In 2021, the federal Surface Transportation Board gave the green light to an 88-mile railway that, if completed, would connect the Uinta Basin’s oil fields to the nationwide rail network.
With those oil fields connected to the national network, oil production in the basin could be expanded significantly, adding up to 350,000 barrels a day. Those barrels of unprocessed oil would then travel along the nation’s rail network, from Utah into Colorado and eventually to refineries in Texas and Louisiana.
Following its approval in 2021, Colorado’s Eagle County, alongside five environmental groups, sued. In 2023, the Court of Appeals for the D.C. Circuit overturned the board’s approval and invalidated its National Environmental Policy Act review.
According to a news brief from Kaplan Kirsch, who represented Eagle County, the appeals court concluded that the board had failed to adequately consider the significant potential for environmental harm from the project, which violated NEPA and the Interstate Commerce Commission Termination Act.
The appeals court also agreed with Eagle County that the board had failed to consider the downstream environmental effects created by the project, and the appeals court found that the board had violated its own rail statute.
But that ruling wasn’t the end of the line for the case. In June, the U.S. Supreme Court agreed to hear an appeal. At the crux of the case are the requirements imposed by the NEPA process and whether NEPA “requires an agency to study environmental impacts beyond the proximate effects of the action over which the agency has regulatory authority,” according to the writ filed by the Seven County Infrastructure Coalition and Uinta Basin Railway.
On Dec. 10, the Supreme Court heard oral arguments for nearly two hours from the litigants in Seven County Infrastructure Coalition, et al. v. Eagle County, Colorado, et al. Justice Neil Gorsuch recused himself from the case.
“The Supreme Court today seems likely to overturn a D.C. Circuit decision and provide additional guidance restricting the scope of reviews under the National Environmental Policy Act,” Michael Drysdale, a partner at Dorsey & Whitney, told Law Week Colorado via email.
“There seemed to be a consensus among the justices that [the] D.C. Circuit had gone too far, and the reasonable foreseeability of effects, standing alone, is insufficient to require an agency to study such indirect impacts,” Drysdale added. “There was much less apparent consensus on how to clarify the standard.”
Paul Clement, representing the Seven County Coalition, argued that the environmental impact statement, which was more than 3,600 pages, was adequate and that the appeals court’s demands of the board to expand its study fell outside of its limited remand.
Justice Ketanji Brown Jackson said that in Kleppe v. Sierra Club, the U.S. Supreme Court said that NEPA analysis required a high level of expertise and was properly left to the informed discretion of responsible federal agencies. She asked Clement about his decision to propose a new test outside of this deference framework.
“[Clement] proposed a narrow test, stating that agencies should not have to examine effects that are ‘remote in time and space, and within the jurisdiction of another agency,’ and if they do so voluntarily, the extent of that review should be given deference and not be considered reversible error,” Drysdale explained. “[Clement] also relied heavily on the tort concept of ‘proximate cause’ to define an agency’s duties.”
Justice Elena Kagan asked Clement about how far, with relation to time and space, he wanted the environmental review to go. Clement said that anything that falls outside of the 88 miles of railroad track connecting the basin and the national rail network shouldn’t be fatal to the project’s environmental impact statement.
Justice Brett Kavanaugh asked Clement about the judicial role in enforcing NEPA, given the amendments and environmental statutes added since the act was passed.
Clement commented that NEPA was a juicy litigation target as currently applied and that the judicial role related to the act should be tailored down.
“When NEPA was first passed, there were very few substantive environmental statutes, and so it was really designed to make sure that the agencies weren’t heedless of the environmental consequences,” Clement said. “Now, with all these substantive environmental statutes, I don’t think an agency could possibly be heedless of the environmental consequences.”
Jackson commented to Clement that she was concerned that the test proposed by Clement was unmoored from the purposes of NEPA.
“Your argument looking only at the 88 miles, I think, might narrow in too closely for a purpose of really informing the agency about its approval of this piece of the project,” Jackson said.
The federal government appeared in the case in support of Seven Counties, represented by Deputy Solicitor General Edwin Kneedler. Justice Clarence Thomas asked Kneedler about what the difference was between the two parties’ arguments.
Kneedler said the principal difference was that Seven Counties wanted rigid rules, and that the U.S. government didn’t think it was right to say there should be absolute rules.
“The federal government sought to strike a middle ground and faced questions about the scope of a workable standard. Justices Roberts, Kavanaugh and Alito asked questions about the need to provide guidance to agencies so that agencies would not be over-cautious about litigation risk and judicial second-guessing,” noted Drysdale.
William Jay, partner at the Goodwin Law Firm, argued for Eagle County in the case. Jay told the high court that impacts at issue in this case were the foreseeable consequences of a $2 billion railway project intended to transport crude oil. He noted the reasonable foreseeability is the test that’s been in NEPA since its passage and that Congress reaffirmed in 2023 in the BUILDER Act.
Thomas asked Jay about the close connection with the Gulf Coast communities. Jay noted that the purpose of the project is not only to bring the oil from the basin to the rail network but to transport it for refining. “Again, the whole raison d’être of this project is to transport one commodity and one commodity only,” Jay said.
Under questioning from Jackson and Justice Sonia Sotomayor, Jay told the court that NEPA requires agencies to look at harms that they can’t mitigate or regulate directly, as it provides an opportunity for public comment to the agencies conducting the review.
Jackson followed up on the foreseeability argument, asking Jay how the refining of the oil, which causes environmental effects, is relevant to the approval of an 88-mile line of train track.
Jay pointed to a statute within NEPA, which talks about any reasonably foreseeable adverse environmental effects that can’t be avoided if the proposal is implemented.
“In other words, for the agency to say, ‘Well, we don’t have the authority to mitigate these effects and, therefore, we won’t look at them at all,’ that is ignoring a category of consequences,” Jay said.
Later in his argument, Jay returned to a question that Kavanaugh had asked earlier in the day: what NEPA was adding to the suite of environmental statutes.
“Mr. Clement seemed to be suggesting that, ‘Well, its importance has eroded over time,’” Jay said. “But what hasn’t eroded is the text. And the text sets out a requirement that, to the fullest extent possible, all agencies are to follow these basic NEPA procedures.”
Drysdale noted that Jay received additional pushback on his foreseeability argument from Kagan, Sotomayor and Jackson, according to Drysdale.
“Given that the agency has limited authority under common carrier law to discriminate based on the type of cargo, the court’s liberal justices asked what value analysis of cargo and disposition of oil cargo through refining should have if the agency could do nothing about it,” Drysdale said.
A decision in the case is likely several months away, but Drysdale told Law Week it was likely that the court will build upon the principles established in its DOT v. Public Citizen ruling.
“Whether the Court adopts the narrowest, most specific test advocated by the industry petitioners remains to be seen. Equally important is whether the Court focuses on the unique elements of the case, like the common carrier restrictions, or issues a broader ruling intended to govern NEPA analyses more generally,” Drysdale said.
“It is likely, for example, that Justice Thomas, who authored the Public Citizen decision, thought the Court was articulating broad principles in that decision, only to find that many courts interpreted the decision as being of limited application to other agency decisions,” Drysdale added. “It also seems plausible that he and other similarly-inclined justices will attempt to be clearer that they are stating widely applicable principles for all agencies.”