Low-Energy Fridays: SCOTUS delivers a permitting win, but we still need Congress

Advocates of building more things in America scored a big win last week in the Supreme Court of the United States (SCOTUS). For some context, a proposed railroad in Utah that would have connected an oil field to downstream refineries was delayed over litigation challenging the adequacy of the Environmental Impact Statement (EIS) prepared for it as compliance with the National Environmental Policy Act (NEPA). The plaintiffs challenged that although the EIS had evaluated the direct environmental impacts of the railroad, the agency preparing the EIS had failed to consider the upstream and downstream environmental impacts from increased oil drilling and refinery use. Regular readers of Low-Energy Fridays will note that I often point to exactly this type of litigation as a common reason for delays in major infrastructure projects. SCOTUS handed down a unanimous decision approving the EIS, but more importantly, harshly noting that the lower courts are getting it all wrong on NEPA cases.

The fundamental challenge with NEPA litigation is that plaintiffs can broadly accuse permitting agencies of failing to have adequately considered some environmental impact associated with a project. It’s almost impossible for an agency to recognize every potential environmental impact of a major infrastructure project, and the EIS at the center of the SCOTUS case was over 3,600 pages long. But agencies try to be as broad as possible, and project opponents can use NEPA litigation to further move the goalposts. SCOTUS is essentially putting the kibosh on this by clarifying that the law only requires adequate evaluation, not exhaustive.

The SCOTUS ruling makes a couple key points, the first of which is that EISs need only focus on the direct environmental impacts of the proposed project. Agencies don’t need to consider how a project might affect someone else’s decision to build or not build something else. This is big, because major infrastructure projects have what we nerds call “incidental environmental impacts,” the indirect effects—positive or negative—of a project, which are extremely difficult to credibly evaluate. For example, while building a bridge directly impacts water quality and animal life in and around the waters, it also affects what gets built around the bridge, which affects further construction, and so on. Importantly, however, SCOTUS says it’s not the role of agencies (or courts) to speculate on environmental effects from subsequent projects.

At R Street, we’ve argued that the evaluation of incidental environmental impacts is outside the scope of NEPA, beyond the expertise of permitting agencies, and creates unnecessary delays without producing any discernable environmental benefit. The SCOTUS ruling largely follows these lines, so we’ll assume the justices are avid readers of R Street’s permitting work.

The second key point from the SCOTUS decision is that when NEPA permits are litigated, the immediate reaction of the courts should not be to vacate the decision—that is, if the courts find a fault in an EIS, it doesn’t mean the permit should be revoked until new documentation is prepared. This is particularly important because evidence indicates that litigation rarely has any substantive effect on environmental reviews.

SCOTUS is now saying these permits should only be withdrawn when there is a good reason to suspect that additional EIS documentation would have changed the agency’s decision to issue the permit. This substantially raises the bar for litigants that seek to delay or prevent construction, since any permitting deficiency they claim to occur will need to have been substantial enough that it would materially affect a project’s compliance with environmental law.

Overall, the SCOTUS ruling is good news from a permitting policy perspective: Agencies now have clearer guardrails on what they must evaluate, and the SCOTUS decision should make it tougher for permits to be needlessly delayed—so is the permitting policy issue solved?

Unfortunately, not quite. While I expect the SCOTUS decision to benefit infrastructure development timelines, the core issue of NEPA’s vagueness remains. Only Congress itself can correct that, since only they have the authority to narrow the scope of NEPA—even if SCOTUS has narrowed how courts ought to respond to NEPA-related cases. There is also a question of policy: How will current or future administrations promulgate their permitting decisions, and what will they consider adequate compliance with NEPA absent clarification from Congress?

In practice, the main effect of the SCOTUS ruling will be that litigants challenging NEPA decisions must clear a higher bar when challenging projects, while defendants who want to sustain a permit’s eligibility have a clear-cut defense that courts should not needlessly delay project construction. But much of this procedure still rests with the discretion of the permitting agency, which is why there is still a need for Congress to better define such functions.