By Paul Foy / Associated Press

Utah gave its final approval Wednesday for the first commercial tar sands project in the U.S., handing a victory to a Canadian company that aims to start producing 2,000 barrels of oil next year in the start of what could grow into a larger operation.

The Utah Water Quality Board upheld the decision of state regulators and turned back an appeal from a Moab-based environmental group that vows to take up its fight in the state courts.

Living Rivers has fought the project every step of the way, arguing that tar sands mining will contaminate groundwater in a largely undeveloped area of Utah’s Book Cliffs region that drains into the Colorado River.

State regulators and the company insist the eastern Utah desert is so dry there is no significant groundwater to pollute. An administrative law judge agreed, sending a recommendation for approval to the Water Quality Board, which held hours of arguments before upholding a crucial state permit Wednesday by a vote of 9-2.

U.S. Oil Sands Inc. has said it was raising the money it needs to start digging after working since 2005 to obtain or defend its state approvals. Executives said they planned to produce oil from a 62-acre mountaintop pit starting in late 2013. The Calgary, Alberta-based company holds leases on 50 square miles of Utah trust lands sprinkled with gooey bitumen, a tar-like form of petroleum.

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