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A bill being seriously considered by the Utah Legislature this week seeks in essence to finance a backdoor subsidy for a coal export terminal in Oakland whose construction could well leave Utah taxpayers on the hook for a highly questionable and highly speculative $53 million out-of-state subsidy.

The proposed law, which exists now as Senate Bill 246, is being offered as a narrow, technical transfer of state funds that would let a number Utah counties participate in a transaction that goes unnamed in the legislation.

However, the actual project for which the legislation is intended — that coal-export terminal in California — is a highly risky undertaking that is likely to end in losses for Utah. The state stands to lose not only the $53 million that proponents want earmarked for the Oakland port project. It also would be buying into deeper potential liabilities.

The biggest fiscal and implementation risks in this legislation include:

• That the bill would essentially allow a low- or no-return subsidy for a public-private partnership. It would allow this subsidy to take the form of a loan or grant to local governments and it includes a mechanism that ultimately would let the state forgive loan and interest payments. The proposed statute would limit state recourse for repayment to revenue from the port project, which isn't likely to pan out.

• The bill offers no guidance as to how state and local officials are to protect Utah taxpayers in port negotiations. Key here is whether the state's $53 million is subordinated to the $200 million that the private sector is supposed to invest alongside this public money. The original state application by the Utah counties says that a $200 million companion investment from a private institutional investor would be available by June 2015. This benchmark has been missed. That means the only player in this transaction with an open checkbook and a deep pocket is the state of Utah.

• The bill is constructed on the back of an existing state investment vehicle designed to assist local governments in maximizing the best use of their resources. This transaction would fly in the face of that purpose, concocting a complex entanglement in global coal markets at a time of deep distress across these markets.

It's hard to imagine a worse time to get talked into a giving the coal industry a $53 million subsidy. Coal companies across the U.S. have either declared insolvency or are teetering on the brink of bankruptcy. Cloud Peak Energy, a leading Western U.S. coal producer and exporter, says it sees no export market for the foreseeable future. Signal Peak Energy in Montana, another West Coast coal exporter, has taken recent write-downs tied to the weak state of the U.S. coal export market. Arch Coal, whose business model is based largely on West Coast exports, is in bankruptcy. Utah-based Bowie Resources, a major beneficiary of the proposed transaction outlined SB246, is in financial distress, having failed to close plans to buy out private equity investors and having failed recently to secure backing for its proposed purchase of three mines in Colorado and New Mexico from Peabody Energy. Bowie has also failed recently to meet its latest targets for coal shipping through the Port of Stockton.

Coal-export facilities are "risky long-term bets" to borrow a recent phrase from Wood Mackenzie, the global consulting firm that recently reserved course on its long-bullish view of the U.S. coal industry.

If Utah were to take part in the Oakland port scheme it would be buying a pig in a poke.

Tom Sanzillo is the director of finance for the Institute for Energy Economics and Financial Analysis.