How a fantasy oil train may help the Supreme Court gut a major environmental law

This story was originally published by Mother Jones and is reproduced here as part of the Climate Desk collaboration.

The state of Utah has come up with its share of boondoggles over the years, but one of the more enduring is the Uinta Basin Railway. The proposed 88-mile rail line would link the oil fields of the remote Uinta Basin region of eastern Utah to national rail lines so that up to 350,000 barrels of waxy crude oil could be transported to refineries on the Gulf Coast. The railway would allow oil companies to quadruple production in the basin and would be the biggest rail infrastructure project the U.S. has seen since the 1970s.

But in all likelihood, the Uinta Basin Railway will never get built. The Uinta Basin is hemmed in by the soaring peaks of the Wasatch Mountains to the west and the Uinta Mountains to the north. Running an oil train through the mountains would be both dangerous and exorbitantly expensive, especially as the world is trying to scale back the use of fossil fuels. That’s why the railway’s indefatigable promoters, including the state’s congressional delegation, will probably fail to get the train on the tracks. However, they have succeeded in one thing: providing an activist Supreme Court the opportunity to take a whack at the National Environmental Policy Act, or NEPA, one of the nation’s oldest environmental laws.

Enacted in 1970, NEPA requires federal agencies to consider the environmental and public health effects of such things as highway construction, oil drilling, and pipeline construction on public land. Big polluting industries, particularly oil and gas companies, hate NEPA for giving the public a vehicle to obstruct dirty development projects. They’ve been trying to undermine it for years, including during the last Trump administration.

Last week, when the Supreme Court heard oral arguments in Seven County Infrastructure Coalition v. Eagle County, former Solicitor General Paul Clement channeled those corporate complaints when he told the justices that NEPA “is designed to inform government decision-making, not paralyze it.” The statute, he argued, had become a “roadblock,” obstructing the railway and other worthy infrastructure projects through excessive environmental analysis. “NEPA is adding a juicy litigation target for project opponents,” Clement told the court.  

But NEPA has almost nothing to do with why the Uinta Basin Railway won’t get built. “The court is doing the dirty work for all of these industries that are interested in changing our environmental laws,” Sam Sankar, a senior vice president at Earthjustice, said in a press briefing on the case, noting that Congress already had streamlined the NEPA process last year. Earthjustice is representing environmental groups that are parties in the case. “The fact that the court took this case means that it’s just issuing policy decisions from the bench, not deciding cases.”

The idea of building a railway from the Uinta Basin to refineries in Salt Lake City or elsewhere has been kicking around for more than 25 years. As I explained in 2022, the basin is home to Utah’s largest, though still modest, oil and gas fields:

Locked inside the basin’s sandstone layers are anywhere between 50 and 321 billion barrels of conventional oil, plus an estimated 14 to 15 billion barrels of tar sands, the largest such reserves in the U.S. The basin also lies atop a massive geological marvel known as the Green River Formation that stretches into Colorado and Wyoming and contains an estimated 3 trillion barrels of oil shale. In 2012, the U.S. Government Accountability Office reported to Congress that if even half of the formation’s unconventional oil was recoverable, it would “be equal to the entire world’s proven oil reserves.”

Wildcat speculators, big oil companies, and state officials alike have been salivating over the Uinta Basin’s rich oil deposits for years, yet they’ve never been able to fully exploit them. The oil in the basin is a waxy crude that must be heated to 115 degrees to remain liquid, a problem that ruled out an earlier attempt to build a pipeline. The Seven County Infrastructure Coalition, a quasi-governmental organization consisting of the major oil-, gas-, and coal-producing counties in Utah, has received $28 million in public funding to plan and promote the railway as a way around this obstacle. The coalition is one of the petitioners in the Supreme Court case.

“We don’t have a freeway into the Uinta Basin,” Mike McKee, the coalition’s former executive director, told me back in 2022. “It’s just that we have high mountains around us, so it’s been challenging.”

Of course, there is no major highway from the basin for the same reason that the railway has never been built: The current two-lane road from Salt Lake City crests a peak that’s almost 10,000 feet above sea level, which is too high for a train to go over. So the current railway plan calls for tunneling through the mountain. But going through it may be just as treacherous as going over it. Inside the unstable mountain rock are pockets of explosive methane and other gases, not all of which have been mapped.

None of this deterred the Seven County coalition from notifying the federal Surface Transportation Board, or STB, in 2019 that it intended to apply for a permit for the railway. The following year, the board started the environmental review process, including taking comments from the public.

In December 2021, the STB found that the railway’s transportation merits outweighed its significant environmental effects. It approved the railway, despite noting that the hazards from tunneling “could potentially cause injury or death,” both in the railway’s construction and operation. It recommended that the coalition conduct some geoengineering studies, which it had not done.

Among the many issues the board failed to consider when it approved the project was the impact of the additional 18 miles of oil train cars that the railway would add to the Union Pacific line going through Colorado, including Eagle County, home to the ski town of Vail. Along with creating significant risks of wildfires, the additional trains would run within feet of the Colorado River, where the possibility of regular oil spills could threaten the drinking water for 40 million people. The deficiencies in the STB’s environmental impact statement prompted environmentalists to ask the D.C. Circuit Court of Appeals to review the STB decision, as did Eagle County.

In August 2023, the appeals court invalidated the STB’s approval of the railway. Among the many problems it found was the STB’s failure to assess “serious concerns about financial viability in determining the transportation merits of a project.” A 2018 feasibility study commissioned by the coalition itself had estimated that the railway would cost at least $5 billion to construct, need 3,000 workers, take at least 10 years to complete, and require government bond funding because the private sector had little incentive to invest in the railway.  

As Justin Mikulka, a research fellow who studies the finances of energy transition at the New Consensus think tank, told me in 2022, “If there were money to be made, someone would have built this railroad 20 years ago.” The appeals court was also skeptical that the railroad had a future: “Given the record evidence identified by petitioners — including the 2018 feasibility study — there is similar reason to doubt the financial viability of the railway.”

Indeed, the plan approved by the STB claims the railway construction would cost a mere $2 billion, to be paid for by a private investor. So far, however, only public money has gone into the project. The private investor, which is also one of the petitioners in the Supreme Court case, is a firm called DHIP Group. When I wrote about the railway in 2022, DHIP’s website showed involvement in only two projects: the Uinta Basin Railway and the Louisiana Plaquemines oil export terminal, which had been canceled in 2021. Today, the long-dead Louisiana project is still listed on its website, but the firm has added a New York state self-storage facility to its portfolio — a concrete box that’s a far cry from a complex, multibillion-dollar infrastructure project.

DHIP’s website also touts its sponsorship of the Integrated Rail and Resources Acquisition Corporation, a new company it took public in 2021 with a $230 million IPO. But in a March 2024 SEC filing, the company disclosed that the New York Stock Exchange had threatened to delist it, because in the three years since the IPO, it has done … nothing. (The company has managed to hang on.) Environmental concerns notwithstanding, DHIP seems unlikely to come up with $2 billion to build the railway. A spokesperson for DHIP did not respond to a request for comment.

Even if environmentalists had never filed suit to block it, the railway probably would have died under the weight of its own unfeasibility. Instead, the Seven County coalition appealed the decision to the Supreme Court, arguing that the appeals court had erred when it required the STB to study the local effects of oil wells and refineries that it didn’t have the authority to regulate. In July, the Supreme Court agreed to take the case.

Now the court stands poised to issue a decision with much broader threats to environmental regulation by considering only one question raised by the lower court: Does Supreme Court precedent limit a NEPA analysis strictly to environmental issues that an agency regulates, or does the law allow agencies to weigh the wider impacts of a project, such as air pollution or water contamination, that may be regulated by other agencies?

During oral arguments in the case, liberal Justice Sonia Sotomayor expressed frustration with Clement’s suggestion that the court prevent NEPA reviews from considering impacts that were “remote in time and geography.” She suggested that such an interpretation went against the heart of the law, noting, for instance, that if a federal agency allowed a car to go to market, “it could go a thousand miles and 40 states away and blow up. That’s a reasonably foreseeable consequence that is remote in geography and time.” A federal agency, she implied, should absolutely consider such dangers.

“You want absolute rules that make no sense,” Sotomayor told Clement.

Sotomayor seemed to be alone, however, in her defense of NEPA, and the majority of the other seven justices seemed inclined to require at least some limits to the statute. (Justice Neil Gorsuch recused himself from the case because his former patron, Denver-based billionaire Philip Anschutz, had a potential financial interest in the outcome of the case. His oil and gas company, Anschutz Exploration Corporation, has federal drilling leases in Utah and elsewhere and also filed an amicus brief in the case.)

While the justices seemed inclined to hamstring NEPA, such a ruling would be a hollow victory for the Utah railway promoters that brought the case. When the appeals court voided the STB decision approving the railway, it cited at least six other reasons it was unlawful beyond the NEPA issue. None of those will be affected by a Supreme Court decision in the Seven County coalition case. The STB permit will still be void, and the oil train will not get out of the station.

There will be winners in the case, however, most likely the big fossil fuel and other companies whose operations would benefit from less environmental scrutiny, should the court issue a decision reining in NEPA. For instance, the case could lead the court to strictly limit the extent of environmental harms that must be considered in future infrastructure projects, meaning that the public would have a much harder time forcing the government to consider the health and environmental effects of oil and gas wells and pipelines before approving them.

“This case is bigger than the Uinta Basin Railway,” Earthjustice’s Sankar said. “The fossil fuel industry and its allies are making radical arguments that would blind the public to obvious health consequences of government decisions.” The court will issue a decision by June next year.

This story was originally published by Grist with the headline How a fantasy oil train may help the Supreme Court gut a major environmental law on Dec 22, 2024.