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New bill would have Utah taxpayers invest $51 million in California coal port

First Published      Last Updated Feb 29 2016 11:24 pm

FILE - A deep water port is under development at the former Oakland Army Base, pictured here in 2008 at the foot of the San Francisco Bay Bridge. Utah has loaned four coal-producing counties $53 million to buy into the project to guarantee export throughput for coal and other commodities produced in central Utah. But coal shipments might not be welcome in Oakland. (AP Photo/Bay Area News Group, Laura A. Oda)

Public investment » Proposal would use sales-tax revenues to invest in the project.

A Utah senator wants to invest $51 million in taxpayer money to issue loans to help build a deep-water port in California to export Utah coal overseas, a proposal that has sparked outcry in California and from environmental groups.

"It's a once-in-a-lifetime opportunity for Utah," said Senate Majority Whip Stuart Adams, R-Layton, who released the bill late Monday night, with just eight working days left in the annual legislative session. SB246 would use sales-tax revenue to give out loans to help acquire an ownership interest in a port near Oakland, Calif.

Adams said access to the port would be a huge benefit for rural Utah, particularly the energy-producing areas of the state, which are struggling with double the unemployment rate of urban parts of the state.



Mark Clemens, director of the Utah chapter of the Sierra Club, called the move a "misappropriation" of public money to have taxpayers help build a port to export coal to a world market already saturated with coal.

"One has to ask: Would they go to this — one can't call it anything other than a shell game — if it wasn't to somehow escape potential legal or fiduciary responsibilities of some kind?" he said.

"It just makes my head spin to think of the waste and stupidity of an undertaking like this at a time when coal mines are in such deep holes financially that it's entirely possible few of them will ever be able to do the necessary reclamation to close themselves down. The Utah Legislature is throwing taxpayer money into the same black hole," Clemens said. "It's disgraceful."

SB246 was released Monday night as the Senate met well into the evening. It would have to go before a committee before Wednesday, the last day committees are meeting, in order to get a hearing.

Late last year, the Utah Permanent Community Impact Board committed to helping four rural counties pay for the development of the bulk-freight-loading seaport under development at the former Oakland Army Base. Environmental groups had challenged the legality of investing the funds in what is essentially a private enterprise.

The Community Impact fees are generated from mineral and energy royalties and intended to mitigate the impacts of federal mining on local communities. Typically, those monies have been granted or loaned for projects such as public buildings, water systems or parks.

Adams is proposing pulling the $51 million out of sales-tax revenues currently earmarked for state transportation projects, and letting the Governor's Office of Economic Development give out loans for the development of the port project.

The Community Impact Board, Adams said, would then let the state use the impact fees to replace the transportation money.

"It's a lot better for us to use state money to buy this port," Adams said. "That way, the state has control over this project and not just a few counties, but the community impact money is basically paying for it."

A pair of complaints had been filed with Attorney General Sean Reyes — one by Ted Zukoski, an attorney for the environmental group EarthJustice; the other by Christina Sloan, a Moab-based attorney — that challenged the legitimacy of using the impact board funds to invest in the port.

Jon Cox, a spokesman for Gov. Gary Herbert, said the governor is only generally aware of what Adams is trying to do.

"The governor is supportive of the project but has not had an opportunity to review this specific piece of legislation," Cox said Monday night.

The proposal to ship Utah coal out of the port has been met with strong opposition in California, an outcry that Adams said won't change what Utah does.

"We always do what California tells us to, don't we? They think they're forward-thinking and so economic-minded, we ought to just listen to California," he said. "Quite frankly, we don't block [Interstate 15] for their trucks coming out of the port in [Los Angeles] and hauling stuff across the nation. … We allow them to haul material all the way across our state and pollute our air all the way to the East Coast. We don't block our freeways."

Under the bill, the loans would be awarded in two phases, $24 million in 2016-17 and another $27 million in 2017-18. It allows loans to be used for an ocean terminal, a pipeline for the transport of oil and gas, or for the construction of power lines. It would essentially make the state a partner in the project, ensuring it either a membership interest or a contractual right to use the facility.

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