SALT LAKE CITY (AP) — A U.S. Appeals Court on Friday struck down a critical approval for a railroad project that would have allowed oil businesses in eastern Utah to significantly expand fossil fuel production and exports.

The ruling is the latest development in the fight over the proposed Uinta Basin Railway, an 88-mile (142-kilometer) railroad line that would connect oil and gas producers in rural Utah to the broader rail network, allowing them to access larger markets and ultimately sell to refineries near the Gulf of Mexico. The railroad would let producers, currently limited to tanker trucks, ship an additional 350,000 barrels of crude daily on trains extending for up to 2 miles (3.2 kilometers).

The Washington, D.C.-based appeals court ruled that a 2021 environmental impact statement and biological opinion from the federal Surface Transportation Board were rushed and violated federal laws. It sided with environmental groups and Colorado’s Eagle County, which had sued to challenge the approval.

The court said the board had engaged in only a “paltry discussion” of the environmental impact the project could have on the communities and species who would live along the line and the “downline” communities who live along railroads where oil trains would travel.

“The limited weighing of the other environmental policies the board did undertake fails to demonstrate any serious grappling with the significant potential for environmental harm stemming from the project,” the ruling stated.

Surface Transportation Board spokesperson Michael Booth said the agency does not comment on pending litigation.

Though the Uinta Basin Railway proposal still must win additional approvals and secure funding before construction can begin, proponents saw the 2021 environmental impact statement from the board as among the most critical approvals to date.

The statement received pushback from environmentalists concerned that constructing new infrastructure to transport more fossil fuels will allow more oil to be extracted and burned, contributing to climate change.

Additionally, communities in neighboring Colorado including Eagle County and the city of Glenwood Springs — which filed a brief in support of the lawsuit — are worried about safety and potential train derailments. Oil trains would link from the proposed new Uinta Basin line to the common carrier network throughout the country, including through Colorado.

Proponents — oil businesses, rural Utah officials and the Ute Indian Tribe of the Uintah & Ouray Reservation — have argued that the railroad would be a boon to struggling local economies and boost domestic energy production.

The court ultimately ruled that the Surface Transportation Board’s decision to grant the project an exemption from the typical review process and claims that it could not examine its full environmental impact violated the agency’s mandate.

“The Board’s protestations at argument that it is just a ‘transportation agency’ and therefore cannot allow the reasonably foreseeable environmental impacts of a proposed rail line to influence its ultimate determination ignore Congress’s command that it make expert and reasoned judgments,” it said.

Deeda Seed of the Center for Biological Diversity characterized the decision as a victory and demanded that President Joe Biden’s administration stop the project from seeking any further approvals.

“The Uinta Basin Railway is a dangerous, polluting boondoggle that threatens people, wildlife and our hope for a livable planet,” she said in a written statement.

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Associated Press writer Josh Funk in Omaha, Nebraska, contributed to this report.