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 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."

Salisbury Post: 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 their legal obligation, 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.