To hear Utah education advocates, Utah schoolchildren would stand to lose $640 million to $1 billion if President Clinton designates a new national monument in southern Utah.
But how accurate is the $1 billion figure? "The numbers (being used by various groups) are all pretty squishy," said Mike Christensen, director of the Utah Foundation, a nonpartisan government research group. "I think the $1 billion figure is probably overstated."The $1 billion figure - which has since been quoted as fact by Utah's congressional delegation in various press conferences - has state economists, including those in the governor's office, squirming. Their own studies show considerably less revenue would be generated from coal development on the Kaiparowits Plateau.
In 1993, the Governor's Office of Planning and Budget prepared a fiscal impact analysis of coal reserves for Andalex's proposed Smoky Mountain Mine - the only coal mine being considered for development in the region and the only mine considered remotely feasible from an economic standpoint.
That study indicated the mine would produce about 2.5 million tons of coal per year with an annual market value of $48.8 million. Of that amount, $7.8 million would come from coal on school trust lands.
The company would pay an 8 percent coal royalty directly to the school trust fund of about $624,000 a year. The trust fund can only spend the interest from that money, or about $36,000 a year. Last year's state education budget was about $1.7 billion.
Over the 30-year life of the mine, revenues from coal royalties would collectively produce $16.7 million for the school trust fund and slightly less than $1 million for the public education budget.
Christensen said it is misleading to focus the debate on how much coal lies beneath the Kaiparowitz Plateau. Rather, the issue should be how much coal can be mined economically and competitively and what market conditions must be present for more-remote coal leases to become viable.
In the Kaiparowitz, some of the coal reserves are so isolated or so deep that they will never be economical, he said. The rugged, largely roadless nature of most of the region is why other coal reserves have not been developed before now.
Three companies have held coal leases in the region. The 5M Corp. of Hurricane has defaulted on its leases and the federal government is suing to revoke the leases. PacificCorp has voluntarily relinquished its leases in an exchange deal worked out with the federal government.
The only other company with valid leases is Andalex, the Dutch mining company whose proposed Kaiparowits project is currently undergoing federal and state environmental reviews. The reason Andalex is pushing ahead is because it owns the leases that are economically viable.
"Andalex is where they are at today because of the location of their leases," Christensen said. "But there is a question whether or not even they can be competitive. They have to truck the coal several hundred miles to Nevada, put it on a train for the coast and ship it to the Pacific Rim. Those are incredible costs."
Other companies that might want to mine coal in the region would have even greater extraction and transportation costs.
Dave Tabet, coal geologist with the Utah Geological Survey, estimated that 65 billion tons of coal are located within the area being considered for national monument designation. Geologists estimate that 2.8 billion to 3 billion tons of coal are located within school trust land tracts in Kane County, with a smaller, as-yet undetermined amount in the Garfield County tracts.
Margaret Bird, a lobbyist for the Office of School and Institutional Trust Lands and chief proponent of the $1 billion figure, stands by her calculations. If there are 62 billion tons of coal, then one-ninth belongs to the schoolchildrem. "Multiply that by $20 a ton, multiply that by the .08 royalty rate and the about is $11 billion. If only 10 percent is recoverable, and the best estimates are 10 to 30 percent is recoverable, then $1 billion is a good figure.
"I don't care what they say about voodoo economics. It is voodoo economics to say that the nation's largest coal reserve is worth only $47,000 a year."