A proposed bond-financed crude oil-transporting railway project in Utah lost a federal right-of-way permit in the wake of a 2023 court ruling.

The U.S. Forest Service announced Wednesday it withdrew a 2022 permit allowing the Uinta Basin Railway’s construction and operation on about 12 miles of land in the Ashley National Forest. 

The federal agency said the move was based on an August U.S. Appeals Court ruling that found the U.S. Surface Transportation Board , which plans to seek up to $2 billion in private-activity bond authorization from the U.S. Department of Transportation for the project.

The 86-mile rail line 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 refineries.

U.S. Sen. Michael Bennet, D-Colo., called the Forest Service’s action an important step in protecting the Colorado River. 

“Last year, a federal court agreed with Coloradans that the approval process for the Uinta Basin Railway had been gravely insufficient and did not properly account for the project’s full risks,” he said in a statement “A derailment along the headwaters of the Colorado River could have catastrophic effects for Colorado’s communities, water, and environment.”