Enviro groups call for federal probe of Utah funding for Oakland coal export project

Conservation, health, and good government groups on June 20 sent a letter to U.S. Attorney General Loretta Lynch calling for a formal investigation into what they call potential legal and ethical violations in Utah’s $53 million taxpayer-funded loan to build a deepwater terminal in Oakland, California, to export coal.

The letter, which also was addressed to Gregory J. Gould, director of the Office of Natural Resources Revenue, and Mary Kendall, interim inspector general of the Department of the Interior, cites Utah’s alleged misuse of federal community development funds and potential conflicts of interest that propelled the funding through state agency and legislative approval processes with scant public scrutiny.

“It’s staggering that the Legislature and Governor were willing to throw tens of millions in taxpayer money at a project so rife with conflicts of interest,” said Michael Shea, policy associate at HEAL Utah. “It is very clear that someone from the outside should take a careful look at this.”

Several Utah counties began seeking funding to build transport operations to export coal from mines now owned by Bowie Resource Holding Partners LLC as early as 2001. Bowie bought the mines earlier this decade from Arch Coal. In late 2014, the counties requested a $53 million loan from Utah’s Community Impact Board to finance the terminal, said the funding critics. The Community Impact Board approved the loan, and then, when questions arose about the misuse of funds, the 2016 legislature gave fast-track approval to Senate Bill 246, a procedure designed to evade the Mineral Leasing Act’s funding limitations by swapping state general fund money with Mineral Leasing Act money for the loan, said the complaint. 

“It is inconceivable that this is an intended or proper use of $53 million of MLA, CIB or taxpayer funds and this appears to represent the worst kind of corporate cronyism that members of the Utah legislature are usually so fond of rallying against,” said Joshua Kanter, board chair of the Alliance for a Better Utah. “Diverting these funds is not only improper but will leave these communities without the money they really need to help them retool their economic base as the coal industry continues its decline.

“From the very beginning, the proposal to use Utah taxpayer resources to prop up an out-of-state coal export terminal has never had the best interest of Utahns at heart,” said Lindsay Beebe, Utah organizing representative for the Sierra Club’s Beyond Coal campaign. “We need to develop real solutions to help our communities as our state transitions away from coal. Instead, our public officials have shown that they are more eager to hand out political favors than to help Utah communities across the state that deserve our support.”

The Oakland City Council is meeting June 27 to consider placing “health and safety” restrictions on the operation of any coal terminal in the city, the project opponents said. Utah’s legislation to transfer $53 million in state funds for the project goes into effect July 1.

The opponents said that under the Mineral Leasing Act, the U.S. Attorney General has broad authority to seek judicial relief when violations are uncovered. The Department of the Interior is charged with investigating and auditing the use of royalties under the act.

The request for the federal investigation is just one part of a multi-pronged effort to stop coal from being export through Oakland. In addition to pressing the Oakland City Council to adopt health and safety regulations for the proposed Oakland coal terminal, Oakland residents and other concerned citizens are supporting legislation pending in the California State Legislature which would require additional environmental review for this type of terminal project and bring more transparency to project funding.

The June 20 letter was sent on behalf of Alliance for a Better Utah, HEAL Utah, the Institute for Energy Economics and Financial Analysis, Sierra Club, Center for Biological Diversity, Grand Canyon Trust, Earthjustice (on behalf of Sierra Club and Grand Canyon Trust), Living Rivers, and The Sloan Law Firm (on behalf of Living Rivers).

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.