A legislative audit of Utah’s Permanent Community Impact Funds released in May found that money is being misspent for industry subsidies and economic development instead of for the intended purpose to mitigate social disruption caused by boom-and-bust extractive industry.
The funds are collected as royalties on oil, gas and mineral extraction of federal public lands. Since local communities can’t collect property taxes on federal land, this money is supposed to help fund things like parks and recreation, public safety, sewage treatment, street lights and so on. The law does not allow using the money to help private businesses or to make low-interest loans to the private sector.
The auditors found that the Utah Community Impact Fund Board (CIB) has been handing out massive subsidies to fossil fuel industries. In 2019, CIB gave $27.9 million to the Seven County Infrastructure Coalition to plan for a Uintah Basin Rail Line intended to export Utah coal to Asia.
CIB also gave a total of $59.5 million to upgrade and pave the Seep Ridge Road in the Uinta Basin order to access oil and gas fields.
Likewise, $9 million was given for the Leland Bench Road, also to benefit the oil and gas industry.
Environmental groups have opposed these projects because government subsidies for fossil fuels prevent an energy transition to cleaner fuels.
On principle, community impact funds paid by industry should actually be used to help communities, not plowed back into industry. The fossil fuel handouts have an appearance of corruption, but the auditors blame it on lack of appropriate guidelines and note that “no CIB policy exists to assure projects adequately alleviate mineral extraction impacts.”
Performance Audit of the Permanent Community Impact Funds: www.olag.utah.gov/olag-doc/2020-03.pdf
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This is an excerpt from our June EnviroNews column. View the full article here.