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The Bookworm Sez: Be the best at being your own boss

Another desk at the office is empty this week. Another co-worker packed up, leaving the place short-handed. Another downsize, and another reason for worry. What will you do if you’re next? You can’t just start over but you can’t retire yet, either. So read the new book “Be Your Best Boss” by William R. Seagraves, and see if you have what it takes for a new beginning. William Seagraves likes to drive. When he’s with friends or colleagues, he’s always the first to offer his car, which is a good metaphor for his worklife: he likes to be in the driver’s seat in business. Yes, he enjoyed some autonomy in his last position, but he says, “I could not stand (the) lack of control.” Seagraves left his corporate job and tried his hand at being an entrepreneur (“That scary twelve-letter word”) in a few different ways before he discovered something he liked. Today, he runs a successful company that helps entrepreneurs get started; in this book, he offers guidance on deciding if owning a business is for you. First: what’s your pain? Are you being forced out by younger workers? Downsized? Or are you disillusioned with corporate life? What are your passions? Knowing answers to those questions will help winnow your options and overcome the “Yeah, Buts.” Look at your skills and experiences and understand that you’ve already won half the battle. You know how to play nice with others. You’ve grown a thick skin, “practiced making money,” and learned the rules of a lot of games. Many of the traits you’ll need to be an entrepreneur are inherent in you now. Next, take the quiz Seagraves includes and understand that “size matters.” Are you more of a “Company of One” kind of person? Would you be better as “Boss of a Few”? Is a “Business of Many” more your style? And what about a franchise? Know the pros and cons of these entrepreneurial methods, take things “one step at a time,” keep in mind that change is the “only constant,” and remember that “… a smart business owner always plans for the exit, and there are more options than you might think.” Self-employment: the most frustrating, irritating, horrible, wonderful, awesome, terrific thing you’ll ever do for yourself. Are you ready? “Be Your Best Boss” will help you decide. As you might expect, author William R. Seagraves is mostly encouraging in his book. There’s a lot of surface positivity here, but entrepreneurial readers with a mindset of doing it will absolutely find the help they need to do it right. I was happy to note plenty of quizzes to guide future business owners into the kind of endeavor that best fits their personality and work-style, and the Pros and Cons pages here are invaluable. While younger entrepreneurs might appreciate this book, it really seems to be more for older readers who’ve been in the workforce awhile. Corporate life may have soured for Boomers and early Gen-Xers, but “Be Your Best Boss” won’t leave them empty handed. Terri Schlichenmeyer is the author of The Bookworm Sez, which is published in more than 200 newspapers and 50 magazines throughout the U.S. and Canada. Schlichenmeyer may be reached at [email protected]

Movers and Shakers 3/27/16

Thompson & Co. Public Relations President and CEO Jennifer Thompson was inducted into the Anchorage ATHENA Society on March 21, along with 10 other members in the class of 2016. Anchorage’s most influential female leaders are invited into the society each year, chosen for their support of Anchorage’s business community and their dedication to helping business women in Anchorage. A program of the Anchorage Chamber of Commerce, the society works to encourage the potential of all women as valued members and leaders of the business community. Thompson took the reigns of Bernholz & Graham Public Relations under her mentor, ATHENA Society member Robbie Graham, and purchased the PR firm in 2009. As president and CEO of Thompson & Co. PR, she’s more than doubled the agency’s size, diversified its clients, grown the agency’s New York City office and recently opened a Houston, Texas, office. Residential Mortgage announced the hiring of Wasilla Branch Manager Gwen Greenup, and Mortgage Loan Officer Susan Fitzgerald-Brinegar. Greenup joins Residential Mortgage with 10 years of experience in mortgage lending, most recently working at Alaska USA Mortgage Co. She is a U.S. Coast Guard veteran. Greenup has lived in Alaska for over 28 years, enjoying family, boating, cross-country skiing and hiking. She volunteers with the Valley Board of Realtors. Fitzgerald-Brinegar joins the Residential Mortgage team with four years of experience as a loan originator after a career in real estate. She has been in Alaska for over 20 years and is an active volunteer with Beta Sigma Phi, the Valley Board of Realtors, The Children’s Place and Homeless Connect.

Army officially delays JBER force cut

The U.S. Army has officially announced that it will delay the long-dreaded reduction of 2,600 soldiers from the 4-25 Infantry Brigade Combat Team stationed at Joint Base Elmendorf-Richardson. Alaska’s Congressional delegation hailed the delay as a win for both national security and for Alaska, which draws substantial economic benefit from troops and their families. Army officials first announced plans to cut 2,600 soldiers from the 4th Airborne Brigade Combat Team of the 25th Infantry Division, also known as the 4-25, last July as part of an Army-wide cut of 40,000 troops. The full division stationed in Alaska is about 4,000 troops. All three members of the Alaska Congressional delegation decried the withdrawal as short sighted and potentially dangerous in the face of chilly Russian-U.S. foreign relations and other political issues in the Pacific Rim and Arctic. 
“This is good news for Alaska — from the moment the Army proposed to eliminate the 4-25 Airborne Brigade I knew that it was shortsighted and the direction of world events would ultimately prove that,” said Senator Murkowski in a release. “Whether measured by North Korea's provocative actions this month, our discomfort with Russia's military path, the need for troop strength to support the strategic balance to the Pacific, or emerging challenges in the Arctic, maintaining Army strength in Alaska right now is the right answer.” Rep. Don Young praised the delay, but said Alaskans should not get too excited until the possibility of a troop withdrawal is completely off the table. “While today’s announcement comes as great news for Alaska and the nation, we must not rest on our laurels,” said Young in a release. “Instead, we must continue to fight to ensure this reduction is overturned so JBER’s 4-25 can continue its status as the only airborne brigade in the Pacific.” The announcement comes on the heels of U.S. Army Chief of Staff General Mark Milley’s public announcement that he wants to delay proposed force reductions at least a year in testimony to a Senate committee Feb. 24. The revelation came as Murkowski questioned Milley during a Senate Appropriations Defense Subcommittee hearing. Local leaders had worried the troop reduction would further damage Anchorage’s economy, already in a tenuous situation as rock-bottom oil prices have led to multi-billion dollar state budget deficits and growing job losses in the oil and gas industry. The 4-25 also just completed a training exercise at Fort Polk in Louisiana with a full Airborne Task Force of nearly 1,600 troops to show the value of the full force, according to a U.S. Army Alaska press release. U.S. Army Alaska officials asked branch leaders to consider training with the full force last year after the Army directed the 4-25 to downsize to an Airborne Task Force of 1,046 soldiers as part of the effort to restructure to a smaller, more agile force, the release states. The release stated that the exercise at Fort Polk validated the 4-25 as “the only U.S. airborne unit in the Pacific region capable of performing forcible entry operations.”   DJ Summers can be reached at [email protected]  

Cultivation licenses dominate marijuana applications

The first batch of marijuana business license applications is available to the public, and so far Alaskans have more interest in growing than selling. The Marijuana Control Board began accepting license applications on Feb. 24, but only made them available to the public March 14. Public figures from various marijuana industry and political groups have filed, including members of the Marijuana Control Board itself and the Alaska Marijuana Industry Association. The Marijuana Control Board received 198 different applications as of March 17, but many applicants submitted duplicates, an issue raised by Marijuana Control Board Executive Director Cynthia Franklin the first week after submissions began.  After duplicates are removed, the board received applications for 175 individual licenses, submitted by 136 individuals or groups of individuals acting as a single agent. By far, more Alaskans have applied for cultivation licenses than any other license type. Of 175 licenses, 117 are for cultivation — 40 for limited cultivation, which applies to grow operations 500 square feet and under — and 77 for standard cultivation, which has no upward limit.  There are 43 applications for retail establishments. Marijuana product manufacturing licenses, which include edibles, number six, while concentrate manufacturing facilities number seven. Only three people have submitted applications for testing facilities, which all cannabis products must pass through to be legally saleable. Both are located in Southcentral Alaska — two in Anchorage and one in the Matanuska-Susitna area. The numbers expose several cracks in the ongoing struggle for marijuana businesses to get their establishments running quickly in spite of tight zoning regulations and local government actions. Some applications are submitted in unincorporated Mat-Su Borough areas, which could outlaw commercial marijuana as soon as October, while others are using only tentative addresses. The current number of applications would put Alaska at roughly half the concentration of marijuana licenses per capita compared to other states that have legalized recreational use. As of now, only a few weeks into accepting licenses, Alaska would have one recreational marijuana license per every 4,200 residents. Colorado has one marijuana license per every 2,200 residents, though that ratio includes medical facilities, which do not exist in Alaska. Many applications are co-located; retail marijuana dispensaries and cultivation facilities, for example, are a popular duo. Several license applicants even go for a triple, co-locating product or concentrate manufacturing with retail and cultivation. The Marijuana Control Board received 50 of these stacked license applications, or 25 pairs.   Notable applicants Among applicants is Brandon Emmett, one of two designated industry representatives on the Alaska Marijuana Control Board. Emmett has applied with two associates for three separate licenses in Fairbanks, including limited cultivation, standard cultivation, marijuana product manufacturing and marijuana concentrate manufacturing. Kim Kole, a member of both the Alaska Marijuana Industry Association and the Coalition for Responsible Cannabis Legislation, has applied for seven licenses, all in Anchorage, more than any other individual or group of individuals statewide. These include five applications for retail establishments, each located at different addresses throughout Anchorage. Two include co-locations with standard retail cultivation facilities. Rather than trying to dominate the Anchorage market, Kole said she’s only trying to keep her place in line by getting the ball rolling on all potential locations. She said she didn’t end up securing several of the addresses for which she applied – which she expected. Licenses cost nothing to initiate, and potential landlords are constantly pulling out of potential leasing opportunities to marijuana businesses. “Honestly I’m surprised more people didn’t seem to do that,” Kole said. Among other notable applicants is Sherman Ernouf, law partner of Anchorage attorney and former Anchorage mayoral candidate Dan Coffey, has applied for an Anchorage standard cultivation license. Coffey also acts as filing agent for other marijuana license applicants.   Regional preferences Of the 175 licenses, Anchorage claims the largest interest for marijuana business, with 46 licenses in Anchorage, four in Eagle River, and one in Girdwood. In Anchorage, more interest lies in cultivating than in selling, but only by a hair. The Marijuana Control Board received applications for 21 retail stores, 18 standard cultivation licenses and four limited cultivation licenses. Anchorage will feature quite a few of the brewpub-style, co-located marijuana outlets. Of Anchorage’s 46 license applications, 18 are located at the same address, meaning nine retailers in the area will be growing their own product on the premises. Two of the three applications for marijuana testing facilities are located in Anchorage. The Interior has a clear preference for cultivation. Of 22 license applications located in Fairbanks, 12 are for cultivation — 11 standard cultivation licenses and one limited cultivation license. Only five individuals have made applications for retail outlets. The two applications for North Pole businesses are both for cultivation, one standard and one limited. Fairbanksans also submitted four product manufacturing applications and one concentrates manufacturing application. A dozen of Fairbanks’s licenses are concentrated in only four addresses. The Mat-Su Borough will hold a referendum on Oct. 4 that would ban all commercial marijuana activity in the unincorporated areas of the borough, but evidently, would-be marijuana entrepreneurs in the area are optimistic it won’t pass. Both Wasilla and Palmer have already passed bans on commercial cannabis activity, but a number of licenses have been filed for addresses in each area. Most are attached to addresses that fall outside city limits. Wasilla, like the rest of the state, focuses primarily on growing, with eight standard cultivation licenses and five limited cultivation licenses. Only three retail outlets have been applied for, along with two concentrate manufacturing facilities and one product manufacturing facility. Palmer reflects the same balance, with two limited cultivation licenses, two standard cultivation licenses, two retail stores, and one testing facility.   DJ Summers can be reached at [email protected]

Medicaid reform passes Senate

Medicaid has been a divisive topic in Alaska since Gov. Bill Walker announced his plan to expand the federal insurance program in the state early last year, but the Medicaid reform package that unanimously passed the Senate March 11 seems to be something lawmakers and health care leaders can agree upon. Sen. Pete Kelly’s Senate Bill 74 that was sent to the House after a 19-0 vote combined parts of the administration’s Medicaid reform and expansion bill with an earlier version of Kelly’s bill, both of which were introduced last session. The Department of Health and Social Services estimates the changes to the Medicaid system in SB 74, as it is currently constructed, would save the state more than $31 million right away in fiscal year 2017. Those savings are expected to increase to nearly $114 million per year by 2022 as the programmatic reforms are fully implemented. Kelly, a Fairbanks Republican and co-chair of the Senate Finance Committee, said the savings estimates are very conservative in discussion on the Senate floor before the vote on the bill. He also said prior attempts at Medicaid reform “missed the point” in trying to change patient behavior and therefore didn’t achieve meaningful savings. “(SB 74) is a reform bill that goes after the system, not after the recipient,” he said. Walker said in a statement to the Journal that he typically does not comment on legislation until it reaches his desk, but that he is committed to working with the Legislature on Medicaid reform. Medicaid expansion funded The state’s Medicaid expense has grown more than 70 percent in the last decade, from less than $400 million in 2006 to nearly $700 million this fiscal year at a time when the state is running $3.5 billion-plus annual budget deficits. The federal government is contributing more than $1.1 billion to Alaska’s Medicaid program this fiscal year. The ballooning cost of the program has been oft cited by legislators opposed to expanding it to a new group of beneficiaries, which Walker did last summer via executive order after the Republican-led majorities in the Legislature chose not to last year. A lawsuit against Walker by the Legislative Council challenging his authority to expand the program without the Legislature’s approval was dismissed in state Superior Court earlier this month. Republican leaders in the Legislature have said they intend to appeal the decision to the Supreme Court. The cost of the new class of Medicaid beneficiaries was fully covered by the federal government in fiscal year 2016, which allowed Walker to take the money without legislative approval, but will eventually require a 10 percent state match of about $20 million per year after 2021, based on DHSS enrollment estimates. The federal government’s 100 percent match ends at the end of 2016, meaning the state must begin contributing a match for the last half of fiscal year 2017, which runs through June 30 of that year. The state’s first payment for the new Medicaid recipients, estimated at $3.8 million based on enrollment projections, was funded in the operating budgets passed by House and Senate earlier this month, according to the offices of the Finance Committee chairs in each body. House Bill 227, a Medicaid reform package introduced by Rep. Paul Seaton, R-Homer, passed from the House Health and Social Services Committee to Finance March 9. Federal dollars make up savings By far the most of the forecasted savings to be wrung from SB 74 — $29 million in 2017 growing to $97 million in 2022 — would come from getting more Medicaid services for Alaska Natives fully covered by the federal government. Care received by Alaska Natives enrolled in Medicaid from IHS and Tribal health providers has long been fully funded by the federal government. Changes to federal rules within the last year expand what the feds consider to be received through an Indian Health Services or Tribal health facility. “The policy changes basically broaden what’s considered a service delivered through a Tribal facility to include the related transportation costs and also to include referrals out to other providers from the Tribal system when certain conditions are met,” DHSS Deputy Commissioner Jon Sherwood said in an interview. Federal funding will also now cover 100 percent of the Medicaid expense for Alaska Natives in long-term care facilities outside of a Tribal network. Previously, the match for all care received by Alaska Natives from non-IHS and Tribal facilities was 50 percent, similar to the match for Medicaid services to the broader public. Managed care SB 74 would also require DHSS to implement a primary care case management system to push Medicaid enrollees towards primary care first and away from potentially unnecessary and more expensive specialty provider and emergency room visits. Alaska Primary Care Association Executive Director Nancy Merriman said she doesn’t know what the case management system would look like yet, but hopes it “takes the form of a primary care health home for Medicaid enrollees where that practice has the ability to provide comprehensive and coordinated care for patients.” Included in the optimal system model would be services across the provider spectrum and care coordinators, particularly for individuals with chronic issues, to assure critical health information reaches from one provider to another and help in managing everything from prescriptions to appointments, according to Merriman. Overall, Merriman said she spent a substantial amount of time following the formation of SB 74 and commended the Senate Finance Committee for undertaking a “really thorough process of learning about all the different facets of Medicaid and then really listening to people and putting together a pretty good bill.” The bill also directs the Health Department to partner with a statewide hospital organization in developing a hospital-based approach to reduce over-utilization of emergency services. Sherwood said he expects to start talking with the Alaska State Hospital and Nursing Home Association about the directive if the bill is passed, as the idea was first floated by the organization. Also among the department’s duties would be establishing a medical assistance reform program that would, among other things, reduce travel expenses paid through Medicaid by requiring recipients to obtain care in their home communities whenever possible and expand the use of telemedicine for primary, behavioral and urgent care. Outside telemedicine allowed To make telemedicine providers as accessible as possible, the Department of Commerce, Community and Economic Development is directed to establish a business registry of telemedicine providers in the state. Telemedicine providers are required to be licensed in Alaska but do not have to be located in the state under the bill. Sen. Peter Micciche, R-Soldotna, a Finance Committee member, said on the Senate floor that telemedicine costs about a third of an in-person visit and one-tenth of most emergency room visits. “We are one of only two states that does not allow telemedicine to be practiced across state lines, this bill will change that,” Micciche said. Coinciding with the push to expand the use of telemedicine, the State Medical Board is also tasked with adopting guidelines for physicians who provide treatment or prescribe drugs without an in-person examination that are consistent with national guidelines for administering telemedicine. Behavioral health Also added to the state Health Department’s duties would be the management of a behavioral health system that integrated into the broader primary care system. In partnership with the Alaska Mental Health Trust Authority, the department would develop a plan for community-based behavioral health services that addresses related housing, employment and criminal justice issues. Mental Health Trust CEO Jeff Jesse said in an interview that the focus of the behavioral health reform is an attempt to elevate the treatment of behavioral, or mental, health issues to the primary care level. “We really want to integrate care so that the whole person is being looked at in as many settings as possible,” Jesse said. Prioritizing behavioral health treatment can address minor depression or substance use early on and prevent what can become extremely harmful and costly issues down the road if left untreated, he said. Sherwood echoed what others have said in regards to behavioral health reform, that everyone knows the cost savings are there, but they are hard to quantify because they stretch far beyond medical costs. “We know that when behavioral health issues are not addressed appropriately and quickly we see increased pressure on the criminal justice system, law enforcement, our courts, our correctional system. We see increased pressures on our child protection system; we see increased use of inappropriate services like emergency room services and other kinds of hospitalization,” Sherwood said. The Mental Health Trust’s role in reforming Medicaid goes beyond changing behavioral health practices for in the state to that of a funder, according to Jesse. The trust is in the process of considering a list of requests from DHSS to fund the drafting of federal waivers, provider assistance programs and consulting contracts for studies; “all those one-time expenses that, particularly in this fiscal climate, are pretty hard for the department to come by and hard for the Legislature to appropriate,” he said. In all, he said the self-funded trust could end up contributing several million dollars to the reform effort, which would likely require a restructuring of its current operations but also be worth the extra effort, Jesse said. He, like Merriman of the Primary Care Association, commended the committee for its thorough work on the far-reaching bill. Among the studies the bill calls for is a look at privatizing the Alaska Psychiatric Institute and the six state-run assisted living Pioneer Homes for elderly Alaskans. The original Pioneer Home in Sitka was a converted U.S. Marine barracks that first provided housing, meals and basic medical care to indigent elderly men in 1913, according to the Health Department. Pioneer Home residents applying for payment assistance would also have to show proof of a Medicaid application on the basis that Medicaid eligible individuals could have care partially paid for through the federal Medicaid match, a possible savings approaching $1 million annually, Micciche said. Health plans, opioid monitoring, fraud enforcement Additionally, the bill directs the Department of Administration to analyze the feasibility of establishing a health care authority to consolidate all state employee and retiree health care plans with local school district employee plans to maximize market purchasing power in an attempt to achieve lower insurance rates for the state. Beyond just Medicaid, SB 74 also requires providers and pharmacists to register with the state Prescription Drug Monitoring Program. The prescription drug database was established in 2008 as a voluntary program in an attempt to reduce the over-prescription of opioids and other addictive and controlled substances. Sen. Cathy Giessel said before the Senate vote that setting up the program was the first step of progress and “this inclusion in the Medicaid reform bill is the other half step.” Physicians and pharmacists would be required to search for a patient in the database before prescribing a controlled substance to see if the patient had also been prescribed the medication by another provider and could be “doctor shopping” as Giessel described it. The bill has an allowance for physicians and pharmacists to authorize a designee access to the database who would also register with for the program. Making participation in the Prescription Drug Monitoring Program mandatory will benefit all Alaskans, not just Medicaid beneficiaries, she said. Medicaid fraud is addressed in SB 74 through increased enforcement by the Department of Law and formation of the Alaska Medicaid False Claims Act. Largely in-step with federal law, the Medicaid False Claims Act would set civil penalties between up to three times the damages incurred by the state plus attorneys fees, but not less than $5,500 or more than $11,000 for each count. It would also set a statute of limitations of 10 years for any action to be brought against a provider or beneficiary accused of Medicaid fraud. Stricter fraud monitoring is expected to save the state up to $900,000 per year, according to the Law Department. The department requested $365,000 for two full-time positions to focus on Medicaid fraud for one year until the lawyers can pay for themselves. Criminal Division Director John Skidmore called the request a “put up or shut up” scenario in testimony to Senate Finance March 7. “If we collect the money, we’ve paid for ourselves and if we don’t, we’re not asking you to increase our budget, only to increase our authority to spend if we collect the money,” he said. Implementing the many changes in the bill — if it passes the House with a similar look — will also require seven new Health Department positions in 2017 and nine new staff in 2018. The department projects that number will decrease to five permanent positions once the transition period is complete in 2020. Elwood Brehmer can be reached at [email protected]

Banks, CUs haven’t seen downturn yet

Alaska’s state budget and economy hang over dangerous cliff, but the state’s financial institutions haven’t been pushed to the edge yet. Alaska’s banks and credit unions showed growth in 2015, driven by commercial lending growth statewide and optimism for housing markets in the Interior. “Wells Fargo has continued to see our Alaska business customers stockpile cash with total deposits topping $6 billion in Alaska for the first time,” said Joe Everhart, president of Wells Fargo Alaska region. “That’s an eight percent increase from year-end 2014 to year-end 2015. We have also seen steady loan demand with total loans at $2 billion in Alaska, up five percent over 2014. Wells Fargo provided more than $400 million in new business loans in Alaska in 2015, and we were the No. 1 (Small Business Administration) lender in Alaska for the eighth consecutive year.” Statewide, Alaska’s five largest state-based banks grew net income 5.5 percent throughout 2015, from $61.6 million in 2014 to $65 million. Collectively, the banks represent $6.2 billion in total assets, up from $5.9 billion. Banks increased their total loans by 13 percent to $3.1 billion. Tops in growth was Denali State Bank in Fairbanks, which increased its net income 11 percent in 2015 to $2.1 million. Denali State Bank President Steve Lundgren said a push in mortgages and commercial loans drove the income bump, which came with a sizable dividend for the bank’s investors. Denali State paid out nearly twice the normal dividend than in the previous year. “I think last year we had a couple drivers that helped with that,” said Lundgren. “We saw increased mortgage activity. We had focused on that. Our lending activity overall remained as strong as we could expect it to considering our geography and economy, largely as a result in increase in commercial lending activity.” Lundgren said no particular sector of the commercial world grew in particular; rather, traditional commercial loans and commercial real estate opportunities peppered the year. Denali State Bank also saw a $2 million jump in delinquent loan rates, the majority of which Lundgren said are Outside government-backed loans. Unlike some “doom and gloom” seers, he said, Denali State expects a healthy 2016. Lower oil prices rake the state’s budget, but Fairbanksans — whose homes are generally heated with heating oil, one of the largest household expenses — are reaping the benefits of a disposable income boost. Interior banks Denali State Bank and Mt. McKinley Bank remain hopeful for a construction uptick due to the 2014 U.S. Air Force announcement that Eielson Air Force Base is its preferred location for two new squadrons of F-35 fighters. An estimated 3,000 new Fairbanksans will be made in the process. The runner-up in growth as a percentage was the largest state-based bank. First National Bank Alaska grew net income 10.8 percent to $36.1 million. Growth was natural considering a 12 percent boost in total loans and leases, and a shedding of millions worth of delinquent loans. Public relations director Lyn Whitley said the bank’s strong balance sheet is due to deposit growth and steady growth in interest income. The bank’s $2.5 million increase in other real estate owned came mainly from land improvements to existing properties. Northrim Bank’s balance sheet showed a small downturn for 2015 with a 2 percent net income loss. Bank Executive Vice President and Chief Financial Officer Latosha Frye said the bottom line number is misleading after Northrim’s record-breaking 2014, in which net income increased 42 percent from the previous year. Northrim finalized its purchase of Alaska Pacific Bank April 2014, which gave the company access to the long-sought Southeast Alaska market. Northrim also bought the remaining shares of Residential Mortgage, which was already 23.5 percent Northrim-owned. The mortgage company is now a wholly owned subsidiary of Northrim Bancorp. When merger costs and new revenues are extracted, Frye said, Northrim Bank posted a 33 percent organic net income growth for 2015. Total loans and leases grew 6 percent. Like Lundgren, Frye said Northrim hasn’t yet noticed any impacts of the oil industry’s and state’s problems — she said Northrim still sees “stable demand” compared to this time last year, and no decline in credit quality — but she’s begun to see signals, and lacks the Lundgren’s federal spending-driven optimism. “We certainly expect it to be more challenging to grow,” said Frye. “To have a no growth year is not a goal of ours, but we know it’s going to be harder to grow, when the economy is projected to be flat to slightly down.” Frye said Northrim is noticing some customers appearing to prepare for an economic downturn by paying off debts ahead of schedule. “We have seen our most well capitalized and liquid customers are paying down some debt,” said Frye. “That’s a good thing as far as risk management goes, but of course has its own challenges for us.” Ketchikan-based First Bank had a modest 5.4 percent net income growth for 2015, expanding its loan portfolio by 4.3 percent. Alaska’s six credit unions also performed well in 2015, growing their collective income 23 percent to $67.9 million, driven by an overall 11 percent loan growth. Denali Federal Credit Union more than doubled net income to $4.9 million from $1.8 million. Alaska USA, the state’s largest credit union, drove hard in 2015 as well, growing net income from $34.9 million to $49.4 million with a 14 percent growth in total loans and leases. Matanuska Valley credit union reaped the benefits of a strong 2015 along with Interior and Anchorage, posting $4.2 million in net income, a 14 percent increase from 2014.  Denali big year buries losses in the average. Credit Union 1, Spirit of Alaska, and Juneau’s True North all posted net income decreases for 2015, at 25 percent, 6 percent, and 56 percent, respectively. DJ Summers can be reached at [email protected]

Cook Inlet seismic, exploration work underway

KENAI — Despite pessimistic oil and gas outlooks, two companies are conducting seismic data-gathering activities on the Kenai Peninsula this spring and another is planning more exploration work. Hilcorp Alaska is planning to gather more seismic data on the oil and gas beneath the southern Kenai Peninsula, and SAExploration, a Houston, Texas-based oilfield services company, is gathering 2D and 3D seismic data on an area of the northern Kenai Peninsula near Nikiski. After April 1, Furie Operating Alaska plans to use a jack-up rig to drill new wells in its Kitchen Lights Unit. Hilcorp, which is also based in Houston, contracted with Global Geophysical Services Inc. to do a seismic survey of the area east of Anchor Point. The exploration is planned to through roughly May 31, and will cover a scattering of different lands on the southern peninsula. The Alaska Division of Oil and Gas is working to respond to public comments and approve the application. The areas included will be near the North Fork of Deep Creek, an area south of Ninilchik on the Stariski Creek, the whole vicinity of Anchor Point, a patch of land north Homer on the South Beaver Creek and an area near the end of East End Road. Global Geophysical Services plans to primarily use shotholes as an exploration method, though vibroseis — using heavy trucks pressing plates to the ground to shake the earth and measuring the reaction on ground-based sensors — is still a possibility. The company plans to drill 800 shotholes, three inches wide and 35 feet deep, approximately 330 feet apart in the exploration areas. Shothole drilling will be supported by helicopters, and if necessary, the company will clear an 8- to 10-foot diameter space around each hole to allow access, according to the application. All the equipment and personnel will come from Deadhorse and Anchorage, setting up a base of operations on private property between Ninilchik and Anchor Point. However, the company may look to hire support personal and utilize services locally, such as housing and waste disposal, according to the application. “Efforts will be made to hire community members and utilize local resources for select support positions,” the application states. Some have raised concerns about the environmental impact of Hilcorp’s seismic work, though. Bob Shavelson, executive director of Homer-based conservation organization Cook Inletkeeper, wrote in a public comment on Hilcorp’s application that the company “does not have a realistic grasp of the complex and sensitive habitats in which it seeks to operate.” Shavelson called for more detailed information from Hilcorp about the fish habitat in the proposed exploration areas, saying the application did not include detailed enough information about stream crossings. He also noted that while the company treated shotline trajectory as confidential, it released that information at a community meeting in Anchor Point and to the private landowners. “While Inletkeeper is disappointed in the cursory information provided by the applicant to make important decisions around our invaluable salmon habitat, its intent is to help (Department of Natural Resources) and other state and federal agencies improve the process for assessing the impacts — and mitigating the impacts — from projects such as the South Kenai 2D program,” Shavelson wrote. SAExploration’s project is in a more limited space north of Nikiski and being conducted entirely from helicopters, according to the application, which was approved Jan. 8. The area includes 85 square miles in portions of the northern Kenai National Wildlife Refuge and adjacent to the Captain Cook State Recreation Area. The work was originally expected to run through April 15, but it may be done by the end of March, said Rick Trupp, the general manager for SAExploration’s Alaska operations. The company was contracted by Cook Inlet Region Inc., the Southcentral Alaska Native regional corporation, to do the exploration work, Trupp said. “We have a staging site that’s fairly close to the coast, and we’re supporting operations from on the refuge,” Trupp said. CIRI’s goal in the project is to gain more specific information about the resources that it is fairly confident are there, said Jason Moore, the senior director of corporate communications. It is a fairly small-scale operation compared to other seismic work, Moore said. “We’re confident there’s gas resources where we’re looking,” Moore said. “We’re trying to get some very specific data.” In addition to the Hilcorp and SAExploration projects, Furie has applied to conduct further exploration projects in its Kitchen Lights Unit near the west side of Cook Inlet. Furie plans to drill nine more wells over the course of the next five years, or roughly two wells per year, according to its permit application. The exploration will drill through the Tyonek and Hemlock formations into the Jurassic formation. To conduct the exploration, the company has brought a new jack-up rig to the Kenai Peninsula, the Randolph Yost. The rig is currently docked in Homer for mechanical modifications and will be deployed to the Kitchen Lights Unit when the drilling season opens on April 1, according to Furie Senior Vice President Bruce Webb. Webb said the company is ready to drill, but the rate at which the wells will be drilled will depend on what the Legislature decides about the oil and gas tax credit program. Furie is a relatively small company and has invested a fair amount in the Cook Inlet area and is just beginning to see the first money come back from its investments, he said. “We’re told ‘when is the first day we can be out there?’” Webb said. “A lot hinges on what the state does with the (oil and gas) tax credits.” Reach Elizabeth Earl at [email protected]

Alaska trawlers furious about Walker’s council nominations

Editor's note: This article has been updated to include comment from Alaska Department of Fish and Game Commissioner Sam Cotten. Two months after a heated meeting, trawlers are again accusing Alaska Department of Fish and Game Commissioner Sam Cotten of short-changing their industry.  Gov. Bill Walker submitted nominations to fill two seats of the North Pacific Fishery Management Council on March 9, sending waves of dissatisfaction throughout an industry segment that claims Walker’s administration is forcing it out of the process at the worst time possible. Walker nominated Buck Laukitis of Homer and Theresa Peterson of Kodiak to replace Duncan Fields and David Long among the 11 voting members of the council, one of eight regional councils established by the 1976 Magnuson-Stevens Act to oversee federal fisheries from three to 200 miles off the coast. The U.S. Secretary of Commerce ultimately selects each member, choosing either the governor’s stated preference or from his list of alternates. Of 11 voting members, six seats are reserved for Alaskans, including the commissioner of the Alaska Department of Fish and Game, currently held by Cotten. The remaining seats are reserved for the fish and game officials from Washington and Oregon, as well as a designated seat for the National Marine Fisheries Service Alaska Region. Fields has served his maximum of three consecutive, three-year terms. Long only served one term after being appointed by former Gov. Sean Parnell in 2013. Since Walker announced the nominations, trawl industry representatives have voiced a steadily building frustration with the his administration’s fisheries policy.  “There’s a strong anti-trawl message coming from this administration,” said Glenn Reed, executive director of the Pacific Seafood Processors Association. “The two appointees illustrate that really clearly.” Cotten did not respond to requests for comment before press time, but said on on March 17 that the Washington and Oregon council seats already provide ample represenatation for trawlers, the majority of whom port in the Lower 48, not Alaska. He reiterated his comments from the contentious February meeting, saying that the economic and cultural welfare of Alaska communities is the administration's goal. "We are trying to look out for the health of coastal communities," he said.  ‘Fair and balanced’ Trawl representatives say they bring in too much seafood to be left completely off the Alaska council delegation. “Right now, 90 percent of the 5 billion pounds caught off Alaska is caught with trawl gear,” said Julie Bonney, executive director of Alaska Groundfish Data Bank. “Now we have bycatch management tools in front of the council for Gulf of Alaska fisheries, and yet on the Alaska side of the council we don’t have anyone that really understands those fisheries.” In a release, Walker said his nominations provide “balanced and insightful experience.” Trawl representatives insist that Walker’s nominations run afoul of the clause of the Magnuson-Stevens Act which calls for “the Secretary, in making appointments under this section, shall, to the extent practicable, ensure a fair and balanced apportionment, on a rotating or other basis, of the active participants (or their representatives) in the commercial and recreational fisheries.” Both Peterson and Laukitis have opposed many policies in recent years supported by the trawl industry, and promoted others in opposition to the industry’s stakeholders. Most recently, Peterson opposed a proposal to establish rationalization programs in the Gulf of Alaska groundfish fisheries favored by the trawl industry during a February council meeting as a member of the Advisory Panel that’s made up of 21 fisheries stakeholders. Instead, Peterson voted to continue studying a proposal the trawl industry loathes which does not allocate harvest quota. Peterson said “large scale fishing operations and the processing sector are well represented both on the council and through dedicated participation,” and that she believes small-scale coastal residents need more help. “Through my years participating in the Council process, seven of them serving as an Advisory Panel member, I find the voice of the small-scale, independent fishing operations to be the most underrepresented group in the process,” said Peterson. “In order to maintain fair and equitable representation on the council we need to have council members who represent coastal community members and understand the challenges of living in remote regions.” Laukitis does not have experience on the council’s Advisory Panel, but has gone on record during council process opposing trawl-backed regulatory proposals. In an 2014 Homer News editorial addressing halibut bycatch, Laukitis advocated for deep halibut bycatch cuts for the Bering Sea groundfish trawlers, referring to Clem Tillion, former Gov. Jay Hammond, and former Sen. Ted Stevens as examples of sound fisheries management. As alternates to Laukitis and Peterson, Walker forwarded Eric Olson, Paul Gronholdt, Linda Behnken, and Art Nelson. None directly represent trawlers or processors. Screening process Trawlers claim nominees were chosen based on fealty to a specific vision of Alaska fisheries rather than experience. John Whiddon, a Kodiak city council member, had applied and was interviewed by Cotten along with Barbara Blake and Walker’s Deputy Chief of Staff John Hozey. Whiddon said the interview had two components. One asked a list of basic questions to determine fisheries management experience and familiarity with council process. The second probed for something deeper. “The second part was how supportive I’d be as a potential candidate of the state’s position towards the various fisheries,” said Whiddon. Whiddon said Walker’s team seemed to want to engineer the council so that “there wouldn’t be any real strong outliers in the Alaska contingent.” “It’s obvious the state has a direction they want to go,” said Whiddon. Bonney, executive director of the Alaska Groundfish Data Bank, was interviewed for a council seat. “It seemed to me they were looking for people who were all going to agree with a particular vision,” she said. “My feeling was, there’s two sides of fish. One is social justice and access and the mantra coming out of fish policy now, and the other side, which is economics. Fishing is about making money. I think they’re looking not so much about the division of return of dollars…but access to opportunities for small boat participants.” Certain applicants received no interviews at all, including trawler Jason Chandler, Anne Vanderhoeven, and Rebecca Skinner, an attorney and Kodiak Borough co-chair of the Kodiak Fisheries Work Group. Trawl representatives suspect the timing and reveals what they say is a pattern. “That’s sort of the way the commissioner is stacking the deck,” said Paddy O’Donnell, Kodiak resident and trawl operator who serves on the council’s Advisory Panel. At its December meeting, the council removed Mitch Kilborn of Kodiak’s International Seafoods of Alaska, and Anne Vanderhoeven, fisheries quota manager for Bristol Bay Economic Development Corp., a Community Development Quota group. In place, the council appointed Ben Stevens of the Tanana Chiefs Conference and Angel Drobnica of the Aleutians Pribilof Islands Community Development Association, another CDQ group, both of whom trawlers describe as “anti-trawl.” Before the Portland meeting, the AP changed leadership roles, voting to replace Ruth Christiansen with Ernie Weiss of Aleutians East Borough as chair, with co-chairs Matt Upton from U.S. Seafoods and Art Nelson from Bering Sea Fishermen’s Association. Trawl representation Trawlers argue their fisheries are the most important part of the Kodiak economy and other coastal economies with fish processing capability. In Kodiak, groundfish fisheries contribute to a year-round processor workforce, rather than the seasonal employment used by many other processing hubs. In Kodiak, an average of 1,500 employees work in processors per month. In all months except June-August — salmon fishing months — the majority of Kodiak’s processor poundage is delivered by trawl vessels. More Alaskans fish the Gulf of Alaska federal fisheries than non-Alaskans, though more non-Alaskans use trawl gear. According to permit data from the National Marine Fisheries Service Alaska Region, twice as many Alaskans fish groundfish in the Gulf of Alaska than do non-residents — which includes pollock, Pacific cod, and flatfish. NOAA federal permit manager Tracy Buck clarified that the agency does not monitor permits according to resident status, exactly. Rather, each permit is attached to a physical address; 65 percent of groundfish permits are attached to an Alaska address. Gulf of Alaska groundfish can be harvested by trawl or non-trawl gear, though the majority of the catch is taken by trawl. There are 1,209 limited license permits, or LLPs, for groundfish in the Gulf of Alaska: 1,062 non-trawl LLPs and 152 trawl LLPs. The numbers favor Alaska addresses, but the difference between trawl and non-trawl residency speaks to the nature of fisheries. Of the non-trawl permits, a majority of 70 percent trace back to Alaska addresses while just a third of the trawl LLPs have an Alaska address. Non-trawl permits include longline and pot vessels — typically smaller than trawl vessels with a substantially lower barrier to entry where cost is concerned. Larger and more expensive trawlers have the ability to move between Pacific Northwest and Alaska waters, leaving homeport in Seattle or Portland to prosecute groundfish in the Gulf.

Victors in suit against NMFS want hired skipper rule scrapped

The victorious plaintiffs in a case challenging a federal rule over hired skippers in the sablefish and halibut fisheries filed a motion Feb. 24 to vacate the National Marine Fisheries Service action. Fairweather Fish Inc. and Ray Welsh filed suit against the National Marine Fisheries Service, or NMFS, in 2014, following the finalization of a regulation that prohibited the use of hired skippers to harvest halibut and sablefish quota acquired after Feb. 12, 2010. A U.S. District Court judge in the Western Washington District ruled in their favor on Jan. 13, finding that the regulation didn’t meet legal muster. The court ruled that NMFS violated the Administrative Procedures Act, and failed to ensure the new rule complied with National Standards 9 and 10 of the Magnuson-Stevens Act. Judge Benjamin Settle asked the parties for briefings regarding remedy, and the plaintiffs are now requesting that the court simply throw the rule out. “To remedy these violations of law,” the motion reads, “plaintiffs respectfully request that the court vacate the final rule and remand to NMFS for further review.” The Magnuson-Stevens Act was passed in 1976 to govern all federal fisheries in the U.S. It established an Exclusive Economic Zone from three to 200 miles off the U.S. coast, and created eight regional fishery management councils to govern. The act, or MSA, has 10 National Standards, or guidelines that mandate fisheries management goals. National Standard 9 requires regulations to minimize bycatch and bycatch mortality; National Standard 10 requires regulations to prioritize human safety at sea. The court ruled that NMFS failed to consider either when it approved the hired master prohibition. “A fundamental purpose of the halibut and sablefish IFQ program is to reduce bycatch in those fisheries. Yet, the final rule increased bycatch,” reads the plaintiffs’ motion to vacate the rule. “Likewise, by forcing disabled individuals to be onboard their vessels, the final rule decreased safety at sea.” Rather than tune up the rule, the plaintiffs argue that it should be scrapped, citing an earlier case against the U.S. Department of Energy: “When a court determines that an agency’s action failed to follow Congress’s clear mandate the appropriate remedy is to vacate that action.” The hired master rule was a perceived loophole in the federal quota systems installed in the North Pacific, following a derby-style fishery that was both dangerous and over-capitalized. In 1993, the North Pacific Fishery Management Council created an Individual Fishing Quota, or IFQ, program for halibut and sablefish in the North Pacific. The program, ultimately approved by NMFS through the Secretary of Commerce, assigned quota shares to fishermen based on their historical participation in the fishery, and provided for the transfer or sale of those shares among fishermen. The IFQ system allowed for some initial quota recipients to use hired skippers to fish quota for them as long as the quota holder retained more than 20 percent interest in the vessel. They also had to have traditionally used a hired skipper to fish. The North Pacific council, believing that the hired skipper exception was allowing for overconsolidation of quota shares among owners not required to be onboard the vessel, passed a rule in 2013 that prohibited the use of hired masters to harvest any quota acquired after Feb. 12, 2010. However, the council did not set the control date until February 2011, which was after several share transfers had occurred and been approved by NMFS. The plaintiffs argued that the council’s action was an illegal retroactive rule, and that it violated the Rehabilitation Act by disqualifying a disabled quota share owner from the fishery by requiring them to be on board the vessel. The judge did not rule on either the retroactive or Rehabilitation Act claims, stating that the violations of National Standards were enough to determine the final rule was improperly implemented. DJ Summers can be reached at [email protected]

Operating budgets pass; Legislature turns eyes to revenue

The Alaska Senate voted 16-4 on March 14 to approve an $8.73 billion state operations budget that includes $571 million in cuts and sets up the full Legislature to focus on long-term revenue sources. The Senate’s budget will be combined with an $8.66 billion version the House passed last week. A final, compromise version of the budget is not expected until the end of the legislative session, after lawmakers have figured out how to pay for it. With the state considering a $3.7 billion deficit due to low oil prices, the next question is whether to cover the deficit with savings from the $8.2 billion Constitutional Budget Reserve or to come up with additional revenue from taxes or the earnings of the Alaska Permanent Fund. As in the House, the Democratic-led minority on March 14 attempted to amend the budget to address what it saw as problems with the bill drafted by the Republican-led majority. Again, similar to the House proceedings days prior, all the amendments were resoundingly defeated. “This budget still leaves unscathed hundreds of millions of dollars in corporate welfare,” said Sen. Bill Wielechowski, D-Anchorage. “These are tough financial times for Alaska, but when the boat takes on water, you shouldn’t be throwing overboard foster kids.” Both the House and Senate cut $2 million in pre-kindergarten grants from the Department of Education, which follows Gov. Bill Walker’s budget proposal submitted to the Legislature at the start of the session. Walker was criticized by the minorities in the Legislature for the cut when his budget was released. Sen. Pete Kelly, R-Fairbanks and co-chairman of the Senate Finance Committee, said the thinner budget means the “people of Alaska are somewhat assured we’re somewhat committed to cutting the budget” before trying to raise more revenue. He also said the Senate is passing its version of the budget early, so it has time to consider revenue. “We’ve never even been close to operating on this timeline,” he said. In a March 15 press briefing Kelly reiterated the sentiment that has come from leaders of the majorities in both bodies that tax increases are almost certainly off the table until this year. The focus this year is on reducing spending and harnessing revenue from the Permanent Fund investment returns before taxes are used to close the deficit as a last resort. Republican leaders have said they are comfortable with running deficits for a couple years to see if oil prices rebound before tax increases are accepted. The exception to that is a change to the state’s oil and gas tax program. The state’s obligation for refundable tax credits has become a $500 million-plus budget line item in recent years. While Republicans have picked apart Walker’s legislation to overhaul the program and say drastic changes could further impact an industry that is already severely hurting from low oil prices, they have also acknowledged the state’s status quo outlay is unsustainable. Both budgets currently fund only the state’s absolute minimum obligation of $73 million for refundable credits this year, with the expectation that money will be added when changes to the program are finalized. Bills to raise Alaska’s fuel taxes, which are some of the lowest in the nation, are the only tax proposals of Walker’s suite of industry and personal tax increases to move out of committee so far. Meanwhile, Gov. Bill Walker said a fiscal plan is needed this year to address the multibillion-dollar deficit Alaska faces amid chronically low oil prices. “To continue to drag the black cloud of deficits over the top of the state of Alaska for the next several years is not a plan,” he said March 14, adding later, “The urgency is to do it this year so we can get on with our future.” The taxes are part of Walker’s New Sustainable Alaska Plan unveiled in December to balance the state budget with a combination of spending cuts and new revenue by 2019. The House and Senate budgets are similar in amount, but they differ under the hood. Speaking in the Senate Finance Committee last week, Kelly said the Senate decided to forego some budgeting strategies used by the House. To reduce the amount of money the Legislature needs to find this year, the House plans to roll money left over from last year into a handful of state trust funds, and then use those trust funds to pay for some operations. That plan, which includes $288 million in “found” money left in the Statutory Budget Reserve, was decried as a “shell game” by a pair of House lawmakers, and the Senate decided against the House’s approach. “It has been our intent to make the budgeting as simple or transparent as possible,” Kelly said. Instead, the Senate plan calls for spending about $342 million to pay down the state’s debt to the Teachers Retirement System and the Public Employee Retirement System. That will save between $16 million and $20 million per year in debt service payments, Kelly said. The Senate budget also provides more funding to the Alaska Seafood Marketing Institute and state tourism marketing than the House version does. The Senate budget provides more money for pre-kindergarten programs, and it does not fund a $30 million grant program for substance abuse treatment and prevention that was included in the House. The House version of the budget includes millions in inflation proofing for the Alaska Permanent Fund; the Senate version does not. The House version makes steeper cuts to the University of Alaska; the Senate version includes $100 million in undesignated cuts. According to a legal memo provided to Sen. Dennis Egan, D-Juneau, those undesignated cuts could be unconstitutional. The Senate budget could have included significant cuts to the state’s big-ticket construction projects, but each of the Senate minority’s amendments in that regard were defeated. The minority repeatedly suggested the state should divert previously authorized money for the Ambler Road, Knik Arm bridge, Susitna-Watana dam, and other construction projects to things like community revenue sharing, grants for seniors, and public broadcasting. Each time, the majority said no. The closest vote came when Egan proposed diverting money from an Anchorage road project to the Alaska Marine Highway and state revenue sharing, which sends money to hundreds of towns and cities across the state. “The marine highway system is not a choice or convenience ... it’s vital for our region’s commerce and transportation,” Egan said. Egan’s amendment was defeated 6-13, with the minority joined by Sen. Gary Stevens, R-Kodiak, and Sen. Bert Stedman, R-Sitka. Sen. Donald Olson, D-Golovin, walked out of the room for the vote. At the end of the floor session, Egan was one of the four votes against the full budget. “I just really am deeply disappointed in what they did to the marine highway system,” he said. “The ferry system has taken a disproportionate cut, and I really think they ought to be fairer. This story includes reporting from James Brooks of the Juneau Empire, Elwood Brehmer of the Alaska Journal of Commerce, and Becky Bohrer of the Associated Press.

Movers and Shakers 3/20/16

The Alaska Air Carriers Association scholarship, underwritten for the last four years by Crowley Fuels in Alaska, was recently awarded to Brandon Smothers, a high school senior at Interior Distance Education Alaska in Fairbanks. Smothers, a Talkeetna native, will enter University of Alaska Fairbanks this fall to pursue a degree in aeronautical engineering. Don King, senior account executive, highway sales for Crowley, presented Smothers with the $3,000 scholarship at AACA’s 50th Annual Convention in Anchorage. Smothers’ love of aviation began at the age of 12 when he joined the nationally-recognized Talkeetna Build-a-Plane program where he learned valuable skills like sheet metal fabrication and repair, riveting, electrical repair and welding, as well as project management and leadership. Soon after joining the program, he began flight training and has since logged over 50 hours. Because of his excellent work and dedication to the TBAP program, Smothers has been selected to attend multiple simulator sessions with both UPS and FedEx, and has worked as an intern for air-taxi company, K2 Aviation. He expects to complete his private pilot training this spring. The Mat-Su Health Foundation recently welcomed Jim Beck and Vandana Ingle to its team. In addition, Desiré Shepler was promoted to director of a community initiative supported by the foundation called R.O.C.K. Mat-Su (Raising Our Children with Kindness). Beck joined the foundation staff as a program officer, and he is leading the Healthy Aging focus area. He previously served as executive director of Access Alaska Inc. He holds a master’s degree in public administration with a nonprofit management concentration from the University of Colorado at Denver, and a bachelor’s degree in elementary education from the University of Alaska Anchorage. Ingle was hired as a program associate to support the foundation’s program team in implementing grant programs and other strategies to further the organization’s mission. Ingle previously served as director of development and communication at Frontline Mission. She earned a master’s degree in communications media for children from SNDT College, India, a bachelor’s degree in ministry from Nazarene Bible College in Colorado Springs, and a bachelor’s degree in commerce/banking and finance from the University of Poona, India. In her new role as director of R.O.C.K. Mat-Su, Shepler oversees a collaborative project working towards increasing family resilience and creating a culture that supports children and families, as well as reducing child maltreatment and number of Adverse Childhood Experiences Mat-Su Children experience. Prior to her promotion, Desiré was a program officer with the foundation. She holds a master of public health degree from the University of Alaska Anchorage, as well as a bachelor’s degree, also from the University of Alaska Anchorage, and an associate’s degree from Mat-Su College. She received an academic scholarship from MSHF in 2010, the first such scholarship recipient who went on to employment with the Foundation. Effective Feb. 18, Bill Cohen, PLS, retired from R&M Consultants Inc., where he served as senior vice president of Geomatics since 2008. Bill Preston, PLS, GISP, has been named as the firm’s new vice president of Geomatics. The Geomatics Department includes land surveying, right of way services and geographic information systems. Preston has been with R&M since 2000 and has more than 15 years of experience in field and office work. Preston holds a bachelor’s degree in geomatics from the University of Alaska Anchorage. He is a professional land surveyor licensed in Alaska and a certified GIS professional. Cohen joined R&M in 2008. Over his 40-year surveying career, he participated in hundreds of surveys for municipal agencies and performed surveying and mapping on many large projects throughout Alaska, including projects for Anchorage Water & Wastewater Utilities, Municipality of Anchorage, Parks and Recreation, Heritage Land Bank, Alaska Department of Transportation & Public Facilities, U.S. Army Corps of Engineers, Alaska Railroad Corporation, UAA and Anchorage School District. Anchorage Economic Development Corp. added Natasha Price as its new communications coordinator. Price joins AEDC following her role at Spirit of Youth where she was responsible for social media and communications. Born and raised in Anchorage, she earned a bachelor’s degree in languages and journalism from the University of Alaska. Price has immersed herself in the Anchorage community through service on the Anchorage Youth Development Coalition Leadership Team, the 90% By 2020 Community Will-Building team and her involvement in organizing the LovAlaska Youth Pick.Click.Give. campaign.

Alaskans note lack of input in pushback against Arctic plan

Alaska’s leaders in Juneau and Congress had harsh words for a joint March 10 statement from the White House and Canadian Prime Minister Justin Trudeau announcing plans for new emissions caps on the oil and gas industry and preservation of significant chunks territory in each country’s Arctic. The statement was released as Trudeau made the first official visit by a Canadian prime minister to the White House in nearly two decades. “Beyond deepening cooperation to reduce greenhouse gas emissions — which will have an outsized impact on the long-term health of the global Arctic — President Obama and Prime Minister Trudeau are announcing a new partnership to embrace the opportunities and to confront the challenges in the changing Arctic, with indigenous and northern partnerships, and responsible, science-based leadership,” the statement reads. It asks the leaders of all Arctic nations to embrace the objectives of conserving Arctic biodiversity, incorporating traditional indigenous knowledge in decision-making, supporting strong Arctic communities and building a sustainable economy in the region. The U.S. took chairmanship of the international Arctic Council last year from Canada, which held the post starting in 2013.  The council is a non-binding body of eight Arctic nations meant to spur positive relationships between the countries on Arctic issues. Secretary of State John Kerry led U.S. representation at an Arctic Council meeting in Fairbanks the following week. Sens. Lisa Murkowski and Dan Sullivan and Gov. Bill Walker all noted the omission of Alaska in drafting the 10-page agreement in formal statements of their own. The sentiment is similar to comments made following the president’s three-day visit to Alaska last summer, which was used as a vehicle to promote his climate change policies. “The Arctic presents great opportunity for our state and our nation to prosper in a global economy. However, the way to achieve that is by greater federal investment in our state’s Arctic development efforts, and not the restrictive policies that were presented today,” Walker said March 10. “It is important to consider the interests of all stakeholders in the region – whether it be focused on marine and wildlife preservation, international travel and shipping, or natural resource development. In doing so, we will ensure Alaska and the United States remain at the forefront of a flourishing Arctic economy.” Walker has said he pushes Obama to allow for oil and gas exploration on the coastal plain of the Arctic National Wildlife Refuge each time he meets with the president, despite actions from the White House to move further towards preservation, not development, of the area. Specifically, the U.S.-Canadian Arctic plan calls for protecting at least 17 percent of the countries’ Arctic land and 10 percent of far north marine waters by 2020. Obama and Trudeau also agreed to the “ambitious and achievable” goal of reducing methane emissions from oil and gas operations by up to 45 percent below 2012 levels by 2025, according to the statement. Further, both countries also endorsed the World Bank’s initiative to eliminate routine methane flaring from oil and gas facilities by 2030. Methane is the primary component of natural gas. “Recognizing the role that carbon markets can play in helping countries achieve their climate targets while also driving low-carbon innovation, both countries commit to work together to support robust implementation of the carbon markets-related provisions of the Paris (climate) agreement” reached in December, the joint statement reads. The countries would also be required to consult each other before approving future oil and gas development in the Arctic. Murkowski called the consultation requirement “simply stunning” in a release from her office. She also said by focusing almost solely on climate change in regards to the Arctic, the Obama administration fails to address other needs in the region, namely economic development. “Although the joint statement makes topical reference to consultation with indigenous people and the incorporation of traditional knowledge into decision-making, it also implies unjustifiable limits that will leave Alaskans standing at the door, rather than seated at the table, on Arctic policy,” Murkowski said. The announcement was not received kindly by the largest private employer in Alaska and the Native regional corporation for the North Slope. “Unfortunately, this is the treatment we’ve come to expect from this administration,” said Arctic Slope Regional Corp. president and CEO Rex A. Rock Sr. “Although these burdensome and largely unnecessary regulations will negatively impact the economy and the people of our region, Alaska’s North Slope, we continue to be completely left out of the conversation when the rules are being drafted. It appears, by all counts, the only side the administration bothered to reach out and listen to was the environmental groups, like the Center for Biological Diversity, World Wildlife Fund and National Resources Defense Council. “Make no mistake, this agreement isn’t the final word; we will fight for keeping the door of opportunity open across the Slope.” Environmental groups noted by Rock hailed the announcement as leadership towards protecting one of the world’s most delicate environments. To achieve the methane reduction goals the Environmental Protection Agency and Environment and Climate Change Canada will develop new regulations governing methane emissions from existing oil and gas sources as soon as possible. The EPA will quickly begin a process requiring producers operating existing methane emissions sources to provide data that will assist in developing “comprehensive standards to decrease methane emissions,” according to the joint statement. The proposed actions will harm the nation’s energy sector, and in-turn could impact the lives of hundreds of millions of Americans that rely on low-cost energy for their quality of life, Sullivan said, adding they could be “particularly devastating” for Alaska at a time when the state needs oil and gas revenue more than ever. “If the initiatives are enacted, less oil and gas will be produced in our state, more jobs will be lost, and state coffers will be increasingly diminished,” he said. “Now is the time when Alaska needs a federal government that will work with the state, instead of working against us to stymie economic opportunity.” Arctic fisheries were also addressed in that Obama and Trudeau are calling for an international agreement to preemptively close unregulated fishing in the central Arctic Ocean, an area that is increasingly accessible as summer sea ice continues its retreat. Elwood Brehmer can be reached at [email protected]  

AJOC EDITORIAL: Read their lips: No new taxes

With operating budgets passed in the House and Senate but not yet funded, at least one thing is now clear: Gov. Bill Walker’s proposals to raise taxes on individuals and businesses by nearly $460 million in the next fiscal year aren’t going anywhere. Senate Finance Co-Chair Pete Kelly, R-Fairbanks, couldn’t have been more blunt — or, frankly, rude — in response to a question about how the Legislature plans to pay for the fiscal year 2017 spending that figures to outpace revenue by $3.7 billion. At a Finance Committee press conference March 15, Kelly took the opportunity of a question that did not mention taxes to state unequivocally that he has no intention of plumbing a well to the private sector to fill whatever gap remains once some means of drawing from Permanent Fund earnings is chosen. Kelly noted he was speaking for himself, but with all but one of Walker’s proposed tax hikes still sitting in committee or yet to receive a hearing, there can be little doubt his opinion represents the Republican majorities. The only tax proposal that has moved out of its original committee is the doubling of the fuel tax from its current national low of 8 cents per gallon that is projected to raise about $49 million per year. The increase has received a large amount of support from stakeholders in the transportation industry who recognize the importance of maintaining the infrastructure on which their livelihoods depends. Of all Walker’s tax proposals, it’s also the fairest and most broad-based, especially at today’s depressed fuel prices. The Legislature still has a heavy lift ahead to select a means to use the Permanent Fund earnings and because it won’t raise additional revenue through taxes, the majority in the House is going to have to cut some deals with the minority Democrats in order to draw from the Constitutional Budget Reserve, or CBR. And just as an aside, Kelly and fellow Finance Co-Chair Anna MacKinnon, R-Eagle River, attempted to argue that a budget paid for with the Earnings Reserve and the CBR is “balanced.” A budget is balanced when revenue covers expenses. A budget that relies on savings is funded. There’s a huge difference, and as far as spin goes it can’t turn a pinwheel in a hurricane. Nevertheless, the majorities are correct that it is far better to make a relatively small draw from the CBR than it is to kick Alaska’s economic drivers in the guts while they’re down. The oil industry that’s propped up Alaska’s government spending for nearly 40 years is always a juicy target — for this governor in particular — but no knowledgeable observer could look at the daily stream of news about layoffs, delayed projects and idled rigs and think raising taxes on its members by some $100 million as Walker has proposed is anything but a terrible idea. Alaska’s most valuable fishery with the greatest number of workers — salmon — is in the midst of its own price crisis yet Walker wants to extract $18 million out of the industry by raising every fish tax. Minerals prices have also trended lower, and global sluggishness is reducing demand along with other factors such as transitions away from coal that caused Usibelli to halt exports last year. The governor and his Revenue Department asked the University of Alaska Institute of Social and Economic Research to study the effects of budget cuts on the broader economy. That ISER’s original analysis did not consider the impacts of private sector job losses was a glaring omission that still managed to be revealing. What we can see from the ISER study is that government job losses have a multiplier effect of less than one. A loss of 900 government jobs results in a loss of about 700 indirect jobs. ISER may not have looked at private sector losses and their multipliers, but the McDowell Group has done plenty of work in this arena over the years. What McDowell Group has found is that every direct job in oil production creates an additional nine in the private sector. When the role of oil taxes are accounted for, each oil industry job pays for another 10 state and local government jobs. Mining and fishing have 2-to-1 job multipliers according to various McDowell Group studies. Breaking it down, the Legislature’s priorities should be clear: Preserving private sector jobs is more important than preserving public sector jobs. As a business publication, we don’t want anyone to lose their job, but this is the tradeoff the state faces. Walker may not like it — and he’s certainly welcome to go out and advocate for taxing Alaskan incomes at a $400 million annualized rate — but refusing to raise taxes during an economic downturn is the right call from the Legislature. Andrew Jensen can be reached at [email protected]  

FISH FACTOR: Salmon permit values sink; halibut quota prices spike

Firesale salmon prices last year and a dim outlook for the upcoming season have caused the value of Alaska fishing permits to plummet. To another extreme, the prices for halibut catch shares have soared to “unheard of levels.” Starting with salmon permits: “A lot of people had disastrous seasons last year, whether it was drift gillnet or seine permits, and the values have declined dramatically,” said Doug Bowen of Alaska Boats and Permits in Homer. At Alaska’s bellwether fishery at Bristol Bay, a base sockeye prices of 50 cents per pound helped push drift gillnet permit prices into the $98,000 range, down from $175,000 last spring. “That may be the bottom; they seem to have come up a bit,” Bowen said, “but it’s still way below what they were trading for at this time last year.” The lower prices have spawned little interest in Bay drift permits; likewise, for salmon seine cards across the state. Seine permits at Prince William Sound are priced in the $150,000 range, down from over $200,000 a year ago. Kodiak seine permits have sunk into the mid $30,000s, and a Cook Inlet drift permit is valued in the $60,000 range. Bowen doesn’t expect the tide to turn anytime soon. “I’m afraid a lot of the same factors that contributed to the low prices we saw last year are pretty much the same this year. It’s not an optimistic outlook for salmon, and that is depressing the market for permits, and also the boats,” he added. “There are lots on the market, lots of sellers, not that many buyers. “There’s not a lot of extra money floating around in the salmon industry. So folks wanting to upgrade their vessels or pick up permits in another area, we’re just not seeing that happening.” The situation is slightly better in Southeast Alaska, where driftnet permits are getting a plug of interest. “More than I thought compared to all the other salmon areas,” said Olivia Olsen of Alaskan Quota and Permits at Petersburg. “We started at $78,000 in November and drifts now are going for $85,000 and they may creep up from there. Same with power troll permits. They’ve been pretty steady sales at about $35,000, which is down about $6,000 from last year, but still a pretty good price when you listen to all the talk about bad salmon prices. Hand troll permits also are on the upswing to $12,000.” Both brokers said salmon permit prices tend to tick upwards the closer it gets to salmon season. “I think the main issue is what we are going to see for prices, Bowen and Olsen said. Halibut share shocker This year’s small increase in halibut catches combined with hopes of a repeat of $6-$7 per pound prices was enough to send quota share prices skyrocketing. “There was a big rush after the halibut numbers were announced in late January,” said Olsen at Alaskan Quota and Permits in Petersburg. For the first time in nearly two decades, the coast-wide halibut catch was increased by 2.3 percent to nearly 30 million pounds. Alaska’s share of 21.45 million pounds is up 200,000 pounds from 2015. “I would say quota prices shot up $10 a pound since December,” Olsen said of Southeast shares. “We have current sales pending at $63 and $65 per pound, with rumors of going higher. Those prices are just unheard of, and to jump up that high in that short period of time — oh, my golly!” Are people buying at those nosebleed prices? “There’s a lot of people drawing the line, but there are a few who have bought. They’ve been waiting a long time for it and are just going to bite the bullet,” Olsen said. The same holds true for quota prices in the Central Gulf, Alaska’s largest halibut fishing hole. “Those are bumping up to $60,” said Doug Bowen of Alaska Boats and Permits in Homer. “We’ve had offers of $59 but no takers. Quota shares for the Western Gulf have increased by around $5 and are in the $40s if you can find it. There is strong interest there and also in Bering Sea regions. But it’s the same scenario: more buyers than sellers and the market is really tight.” Olsen added: “It will be interesting to see if these prices will last.” Got ice? A grass roots push is underway in Kodiak for a self-pay icehouse and crane at Oscars Dock at its downtown harbor. “It’s common in fishing communities throughout Alaska and the nation,” said Theresa Peterson, a fisherman and outreach director for the Alaska Marine Conservation Council. “It’s kind of strange that Kodiak doesn’t have this facility, being that we are the No. 2 port in the nation, and home to the largest and most diversified fleet in Alaska.” The need and benefits go far beyond commercial fishing, Peterson stressed. It would serve Kodiak’s five outlying villages, whose residents travel by boat to town and load/offload provisions, sport charter operators, recreational anglers and hunters. Fisherman Darius Kasprzak, who calls Kodiak’s lack of a public icehouse “flabbergasting,” is worried that a lack of it will drive the island’s fleet of small salmon boats out of business. “More processors are requiring RSW (refrigerated sea water) systems and are phasing out all the ice boats. Only a few processors are still accepting fish iced in holds, and most of those are grandfathered in,” Kasprzak said. “So all these little boats that don’t have room for RSW or don’t have the money are walking on pins and needles. But if there’s public ice that will change things dramatically.” Boat owners with RSW also would like to be able to grab ice so they could shut down the systems at night “and not have to listen to it,” he added.  “It’s worth it to buy some ice and chill off the top of the fish and not have to buy fuel and put wear and tear on the RSW,” he explained. Kasprzak said there is another reason ice is even more important for a water faring community. “Our waters are warming. Right now temperatures are at 7 degrees over normal. Last summer the water at Prince William Sound reached 60 degrees. Our RSW systems aren’t built to handle those temperatures. The Kodiak processors didn’t have enough ice for boats last salmon season because it was so hot. There’s more of a need now for a community ice house than ever.” The Kodiak City Council will hear the issue on March 15. Weigh in on water The Alaska Department of Natural Resources is considering revising its water management practices and wants input from the public. It includes regulations on water rights in streams, lakes, wells and other bodies. A DNR announcement said: “The department is soliciting feedback and comments from the public on how they would change or improve the existing regulatory framework related to water management or for suggestions and proposals which would improve the regulations related to water management before the formal process of drafting any proposed changes begins.” Comments are accepted through March 18. Send via email to [email protected] Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

EYE ON WALL STREET: A volatile month for stocks; eying Fund earnings bills

After a rocky start to the year, the financial markets settled down mid-February with oil and U.S. equities rebounding in the latter half of the month. The foreign equity markets have rallied a bit, but are still in a funk. Bond yields remain at historic lows. The 10-year Treasury yields 1.8 percent, which looks positively mouthwatering compared to Japanese and German government bonds that are flirting with negative yields. Dipping into the Permanent Fund As everyone knows, Alaska is facing some difficult fiscal decisions as a result of plunging oil prices and declining production. Approximately 90 percent of general fund revenue is directly tied to oil. Oil is just over $30 a barrel and the Department of Revenue is assuming $60 a barrel for budgeting purposes. At the $60 level, the state faces a $3.5 billion budget deficit both this year and next. We are spending $5 billion and taking in $1.5 billion. At current spending levels it would take a price of $115 per barrel to balance the budget. What to do? Well, we can’t just cut out $3.5 billion. The state’s annual domestic product, or GSP, is around $50 billion so $3.5 billion is 7 percent. Reducing spending by 7 percent of GSP (even forgetting about multiplier effects) would be disastrous. The Great Recession of 2008 saw the U.S. economy fall just over 4 percent and that was pretty scary, pushing unemployment up to 10 percent. The state has saved a lot to help us get through this current crisis, something we didn’t do in front of the economic crisis in the late 1980s. But we’re burning through that savings quickly. At current rates it would be gone in several years. There are three plans for addressing the budget crisis that are currently being debated in Juneau. I won’t go into the details, but all three draw on the Permanent Fund. The Governor’s plan (SB 128) is a bit more complicated (and comprehensive) than the other two (SB 114 and HB 224). Let’s ignore that in the interest of simplicity. Callan Associates, the longtime consultant for the Permanent Fund, was in town a few weeks ago and analyzed what these three plans would mean for the Fund. The firm analyzed the impact on the Fund of drawing roughly 4 percent to 5 percent net out of the Fund (actually the Realized Earnings Reserve) each year, depending on the plan. The Fund’s expected return over the long run is 6.9 percent, so that seems doable and would leave enough room for the fund to grow, albeit slower than before. To get a handle on how market volatility would affect the analysis, Callan ran Monte Carlo simulations over several thousand future market scenarios to look at the dispersion of results over 10 years for each plan. (APCM uses this technique for modeling balanced accounts and the probabilities of reaching horizon goals. It’s standard operating procedure in the asset allocation business.) Guess what? It looks like all three plans are reasonable and leave the Permanent Fund with a median real value of just over $50 billion at the end of 10 years — about where it is today. Each plan can withdraw at least $2 billion per year from the get-go to help with the budget deficit. A combination of cuts and tax increases would need to be debated and adopted to close the remaining $1.5 billion deficit. While tapping the Permanent Fund is not a perfect solution, doing so would buy some time to consider other options. What about the Permanent Fund Dividend? The Governor’s plan provides for a $1,000 dividend this year, followed by modest declines as oil production decreases over time. The other two plans allow for the existing dividend formula to play out for a year or two and then it will probably be up to the Legislature to decide if future dividends are feasible. If it is decided that the Permanent Fund should be used to help close the budget deficit, using the current payout method for the annual dividend would likely prove unsustainable. Under current laws the Legislature can only distribute earnings from the Fund for any public purpose (including dividends). However if there are no earnings reserves it would require a constitutional amendment (and vote of the people) to make a principal distribution. There is no easy or perfect answer in this situation, but moving forward with a plan that balances the budget over time is best done sooner rather than later. Jeff Pantages, CFA, is the chief investment officer for Alaska Permanent Capital Management, a $3.5 billion investment management and advisory firm located Anchorage.

Ahtna cites tax credits as it prepares to spud gas well

Ahtna Inc. is preparing a drill site near Glennallen to further its hunt for natural gas in the Copper River basin. The Copper River-area Alaska Native regional corporation is building a gravel road and four-acre pad now, with first drilling of its exploration well Tolsona No. 1 scheduled for next month, according to a March 12 company release. Tolsona No. 1 will be on state land about 10 miles west of Glennallen along the Glenn Highway. Ahtna President Michelle Anderson said in a statement that the company is anxious to get drilling after beginning the exploration application process nearly six years ago. “We are optimistic of a resource discover that will help address the rural energy crisis in the Ahtna region,” Anderson said. “A substantial discovery would benefit not only the Ahtna region but the state at large. It would provide a boost to the economy by putting Alaskans to work and help alleviate the high energy costs that many residents experience.” The proposed well depth of 4,500 feet will reach the targeted Nelchina sandstone formation, according to Ahtna. Drill work will be done with a Saxon rig owned by the global drilling company Schlumberger Ltd. Ahtna is partnering on the work with the Midland, Texas-based independent Rutter and Wilbanks, which hit gas when it drilled the nearby Ahtna 1-19 well in the mid-2000s. That well was abandoned, however, because of high-pressure water zones that were also encountered. Ahtna conducted more that 40 miles of seismic surveys last winter, the results of which led to the decision to drill this year, according to the company. Roy Tansy Jr., Ahtna’s executive vice president, testified to the House Resources Committee earlier this month that the company utilized the state’s Frontier Basin refundable tax credits for its seismic program and will do the same for drilling. The state covered about $2.4 million of the $3 million in seismic costs and the company expects to recover 73 percent of its drilling costs estimated at $10 million through the tax credit program. While Gov. Bill Walker’s proposed overhaul of the state’s oil and gas tax credit program does not touch the Frontier credits, Tansy urged the Legislature to extend them, as they are set to expire July 1, the start of the 2017 fiscal year. The Frontier Basin credits were established in 2012. “Ahtna would not be doing this exploration if the tax credits were not there,” he said. The Frontier Basin seismic credit can be used to cover 75 percent of costs up to $10 million for the first four surveys in the six Frontier oil and gas basins identified by the state. The drilling credit covers up to 80 percent of drilling costs up to $25 million, also on the first four wells in each of the areas. Once drilling of Tolsona No. 1 is done in May the site will be demobilized and cleaned and the road will be available for public access to the surrounding state land. Elwood Brehmer can be reached at [email protected]

Feds file to dismiss suit over Kenai River subsistence gillnet

The Ninilchik Traditional Council filed a response March 3 to a motion by the Federal Subsistence Board and U.S. Secretaries of the Interior and Agriculture seeking to dismiss a lawsuit filed last October. NTC filed the complaint after requests were denied by the board to remove federal fishing manager Jeff Anderson and to approve a subsistence gillnet on the Kenai River. According to the motion seeking dismissal by the federal defendants filed Jan. 25, the court should not take up the lawsuit because the Kenai River approval is ongoing. “Plaintiff lacks standing, and its claims are unripe,” reads the motion, “because its claims center around the (Federal Subsistence) Board and the in-season manager’s actions related to a gillnet fishery on the Kenai river, and the decision to authorize that fishery is not yet final.” NTC filed the complaint against Federal Subsistence Board Chair Tim Towarak, U.S. Secretary of Agriculture Tom Vilsack and U.S. Secretary of the Interior Sally Jewell. NTC disputes federal actions that closed subsistence fishing for chinook salmon last summer on the Kenai River because of conservation concerns and the refusal of Anderson to approve an operational plan for a gillnet on the Kenai River within the federal Kenai River Wildlife Refuge. In a divided vote, the Federal Subsistence Board approved the use of a subsistence gillnet on both the Kenai and Kasilof rivers in January 2015, drawing strong opposition from other stakeholders linked to Cook Inlet commercial and recreational fishing. So many people have challenged the proposal, the defendants argue among other administrative points, that the board still hasn’t authorized the operational plan for the fishery. “The board has not yet completed the process of determining whether to authorize the gillnet fishery,” reads the motion. “While it initially decided to authorize the fishery, multiple parties have filed requests for consideration, and that reconsideration process is still underway.” According to a previous Supreme Court decision, “when a motion for reconsideration is pending, an order under reconsideration is nonfinal.” NTC denies this argument on several grounds. First, NTC challenges that the 700-plus requests for reconsideration already filed don’t meet the criteria for the legal definition of a request, which can only be filed by a party “aggrieved by a (board) failure…to provide the priority for subsistence uses.” Because none of the request filers are subsistence communities directly impacted by Federal Subsistence Board actions, their requests cannot hold the process, according to the NTC response. “Defendant’s interpretation…would deny NTC the right to a meaningful subsistence fishing opportunity merely because someone who disagrees with the board, and who has no right to a judicial review, takes advantage of an ambiguous administrative position to delay the fishery for year,” the response reads. Further, NTC argues that the board characterized its two early special action requests as requests for reconsideration, and denied them. That makes the matter final, and the complaint timely. “The claims in NTC’s complaint stem from these final administrative actions…NTC’s claims relate to final actions and are ripe even under defendants’ reading of the applicable regulations,” the motion argues. NTC argues that the dismissal motion is disingenuous as the approval of the Kenai and Kasilof gillnets regulation already appeared on the Federal Register. “Indeed, the 2015 Federal Register notice in which the final gillnet fishery regulations were published makes the Board’s position clear: the gillnet regulations were effective, and thus final and ripe for the purposes of this litigation, on the date they were published,” according to the NTC motion. The denial is the latest in a back-and-forth between the federal government, NTC, and non-subsistence fishermen on the Kenai River. In January 2015, the Federal Subsistence Board, a multi-agency board that governs Alaska subsistence users, allowed NTC two community subsistence gillnets, one each on the federally managed portions of the Kasilof and Kenai rivers in the Kenai National Wildlife Refuge. As a condition, NTC would have to submit operational plans for each gillnet. The federal in-season manager Anderson, who works for the U.S. Fish and Wildlife Service, must approve the plan before either net can go in the water. The proposal passed 5-3, with the U.S. Fish and Wildlife Service voting against. Few besides NTC itself appreciated the gillnets. State and federal biologists opposed the gillnet idea on conservation grounds. More than 700 requests for reconsideration have flooded the Office of Subsistence Management urging a repeal; the previous record for such requests of a single proposal was six. Anderson reviewed and approved an operational plan for the Kasilof River sockeye gillnet on July 13, but did not approve the operational plan submitted for the gillnet on the Kenai River. In an emergency order, Anderson also closed all chinook fishing in the area, including subsistence fishing. Anderson argued that while the early chinook run did meet the lower end of the escapement goal, the low statewide numbers for chinook returns merited a conservation-minded approach. NTC Executive Director Ivan Encelewski said there were no conservation concerns, and that Anderson unfairly halted the fishery for political reasons. With a week to go in July, the Alaska Department of Fish and Game liberalized commercial fishing time for sockeye salmon and allowed the recreational take of Kenai River chinook salmon based on estimates that the minimum escapement goal would be met. The Ninilchik Traditional Council submitted two requests on July 17 and July 21 asking the subsistence board not only to rescind Anderson’s orders, but to remove Cook Inlet area subsistence fishing from the federal in-season manager’s authority. Further, NTC wanted to rewrite the proposal, requesting that the federal manager be forced to accept their operational plan. At a July 28 meeting in Anchorage, the board upheld Anderson’s decision to deny the operational plan and kept him as the manager of the fishery despite the council’s request to remove him. The special action request failed on a tie vote. Ninilchik Tribal elder and Council President Greg Encelewski later spared no venom, describing the board and Anderson’s management as “shameful.” DJ Summers can be reached at [email protected] Follow him on Twitter @djsummersmma.

Federal Subsistence Board restores Saxman’s rural status

The Federal Subsistence Board has ended a decade-long struggle for the Southeast Alaska village of Saxman by restoring its rural designation. As a formally recognized rural village, Saxman residents now regain subsistence hunting and fishing rights they lost in 2007 when the board declared the village “nonrural.” Tribal leaders expressed relief, saying their practical survival and cultural survival depend on subsistence rights. “The importance of being recognized as a rural community is acute for Saxman and is crucial to survival,” said Lee Wallace, Tribal President of the Organized Village of Saxman, in a release. “Subsistence is an essential cultural practice, a traditional worldview that is at the heart of surviving and thriving in Saxman,” In 2013, the Village of Saxman in Southeast Alaska filed a lawsuit against the board, the Department of Interior, and the Department of Agriculture over a 2007 board ruling that stripped the village of federal subsistence rights with a nonrural designation. A key part of qualifying for federal subsistence rights means having a rural designation. In 2007, the Federal Subsistence Board ruled that Saxman and its largely-Tlingit inhabitants would incorporate into the Ketchikan urban area two miles north and lose rural status, and therefore not qualify for federal subsistence rights. The Department of the Interior updated regulations in November 2015 defining which parts of Alaska are designated as rural. The new regulations restore Southeast Alaska’s village Saxman as rural, and establish a new process for making rural designations. The Federal Subsistence Board voted unanimously to adopt the rule proposed by the Secretaries of the Interior and Agriculture giving the board the authority to restore subsistence rights to Saxman under a new flexibility to make the numerous designations in Alaska that require rural or nonrural designation as a matter of policy. DJ Summers can be reached at [email protected]

FDA: No significant impact from test of modified mosquitoes

MIAMI (AP) — A field trial releasing genetically modified mosquitoes in the Florida Keys would not harm humans or the environment, according to documents released March 11 by the U.S. Food and Drug Administration. The agency’s Center for Veterinary Medicine released a preliminary finding of no significant impact for the trial of a method that aims to reduce populations of the mosquito that spreads dengue, chikungunya and the Zika virus among humans. The trial is proposed by the British biotech firm Oxitec. The Florida Keys Mosquito Control District wants to test Oxitec’s mosquitoes in a small neighborhood north of Key West. The FDA still needs to review public comments before deciding whether to approve the trial. But the tentative approval could make it easier explore similar trials in the Southeast or Puerto Rico, said Oxitec CEO Haydn Parry. “Time is not on our side here, if you look at how Zika has been spreading in Brazil and other countries,” Parry said in a conference call with reporters. “The sooner we can start the trial, the sooner we show what we can do.” Oxitec modifies Aedes aegypti mosquitoes with synthetic DNA to produce offspring that won’t survive outside a lab. Oxitec has conducted similar tests in Panama, Brazil and the Cayman Islands. With or without the test, the district is looking for additional options to kill Aedes aegypti, which it considers a significant and expensive threat. In a statement, executive director Michael Doyle said the district needs to be proactive, and the trial will need to determine how efficient Oxitec’s mosquitoes are at suppressing the local Aedes population. “A small trial like this is designed to see if highly reducing the population is possible with this technology here in the Keys. If so, we will then look at larger trial areas,” Doyle said. A residents’ group called the Florida Keys Environmental Coalition wants the district to instead try infecting mosquitoes with a bacteria that curbs their ability to transmit disease, arguing that Oxitec’s proposal is mostly marketing hype and won’t be subject to adequate federal oversight. In an email Monday to The Associated Press, the coalition’s executive director, Barry Wray, questioned the ongoing costs Oxitec’s method might incur. “Oxitec has exploited the fear surrounding Zika very effectively,” Wray wrote. “When you start looking at the quantity of mosquitoes they need to continuously provide, in order to keep problems under control, the numbers are astounding. So is the money required!” Doyle said the district is investigating several different technologies for eradicating Aedes mosquitoes, but those other methods take years to develop and Oxitec is furthest along. Oxitec developed the mosquito in 2002 and has been testing it outdoors since 2009, Parry said. The Keys district approached Oxitec about trying its technology in 2010. The company will cover the costs of the Keys trial, if it is approved, and a lab in Marathon where its mosquitoes will be raised already has passed U.S. government inspections. The company’s application allows for a trial lasting up to 22 months, but trials elsewhere have reduced mosquito populations in about six months, Parry said. Oxitec aims to eventually sell its mosquitoes and services in the way that other companies sell insecticides. The Keys district spends over $1 million a year to suppress up to half its Aedes aegypti population. Oxitec’s method would not increase the district’s costs but it would boost their suppression rates up to 90 percent, Parry said. Anti-GMO activists have criticized Oxitec’s trials, saying more proof is needed that stray female modified mosquitoes that leave the labs aren’t spreading genetic material through bites or that there are no other environmental risks, such as opening areas to infestation by another disease-carrying mosquito species. Modified females are manually separated in Oxitec labs from the modified males, which do not bite and are released to mate with wild female mosquitoes. In its preliminary finding, the FDA said it was “highly unlikely” that humans or animals bitten by female modified mosquitoes would be exposed to synthetic genetic material, and any bites wouldn’t be any different from bites made by a wild mosquito. It’s also unlikely that suppressing the local Aedes population during the trial would open the area to an infestation of another disease-carrying species during that period, the FDA said. The FDA also found no significant risks that the modified mosquitoes would disperse well beyond the trial area, develop resistance to insecticides or persist in the environment. “Based on the data and information submitted in the draft (environmental assessment), other submissions from the sponsor, and scientific literature, FDA found that the probability of adverse impacts on human or other animal health is negligible or low,” the finding said. A draft environmental assessment on Oxitec’s proposal will be available for public comment for 30 days. The FDA will review those comments and may require further documentation from Oxitec before deciding whether to approve that trial. There is no deadline for that decision, so no modified mosquitoes will be released anytime soon. The Centers for Disease Control and Prevention and the Environmental Protection Agency also have reviewed the proposal along with the FDA.

First-ever dissolving heart stent gets FDA review

WASHINGTON (AP) — A disappearing medical implant got a closer look from the Food and Drug Administration this week. The FDA met on March 15 to review Abbott Laboratories’ first-of-a-kind heart stent that dissolves into the body after helping to clear fat-clogged arteries. Abbott has asked the agency to approve its Absorb stent as an alternative to permanent, metal implants that have long been used to treat narrowing arteries that can lead to heart attack and death. But regulators have questions about the safety and effectiveness of the experimental device. In a review posted late last week, FDA scientists noted that rates of cardiovascular complications were actually slightly higher with Absorb than with older stents tested in a company study. Additionally, complications were more likely to occur when Absorb was implanted into smaller arteries. The agency will ask a panel of outside advisers to discuss the data and whether the device should be approved. A positive opinion from the panel, while not binding, would bring Absorb one step closer to the U.S. market, where some 850,000 patients receive heart stents each year. Stents are tiny, mesh-wire tubes that prop open arteries after they have been cleared of fatty plaque. They have grown into one of the most widely-used medical implants ever, but sales have been tempered by rare, risky complications. Researchers first added drug-coatings to the devices in 2003 to prevent arteries from becoming reclogged after implantation. But subsequent studies showed that stented arteries could still develop blood clots, potentially triggering heart attack and death. To address that risk, Abbott and other device makers began developing dissolving stents that would slowly melt back into the body like stitches. The Absorb stent, already sold in Europe, is made of a degradable material that’s designed to stay intact and release medicine for a year, then break down over the next two years. In the company study submitted to FDA, patients who got Absorb fared as well as those receiving Abbott’s older metal stent, Xience. However, FDA reviewers noted that the rate of complications was actually slightly higher with Absorb — 7.8 percent of patients, versus 6.1 percent of patients with Xience. While that difference was not statistically significant, the FDA will ask advisers if it has implications for Absorb’s safety. Additionally, FDA reviewers noted that complications appeared to increase when Absorb was placed in smaller blood vessels. That’s led Abbott to propose a warning to cardiologists not to use the device in vessels under a certain size, cautioning an increased risk of heart attack and clotting. The FDA will ask its experts whether that warning is adequate. Abbott followed patients for a year and measured a cluster of negative outcomes, including heart attack, repeat procedures to clear the artery and heart-related deaths. All patients in the study also received anti-clotting medications to prevent blood clots, standard medical practice for those receiving stents. Despite negative questions from the FDA, Wells Fargo analyst Lawrence Biegelsen says federal approval is likely. But he doesn’t expect Absorb to be a major seller, “given its shortcomings — difficult to use, numerically worse outcomes versus Xience, higher rates of stent thrombosis.” He estimates the device will capture just 5 percent of the U.S. market for stents, according to a research note. North Chicago-based Abbott competes against industry rivals Boston Scientific Corp., Medtronic Inc. and St. Jude Medical Inc.

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