Will EPA help fund Utah Lake island-building project?

Dredging proponents are seeking $893 million in federal loans supporting water infrastructure.

Proponents of a controversial dredging project for Utah Lake are seeking $893 million in federal financing, hoping to tap a program aimed at “accelerating investment in water infrastructure” and gaining a crucial validation in the process.

On Monday, the U.S. Environmental Protection Agency (EPA) announced Lake Restoration Solutions made the waitlist to apply for massive credit assistance under the Water Infrastructure Finance and Innovation Act, or WIFIA. Winning this federal financing would be an important step forward for the $6.4 billion project that many critics contend is a real estate development scheme dressed up as environmental restoration.

Lake Restoration CEO Ryan Benson characterized the EPA’s announcement as a “fabulous endorsement” for the project that he says would not only expand water storage on Utah Lake by 410,000 acre-feet but also cleanse its waters long degraded by effluent from agricultural, industrial and wastewater sources.

“We live in the second-driest state, also one of the fastest growing states in the country. We’re also a state that’s prone to multiyear droughts,” Benson said Monday. “So the water conservation aspects of the project, the additional available water, the additional water storage and water that can go to the Great Salt Lake, all of those were not only deemed to be eligible, but highly desirable.”

According to Benson, the project already has $6 billion lined up, but the company can’t identify potential funders because of nondisclosure agreements.

Benson and his associates have asked the state to let them dredge up a billion cubic yards of lake bed and use the material to form 20,000 acres of islands that can then be used for residential development, recreation and wildlife habit. By deepening the lake and sequestering contaminated sediments in new islands, the project would restore the lake, they claim.

In exchange, the company is seeking title to some of the new land created and permission to construct communities on it. Private development would pay for the lake’s ecological restoration, according to the plan.

But no studies documenting the viability of such a project have been publicly released. Scientists who have long studied Utah Lake, the West’s third-largest freshwater body of water, scoff at the proposal, arguing there is no scientific evidence that dredging would fix the lake’s problems and plenty that it could make them worse.

Brigham Young University ecology professor Ben Abbott says the proposal is larger than any dredging project ever attempted and is likely impossible to pull off from a technical standpoint.

“More importantly, if the project were to accomplish the stated goals, it would be devastating for the lake ecosystem and for our community because it would change the natural characteristics of the lake that currently make Utah Lake so vibrant and resilient,” he said. “It would be the largest destruction of wetlands and lake in modern U.S. history. It’s a land grab.”

The Legislature stepped in to help advance the proposal, passing legislation in 2018 instructing the Utah Department of Natural Resources to give it serious consideration. Since then, however, Lake Restoration has yet to submit any formal application with the department’s Division of Forestry, Fire and State Lands, the agency charged with overseeing the beds of Utah’s navigable waters.

Lake Restoration plans to first undertake an environmental review instead by the Army Corps of Engineers in accordance with the National Environmental Policy Act, or NEPA, according to Benson. But first, it must submit a notice of intent to conduct an environmental impact statement, which has yet to happen.

In the meantime, the group Conserve Utah Valley has launched a citizens’ campaign to press lawmakers to repeal HB272, the 2018 bill that carved out a loophole in state law that would allow a transfer of “sovereign” state land to private developers.

The Legislature has already authorized $10 million in loan guarantees for the project. The appropriation was approved last session, but without the usual public vetting for such funding requests. Those guarantees are to be administered by the Governor’s Office of Economic Opportunity, or Go Utah, through the Industrial Assistance Fund and have yet to be awarded.

Established under a 2014 statute, the WIFIA program is a federal loan and guarantee program administered by EPA to accelerate investment in “water infrastructure by providing long-term, low-cost supplemental credit assistance for regionally and nationally significant projects.”

To date, 63 WIFIA loans have been announced, totaling $12 billion in credit assistance supporting $26 billion in projects and creating 73,000 jobs, according to the EPA. The program lent nearly $350 million to Salt Lake City to help pay for upgrades to its wastewater treatment plant.

Lake Restoration Solutions’ first attempt to apply for WIFIA funding in 2020 was turned down.

The Salt Lake Tribune sought the two letters of interest and supporting documents the company had submitted to EPA in 2020 and 2021 the Freedom of Information Act. The agency tentatively rejected the Tribune’s request, citing the presence of “confidential business information” in the documents. Lake Restorations Solutions specifically asked that the letters not be released, according to the EPA.

On Monday, Benson declined to release the letters of interest.

“There is a lot of sensitive, confidential information and ours is one of those projects that is protected,” Benson said. “We are going to keep that protected at this point.”

Benson, who joined the project last year, also leads the Utah nonprofit Big Game Forever, which has received $5.1 million in state appropriations over the past decade to lobby federal agencies to delist the gray wolf from endangered species protections, according to the state’s transparency website.

In Monday’s announcement, the EPA released a list of 39 projects around the country invited to apply for WIFIA financing this year, along with four on a waitlist that included a $464 million request for Colorado’s Northern Integrated Supply Project supporting the construction of the Glade Reservoir Complex.

Lake Restoration Solutions’ request was by far the largest on the list. Most were for far less than $90 million, or one-tenth what the Utah company is seeking.

While no guarantee of federal funding, making the program’s waitlist indicates that the EPA believes it could meet the criteria for funding, which are spelled out in the program’s handbook.

“The EPA does a lot more than just ecological restoration. In fact, restoration is pretty far down its list of responsibilities,” Abbott said. “So the fact that it was wait-listed and considered at least eligible for this kind of funding does not at all indicate that it would have environmental benefit.”

This week Benson had been planning to host a news conference at the Utah Capitol where members of the news media would get to speak directly for the first time with experts designing the project and conducting scientific studies. However, the event was postponed.

“The feedback we’re getting was that it was a challenging time of year and people wanted to participate but just weren’t able to,” Benson said. “We want people that wanted to be involved to be able to be involved. Moving that after the holidays would facilitate that.”