The U.S. Supreme Court Issues a Major “Course Correction” on Judicial Review Under NEPA in Seven County

“A 1970 legislative acorn has grown over the years into a judicial oak that has hindered infrastructure development ‘under the guise’ of just a little more process. A course correction of sorts is appropriate to bring judicial review under NEPA back in line with the statutory text and common sense.”

On May 29, 2025, the U.S. Supreme Court issued its decision in Seven County Infrastructure Coalition v. Eagle County, Colorado, unanimously reversing the D.C. Circuit and strongly suggesting that both courts and agencies circumscribe their reviews under the National Environmental Policy Act (NEPA). The Supreme Court held that the Surface Transportation Board (STB) did not violate NEPA in approving a crude oil railway without analyzing the indirect environmental impacts of potential increases in upstream drilling and downstream refining. The Supreme Court emphasized that such effects lacked a “reasonably close causal relationship” to the railway project itself and reinforced the principle that agencies are owed “substantial deference” on shaping the scope of their reviews under NEPA. This decision clears the way for construction of the Uinta Basin Railway, as well as potentially many other infrastructure projects that may benefit from speedier and more deferential review.

Background

The scope of effects analysis is one of the most contested issues in NEPA — the most litigated environmental statute. Why? Because while NEPA is a purely procedural statute (as the Supreme Court reminds us in Seven County), the analysis matters when agencies make decisions under other, substantive statutes. While some agencies have pushed back on efforts to expand analysis, others have acquiesced and prepared painstakingly detailed and sweeping NEPA documents in an effort to “litigation proof” their reviews. In both cases, the result has often been delays, uncertainty, and, in some cases, the undermining of projects that otherwise comply with permitting requirements.

The Seven County Infrastructure Coalition proposed constructing an 88-mile rail line in northeastern Utah to transport crude oil. The STB prepared an Environmental Impact Statement (EIS) that extensively evaluated the environmental effects of the railroad’s construction and operation. However, the STB “noted, but did not fully analyze” the environmental effects of increased “upstream” drilling of the crude oil that would fill the tank cars or the “downstream” refining of that crude oil — thousands of miles away in the Gulf Coast. The D.C. Circuit held that the STB violated NEPA by failing to analyze those “indirect” effects because they were: (1) reasonably foreseeable, and (2) caused by the STB’s action, since the STB could disapprove of the railroad project based on its environmental effects.

The Decision

The Supreme Court unanimously disagreed; Justice Brett Kavanaugh, writing for a five Justice majority, did so on two grounds. First, the majority held that factual questions, like those raised in Seven County, are generally for the agencies — not the courts — to decide. The majority held that the D.C. Circuit failed to afford the STB the “substantial deference” it was owed in assessing whether the agency’s EIS complied with NEPA. Agencies’ determinations on scope and depth of analysis “should not be excessively second-guessed,” provided they fall within a “zone of reasonableness.”

Second, the majority held that NEPA does not require analysis of effects from other projects that “are separate in time or place” from the proposed project. Specifically in Seven County, the “separate projects” of oil drilling and refining lacked the requisite “reasonably close causal relationship” to the railroad for two independent reasons: (1) their effects were too attenuated, such that “the separate project breaks the chain of proximate causation,” and (2) the STB had no “regulatory authority” to prevent effects from those separate projects.

Justice Sonia Sotomayor, joined by Justices Elena Kagan and Katanji Brown Jackson, concurred only in the judgment. She wrote that the case could be resolved solely by answering the legal question of STB’s authority, which is answered de novo — without any deference — under Loper Bright. Since STB’s organic statute did not permit decision-making based on the upstream and downstream effects, NEPA did not require analysis of those effects.

Potential Implications

The Supreme Court’s 8-0 ruling in this case (Justice Neil Gorsuch was recused) leaves little room to debate whether NEPA’s effects analysis should be reined in. But the outcome of the majority’s intended “course correction” on NEPA more broadly will depend on whether agencies and the district and appellate courts heed the Supreme Court’s direction. In the judiciary, the decision should be interpreted as a call for judicial restraint in review for a wide range of NEPA issues (e.g., effects, alternatives, significance) and for all types of projects, specifically including “clean-energy projects.” Yet, different factual scenarios and agency legal authorities will give courts plenty of opportunity to push back and test the limits of the Supreme Court’s “separate project” and “zone of reasonableness” tests. Agencies will similarly need to resist the temptation to acquiesce to calls for more expansive review, which should be easier now that the Supreme Court has made clear they will not, as the majority put it, “earn bonus points for studying more than NEPA demanded.” Another important question is whether the Supreme Court’s decision will provide further impetus for Congress to enact permitting reform, including to judicial review.

Developers and investors should carefully consider how they can proactively use this decision to further their projects, including by working collaboratively with regulatory agencies to fashion a permitting strategy that takes advantage of this “course correction” in a manner that will withstand scrutiny in the courts. Time will tell whether this “judicial oak” will evolve into an administrative canopy — one that facilitates, rather than hinders, the development of infrastructure to meet our nation’s rapidly changing energy needs.

For questions or additional information, please reach out to the authors of this Blog or your Arnold & Porter contact. And stay tuned for more detailed analysis.

© Arnold & Porter Kaye Scholer LLP 2025 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.