Oakland/Sacramento Decisions Put Hold on Utah Plans to Ship Coal

Photo: Aric Crabb courtesy Oakland Tribune -- Protests erupt outside Oakland City Council meeting, Monday, June 27, 2016
Photo: Aric Crabb courtesy Oakland Tribune — Protests erupt outside Oakland City Council meeting, Monday, June 27, 2016

Sacramento — The bills sponsored by California State Senator Loni Hancock (Democrat, Oakland), which would require additional environmental review and limit California state funding for a coal terminal in East Oakland have already passed the California Senate and now are advancing in their state’s Assembly.

Readers will recall that in February, during Utah’s regular legislative session, the California Senator had introduced two bills in Sacramento that were in opposition to the expansion of the Port of Oakland to expand coal exports. Developer Phil Tagami had announced plans to build a bulk commodities terminal as part of the design occupying the former Oakland US Army base. Four Utah counties had pledged more than $26 million in road funds in 2017 budgets with the Beehive state pledging yet another $27 million in the 2018 budget as a “construction loan” to Tagami’s development company, all in exchange for the rights to be first in line for “throughput” loading priority of Utah coal. The net effect would represent an expansion of Bowie Resource Partners‘ coal markets to Pacific Rim nations, quite likely through the Chinese Lüshun Port of Dalian, Liaoning on the Bay of Korea.

On Monday, Senator Hancock issued the following statement after the day’s committee votes: “California has worked for more than a decade to show what state leadership can do to contain climate change. The proposed coal-export project in Oakland would threaten that progress. I’m grateful my colleagues agreed that California cannot relinquish its leadership role in Oakland and future projects.” Hancock, a delegate to the 2015 Paris climate talks known as COP21, had authored SB 1277, which was approved by the Assembly Natural Resources Committee, and calls for an additional level of environmental review for any proposed Oakland coal terminal. Additionally, California’s Assembly Transportation Committee approved Hancock’s SB 1279, which would bar the Golden State’s Transportation Commission from allocating state funds for new coal exports. The effect of SB 1279 would direct California monies to modifications of existing port facilities to improve “safety, rehabilitation, congestion reduction, modernization and/or maintenance.”

Also late Monday night on a packed agenda that concluded weeks of vigorous, and at times very contentious debate, the Oakland City Council came to a unanimous decision to oppose coal shipments from that city, enjoining other west coast proposals to effectively seal coal shipping potential via the North American, Pacific seaboard. After another presentation on the council’s second reading calendar scheduled in July, the council’s prohibition on coal exports will be final and will align in opposition with groups like the Sierra Club, the AFL-CIO via the International Longshore and Warehouse Union (which lobbied for “higher value cargo” capability), and east bay civic groups (concerned with dirty, combustible cargo rolling through their neighborhoods). Oakland Mayor, Libby Schaaf (Democrat), and her allies on the council had endured weeks of polling, scrutiny and debate over a report prepared by staff which cited the potential for public health concerns such as increased heart and lung ailments, childhood developmental problems and long-term cancer risk, all resulting from exposure to what the report termed “fugitive dust emissions,” referring to the airborne, combustible particles generated from handling, transporting and loading coal onto ships. Coal proponents downplayed and even denied the concerns, citing newly-designed rail cars that minimize the airborne toxic dust.

Oakland wasn’t having any of it.

Predictably, the Oakland city council’s vote and announcement was met with numerous industry-based denials and a terse e-mail from Tagami’s California Capital and Investment Group asking, in part, “Exactly how much of the city’s limited resources and how many jobs for West Oakland are this council willing to sacrifice on this [environmental] crusade?” Indeed, there were several civic organizations which endorsed the coal terminal as a source of needed jobs and the entire community of Oakland was well aware and involved with the proposal, which spanned several years of planning and consideration.

Utah’s Investment

Utah taxpayers now rightfully wonder about their money that’s been committed to the Oakland proposal, since the Utah Legislature authorized the participation of combined sales tax and Community Impact Board funding in March totalling a substantial $53 million. “We were dealing with different surpluses,” said Utah State Senator Lyle Hillyard, (Republican – Logan) who chairs the state’s Executive Appropriations Committee, “…in addition to the state’s Transportation Investment Fund allocations, four Utah counties were authorizing a transfer of Permanent Community Impact Funds,” drawing the interest of potential litigants in several activist organizations. Hillyard emphasized that “When and if the coal port project is approved, the disbursements would be handled much like construction loans,” he stressed that to his understanding, no Utah monies had been tapped by Oakland interests as yet which he confirmed with the office of the Legislative Fiscal Analyst on Tuesday. “It’s not a ‘done deal,’ and Utah money won’t be spent until the program is approved.”

Hillyard also noted $3 million designated for “consultants” associated with the effort was designated in the appropriation. He had contacted the Office of the Legislative Fiscal Analyst which told him that they were keeping a close eye on those provisions of SB 246, the enabling law sponsored by Senator Stuart Adams (Republican – Layton), signed by Governor Herbert in the first quarter of this year. Funds are set aside from reserve accounts and may ultimately return to those accounts at both the state (in the form of sales tax revenue) and county levels (representing the converted Community Impact Board awards).

Utah Money on Hold

So the Utah taxpayers may note that because of the elaborate legislative and economic chess game currently in check and being played-out between two polar-opposite super-majorities in Sacramento and Salt Lake City, no Utah money has changed hands to ship or market Utah coal from the nation’s west coast as yet, even though SB264 goes into effect on Friday, July 1. At the earliest, only half of the monies discussed are even potentially available to the power players from Utah’s upcoming 2017 budget. Senator Hillyard has not ruled out the possibility of proposing additional re-authorization during Utah’s 2017 legislative session next January. The state’s Executive Appropriations Committee will meet on Tuesday, July 12 at 2pm in the Utah Capitol’s room 445, the next time that an agenda could reflect the status of Utah’s investment in coal export markets.

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