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Crumpled coal cars litter the train tracks in Glenwood Canyon about four miles east of Glenwood Springs, Feb. 16, 2004. (Ed Kosmicki, Special to The Colorado Sun)

There’s a new battleground for opponents hoping to stop controversial plans for a short railroad in Utah that could roll 350,000 barrels of dense crude a day through Colorado. 

Utah’s Seven County Infrastructure Coalition earlier this month approved a resolution allowing the owners of the railroad to secure up to $2 billion in “private activity bonds” to finance the construction of the 88-mile railroad that will connect Utah’s Uinta Basin oil fields with the national railroad network. Those bonds will cover only 70% of the project, so the Uinta Basin Railroad could cost as much as $2.9 billion after funding from private investors. The project was originally priced at $1.4 billion when the Surface Transportation Board began studying the plan four years ago.

The bonds are allocated by the federal Department of Transportation, which has approved $16.9 billion of the bonds for transportation projects in 22 states since 2006. All the projects are highway improvements plus a passenger rail project in Florida, with no oil or freight rail plans receiving funding. In Colorado, private activity bonds have delivered $114.7 million to the Central 70 project; $20.4 million for expanded lanes on U.S. 36 between Boulder and Denver; and $397.8 million for RTD’s transportation plan in metro Denver.

The tax-exempt bonds offer very low interest rates, allowing developers — typically public entities — to pursue publicly beneficial projects. A private entity who uses the bonds to finance a project needs the endorsement of a public group — like Utah’s Seven County Infrastructure Coalition.

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That endorsement came earlier this month as the coalition — which formed in 2014 to support the construction of the Uinta Basin Railway as a way to better move the region’s waxy crude to Gulf Coast refineries and support the basin’s oil industry — approved a plan that could deliver one of the largest private activity bond issuances ever to the railroad owner, Uinta Basin Railway, LLC.

“This is a pretty momentous occasion to approve a resolution for a project this big,” coalition chairman Casey Hopes said after the Feb. 9 vote. “We are looking forward to the day when we can ride the first train out of the Uinta Basin.”

Mark Michel, a managing partner at Drexel Hamilton Infrastructure Partners, which recently changed its name to Uinta Basin Railway Holdings, LLC, told the coalition of Utah county commissioners that the debt would be the responsibility of the company, not taxpayers. Michel said the railway company is “in very late stage negotiations” with Uinta Basin oil producers and refinery operators who would pay to ship the paraffin-heavy crude across the country. 

Kevin Carney, the head of Wells Fargo’s New York investment team that works on transportation projects, told the coalition that “sophisticated” investors appreciate the tax-exempt bonds and “there is a lot of appetite for these kinds of infrastructure projects in the country.”

The line of opponents to the new railroad has grown quickly as the proposed railroad takes shape. More than a dozen Colorado municipalities, counties and water districts are protesting the plan, which could send mile-long trains carrying hundreds of thousands of barrels of the viscous crude in heated train cars along the Colorado River, Grand County’s Fraser River and through the Moffat Tunnel at Winter Park.

The Uinta Basin’s yellow and black waxy crude is laden with paraffin and notoriously difficult to move. The new railroad, with heated train cars, is expected to be a boon to the region’s producers, who in the past have been limited by trucking the crude to regional refineries.  

The push to stop the oil trains from rolling along the Colorado and Fraser rivers in rural Colorado seems particularly acute as residents around East Palestine, Ohio, deal with the derailment of 45 tanker cars that spilled toxic chemicals and burned for two days.  

The fiery derailment “is a scary reminder of the risks freight trains carrying hazardous materials pose to communities and environments they travel through,” U.S. Sen. Michael Bennet tweeted last week. “That’s why we shouldn’t let heated oil trains run next to the headwaters of the Colorado River.”

Bennet, alongside U.S. Sen. John Hickenlooper and U.S. Rep. Joe Neguse — all Democrats — have asked the Biden Administration to scrutinize the Uinta Basin plan

Eagle County has joined several environmental groups appealing the federal Surface Transportation Board’s 2020 approval of the new railroad. Many Colorado communities have filed “friend of the court” briefs with the U.S. Court of Appeals in Washington supporting Eagle County’s fight. (Only Eagle County can appeal the decision because it’s the only Colorado community that voiced concerns in the Surface Transportation Board’s environmental review of the Utah railroad plan.)

Environmental groups also have filed an appeal of the transportation board’s approval of the project and those same groups also have sued to overturn the Forest Service’s approval of a short stretch of the railroad in a designated roadless area in Utah. Those groups argue that approving a railroad that will deliver 110 trains cars a day to refineries on the Gulf Coast do not align with the nation’s emission-slashing climate goals.

Those lawsuits have been a last stand to block the trains. Now the groups are scheming how they might lobby the federal Department of Transportation to deny the bonds for Uinta Basin Railway, LLC. (The company is majority owned by Uinta Basin Railway Holdings, which used to be called Drexel Hamilton Investment Partners, LP., a spinoff of New York investment firm Drexel Hamilton. A minority of the railway company is owned by Dallas-based rail operator Rio Grande Pacific Corp., which will operate the proposed railroad and is pushing to run passenger trains over the long dormant Tennessee Pass Line between Gypsum and Cañon City.)

The Seven County Infrastructure Coalition will hold a public meeting on March 9 to gather more input on the public activity bond resolution the group approved as a first step toward endorsing the railway company’s funding plan. 

Ted Zukoski, senior attorney with the Center for Biological Diversity, which is fighting the Utah train project, said he expects more communities and groups will take up the bond funding campaign with the Department of Transportation. If the railroad owners are getting $2 billion in 30-year bonds at a reduced interest rate around 6% while most corporate entities borrow at rates closer to 10%, Zukoski estimates the Uinta Basin Railway group could be getting an annual savings of $80 million a year paid by U.S. taxpayers. 

“The taxpayers should not be subsidizing a massive carbon bomb, which would appear to be in direct contradiction to the president’s executive orders to all departments that directs them to take all actions necessary to address the climate crisis,” Zukoski said. “This will pour up to 4 billion gallons of gasoline every year onto our climate fire. But it’s a good deal for some Utah oil companies. Not so much for everyone else.”

Jason Blevins lives in Eagle with his wife, daughters and a dog named Gravy. Topic expertise: Western Slope, public lands, outdoors, ski industry, mountain business, housing, interesting things Location: Eagle, CO Newsletter: The...