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House Interior Appropriations Budget Carries Ill Winds for National Park System

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With all the drama surrounding the White House negotiations to raise the nation's debt limit without doing further damage to the country's fiscal profile, legislation still working its way through the House of Representatives understandably takes a backseat.

But as crafted, the proposal concerning Fiscal Year 2012 funding for the Interior Department stands to do more than a little harm to the National Park Service's fiscal fitness, and also threatens to degrade the watersheds that drain into the Colorado River as it runs through Grand Canyon National Park.

"In its current form, it's deeply damaging to our national parks, Grand Canyon in particular," John Garder, the National Parks Conservation Association's budget and appropriations legislative representative, said Monday.

As it stands, the bill would, if enacted, reduce overall funding for the Park Service, weaken air and water regulations that are needed to protect park resources, and stall efforts to let the agency acquire a private 1,400-acre inholding in Grand Teton National Park.

The legislation, which was scheduled to be considered by the full House Appropriations Committee on Tuesday, has drawn criticism from a number of groups concerned about its environmental impact.

Trout Unlimited issued a release last week that condemned the bill, saying it "cuts funding for essential conservation programs like the Land and Water Conservation Fund and North American Wetlands Conservation Act, and contains harmful riders that undermine the Clean Water Act and other protective rules for rivers and streams."

“Fishing and hunting generate $76.7 billion annually in economic activity in the U.S.,” said Steve Moyer, vice president for government affairs at Trout Unlimited.  “We can’t expect to sustain this powerful economic engine if we’re removing the very conservation programs that make it run.”

At the Natural Resources Defense Fund, Scott Slesinger, the group's legislative director, said the legislation "is a contract on America masquerading as a spending bill. It’s nothing short of a declaration of war on our most basic health protections."

"It would do away with fundamental safeguards that keep our air, water and lands clean. Worse than making deep budget cuts, the bill is chock full of gratuitous policy riders that are unprecedented in number and scope. They have no place in a budget -- or anywhere else.”

Back at NPCA, Mr. Garder said one of the most egregious riders, or amendments, to the bill would block efforts to continue a moratorium on new mining claims on 1 million acres surrounding Grand Canyon National Park for 20 years.

“What really put us over in the edge in opposing this bill were the policy riders, in particular one that would undermine protections for the Grand Canyon," he said during a phone call from his Washington, D.C., office.

The proposed 1 million-acre buffer was identified "through a public process that allowed for public comment, and 300,000 people commented and the determination was that it is appropriate for the protection of Grand Canyon and for the 25 or so million people who rely on the Colordao River for drinking water and their uses," said Mr. Garder.

If the moratorium is not put in place and uranium mining claims are allowed, “It is not unfathomable to imagine that those who are hiking around the Grand Canyon would have to note in which streams there is uranium contamination and carry their own water," he added.

Conservation groups are not the only organizations that support the 20-year moratorium, said Mr. Garder, noting support for it from the Metropolitan Water District of Los Angeles, the Southern Nevada Water Authority, the Central Arizona Project, and Native American tribes in the Southwest.

Other sections of the proposed legislation the NPCA takes issue with include:

* Efforts to weaken or remove Environmental Protection Agency regulation of greenhouse gases;

* Efforts to weaken EPA regulation of coal ash;

* Efforts to weaken oversight of stormwater discharges, something that can lead to degredation of waters such as the Chesapeake Bay;

* Cuts to the Land and Water Conservation Fund that would zero out funding for Park Service lands acquisition;

* A $7 million cut in National Park Service funding.

“That is less than 1 percent," Mr. Garder said of the $7 million, "but it is on top of the cuts that park operations received last year. Something that concerns us is backtracking on funding for an account that is essential to ensuring our parks operate essentially.”

The Park Service already is underfunded by roughly $600 million a year, according to the NPCA, and this proposed cut, while small, would nevertheless have to be absorbed by the parks, he said.

Without the LCWF land acquisition funding, the Park Service also might not be able to move forward with the $107 million purchase from the state of Wyoming of 1,400 acres inside Grand Teton. The administration had been counting on the LCWF funds to start the purchase with a $10 million downpayment in the coming fiscal year, according to Mr. Garder.

“But when there is an effort to prevent any new land acquisition projects in FY12, that’s going to seriously undermine that multi-year effort, and the threat of development there should not be underestimated," said Mr. Garder. "It’s critical that this bill go through if we’re going to prevent the building of trophy mansions or subdivisions in the middle of Grand Teton National Park.”

The House measure also carries an 18 percent cut to the Park Service's construction budget, which the president had already reduced by $50 million in his budget proposal, said the NPCA budget analyst.

“If you look at the suite of those (construction) needs, there are some projects in there that are clearly very important for the protection of visitor safety and the protection of the historic and natural resources,” Mr. Garder said.

For instance, at Grand Canyon National Park there's a $16 million need for a storage system for potable water for park visitors, and at the Statue of Liberty National Monument there's a need for asbestos abatement work, roofing, sidewalk repairs, and seawall repairs that alone are estimated to cost nearly $11 million, he said.

“Many of those jobs are contracted to businesses, and so there is a direct jobs loss component when you are reducing the ability for the Park Serivce to engage in some of those contracts to do some of those basic repairs,” said Mr. Garder.

How the legislation will fare after the House Appropriations Committee deals with it remains to be seen, he said. The full House might take it up next week, or possibly not until September. And the Senate has not even started its work on the Interior Appropriations measure, he said.

Of course, the lawmakers could find themselves having to go back to square one, depending on how negotiations over the nation's debt limit go with the White House.

Comments

"have all said publicly that oil subsidies are not necessary and should be discontinued."

Not as a stand alone action but as part of an total overhall of the tax system as well as reigning in of the budget.  You seem to have left that "fact" out.  You give me what Boehner and Ryan want for taxes and the budget and I'll give you the "oil subsidies".


   Well, I learned a lot on this one. I learned that I don't have a clue as to who is right and who is wrong. Sorta reminds me of the " Best available Science " we have been battling at Cape Hatteras.
   Now, I know you are saying 'what has that got to do with anything'. Well, maybe nothing but, I was just thinking, with all the problems the NPS and our Country are having, particularly financially, pray tell me why we are going through the mess we are at Cape Hatteras concerning beach access.
   The people there just want to continue to fish, swim and recreate on the beaches (and, yes, walk and drive on them to do so) in the manner they have for better part of a century. They want to work, make a living and spend money and so doing, pay taxes. They readily purchase fishing licenses (taxes) which support conservation efforts. They have done this for ever while protecting and preserving the resources and coexisting with the birds, turtles and other wildlife. They have left no significant footprint on these beaches during this time.
   My question is, why are there people that are insisting that these people give up this culture. Why are they proposing that millions of dollars be spent by NPS for improvements that are not needed and will be useless, when it works just fine the way it is, at the same time, excessively limiting access to every user. Doesn't make sense. I repeat, doesn't make sense. It's a recreation area for God's sake. The birds and turtles will be fine.
   Worry about funding of the NPS ? Want to meet a lot of folks who don't care ? Come to Cape Hatteras and talk to the people.
   You can quote all the statistics and science you want but, the people don't care anymore. It has all been corrupted to a point that none of it is believed anymore. What used to be the fabric of which this country was built, is now worthless, and will be until someone figures out how to bring back the credibility. That goes for all the politicians, judges, lawyers, scientists, environmentalists and special interest groups. I wonder if that is even possible.

Ron (obxguys)   


EC, I gotta admit reading the CRS report very possibly would clear some of the confusion up. Here are a coupla snippets:

Repeal of the immediate expensing of intangible drilling costs provision and replacement with a form of cost amortization more consistent with depreciation methods common in other industries likely will have no effect on current U.S. oil production, and hence no effect on current gasoline prices. The purpose of the expensing provision is to enhance the investment returns for investors in what has historically been a risky activity: exploring for, and developing hydrocarbon resources. Since the provision has little effect on wells already in production, available output and prices should be unaffected if the provision is repealed and replaced with less favorable amortization procedures.

Wood MacKenzie, a consultancy, determined that the sum effect of eliminating the Section 199 deduction and the repeal of the expensing of intangible drilling expenses would have an effect on the rate of return to exploration, lowering the return of marginal projects, and reducing over-all domestic exploration and development activity by U.S. firms. However, the conclusion is sensitive to the level of oil and natural gas prices. High prices can raise rates of return substantially. Natural gas projects are more likely than oil projects to be affected by the tax changes because they are experiencing low market prices due to the
volume of non-conventional gas production that has entered the market in the past several years. The Wood MacKenzie study did not conclude that U.S. gasoline prices would be affected by the tax changes.

The oil industry has benefited from the ability to deduct very broadly defined foreign income tax payments from their U.S. tax liability since the 1950s. If the definition of what constituted an actual income tax payment were tightened and foreign governments did not reduce their charges correspondingly, the industries’ domestic, as well as total income tax burden would likely increase. However, this provision again is a tax on profit, and in line with the economic theory of taxation, should have no effect on the firms output or pricing decisions, and therefore no effect on the price of gasoline. The incidence of the tax would appear to be on shareholders. The change in the dual capacity tax payer rules might make overseas investment that leads to foreign profits less attractive to the companies than investment in the United States. This could lead the firms to enhance domestic capital spending leading to increased domestic production and reduced oil dependency.

Costs associated with the use of tertiary injectants are currently treated as deductible expenses. Expensing of these costs encourages their use and enhances oil production levels. For smaller, independent exploration and development firms the cost incentive could be important. However, the five major oil companies, to which repeal would apply, earned over $32 billion in net income in the first quarter of 2011. Repeal of the deduction for the industry is estimated by the Obama administration to yield only $6 million in revenue in 2012. Only a part of the $6 million revenue estimate would be paid by the five major oil companies. As a result, it is likely that repeal of the deduction, with a change to capitalization, or amortization, of these costs, would have only a small effect on oil production or pricing, especially in a market where oil returns over $100 per barrel. In periods of low oil prices the repeal of the deduction could have a larger effect. The effect on domestic gasoline prices is likely to be small.

As for your figures on how much Exxon Mobil made and how much the oil companies paid in taxes, the CRS would seem to disagree:

For the calendar year 2010, the revenues of the five largest oil companies were approximately $1.5 trillion with additional revenues accruing to the non-majors. The net incomes, after tax, of these five companies totaled over $76 billion with additional earnings accruing to the non-majors.

You can read the full CRS report here.


ecbuck,

The two articles I linked above explain pretty clearly how that "magic" would happen, according to the findings by the CRS report.  As for "facts," I'm not sure what you mean here.  Googling "oil industry record profits" brings up a whole slew of articles that document this.  Would googling, copying, and pasting the links for you consitute "facts"?  Or are the articles incorrect in their reporting, and therefore not "facts"?
You wrote, "Not as a stand alone action but as part of an total overhall of the tax system."   Again, unless you ignore the CRS report (and others, such as that of the Joint Economic Committee), one can discontinue oil subsidies without overhauling the entire tax system, and the impact of gas prices and oil company profits would be the same.
 


Last sentence: I meant, of course, impact "on" gas prices.


Ron,

I should know better than to wade in to the Cape Hatteras situation, but I don't think anyone is being asked to "give up a culture."

I was down your way a couple weeks ago and there seemed to be folks on the beach, with their rigs, enjoying themselves and fishing and carrying on. True some ramps were closed, but others weren't. I saw ORVs on the beaches at Cape Lookout, which are harder to reach than those at Cape Hatteras, and I saw vehicles on the beaches at Cape Hatteras. And I saw surfers and surfcasters.

Now, before I totally ignite this issue, I'm still talking to folks and reading reports and listening to concerns about what's going on down your way. I'm not saying that everything's hunky-dory. But I also didn't see the death of a culture.


Kurt,

The CRS report only considers the impact on the amount of oil produced.  It assumes if that amount doesn't change than the price won't change.  I don't know what "economic theory of taxation" they are referencing.  The reality is that taxes are like any other cost for the oil companies.  If their taxes go up, either their net profit goes down or their prices will go up.  The oil companies may produce the same amount BUT they will charge more to make up for their higher costs.  The CRS report totally ignores that basic economic factor.  Now if the subsidy is really on $6 million as you quote - then no it won't have any real impact - but then - it wouldn't make up for the shortfall in the Park budget either.

As to my figures on Exxon Mobil - I see nothing you provided that disputes what I said.  I gave Exxon Mobils numbers and you gave a total for the five largest oil companies.  Exxon paid more in taxes in 2010 than they netted and their profits were lower than they have been since 2005.  By the way - their profits represented a 10% return on assets?  Do you think that is unreasonable?


"The two articles I linked above explain pretty clearly how that "magic" would happen"

No they don't.  If pretax profit is x and taxes are y then net income is z.  x-y=z  If Y goes up (higher taxes) than either z (net profit) goes down or the company will have to raise prices (or other lower costs) to make pretax profit go up.  Simple accounting.

" brings up a whole slew of articles that document this."

And I show you the ExxonMobile annual report that show those undocumented articles are wrong.  Or is ExxonMobile lying to the SEC?

"one can discontinue oil subsidies without overhauling the entire tax system" 

One can but that is not what Ryan Boehner et al are proposing.  They know better.


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