WASHINGTON - A state authority in Wyoming is considering financing port projects in Oregon or Washington to strengthen Wyoming's coal industry.
The Wyoming Infrastructure Authority, created by state statute in 2004, is authorized to issue up to $1 billion of bonds to develop energy infrastructure.
Legislation Gov. Matt Mead signed into law earlier this month padded the authority's mission, stating that it should also facilitate the development of coal distribution facilities, including ports. Wyoming is far and away the nation's biggest coal producer, accounting for nearly 40% of American production in 2013 according to the National Mining Association.
The authority's bonds would be backed by the revenues of any facility it finances, per its enacting legislation.
Loyd Drain, the authority's executive director, said the WIA pursued the authority to do out-of -state deals but is not actively in any financing discussions with port facilities.
The WIA's website lists potential projects in both Oregon and Washington, including the Millennium Bulk Terminals at Longview, Wash., Gateway Pacific Terminal in Whatcom County, Wash., and Morrow Pacific Terminal near Boardman, Ore. The projects are in various stages of permitting and in some cases battles with local environmental advocates opposed to the coal transfer facilities.
Drain said the authority would be prepared to have serious discussions with any of those projects, which represent potential avenues for Wyoming's coal to travel to foreign markets, once the project developers are ready.
"They're not pursuing financing at this time," Drain said.
Inter-state bond financing is not extremely common, but experts said the issuance of taxable bonds for projects in other states is something the industry has become comfortable with. Tax-exempt bonds have far stricter compliance requirements than do taxable bonds, which Drain said any out-of-state bonds would be.
"The federal tax law does not prohibit it," said Roger Davis, a partner at Orrick, Herrington & Sutcliffe in San Francisco. Davis said issuers in other parts of the U.S. have done out-of-state financings, and have managed to overcome any applicable state and local legal hurdles.
Phil Letendre, a program manager for the Wisconsin-based Public Finance Authority, said the PFA was created to and has issued bonds for a number of infrastructure projects all over the country. Letendre said that the PFA, established by an act of the state legislature in 2010, provides conduit financing in locations that might not otherwise have an issuer able to do the deal, or where the deal would be too small to be done stand-alone.
The state where the project is located benefits from the facility and resulting job creation, while Letendre said Wisconsin benefits from those activities because those financings bring attention to the state from the public finance industry.
Mead has made no secret of how such out-of-state financings might, and made a trip to the Northwest last year in which he publicly lobbied local leaders to support the development of coal export facilities that would allow Wyoming coal to reach Asia. The WIA said on its website that more shipping capacity is needed.
"Wyoming's exports to foreign markets is equal to less than 1% of the state's total production," the WIA site states. "The U.S. currently exports approximately 125 million tons annually. Virtually all of the current capacity is being utilized."
Coal exports almost doubled from 2009 to 2013, according to the U.S. Energy Information Agency.
Drain said the Wyoming authority is looking into some projects within its own borders as well, including wind energy farms in various parts of the state.
