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Oakland coal terminal opponents unfazed by passage of $53M Utah funding bill

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Oakland coal terminal opponents unfazed by passage of $53M Utah funding bill

AfterUtah's Republican Gov. Gary Herbert signedlegislation that would set aside $53 million in highway funds to help finance acoal export terminal in Oakland, Calif., last week, opponents remain confident thatthey can halt the project.

Rushedthrough the Utah Legislature earlier this month, the bill placed the responsibility for a loan package on the state,taking the place of four counties that were behind the original financing proposal.

The loanpackage was originallyapproved by the Utah Permanent Community Impact Fund Board, or CIB, in April 2015,clearing the way for $53 million in local funds to be loaned to developers of a$250 million shipping port project in Oakland. The project, should it be completed,will potentially open a new, international customer base for south-central Utahcoal.

Despitethe quick passage and the governor's approval, critics of the project have saidthat while they are disappointed, they are still confident that they will be ableto stop the project before it begins construction.

JessicaYarnall Loarie, staff attorney with the Sierra Club Environmental Law Program toldS&P Global Market Intelligence that local opposition to the project still providedan opportunity to slow the terminal's progress.

"TheOakland City Council has the legal authority to ban coal from the Oakland Bulk andOversized Terminal if they can demonstrate that coal poses a health and safety riskfor Oakland residents," Loarie said. "The Oakland Council has ample evidenceto that effect, and we anticipate that they will act to ban coal soon."

OaklandMayor Libby Schaaf, who has been a vocal critic of the project, echoed that sentiment,saying that while she understands Utah's interests, she remains "opposed tothe transport and handling of coal through our city and I am committed to upholdingour city policy.

"I continue to be committed to working with our business partnerson the redevelopment the former Oakland Army Base to find a mutually acceptableway to move forward that respects our city policy and honors Oaklanders' commitmentto protecting our environment and the health and safety of this community,"Schaaf said.

The officeof state Sen. Loni Hancock, D-Oakland, who introduceda series of bills aimed at stopping the project in February, said that while theUtah legislation was a "disappointment," the senator held out hope thatthe project could be killed on the local or state level.

Hancock'sbills are scheduled for their first committee hearing April 5.

Ted Zukoskiof Earthjustice downplayed concerns that the access to funding allowed by the Utahlegislation would be enough to push the project through, arguing instead that broadermarket pressures would ultimately doom the project. Zukoski cited the challengesfacing the U.S. export market, waning Chinese demand, declining financial interestin the industry and declining production as factors that could weigh down the projectwith or without Utah's backing.

"Even with Utah taxpayers being on the hook for $50 million,the port developer must still come up with the balance needed to fund the terminal:$200 million," Zukoskisaid. "Yes, with the Utah subsidy the developeris $50 million closer toward the $250 million goal. But coming up with the remaining$200 million is likely to remain a challenge."

Further, Zukoskisuggested Bowie Resources LLC'srecent difficulty in financingthe purchase of mines from PeabodyEnergy Corp. reflected the broader challenges faced by new coal projects.The Oakland project has been reportedly linked to mines operated by Bowie in Utah.

Statingthat opponents were exploring ways to challenge the project in court, Zukoski said,"numerous options for halting the project remain. And this ain't over."

The project,which is intended to redevelop a former Oakland Army Base, has been a point of between backers and theOakland City Council for months after reports emerged suggesting that the exportof coal through the facility was in the cards.

The backersof the Oakland project, including California Capital & Investment Group, themaster developer of the project, have remained largely quiet in the face of environmentaland political criticism. However, Phil Tagami, president and CEO of the developmentgroup, recently told local media that he had spoken about the project with CaliforniaGov. Jerry Brown, who he called a long-time friend. Tagami did not expand on whetherthe governor would support the project, saying only that he had asked questionsabout it.

CaliforniaCapital & Investment did not respond to a request for comment.

The Oaklandproject is one of a handful of Westerncoal export projects that have faced increased scrutiny on the local and federallevel, including larger efforts in Washington and Oregon.