Utah’s fossil fuel industry benefits from new mining royalty law, advocates say

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Last year, auditors warned that a fund set up to benefit rural Utah communities was actually pumping money into projects that could increase the cost of mining in those areas.

But many fear that instead of trying to change those practices, state lawmakers have acted this year to validate them by lifting legal constraints on the use of millions of federal revenues to subsidize the expansion of oil production. and other extraction efforts.

Changes adopted by state legislators SB176 would deprive affected communities of fossil fuels and essentially convert the Permanent Community Impact Fund into “a state-backed piggy bank for these industries,” one conservationist said earlier this year. On top of that, opponents of the bill recently signed by Governor Spencer Cox say it could have implications for a ongoing legal battle for $ 28 million grant to study railroad project for waxy crude oil from the Uinta Basin.

The state senator who sponsored the bill described it as an innocuous clarification he made at the request of state officials and the Community Impact Fund Standing Committee, which oversees royalties. mining companies and is commonly known as CIB.

“We’re not trying to change anything,” Senator Ron Winterton said during a committee hearing on SB176. “It is a very simple bill.”

However, the bill removes language that designates money from federal mining royalties for “the mitigation of social, economic and public finance impacts resulting from the exploitation of natural resources.” And some rural officials and environmentalists say small changes remove the legal guarantee that funds should go to ambulances, fire trucks, parks and trails, water pipes and municipal buildings in affected communities. mineral extraction.

Officials from the Department of Workforce Services, CIB’s parent agency, say the intention of the bill is to give board members clear parameters on how to allocate grants and loans from the fund, which distributed $ 77 million from July 2019 to June 2020. To that end, the legislation attempts to better define the planning and public service initiatives that BIC money can support, they say.

They say they do not understand that the bill opens the door to more mineral extraction.

(Rick Egan | Tribune File Photo) Senator Ronald Winterton, R-Roosevelt, speaks on a bill at the Senate Health and Social Services Committee on Thursday, February 18, 2021.

To approach or ignore an audit?

The audit completed last year concluded that in several major cases, funds administered by the CIB appeared to be towards economic development efforts or offer low-interest loans for the benefit of the private sector.

One example was the council’s decision in 2019 to funnel $ 28 million to a coalition of rural counties for planning a Uinta’s controversial 80-mile railway line Pool Trails at Union Pacific at Price Canyon. Supporters of the railroad, a group that includes Winterton, say the line would allow a surge in energy development by connecting the basin to the national rail network and allowing producers to transport oil to refineries without the limitations of trucking.

The proponents also argue that the project qualifies for IPC assistance as it would benefit the surrounding community by adding job opportunities in a location that is badly needed.

“This will create hundreds and thousands of jobs,” said Mike McKee, executive director of the Seven County Infrastructure Coalition, the interlocal entity trying to develop the rail link. “In the Uinta basin and in our other regions, our businesses and our people are in difficulty.”

Environmental groups allege the railroad subsidy violates the law and have gone to court to force CIB to return the money to the fund.

“This money is intended to help repair the damage done by the fossil fuel industry, not to subsidize it,” said Wendy Park, an attorney at the Center for Biological Diversity, one of the groups that filed the lawsuit. .

Auditors also focused on the roughly $ 60 million in loans and grants made for the construction of Seep Ridge Road in an area dotted with oil and gas wells and a $ 9 million grant for improvements. of Leland Bench Road which could accommodate large industrial trucks. Both projects were in Uintah County.

Challenging funding decisions in these cases, legislative auditors pointed out that state law set aside money for the IPC to mitigate community impacts of fossil fuel development – referring to the very language of the Winterton’s proposal had deleted.

The state senator said the removal was the job of the legislative attorney who drafted his bill and that he would have been willing to leave that language untouched. He also asserts that most of the audit recommendations have already been implemented by the IBC without the need for legislative action.

For Winterton, the road expansion and railway assessment efforts would fulfill the traditional mission of CIB funds by moving heavy trucks away from community roads and improving the lines of communication that serve everyone, from the mining industry to public school buses.

A former Duchesne County Commissioner, Winterton is employed as a customer relations consultant by the coalition’s benchmark engineering firm working on the railway project. He sponsored failed legislation last year that would have given huge tax relief to oil and gas companies in a move to increase production – which is considered necessary to make the railway economically feasible.

With supporters of the Uinta Basin Line believing the project will nearly quadruple oil production, Park said there was no way around the fact that the rail link would dramatically exacerbate the impact of extraction. of oil rather than improving it as suggested by the supporters of the project.

And opponents of SB176 also argue that the measure would only exacerbate the problems identified by the audit, as it not only removes language on mitigating impacts on the community, but also specifies that IPC money may fund studies on “natural resource development”.

“Rather than fixing this problem in the future, the legislation is simply trying to legalize this outrageous practice,” Grand County Commissioner Sarah Stock told state lawmakers earlier this year.

Other local leaders supported the bill as a way to strengthen a program that serves as a lifeline for their communities.

“In Duchesne County, with 63% of our county owned by the federal or state government,” said Commissioner Greg Miles, “we rely on mine lease funds for important purposes like planning.”

To those who argue that this money should not stimulate the industry, he said, “Show me an IPC project which has been granted and which cannot be misinterpreted as economic development.”

(Brian Maffly | Photo from the Tribune) An oil jack extracts crude from a well in Lake County, Duchesne County.

Who benefits?

Winterton acknowledges that his bill gives a legislative nod to the exploitation of IPC funding for projects such as railroad or road improvements highlighted by the audit. But that won’t make much of a difference when the board already supports these kinds of initiatives, he said.

“The money will continue to be used the way it has,” said Republican Roosevelt, who served at CIB, in an interview. “[SB176] only gives the board an understanding of what will be appropriate and what will not. “

This interpretation of the CIB fund’s goal flies in the face of the intent of state and federal lawmakers over the years, Park argues.

Utah’s law mirrored the Federal Mineral Leasing Act, which states that royalties should go to local governments “socially or economically affected” by the mining activity. And the Utah Attorney General’s Office argued that these federal restrictions would prohibit the CIB from citing only economic development to justify the granting of funds, although job creation may be a welcome side effect of a project.

Congress saw this money as a way to protect communities from the “boom and bust cycles” that often accompany mineral extraction and to strengthen police, public health services and government facilities in these areas. the office’s lawyers wrote in a 1993 notice.

Park expects promoters of the rail line to cite SB176, which is retroactive, as they attempt to push back his group’s lawsuit challenging the CIB grant for the Uinta Basin Railway – but she believes that in itself could create an opportunity to mitigate the impact of the new state law. As it asks a judge to overturn the grant, the Center for Biological Diversity will likely argue that even the revised state statute should be read in light of federal rules that prioritize mitigation projects, a she declared.

Eric Johnson, another representative of the Seven County Infrastructure Coalition who testified for the Winterton bill, said its retroactive clause would add a layer of protection for past IPC disbursements, including those reported by auditors.

“The retroactivity is there because there were a lot of projects that were called into question, and there are a lot more that could be called into question,” he said. “And you just want to ratify the things that have been done.”

Carly Ferro, who heads the Utah chapter of the Sierra Club, said relaxing legal controls over the IPC was the wrong answer to last year’s audit calling for process improvements. His plan for moving forward is to work with the governor’s office on reforms that will ensure that federal mining revenues end up benefiting the rural Utahns, not the energy industry.

“Our goal is to really make sure that rural communities receive the support and investment that can enable them to have healthy communities and healthy environments, ”she said,“ so that they can not only sustain and endure, but also thrive.

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