The Board Preliminarily Concludes that the Transportation Aspects of the Proposed Construction and Operation of a Rail Line in Utah Meet the Statutory Exemption Standard

On January 5, 2021, the Surface Transportation Board (STB or Board) issued a decision addressing the transportation merits of the proposed construction and operation of an approximately 85-mile rail line in Utah.  Seven County Infrastructure Coalition—Construction and Operation—in Utah, Carbon, Duchesne, and Uintah Counties, UT,FD 36284 (STB served Jan. 5, 2021) (with Board Member Oberman dissenting).  The Board preliminarily concluded, subject to completion of the ongoing environmental review, that the transportation aspects of the proposed project meet the statutory exemption standard under 49 U.S.C. § 10502.  Id., slip op. at 1.

            This decision stems from a May 29, 2020 petition filed by the Seven County Infrastructure Coalition (Coalition) for exemption under 49 U.S.C. § 10502 from the prior approval requirements of 49 U.S.C. § 10901.  Id.  The Coalition seeks to construct and operate an approximately 85-mile rail line that would extend generally west from terminus points in the Uinta Basin to a connection with an existing rail line near Kyune, Utah, owned by Union Pacific Railroad Company.  Id., slip op. at 2.  The Coalition claims that goods produced or consumed in the Uinta Basin currently can only be transported by truck.  Id.  

The Coalition requested that the Board, in considering the petition, follow a two-step approach and issue a preliminary decision addressing the transportation aspects of the project, in advance of completing the environmental review.  Id.  According to the Coalition, a preliminary decision from the Board would serve as a way to “help hasten” its recovery from the negative economic repercussions of the COVID-19 pandemic by expediting the Coalition’s ability to secure financing.  Id., slip op. at 8.  The Board received filings in support of and in opposition to the petition.  Id., slip op. at 1.  Numerous state and federal government officials filed in support of the petition.  Id., slip op. at 3.

            The Board noted that it is required to “exempt a proposed rail line construction when it finds that application of the provisions of 49 U.S.C. § 10901 is not necessary to carry out the [rail transportation policy (RTP) of 49 U.S.C. § 10101] and there is no danger of market power abuse.”  Id., slip op. at 9.

The Board found that regulation under § 10901 is not necessary to carry out the RTP in this case because “the proposed line would enhance competition by providing shippers in the area with a freight rail option that does not currently exist and foster sound economic conditions in transportation.”  Id.  The Board also found that application of § 10901 is not necessary to protect shippers from an abuse of market power since “the proposed line would increase competitive options to shippers and eliminate shippers’ reliance on one option for freight transportation.”  Id., slip op. at 10.  Thus, the Board determined that the Coalition’s requested approach of issuing a preliminary decision on the transportation merits of the project is appropriate.  Id., slip op. at 1.  The Board also rejected arguments presented by opponents urging the Board to reject the Coalition’s petition and instead require an application.  Id., slip op. at 5.

            The Board’s Office of Environmental Analysis (OEA) issued a Draft Environmental Impact Statement (EIS) on October 30, 2020, and following conclusion of the comment period on January 28, 2021, OEA will issue a Final EIS and make its recommendations to the Board.  Id., slip op. at 10.  The Board will then issue a final decision “addressing any potential environmental impacts, weighing any environmental impacts with the transportation merits, and determining whether the exemption should become effective (subject to any appropriate mitigation conditions).”  Id., slip op. at 11.  The Board noted that construction on the project cannot begin unless and until the Board authorizes the exemption in a final decision and such final decision becomes effective.  Id.

Board Member Oberman issued a dissent, stating that “the Board is mistaken when it

reaches a conclusion, preliminarily and via the petition for exemption process, on the transportation merits of a project presenting serious questions like those raised here without more

thoroughly evaluating those issues.”  Id., slip op. at 21.  Board Member Oberman noted that a more prudent course for the Board would be to defer any decision on whether an exemption is warranted and on the transportation merits of the project until the environmental review process is completed and until the Coalition submits more persuasive evidence on the financial viability of the project.  Id., slip op. at 21-22.

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