Bigger amount of private-activity bonds sought for Utah railway

Utah officials have increased the amount of private-activity bond authorization they are seeking from the U.S. Transportation Department for a proposed crude oil-toting railway to $2.4 billion from $2 billion even as the federal agency nears its debt cap.

The Seven County Infrastructure Coalition, a public agency that created a public-private partnership for the Uinta Basin Railway, was told last month that more bond authorization was needed for the 88-mile railway due to inflation and supply chain issues.

The coalition set a public hearing for Thursday on the potential issuance of the tax-exempt debt after passing a bond inducement resolution on May 8 for the $2.4 billion of PABs. 

USDOT only has about $563 million of unallocated PAB authorization available under its $30 billion cap.

“Regarding the PABs allocation, we are working with the (USDOT’s) Build America Bureau to receive as large of an allocation as possible with what is remaining in the program,” William P. Lane, vice president of DHIP Group, the railway’s private investment partner, said in an email. “We expect Congress to pass legislation that will recapitalize the program with additional funding.” 

Transportation advocates are lobbying Congress to increase or eliminate the cap in the next surface transportation bill, which would take effect in October 2026. 

The railway got a boost from a May 29 U.S. Supreme Court decision, reversing a 2023 lower court ruling that yanked its federal permits.

The high court’s decision found the U.S. Court of Appeals for the Washington, D.C., Circuit erred in determining that the environmental impact statement for the railway failed to consider environmental effects that could result from increased oil drilling in the basin and increased oil refining on the Gulf Coast. The ruling was widely seen as weakening the National Environmental Policy Act. 

The coalition, which filed a petition for a Supreme Court review in March 2024, launched the P3 for the railway in 2019 with Drexel Hamilton Infrastructure Partners, now DHIP Group, which owns the Uinta Basin Railway limited liability company. 

The litigation, brought by Colorado’s Eagle County and environmental groups, will go back to the D.C. circuit court, which ruled also against other aspects of the Surface Transportation Board’s December 2021 approval of the railway that were not affected by the Supreme Court’s decision. 

The railway would extend from two terminus points in the Uinta Basin to connect with an existing Union Pacific line, providing a cheaper alternative to trucking for shipping waxy crude oil produced in the basin to Gulf Coast and other refineries.

Caitlin Devitt contributed to this report