Sanpete one of four counties trying
to bail out Calif. coal terminal
By Robert Stevens
The developers of a bankrupt Oakland, CA export terminal project might be getting a bailout with state funds at the behest of Sanpete and three other Central Utah counties at a special session of the state legislature today.
The export terminal, which is being developed for the purpose of exporting coal to Asia, has been buried in litigation and controversy for years. Most recently, the terminal’s developers, Insight Terminal Solutions (ITS), have been fighting in Kentucky bankruptcy court to retain control of the project while its creditors, a California-based company called Autumn Wind Lending, try to assume control over ITS debt.
According to documents filed in the bankruptcy case, Sanpete County, along with Sevier, Carbon and Emery counties, submitted letters to the Kentucky State Court reaffirming their financial support in the form of a $20 million to be drawn from a $53 million state fund meant for “throughput infrastructure.”
The pledged $20 million is to come from the Utah Permanent Community Impact Board (CIB), which was created to mitigate the impact of mineral extraction on counties by funding community improvement projects with money from federal mineral lease fees. Mineral extraction companies pay the federal government for the right to drill on public land, and some of that money goes to the state, which in turn doles out some to the counties deemed most impacted by the mineral extraction.
The four counties originally pledged the whole $53 million in the fund towards the project, which was planned to be a two-part concept. The first part, and the most valuable, is the export terminal.
The second part was a rail line connection for the four counties that would connect them with the Pacific Union railroad, and with it, a gateway for the export of coal, potash, alfalfa and other goods.
ITS promised to export 10 million tons of Utah coal in return for the financial support.
Somewhere along the way, the rail line part of the project fell by the wayside, but the export terminal continued on full steam ahead. Along the way, the Oakland City Council fought back against the terminal developers in court on the grounds of environmental risk related to the handling of coal in their city. A judge ruled their concerns unfounded in court, but the developers and the city remain in drawn-out litigation.
The delays and setbacks related to litigation and development of a project of this scope have taken a financial toll on ITS, which led to bankruptcy over $6.8 million owed to Autumn Wind.
But with the bankruptcy proceedings moving forward quickly, ITS needs an injection of cash soon to convince Kentucky State Bankruptcy Court to let them retain control of the terminal project. Sanpete and the other counties can’t get them the whole $53 million soon enough for it to keep control, but Utah lawmakers will meet in a special session today, and will decide whether or not to make a rush payment of the $20 million available to ITS, according to statements made by ITS lawyers in bankruptcy court.
The four counties invested in this project all have strong economic ties to coal. With the demand for domestic coal dropping all the time, but booming in countries like Japan, the coal industry in Utah could stand to benefit a lot from access to an export terminal like the one ITS is developing.
The unique location of the port, which is being built at a former Army base on the Port of Oakland, has the two important components to make it all happen—a deep water bay for heavy coal ships, and a rail line connection. If the terminal is realized, 10 million tons of Utah coal could come in via rail each year, get loaded on ships and be exported to Asia.
ITS is run by Jon Siegel, formerly an executive of what is now known as Wolverine Fuels, Utah’s biggest coal producer. Wolverine recently moved its headquarters from Kentucky to Utah.