By Brian Maffly
March 12, 2019 - One way or another, $53 million of Utahns’ money soon may get sunk into a deep-water export terminal on the West Coast in an effort to shore up the state’s fading coal industry.
On Monday, a Senate panel advanced a bill that would transfer the administration of a special “throughput infrastructure” fund to the Utah Office of Energy Development, bypassing a vetting process established by another agency charged with determining how these federally sourced dollars are spent.
Introduced last week, SB248 appears to sever the Community Impact Board’s authority over the fund it set up three years ago to support loans that promote high-dollar projects for moving Utah coal, oil and natural gas to markets.
That fund was set up to legitimize a $53 million CIB loan that four coal-producing counties hoped to invest in a controversial export terminal under development in Oakland, Calif., in exchange for guaranteed export capacity of up to 10 million tons a year. That project has been mired in litigation over a coal-handling ban Oakland leaders enacted in response to Utah’s involvement.
“We were trying to facilitate the export primarily of coal. Since then, it has been refined to include some of these other products, as well as coal,” SB248 sponsor Sen. Ralph Okerlund, R-Monroe, told the Senate Natural Resources, Agriculture and Environment Committee. “Carbon County and other counties have been standing the costs for a lot of the development to get ready to do this, [such as] administrative and legal costs. This bill just allows some withdrawal of those funds to cover administrative and legal costs as we move forward in the process.”
The language of the bill, however, directs that the entire balance of the fund be earmarked for an unnamed “bulk commodities ocean terminal.”
The money’s source is royalties from federal mineral leases, which are ordinarily used to offset the impacts to local governments arising from mineral extraction on public land. To avoid those restrictions, the Legislature diverted $53 million in CIB money under 2016 legislation to the “throughput infrastructure” fund, which is to provide loans to build pipelines, transmission lines, rail and marine export terminals.
The CIB set up a vetting process to evaluate applications to the fund, but the new legislation simply puts the Office of Energy Development in charge.
“The CIB has been wonderful to work with in the past,” former Carbon County Commissioner Jae Potter told lawmakers.
“This is going to be a heavy-lifting project,” he said. “We want to make sure we have the professional involvement on this and it can move forward as quickly as possible.”
One critic cautioned lawmakers against throwing so much money against California’s desire to block coal exports through its ports. Another critic, Salt Lake City climate activist Stan Holmes, reminded the panel of last year’s HCR7, which acknowledged the risks of climate change. Coal combustion plays a big role in the emissions contributing to global warming.
“Do you really want to renege on your promise to students last year and further subsidize a coal industry that is succumbing to market forces?” Holmes asked. He urged investing that money in a new economic direction for Carbon and the other coal-country communities.
Okerlund assured the panel that coal is not the only Utah product the deep-water port would handle, but without providing any specifics, and said it would tie into the inland port proposed for Salt Lake City.
“If there is a hub-and-spoke system with an inland port program, it would allow us to ship directly to the deep-water port,” Okerlund said. “That creates tremendous opportunity for the inland port to gather and supply products to that deep-water port. They really work well together.”