By Tom Sanzillo First Published Mar 09 2016 11:00AM A bill being seriously considered by the Utah Legislature this week seeks in essence to finance a backdoor subsidy fora coal export terminal in Oakland whose construction could well leave Utah taxpayers on the hook for a highly questionable and highly speculative $53 million out-of-state subsidy.
The proposed law, which exists now as Senate Bill 246, is being offered as a narrow, technical transfer of state funds that would let a number of Utah counties participate in a transaction that goes unnamed in the legislation. However, the actual project for which the legislation is intended — that coal-export terminal in California — is a highly risky undertaking that is likely to end in losses for Utah. The state stands to lose not only the $53 million that proponents want earmarked for the Oakland port project. It also would be buying into deeper potential liabilities. The biggest fiscal and implementation risks in this legislation include: • That the bill would essentially allow a low- or no-return subsidy for a public-private partnership. It would allow this subsidy to take the form of a loan or grant to local governments and it includes a mechanism that ultimately would let the state forgive loan and interest payments. The proposed statute would limit state recourse for repayment to revenue from the port project, which isn't likely to pan out. • The bill offers no guidance as to how state and local officials are to protect Utah taxpayers in port negotiations. Key here is whether the state's $53 million is subordinated to the $200 million that the private sector is supposed to invest alongside this public money. The original state application by the Utah counties says that a $200 million companion investment from a private institutional investor would be available by June 2015. This benchmark has been missed. That means the only player in this transaction with an open checkbook and a deep pocket is the state of Utah. • The bill is constructed on the back of an existing state investment vehicle designed to assist local governments in maximizing the best use of their resources. This transaction would fly in the face of that purpose, concocting a complex entanglement in global coal markets at a time of deep distress across these markets. It's hard to imagine a worse time to get talked into giving the coal industry a $53 million subsidy. Coal companies across the U.S. have either declared insolvency or are teetering on the brink of bankruptcy. Cloud Peak Energy, a leading Western U.S. coal producer and exporter, says it sees no export market for the foreseeable future. Signal Peak Energy in Montana, another West Coast coal exporter, has taken recent write-downs tied to the weak state of the U.S. coal export market. Arch Coal, whose business model is based largely on West Coast exports, is in bankruptcy. Utah-based Bowie Resources, a major beneficiary of the proposed transaction outlined SB246, is in financial distress, having failed to close plans to buy out private equity investors and having failed recently to secure backing for its proposed purchase of three mines in Colorado and New Mexico from Peabody Energy. Bowie has also failed recently to meet its latest targets for coal shipping through the Port of Stockton. Coal-export facilities are "risky long-term bets" to borrow a recent phrase from Wood Mackenzie, the global consulting firm that recently reserved course on its long-bullish view of the U.S. coal industry. If Utah were to take part in the Oakland port scheme it would be buying a pig in a poke. Tom Sanzillo is the director of finance for the Institute for Energy Economics and Financial Analysis. http://www.sltrib.com/opinion/3635615-155/op-ed-oakland-coal-port-scheme-is
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By Van Jones March 7, 2016 Updated Oakland has a decision to make. The proposed deal to ship coal by rail through the export terminal project is a filthy bargain. No one should be forced to choose between a job and good health; our communities need both to thrive.
West Oakland has been a dumping ground for polluters for generations. People who live in West Oakland are twice as likely to wind up in the emergency room with asthma than other Alameda County residents are. A baby born in West Oakland today has a life expectancy at least 10 years less than one born just miles away in the affluent Oakland hills. There are few places in America where the intersection of class, race and environmental oppression are clearer. If we want to address the damage done, then we need to deeply invest in neighborhoods like West Oakland — right now. Instead, West Oaklanders are in a fight for survival. The risk is clear: Developer Phil Tagami will use public land and taxpayer dollars to build a shipping terminal that would export up to 10 million tons of coal a year through West Oakland. Tagami’s project has struggled, however, to secure funding, and this week the Utah Legislature will consider spending more than $50 million of Utah taxpayers’ money to help him build the terminal. State Sen. Loni Hancock, D-Berkeley, has introduced anticoal legislation in the California Legislature to block the effort. The shipments would arrive on coal trains that stretch more than a mile and would spew tens of thousands of pounds of dangerous coal dust on every trip. That coal dust contains lead, mercury and arsenic. It causes asthma and heart disease and is particularly dangerous to children. It is no coincidence that 91 percent of the people who live within 1 mile of the tracks are people of color. Although the pollution and health impacts of this proposal would affect everyone in Oakland, people of color would certainly suffer the most. And the suffering wouldn’t end after the coal left Oakland, either. Once exported, the coal would be burned in power plants overseas, sickening poor people in other nations. The developer promised the community the export terminal project would bring jobs. To build further support, he promised the project would not add to the pollution by exporting coal. He has broken that promise. This developer has given the community a dangerous ultimatum — accept the polluting coal trains and health risks, or the promised jobs will not appear. But this is not true. According to the city of Oakland’s economic impact report, the facility can create the same number of jobs (and possibly more) if it exported other goods such as grain or even wind turbines — as was originally promised. What West Oakland needs — and deserves — is a green economy that is strong and inclusive enough to lift people out of poverty. Those are the kinds of jobs that will usher in a new era of prosperity for local residents. Coal is a dying industry, and it shouldn’t be allowed to take the people of West Oakland down with it. Instead of tying its future to a doomed and dirty fuel source, Oakland should demand a shipping terminal that won’t be tied for decades to a failing industry. Demand jobs and opportunity that don’t come with asthma attacks and heart disease. Demand access to the clean-energy economy that is sweeping America by powering Oakland with more than 50 percent clean energy by 2030. If San Diegans can make a commitment to transition their city to clean energy, there’s no reason Oaklanders can’t do so as well. I urge readers to ask their Oakland City Council representatives to use their legal authority to ban coal exports. When asked to choose between economic opportunity and public health, we should settle for nothing less than healthy, prosperous communities. CNN political commentator and former presidential adivser Van Jones is the president and founder of the “Green For All” campaign. http://www.sfchronicle.com/opinion/openforum/article/West-Oakland-deserves-better-than-dirty-coal-6875946.php 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) ‘Shell game’? » Critics question legality and wisdom of the proposal, now on its way to the Utah House. The Utah Senate voted Monday to approve a fund-swapping scheme to spend $53 million in public money to help build a deep-water port in California with an eye to exporting Utah coal and other products overseas. Some senators called it a questionable "shell game" to advance a project that has sparked outcry in environmentally conscious California and from conservation groups. But Sen. Stuart Adams, R-Layton and sponsor of SB246, third substitute, said the project is needed to help Utah's coal-producing areas survive, and it could also boost exports of other Utah products, from oil to alfalfa. He said residents in Utah's coal country "are invested in coal. Their economy is built on coal. Their jobs, their livelihoods and their families are dependent on coal. They see this as a great investment." Senators voted 20-7 to pass SB246, and sent it to the House with just three days left in the legislative session.
The bill would swap $53 million in state sales tax money now earmarked for transportation for an equal amount of federal mineral royalties given to the Utah Permanent Community Impact Board (CIB). Last year, the CIB approved loaning the money to four rural counties to help pay for the development of the bulk-freight-loading seaport under development at the former Oakland Army Base. 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 roads, public buildings, water and sewer systems or parks. A pair of complaints was filed with Attorney General Sean Reyes by environmentalists challenging the legitimacy of using the funds to invest in an out-of-state port. Reyes and his office have declined to comment on the legality of the plan, but questions apparently have prompted the CIB to now ask the Legislature to approve the unusual swap. Sen. Jim Dabakis, D-Salt Lake City, said the attorney general "has been completely and absolutely silent" on this issue. Adams said he had placed one call to the attorney general and had not received a response. Still, Adams said the swap he proposes "is cleaner and easier, and doesn't have the tentacles of federal money." Senate Democratic leader Gene Davis, D-Salt Lake City, called it a "shell game." "I don't understand why we feel it is important to take Utah tax dollars, dollars that are needed here in the state of Utah, no matter how we shift them around, to help build a port in Oakland. That seems like a real stretch." Sen. Lyle Hillyard, R-Logan, complained that the proposal was a major, complicated idea that came out late in the legislative session, allowing little time for scrutiny. Dabakis questioned why the port developer, instead of turning to private investors, were seeking money from Utah in exchange for exportation rights. "It may be a sign that it isn't that good of a deal," he said. But Adams repeatedly said the plan presents "no risk to taxpayers," assuring that the $53 million will instantly be wired to the Utah treasury by the CIB as soon as the state money is allocated. It should be up to the CIB board to decide how to use the funds, Adams said, suggesting the money would otherwise be spent on frivolities such as "splash pads." The CIB in its last annual report said it spent $157 millon in grants and loans, mostly for roads, public buildings — including fire stations — and water and sewer projects. Sen. Howard Stephenson, R-Draper, defended using community impact money to help coal country residents with this out-of-state project. "If ever there is something to affect and impact these [coal country] communities, it is the continuation of those jobs, and the assurance that these products can be exported around the world to ensure that these towns don't become ghost towns," he said. Previously, 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 the product . "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," Clemens said. "It's disgraceful." http://www.sltrib.com/home/3631223-155/utah-senate-oks-fund-swapping-scheme-to by Michael Orton • March 10, 2016 In the last hours of Utah’s 45-day legislative session for 2016 a scandal has erupted involving two of the state’s most powerful policymakers and it involves a bill that is poised for passage before midnight on March 10. Both Republican Governor Gary Herbert and Senate Majority Whip Stuart Adams (Republican – Layton) have been actively campaigning for the passage of SB 246 – Funding for Infrastructure Revisions, known as the bill that would authorize $53 million in public funds for investment in an expansion of the Port of Oakland and is intended to allow Utah to have an export portal to extend it’s sizable coal market to buyers on the Pacific Rim.
On Thursday, the East Bay Express, one of Oakland’s most widely read alternative media sites carried a story that tied Herbert and Adams as being under the influence of contributions from Bowie Resource Partners, with conflicts involving more than $30,000 since the last campaign cycle in 2014. Bowie is a Kentucky coal mining conglomerate which recently purchased coal Bowie is a Kentucky coal mining conglomerate which recently purchased coal mines in Utah and now desperately needs access to remaining coal markets – including third-world, emerging steel suppliers who purchase bulk quantities of metallurgical coal used in smelter operations and antiquated power generation facilities. Named in the Oakland article were most of the Utah legislative leadership which constitutes the state’s Republican supermajority. Aside from Herbert and Adams, public campaign documents disclosed that the year before Bowie purchased existing Utah mining operations in 2015, House Speaker Greg Hughes (Republican – Draper), Majority Leader Jim Dunnigan (Republican – Taylorsville), Rules Committee Chairman Mike Noel (Republican – Kanab), were given in excess of $15,500 from Bowie. The mining firm had been seeking access to a port since 2013 and found the potential for that with Utah. Bowie’s own efforts had been rejected by California authorities previously. During the majority caucus luncheon attended by several reporters, a brief reference was made to send SB 246, known as “the Coal Port bill” by lawmakers to interim study. This is a procedural move that would allow the politicians to save face as well as effectively sweep the scandal under the state’s carpet. The bill is presently awaiting its presentation in the Utah House of Representatives for final passage unless that motion to refer to “interim study” were to occur. Many feel that would be appropriate The bill is presently awaiting its presentation in the Utah House of Representatives for final passage unless that motion to refer to “interim study” were to occur. Many feel that would be appropriate because in addition to the looming ethics scandal, many litigants are reported to be poised to challenge the bill in court as it involves the questionable use of public funds. The bill has been introduced by its House sponsor and is being debated as this article went live. http://utahpoliticalcapitol.com/2016/03/10/coal-payola-scandal-erupts-during-waning-hours-of-session/ by Michael Orton • March 1, 2016 Ahead of her city council’s regularly scheduled meeting on Tuesday, February 16th, Oakland Mayor Libby Schaaf (Democrat) forwarded a letter to her council members requesting that they postpone a vote for a study to determine the viability of a coal terminal at the planned Port of Oakland.
Schaaf was on the record early on in her attempts to scuttle any coal or crude oil transported through the city. Her letter was her attempt to convince the council that there were other, “more effective options” to exclude the coal terminal idea which has drawn widespread opposition in her community. At the city council’s September 15th meeting, the AFL-CIO led by International Longshore Workers Union Local 10 flooded the room to register their opposition as well, telling the city to “Kill Dirty Coal” and other “low-value cargoes.” Environmental Science Associates, a San Francisco planning and project design firm, had previously issued a report finding “negligible impacts” of plans to move crude oil by rail through Benicia, a sister-city in the eastern San Francisco Bay. Recent rail incidents involving hazardous materials in densely urban areas have sparked safety concerns for transportation regulators throughout the country. All of this prompted a commissioned, independent research firm named FM3, to conduct a poll which found that 75 percent of Oakland voters oppose transporting coal by rail through their city. On February 16, the Oakland city council tabled a proposal in support of Mayor Schaaf’s letter – which was viewed as a victory for the activists and unions opposing the coal terminal and crude oil shipments. This was noted locally as a defeat for Terminal Logistics Solutions, the company which planned to use the marine terminal in West Oakland to access Pacific Rim markets for coal and other commodities. TLS is fronting the effort for developer Phil Tagami, who has had some difficulty securing funding for his plans. It is unclear as to how Senate Majority Whip Stuart Adams’ (Republican – Layton) Senate bill SB 246 – Funding for Infrastructure Revisions will be affected by these developments and why he would proceed with such information coming from Oakland just weeks before. The bill would enable Utah to formally invest in the port and came surprisingly late in the session on Monday night. In a press conference on Tuesday, March 1, Republican Governor Gary Herbert indicated that he could support Adams’ bill that involved sales tax monies for what Adams insists would be a loan to the Oakland developer. A loan with a high return on investment, the Governor believes. (Audio here). Utah Political Capitol asked Adams about the SB 246’s conception and how it became legislature that he is moving. (Audio to come) http://utahpoliticalcapitol.com/2016/03/01/adams-coal-exportport-expansion-bill-thwarted-in-oakland-ca/# Scott Sommerdorf | Tribune file photo Senator Stuart Adams, R-Layton, left, confers with Senate Majority Leader Ralph Okerlund, R-Monroe, in this 2013 file photo. Adams is sponsoring an end-of-the session bill that would use state sales-tax money to purchase an ownership interest or access rights to a deep-water port under construction near Oakland, Calif., with plans to ship Utah coal there for international export. BY ROBERT GEHRKE THE SALT LAKE TRIBUNE PUBLISHED: MARCH 1, 2016 10:58AM Scott Sommerdorf | Tribune file photo Senator Stuart Adams, R-Layton, left, confers with Senate Majority Leader Ralph Okerlund, R-Monroe, in this 2013 file photo. Adams is sponsoring an end-of-the session bill that would use state sales-tax money to purchase an ownership interest or access rights to a deep-water port under construction near Oakland, Calif., with plans to ship Utah coal there for international export. 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. 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 Zukowski, 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. Adams said it’s not just about coal — that Utah could also ship salt from the Great Salt Lake and copper and other minerals from Rio Tinto through the port. “For Utah to have access to [a worldwide market] for economic development, especially for rural Utah, which has the most challenges now getting people to stay in their communities, getting people to live in their communities … man, this is a great opportunity for them,” Adams said. gehrke@sltrib.com Twitter: @RobertGehrke http://www.sltrib.com/news/3599136-155/new-bill-would-have-utah-taxpayers |
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