EXHIBIT 14 STATE OF UTAH O FF ICE O F H IE ATTORN E Y GEN E RAL SEAN D . REYES ATTORNEY GENERA L Spencer E. Austin Ct.;er 0 ....... Oe""'r RicCa nllen T yler R. Green ChoeI 01 Stall SoI ociIo<~ Brian l. Tarbet "'" ""' ,.,., October 30, 20 18 via E-mai l Eric Joh nson 5995 S. Redwood Road Salt Lake City, Utah 84 123 eric@bcjlaw.net Dear Mr. Johnson: Thank you for your letter of October 23, 20 18, I which responds to the Office of the Attorney General (OAG) letter of October 17,20182 regarding the App li cat ion to the Pennancnt Community Impact Fund Board (e[8) from the Seven County Infrastructure Coalition (SClC) for a loan of $27,900,000 for Uinta Basin Rail Line planning (Appl ication or Proposed Project). The purpose of the Octoher 17 letter was 10 raise important questions and legal concerns about the Application. It is possible-perhaps likely, even-that the crn 's decision on the Application wi ll be challenged in court. Therefore, it is critical that the ClB members and SCIC are fully aware of the potential claims and legal risks that may arise duringjudiciai review. The ClB 's decision must be supported by substantial evidence, and so, it is imperative for the CIB members to be fully informed of all legal and factual issues because thorough anal ys is of these issues is essent ial to its decision . Should the CIB grant the Application, it is in the CIB 's interest-as well as SCIC-to have a well-supported, well-documented decision. Moreover, it is the dut), of the CIE, as a steward of public funds, to closely exam ine each appl ication it receives, including SCIC' s application. With this in mind, the response below to the October 23 letter follows the numbered secti ons in mat letter. 1. Previous CIB approvals "for rail" may be distinguishable from SCIC's Application. The October 23 letter stales that the cm has previously approved applicati ons "for rail," and therefore SCIC's Application can be funded. 3 The primary example discussed involves a 20 14 Letter from E. Johnson to S. Reyes, October 23, 20 18. Letter from A. Gamer to E. Johnson, October 17. 20 18. 3 Oct. 23 letter at 1-2. I 2 160 E. 300 5 ., FIFTH FLOOR' P.O. Box 140857, SALT LAKE CITY, UT 84114-(1857 TELEPHONE: (801) 366-0353· FA)(: (801) 366-0352 application from SCIC's predecessor. There th e CIS approved a $50 million granlto begin saving for a credit scori ng amount for a future possible loan application from the U.S. Department of Transportation for a railroad . This money was to be set aside and reserved as part of what was plann ed to be a larger amount of money used to secure that loan, with UDOT acting as the pennitling sponsor lor the project. That application did not request funding for planning, pemlitting, legal fees, or engineering/des ign costs. The October 23 Ictter is correct that ClB has approved fundin g in the past for small studies, mostly for analyzing potential rai l routes. However, those studies arc much more like the stud ies SCIC commissioned from HDR, Inc. or RL Banks than SCiC's Application. Because previous approvals can be di stinguished from SC IC ' s Application, the October 17 letter raiscd the issue. 2. Will th e requ csted gran t be used for the M incm l Lease Act's (MLA) inten d ed p u r p ose? The October 17 letter raised questions about whether the proposed UinLa Rail Line mi ght exacerbate impaclS from mineral development, rather than mitigate burdens, consistent with the purposes of the MLA and state slatutc. 4 SCIC's Application and supporting materials do not appear 10 adequatel y address this question . Importantly, the CIS 's expert com;ultants have raised factual questions about whether the rail wililruly alleviate truck traffic if oi l production is increased exponentia ll y.s serc's supporting studies do not offer much (if any) evidence to support the claim Ihat truck traffi c wil l decrease, addressing this queslion in a single page of the RL Banks study. As explained by the Cllrs expert consultants a lypi cal study of this kind would include far more reaching analysis on this key question. 6 The cases ciled in the October 23 lener are not re1evanl. 1 They recogni 7.-C that state legislatures may, within their discretion and with few limitations, d irect the use of mineral lease funds. The Utah legislature did so with the Community Impact Al leviation statute. s The question of stale legislative authority to draft a starute for use of mineral lease funds is not at issue here. The October 17 also letter raised questions about the impact of mineral development to make the CfB aware of the issue and so that SCIC could have the opportunity to respond. Raising questions does not attempt to "determine priori ties" or "direct 0 political prioritics.,,9 Oct. 17 letter at 4. S See Zions Public Finance on the RL Banks P rc~ Feasi bility Srudy, nt 3, provided to SCIC on Oetober23,2018. 6 !d. 7 October 23 Jetter at 3 (Cuba Soil and Water Cons. Disl. v. Lewis, 527 F.3d 1061 (IOth Cir. 2008); BradJordv. lron Cnty. C-4 Sch. o;SI., 1984 WL 1443 (E. D. Mo. 1984) (unreported); United States ex rei. Hogan v. Uintah Special SV.f. Disl. , 395 F. Supp. 2d 1088 (D. Utah 2005»). • Utah Code Ann. 3SA-8-301, el seq. 9 Nor does the October 17 letter "argueO that jf mineral production might increase from a project, then it becomes ineligible because it would 'exacerbate' impacts rather than alleviate them." Oct. 23 letter at 3. 4 I 2 Whether n project is consistent wi th the fundamen ta l purpose of the MLA and stale statute is an ohvious question, a nd one that any appli cant to the C IB should be able to a nswer and support. 3. Is th e Proposed Project an eligible public proj ect '! The October 17 letter cited examples of e ligi ble projects found in federal and state law. lo The October 23 letter notes that one of those statutory examples ll includes " transportation," defi ned as: " includi ng the receipt of fed eral secure rural school funds under Section 5 1-9-603 for the purpose of constructing, improv ing, rcpa iring, or maintaining public roads. " 12 It is silent on rai l, specifi cally freight rail. Likewise, Ilone of the cases c ited in the October 23 leiter speci fic ally reference frei ght rail , but instead are a hout passenger rail or publi c transit, not freight r18 Becausc the MLA expressly forbids the use of mjnerall casc funds for mere economic development, the issue is one scre must address. Oct. 17 letter at 4 . " Utah Code Ann. § 170-1-201. 121d. a t -201(7). 10 Salt lake on Track v. Salt Lake City. 939 P. 2d 680 (Utah 1997) involved an initiative petition for light rai l public transit in SaIt Lake City. The case does not mention § 17D-I-201 . nor does it discuss freight rai l. Likewise. Rich \I. SaIl Lake City Corp, 437 P.2d 690 (Utah 1968) a lso re lates to public transit or "street rai lways." 14 Oct. 23 let1er at 5-8. IS A. G. Opinion 92-03 at 6_ 16 RL Banks study at 66. 17 Id. at 67. 1& App. Addendum at 1. 13 3 5. SCIC's Application is considered submitted on September 13, 2018, not in February. The October 23 letter expresses frustration at "delays" or "postponements" in hearing the Application. 19 However, the application SCIC submitted on February I, 2018, was incomplete. In meetings with CIS staff following submission of its application, scrc representatives volunteered that SCIC had commissioned a study from RL Banks that would not be comp leted until July or August 2018. 20 CIB staff then explained that the cm would not consider an incomplete application for which supporting materials were not yet ready. This conclusion is consistent with the CIB's rules and conunon practices. R990-8-3 states: "Applicants submitting incomplete applications will be notified of deficiencies and their request for funding assistance will be held by the Board's staff pending submission of the required inform ation by the applicant. " At the time of these meetings, SCIC representatives did not object to waiting for CIB review until the RL Banks study was completed. CIB staff asked SCIC to file an application for the Major Infrastructure Set Aside Fund, since this is the fund /Tom which it seeks a grant. The ClB received this application on Septcmber 13, 20 18. Thus, SClC's application is considered submitted for hearing in the second trimester of FY20 19 (October, November, December). In multiple meetings and phone call s, SCIC was informed that the CtB staff required time to consider the application. The CIB and its staff have an obligation to conduct due diligence on every application submitted. It is only logical that the more complicated an application, or the more money requestcd, the more time the staff and Board may take to conduct this due diligence. Also, at the May 3, 2018 CIB meeting, the Board discussed the fact that it needed additional support to conduct due diligence for certain major infrastructure project applications it expected to receive this year, including for the Uinta Rail LineY SCIC representatives attended that meeting, and the CIB minutes and audio have been available to thc public since that time. And, regarding CIB staff's request for a new public hearing, the CIB's rules counsel in favor of public disclosure: The Board requires all applicants to have a vigorous public participation effort. All applicants shall hold at least one formal public hearing to solicit comment concerning the size. scope and nature of any funding request prior to its submission to the board. In that public hearing, thc public shall be advised the financing may in the fonn or a loan, even jfthe application requests a grant. Complete and detailed information shall be given to the public retarding the proposed project and its financing. The information shall include the expected financial impact including potential repayment terms and the costs to the public as user fees, speciaJ assessments, or property taxes if the financing is in the fonn of a loan. The Board 19 20 21 Oct. 23 letter at 8-9. SCIC provided the RL Banks study to the See May 3, 2018 CIB meeting minutes. cm staff on August 17,2018. 4 may req uire additiona l public hearings if it detennines the app li cant did n01 adequately d isclose to the publi c the impact of the fin ancial assistance during the in itia l public hearing. 22 Whi le SCIC held two public hearings in January and February 20 18, it did not advi se the public that the financin g may be in the form or a loan. Nor did SClC provid e "complete and detail ed infomlation " abou t its Proposed Proj ect. In addition, at the Fehruary meeti ng. the SC IC Board C ha ir expressed concem s about whether the public had received adequate notice of the subject to be discussed at the meeting. Many months had passed since the public meeti ngs and submi ssion or lhe Application in September. And, until October II , no meet ings had been he ld in the Proposed Proj ect area, allowing local resi dents who wi ll be most impacted by the Proposcd Project the o pportunity to receive infonnution about it and to provide comments to SCIC. The CIB thanks SC IC for ho ldi ng a meeting in U intah County on October 11 for th e benefi t of th ose res idents who may be most impacted by the Proposed Project. The October 17 lette r does not suggest or a rgue for a de lay of the scheduled November hearing date. Whether the Board invokes R990-8-4(F) is a dec ision for the Board at the hearin g. 6. Does SCIC's Application qua lify llS " planning" as defined by slatute and CIn pracfice? T he October 23 letter raises some good points regard ing the question of planning. However, none of the letter' s citations to Utah Code are fou nd in the c m 's code. The MLA and slate statutes arc si le nt o n the definition of planning, and no COUl1 has directly addressed the issue. Nor has the C IB heard any application that is remotely like SCIC's Appl ication. And, as mentioned in the October J7leller, the CIB's general pr