U.S. Supreme Court Grapples With Loper Bright In The Context Of NEPA Reviews

Highlights

• In a decision aiming to reiterate and clarify the fundamental role of judicial review in National Environmental Policy Act (NEPA) cases, the U.S. Supreme Court emphasized that courts must afford agencies substantial deference to agency expertise in reviewing NEPA decisions.
• The Court also set limits on the scope of review, limiting how "indirect" effects are to be considered under NEPA.
• This Holland & Knight alert details the major takeaways of the decision and how it may have lasting effects on NEPA jurisprudence and reviews of projects under NEPA moving forward.

The U.S. Supreme Court issued a decision on May 29, 2025, in Seven County Infrastructure Coalition v. Eagle County (No. 23-975) that clarified the role of deference to agency expertise in carrying out obligations under the National Environmental Policy Act (NEPA) and clarified application of the Loper Bright decision in the NEPA context. Consistent with prior precedent, the Court also set limits on agency consideration of other projects and the scope of effects in a NEPA review, declaring that upstream and downstream projects need not be considered unless they are under the agency's authority and so interrelated that they effectively constitute one single project. This Holland & Knight alert discusses the major takeaways of this agency-friendly decision and how it may have lasting effects on NEPA jurisprudence and reviews of projects under NEPA moving forward.

Background

NEPA requires federal agencies to create a "detailed statement" for "major Federal actions significantly affecting the quality of the human environment."¹ NEPA's sliding-scale approach requires Environmental Impact Statements (EISs) for proposed actions with the potential for "significant" environmental effects and allows for the preparation of an Environmental Assessment (EA) to determine whether a project will have "significant" environmental effects. In certain instances, a Categorical Exclusion (CatEx) expedites the NEPA process, where an agency has determined that a category of action would not normally, individually or cumulatively, have potential for significant environmental impacts absent extraordinary circumstances.

The NEPA statute was amended in 2023, with significant amendments adopted to the Council on Environmental Quality's (CEQ) NEPA regulations in 2020, 2022 and 2024. Since President Donald Trump took office in 2025, his administration has prioritized deregulation and expediting of project permitting and approval processes, including rescission of CEQ's NEPA regulations in the wake of several courts explicitly holding that CEQ lacks rulemaking authority. (See Holland & Knight's previous alerts "Adding Fuel to the Fires Calling for Permitting Reform," Nov. 26, 2024, and "Court's Denial of Review Leaves Open Questions of CEQ Authority," Feb. 3, 2025.) Thus, there has been significant flux in the NEPA context within the past six months that continues to evolve. The long-awaited Seven County decision is the latest action in this timeline of events that will impact NEPA decisions moving forward.

Seven County Case

In 2020, the Seven County Infrastructure Coalition, a group of Utah counties, proposed an 88-mile intrastate railroad project to connect the Uinta Basin to the national freight rail network. Because the project required approval from the Surface Transportation Board (STB), NEPA review of the project was triggered. After STB prepared an EIS and approved the project, Eagle County, Colorado, and other environmental groups challenged the sufficiency of the NEPA review in the U.S. Court of Appeals for the District of Columbia Circuit. The Court ruled in August 2023 that the STB had committed "numerous NEPA violations" by failing to adequately analyze indirect environmental impacts and remanded the matter for further proceedings. (See Eagle County, Colorado v. Surface Transportation Board, No. 22-1019 (D.C. Cir. 2023).) The Seven County Infrastructure Coalition, along with the STB, filed a petition for a writ of certiorari before the Supreme Court. The Supreme Court granted the writ "in light of the continuing confusion and disagreement in the Courts of Appeals over how to handle NEPA cases" and "to reiterate and clarify the fundamental principles of judicial review applicable to those cases."

Supreme Court Decision

In an 8-0 decision delivered by Justice Brett Kavanaugh on May 29, 2025, the Supreme Court reversed and remanded the D.C. Circuit Court's decision, holding that the circuit court 1) did not afford the agency the "substantial judicial deference" required in NEPA cases and 2) misinterpreted NEPA to require consideration of other projects. The Supreme Court emphasized its intent to "reiterate and clarify the fundamental principles of judicial review in [NEPA] cases," which, in the eyes of the Court, "is deference."

Interestingly, the Supreme Court did not opine on the validity of CEQ regulations or CEQ's regulatory authority, despite the recent executive and judicial activity on that issue.

Key Takeaways

There are several main takeaways from the majority Seven County opinion.

Agencies Are Afforded Substantial Deference in the NEPA Context

Despite the Court's recent holding in Loper Bright v. Raimondo, 603 U.S. 639 (2024), overturning Chevron deference and holding that deference to agency on questions of law, such as interpretation of federal statutes, conflicts with the Administrative Procedure Act (APA), and courts must exercise "independent judgment in deciding whether an agency has acted within its statutory authority" and "ensur[e] the agency has engaged in 'reasoned decisionmaking' within those boundaries." The Court nonetheless made clear that courts must afford substantial agency deference in judicial review of NEPA decisions, and that deference extends to what details are (and are not) included in the NEPA decision documents. The Court emphasized that courts "should not micromanage agency choices so long as they fall within a broad zone of reasonableness" (emphasis added).

In so holding, the Court appears to clarify the extent of Loper Bright application consistent with its language in that decision. Notably, the Court states in the Seven County decision that "when an agency exercises discretion granted by a statute, judicial review is typically conducted under [a] deferential arbitrary-and-capricious standard." Yet, like many statutes, NEPA is a broadly worded statute that does not expressly provide discretion over every aspect of NEPA decision-making. The Court reconciles Loper Bright in this decision by reasoning, for example, that the requirement that an EIS be "detailed" is a statutory question of law to be decided by a court, but the question of what needs to be included in order for the EIS to meet the "detailed" requirement is a question of fact that should be left up to the agency.

NEPA Is a Purely Procedural Statute

It is a bedrock NEPA principle that the statute imposes only a procedural, not a substantive, obligation on agencies, but the Court takes time to emphasize its importance in the Seven County decision. In the words of the Court, "[u]nder NEPA, an agency's only obligation is to prepare an adequate report." The Court contrasts NEPA to other environmental statutes that have substantive requirements – such as the Clean Air Act and Clean Water Act – to emphasize that NEPA has no substantive constraints on the agency's decision. "Because an EIS is only one input into an agency's decision and does not itself require any particular substantive outcome, the adequacy of an EIS is relevant only to the question of whether an agency's final decision ... was reasonably explained." This principle underlies the Court's position that agencies are to be afforded substantial deference in conducting a NEPA review, including the extent of detail included in a NEPA decision document given the statute's purely procedural nature. This is consistent with the prior line of cases on deference to agency expertise, but not questions of law.

The Court also makes clear that judicial review of an agency's NEPA decision is not the same as review of the final project. Because NEPA is a procedural statute, a court cannot consider whether the project should have been approved but whether the final decision was reasonable and reasonably explained in the EIS. The Court also stressed that in some cases a deficient NEPA decision may not require a court to vacate the ultimate project approvals where corrections to the NEPA decision would not change the course of the project as approved, which is consistent with the APA's statement that "due account shall be taken of the rule of prejudicial error." 5 U.S.C. § 706. This will have some significance in future NEPA litigation as lower courts fashion relief.

Agencies Determine Scope of Environmental Effects to Be Reviewed

Because an agency is afforded substantial deference when complying with NEPA's procedural requirements, the Court emphasized that an agency is also afforded substantial deference in determining the scope of the environmental effects that it will address in its NEPA review of a project, and that courts must give agencies "broad latitude to draw a 'manageable line'" (citingPublic Citizen v. Department of Transportation).²

As described by the Court:

To support this conclusion, the Court reminded the public of another bedrock NEPA principle: the rule of reason. Agencies apply the rule of reason to determine whether and to what extent an EIS is necessary, and a court may not "substitute its judgment for that of the agency" unless the agency was unreasonable.

NEPA Review Need Not Include Consideration of Other Projects

Regarding the question of whether and to what extent agencies need to consider the environmental effects of other, geographically or temporally separate projects, the Court held that the circuit court had misinterpreted NEPA to find that the agency was required to address environmental effects from other projects. Instead, NEPA requires agencies to focus only "on the environmental effects of the project at issue."

Here, the agency had determined that upstream oil drilling and downstream oil refining were separate from the railroad project at issue, reasoning that they were not two phases of a single action but separate, independent projects. The Court determined that this approach was "absolutely correct," explaining that the statutory focus of NEPA is on the "proposed action,"³ and that effects from a separate project are not required to be evaluated. The Court differentiated between entirely separate projects, which are not required to be evaluated, and environmental effects of the project itself that may occur in a different geographical area or time, which are required to be evaluated as indirect effects. Applying Public Citizen, the Court reasoned that separate projects break the chain of proximate causation, even if they are factually foreseeable, and there is no "reasonably close causal relationship" between the project under review and the other, separate projects.

The Court also noted that the separate projects in this case fell outside of the reviewing agency's authority because other agencies possess the regulatory authority over the other projects. "As this Court stated in one of the more important sentences in the NEPA canon, 'where an agency has no ability to prevent a certain effect due to its limited statutory authority over the relevant actions, the agency cannot be considered a legally relevant 'cause' of the effect'" (citing Public Citizen, 541 U.S., 770). In other words, "agencies are not required to analyze the effects of projects over which they do not exercise regulatory authority."

Lastly, the Court rejected any notion of "but-for causation" as a reason for requiring agencies to consider other, separate projects. Just because Project A may make it more likely or more foreseeable that Project B will materialize does not necessitate review of the environmental effects of Project B when reviewing Project A. However, the Court did note that there may be certain circumstances in which other projects are so interrelated and close in time and place so as to constitute a single project within the authority of the reviewing agency, which is a decision up to the agency that should be afforded substantial deference.

NEPA Cannot Be Used as a Tool to Block or Delay Projects

Justice Kavanaugh's opinion emphasized that NEPA cannot be used as a tool to slow down or block projects, which in turn "caused litigation-averse agencies to take ever more time and to prepare ever longer EISs for future projects." The Court described the effects of slowing down NEPA projects through judicial review, leading to fewer projects being approved and fewer jobs. "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." The Court urges that "a course correction" is necessary to return judicial review of NEPA decisions back to Congress' original intent. The opinion also cautions other courts from applying a lesser deference standard in judicial review of NEPA decisions, which causes "overly intrusive" review of in NEPA cases.

What Does This Mean and How Holland & Knight Can Help

The Court makes clear that courts are to give agencies deference in the context of NEPA review, particularly as it relates to scoping. Specifically, the Court emphasized that NEPA does not require evaluation of other, separate projects that are not under agency authority and are not so interrelated that they effectively constitute one project, thereby narrowing how far an agency must take its NEPA review.

Though the Court has made clear that judicial review of NEPA decisions are largely unaffected by the Loper Bright decision, it is likely to see further refinement of post- Loper deference in other contexts as courts grapple with the impacts of the Loper Bright decision in light of the Seven County decision.

This decision also coincides with federal agencies' undertaking rulemaking processes to update their NEPA regulations, pursuant to President Trump's "Unleashing American Energy" Executive Order (EO) 14154, dated Jan. 20, 2025. Agencies may consider and incorporate these conceptual limits on project scoping into their NEPA-implementing regulations.

Finally, the Court's determination that environmental effects of other, geographically or temporally separate projects are not warranted in a NEPA review will likely mean that "indirect" and "cumulative" effects⁴ will be narrowly defined or eliminated in future NEPA reviews and rulemaking.

Holland & Knight is closely tracking how agencies respond to the Seven County decision in modifying their NEPA procedures and how lower courts may apply Seven County and Loper Bright.

Footnotes

1. 42 U.S.C. §§ 4321 et seq.

2. Public Citizen v. Department of Transportation, 541 U.S. 752 (2004).

3. The 2023 Fiscal Responsibility Act of 2023 (FRA) amendments to NEPA, further cabined the language to the "proposed agency action." 42 USC § 4332(2)(C)(i).

4. "Cumulative effects, which are effects on the environment that result from the incremental effects of the action when added to the effects of other past, present and reasonably foreseeable actions regardless of what agency (federal or non-federal) or person undertakes such other actions. Cumulative effects can result from actions with individually minor but collectively significant effects taking place over a period of time." 40 CFR 1508.1(i)(3) (emphasis added) (rescinded Feb. 2025)

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