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Paul Thompson directs workers testing Petroteq’s then-new oil sands processing plant near Vernal, Utah, in the Uinta Basin on Aug. 16, 2018. A proposed 85-mile rail line would allow drilling operations in the Uinta Basin to expand and ship Existing drilling operations waxy crude oil to refineries in Texas and Louisiana. The line would run through Colorado, likely alongside Interstate 70 and the Colorado River.

Development has paused on a proposed railway that would haul millions of gallons of crude oil through Colorado after a federal appeals court on Friday found significant deficiencies in analyses of potential environmental impacts like increased wildfire risk and potential spills into the Colorado River basin.

A coalition of private companies and seven Utah counties want to build the 88-mile Uinta Basin Railway Project to connect Utah’s oil fields in the 12,000-square-mile basin to the national rail network. The project would send up to nine more trains a day through Colorado– along Interstate 70 on the Colorado River and through Denver — and eventually to refineries in the Gulf of Mexico.

The Surface Transportation Board — a federal agency that regulates railways — violated the National Environmental Policy Act by failing to take a “hard look” at some environmental impacts of the project and disclose key potential damage in its environmental analyses, the court found. The analyses failed to mention any potential impacts to the Colorado River — the source of water for drinking, agriculture and power for more than 40 million people.

“It omitted the effects of increased crude oil refining on Gulf Coast communities in Louisiana and Texas already overburdened by pollution from refining,” the opinion states. “It omitted upline impacts on vegetation or special status species of increased drilling in the Uinta Basin. And it omitted downline effects of projected increases in spills and accidents from additional oil trains traveling the existing Union Pacific rail line alongside the Colorado River —including effects on water, special status species or habitats, and recreation and land use.”

The court ordered the Surface Transportation Board to redo its environmental impact analysis.

The project has drawn criticism from Colorado’s congressional leaders, environmental groups and local government. Democrats Sen. Michael Bennet and Rep. Joe Neguse on Friday released a joint statement calling the court decision “excellent news.”

“A new review must account for all harmful effects of this project on our state, including potential oil spills along the Colorado River and increased wildfire risk,” they said in the statement. “An oil train derailment in the headwaters of the Colorado River would be catastrophic — not only to Colorado, but the 40 million Americans who rely on it.”

The Surface Transportation Board approved the project in 2021 after finding that the railway could have “major impacts” on water, air quality, protected species, recreation and cultural resources. The impacts could be mitigated, however, and economic benefits of the railway outweighed the risks, the board found.

In 2022, five environmental groups and Eagle County sued over the board’s decision alleging the environmental analyses were insufficient.

The court on Friday agreed with some of the allegations but denied other claims.

“As the Board identified, on one side of the scale the Railway could result in nearly one percent of total U.S. greenhouse gas emissions and the increased rail traffic downline could cause amplified risk of wildfires, the potential of derailed trains on an annual basis, and crude oil spills in critical habitats and sensitive water resources that are home to endangered species,” the opinion states.

“On the other side, the Railway may open up new markets for crude oil transportation, assuming the project is financially viable — an assumption that is not clear from this record,” the opinion continues. “The Board’s consideration of these impacts and benefits was cursory at best, leaving little question that the (ICC Termination Act) necessitated a more fulsome explanation for the Board’s conclusion that the Railway’s transportation benefits outweighed the project’s environmental impacts.”