energy sector braces for Supreme Court NEPA case

By Niina H. Farah, Pamela King | 06/25/2024 06:59 AM EDT

A ruling next term on the environmental review for a Utah oil railway project could complicate White House permitting reforms.

A pumpjack dips its head to extract oil north of Helper, Utah on July 13, 2023.

A pumpjack dips its head to extract oil north of Helper, Utah, on July 13, 2023. Rick Bowmer/AP

A new Supreme Court case is seeking to limit federal environmental reviews for energy infrastructure projects — throwing the spotlight on conservative justices who have sought to restrict agency powers.

The case the justices Monday agreed to hear next term, Seven County Infrastructure Coalition v. Eagle County, Colorado, may allow the court to set boundaries for how much agencies can consider under the National Environmental Policy Act. With America’s environmental movement in full swing, then-President Richard Nixon signed NEPA into law in 1970 to ensure federal project permits were granted only after in-depth reviews of environmental impacts.

This latest case comes after the court’s 6-3 conservative majority has curtailed agency powers to take broad steps to protect air and water — including a 2022 decision that limited the EPA’s ability to regulate carbon dioxide emissions that cause climate change.


From railways to power lines to natural gas terminals, agencies are required to look at how every major transportation or energy project could disrupt habitat, pollute streams and contribute to poor air quality. The review is a key determination before granting a federal permit to build.

Developers have long complained about the resources and time needed to complete environmental reviews. In Washington, that’s turned into a roiling debate about how to balance infrastructure needs with environmental priorities. Republicans are pushing for speedier reviews, and environmental groups are pressing permitting agencies to assess the way oil and natural gas projects contribute to climate change.

“NEPA is a very big burden on a lot of projects,” said Jay Johnson, a partner at the law firm Venable, which represents the Seven County Infrastructure Coalition of Utah in the case to come before the high court.

The group is challenging a court-ordered NEPA review of the Uinta Basin Railway, a project designed to carry oil out of the region to coastal ports or refineries. The U.S. Court of Appeals for the District of Columbia Circuit ruled last August that a permit from the Surface Transportation Board for the 88-mile rail line failed to fully analyze the effects on wildlife that can result from increased oil drilling. Further, the court found the board failed to look at the potential harm of oil spills and accidents along the Colorado River and the impact that more crude oil refining would have on Gulf Coast communities.

The parties to the Utah court challenge say the the Surface Transportation Board was correct not to include those impacts in its environmental review — noting that they’re too far outside the regulatory scope of the agency.

“The further out you have to study impacts,” Johnson said, “the harder it is to get a grasp on them and to even understand which impacts are really impacts of the project you’re dealing with and which impacts are actually things that are happening for other reasons.”

“Having the Surface Transportation Board review those effects for a project that’s more than 1,000 miles away seems to go too far,” he added.

The coalition in Utah is asking the Supreme Court to clarify the guardrails on NEPA reviews that stem from an older case. The court held in Department of Transportation v. Public Citizen in 2004 that if an agency can’t prevent an environmental harm because of “limited statutory authority,” there’s no requirement to consider the harm as part of the NEPA review.

Wendy Park, an attorney at Center for Biological Diversity, one of the groups that opposed the construction of the railway, said it is specifically designed to facilitate increased oil drilling in the Uinta Basin. And that would lead to thousands of trains traveling along the Colorado River each year and result in billions of gallons of oil being refined in Gulf Coast communities.

“Courts have long held that reasonably foreseeable indirect effects are live in the proper scope of NEPA review,” Park said. “We think that the Court of Appeals got it right here.”

NEPA rules

The Biden administration urged the Supreme Court to ignore the Utah oil railway case. Solicitor General Elizabeth Prelogar’s brief to the high court came as the White House Council on Environmental Quality continues to grapple with how to write new rules and guidance for what agencies should include in their reviews.

Kevin Minoli, a former EPA lawyer who is now a partner at the law firm Alston & Bird, said the Supreme Court’s ruling in the NEPA case could affect the CEQ rules. He noted the court’s treatment of the federal government’s definition of “waters of the U.S.,” or WOTUS, last year in Sackett v. EPA.

While Sackett dealt with permitting enforcement — rather than the WOTUS rule itself — the court’s decision had massive ramifications for the nation’s wetlands and for the Biden administration’s effort to cover more waters under its WOTUS definition than Trump’s EPA had protected.

“You can see a similar thing here where the CEQ regulation is not technically before the court, but the court could issue an opinion here that has significant impact on the rule,” he said.

Dinah Bear, who served as CEQ general counsel for 25 years, said the court’s decision in the NEPA case has the potential to significantly narrow environmental reviews, but she noted that outcome is by no means a guarantee.

“CEQ’s going to have to pay attention to whatever the court says,” she said, “particularly if they get to the merits.”

Ripple effect

The Supreme Court’s ruling could have potential effects for the Federal Energy Regulatory Commission, which has wrestled with how to account for climate effects in how it approves new gas projects, said Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School.

For nearly a decade the commission has split along party lines on its legal authority to consider both the upstream and downstream greenhouse gas effects of gas pipelines, he said.

“Next term’s SCOTUS case could free FERC from any obligation to merely disclose those emissions under NEPA. The question before the Court is whether NEPA ‘requires an agency to study environmental impacts beyond the proximate effects of the action over which the agency has regulatory authority,'” Peskoe wrote in an email.

“Because FERC does not have authority over upstream gas production or downstream consumption, the Court’s decision could allow FERC to ignore upstream and downstream emissions entirely,” he said.

The commission may still find that it has authority under the Natural Gas Act to consider greenhouse gas emissions in pipeline application proceedings, although commissioners are split on that issue, Peskoe said.

Jan Hasselman, a senior attorney at Earthjustice, said these types of NEPA cases are very fact-specific. “They don’t lend themselves to sweeping rules of judicial application.”

“It’s puzzling that the court took this case up,” said Hasselman. “The law is pretty settled and pretty clear on the scope of NEPA reviews.”

The point of NEPA is to ensure that agencies are making fully informed decisions about projects, and that includes effects of projects that extend beyond direct effects, he said.

An agency authorizing a highway, for example, would typically consider how construction could affect traffic or spur development. The same holds true for the analysis of a railway carrying oil. The agency has to balance the public interest in the project against its risks, Hasselman said.

“I don’t see what the problem to be solved here is,” he said.

This story also appears in Climatewire.