Seven County v. Eagle County: The Supreme Court Provides Guidance on How Loper Bright and State Farm Review Coexist 

Yesterday, in Seven County Infrastructure Coalition v. Eagle County, Colorado, the Supreme Court addressed the scope of federal agencies’ obligations under the National Environmental Policy Act (NEPA) to study the environmental effects of proposed agency actions and prepare “detailed” reports, known as environmental impact statements. In the course of grappling with those questions, Justice Kavanaugh’s Seven County opinion may provide some insight into how under Loper Bright the Court may distinguish between questions of law that courts must independently decide and exercises of agency discretion subject to laxer arbitrary and capricious review. 

How Seven County Incorporated Loper Bright

Seven County cited Loper Bright for the proposition that “[a]s a general matter, when an agency interprets a statute, judicial review of the agency’s interpretation is de novo.” This appears to be the first time the Supreme Court has expressly tied Loper Bright to de novo review in the body of a majority opinion. (The Loper Bright majority opinion referenced the word de novo only once—in a footnote responding to Justice Kagan’s dissent.) Conversely, the Court observed that “when an agency exercises discretion granted by a statute” the APA’s “deferential arbitrary-and-capricious standard” usually applies, which “asks not whether [a court] agrees with the agency decision, but rather only whether the agency action was reasonable and reasonably explained,” citing State Farm and FCC v. Prometheus. This distinction seems to track Loper Bright’s recognition that some statutes are best read to grant discretionary authority to agencies and how courts should review agency exercises of discretion. It is also consistent with then-Judge Kavanaugh’s observation in his 2016 article “Fixing Statutory Interpretation” that “a judge can engage in appropriately rigorous scrutiny of an agency’s statutory interpretation and simultaneously be very deferential to an agency’s policy choices within the discretion granted to it by the statute.”  

Seven County illustrates how this distinction might operate in the context of NEPA—a purely procedural statute that obligates agencies to create “detailed” reports under certain circumstances. Again citing Loper Bright, the Court notes that “[o]f course” what the word “detailed” in the statute means “is a question of law to be decided by a court.” By contrast, what details are included in the report is left largely to the agency’s exercise of discretion, as it is a fact-bound matter that doesn’t revolve around what the word “details” means. More broadly, the Court observed that “an agency will invariably make a series of fact-dependent, context-specific, and policy-laden choices” in conducting NEPA analysis and preparing the required reports that “[c]ourts should afford substantial deference.” Those are also not questions of statutory interpretation, and courts are not tasked with making policy choices.  

NEPA and Loper Bright

An overarching theme of Seven County is the need for the judiciary to show “substantial deference” to exercises of agency discretion in implementing NEPA’s purely procedural requirements. A possible reason why warrants brief mention: over the years, certain courts added extra-statutory procedural requirements to NEPA and overzealously policed agency compliance to block projects. Seven County suggests this judicial overreach was contrary to Congress’s intent and NEPA’s text. As Justice Kavanaugh put it, “[a] 1970 legislative acorn has grown over the years into a judicial oak that has hindered infrastructure development” and “Congress did not design NEPA for judges to hamstring new infrastructure and construction projects.” Put in the parlance of Loper Bright, the best reading of NEPA is that Congress statutorily granted agencies wide discretion to make decisions about how best to implement NEPA and directed courts to deferentially review how the agency exercised that discretion.  

One other quick note: Seven County cites Baltimore Gas and Electric v. NRDC as “black-letter administrative law,” suggesting this form of judicial deference to agencies’ scientific and technical judgments may, for better or worse, remain alive and well.  

It will be interesting to see the extent to which Seven County elucidates the key distinction in Loper Bright between questions of statutory interpretation (which the APA and, at least as a matter of first principles, the Constitution reserves to courts) and fact-bound or policy-laden exercises of agency discretion within the boundaries set by Congress, which courts must generally respect, so long as those boundaries are constitutional.