The Supreme Court reversed an appellate court’s decision on a crude-carrying railroad in the Uinta Basin, and the decision has major implications for natural gas and crude infrastructure across the U.S.
In 2024, the U.S. Court of Appeals, D.C. Circuit ordered energy projects from Texas to New Jersey to stop, ruling that the projects had violated National Environmental Policy Act (NEPA) standards in their permitting processes.
On May 29, the high court ruled 8-0 that the lower court had overstepped its boundaries. (Justice Neil Gorsuch did not participate in the ruling.)
“Simply stated, NEPA is a procedural cross-check, not a substantive roadblock,” Justice Brett Kavanaugh wrote in the court’s opinion. “The goal of the law is to inform agency decision-making, not to paralyze it.”
NEPA requires companies to create an environmental impact statement (EIS) for major projects. The reports include the potential results of the project on air, water quality and other issues, and often run over 1,000 pages.
The report from the seven Utah counties that proposed a new crude transport railway out of the Uinta Basin totaled more than 3,600 pages.
The counties decided to develop the railway because of the unusual nature of Uinta’s crude, which comes out of the ground too waxy and thick to be pumped through pipelines. The proposed 88-mile railway would use specialized tank cars to carry the oil, about 350,000 bbl/d of it, out of the Uinta and eventually to refineries on the Gulf Coast or elsewhere.
The seven Utah counties filed an EIS that was approved by the U.S. Surface Transportation Board in 2021. Colorado’s Eagle County and five environmental groups sued to stop construction. In 2023, the D.C. court of appeals agreed with the plaintiffs.
Specifically, the appellate court faulted the scope of the EIS. The counties’ report had limited the scope of the review to the impacts of the project itself. The court ruled that the report should have also considered the upstream effects of increased drilling in the Uinta Basin and the downstream effects of increasing the amount of crude oil on the market.
The high court ruling agreed with the railway developers.
“Under NEPA, the Board’s EIS did not need to address the environmental effects of upstream oil drilling or downstream oil refining,” Kavanaugh wrote. “Rather, it needed to address only the effects of the 88-mile railroad line. And the Board’s EIS did so.”
The ruling will send the lawsuit back to the appeals court. The NEPA scope issue was one of several legal matters brought up in the trial.
Environmentalists and politicians opposed to the project criticized the decision.
“We are deeply disappointed by today’s Supreme Court decision that strikes a blow to efforts to block the dangerous Uinta Railway project, which threatens Colorado’s communities, watersheds and forests. The risks of wildfire and train derailment at the headwaters of the Colorado River are simply unacceptable,” Sen. Michael Bennet and Rep. Joe Neguse, both Democrats of Colorado, said in a statement.
Utah Gov. Spencer Cox applauded the move on social media, responding to claims that ruling had curbed the power of NEPA regulations.
“The court didn’t ‘scale back’ a key environmental law, the court unanimously stopped an insane idea that doesn’t exist anywhere in the law,” Cox wrote on X.
Other CO2 rulings
During the summer of 2024, the same D.C. appeals court made similar rulings on three other projects, all involving permits awarded by the Federal Energy Regulatory Commission (FERC).
In July, the court vacated permits for the Rio Grande LNG and Texas LNG projects in South Texas, ruling that the FERC’s EIS did not adequately consider the greenhouse gas emissions that the projects would ultimately create, among other issues.
The same month, the court vacated the FERC permit for Williams Cos.’ Regional Energy Access Project (REA) in the Mid-Atlantic region. The project, which was a few months away from completion, would increase natural gas capacity for the region. The court ruled again that the FERC had inadequately considered greenhouse gas emissions resulting from the completion of the project.
Legal actions on all of the projects continued while the Supreme Court considered the Uinta railway case. The appeals court reinstated the permits for the LNG projects in March, ruling that the permits were viable while Glenfarne Group and NextDecade amended their environmental statements.
NextDecade’s Rio Grande LNG is under construction. Work did not stop on the project when the permit was withdrawn. Glenfarne expects to reach a final investment decision on Texas LNG by the end of 2025.
Williams’ REA came online before the end of 2024. The FERC reinstated the permit for the project in January.