## Facts

- Dakota, Minnesota & Eastern Railroad Corp. (DM&E) sought federal approval to build about 280 miles of new rail line to Wyoming’s Powder River Basin and to upgrade roughly 600 miles of existing track in Minnesota and South Dakota.
- The Surface Transportation Board (STB) prepared a Final Environmental Impact Statement (FEIS) under the National Environmental Policy Act (NEPA) and approved the project with mitigation conditions.
- Opponents argued the expanded rail capacity would lower transportation costs and increase the supply of low-cost coal, predictably increasing coal combustion and resulting air emissions from coal-fired power generation.
- The STB’s FEIS primarily evaluated impacts along the rail corridor (e.g., construction effects, noise, safety, and community impacts) and did not meaningfully analyze downstream increases in coal consumption or related air emissions, citing uncertainty about future power plants’ locations and characteristics.
- Petitioners sought review under the Hobbs Act, asserting NEPA and Administrative Procedure Act (APA) violations in the STB’s approval and environmental review.

## Issues

1. Whether NEPA required the STB to analyze reasonably foreseeable indirect effects of the project, including increased coal combustion and associated air emissions driven by added rail capacity.
2. Whether the FEIS was otherwise adequate regarding environmental impacts and mitigation for impacts along the rail line.
3. Whether the STB’s approval and FEIS complied with the APA’s arbitrary-and-capricious standard.

## Decision

- The court granted the petitions in part and denied them in part.
- The court held the FEIS was inadequate because the STB failed to address the reasonably foreseeable increase in coal consumption and related air emissions attributable to the project.
- The court rejected the STB’s position that uncertainty about future power plants justified omitting any analysis of coal-use-related impacts.
- The court upheld much of the STB’s analysis and mitigation concerning corridor-related impacts and declined to overturn the project approval wholesale.
- The court affirmed in part, reversed in part, and remanded to the STB for further proceedings consistent with NEPA.

## Legal Principles

- NEPA requires agencies to consider indirect effects that are later in time or farther removed in distance when those effects are reasonably foreseeable.
- An agency may not avoid NEPA review of an important, foreseeable environmental consequence merely because some downstream details (such as exact facility locations) are uncertain.
- When an infrastructure project predictably affects fuel markets and consumption, economically driven increases in combustion and emissions can be indirect effects requiring NEPA analysis at an appropriate level of generality.
- Under the APA, agency action is unlawful if the agency fails to consider an important aspect of the problem or offers an explanation inconsistent with the record; review remains deferential where the agency reasonably evaluates relevant factors and explains its choices.

## Conclusion

The Eighth Circuit held that the STB’s FEIS had to meaningfully address the reasonably foreseeable downstream increase in coal use and related emissions caused by the rail project, while otherwise leaving much of the STB’s corridor-focused analysis and mitigation intact; the matter was remanded for additional NEPA analysis and reconsideration.


Mid-States Coal. for Progress v. Surface Transp. Bd., 345 F.3d 520 (8th Cir. 2003)