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Mining sector in turmoil as Anglo American sheds jobs

LONDON (AP) — The decision by a London-based mining company to shed 85,000 jobs is the sign of a global industry in crisis, with conglomerates reassessing their huge operations to cope with a drop in demand from Chinese factories for metals and other raw materials. Anglo American said Dec. 8 it will shed some 63 percent of its workforce in a radical restructuring meant to cope with tumbling commodity prices. It will streamline its global business from some 55 mines to around 20. CEO Mark Cutifani said the drop in commodity prices requires “bolder action,” even though the company has delivered on performance and previous business restructuring objectives. He pledged to provide more details later. The dividend was suspended for the second half of 2015 and 2016. Investors reacted with dismay. The company’s share price fell 11 percent to 327.30 pence. Mining companies around the world are facing tough times as economic growth slows in China, whose manufacturers’ need for raw materials has driven a years-long boom in mining in countries like Australia and Brazil. China accounts for as much as 40 percent to 50 percent of global commodity demand, according to consultants PwC. Its economic growth is forecast to drop below 7 percent a year from double digits in recent years — and commodity prices are tracking it lower. “Mining companies are feeling the wrath of the collapse in commodity prices,” said Gianna Bern, who teaches finance at the University of Notre Dame in Indiana and expects others across the industry to also either cut or suspend their dividends to cope. “Companies are weathering some very tough economic times.” The price of copper has dropped about 30 percent in the past year; gold 11 percent; iron ore has about halved. Companies have focused on cutting costs and reducing capital spending, but market values have continued to decline among the top 40 companies — losing some $156 billion, or 16 percent, of their combined market value in 2014, PwC said. “With few exceptions, the commodity price outlook remains dim, forcing miners to keep up their guard,” PwC said in its report. “As the old saying goes, survival will be of the fittest, and for miners also the leanest.” Just as first there was a big boom in commodities, now there’s an equally big bust, said Julian Jessop, the chief global economist at Capital Economics. “I think the pendulum has swung too far to pessimism but as long as you have pessimism, you’re going to get these big cuts.” Anglo American is not alone. Shares in Glencore slid about 30 percent in one day in September amid concerns over its ability to service sky-high debts at a time of low market prices. Glencore shares have since stabilized as the company announced the sale of several mines, but they were down another 9 percent on Tuesday. Rival BHP Billiton fell 6 percent and Antofagasta 5 percent. But Anglo American is different from others in that two commodities in its portfolio — diamonds and platinum — are labor intensive to extract, said Kieron Hodgson, a mining analyst at Panmure Gordon & Co. The company said it provides some 40 percent of the world’s newly mined platinum from South Africa and Zimbabwe. De Beers and its partners produce a third of the world’s diamonds by value, employing more than 20,000 people around the world. As Anglo American moves to rationalize its business, it will reduce its assets by 60 percent. It will consolidate from six to three businesses. The company will also move its London office to “co-locate” with DeBeers, its majority-owned diamonds business by 2017. Some $3.7 billion of cost and productivity improvements are underway and set to be completed by 2017. Cutifani also confirmed Anglo will sell the phosphates and niobium businesses during 2016. “We will set out the detail of the future portfolio in February, with the aim of delivering a resilient Anglo American and a step change in the transformation of the company,” he said. Some analysts wonder if it will be enough. “It’s underwhelming as a package,” Hodgson said. “The business needs to reappraise itself in a manner that gives it a future.” Hodgson said that if commodity prices recover, Anglo is likely to achieve its targets. But if commodity prices drop again, the company risks having to raise cash from investors through a share issue, he said.

Energy stocks lead another decline as oil price weakens

NEW YORK (AP) — Global stock markets fell sharply Dec. 8 as oil prices remained near six-and-a-half year lows following last week’s decision by the OPEC oil cartel to leave production unchanged. Most of the biggest decliners in early trading Dec. 8 were oil and gas companies. Devon Energy lost 8 percent, Kinder Morgan fell 7 percent and Southwestern Energy fell 5 percent. U.S. crude dropped another 2 percent to $37 a barrel. Oil is the lowest it’s been since early 2009. Keeping score: In Europe, Germany’s DAX fell 1.2 percent to 10,750 while the CAC-40 in France was 1.2 percent lower at 4,701. The FTSE 100 index of leading British shares was down 0.9 percent at 4,698. U.S. stocks were poised for a lower open with Dow futures and the broader S&P 500 futures both 0.7 percent lower. Oil slump: Last week’s decision by OPEC to maintain production levels has hit oil prices hard over the past two trading sessions. On Dec. 8, oil prices recouped some losses but still remain near their lowest levels since early 2009, when the world economy was in its deepest recession since World War II. Brent crude, the international standard, was up 60 cents at $41.33 per barrel in London after plunging $2.27 on Monday. Benchmark U.S. crude gained 28 cents to trade at $37.93 per barrel in electronic trading on the New York Mercantile Exchange. The contract lost $1.32 on Monday. Oil stocks: Shares in oil companies have suffered as traders price in the prospect of lower future earnings and the impact it will have on production plans — low oil prices make many projects uneconomic. Among the fallers were Britain’s BP, which was down 1.5 percent, and France’s Total, which dropped 1.8 percent. Analyst take: “The renewed decline in the oil price in the aftermath of last Friday’s OPEC meeting is the main focus of financial markets and is weighing on equity prices,” said Neil mackinnon, global macro strategist at VTB Capital. Anglo American: Shares in the mining firm Anglo American plunged by more than 8 percent after it said it would shed around 85,000 employees — or 63 percent of its workforce — amid a radical restructuring program meant to cope with the tumble in commodities prices. China trade: Customs data showed imports and exports shrank again in November, though there were signs weak domestic demand might be improving. Exports contracted by 6.8 percent, accelerating from October’s 3.6 percent fall. Imports fell 8.7 percent, an improvement over the previous month’s 16 percent decline. Import volumes of some goods such as crude oil, fresh fruit and cooking oil rose. Asia’s day: China’s Shanghai Composite Index fell 1.9 percent to 3,470.07 and Japan’s Nikkei 225 lost 1 percent to 19,492.60. Australia’s S&P/ASX 200 retreated 0.9 percent to 5,108.60 and Seoul’s Kospi declined 0.7 percent to 1,949.04. India’s Sensex was off 0.5 percent at 25,401. Taiwan, Singapore, Jakarta and New Zealand also declined. Currencies: The dollar was slightly softer Dec. 8. The euro was up 0.3 percent at $1.0875 while the dollar fell 0.3 percent to 122.98 yen.

House considers requiring search warrant for old emails

WASHINGTON (AP) — Investigators would need a search warrant to get people’s old emails under a bill considered Dec. 1 by a House panel looking to update a nearly 30-year-old federal law to reflect today’s communications. The Email Privacy Act, co-authored by Rep. Kevin Yoder, R-Kan., and Rep. Jared Polis, D-Colo., has broad bipartisan support and would close a loophole in the 1986 Electronic Communications Privacy Act, which passed before online storage became so convenient and inexpensive. The law gave the government access to emails older than 180 days with just a subpoena. The emails were considered abandoned at the time, when there was rarely enough storage space to hold emails longer than six months. Under current law, the government uses subpoenas to Internet service providers like Google or Yahoo to obtain emails older than 180 days; search warrants are already generally required by service providers for more recent email content. The bill taken up by the House Judiciary Committee instead would require agents to get a search warrant, which generally requires probable cause that a crime has occurred. Exceptions in the bill would allow agents to continue obtaining emails in terrorism investigations without any changes. Committee Chairman Bob Goodlatte, R-Va., said he hoped to provide a “fair balance between the privacy expectations of American citizens and the legitimate needs of law enforcement agencies,” so that searches in the virtual world and physical world are treated equally. This is a “modest step for bringing our privacy protections into the 21st century,” said Chris Calabrese, who is vice president for policy for the Center for Democracy & Technology. He added that the bill still provides more leeway for law enforcement than when using a warrant to search a physical place. For example, it allows investigators to wait up to 10 days to provide notice of the email warrant to the subject, as well as a gag order in certain circumstances so that person would not be notified at all. Google’s law enforcement director, Richard Salgado, told lawmakers that provisions under the old law “do not reflect the reasonable expectations of privacy of users.” He also noted that the Justice Department has said there is no reason under privacy law for criminal investigators to treat old emails differently than newer emails. The Supreme Court ruled last year that law enforcement officers generally need a warrant to search the contents of a cellphone. The Securities and Exchange Commission opposes the new measure, saying as a civilian law enforcement agency it can’t obtain a criminal warrant. The SEC’s enforcement director, Andrew Ceresney, said agents can’t reasonably expect the targets of their investigations to turn over emails or other messages that might implicate them in fraud schemes. “Individuals who violate the law are often reluctant to produce to the government evidence of their own misconduct,” he said, adding that individuals would be able to contest a subpoena under revisions proposed by the SEC. Under questioning, Ceresney acknowledged that his agency has not used its subpoena power to access older emails as allowed under the Electronic Communications Privacy Act since an appeals court in 2010 ruled that the provision violates the Fourth Amendment because it doesn’t require a warrant. Some states have worked to address inconsistencies in the law due to technological advances. California passed a law earlier this year requiring the government to obtain a warrant when requesting communications from third parties. The California law also applies to metadata, such as details on who sent or received the information, which previously only required a subpoena. This is the second time Congress has examined email privacy and a change to the 1986 law. A bill in 2013 received broad bipartisan support but failed to proceed beyond initial votes. Since then, disclosures by former National Security Agency contractor Edward Snowden about the scope of government snooping on Americans’ communications led to increased privacy concerns and efforts to limit government access. Earlier this week, after a gag order was lifted on a founder of an Internet service provider, it was revealed that the FBI has used national security letters to demand records from ISPs, phone companies and financial institutions, without a warrant.

The Bookworm Sez: Santa’s lessons on leading

The holidays couldn’t get any busier. Between mandatory-attendance parties, decorating your home, buying gifts, wrapping them, and getting your cards out in time, your plate is full and you still have a business to run. Don’t pout — instead see how The Big Guy does it by reading “The Leadership Secrets of Santa Claus” by Eric Harvey. Imagine the logistics: tens of millions of households. Billions of toys and gifts. The biggest team of toymakers ever assembled, and eight tiny reindeer, plus back-ups. Surely, it’s enough to give any Old Elf a headache but, for hundreds of years, without fail, Santa has delivered Christmas with a personal touch. So how does he do it? The first thing, says Santa, is to make sure everybody — from senior reindeer all the way down to newly-hired elves — knows your business mission and its meaning. Then, keep your employees first in mind because “you can’t possibly focus on your mission without also focusing on the folks that make your mission happen.” Hire wisely, Santa says, which is a lesson he learned the hard way: you can well imagine what a mess it is to have a Reindeer Team that’s off-kilter. If you promote from within, be sure the person is ready and able to handle the job; you’ll save yourself a lot of hassle if you do. Once you’ve got a great team, teach them to be successful, then be sure to recognize them for the great job they do for you. Much like the Big Guy, you’ll want to make your list (plan) and check it twice (to be sure you’re staying the course). Touch base with employees often, to ensure that they’re on-track, too. On that note, pay attention to the people who work for you: both in how they perceive you and in the suggestions they might have for the job. Help your employees to accept change, utilize “Santa’s CALM Model,” and finally, be a leader. The elves expect that from Santa and “your people expect the same of YOU!” You’ve already dropped a few hints. Everybody knows what to get you for Christmas, and it might have something to do with your business. Even Santa knows what you need and he wraps it up here. And while that may seem somewhat juvenile to the Scroogiest of readers, I had to admit that “The Leadership Secrets of Santa Claus” offers good guidance. With humor that sometimes borders on too-cute, (co?) author Eric Harvey easily relates the business issues of the North Pole to that of, really, any workplace. His advice can be repetitive, but it’s sound and simple enough to implement quickly; in fact, each chapter ends with quick takeaways and the book itself wraps up with checklists and final reminders. That’s a nice surprise at this busiest of times. This particular edition of this book is a new version of an old classic, and it’s worth reading all over again. If you want a happy ho-ho-holiday at work, “The Leadership Secrets of Santa Claus” will make you shout. 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 & Shakers 12/13/15

Richard Collins has been appointed University of Alaska Fairbanks associate vice chancellor for research and director of the Office of Intellectual Property and Commercialization. Collins is a professor of atmospheric sciences. He joined UAF in 1994 as a research faculty member in the Geophysical Institute. Since that time he has served as a faculty member in the departments of Electrical and Computer Engineering and Atmospheric Sciences, and as an associate director of the Geophysical Institute. Collins’ teaching is primarily focused on undergraduate laboratory classes in engineering and science, most recently teaching laboratory science by distance. His research is primarily focused on Arctic meteorology and remote sensing based on observations from the Lidar Research Laboratory at Poker Flat Research Range. His most recent project was the MTeX rocket investigation. Collins earned his bachelor’s degree from the National University of Ireland, his master’s degree from Case Western Reserve University and his doctorate from the University of Illinois. He began his new position Oct. 4. Mary Michaelsen has been named Member Contact Center Outbound manager at Denali Alaskan Federal Credit Union. In this role, she is responsible for developing the Outbound department’s sales and service support to members, and conducting new member audits through multiple communication channels. Prior to assuming this position, Michaelsen worked at Navy Federal Credit Union. She has more than seven years of experience in the financial industry, and an additional two years of experience in call center operations, at the Iowa State University Foundation. She is an Iowa State University graduate, with a major in communications studies and a minor in journalism and mass communications. The Member Contact Center assists members across the world through a 24/7 call center, as well as fax, internet and mobile channels. The Anchorage Economic Development Corp. has welcomed Moira Sullivan as the new director for the Live.Work. Play. Initiative. The AEDC initiative is to make Anchorage the No. 1 city in America by 2025. Sullivan will continue the work of former director Archana Mishra whose three-year tenure made a lasting impact on the Anchorage community. Sullivan is a fifth-generation Alaskan who joins AEDC following two years working for the U.S. Treasury Department in Washington, D.C. In her former position, Sullivan focused primarily on issues of community development and access to capital for small businesses, first as a policy adviser in the Office of Capital Markets, and most recently as the communications manager for the Small Business Lending Fund and State Small Business Credit Initiative programs. Sullivan earned a bachelor’s degree in history from Dartmouth College and a master’s degree in finance from Trinity College in Dublin. The Mat-Su Health Foundation recently welcomed Director of Finance Christopher J. Emond to its team. Emond oversees all fiscal and fiduciary responsibilities for the organization, in conjunction with the executive director, board of directors, and finance and audit committees of the board. He plays a key role in the organization’s overall strategy development and implementation; serves as the management liaison to the MSHF board finance and audit committees; and supports joint venture planning and management. He also oversees key operating functions of the organization including accounting, legal and compliance, human resources, IT, physical plant asset management, and grant management function. Emond came to the Mat-Su Health Foundation from his previous role as director of treasury at Alaska Communications. He earned a bachelor’s degree in finance from the University of Houston and serves as an officer on the board of directors for the Alaska E-Health Network. Lon Wilson, President and CEO of The Wilson Agency, succeeded Donna Albers as president of Tacoma, Wash.-based Albers & Company at the end of November. The changes are part of the long-planned merger, completed last August, of the two growing independent regional benefits, human resource and financial service companies. Wilson and Albers & Company founder Steve Albers envisioned the merger before Steve passed away in 2012. Jennifer Bundy-Cobb, a 20-year veteran of The Wilson Agency becomes director of Health and Welfare Services and a principal in the merged organization. She will integrate day-to-day management of Albers & Company’s H&W Division into her responsibilities. Wilson and Bundy-Cobb have offices in both Anchorage and Tacoma. Steve Albers’ wife Donna Albers and his brother Jeff Albers continued the merger planning after Steve’s passing with the goal of giving Albers’ employees additional growth opportunities and the clients continued service from the best people possible. Donna will continue her support of her local Tacoma community organizations and remain invested in the company’s ongoing success. Jeff Albers will carry on the 30-year Albers legacy and will continue to head up the merged firm’s retirement and financial services division. Credit Union 1 has promoted Kelly Smith to the position of regional branch manager. Originally hired in 2005, Smith began as a teller and later held the positions of member services assistant, member service officer, branch manager of the Eagle River Branch and most recently, branch manager of the credit union’s Mountain View Branch, the position he held prior to this promotion. In his new position, Smith will be responsible for analyzing and assessing branch operations, security, growth and services. He’ll provide direct feedback to branches on operations and procedures. Smith’s new position will also allow him to ensure senior branch staff coverage and scheduling are managed with maximum efficiency. Michael Noone will assume the role of TOTE Maritime Alaska president on Jan. 1. Noone joined TOTE Maritime Alaska as chief operating officer in August 2013, bringing 28 years of experience in the shipping and logistics field. As COO, he has been responsible for creating strategic and operating plans for sales, pricing and operations. Noone received his bachelor’s degree from Wagner College and is certified by some of the nation’s top executive programs in Logistics, including the SMEAL College of Business Administration at Penn State University and the Fisher College of Business at Ohio State University. He also earned certifications in Advance Management from INSEAD, in Strategic Planning and Implementation from the Ross School of Business at the University of Michigan and is a past Steering Committee Member at the Retail Industry Leaders Association. Noone’s predecessor John Parrott, who has served as the company’s president since 2009, will join TOTE’s sister company, Foss Maritime as chief operating officer, where he will be responsible for the oversight of Foss’s key operating divisions.

Marijuana board reverses itself on residency

In an emergency meeting, the Marijuana Control Board voted unanimously on Dec. 1 to reinstate a stricter residency requirement for marijuana business licensees, following Permanent Fund Dividend rules instead of voter registration rules. The board also tried to loosen rules to allow more access to Outside money, but public process rules will hold that discussion until the board’s next meeting in February 2016. The regulatory package will now move to Lt. Gov. Byron Mallot for approval pending a review by the Department of Law to make sure the regulations follow statute. “This amendment essentially changes the residency requirements back to what were in the draft regulations,” board chairman Bruce Schulte said. This requirement plus the definitions of financial investment satisfies the demands of some in the local cannabis industry and the board’s legal advisers, who respectively fear “Big Marijuana” investors and federal money laundering charges, but frightens others about their prospects in a small market with limited capital. “I’m very disappointed in the inability to seek Outside investments,” said Tina Smith, chief operations officer for Midnight Greenery. “This is going to severely limit the number of licensees (applications) in February. It’s required that you already have a very significant amount of capital to even submit a license that has a chance of opening.” The adopted regulations require a marijuana licensee to be an Alaska resident by Permanent Fund Dividend definitions. Under these rules, non-Alaskans must maintain a physical presence and Alaska address for a calendar year and not maintain residency in any other state. Because of financial regulations, this effectively bars all transparent Outside financial contributions in the Alaska marijuana industry. According to regulations, no one can hold “direct or indirect” financial stake in an Alaska marijuana business without being listed as a licensee. The board’s action follows a last minute amendment at its Nov. 20 meeting that opened the Alaska cannabis market to more Outside presence than stakeholders were comfortable with, and overburdened the board’s small staff. Alaskans declared it the death knell for small Alaska marijuana businesses, and board members regretted the hasty amendment as too slack. That amendment loosened residency requirements to voter registration standards, which only require an Alaska address and a 30-day wait. Outside investors could theoretically become residents without leaving their current state, and board staff would have to verify that licensees have filled all the requirements. “In an effort to meet some of the suggested changes,” Schulte said, “the board may have inadvertently put staff in a position where they wouldn’t be able to execute the regulations.” After the board returned to PFD rules on Dec. 1, board member Brandon Emmett proposed an amendment that would “expand the pool of investment resources” and allow 12.5 percent Outside financial stake or ownership in Alaska marijuana businesses. However, the board had not requested public comment for this change or announced its presence on the meeting agenda. Assistant Attorney General Harriet Milks said the board could not consider the motion without the proper public input, and Emmett withdrew the motion. “I think the most important action today is to sign this and get it off to the lieutenant governor,” said board member Marc Springer. “We can talk about this in February.” The combination of residency requirements and total investment prohibitions are a step in the wrong direction, according to Outside industry figures, who share the same concerns as Smith. “That’s going to be a real problem,” said Kris Krane, former executive director for the National Organization for the Reform of Marijuana Law. “I’m sympathetic to the idea they don’t want outsiders dominating the state’s industry. But these are really expensive businesses to set up. You’d be hard-pressed to find a medium-scale cultivation operation for less than a million bucks. Some of the bigger ones are three, four million. There’s just not that much money in Alaska. How are you going to fund all that?” In other states, marijuana policy makers have bounced back and forth between different residency requirements, trying to fine tune the balance between locals who want to roadblock out of state competitors while still allowing a path for investment dollars. In Oregon, a bipartisan group of state representatives has publicly opposed the two-year residency requirement and 51 percent Oregon ownership regulation proposed in that state. “Our own thinking on these issues has evolved over time,” wrote a group of legislators to the Oregon Liquor Control Commission, which oversees marijuana regulation. “We now believe that broad residency requirements and significant limits on outside investment could do more harm than good.” Vincent Sliwoski, an attorney with Harris Moure, a Seattle firm specializing in corporate law including regulated substances, said strict residency requirements fail to keep outsiders outside. Well-financed investors find legal loopholes. “All residency requirements do is make people find ways around them, then you get people like me,” said Sliwoski. “They’re basically creating a bunch of hoops to jump though. This sort of trade protectionist policy isn’t helpful.” DJ Summers can be reached at [email protected]

Interior aurora tourism continues to grow in new markets

(Editor's note: This story was updated to reflect an accurate number of Japan Airlines charter flights for this aurora season — from two to three —  after a scheduling change by the airline.)   Don’t say “winter” to Deb Hickok. The Explore Fairbanks CEO is not in denial of the chilling temperatures and dark mornings yet to come. Rather, in the style of any good marketer, she will tell you the Golden Heart City has two seasons: summer and aurora. “The aurora is really the big thing in Fairbanks,” Hickok said. It’s hard to argue with her stance. About a 30-minute drive north of Fairbanks just off the Steese Highway is Aurora Borealis Lodge, one of a select few accommodations in Alaska that is closed during summer. Aurora Borealis Lodge opens Aug. 16 each year and shutters — for the summer — April 12. “Basically, we designed our season around when we have darkness,” lodge co-owner Mok Kumagai said. Kumagai’s foray into aurora-centric tourism began in 2003 as a tour operator out of Fairbanks. That year he was open for two months and served about 100 customers, he said. By 2008, demand had grown enough for Kumagai and his business partner Logan Ricketts to open the lodge, which can host up to 35 guests. “All of a sudden there was an increased demand for places that could hold 30 or so people at a time,” Kumagai said. That roughly coincides with Japan Airlines’ first winter, err, aurora, charter flights direct from the island country. The first three aurora charters from Japan flew in 2004. By 2007, Japan Airlines had dedicated 16 flights to Fairbanks for aurora spotters. The non-summer charters peaked in 2011 with 19 flights. Most charter itineraries include at least five nights in Fairbanks, giving guests a fair shot to find clear skies. Those guests are spending money, too. The average Outside traveler to Alaska spends about $950 once in the state; international travelers shell out more than $1,600; and Japanese travelers eclipse $2,000, according to the state Commerce Department. In recent years, Kumagai has had upwards of 5,000 aurora tour customers in addition to a full lodge most of the season. This aurora season Japan Airlines has only three charters scheduled —a consequence of reorganization within the airline after it filed for bankruptcy — not for lack of demand, Hickok said. Those travelers that would have taken the charter will simply have to find another way to Alaska. Explore Fairbanks lists 15 lodges and tour companies offering customers a chance to see Alaska’s renowned northern lights. Many of those businesses have opened — or decided to stay open in winter — within the last 10 years. In the first few years of the business virtually all of Kumagai’s customers were Japanese. Being a native of Japan himself, he has a theory as to why aurora viewing is such a popular vacation theme amongst his brethren, and it’s not a popular myth about the mystical powers of the aurora. “You may have heard that it brings good luck to conceive a child under the northern lights; that’s completely wrong by the way,” Kumagai clarified. “It’s really a fascination with nature (among Japanese tourists). It’s similar to wanting to go see Old Faithful geyser in Yellowstone or Machu Picchu in Peru — this fascination with the wonders of the world, the aurora being one of them.” Rather than sitcoms or dramas, Kumagai said travel shows were the primetime must-watch television in Japan when he was growing up, which exemplifies the urge to see the world in the country. Ralf Dobrovolny opened 1st Alaska Outdoor School in Fairbanks in 2003. A year-round excursion provider, 1st Alaska offers Denali and Arctic adventures in the summer and mushing and aurora viewing the rest of the year. Once a niche to go along with summer business, Dobrovolny said the aurora season now makes up about 70 percent of his annual business activity. Northern Alaska Tour Co. has offered a suite of Arctic trips for 25 years. Co-owner Matt Atkinson said Northern Alaska began its aurora tours 10 years ago and “the last five to six years it’s just been gaining momentum.” The aurora’s popularity is evidenced by the distinct terms that have been generated to describe it. At Northern Alaska Tour Co. there are aurora viewers, those that are actively taking the northern lights. Aurora watchers are on guard for the slightest light activity and aurora hunters or chasers are those traversing Alaska to find a break in the nighttime clouds. While the Japanese may have been the first on the Alaska aurora bandwagon, they aren’t the only group on it anymore. The first China Airlines aurora charter, direct from Taiwan, was scheduled to land in Fairbanks Dec. 4. It is the first of three charters the carrier has planned to Fairbanks before the end of the year, and they all sold out, Hickok said. Chinese students going to college in the U.S. are a subsection of the aurora visitor market Atkinson said has caught him by surprise over the last couple years. “These kids are wired; they’re going on Weibo, which is basically Chinese Twitter. Then there’s Trip Advisor and these things so they’re very connected,” Atkinson said. That technological connectivity will hopefully help cultivate the concept aurora viewing in Alaska across China through good old word of mouth, he hopes. Dobrovolny agrees. “I am convinced that in the next few years we will see a huge impact on our winter business — on winter tourism — from the Chinese market,” Dobrovolny said. The European market is also starting to catch on, Dobrovolny added. He just better not let Hickok hear him using the “W” word.

IPHC staff presents 2016 halibut harvest recommendations

The International Pacific Halibut Commission’s scientific staff released its recommendations for the 2016 harvest Dec. 1, including the first natural bump the Central Bering Sea, or Area 4CDE, has seen in 10 years, as well as an overall increase from recent recommendations. The international commission sets the direct commercial halibut removals in U.S. and Canadian waters of the Pacific Ocean, incorporating the allocations for sport removals and halibut bycatch that are set by the North Pacific Fishery Management Council. The commission will decide on the final allocations at its meeting in January 2016. The suggested harvest limit, or blue line, for 2016 is 26.56 million pounds, 20.32 million of which are reserved for Alaska waters. This is 9 percent lower than the adopted harvest limit in 2015, but higher than the blue lines from 2014 and 2015 at 25.22 million pounds and 24.45 million pounds, respectively. Most regulatory areas have an increased blue line harvest limit from both the 2015 blue line harvest limit. Three areas have a blue line limit greater than the actual 2015 allocation. One notable exception is Area 3A, or the Central Gulf of Alaska, which has the largest amount of removals from directed catch, sport harvest and bycatch. The blue line recommendation for 3A in 2016 is 9.37 million pounds compared to 10.1 million pounds in 2015. IPHC scientists recommend the “blue line” harvest quotas at the interim meeting each year; the six commissioners (three each from the U.S. and Canada) then vote at the annual meeting each January to choose the limits. The IPHC can choose to set the quotas greater or less than the blue line recommendation. Last year, the British Columbia coast had a blue line recommendation of 5.22 million pounds, but the IPHC ultimately adopted a harvest limit of 7.06 million pounds for the area. Overall, the IPHC chose a total commercial harvest of 29.2 million pounds in 2015 compared to the blue line recommendation of 26.5 million pounds. Area 4CDE is seeing an increase in 2016, with a blue line harvest level of 1.44 million pounds. The increase should be cause for some relief in the Central Bering Sea, where declining halibut allocations have taken their toll on the fishery-dependent Pribilof Island economies. The blue line in 2015 was just more than a half-million pounds, or a 60 percent cut from 1.285 million pounds in 2014, and a 73 percent cut from 1.93 million pounds in 2013. Only an emergency order from U.S. Department of Commerce officials got the adopted harvest in 2015 up to 1.285 million pounds, which fishermen say is the bare minimum they need to sustain their livelihood. Halibut quotas shrank considerably from 2004-2014 until stabilizing in the last two seasons. In 2004, the coastwide Pacific halibut catch limit was 76.5 million pounds. By 2014, that had been cut 64 percent to 27.5 million pounds. On Jan. 30, 2015, the commission set the quotas for commercial and charter halibut industries at 29.2 million pounds total coastwide catch, 22 million pounds of which went to Alaska waters. The following are the blue line harvest limits compared to last year’s: • Area 2A (Northern California to Washington): 1.02 million pounds, up from 750,000 in 2015. The adopted allocation was set at • Area 2B (British Columbia): 5.22 million pounds, up from 4.96 million pounds in 2015. • Area 2C (Southeast Alaska): 4.63 million pounds, up from 4.30 million pounds in 2015. • Area 3A (Central Gulf of Alaska): 9.37 million pounds, down from 10.1 million pounds in 2014. • Area 3B (Western Gulf of Alaska): 2.67 million pounds, up from 2.46 million pounds in 2015. • Area 4A (Alaska Peninsula): 1.3 million pounds, down from 1.39 million pounds in 2015. • Area 4B (Aleutian Islands): 910,000 pounds, up from 730,000 in 2015. • Area 4CDE (Bering Sea); 1.44 million pounds, up from 520,000 in 2015. DJ Summers can be reached at [email protected]

ADFG reports show sportfishing may damage Kenai River

KENAI — The increasing numbers of bank anglers and powerboats on the Kenai River may be damaging the river habitat. The Alaska Department of Fish & Game released two long-delayed reports in October addressing the effect of bank angling and powerboat use on bank erosion in the Kenai River. The reports, covering the years 2000 and 2001, found that as more anglers fished the river, the more banks crumbled and vegetation disappeared. The reports are the final two installments of a series commissioned by the Board of Fisheries in 1996 to study the effects of increased sport fishing participation on the Kenai River after the board increased the sockeye salmon escapement goal. Sport fishing participation more than tripled on the Kenai River between 1977 and 1995. The Board of Fisheries requested that the ADF&G monitor angler use and impacts to the habitats on the river, which was done from 1997 to 2001. Although the reports from 1997, 1998 and 1999 were published within two or three years, the reports from 2000 and 2001 never appeared. At first, the research team encountered some snarls with methodology, said Mary King, a former fisheries biologist who served as the principal investigator for the study. When they began in 1997, there was no definitive methodology for studying bank change over time. By 1998, they had determined how to approach the measurements and were getting observable results by 1999. “The reports that were published in ‘97 and ‘98, we were stumbling around trying to find a method that the Board of Fisheries asked us to do,” King said. “Once we found a method and were getting results, they never got published.” The researchers focused on the herbaceous lands and shrublands to study angler effect because they would be more sensitive to foot traffic, said Patricia Hansen, King’s co-author on the study. They also tried to select an even number of sites on both sides of the river, she said. “For each macrohabitat type, sites were selected as randomly as possible allowing for various levels of angler use,” Hansen wrote in an email. “We also checked to be sure both bank and meander were represented within each habitat type.” The plant habitat on the banks was significantly impacted because of trampling by anglers, according to the 2001 report. As vegetation was trampled, bare ground and water cover increased. Invasive species moved into the damaged soil — dandelions, grass and horsetails. Low angler effort areas had a small increase and areas with many anglers saw less grass but more horsetails and dandelions. About half the sites showed bank gain while the other half showed bank loss. Bank gain largely occurs when the bank has broken but not separated yet in a process called calving. The average bank loss came out to about .28 meters, slightly more than 10 inches, King said. Some of the accelerated erosion underneath the edge of the bank can be attributed to the wake from powerboats and some is due to the increased presence of sport anglers, she said. “What the conclusions indicated was that there are measurable changes in habitat that can be attributed to the presence of sport fishing on the Kenai River,” King said. “If you compound (powerboats) with whatever shore angling is going on, we saw changes in vegetation that were damaging to the natural habitat.” Stuck in draft That significant changes were detected over only three seasons was “cause for concern,” the researchers wrote in the conclusion. They recommended the fisheries managers reevaluate how sport fisheries are prosecuted on the Kenai River to minimize damage to the riparian habitats. Though the results were presented to the Board of Fisheries in 2002, the studies were never published. King said she did not want to speculate as to why they were not published, but said the results had been filed on time and presented as requested. In her presentation to the board in 2002, King made three recommendations: to continue assessment of shore angler use and bank position change until better methods are developed, to finish the aerial photogrammetry feasibility study and make recommendations for future application river-wide and to develop better programs to educate anglers on how to preserve the environment. The second two were carried through, but the shore angler and bank change assessments were abandoned. Jim Hasbrouck, the chief fisheries scientist for the Fish & Game in Anchorage, said the reports were delayed because of staffing changes. The reports were classified as “draft” for that time period. “The information was presented to the Board of Fisheries, but several staffing changes happened at the time, people moving around into different positions,” Hasbrouck said. During the 14 years it took to release the reports, several people called for their release at Board of Fisheries meetings, but the logs held at the Alaska Department of Fish and Game commissioner’s Office have no record of anyone ever submitting a public records request for the reports, said Lisa Evans, assistant director of Fish and Game’s Division of Sport Fish. There are also no records of correspondence about the reports between 2000 and the present between staff at the Soldotna Fish & Game office and the Commissioner’s office, Evans wrote in an email. In a public comment submitted at the 2008 meeting, Gary Hollier of the Kenai Peninsula Fisherman’s Association cited King’s presentation in 2002 on the damage to the riverbanks and asked why there were no updated habitat reports in the years since. Two other members of the public also asked why there had been no updates on the habitat reports in 2008. In 2014, Lisa Gabriel, also of the Kenai Peninsula Fisherman’s Association, submitted a public comment to the Board of Fisheries detailing that she knew the reports existed and asking why they hadn’t been published. Gabriel said she never submitted a formal records request for the 2000 and 2001 reports because she was able to find the draft versions on the Internet. When she requested a copy of the most current habitat report, she was given another Kenai River habitat assessment from 2010 from a team of researchers from Inter-fluve, a river restoration research firm, and Cramer Fish Sciences, a fisheries research firm. The report had been presented to Fish & Game and to the Kenai River Sportfishing Association. It primarily focused on restoration efforts, but in the section addressing bank erosion said some reports had indicated that increased angler traffic caused bank loss. The report concluded that there is insufficient information about the scale of habitat changes and what causes them. “There was nothing on biological habitat information,” Gabriel said. “(The report said) we’re repairing walkways, that sort of thing. All of the reports we were seeing at the Board of Fish level, none of them were official reports.”  ‘Appropriate modification’ King, who retired from Fish & Game in 2010, said she did not change offices for some time after the reports were filed and did not know why the reports had not been published. In a presentation she gave to the Kenai River Special Management Area board in February 2015, she said she requested the status of the reports when she retired in 2010 and was told they had never been peer-reviewed. The project ended in 2001 and has not been revived, she said. There are no ongoing habitat research projects on the Kenai River through Fish & Game, according to Habitat Division director Ginny Litchfield. Fish & Game is required by statute in the late-run salmon management plan to conduct habitat studies “to the extent practicable” for the Board of Fisheries meetings on the Upper Cook Inlet. It also requires the board to make “appropriate modification” if the studies show a net loss of riparian habitat, according to the management plan. To be published, Fish & Game’s research reports must first be compiled, sent through the peer review process, edited, reviewed again and then sent to Research and Technical Services in Anchorage to be published. Sometimes this process takes years, with backup through the system. However, King and Hansen’s report remained in publishing purgatory for an exceptionally long time compared to other reports published by Fish & Game. Other reports are published within five or six years; some are published in less time. The first reports they wrote were published in fewer than three years. Jeff Fox, the former Director of Commercial Fisheries based in Soldotna, said people repeatedly came in asking for those reports and that they were demanded at various meetings. The department is required to perform yearly assessments on the habitat quality of the river but has not done so in years, he said. At this point, King’s reports are so old as to be irrelevant, he said. “That’s the interesting thing,” Fox said. “If you hang onto something long enough, it doesn’t matter what the conclusions are.” Under the Alaska open records laws, oral requests are usually considered valid requests for public records. If the oral request is denied, the requester is supposed to follow up with a written request. The department can ask that the request be submitted in writing, but it is still a valid request. Fish & Game has been investigated for noncompliance with the open records laws before. In 2009, an incident at the Anchorage office over the disclosure of a public document led to the Alaska Ombudsman’s Office investigating Fish & Game and recommending that the department release the record, train its staff how to comply with records requests and consult with the Assistant Attorney General on how to better fulfill requests in the future. The department did release the record requested, but the investigation was closed as “partially rectified” because the agency did not fully implement the ombudsman’s recommendations, according to the investigation archives. No further reports have been funded by Fish & Game on the habitat of the Kenai River. King said the studies were cut off, but they would have likely continued to show damage. “Had the project continued, we probably would have found further correlations with the sport fishery,” King said. “But the hard part of it is the teasing out of what the natural process was. The correlations were to look at whether or not something was significant accelerating the erosion.” Reach Elizabeth Earl at [email protected]

Citing new projects, explorers urge preservation of tax credits

State oil and gas tax credit incentives are a valuable investment in new oil production and in-state energy security and shouldn’t be trashed, independent explorers are telling state officials and legislators. In the long run they more than repay the state treasury through new royalty and state taxes, too, several companies say. Casey Sullivan, Caelus Energy’s external affairs manager, said his company’s planned $1.2 billion Nuna project on the North Slope will benefit from tax credits and royalty reductions in the near term but will ultimately pay the state treasury an estimated $1.23 billion to $1.32 billion in royalties and taxes. Nuna is expected to begin production in October 2017 and will produce 20,000 barrels per day to 25,000 barrels per day, Sullivan told the Resource Development Council’s annual conference Nov. 19. Caelus is an independent oil and gas company based in Dallas. Benjamin Johnson, president of BlueCrest Energy, a Fort Worth, Texas-based independent, told the RDC conference that his company’s new Cosmopolitan oil project in Cook Inlet is expected to be in production next April and that new gas production could follow by 2018. But those will depend on the state of Alaska not abruptly terminating its oil and gas incentives, particularly for projects now under development and in which investments have been made by companies. Many legislators are looking at the incentive program as a cost and at $500 million a year in direct expenditures by the state in recent years it has weighed heavily on the state budget. “We need to view this as an investment in the future, but we should manage it well,” Johnson told the RDC conference. Sullivan said, “This isn’t free money. We spend money in the economy, and no industry has a greater job-multiplier effect than oil and gas — about 9 to 1,” meaning for every one job in the industry nine other jobs are created indirectly by the spending. Caelus itself has invested massively in its ongoing development and new exploration, employing 900 workers in its North Slope program last winter, Sullivan said. Recent publicity about the program, and some legislators’ calls for ending it, has created financing problems for small companies who are exploring and raising money, he said. “When Alaskans sneeze about oil tax credits, the ripple effects are felt on Wall Street,” Sullivan said. Johnson said the state incentive program may need changes and a range of alternatives are being discussed. For projects in development, like BlueCrest’s Cosmopolitan and Caelus’ Nuna, a low-interest loan or loan guarantee by the state may be just as effective as a cash tax credit, and would have the benefit of not directly taking money from the treasury, Johnson told the RDC. “Loans like this could be low-risk and high return (with a discovered oil and gas deposit) and wouldn’t be cash out of the pocket for the state,” he said. The worst alternative is to end the program and make the termination retroactive, so that tax credits already applied for would be worthless, Johnson said. “Stability of the tax system is vital, and we feel that commitments should be honored for projects (under development) that are low risk, and where benefits can be quantified,” he said. “Changing the program would be fine, but do it in a way that doesn’t immediately affect projects now underway. I would recommend retaining the existing program for a couple of years and then phasing it out.” A particular concern Johnson has is keeping the Spartan Drilling Co. Spartan 151 jack-up rig in Alaska so that it can be used to drill Cook Inlet offshore wells. The rig has been under contract to Furie Operating Alaska for its Kitchen Lights gas project in Cook Inlet but Furie has released the rig now that it is producing. Spartan currently has no customers but is storing the rig in Seward over the winter, hoping for more work next year. BlueCrest hopes to use the Spartan 151 to drill gas production wells at Cosmopolitan in 2016 and 2017 but the gas project can’t proceed until there is more clarity on the state’s intentions on the incentive program. Hilcorp Energy has done an admirable job in developing new Cook Inlet gas for Southcentral Alaska but gas from other new discoveries, like at Furie’s project and BlueCrest’s, is needed to supply regional energy needs until a North Slope gas pipeline can be built, Johnson told the RDC. Gov. Bill Walker put a $500 million cap on current-year expenditures under the incentive program (it was to have cost $700 million) and instructed administration officials to come up with less-costly alternatives. A proposal for a new system is expected to be presented to the Legislature next spring. Options under consideration include an annual cap on tax credit expenditures, a pre-approval process for eligible expenditures as well as some form of direct state financing, or even investment. The state is already making limited investments in the industry through the Alaska Industrial Development and Export Authority, the state’s finance corporation, although these are so far restricted to infrastructure such as roads, pads and process plants, although a company’s acquisition of an offshore jack-up rig was also funded through an investment, which has since been repaid.

Alaska, British Columbia sign transboundary MOU

Gov. Bill Walker and British Columbia Premier Christy Clark signed a Memorandum of Understanding Nov. 25 committing to cooperation on transboundary issues, particularly related to concerns in Southeast over mines on the Canadian side of the border. The MOU will create a Bilateral Working Group on the Protection of Transboundary Waters that will facilitate the exchange of best practices, marine safety, workforce development, transportation links and joint visitor industry promotion. It will also explore other areas for cooperation such as natural resource development, fisheries, trade and investment and climate change adaptation. The neighboring U.S. state and Canadian province will work together on water quality monitoring, scientific information exchanges, resource sharing and facilitating access to information and soliciting input from First Nations, Alaska Native Tribes, and other stakeholders. Lt. Gov. Byron Mallott will lead the Alaska side of the working group and the Minister of Environment and Minister of Energy and Mines will lead the BC side. “As our next door neighbor, Canada plays a significant role in many Alaska industries, including trade, transportation, and tourism,” Walker said. “This MOU underscores that connection, and I thank British Columbia Premier Clark for her support and cooperation in advancing this important relationship “As we work to improve our state’s economy, it is important that we actively reach out and foster good relationships with our trading partners and neighbors with whom we share so much in common.” In an interview with the Journal, British Columbia Minister of Energy and Mines Bill Bennett said the MOU signifies a “change in how we do business” between Alaska and BC. “How we were doing business was the state and province cooperated on mine approvals and permitting that takes place in British Columbia that has potential to impact Alaska,” he said. “But there wasn’t very much public awareness of that relationship and it was incredibly difficult for Tribes and conservation groups and fishing groups to get information on our processes. “We realized that was a shortcoming of our approach and Alaska realized they needed to communicate more with Alaskans on the opportunities the state has to be involved in our process. It’s a matter of opening our doors to acquiring information and making it easier. We’re adding to the opportunities for them to be involved. “This is sealing the deal by having the two leaders sign a deal that says ‘we’re going to do a better job on issues between the jurisdictions.’” There was initially some confusion among the Southeast stakeholders who have been pushing for action on transboundary issues. They had been presented the draft of a statement of cooperation on Nov. 16 by Mallott and told they had two weeks to provide comments to the state. After the announcement, Salmon Beyond Borders, a coalition of Southeast stakeholders representing Tribes, fishing and conservation groups, released statements blasting the timing of the signing and the nonbinding nature of the agreement. A spokesperson from the governor’s office clarified to the Journal that the MOU signed Nov. 25 was not the one presented to the stakeholders for comment Nov. 16, and that the comment period has been extended to Dec. 11. The MOU signed Wednesday is the “umbrella agreement,” Bennett said, which creates the working group that will facilitate the access and cooperation between the two jurisdictions. Southeast stakeholders have repeatedly called for the involvement of the International Joint Commission, which regulates disputes under the Boundary Waters Treaty of 1909. “Since day one, the fishing industry has called on the state and Congress to secure legally binding agreements between the U.S. and Canada with substantial habitat protection and mitigation requirements to ensure the state’s interests are protected,” said Dale Kelley, Executive Director of the Alaska Trollers Association, in the Salmon Beyond Borders press release. “Alaska has instead signed non-binding agreements with British Columbia that offer no visible means of holding Canada, or the mining companies, accountable for mitigating our losses should accidents like the one at Mt. Polley occur in the region.” Kelley was referring to the Mount Polley mine tailings disaster on Aug. 4, 2014, that spilled millions of gallons of mine waste into the Cariboo region of British Columbia, polluting several lakes and watersheds. Concerns over mine waste polluting Alaska watersheds have been elevated by several proposed cross-border mines, particularly the proposed KSM mine near the Unuk River watershed that will also require a large tailings dam structure; there is also ongoing acid rock drainage flowing into a tributary of the Taku River from the abandoned Talsequah Chief Mine. R. Brent Murphy, vice president of environmental affairs for Seabridge, the owners of the proposed KSM mine, wrote in an emailed statement that, “Seabridge wants to clarify that our proposed TMF (tailings mine facility) associated with the KSM Project is not situated in the Unuk watershed or a watershed that drains into Alaska, contrary to the assertions of those who are the most vocal with regards to transboundary development. Our TMF will be situated within the Nass watershed, a watershed that drains entirely into Canadian waters.” Murphy also wrote that naturally occurring acid rock drainage is currently occurring in a Unuk tributary. “We also want to highlight that the water quality within the Unuk River is currently being impacted by naturally occurring acid rock drainage originating from the exposure of the Mitchell Deposit within the head waters of Mitchell Creek (which is a tributary of the Unuk River),” he wrote. “This naturally occurring acid rock drainage results in naturally elevated concentrations of many metals within the river, including copper, iron and zinc. These elevated concentrations have been identified during our extensive baseline sampling of the Upper Unuk River and associated watersheds, which has been ongoing since 2008.” After Bennett visited the Talsequah site in August, government agencies issued a letter to the owners of the mine Nov. 10 that they have 90 days to come up with a plan to stop the acid rock drainage. Although the drainage has been ongoing for years, tests by several government agencies have found that fish in the Tulsequah River are not being affected by the discharge. Regarding the Tulsequah mine, Bennett said the company has told the province it will have a plan to improve the site but that it will stop short of reopening the water treatment plant because the small exploration company doesn’t have the financing. “We think we have some opportunities here to have the company improve the site,” he said. “The best thing would be to develop the site, create cash flow for the company that can open the treatment plant, operate the mine, then close the site, remediate the site, and stop the leaching. That would all be paid for by company as opposed to the public. “That’s what BC has been trying to see happen for 20 years.” He said the fact no harmful effects have been measured by agencies on either side of the border affects how the province is approaching the mine, but that could change if damage was being done. “If the scientists in Alaska and British Columbia were saying that the drainage was harming the water, harming the fish, we’d obviously have a different reaction,” he said. “I think we should do more study, more monitoring, to make sure about the impacts. “If it was determined that there is a negative impact, I think BC would have to take more dramatic action and we’d be responsible for that site. The government would probably have to take it over. I don’t see it happening any time soon, but I acknowledge that it’s a possibility in the future.” Bennett also said there is a “fundamental misunderstanding” of what role the International Joint Commission, or IJC, could play on Alaska-BC transboundary issues. As sub-national jurisdictions, Alaska and BC cannot sign legally binding documents, and the IJC could only get involved if both the U.S. and Canada agreed to it, and if there was a complete breakdown in communications between the nations. He noted that there is a “tremendous amount of pressure on both jurisdictions” related to preserving watersheds from mining impacts and the signing of the MOU is a strong public commitment to working together. “It’s there for the world to see,” he said. “It’s shortsighted to say it won’t impact BC or Alaska.” Andrew Jensen can be reached at [email protected]

North Pacific council to talk halibut rules, groundfish quotas

The North Pacific Fishery Management Council will meet in Anchorage Dec. 9-15 at the Hilton to hash out sport halibut measures for 2016 in addition to setting groundfish harvest limits. Groundfish — which includes pollock, Pacific cod and flatfish — makes the bulk of the volume pulled from the federal waters off Alaska’s coast. Harvest quotas totaling two million metric tons of those species are set each year in the Bering Sea and Aleutian Islands fisheries. The council also will adopt charter halibut rules for 2016, which can include size, bag and annual limits for sport anglers to keep them within their overall allocation. The bottom trawlers who prosecute the groundfish fisheries will be on the lookout for restrictive total allowable catch, or TAC, having taken some cuts last year and taken bycatch cap reductions earlier in 2015. Halibut avoidance is a high priority for council, and groundfish trawlers take the vast majority of halibut that is bycatch. To start off the meeting, the Amendment 80 cooperatives of bottom trawl catcher-processors will report on what progress they’ve made reducing halibut bycatch on their own. Lori Swanson, assistant executive director of industry group Groundfish Forum, said her fleet has managed to cut its overall bycatch by several hundred tons in 2015 using voluntary measure like intrafleet communication, deck sorting, and halibut excluder devices. Halibut management sorely needs an overhaul, according to policy makers. Clashes between directed halibut fisheries, the groundfish trawlers who use halibut as bycatch, and the younger guided angler industry are spurring the council to review a new halibut management framework that takes a more nuanced and proactive role in the fishery. In summary, the framework tries to identify what data the council needs to best manage halibut, and the best way to get and share it. First and foremost is how to bridge the knowledge gap between the two biggest halibut authorities. The North Pacific council oversees all federal fisheries from three to 200 miles off the coast. It only manages the sport removals and halibut bycatch, mostly concentrated in the groundfish fisheries. The U.S.-Canadian International Pacific Halibut Commission manages the directed halibut fisheries. Unlike the council’s stationary bycatch limits, the commission’s halibut quotas shift with legally harvestable halibut biomass. Directed halibut limits have shrunk along with declining biomass, while bycatch limits largely remained unchanged until reductions for the Gulf of Alaska passed in 2012 and new reductions for the Bering Sea passed earlier this year. As a result, more halibut are taken and wasted as bycatch than by the actual halibut fishery, disenfranchising small boat halibut fishermen in fishery-dependent communities. The council reduced bycatch limits in June, but the cuts were less than the Bering Sea halibut fishermen say they needed. Learning from each other’s methodology will factor heavily into the new framework. Right now, the council’s only formal communication with the commission is a yearly management report. Informal information sharing and collaboration are common, but not required. The proposed framework makes is clear there is no plan to merge the two bodies, but would like to create a system of recommendations from one to another, along with the possibility of regularly scheduled meetings in some kind of joint protocol board. Along with inter-body meetings, stakeholders have requested the council create some kind of advisory system that addresses not only biological issues but also economic and social issues. As fishery-dependent communities in the Bering Sea have little other economic driver besides commercial fishing, they believe more thought should go into allocations than just what is biologically acceptable. Potentially, this could mean a new system where a stakeholder group makes recommendations prior to the regular council process. Even arriving at what is “biologically acceptable” needs revision. The framework says the industry needs a host of new science to better inform both the North Pacific council and the international commission. “I think everybody recognizes the need for better science,” Swanson said. “There’s a lot of conjecture about what the impact of Bering Sea bycatch is, and it drives decisions behind not-so-solid science.” The new framework will identify council priorities, including migration studies of halibut spawned in the Bering Sea, the rate at which discarded bycatch fish die, and the disparity between U.S. and Canadian abundance survey techniques. To get to more concrete numbers, the council will review the efficacy and frequency of tagging studies for Bering Sea halibut, deck sorting mortality rates, observer coverage rates, and environmental impact studies. Among other research priorities, the North Pacific council will review a discussion paper on a possible abundance-based halibut bycatch management scheme similar to the commission’s. Earlier this year the council heard a presentation from Steve Martell, a fisheries biologist working for the commission regarding the possibility, and identified process as a possibility.  Halibut sportfishing captains want restructuring in their fleet as well. As biomass has declined, charter operators have seen their slice of the halibut pie shrink, too. They have no sector-wide method to purchase unused allocation from the commercial fleets who use the fish as bycatch, and are asking for a remedy. The council will hold an initial review of Recreational Quota Entities, which would potentially hold commercial halibut quota share on behalf of guided recreational halibut anglers under a “willing seller and willing buyer” approach. This would allow looser charter restrictions while still staying within halibut allocations. The proposed program would differ from current Guided Angler Fish system in that charter operators could purchase, rather than simply lease, quota from commercial users. The program would also be sector-wide rather than individual; purchased quota would be held in a common pool for all charter vessels to draw from as needed to stay within their allocation. The council will review several different options on how many RQEs to establish and in which areas, what kind of transfers will be allowed, and the broader economic impacts of RQEs on the commercial and charter fleets. Halibut quota isn’t cheap, and the charter industry will have to determine how they purchase the quota in the first place.

Tongass EIS proposes transition to young-growth harvest

The future of timber management in the Tongass National Forest in Southeast Alaska is beginning to take shape. On Nov. 20, the U.S. Forest Service released the first draft of an environmental impact statement, or EIS, needed to amend the Tongass Land and Resource Management Plan with five alternatives for managing the federal forest that dominates the region. At nearly 17 million acres, the Tongass is the nation’s largest national forest and encompasses about 90 percent of Southeast Alaska. An emphasis to shift away from harvest of the forest’s old growth hemlock, spruce and cedar is evident in the Forest Service’s preferred EIS option. Alternative 5 would phase out old-growth timber harvest over 15 years and would not allow any harvest — young- or old-growth — in roadless areas defined by the 2001 Roadless Rule. Old-growth harvest that would be allowed in previously designated areas would be limited to commercial thinning or 10-acre openings, with removal of no more than 35 percent of available timber. A 200-foot “no-cut buffer” from the shoreline inland would be instituted along beach and estuary areas open to harvest. The preferred alternative was a unanimous recommendation from the Tongass Advisory Committee, according to a release from the Tongass office of the Forest Service. The 15-member Tongass Advisory Committee was formed in early 2014 to steer the direction of the latest management plan. It is comprised of three members each from five stakeholder groups: Alaska Native tribes and corporations, conservation organizations, government, the timber industry and other commercial users. In July 2013, U.S. Department of Agriculture Secretary Tom Vilsack issued a memo directing Tongass management to be more ecologically, socially and economically sustainable, while accelerating the transition to predominantly young-growth timber harvest by the region’s remaining timber industry. Other alternatives would allow harvest of any-age timber in inventoried roadless areas that were developed before the Roadless Rule took effect in 2001 and during the period that the Tongass received an exemption from the executive order. Additional options would limit young-growth harvest as well. According to the Forest Service, less than 10 percent of old-growth habitat in the Tongass has been converted to young-growth; however that percentage is much higher for some types of old-growth habitat, such as lowland and large tree areas. The Alaska Forest Association, which represents the state’s timber and sawmill industry, is quick to point out that under the current management plan, for each acre scheduled for future timber harvest there are 24 acres managed for uses other than logging in the Tongass. Timber harvest in the forest has declined by more than 90 percent since enactment of the Roadless Rule in 2001 — prohibiting further development of many National Forest lands. At its peak in the 1980s the timber industry supported nearly 4,000 jobs in Southeast. Today, there are about 300 timber-related jobs in the region, according to the state Labor Department. Emily Ferry, deputy director for the Southeast Alaska Conservation Council said the Forest Service’s preferred alternative steers away from logging in the “salmon strongholds” the organization has sought to protect. “It has been a long-term goal of ours to make sure those salmon strongholds aren’t cut and at first blush (the Forest Service) isn’t planning to log those areas,” Ferry said. She noted at the same time a worry about continuing to harvest old-growth timber, which just perpetuates the classic controversy surrounding the timber industry in the Tongass, Ferry said. Alaska Forest Association Executive Director Owen Graham said current young-growth stands in the Tongass simply aren’t mature enough to be useful to the region’s sawmills designed to cut larger trees. “We always planned to transition (to young-growth harvest) but we wanted to do it so sawmills could start cutting the products they do now out of the larger logs,” Graham said. “By continuing the old-growth harvesting now we would build more acres of young-growth so that once the mills transition into the young-growth they can sustain it.” By allowing young-growth stands to mature another 30 years, the board feet available per acre would double, he said, which would also reduce the footprint made by harvesting a given amount of timber. Most young-growth trees in the Tongass today are suitable only for low-grade construction lumber and the distance from the Lower 48 market puts Alaska mills at a competitive disadvantage, Graham said. The market for exporting raw logs to Asia has grown, but that means the value-added manufacturing opportunity drawn from lumber is lost, a concern shared by Ferry and Graham. “We are not making the most of each board foot when we cut a round log, an unprocessed log, and send it to Asia,” Ferry said. Finding a way to quickly transition to young-growth timber harvest and still maximize the value of the lumber is imperative, she said, because no one in Alaska is benefiting from the current Tongass timber situation. Elwood Brehmer can be reached at [email protected]

AJOC EDITORIAL: Tax credit program would benefit from transparency

When the Legislature finally adjourned after a second special session to pass a budget this past spring, about 20 percent of the approximately $3.5 billion deficit was related to payments from the state’s oil and gas tax credit program. Unlike deductions, which the large producers use on a per-barrel basis to reduce their tax liabilities, the credits are direct payments from the state to mostly independent companies exploring for oil and gas in Cook Inlet and the North Slope. Gov. Bill Walker roiled the industry and lending circles with his move in late June to use his line item veto authority to reduce a $700 million appropriation for the credits by $200 million, deferring the payments to future fiscal years. The short-term effect was a credit freeze between lenders and explorers that required damage control by the state Revenue Commissioner Randall Hoffbeck to assure financial institutions and private equity firms that Alaska would make good on the payments owed. That’s according to the report released Dec. 1 by the Senate Oil and Gas Tax Credit Working Group formed among members of the Senate Majority and Minority member Sen. Bill Wielechowski, D-Anchorage. The report was short on recommendations to actually reduce the annual outlays and focused more on going slow with any changes so as not to disrupt projects in the development stage, protecting the state’s interests should a company go into bankruptcy as Buccaneer Energy and Cook Inlet Energy have, and firming up the tax “floor” on production taxes so companies cannot use a net operating loss, or NOL, deduction to reduce their liability to less than 4 percent. Cementing the tax floor seems to be a no-brainer and should be an easy fix by requiring companies to spread the NOL out over multiple years if necessary to ensure a minimum production tax is received. Ultimately, though, there is no silver bullet to fix Alaska’s revenue problem at the current oil prices under any current or prior tax system. Without question the oil and gas credits, or rebates, require examination along with every expenditure the state is making. There is also no question that the state’s oil and gas credit system has major successes to tout. The Cook Inlet gas supply resurgence led by Hilcorp would not have happened absent the credit system, nor would the recent start of gas production by Furie Operating Alaska that is now delivering gas to Homer Electric Association at a lesser price than some of Hilcorp’s customers from the first new production platform seen in Cook Inlet in more than three decades.  Looking to the North Slope, the independent Caelus is currently developing the Nuna prospect it acquired from Pioneer Natural Resources in 2014, and is scheduled for production in 2017. Hilcorp has entered also the fray by purchasing some smaller BP assets and has now submitted a development plan for the Liberty offshore field that could produce 60,000 to 70,000 barrels per day by 2020. The majors are also spending money on the Slope despite the price crash. ConocoPhillips has spent $1.5 billion developing Drillsite 2S in Kuparuk and the CD-5 field in the National Petroleum Reserve-Alaska. It also just sanctioned a billion-dollar project at Greater Moose’s Tooth-1, also in the NPR-A. When companies continue to spend money in the current price environment and bid on acreage as many independents did at the recent state Slope lease sale, something is working. While we can piece together a rough picture of how credits may be benefitting the state economy, the credit program needs to be more transparent. The public has a right to know how much in credits is being paid out and for what projects. That is the only way to tell if the state is getting something back for what it is spending. The working group reached a rather strange conclusion in its recommendations to disclose the amount of credits paid by project, but not the recipient of the credits. It is hard to understand what difference it would make to withhold the recipient of the credit while disclosing the project for which it was paid. Under the since-discontinued film tax credit program, the public was able to see the project, the recipient, the amount of the credit and the qualifying expenditures that led to the credit. If the oil and gas industry really wants to see this program continue, they should be disclosing how much they’re spending, what they’re spending it on, and how many people in Alaska are being hired as a result. A simple return on investment analysis of credits relative to production taxes does not capture things like local wages, their multiplier effects or the economic impact of ratepayers in Homer or elsewhere benefitting from lower utility costs. The best way to ensure a stable credit system continues — and it must continue — is to make it more transparent.

Hilcorp looks for cost savings, new reserves

Hillcorp Energy’s Cook Inlet oil production is holding steady at about 14,000 barrels per day and the company is now negotiating with Southcentral regional utilities for extension of natural gas supply contracts, Hilcorp president Greg Lalicker told the Resource Development Council conference Nov. 19. In a briefing on Hilcorp’s activity in Alaska, Lalicker said some new gas supply contracts have been signed out to 2023 and 2024 and others are still being finalized. Hilcorp’s previous supply contracts were through the early part of 2018. Hilcorp’s entry into Cook Inlet in 2012 and 2013 and the company’s aggressive redevelopment of aging gas fields, as well as oil fields, staved off a looming gas shortage facing utilities in the region. Lalicker told the RDC that Hilcorp is investing in new Southcentral gas development with a new exploration well planned to be drilled next spring at the producing small Happy Valley field on the Kenai Peninsula. While Cook Inlet oil production is steady the low price of crude oil is having its effects. Given the high costs of work in the Inlet and low prices, the company can no longer afford certain well workovers and maintenance procedures that Hilcorp has emphasized to sustain and even build per-well oil production rates, Lalicker said. “We just can’t afford to do some of this work,” he said. Still, the company remains focused on oil. “We get to sell it quickly,” Lalicker said, as opposed to gas which is sold to utilities at intervals when there are openings in gas supply contracts. All of Hilcorp’s Cook Inlet oil goes to the Tesoro refinery at Nikiski. Hilcorp has also invested in new 3-D seismic surveys in the mature MacArthur River and Middle Ground Shoal fields in a hunt for new oil. “Parts of these fields have never had 3-D seismic before, so we expect to be able to identify a lot more (oil) targets,” Lalicker said. Three-dimensional seismic is a more intensive and sophisticated method of doing geophysical surveys of underground geologic formations than the older, two-dimensional surveys that were previously done. On the North Slope, Hilcorp has had less luck holding oil production rates steady at three older producing fields acquired from BP last year, the onshore Milne Point and offshore Northstar and Endicott fields. Production has dropped from about 40,000 barrels per day in December 2014, just after Hilcorp took over the fields, to about 36,000 barrels per day in early November, Lalicker said. Hilcorp has only had one year as owner and operator of these fields, however, and the company believes its strategies of seeking efficiencies and then investing will still succeed over several years. Lalicker said big cost reductions have already been achieved in the three producing fields. “When we took over at the end of 2014 we were spending $15.8 million a month operating these fields,” he said. Now, a year later, costs are down to $12.5 million a month. “We don’t focus on eliminating people or services but rather in finding the most efficient ways to do things,” Lalicker said. “It’s a 21 percent cost reduction, but unfortunately the price of what we produce is down 50 percent,” he said. Despite oil prices, Hilcorp is investing in its North Slope assets. The company has been working on producing wells in the Milne Point field with the Nordic-Calista workover rig and plans to bring an additional, new workover drill to the Slope next fall, for more work at Milne Point. A workover rig is one that is mostly designed for repair and major maintenance on producing wells in contrast to larger rigs that are built to mostly drill new wells. Workover rigs can sometimes drill wells, however, although these are typically “sidetracks,” or new wells drilled underground laterally an older producing well. Lalicker said Hilcorp sees potential for new oil from its North Slope fields and particularly Milne Point and the Sag River formation that is there as well as potential oil from tighter rocks and eventually the heavy, large Ugnu deposit. Hilcorp is operator at Milne Point but BP is still a 50 percent owner. Hilcorp is also in a 50-50 partnership with BP at Liberty, an undeveloped offshore oil deposit, but is also the operator there. Liberty is in federal offshore waters and Hilcorp has submitted a development plan to the U.S. Bureau of Ocean Energy Management, which was approved by the federal agency on Sept. 18, triggering a 60-day public review period. The schedule in the application calls for a Record of Decision by the BOEM if the agency grants final approval. If Hilcorp and BP move ahead, engineering would begin in late 2017 and construction would start in 2018. Production would begin in 2020. In its press release BOEM said its Sept. 18 announcement, “does not mean that the Development and Production Plan for Liberty has been or will ultimately be approved; it merely denotes that BOEM has determined that Hilcorp has submitted the information required,” under the agency’s regulations. Public “scoping” meetings on the plan are now being conducted by BOEM to craft an environmental impact statement. Liberty has oil reserves of 80 million to 150 million barrels, according to the BOEM application, which could sustain peak production rates of 60,000 barrels per day to 70,000 barrels per day. Tim Bradner can be reached at [email protected]

Russian oil tanker grounds Nov. 28 in north Pacific

MOSCOW (AP) — Russian emergency services say cleanup operations are underway after an oil tanker was grounded, damaging one of its fuel tanks. The tanker Nadezhda hit a reef during a storm on Nov. 28 near the port city of Nevelsk on Sakhalin Island in Russia’s Far East. It was carrying 786 tons of fuel oil and diesel fuel. The amount of oil spilled and the extent of any environmental damage was not immediately clear. The emergency services said operations were taking place on Nov. 29 to collect spilled oil and also contaminated soil from along the shore, while oil remaining on the vessel was being pumped onto other tankers.

Native regional corporations net income rebounded in 2014

Alaska Native corporations continue to grow in financial strength and are increasingly integrated into the state’s economy. In 2014 total revenues by the 12 Alaska Native regional corporations grew over 2013 in line with a five-year average, according to the latest financial reports on regional corporations released Dec. 1 by the ANCSA Regional Association. ANCSA stands for the Alaska Native Claims Settlement Act that passed in 1971 and created the regional and village corporations. The data is compiled and presented annually by the association, which represents the 12 regional corporations. Total revenue for the corporations was $8.57 billion in 2014 compared with $8.49 billion in 2013. Profits in 2014 took a sharp jump for the group, up 98 percent for the group compared with 2013, Kim Reitmeir, the association’s executive director, told the Anchorage Chamber of Commerce Nov. 30. Profits in 2014 were $304.9 million compared with $153.7 million in 2013. The difference is unusual, however, and more a one-year event. Aggregate net income was $389.5 million in 2010. The corporations’ aggregate net income took a dip in 2013 compared with previous years. However, net income for the group was still 11 percent higher in 2014 that the five-year average of net income. “This is a result of management being more focused on getting value for shareholders,” Reitmeir said. Meanwhile, total shareholder equity in the regional corporations, an important measure of the value of the businesses, was also up 8.6 percent in 2014, or about $4 billion compared with $3.8 billion in 2013, she said. Dividends paid to shareholders dropped in 2014 compared with the previous year but that was mainly because of a large one-time dividend paid by one corporation in 2013, Reitmeir said. “Several of our corporations are now paying annual dividends that are larger than the Permanent Fund Dividend. This is something retailers should pay attention to,” she told the chamber. The corporations are also “giving back” a big share of net income, in charitable contributions, support given to nonprofits, scholarships and dividends, which totaled 60 percent of profits in 2014, Reitmeir said. Over five years the average has been 75 percent. Meanwhile, the increasing diversification of the Native corporations is being felt throughout the state’s economy. “It’s difficult to find an industry that Alaska Native corporations are not involved in,” she told the chamber. The corporations have long been engaged in the basic natural resource industries like oil and gas, minerals and timber, but now they are in fields like commercial and residential real estate, financial services and telecommunications and offshore fisheries support. Of strategic importance for Alaska, however, is that the majority of the corporations’ earnings are from outside Alaska, in the form of income on investments and earnings of subsidiaries that operate in the Lower 48 and elsewhere. Some of these are minority 8(a)-designated firms, a U.S. Small Business Administration classification that allows preferences in federal contracting for minority-owned businesses. The regional corporations are now less dependent on 8(a) contracting, however. “The 12 regional corporations have seen a 7 percent decline in 8(a) revenues over the last five years,” Reitmeir said. This is partly due to several of the corporations’ subsidiaries having “grown out,” or graduated, from the minority preference program so that they now fully compete with other companies for private contracts. Several of the regional corporations have also decided to reduce their 8(a) involvement for policy reasons, partly because of criticism of the program from certain people in Congress. Among the regional corporations, one still has 30 percent of its total business operations in the 8(a) field, the largest share for a corporation in 8(a) business, while the corporation with the smallest share has 10 percent of its business operations in 8(a), Reitmeir said. Overall, the regional corporations took in 28.5 percent of their total revenue from 8(a) contracting in 2014 compared to 42.9 percent in 2010. The ANCSA Regional Association compiles and publishes the data to build an understanding of what Native corporations contribute to the economy. The information is incomplete, however, because it does not include data from Native village corporations, several of which are substantial businesses and employers. The regional corporations’ report used to include data from several major village corporations, but this ended, “because there are now many village corporations that are doing very well,” Reitmeir said. Alaska Native corporations were formed in 1971 with the passage by Congress of the Alaska Native Claims Settlement Act, which returned 44 million acres of Alaska’s 365 million acres to Native ownership and paid $965 million in a cash settlement in lieu of lands not returned. “Many people think the $965 million was seed money to get the Native corporations started in business, but it was really a settlement,” and compensation for lands taken, Reitmeir said. The new corporations did use the money to get started in the early 1970s, and while there have been problems and bumps along the road many of the corporations have grown into multi-billion-dollar business enterprises. Passage of the 1971 claims act was also crucial to the development of the state’s economy at the time. The pending Native land claims issue had clouded title to many Alaska lands important for development including a corridor for the 800-mile Trans Alaska Pipeline System then being planned. The federal government wouldn’t grant the pipeline corridor until the claims were settled, which put the oil and gas industry into a political alliance with regional Native groups to get the bill through Congress. It took a second act of Congress to fully approve the oil pipeline, however. In 1973 Congress passed the Alaska Trans-Alaska Pipe Line Authorization Act, which cut through a thicket of environmental lawsuits that were blocking the pipeline. The creation of a large privately-owned land base in Alaska would also boost the economy. Development of mineral resources, oil and gas and timber harvesting has happened since 1971 that wouldn’t have occurred had the lands remained in federal ownership. Reitmeir recalled that many environmental groups worked against the land claims settlement. “They didn’t want these lands going into private ownership,” she told the Anchorage chamber. Tim Bradner can be reached at [email protected]

With emerging market stock funds, check what’s in the tin

NEW YORK (AP) — When you’re built different, in investing, you act different. That’s why it’s important to check what’s in your emerging-market stock fund — even if it’s an index fund. Emerging-markets index funds track different indexes, which can have very different exposure to different parts of the world. And as Brazil, India and other emerging market economies move in increasingly different directions, actively managed funds are looking more distinct as well. Some managers are avoiding broad swaths of the developing world, and they say their funds have never looked this different from their index-fund rivals. The big differences in composition can lead to big differences in returns. All of the 20 largest emerging-market stock mutual funds are down this year, but by anywhere from 3.9 percent to 21 percent, as of Wednesday. That gap of more than 17 percentage points is much wider than the 7.4 point gap in performance for the biggest funds in the largest category of U.S. stock funds. The changes in portfolio focus are occurring as more dollars head into emerging-market stock mutual funds and exchange-traded funds. More than $5 billion flowed into them in the first 10 months of the year, according to Morningstar, at a time when nearly $73 billion left U.S. large-cap stock funds. If you want to join the tide into emerging-market stock funds, it’s important to ask a few questions: • If it’s an index fund, what index does it follow? It may seem like a boring question, but it can make a difference, as a look at the two largest emerging-market stock ETFs shows. The iShares MSCI Emerging Markets ETF keeps nearly a sixth of its portfolio in South Korean stocks, such as Samsung Electronics and Hyundai Motor. The only country that accounts for a bigger percentage of its portfolio is China. Vanguard’s FTSE Emerging Markets ETF, meanwhile, doesn’t own a single Korean stock. That’s because the two ETFs track different indexes, which disagree on whether South Korea is an emerging market or a developed one. Despite the difference, the two ETFs have performed similarly this year: Both lost 11 to 12 percent, including dividends, as of Wednesday. But the ETFs are set to get even more different. The Vanguard ETF is in the process of adding small-cap emerging-market stocks to its portfolio, which are generally riskier than large-cap stocks but have the potential for bigger gains. The Vanguard fund is also bringing in so-called A-shares of Chinese companies. These shares are listed in Shanghai or Shenzhen, and the Chinese government has only recently begun loosening limits on foreign ownership of them. A-shares have had much sharper jumps up and down than the Hong Kong-listed shares that many emerging-market stock funds focus on. • If the fund is actively managed, what is it flocking to and avoiding? Emerging-market stock indexes tend to be full of state-owned companies in China and commodity producers in Brazil and Russia. These are precisely the stocks that many active managers say they’re most keen to avoid. China’s growth has slowed sharply, as the government tries to shift the economy away from industrial-led gains to one more dependent on consumer spending. That has helped send prices for metals and oil tumbling, which hurts Brazil and Russia. They’re big commodity producers, and both their economies are in the midst of recessions. That’s why Laurence Taylor, portfolio specialist at T. Rowe Price, says adhering to an index is akin to “investing in the history of emerging markets.” He prefers countries that are smaller players in emerging-market stock indexes, but where growth prospects look better, such as Indonesia and the Philippines. He also favors India, which is well represented in emerging-market indexes. Actively managed funds can also steer clear of places where politicians are making things difficult. When Russia, which makes up about 4 percent of emerging-market stock indexes, annexed Crimea in 2014, it led to an international uproar and sanctions that hurt Russian companies badly. Lee Rosenbaum, portfolio manager at the Loomis Sayles Global Equity and Income fund, which can invest anywhere around the world, sold the fund’s investment in the Russian Internet company Mail.ru after the upheaval. Now he says it’s safe to assume it won’t be buying another Russian stock again for a while. • What are the fees? As with investments in all funds, try to keep expenses low, regardless of whether you opt for a fund that tracks an index or is actively managed. Investing in emerging markets can be expensive in general, and the average expense ratio is 1.56 percent for mutual funds in the category. That means $15.60 of every $1,000 invested goes to cover fund manager salaries and other costs. A fund manager with higher costs will need to perform that much better just to match the after-fee returns of lower-cost funds.

New North Dakota oil tax framework saving state $1M daily

BISMARCK, N.D. (AP) — Action by the North Dakota Legislature earlier this year means a price-triggered exemption for the state’s oil industry did not go into effect Dec. 1. November marked the fifth-straight month that oil prices averaged less than a trigger price of $55.09. Had lawmakers not acted, the tax break for drillers would have gone into effect Dec. 1, costing the state millions in lost revenue. “I’ve said ‘I told you so’ about eight times today,” Republican House Majority Leader Al Carlson, R-Fargo, told The Associated Press. The price for North Dakota sweet crude has averaged nearly $10 less than the trigger price in the past five months. North Dakota oil was fetching about $14 less than the trigger Dec. 1. North Dakota has two primary taxes on oil production — a 5 percent production tax and a 6.5 percent extraction tax, the latter of which was part of an initiated measure voters approved in November 1980. Until Dec. 1, state law had forgiven the extraction tax if the five-month average price slipped less than the trigger prices. The prospect of the big tax cuts due to declining oil prices had North Dakota lawmakers scrambling to approve a new oil tax framework that cuts the overall rate from 11.5 percent to 10 percent, while abolishing the trigger for drillers on Dec. 1. North Dakota’s oil industry enjoyed the triggered tax break for 17 years, until 2004 when oil prices rebounded for five months greater than the trigger, which was just more than $35 a barrel at the time. State Tax commissioner Ryan Rauschenberger said the Legislature’s elimination of the law means the state will save about $1 million daily based on current oil prices and production. The legislation abolishing the breaks was among the most contentious of the session and passed just a few days before lawmakers adjourned. GOP lawmakers said it would provide a predictable tax policy. “I think this will prove in the end that it will create long-term stable situation for us,” Carlson said. Democrats said the lower tax rate will cost the state billions of dollars in tax revenue in the long run. Senate Minority Leader Mac Schneider said most in his party favored cutting the price-triggered exemptions but did not want to shave the overall tax rate. “There was absolutely no long-term thought given to this,” Schneider said. “It was shoved through the Legislature in the last five days of the session.” North Dakota’s oil industry wanted a flat 9 percent tax rate in exchange for giving up the price triggers. Ron Ness, president of the North Dakota Petroleum Council, said the tax emption would have triggered a surge in drilling in the oil patch, were the number of drill rigs has slipped from 187 a year ago to 66 on Dec. 1. “My phone is not ringing with glee from our folks,” Ness said. “It didn’t exactly work out in our favor but we can’t cry over spilled milk.”

Testing finds no nuke-disaster radiation in Alaska seafood

Alaska seafood has not been tainted by the Fukushima nuclear disaster four years ago, according to test results announced Nov. 30 by a state agency. Alaska health authorities working with the federal Food and Drug Administration pronounced Alaska salmon, cod, halibut and other species free from radioactive contamination connected to the power plant damaged in Japan more than four years ago. A 9.0 earthquake on March 11, 2011, generated a 130-foot wave that devastated 217 square miles in Japan. About 16,000 people were confirmed dead and nearly 2,600 were never found. Among the damaged facilities was the nuclear plant complex at Fukushima, and meltdowns created fear that radionuclides, or radioactive isotopes, might drift east. Debris from Japan, including boats and buoys, crossed the Pacific and arrived on Alaska’s shore. The greater concern was the potential effect on the Alaska seafood industry, which in 2011 was valued at $15.7 billion in direct and secondary economic output. The industry employed 63,100 workers in Alaska, making it the state’s largest private sector employer. Sampling has never detected radioactive contamination from Fukushima in Alaska, but that has not stopped the rumors. Misinformation spread online has caused much concern in the last four years, said Marlena Brewer, an environmental protection specialist for the Division of Environmental Health. “I get calls from all across the country,” Brewer said. “I’ve even had international calls with concerns about Alaska seafood.” Ocean modeling of the distribution of contaminants did not indicate a potential risk to Alaska fish, according to the state Department of Environmental Conservation. The department made arrangements with the FDA to sample and directly test fish. Testing this year at the FDA’s Winchester Engineering Analytical Center in Winchester, Massachusetts, as in 2014 found no detectable levies of contamination from Fukushima. Samples in 2014 were collected from four of five Alaska salmon species, including king, chum, sockeye and pink, which spend part of their lives in the western Pacific Ocean. Health officials in 2015 took samples from coho salmon, halibut, pollock, sablefish and Pacific cod but not pink salmon. Test results were in line with water-quality sampling done in 2014 by a nonprofit group, Cook Inletkeeper. Woods Hole Oceanographic Institution has sampled along the West Coast since 2011 and found no levels of concern, Brewer said. Scientists predicted concentrations of Fukushima radioactive isotopes in North Pacific waters could peak in 2015.

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