Surface Transportation Board approves proposed Uinta Basin oil railway

The federal Surface Transportation Board has granted final approval for an 85-mile rail line that backers say is needed to connect the Uinta Basin’s oil production to markets outside of Utah.

While Utah leaders hailed Wednesday’s 61-page decision as a boon to rural economic development, critics challenged the project’s financial viability, calling it a reckless subsidy that perpetuates the nation’s addiction to fossil fuels.

For years, Utah’s oil-producing counties have sought a rail connection for the basin’s waxy crude, which is shipped entirely by truck, mainly to Salt Lake City refineries that enjoy a steep discount for the product. Past stabs at rail development got hung up on cost estimates, which exceeded $3 billion.

The rail idea’s latest iteration comes from the Seven County Infrastructure Coalition, a consortium of eastern Utah counties formed in 2014 to promote projects that would bolster the region’s extractive industries.

Under its current configuration, the Uinta Basin Railway is expected to cost only $1.4 billion and it will be financed and operated by private firms. Under a “public-private partnership,” Rio Grande Pacific Corp. would operate the line and Drexel Hamilton Infrastructure Partners would finance it, according to an Environmental Impact Statement, or EIS, released in November.

The Ute Indian Tribe, which relies on oil and gas production as a revenue source, is expected to become an equity partner. In a Sept. 21 letter to the board, the tribe said the railway exemplifies the type of infrastructure investment deemed vital by the Biden administration.

“Royalties derived from these minerals enable the Tribal government to provide critical services to its membership of almost 3,000 members. The highs and lows of commodity markets, economic cycles and geopolitical turmoil all pose risks to this vital source of funding used for education, health, policing, public works, housing, food services, natural resources and sovereign defense,” wrote Edred Secakuku, the tribe’s business committee vice chairman. “The Uinta Basin Railroad enhances and expands access to both national and international markets which reduces these risks.”

The board’s 4-1 decision, however, drew immediate condemnation from environmentalists who view the move as a betrayal of the Biden administration’s pledge to curb greenhouse gas emissions.

“The Surface Transportation Board just blew an opportunity to address the climate emergency and instead poured gasoline on the fire,” said Deeda Seed, Utah campaigner for the Center for Biological Diversity. “If this boondoggle is built, it’ll quadruple fossil fuel extraction in the Uinta Basin, destroy wildlife habitat and decimate hundreds of streams. Adding insult to injury, Utah officials are misusing public funds to plan this carbon bomb.”

Her group, which is already suing Utah agencies for improperly directing public money into the project, vowed to pull out all the stops to block the project. A ruling is expected any day in that case from the 3rd District Court in Salt Lake City.

The railway would degrade up to 10,000 acres of wildlife habitat in northeastern Utah, potentially disrupting migration corridors and ruining wetlands, according to the EIS. The single-track railway would cross streams at 443 places, affecting 61 miles of waterways.

The board OKed the railway’s Whitmore Park alternative, an alignment that was drawn to avoid federal sage grouse habitat and a residential area at Argyle Canyon. Although that route adds 7 miles of track to the railway, the alternative affects the fewest number of residences and crosses mostly private land, primarily affecting large property owners and ranchers, according to the EIS.

The U.S. Forest Service recently approved a right of way for the railway to cross 12 miles of Ashley National Forest. That decision becomes final on Monday, but it will be contested by numerous environmental groups.

Though various statements of support circulated for public consumption, Utah Gov. Spencer Cox and other political leaders have avoided emphasizing oil, instead promoting the idea that the railway would support a broader array of industries.

In a tweet Wednesday that doesn’t mention oil, Cox said the railway “will serve the economic interests of residents and businesses.”

STB member Martin Oberman offered a stinging dissent to Wednesday’s decision, highlighting the lack of evidence that the railway will serve any purpose other than moving oil and drilling material to the detriment of the climate.

“I have concluded not only that the financial viability of the Line is in serious doubt but also that the Line’s environmental impacts significantly outweigh its transportation merits,” he wrote. “The Board should consider those impacts as the reasonably foreseeable, indirect effects that they are, especially since the ‘entire purpose’ of this Line is to stimulate and support oil production in the Basin.”

As the world takes increasing action to avert the forecasted climate disaster, Oberman wrote, the demand for oil will likely dampen. If commodity prices drop, Uinta production could take a dive leaving little for the railway to haul.

He has “grave concerns” that it would be taxpayers, not private investors, “who would bear the cost of constructing an ultimately unprofitable rail project.”