Environmental Lawsuit Says $30 Million Uinta Basin Railway Is A Misuse Of Oil And Mining Royalties
Environmental groups are suing a Utah state board that distributes oil and mining royalties to communities impacted by natural resource extraction. The lawsuit, brought by Living Rivers and the Center for Biological Diversity, involves a proposed railroad that could increase oil production in the Uinta Basin.
It cites a provision in the 1920 Mineral Leasing Act, which established a framework for spending the royalties generated by drilling and mining on public lands, that says the money must be spent on projects that alleviate the impacts of extraction in the communities where they occur.
The Utah Permanent Community Impact Fund Board, or CIB, oversees the distribution of these dollars in Utah, and has decided to grant almost $30 million to develop plans for an 85-mile railroad to move oil out of the Uinta Basin by connecting it to a railroad in Colorado. The lawsuit argues the project primarily benefits the private sector and could increase the impact of extraction on residents, thus violating federal law.
“The board gave away tens of millions of dollars to an oil railway project to aid the oil industry and ramp up oil production in the Uinta Basin,” said Wendy Park, a lawyer with the Center for Biological Diversity. “This has the exact opposite purpose of how these funds should be used.”
The Utah Attorney General’s Office, which provides legal guidance to the CIB, raised concerns on multiple occasions about the legality of the project before it was approved last June. Assistant Attorney General Alison Garner wrote a letter to the board in 2018 pointing out legal issues with the project and urging the board to address them.
“It is possible — perhaps likely, even —that the CIB's decision on the application will be challenged in court,” she wrote.
Garner pointed out that the applicant, Seven County Infrastructure Coalition, says in its application to the CIB that “the ultimate goal of the [Uinta Rail Line] is to provide prospective Uinta Basin rail shippers with the lowest cost transportation option between the Uinta Basin and national markets.”
Yet, a 1993 opinion on the Mineral Leasing Act issued by the Utah Attorney General’s Office found that grants or loans issued "merely" for economic development are not authorized under the state and federal acts governing the expenditure of Community Impact Funds.
Garner echoed the same issue a year later during the CIB’s June 2019 meeting, just before the project was approved.
The lawsuit is the first of its kind brought against the CIB, according to Park, and seeks the return of the railway grant to the Community Impact Fund.
“We’re hoping that we prevail, and that this will result in more rigorous and close review of projects,” Park said, adding that the CIB has shown increased interest in projects that promote resource extraction since the Seven County Infrastructure Coalition was formed in 2014.
A state audit of the CIB completed in May raised similar concerns with funding decisions. It found the board does not have a policy to ensure projects alleviate the impacts of extraction and suggested it develop one in order to ensure compliance with the state and federal law.
A spokesperson for the CIB declined to comment on the lawsuit but said the CIB is working to develop the policies recommended in the audit. The CIB received $36.6 million in revenues from the federal government in 2019.