State officials awarded $21.4 million to fund the next phase of the Uinta Basin Railroad during a meeting on Thursday.
The Commuinty Impact Fund Board (CIB) has now given the Uinta Basin Railway project, sponsored by the Seven County Infrastructure Coalition (SCIC), over $30 million since last fall. This is the largest award ever made by CIB. The funds will be used for the environmental review process of the project to meet the requirements of the National Environmental Policy Act (NEPA).
CIB collects mineral lease funds and distributes that money to communities throughout the state. On the advice of Utah Assistant Attorney General Alison Garner, CIB members threw a lot of cold water on the rail proposal that would move Uinta Basin’s waxy crude oil to refineries on the Gulf Coast.
Garner advised CIB members that mineral lease money is not to be used for economic development projects and that this railway may not meet the requirements of the Federal Mineral Leasing Act. That law states the money should be spent on communities to mitigate adverse effects of mineral development. Mineral lease money is paid by energy developers to mitigate the impacts of their business on rural counties.
Garner said if the railway project is challenged in court, there is no case law to support using mineral lease money for this purpose. “There are a lot of unknowns and the court will be charged with determining whether the decision was arbitrary and capricious,” she said. “Did the board ask questions, seek supporting evidence and demand answers to tough questions? Or did the board avoid difficult questions and accept flimsy explanations or excuses or act as a rubber stamp? If the latter, the decision will be struck down in court.”
Based on that advice, CIB members questioned SCIC Executive Director Mike McKee and his team for four hours Thursday. But in the end there was only one dissenting vote.
The SCIC, made up of county commissioners from Uintah, Duchesne, Daggett, Emery, Carbon, Sevier and San Juan counties, recently adopted Indian Canyon along Highway 191 as their preferred route. Up to 29 possible routes have been studied over several years now. The Indian Canyon route will require one three-mile-long tunnel and the overall cost estimate for the project is $1.5 billion, which was recently reduced from $5 billion. McKee said the Coalition’s funding plan is a public/private partnership. The Coalition has a partner Drexel Hamilton, a New York investment bank that has pledged somewhere in the range of $5 to $15 million, according to Mark Michel, a managing partner for the bank who attended Thursday’s meeting.
Michel said he has been in discussions with several oil and gas companies and they are supportive. “We are pleased in the way our proposal has been received by potential customers,” he said. “We have been talking for the past month and they tell us it will be great for the Basin and great for their companies.”
However, when questioned about a potential investment in the railway by oil and gas companies Michel said it’s uncommon for exploration companies to invest in transportation infrastructure projects and he has not approached them with that question.
He added that frack sand companies are interested in shipping their products to the Uinta Basin by rail. McKee said they have a short line common carrier rail company that is interested in managing and maintaining the new line and that agriculture and other commodities in the Basin could also utilize the line.
SCIC held a meeting later in the day where they took public comment on the railway proposal. Several people spoke in opposition to the project.
Darrell Fordham, representing the Argyle Wilderness Preservation Alliance said SCIC committed to avoiding Argyle Canyon earlier but it’s now been made clear they have no intention of honoring that commitment. He added that SCIC does not listen or care about public comment from affected landowners.
“It’s clear that you have much to hide regarding this project which reeks of government corruption, conflicts of interest, backdoor dealings and waste of public money to benefit private industry,” he said.
Sarah Stock, a Grand County resident, said SCIC has now received more money from CIB than all of the projects that were funded in 2018. “We should not be pursuing fossil fuel infrastructure projects. We need to invest in clean projects,” she said. “It’s foolish to invest in something that will only benefit the fossil fuel industry. You need to take responsibility and start funding projects that actually benefit people.”
Uintah County Commissioner Bart Haslem said he supports the railway because it will create jobs, stabilize the local economy and allow families to stay here.
“There is no taxpayer money involved here,” he said. “93 percent of the funds CIB receives come from these seven counties. We are bringing a project to this community that will create jobs and help families stay in the area.”