Supreme Court Brings “Judicial Review Under NEPA Back in Line with the Statutory Text”

Despite all the press, the U.S. Supreme Court’s May 29, 2025, decision in Seven County Infrastructure Coalition v. Eagle County, Colorado (No. 23-975) actually does little to change NEPA, but developers of infrastructure projects will welcome the clarity it brings.

The unanimous decision firmly roots itself in long-standing precedent to remind an often-confused federal judiciary that (i) agency decisions implementing NEPA must be accorded substantial deference; and (ii) NEPA review is limited to proximately caused effects such that the impacts of an agency action arising from a separate project do not have to be evaluated. The decision will be particularly helpful to developers of infrastructure projects that, by definition, are components of larger, integrated physical systems.

The case arose from a proposal to build an 88-mile railway in Utah’s Uinta Basin to transport crude oil to national rail networks. The Surface Transportation Board (STB) approved the project after preparing an Environmental Impact Statement. A county and several environmental organizations challenged the approval, arguing that the STB failed to adequately analyze indirect environmental effects, including an increase in upstream oil production and downstream refining that would result from the railway. The D.C. Circuit agreed and vacated the STB’s approval in 2023.

The Supreme Court reversed the D.C. Circuit’s decision on two grounds: deference and causation. With respect to the former, the Court distinguished its recent reversal of Chevron deference in Loper Bright Enterprises v. Raimondo by explaining that while agency interpretations of ambiguous statues are no longer afforded judicial deference, courts still must apply substantial deference to an agency’s exercise of discretion granted by statute: as long as “the agency action was reasonable and reasonably explained” a court must uphold it.

As an extension of this principle, the decision helpfully clarifies that judicial review of a NEPA decision is not the same thing as review of an agency’s approval of a project: even if a NEPA review “falls short in some respects,” overturning the agency’s approval of the project on such grounds would not be necessary unless there was reason to believe the agency might have disapproved the project if the defect had not been corrected.

The Court applied these principles to overturn the D.C. Circuit decision because it should not have second-guessed the agency’s reasonably explained decision to exclude the attenuated effects of the railroad on separate upstream oil production and downstream refining activities.

The Court’s second holding concerned the causal scope of NEPA review, affirming prior decisions of the Court explaining that NEPA review does not extend to all effects ultimately caused by a project and is instead limited to a proximate, “reasonably close causal relationship” between a project and its effects.

The Court explained that NEPA does require review of the indirect effects of a project even if those effects are later in time or extend beyond the bounds of the project, “[b]ut if the project at issue might lead to the construction or increased use of a separate project – for example, a housing development that might someday be built near a highway – the agency need not consider the environmental effects of that separate project.” (Emphasis in original).

As one application of this principle, the Court pointed out that an agency is not required to analyze the effects of projects over which it does not exercise regulatory authority, since the agency “cannot be considered a legally relevant ‘cause’ of the effect.”

Here, the Court overturned the D.C. Circuit and upheld STB’s decision not to include upstream oil production and downstream refining activities in its NEPA review because such activities were clearly causally distinct and separate projects outside the STB’s jurisdiction to prevent or modify.

Although not expressly mentioned by the Court, its second holding regarding causality affirms a long-established body of “connected actions” and “small federal handle” case law holding that NEPA review can separately consider federal projects that are able to exist independently of one another and, similarly, does not have to include non-federal projects that could exist independently of a federal decision.

The Court’s emphasis on agency jurisdiction as a limiting bound on NEPA review is one aspect of the decision that could be interpreted by some as an aggressive contraction of NEPA. NEPA “small federal handle” case law arguably conflicts with this holding by requiring a federal agency to analyze the impacts of activities outside its jurisdiction if those activities could not be conducted without the agency’s decision. The prudent approach, in our view, would be to continue to analyze the effects of non-federal impacts as long as those effects are within the limits of a proximate, “reasonably close causal relationship.”

Separate from its legal holdings, the Court’s majority opinion is full of choice phrases that clearly indicate frustration with the weaponization of NEPA to “paralyze” agency decision-making. The opinion concludes by stating that “[i]n deciding cases involving the American economy, courts should strive, where possible, for clarity and predictability.” The decision sets the example by reaffirming and clarifying the standard of judicial review and causal limits of agency NEPA decisions. While many in the environmental community already strongly criticize the decision, in our view it is a well-founded clarification of existing law that will particularly benefit developers of interconnected independent energy and transportation projects.

Bell Kearns specializes in advising on the review and entitlement of large-scale renewable energy and battery storage projects. If you have any questions regarding this article, please feel free to contact the author at +1.415.471.2294 or reed@bell-kearns.com.