State funds could help save port but railway plans falter

This aerial photo, taken in 2013, shows the location of the proposed Oakland, Calif. port complex where Central Utah coal would be put on ships for export to Asia. But first the port developer must overturn the Oakland City Council’s ban on coal handling within city limits. Utah legislators have committed $1.65 million to help a lawsuit against the city. If the port developer wins in court, Utah may invest as much as $53 million more in the port. Photo courtesy of No Coal in Oakland.

State funds could help save

port but railway plans falter


By Robert Stevens

Managing editor

Apr. 5, 2018


During the legislative session, Utah lawmakers committed $1.65 million in tax dollars to join in a lawsuit aimed at forcing the City of Oakland in California to permit a seaport where Central Utah coal could be put on ships for export to Asia.

But the other half of the project, a new railway linking Central Utah to the Union Pacific line running to the West Coast, may be getting left by the wayside.

And abandonment of the rail line could blunt much of the economic benefit Central Utah anticipated from a two-pronged rail-and-port development.

The $1.65 million was appropriated to help pay the costs of a lawsuit that Phil Tagami, head of the proposed Oakland seaport, has filed against the City of Oakland.

Many Oakland city leaders, notably Mayor Libby Schaaf, have vigorously opposed their city serving as a conduit for shipment of coal, which could be used to generate power overseas even while coal-fired plants in the United States are shutting down, partly to curb green house gasses.

Some time ago, Oakland City commissioned an environmental study of the impact of shipping bulk coal through the city, including the potential for coal dust to be dispersed into the air. In August, 2017, the Oakland City Council, citing the study, voted to ban all coal handling in the city.

But the city council vote wasn’t a slam-dunk. There was significant opposition from local economic development interests, who said the city was sending a message that it wasn’t interested in business growth, and from minority groups who said they wanted the jobs the port would create.

Tagami’s lawsuit contends the environmental study was flawed and claims other civil violations by the City of Oakland. If, with Utah’s help, Tagami wins his suit, the port project assumedly will go forward. If he loses, the port will be dead.

In 2015, Utah’s Permanent Community Impact Fund Board (CIB) approved a $53-million loan to Carbon, Emery, Sevier and Sanpete counties for the purpose of buying in to the port complex, which is being built on a former U.S. Army base, and for creating a railway link from Salina to the Union Pacific line, which runs through Nephi and on to the West Coast.

The rail line was meant to provide economical transportation, not only for Central Utah coal but also for potash, alfalfa and other goods from the region, to the Oakland port.

But recently, Sanpete County Commissioner Claudia Jarrett said the outlook for the rail line is not looking good. Bowie Resource Partners, owner of the largest coal mines in the region, has announced it plans to use other methods for shipping coal to Oakland.

One of the plan’s original architects, Malcolm Nash, Sevier County economic development director, said, “The railroad project is tied to freight needs. If the need for throughput isn’t there, the rail may not happen.”

Without the railroad portion of the project, Sanpete County might not stand to gain as much from port development as previously hoped. The port will facilitate creation of mining jobs, and Sanpete residents may get many of the jobs. But without the rail line, Sanpete won’t be able to ship out its own products, notably hay, for export to Asia.

Bowie owns Utah’s three most productive coal mines, including Skyline and Dugout, and is in the process of expansion onto federal coal leases near the SUFCO Mine on the Sanpete-Sevier County boundary.

Bowie is also a big player in the Oakland port project. It holds a 66-year lease to operate the port terminal, which is capable of moving 10 million tons of raw materials per year. Tagami has outsourced construction of the port to a subsidiary of Bowie.

As soon as the plan to use CIB money for the port buy-in and rail line became known, it met opposition from Utah environmental groups and individuals, who said CIB  money should go for its original statutory purpose—helping municipalities impacted by mineral leasing improve their local infrastructure.

The Utah Attorney General has not yet released an opinion on the legality of the nontraditional use of CIB funds. But Utah lawmakers fighting to make the port happen argue for its legitimacy by saying it would provide more jobs and keep the coal mining going and thereby improve the economy of rural areas.

If the legal battle to force the City of Oakland to permit the port is victorious, the state plans to move ahead with the $53 million port buy-in.

Environmentalist groups and politicians such as Utah Sen. Jim Dabakis, D-Salt Lake City, are not happy about that.

“Disgustingly, the Legislature has appropriated $1.65 million Utah tax dollars to join the Oakland coal port’s private developer’s lawsuit,” Dabakis said. “If victorious, it would allow the state to spend another $53 million to help build this coal port. This is wrong!”

In fact, Utah’s export and trade potential got enormous support during the legislative session.

Earlier this month, Gov. Gary Herbert signed a bill to create an inland trade port in northwest Salt Lake City.

The bill met with some opposition of its own, and Herbert called it “not perfect,” yet it’s moving forward. The governor did say he would call a special session to address concerns voiced by Salt Lake City, where the inland port is located, about land-use control, taxing authority, boundaries of the port jurisdiction and composition of the port authority board.