20070812 Ver 2_NC and Aloca - Takeover is anti-business_20090421

Dorney, John
From: Ellis, H. Gene [[e-mail]]
Sent: Tuesday, April 21, 2009 3:31 PM
Subject: The Salisbury Post: Takeover is anti-business
The Salisbury Post published an editorial today criticizing the State of North Carolina's efforts to take Alcoa's
privately-owned hydro project. The editorial notes that "Alcoa's operation of these darns was never made
contingent on employment figures, and a state takeover won't resurrect the smelters or bring back those jobs. It
will simply make other companies think twice about investing in North Carolina."
The Salisbury Post
Editorial I April 21, 2009
NC and Alcoa: Takeover is anti-business
Supporters of a state takeover of Alcoa's Yadkin Hydroelectric Project argue the action is justified because of lost
jobs at Badin Works, the need for better water control, potential state revenues to be gained from the sale of
electricity, environmental issues and because the Yadkin River is a public resource whose benefits should flow
primarily to the people of the North Carolina.
Let's look at some of these issues:
Jobs: If loss of jobs is justification for the state to take over a company, then Freightliner, Food Lion and other
businesses better line up their legal defenses. It's unfortunate that the Alcoa jobs vanished, along with tens of
thousands of textile, tobacco and furniture manufacturing jobs across the region. But Alcoa's operation of these
dams was never made contingent on employment figures, and a state takeover won't resurrect the smelters or
bring back those jobs. It will simply make other companies think twice about investing in North Carolina.
Water control: Lake levels at High Rock and downstream impoundments have been an issue in the past,
particularly during drought, and will likely be so in the future. That's one of the reasons for the federal relicensing
process - to address such concerns, and Alcoa's relicensing proposal gained the approval of 23 local, regional and
state groups, including the N.C. Department of Environment and Natural Resources. The relicensing agreement
includes stronger drought protection and improved water management. A state takeover won't stave off drought,
sedimentation or farmland runoff, nor will it magically balance the competing needs of Yadkin River users.
Potential revenue: Takeover advocates argue the state is entitled to Alcoa's revenues because they are generated
via a public resource. Whether profits are $44 million (as takeover advocates claim) or $8 million (as Alcoa says),
the principle is the same. If a business' use of a public resource means the public is entitled to the profits, the state
could take over many other businesses - including other small hydroelectric operations. In reality, every business
benefits to some degree from public resources, whether it's a river, local water and sewage lines, interstate
highways or municipal airports. But the public benefits in turn from the payment of corporate income and
property taxes.
Environmental cleanup: Like water-level issues, this is an ongoing concern, especially in light of questions about
PCB contamination of fish in Badin Lake. However, Alcoa has shown a willingness in the past to work with state
and federal officials to address such problems. Under federal law, it has a permanent legal responsibility to
remediate environmental problems. Again, if the state believes Alcoa is not fulfilling its legal obligations, that's an
issue worth contending, but it's not a justification for takeover. State ownership won't spontaneously solve any
remaining environmental problems; it will simply shift more of the burden to the state and its taxpayers.
Supporters of this state takeover, including Rowan Reps. Lorene Coates and Fred Steen, may raise some legitimate
issues, but they fall far short of justifying the hostile usurpation of a private business that has operated in the state
for more than 90 years. Rather than resulting in a public trust to operate Alcoa's dams, the takeover talk is more
likely to create mistrust of North Carolina's business climate and invite a costly court battle.