In the 1993 film Jurassic parkDr. fictional math genius specializing in chaos theory. Ian Malcolm explains the ‘butterfly effect’, which claims that small actions can lead to big results. “A butterfly flaps its wings in Beijing,” says Malcolm, “and instead of sun, you get rain in Central Park.”
But when a federal agency flaps its wings? Should bureaucrats be required to think through the broader implications of decisions like funding a highway crossing or approving an offshore wind farm?
Congress opened the door to this question in 1969 when it passed the National Environmental Policy Act, known as NEPA. This law requires federal agencies to analyze the environmental impacts of major proposed actions before making decisions.
On December 10, 2024, the Supreme Court will hear the oral argument Seven County Infrastructure Coalition v. Eagle County, ColoradoFirst major NEPA dispute before court in 20 years. The Supreme Court’s decision could significantly affect how NEPA applies in the future, particularly with regard to climate change.
“Rule of Mind” test
Under NEPA, federal agencies considering major actions must prepare an environmental impact statement—a detailed analysis of the “reasonably foreseeable environmental effects” of the proposed action. The Council on Environmental Quality, a White House office that advises the president, has adopted rules that divide the potential consequences into three categories:
- Direct impacts, such as cutting down trees to build a highway;
- Indirect effects that occur over time or further afield, such as development spurred by highway construction; and
- Cumulative effects of an activity when added to the effects of other activities, past, present, and reasonably foreseeable, such as building multiple highways in the region.
The Supreme Court last addressed NEPA in 2004, when it unanimously ruled that an agency need only consider impacts that have a “reasonably proximate causal relationship” to a proposed action. The court also explained that unless an agency has the legal authority to prevent a certain effect, the agency cannot legally be held to have caused that effect.
Together, these limitations are known as NEPA’s “rule of reason” standard. A complex issue is determining how much time, space, and causation an agency should project when analyzing potential impacts.
Only a small number of federal actions require an environmental impact statement, but those reviews can take years on the approval timeline for major projects. Determining how wide they should be is a critical question for industries such as transportation and power generation.
A railroad line in Utah
The Eagle County lawsuit 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 sought a license from the Surface Transportation Board, an independent federal agency that prepared an environmental impact report and approved the license in 2021.
Officials in Eagle County, Colorado sued along with several environmental groups, alleging that the environmental impact statement was flawed. In their view, the Surface Transportation Board should have gone further in considering the “upstream” environmental impacts that rail would bring, such as increased oil drilling, and the “downstream” impacts of refining and consuming this additional oil.
This question of upstream/downstream impacts has been a hot topic in NEPA over the past decade, mainly related to greenhouse gas emissions from oil and natural gas pipelines. In 2023, the Council on Environmental Quality issued guidelines that answered this question. Lower federal courts are also grappling with it. Since 2004, agency practice and court decisions have more closely aligned with the broad analysis approach, although the lines are not clearly drawn.
Arguing before the U.S. Court of Appeals for the District of Columbia Circuit, lawyers for the Surface Transportation Board argued that the agency did not have enough information to analyze in detail where or how oil development might increase as a result of the railroad’s construction. oil can be used. But the court found that the agency failed to adequately explain why it could not apply “some degree of foresight” to determine those impacts.
The Council also decided that it was not required to consider the effects of increased oil production and refining, as it had no authority or jurisdiction over these activities. The D.C. Circuit rejected that argument, holding that the agency could have avoided those effects by using its authority to deny a license.
What should agencies consider?
Now, the Seven Counties Coalition is asking the Supreme Court to rule on whether NEPA requires the agency to study environmental impacts “beyond the proximate effects of the activity” it regulates.
This question raises two issues that determine how agencies should analyze the indirect effects of projects. First, to what extent does tort law—the body of law that addresses the wrongful acts of one person against another—guide the application of NEPA?
Under the law of occupation, a person who claims that another has wrongfully injured them must prove that the defendant could have reasonably foreseen the harm and that their action was its proximate cause. To date, courts expect agencies to consider the consequences of their actions more broadly under NEPA because a federal agency’s decision can affect many people and NEPA is intended to inform the public about a proposed action, not to resolve injury claims.
As the Seven County Coalition advocates, standardizing a tort law approach to NEPA investigations would allow agencies to limit consideration of indirect effects.
The second question concerns the agency’s mandate. The Seven Counties Coalition argues that NEPA does not require regulators to study indirect impacts outside the agency’s direct control under their permitting authority. The coalition argues that the D.C. Circuit’s broad reading of the causation rule risks saddling the Surface Transportation Board with “endless work outside the wheelhouse.”
Other interest groups, such as the U.S. Chamber of Commerce, say the sweeping version effectively gives agencies the power to regulate far beyond their authorization powers.
Instead, Eagle County and environmental groups argue that the board has the authority to deny a license to a rail line because of indirect impacts, so the agency should be required to consider those impacts when considering them. The Howard University Law School Clinic has argued that NEPA’s broad indirect effect is “a vital civil rights tool that empowers those historically excluded from decision-making processes.”
Such concerns have led former federal officials and Council on Environmental Quality leaders from both Republican and Democratic administrations to rally behind the rail line’s opponents. Members of Congress also filed amicus briefs, with Democrats supporting rail opponents and Republicans supporting developers.
Climate change and NEPA reviews
If the Court upholds the rail developers’ position on either of these two key questions, I believe that 20 years of NEPA experience and case law under the causation test will be overturned and a new era of NEPA litigation will begin.
Many pro-NEPA observers worry about this possibility, especially for a very important policy area: climate change.
If the Court were to move NEPA’s foreseeable standard of review closer to the criminal law doctrine, it would leave agencies with little to do in their environmental impact statements to examine how proposed actions might contribute to climate change beyond quantifying direct greenhouse gas emissions.
More specifically, if a court orders agencies to ignore indirect effects beyond their direct regulatory control, most agencies may simply ignore the indirect effects of climate change because 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 decisions have been designed to curtail the authority of regulatory agencies. In my view, NEPA is unlikely to do well on this agenda.
JB Ruhl is a professor of law, director of the Law and Innovation program, and co-director of the Energy, Environment, and Land Use Program at Vanderbilt University..
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