Uinta Basin Railway on track after Utah judge approves state grants for railroad funding

Proponents of the Uinta Basin Railway have pledged to pay back the $28 million to a fund that typically supports community projects.

Kim Raff | The Salt Lake Tribune Oil tankers use U.S. Highway 40 near Daniels Summit to travel from the oil fields in the Uinta Basin to Salt Lake refineries on May 18, 2012. A controversial railroad that would connect the basin's production with the national rail network has won federal approvals.

A Utah state judge has thrown out a lawsuit brought by environmentalists seeking to invalidate state grants toward the oil-hauling Uinta Basin Railway, concluding there was nothing improper in using public dollars that originated from federal mineral revenues.

The Center for Biological Diversity and other groups alleged Utah officials misallocated $28 million from a pot of money set aside for projects supporting essential public services — not major infrastructure benefiting a narrow private interest.

In the latest setback to environmentalists’ efforts to derail the controversial project, 3rd District Judge Adam Mow concluded the Utah Community Impact Fund Board, or CIB, properly awarded the grants toward the railroad’s planning.

“There have been multiple studies performed, which show that increasing transportation options to the Uinta Basin, particularly by rail, will result in numerous benefits to the communities, public governments, and private sector actors within the Basin,” the Salt Lake City-based judge wrote in his July 11 ruling.

Although the money was awarded in the form of grants, the Seven County Infrastructure Coalition, the public entity sponsoring the railway, has pledged to pay back the $28 million in an arrangement with its private partners. If built, the railroad will be owned by Drexel Hamilton Infrastructure Partners and operated by Rio Grande Pacific.

Meanwhile, on Thursday, the U.S. Forest Service finalized approval of a right of way essential for the railroad’s construction. That decision, which allows trains to cross 12 miles of the Ashley National Forest, drew applause from Utah Gov. Spencer Cox, who called the decision a win for the regional economy.

“This is a huge victory that will get Utah energy to market faster, more cleanly, more safely, and will help the economies of eastern Utah,” he said in a statement. “State and local governments, the Ute Tribe, energy producers and rail companies have been making the argument for decades that improved access to the outside world will help the basin diversify its economy.”

(Christopher Cherrington | The Salt Lake Tribune)

Colorado’s political leaders were far less enthused with the decision. The Utah project would result in several oil-hauling trains a day crossing the Rocky Mountains, yet potential impacts from that traffic have not been studied adequately, according to Colorado Democrats Sen. Michael Bennet and Rep. Joe Neguse.

“An oil spill in the Colorado River headwaters would be catastrophic to our state’s water supplies, wildlife habitat, and outdoor recreation assets,” they wrote in a July 13 letter to the Biden administration. “We simply cannot afford the risk of an oil train derailment in these sensitive areas that are already recovering from crippling disasters, which are only projected to become more frequent and severe.”

These concerns are reflected in a federal lawsuit filed in February by Colorado’s Eagle County.

While more legal challenges may arise, no major regulatory hurdles are left for the $1.4 billion project. The federal Surface Transportation Board completed an environmental impact statement last year and has approved the project.

Construction could begin next year and is expected to take 2 years to complete the 85-mile line. The new tracks will start in Myton and travel southwest to Kyune, where it would tie into the Union Pacific tracks near the head of Price Canyon. The aim is to connect the geographically isolated Uinta Basin with the national rail network, giving Utah oil producers a pathway to lucrative markets on the Gulf Coast.

Once running, the railroad is expected to enable the basin’s oil producers to at least triple their output from 90,000 barrels a day to between 225,000 and 350,000 barrels.

At a May 25 hearing, Judge Mow noted during oral arguments that all but $2 million of the state grants had already been spent on planning and engineering studies, leaving him to wonder whether a favorable ruling for the environmentalists would accomplish much.

“That’s still $2 million that could go to very important projects in the Uinta Basin for local communities, such as fire trucks, water and sewer lines, road repairs, health clinics, parks and trails, actual planning to help communities to deal with all of the burdens that oil drilling places on them,” said Wendy Park, a lawyer representing the Center for Biological Diversity, ticking off the type of bread-and-butter investment CIB money is designed to support.

Environmentalists were not the only ones raising objections to the CIB sinking the state’s mineral revenues into the railroad. Before the CIB approved the grants, the Utah Attorney General’s Office advised the board that such a use could violate federal law and then-State Treasurer David Damschen, a CIB member, noted the speculative nature of the project’s return on investment.

But Mow’s ruling said there is little chance the private sector would build the railroad without public financial involvement.

“At the present time, the only means of transporting not only oil but other needed products and materials into and out of the Uinta Basin are long, lengthy, often narrow and dangerous highways which, at least during winter months, are frequently hazardous and sometimes closed,” he wrote.