ATR Urges EPA Rejection of 404(c) Petition
ATR, along with a coalition of other organizations, recently sent a letter to Environmental Protection Agency (EPA) Administrator Lisa Jackson asserting opposition to the review of a Clean Water Act 404(c) petition related to potential energy development projects on Alaska state land. As the letter stated:
“This requested action would be tantamount to asking the EPA to assert veto power over an entire industry across a large geographic region where a permit application under Section 404 of the Clean Water Act is contemplated, but has not even been submitted.”
A preemptive strike on Southwestern Alaska’s vast mineral resources would eliminate the opportunity for Alaskans and all Americans to utilize our wealth of natural resources, preventing job creation and economic development throughout the country.
“The investment in mineral resource development in Southwest Alaska would create thousands of needed jobs, accompanying economic development, and significant tax revenues to fund education and infrastructure for the region, the State of Alaska, and America.”
Finally, the letter noted that any negative EPA action with regards to this 404(c) petition would circumvent the standards and procedures already laid out by the United States Congress and the State of Alaska. A move such as this would be “highly detrimental to the credibility of EPA and the certainty of our current legal and regulatory structure.”
Click here for a PDF copy of the letter.
Unfunded Pension Obligations to Factor into State Credit Ratings
Moody’s Investor Service announced that they will begin factoring unfunded public pension obligations into calculations used to determine state credit ratings. This move was recently pointed out by the New York Times in an article that highlights the nation’s growing recognition of the threat posed by massive unfunded obligations.
The numbers are staggering. American Enterprise Institute and Northwestern University have estimated that states unfunded public-pension liabilities is $3 and $5 trillion, respectively.
Unfortunately, the board that writes the rules for state financial reporting does not require the inclusion of public pension obligations, funded or unfunded, in state financial documents. This grossly flawed accounting system allows state governments to hide the true costs of the staggering benefits provided government workers. It permits lawmakers and bureaucrats alike to shy away from the danger posed to state budgets by out of control public pension obligations.
Moody’s new calculation, the article notes, will “add states’ unfunded pension obligations together with the value of their bonds, and consider the totals when rating their credit.” This new method “will be more comparable to how the agency rates corporate debt and sovereign debt.”
Moody’s initial numbers have revealed which states face the largest problems once unfunded public pension liabilities are accounted for:
- Connecticut, Hawaii, Illinois, Kentucky, Massachusetts, Mississippi, New Jersey and Rhode Island all face the highest levels of indebtedness.
- California and New York, states with the most trouble reigning in their budgets and some of the largest obligations, fare a bit better in the ratings as they have contributed to their pension plans more frequently.
This does not, however, diminish the threat that these massive obligations pose to state budgets. The article quoted Robert Kurtter, managing director for public finance at Moody’s who pointed out that these obligations are “part of the ongoing budget stress.”
This decision by Moody’s is a welcome one, and will hopefully lead to more states tackling their budget and pension woes once and for all. Perhaps other ratings agencies will follow Moody’s lead and allow investors to see what lies beneath the flawed accounting and reporting of state financial documents. And perhaps some day in the near future, the rules will change, and states will end the practice of hiding their actual financial woes from the voting public on their own.
Increased Energy Development Will Lead to More Jobs, Faster Recovery
Research and consulting firm Wood Mackenzie recently released a startling new report analyzing the devastating economic impact of the nearly $73 billion in proposed tax increases upon the nation’s oil and gas industry. In contrast, allowing access to energy resources currently off limits would provide massive boosts to production, employment levels, and government revenue. Onerous federal regulation currently prevents access to oil and gas reserves in areas of Alaska, the Eastern Gulf of Mexico, and the Atlantic and Pacific Outer Continental Shelves. The difference between allowing access to these vast reserves versus continued regulation and following through with the nearly $73 billion of proposed tax increases could not be more drastic.
Among the report’s most distressing findings were the economic implications the proposed tax hikes would have:
- A loss of nearly 50k direct and 120k indirect jobs by 2014.
- An estimated loss of 0.7 mmboe/d (million barrels of oil equivalents per day) by 2020, with an additional 1.7 mmboe/d put at risk of not being developed. By 2025, they estimated a loss of 0.4 mmboe/d, with 1.2 mmboe/d put at risk
- A temporary and meager bump of $3 billion in government revenue between 2011 and 2015, followed by a long term loss of $10 billion in 2025, with an additional $8 billion possibly at risk.
At a time of unemployment rates over 9%, any increase in taxes on our nation’s oil and gas industry would further hamstring our economic recovery and hopes of energy independence. On the other hand, increasing access to reserves currently off limits would create hundreds of thousands of jobs and spur much needed investment in communities:
- The addition of 50k direct and 120k indirect jobs in 2014. In the long term, by 2025, those numbers would rise to 150k direct and 380k indirect jobs.
- An additional 4.0 mmboe/d brought on line by 2025. Total US production in 2010 was equivalent to 18.8 mmboe/d.
- Greater production would lead to an increase of $20 billion in government revenue by 2020, and $150 billion by 2025.
The juxtaposition illustrated by this data reveals the benefits of increased energy development when compare to tax hikes. In pursuit of more jobs and an expedient economic recovery, Congress would do well to heed this reports advice.