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Hearings planned on proposed road in Alaska refuge

ANCHORAGE (AP) — The Pacific brant is a small sea goose that likes to forage a mile or more offshore, far from bluffs, where eagles launch attacks from the air. Brant are also herbivores, and to get enough calories, must eat during nearly 80 percent of its waking hours. So it's no surprise that Pacific brant migrating from breeding grounds to Baja Mexico choose to lard up at Izembek Lagoon, 10 miles of shallow, sheltered ocean near the tip of the Alaska Peninsula, the long finger of land at the start of the Aleutian Islands. The lagoon offers protection from predators and a giant buffet — one of the world's largest beds of nutritious eelgrass. Virtually the entire 150,000 population of Pacific brant stops at Izembek. So do 70 percent of migrating Steller's eiders, an endangered species that eats tiny invertebrates — clams, shrimp, and copepods — clinging to eelgrass leaves. So it's also no surprise that environmentalists are fighting a proposal by an Aleut village to build a road through the Izembek National Wildlife Refuge for land access to an all-weather airport. "It's really kind of this gathering place for these enormous numbers of birds," says Beth Peluso of Audubon Alaska. "It's such a rich area and it's fairly unique. It's the size of the eelgrass beds that are drawing a lot of these birds, so you just can't switch it for some habitat somewhere else because it's not equivalent." The U.S. Fish and Wildlife Service begins hearings this week on a draft environmental review of road proposals for King Cove, home to one of the largest salmon canneries in Alaska. Access to the community of 948 is by sea or air — if a plane can make it onto the 3,500-foot gravel runway. Surrounded by mountains, and often besieged by strong wind, scheduled flights are delayed or canceled 50 percent of the time, according to the Aleutians East Borough. In medical emergencies, patients' lives depend on getting to nearby Cold Bay and its all-weather airport. In the last 14 months, there were 21 emergency flights for villagers, said Agdaagux Tribe spokeswoman Della Trumble. That means a white-knuckle ride on a fishing boat, or if harbors are iced in, a call to the U.S. Coast Guard on Kodiak Island 425 miles away for an emergency helicopter flight. A better solution, according to villagers, state officials and Alaska's congressional delegation, is a road. Five access options under review include two configurations of a single-lane gravel road from King Cove to Cold Bay that crosses nine miles of refuge. King Cove residents acknowledge the wildlife — they've depended on subsistence resources for decades — but in the debate between birds and human health, believe people should be getting more consideration, said city manager Gary Hennigh. Fish and Wildlife Service officials, Hennigh said, have become indignant on the occasions when he summarizes his perspective with a question: "Just how many tundra swans equal one dead Aleut?" "That is basically the theme that is going to keep coming back around, that this is for the human environment of the people in King Cove," he said. Pacific brant were the rallying cry against the road five years ago, Hennigh said. Studies have indicated the effect of the road will be negligible and minimal, he said, so the focus has shifted to other species. "All the hype and crap that we went through about the black brant, the Steller's eider, the tundra swan, the caribou, the bear, we are now confident that the final environmental impact statement will say these are not going to be that big of an impact," he said. Federal officials thought they had a road alternative in place 14 years ago. Congress in 1998 appropriated $37.5 million to improve King Cove access. The centerpiece was a $9 million hovercraft, but the Aleutians East Borough announced in November it was grounding the big boat. It cost more than $1 million annually and didn't come close to operating six days per week as promised, Hennigh said, mostly because of dangerous waves. Congress in 2009 reopened the door for a road. It authorized the secretary of the Interior Department to exchange lands within Izembek refuge a single-lane gravel road if the secretary concluded it was in the public interest. The only commercial use would be taxis, Hennigh said, and 15 to 20 vehicles per day are likely to use it. The village and the state of Alaska are willing to pay a steep price in land. The federal government would give up about 200 acres of Izembek refuge for the road corridor and 1,600 acres on Sitkinak Island south of Kodiak. In return, the federal government would receive more than 56,000 acres — 43,093 from the state north of the refuge and 13,300 acres from King Cove's village Native corporation. Ultimately, the Interior secretary will decide if a land exchange and road is in the public interest based on Fish and Wildlife Service environmental review. The agency's first hearing is Thursday in Anchorage. Environmentalists don't like the precedent set by allowing a road in a refuge. They question whether traffic limits will be enforced. Despite the whopping difference in acreage of the exchange, Peluso said, not all habitat is equal. "It doesn't mean it has the same qualities," Peluso said. "The reason why Izembek is important is that it has this specific habitat, and you can't just draw another line somewhere else. It doesn't have the same thing." Trumble said King Cove was not consulted over creation of the refuge. Her sympathies are with patients who have to endure a boat ride across heaving sea water and a walk or a trip by stretcher up an icy dock on top of their medical condition. "It's very dangerous," she said. "It's very uncomfortable for the patient, adding on to the problems that they're going through, without having to go through that extra stress of being offloaded in Cold Bay, or a bad boat ride to Cold Bay."  

Homer Electric to conduct hydro studies this summer

Homer Electric Association will begin field work this summer to fully determine if a hydroelectric project on the east side of the Kenai Peninsula will be feasible. A recent renewable energy grant from the Alaska Energy Authority will spur HEA to award work to crews charged with conducting a battery of tests at Grant Lake near Moose Pass. Crews will look to determine if the body of water would be suitable for producing electricity. According to the project’s website, the idea, if approved, is to install a dam or other structure at the lake’s outlet to control outflow from the lake, and possibly to create storage capacity. The proposed project would have an intake in Grant Lake, near the point at which it flows into Grant Creek. Water would be conveyed from the intake through a pipeline leading to a powerhouse. The powerhouse would be located near the bank of Grant Creek and would discharge into Grant Creek. The Grant Lake watershed, including Grant Creek, is about 44 square miles and the lake has a surface area of about 1,790 acres. Grant Creek, which discharges into Upper Trail Lake, has an average annual flow of 193 cubic feet per second. According to HEA spokesman Joe Gallagher, Kenai Hydro LLC — an HEA subsidiary — began evaluating four hydroelectric sites including Grant Lake, Falls Creek, Crescent Lake and Ptarmigan Lake. Since then, Kenai Hydro has abandoned consideration of all but Grant Lake due to economic feasibility concerns. The project is estimated to cost $35 million. “As studies are completed and more information is obtained, the proposed scope of the project’s features are adjusted from what was initially proposed in 2008,” Gallagher wrote in an email. “A major difference is that current plans call for either a 2-foot-high dam, or no dam, as compared to an initial plan for a 10-foot-tall dam.” The project is still in its study phase, but HEA expects the project would generate about 20,500 megawatt hours annually, which is about 4.2 percent of HEA’s annual demand based on 2010 statistics. HEA would own the project, but reserve the option to sell power to interested utilities. Bradley Lake, a state-owned, HEA-operated hydro project located at the head of Kachemak Bay, generates 300,000 megawatt hours annually. Power from Bradley, a larger lake than Grant Lake, is shared among Railbelt utilities with HEA receiving about 44,000 megawatt hours annually. That figure represents about 9.4 percent of HEA’s power needs. The AEA grant of $1.2 million was received in 2011, as part of the Alaska Energy Authority’s Round IV Renewable Energy Grant Program, and will be used to augment and supplement 2009 and 2010 fieldwork. Crews will study the project’s effects on aquatic, water, cultural, visual and recreational resources. The aquatic study plan will look at salmon spawning distribution abundance, resident and rearing fish distribution and abundance, aquatic habitat mapping and analyzing critical factors as well as in-stream flow studies and others. Gallagher said there are not salmon in Grant Lake as a large waterfall acts as an anadromous barrier, but there are salmon in Grant Creek. Effects on those salmon will be studied. HEA also will examine water quality and temperature, hydrology, botanical and vegetation mapping, survey sensitive and invasive plants, and assess timber resources. Wildlife effects also will be studied including raptor nesting, breeding land and shore birds and surveys of terrestrial mammals. The project also will include cultural use and archaeological field studies. HEA hopes to file a final Federal Energy Regulatory Commission permit in 2014 after field work and other studies are completed. Utility officials are currently spending time making presentations on the issue to area groups such as the Kenai and Soldotna chambers of commerce, Rotary clubs, the Industry Outlook Forum, the Kenai River Special Management Area Board of Directors, Cook Inlet Aquaculture Association, Kenai River Sportfishing Association, Cook Inletkeeper and legislators. Meetings will continue this spring with plans to talk to the Kenai Watershed Forum. Gallagher said the response from those organizations on moving forward with the project’s study phase so far has been “very positive.” “We still have a lot of study work to do before we have a completion date set,” Gallagher wrote in an email. “It is important to note that a decision to move forward with the project has not been made. The results of the study and the licensing process will determine whether or not it is in the best interests of HEA’s members to move forward with the project.”

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Fed-up Congress takes another axe to NOAA budget priorities

Frustrated senators from coastal states are wielding the power of the purse to rein in the National Oceanic and Atmospheric Administration and refocus the agency’s priorities on its core missions. During recent appropriations subcommittee hearings April 17, Sen. Lisa Murkowski ensured no funds would be provided in fiscal year 2013 for coastal marine spatial planning, a key component of President Barack Obama’s National Ocean Policy. Murkowski also pushed for an additional $3 million for regional fishery management councils and secured $15 million for the Pacific Salmon Treaty that was in line to be cut by NOAA’s proposed budget (for $65 million total). On April 24, the full Senate Appropriations Committee approved the Commerce Department budget with language inserted by Sen. John Kerry, D-Mass., and Sen. Olympia Snowe, R-Maine, into NOAA’s budget that would transfer $119 million currently unrestricted funds and require they be used for stock assessments, surveys and monitoring, cooperative research and fisheries grants. The $119 million is derived from Saltonstall-Kennedy funds, which are levies collected on seafood imports by the Department of Agriculture. Thirty percent of the import levies are transferred to NOAA annually, and without Kerry’s language there are no restrictions on how NOAA may use the funds. In a Congress defined by fierce partisanship, no federal agency has drawn as much fire from both parties as NOAA and its Administrator Jane Lubchenco. Sen. Scott Brown, R-Mass., has repeatedly demanded accountability for NOAA Office of Law Enforcement abuses uncovered by the Commerce Department Inspector General that included the use of fishermen’s fines to purchase a luxury boat that was only used for joyriding around Puget Sound. There is currently another Inspector General investigation under way into the regional fishery management council rulemaking process that was requested last August by Massachusetts Reps. John Tierney and Barney Frank, both Democrats. In July 2010, both Frank and Tierney called for Lubchenco to step down, a remarkable statement for members of Obama’s party to make about one of his top appointments. Frank introduced companion legislation to Kerry’s in the House earlier this year, where it should sail through in a body that has repeatedly stripped out tens of millions in budget requests for catch share programs. Catch share programs are Lubchenco’s favored policy for fisheries management and have been widely panned after implementation in New England in 2010 resulted in massive consolidation of the groundfish catch onto the largest fishing vessels. Another New England crisis this year with Gulf of Maine cod also drove Kerry’s action after a two-year old stock assessment was revised sharply downward and threatened to close down the fishery. Unlike many fisheries in Alaska such as pollock, crab and halibut, there are not annual stock assessment surveys around the country. Without a new stock assessment for Gulf of Maine cod, the 2013 season will be in jeopardy. “I applaud Senator Kerry for his leadership on this issue and for making sure that this funding is used for its intended purpose – to help the fishing industry, not to cover NOAA’s administrative overhead,” Frank said in a statement. “We are at a critical juncture at which we absolutely must provide more funding for cooperative fisheries science so we can base management policies on sound data, and we should make good use of the world-class institutions in the Bay State which have special expertise in this area.” Alaska’s Sen. Mark Begich and Murkowski, as well as Rep. Don Young have also denounced the National Ocean Policy as particularly misguided, not only for diverting core funding in a time of tightening budgets but for creating a massive new bureaucracy that threatens to overlap existing authorities for the regional fishery management councils and local governments. The first 92 pages of the draft policy released Jan. 12 call for more than 50 actions, nine priorities, a new National Ocean Council, nine Regional Planning Bodies tasked with creating Coastal Marine Spatial Plans, several interagency committees and taskforces, pilot projects, training in ecosystem-based management for federal employees, new water quality standards and the incorporation of the policy into regulatory and permitting decisions. Some of the action items call for the involvement of as many as 27 federal agencies. Another requires high-quality marine waters to be identified and new or modified water quality and monitoring protocols to be established. Young hosted a field hearing of the House Natural Resources Committee in Anchorage April 3 where he blasted the administration for refusing to explain exactly how it is paying for implementing the National Ocean Policy. “This National Ocean Policy is a bad idea,” Young said. “It will create more uncertainty for businesses and will limit job growth. It will also compound the potential for litigation by groups that oppose human activities. To make matters worse, the administration refuses to tell Congress how much money it will be diverting from other uses to fund this new policy.” Natural Resources Committee Chairman Doc Hastings, R-Wash., sent a letter House Appropriations Committee Chairman Hal Rogers asking that every appropriations bill expressly prohibit any funds to be used for implementing the National Ocean Policy. Another letter was sent April 12 to Rogers by more than 80 stakeholder groups from the Gulf of Mexico to the Bering Sea echoing the call to ban all federal funds for use in the policy implementation. “The risk of unintended economic and societal consequences remains high, due in part to the unprecedented geographic scale under which the policy is to be established,” the stakeholder letter states. “Concerns are further heightened because the policy has already been cited as justification in a federal decision restricting access to certain areas for commercial activity.” Congress refused to fund some $27 million in budget requests for NOAA in fiscal year 2012 to implement the National Ocean Policy, but the administration released its draft implementation policy in January anyway. Begich told the Journal when the draft implementation plan was released that fund diversion was a “main concern.” “At a time Congress is reining in spending, I think the administration needs to prioritize funding for existing services especially those which support jobs such as fishery stock assessments and the like, and not new and contentious initiatives,” he said. Murkowski called the administration’s implementation plan “clear as mud” at an Appropriations Committee hearing April 19. “It’s expensive; there are no dedicated funds for agencies to follow through with the commitments that have been identified in the draft implementation plan,” she said. “I have been told that the national ocean policy initiative is going to be absorbed by these existing programs, but yet the agencies haven’t been able to provide me with any indication as to what work is actually going to be set aside as part of that trade-off, so it is as clear as mud to me where the administration is really intending to take this.”   Andrew Jensen can be reached at [email protected]

Rumors swirl of smaller iPad, which Jobs detested

NEW YORK (AP) — Apple generates more gossip than the Kardashians. There’s a constantly spinning mill of rumors about Apple products, most of which turn out to be untrue. What’s unusual is that talk has revived of a smaller iPad model, an idea company founder Steve Jobs derided publicly a year before he died. Apple and its suppliers aren’t commenting. Rumors of a smaller iPad, or “iPad mini” have percolated ever since the first iPad was launched two years ago. This time around, they’re fed by media reports from South Korea, China and Taiwan, saying Apple has ordered Samsung screens that are 7.86 inches measured on the diagonal. That would make the screen about two-thirds the size of the current iPad, which has a diagonal measurement of 9.7 inches. • Why it’s a good idea: A smaller tablet would help Apple further its lead in the tablet market. “From a competitive standpoint, we believe an iPad mini with a lower price point would be the competition’s worst nightmare, says Shaw Wu, an analyst at Sterne Agee. “Most (competitors) already have a tough enough time competing against the iPad 2, as well as the new iPad.” Apple has successfully fended off competitors who have tried to sell tablets in iPad’s size range. But last year, Amazon.com Inc. figured out how to crack Apple’s stranglehold on tablets by making a half-size, no-frills tablet. The result was the Kindle Fire, which sells for $199 — basically, the cost of production. Amazon has sold millions of them. Apple sells the iPod Touch for $199, but its screen is about a quarter of the size of the Kindle Fire — a big disadvantage for people who want to enjoy books, movies and games. It also sells the older iPad model for $399. It has nothing in between. Price isn’t the only reason customers might prefer a smaller tablet. A 7-inch model would fit in many handbags, unlike the current iPad. Wu says he’s seen evidence of Apple experimenting with both smaller and larger tablet screens since 2009, and doesn’t sense that the release of an iPad mini is “imminent.” • What it might cost: It could be hard for Apple to make money from an iPad-quality 7-inch tablet that sells for $299. Analysts at IHS iSuppli estimate that a smaller tablet would cost around $250 to produce, a figure that doesn’t include development costs, packaging or patent royalties. That suggests Apple would price it at $329 or $349. “The first thing you always have to keep in mind is: Apple is not going to sell an unprofitable product,” says Rhoda Alexander at iSuppli. • Why it’s a bad idea: A smaller iPad would be a headache for software developers. “Going to a different screen size ends up being a ton of work,” says Nate Weiner, the creator of Pocket, an application that stores Web pages and other material for later reading. “If you take, for an example, an interface built for the iPad and try to cram it into the Kindle Fire, it just doesn’t fit,” he says. However, developers who have already adapted their programs to the Kindle Fire or other 7-inch tablets wouldn’t face a big hurdle in adapting to a third Apple screen size, Weiner says. • What Jobs thought: Apple’s late CEO made a rare appearance on an October 2010 earnings conference call to launch a tirade against the 7-inch tablet Samsung Electronics Inc. was set to launch as the first major challenger to the iPad. “The reason we wouldn’t make a 7-inch tablet isn’t because we don’t want to hit a price point, it’s because we don’t think you can make a great tablet with a 7-inch screen,” Jobs said. “The 7-inch tablets are tweeners, too big to compete with a smartphone and too small to compete with an iPad.” He said the resolution of the display could be increased to make up for the smaller size, but that would be “meaningless, unless your tablet also includes sandpaper, so that the user can sand down their fingers to around one-quarter of the present size. “There are clear limits of how close you can physically place elements on a touch screen before users cannot reliably tap, flick or pinch them. This is one of the key reasons we think the 10-inch screen size is the minimum size required to create great tablet apps,” he said. Jobs failed to mention Apple’s success developing apps that use taps, flicks and pinches on the iPhone, with its 3.5-inch screen.

Sen. Olson looking at options for Alaska pipeline bill

JUNEAU (AP) — A bill to help Alaskans deal with high energy costs failed during the regular session, but a Nome senator is raising the possibility of reviving the proposed energy voucher program. Democratic Sen. Donny Olson, chairman of the Senate Community and Regional Affairs Committee, said April 24 that he’s looking at adding provisions, like vouchers, to HB9, an in-state natural gas pipeline bill. The idea, he said, is to try to help both rural and urban Alaskans in their needs. While a pipeline is intended to help people in Alaska’s most populous region, Olson said those in rural areas are suffering with higher energy costs and need help, too. He said he’s looking at the options available to try to provide aid, including vouchers, which he called a “strong possibility.” HB9 is one of two issues left on the special session call and has had one hearing since the special session started last Wednesday. Supporters of HB9 say the bill is meant to further empower the Alaska Gasline Development Corp., or AGDC, in its effort to advance a small-diameter pipeline that would run from the North Slope to south-central Alaska and provide gas for Alaskans. Critics say it gives AGDC too much authority, and they say there are other alternatives for providing gas to Alaskans that could be cheaper. Olson said there aren’t the votes in his committee to advance HB9 as it passed the House. His committee unveiled a pared-down version of HB9 near the end of the regular session, but it drew criticism from the bill’s main sponsors, Reps. Mike Chenault and Mike Hawker. Chenault, R-Nikiski, for example, said the rewrite “neutered” the ability of AGDC to advance a project and reinserts politics into efforts to bring a gas line to fruition. Hawker, R-Anchorage, said that Olson’s comments were “completely new to me.” He said he understands how things work at the Capitol and that there’s “often a need to accommodate the provincial interests of powerful legislators to move forward policy that’s good for the whole state.” He said he and Chenault have committed to make staff available to work with Olson’s staff on HB9, and that he doesn’t understand the resistance to the bill. “We’re looking forward to the opportunity to get before the committee and hopefully present our case,” he said.

Editorial: Regulators hold first joint meeting on halibut bycatch; herring updates

Brainstorming over halibut bycatch was the theme of a two-day workshop this week in Seattle. Topping the discussions: the methods used to collect bycatch numbers and the accuracy of the data. The meeting between the International Pacific Halibut Commission and the North Pacific Fishery Management Council is an unprecedented effort to work together to reduce the estimated 10 million pounds of halibut taken as bycatch and discarded in Alaska’s fisheries. “As far as I know, this meeting represents a first ever joint effort by the two bodies to meet together to discuss current science and/or research,” said Duncan Fields of Kodiak, a member of the North Pacific Fishery Management Council. The NPFMC sets halibut bycatch limits in federal-water fisheries, which produce 80 percent of Alaska’s seafood landings. The IPHC tracks and studies the stocks and sets annual catch limits for commercial halibut fisheries in the U.S. and Canada. It has been more than two decades since bycatch levels were soundly re-evaluated by the NPFMC; two years ago, the IPHC reconvened a task force to study how bycatch removals affect halibut stock assessments and, ultimately, fishery management. Fields said he has “high hopes” that the joint meeting, “will be informative and further more co-operative public presentations.” The North Pacific Council plans to reduce halibut bycatch limits in Gulf of Alaska fisheries at its June meeting in Kodiak. Alaska seafood is tops The seafood industry not only provides the most jobs in Alaska — more than oil/gas, mining, timber and tourism combined — seafood also is Alaska’s top export. State numbers show that Alaska’s total exports increased by more than 26 percent last year valued at $5.2 billion, the highest ever. Half of the value, $2.5 billion, came from seafood exports, a 35 percent increase over 2010. Last year also marked the first year that China ranked first for Alaska exports with seafood also topping that list ($836 million). China was followed by Japan, South Korea, Germany, the Netherlands, Canada, France, Thailand, Spain and Portugal. Europe accounted for more than 22 percent of Alaska seafood exports last year. Other Alaska exports included mineral ores, which increased 31.7 percent to $1.8 billion; precious metals (primarily gold), were up 24.7 percent to $266.4 million. Forest products exports increased 1.9 percent to $119.3 million. Energy exports decreased 7.3 percent to $387.7 million. Herring watch Big roe herring shortfalls at Southeast have boosted fishing and buying interest at Kodiak. The fishery began on April 15 and 25 to 35 boats are signed on compared to 17 last season, said James Jackson, a fishery manager at Alaska Department of Fish and Game in Kodiak. As many as seven major companies are buying the fish valued for its roe. “I think a lot of that has to do with the large harvest that did not get taken down in Sitka,” Jackson said. The Sitka herring fishery in late March produced less than half of its nearly 29,000-ton quota, and a small fishery at West Behm Canal was canceled all together. That puts Kodiak’s 5,355-ton herring harvest in a good spot for interested buyers, and hopes are high that the fish will fetch more than the disappointing $200 per ton last year. Unlike other Alaska regions where herring fisheries can be over in a few short openers, Kodiak’s fishery can occur in up to 81 different sections around the island, and the fishery lasts through June. “Kodiak is a big complicated fishery and it is very different,” Jackson said. “At Sitka and Togiak, those places have large spawning aggregates and they tend to come in usually all at once and you can catch the harvest limit really fast. At Kodiak there are so many different separate spawning aggregates, and they spawn at different times, sometimes in mid-April and sometimes in late June.” Kodiak also is a “stop over” for boats heading to the state’s largest herring fishery at Togiak in Bristol Bay. Alaska’s herring fisheries will continue along the westward coast all the way to Norton Sound. The statewide fisheries bring in more than $20 million to coastal communities. Fish bills United Fishermen of Alaska, the nation’s largest commercial fishing trade group, is claiming “success” with the passing of several measures during the regular session of the state legislature. They include bills that would increase commercial fishing loan limits, support entry of young fishermen into commercial fishing careers. Funding increases UFA also supported include: $9 million in general fund for Alaska Seafood Marketing Institute as a match to industry contributions; a $60,000 increase from the governor’s recommendation for Alaska Marine Safety Education Association trainings; and $489,000 for ADFG Sport Fishing Division Invasive Species response. UFA-supported measures that did not pass include: Sea Otter Management Resolution (held in Senate Rules); labeling of farmed fish and genetically modified fish (Did not move from first committee referral, House Fisheries); prohibiting growing or cultivating genetically modified fish (was not heard in House Resources); R&D tax credits (held in Senate Finance Committee); crew data and statistics (held in House Finance); coastal management (heard but not passed in first committee, House Resources). Also not passing was a bill on Bristol Bay large scale mines: “An Act requiring legislative approval before the issuance of an authorization, license, permit, or approval of a plan of operation for a large-scale metallic sulfide mining operation that could affect water in or flowing into or over the Bristol Bay Fisheries Reserve” (was not heard in first committee of referral, Senate Labor and Commerce). Find a complete update on all fish bills at www.ufa-fish.org.   Laine Welch lives in Kodiak. Visit alaskafishfactor.com for more information or contact [email protected]

Editorial: Alaska needs wise oil tax policy built on compromise

For the second time in two years, oil taxes have prompted a special session of the Alaska Legislature. Or, to put it another way, state Senate leaders outsmarted themselves and were unable to get to the negotiating table with their counterparts in the House during regular session. Here is what happened. In March of last year, the House passed an oil tax reform bill to roll back some of the most damaging aspects of the ACES (Alaska’s Clear and Equitable Share Act) tax increase of 2007. That bill, HB110, has since been languishing in the Senate, bottled up in committee. In two sessions it has not been given a floor vote or even amended in committee more to the Senate’s liking. Usually, amendments are how compromises get started. Not this time. Senate leaders spent two legislative years, untold hours of hearings and big bucks on consultants coming up with a different bill that, in the end, could not draw enough votes in their own 16 of 20 super majority to pass. One reason for the failure was that their bill, SB192, was too clever by half. It had been given a ridiculously long, two-page title that prevented much compromise under the rules of the Legislature. My way or the highway, in other words. When that failed, Senate leaders who had been lecturing anyone who would listen on the virtues of going slow and being cautious, pulled an obscure bill out of legislative oblivion, grafted certain sections of SB192 onto it in a single committee meeting, rammed it through the Senate a few hours later, then sent it back over to the House for action with only a day left. To their credit, House leaders were not stampeded. Hence, the special session. All the trickery aside, what matters most is what happens next. There is still an opportunity to get this right. The bill that the Senate rushed over to the House has constructive relief for new oilfields, a step in the right direction. However, it is far too narrow. It leaves Alaska with a Chilkoot Charlie’s tax policy – “we gouge the other oil field and pass the savings on to you.” The private sector is generally not fooled by such trickery. Today’s new oil will become tomorrow’s old oil, in annual peril of being “reclassified” by politicians hungry for more pork to hand out. A good compromise bill will have two simple elements to it. First, it will alleviate the extreme progressivity that causes Alaska government “take” to become confiscatory as oil prices climb. This is important. Oilfield economists know that prices go up and down over time. They assume that high profitability during periods of high prices offset losses when prices are low. Any taxing region that takes away the upside for industry will find itself underperforming, as Alaska has. Second, a good bill should not try to skim off the vast majority of profits from existing fields. At today’s oil prices or higher, the incremental government “take” on existing oilfields is between 70 percent and 90 percent. That is too greedy. It reduces the incentive to invest in existing fields, which is where most easily recoverable oil lies. The old Chilkoot Charlie’s joke is just that, a joke. It is not wise tax policy. In order to address this issue successfully, our state Senators must do what successful policy makers have always done: don’t be greedy, set aside the trickery and negotiate in good faith. The next generation of Alaskans is counting on it.   Scott Hawkins is president of Advanced Supply Chain International, an oilfield services firm headquartered in Anchorage that employs more than 200 Alaskans. He serves on the board of the Alaska Council on Economic Education and is chairman ProsperityAlaska.org.

Editorial: State spending on energy should look to long term

The twists and turns of legislative attempts to address high energy costs probably left many Interior residents shaking their heads in wonder. On the one hand, the state Senate approved a bill to spend hundreds of millions of dollars on energy cost vouchers across the state, including in many areas where those costs are not particularly high. Yet the same body, at the time of this writing, had abandoned a proposal to spend $30 million on a natural gas storage system for Interior Alaska because of disagreement about how to deliver the money, whether through a direct appropriation or a tax measure that would amount to the same thing. And a much larger request of $100 million or more, which could have delivered dramatic and lasting energy savings across the region where it’s actually needed, also went nowhere. These choices are hard to fathom. Jump-starting a natural gas system would be a real step toward reducing the cost of heating and electricity in the Interior in the long term. The benefits would begin within a few years, and they would compound indefinitely as more people and businesses switched to gas. It would prepare the community for natural gas if a pipeline is ever built. The alternative — spending $330 million to $465 million on energy cost vouchers — is far less forward-thinking. The money would be gone in a year, with nothing done to address the long-term problem of high energy costs. Vouchers perversely reduce the incentive people have to conserve through steps such as switching to cheaper fuels, insulating their homes, using less electricity or taking other steps to address the problem individually. Vouchers also do nothing to reduce business costs, a serious problem illustrated by the recently announced shutdown of a crude refining unit at the Flint Hills refinery in North Pole. The voucher route is certainly easier. A statewide distribution has appeal for legislators everywhere, even in areas where heating costs are not stressing family and business budgets. Few of their constituents are going to complain too loudly about free money. Yet putting the state’s money into infrastructure is clearly the better choice, even for Alaska residents who wouldn’t seem to benefit directly — residents of Southcentral Alaska, for example. There is much talk of building either a small-scale or large-scale natural gas pipeline from the North Slope to Southcentral.

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Movers and Shakers 04/29/12

Margaret Nelson has joined UIC Construction Services as business development/marketing manager. Nelson has extensive business and management experience in Alaska. Most recently she served as senior vice president of corporate development for Calista Corp. and was president/CEO of the Alaska Native Heritage Center during its development and opening. An Alaska Native from Southeast Alaska, she studied business administration at the University of Alaska Anchorage and obtained a bachelor’s degree from the University of Alaska Fairbanks.   Visit Anchorage recognized nine exceptional contributions to the visitor industry and the community as a whole at the 25th annual Seymour Awards Banquet on April 13. Award winners include: Mary and Buzz Rohlfing, the proprietors of Bear Square, won Member Contribution to the Bureau; SMG/Anchorage Convention Centers won the Member Contribution to the Visitor Industry for their meeting services; Oomingmak Musk Ox Producers Co-op secured the Seymour award for Community Organization; David Green, master furrier won Member of the Year; Laile Fairbairn won the All Alaskan Award; Lt. Gov. Mead Treadwell and his office won Meeting Planner of the Year for their help in securing the 2013 National Secretary of State’s Annual meeting in Anchorage; Holiday Vacations won Tour Operator of the Year; Sandra Knight won Volunteer of the Year–Downtown, and Anne Smith won Volunteer of the Year–Airport. Longtime Visit Anchorage volunteers Doris Carey, Gwen Christianson, Charlotte Gill, Arlene Schillereff and Mary Todd were honored with a new award called the President’s Circle. The award recognizes the outstanding service and longevity of some of Visit Anchorage’s most dedicated volunteers. Each has worked in the Visitor Information Centers for more than 25 years.   University of Alaska Fairbanks researcher Margaret Darrow is set to embark on a five-year study of water that remains liquid at subfreezing temperatures in frozen ground. Darrow’s work is being funded by an award from the National Science Foundation’s Faculty Early Career Development Program, also known as CAREER. She hopes her work will lead to better predictions of frost heaving and permafrost’s response to climate change. The research stands to have innumerable applications to construction and planning in Alaska and other circumpolar regions. The project will begin Sept. 1. Other UAF researchers who have received CAREER awards include: Marvin Schulte, Zhongguo John Ma, William Simpson, Bert Boyer, Hong Liang, Anna Berge and Kristin O’Brien.   Thompson & Co. Public Relations announced the promotion of Tara Stevens to account manager and the addition of account executive Janette Sherman and account coordinator Catalina Myers. Stevens joined Thompson & Co. in 2007 as an intern and after spending a year in the agency’s New York office, she returned to Alaska and steadily increased her expertise and role within the agency. Prior to joining the agency, Stevens worked for Teach for America in New York. She graduated from the University of Idaho with a bachelor’s degree in advertising and creative writing. Sherman hails from Bend, Ore., and graduated from the University of Oregon with a degree in public relations and a minor in news editorial and political science. Myers joined Thompson & Co. in 2011, assisting in all aspects of client work from writing and distributing press releases, to conducting research and generating content for social media accounts. Before joining the agency, Myers was at Denali Alaskan Federal Credit Union and worked in their marketing department. She graduated from Southern Oregon University with a bachelor’s degree in journalism and communications.   Frank Richards has joined Alaska Gasline Development Corp. as the pipeline engineering manager. Richards recently served as the deputy federal coordinator, in the Office of the Federal Coordinator, working on Alaska natural gas transportation projects. Richards will direct the performance of a multidisciplinary pipeline engineering team for AGDC. Richards is a registered professional engineer with 25 years of Alaskan project management experience. He brings broad engineering, management, budget and legislative experience to the AGDC project. Richards spent more than 10 years in the private sector working on large-scale projects in Alaska and he spent 19 years with Alaska Department of Transportation.

The business of clean energy

Randy Howard of MRT Technology shows an LED flourescent light to civil engineer Mark Paprocki at the Business of Clean Energy in Alaska Conference April 20.

Exports have record year with seafood, weak dollar

Led by seafood, Alaskan exports enjoyed another record year in 2011 with a value of more than $5.2 billion, a $1 billion increase from 2010.The previous record for Alaska exports was set in 2010 at $4.2 billion, just greater than $4 billion in exports in 2006 and 2007, and last year’s numbers were a 57 percent increase versus $3.3 billion in exports in 2009.Seafood topped the growth with a 35 percent increase in value during 2011 compared to 2010, and accounted for nearly half the state exports at $2.5 billion. All data are from the U.S. Census Bureau.China became the No. 1 destination for Alaska seafood exports, displacing traditional top market Japan for the first time. Seafood exports to China, supplying a growing middle class as well as processing operations that re-export Alaskan seafood to Europe, the U.S. and elsewhere, rose to $836 million compared to $589 million to Japan.Total Alaska exports to China have nearly tripled since 2009, rising from $586 million to $1.44 billion in 2011. Exports have steadily risen in value to South Korea as well, growing from $458 million in 2009 to $644 million in 2011.“Alaska’s sustainable seafood is reaching a wider variety of destinations in a wider array of high quality product forms, and this directly benefits Alaska’s communities that share in production,” said United Fishermen of Alaska President Arni Thomson.Energy exports declined by 7.3 percent to $387 million after ConocoPhillips shut down its liquefied natural gas export facility at Nikiski last November. The plant will resume operations this year after securing new contracts and leasing an LNG tanker.LNG exports declined from $366 million in 2010 to $210 million in 2011. Energy, which includes LNG and coal, remains the state’s third largest export behind seafood and mineral ores followed by precious metals, forest products and fish meal.Most of Alaska’s exports — seafood, mineral ores, forest products and precious metals — grew more in value than they did in volume. The weakened dollar against the Japanese yen, the ballooning price of gold and new mineral export operations played a major role in the increase in value for Alaskan exports.From the middle of 2010 to the end of 2011, the U.S. dollar declined in value by 25 percent against the yen, giving a tremendous boost to the buying power of Japanese markets who covet Alaska salmon, crab, pollock and herring roes (eggs) and sablefish. The total Alaska salmon harvest (not all exported), was tabbed at $603 million for 2011 to rank as the third-highest ever and is expected to climb to second all-time after final price adjustments are reported. The Alaska snow crab harvest increased in 2011 versus 2010, to about 54 million pounds, but the high-dollar king crab harvest was cut in half from 14.8 million pounds to 7.8 million pounds. Nevertheless, the value of crab exports increased by 56 percent, from $73 million in 2010 to $113 million in 2011.The value of frozen fish fillets nearly doubled in 2011, to $519 million, compared to $280 million in 2010. The Bering Sea pollock quota was raised by about 50 percent in 2011, and the value of fish roe (one of three primary pollock products among surimi and fillets) increased by 77 percent to $269 million.Gold prices skyrocketed to more than $1,900 per ounce in 2011, contributing to large increases in the value of exports of gold bars to Switzerland — Alaska’s No. 6 export destination — and buoyed by the first full year of production at Kensington mine north of Juneau.Gold exports jumped from $213 million in 2010 to $265 million in 2011, with $250.9 million going to Switzerland. Exports of gold concentrates, mostly from Kensington, increased from $20 million in 2010 to $142 million in 2011.The Port of Skagway, a project led by the Alaska Industrial Development and Export Authority, or AIDEA, exported $199 million worth of copper ore concentrates from the Minto mine in Canada compared to $37 million in 2010. “The strong international work by industry and by state agencies, like the Alaska Seafood Marketing Institute and Alaska Industrial Development and Export Authority, are reaping benefits for Alaskans across the state,” Gov. Sean Parnell said in a statement.Mineral ore exports from the Red Dog mine in Northwest Alaska accounted for $1.4 billion of the state’s $1.8 billion in such exports. Zinc ores and concentrates increased by nearly 12 percent to $981 million in 2011, and lead ores and concentrates increased by 8.7 percent to $437 million. The value of zinc exports from Red Dog, one of the largest such mines in the world, have doubled since 2008 and the value of lead exports have nearly tripled in the same period.The value of forest products increased slightly by 1.9 percent to $119 million, the highest value in seven years bound mainly for China, Japan, South Korea, Canada and Taiwan.The top 10 markets overall were as follows (percent change):• China, $1.44 billion (56.2 percent)• Japan, $1.08 billion (-10.9 percent)• South Korea, $644 million (35 percent)• Canada, $583.9 million (49.6 percent)• Germany, $261.1 million (49.7 percent)• Switzerland, $252.8 million (20 percent)• Spain, $205.6 million (25.8 percent)• Netherlands, $172.8 million (50.3 percent)• Australia, $96.1 million (46.7 percent)• Mexico, $78.9 million (488.5 percent)Andrew Jensen can be reached at [email protected]

House researches, Senate waits for answers

“We’re in the valley of a decision,” Rep. Alan Dick said April 24 at the end of the third daylong House Resources Committee hearing on Gov. Sean Parnell’s oil tax reduction bill. As the first week of the 30-day special session ended, a decision was not expected soon. Co-chair Paul Seaton, R-Homer, had no target date or timeframe for debate on markup to House Bill 3001. The House Special Energy Committee is unofficially at the table during the research mode, but its members won’t be moving or voting on amendments. Other lawmakers can send written questions to the chair during hearings. The measure goes next to the House Finance Committee. The Senate Resources Committee was generally on a parallel course, planning in particular to question Parnell administration consulting firm, Gaffney, Cline and Associates on the economic basis for the twin Senate Bill 3001. Otherwise it, and the full Senate are waiting for the House to take action after the Senate’s failed effort to pass an oil production incentive bill during the regular session. “I do think it’s appropriate that we see what the House thinks at the end of their process and to see if there is a potential for compatibility in that regard,” said Sen. Joe Paskvan, D-Fairbanks, co-chair of the Senate Resources Committee. He added that House hearings “are getting the answers with similar information we got in the Senate over a year ago.” A two-hour Senate Resources Committee meeting held April 24 was the only one of any kind in the Senate in four days. The April 20 committee session included a scolding for Revenue Commissioner Brian Butcher from the administration’s most ardent champion. “We were called into session with kind of a half-baked bill, and I mean that in sincerity,” Sen. Lesil McGuire, R-Anchorage, said to Butcher. “You’re in a position where you’re trying to sell a bill where, I think, you just don’t understand the ins and the outs of it.” After that and a two-hour hearing earlier in the month, Deputy Commissioner Bruce Tangeman and William Barron, director of the Division of Oil and Gas, Paskvan took a three-day break to await more specifics supporting a bill that is generally a different approach to the tax cuts in HB 110 for the Prudhoe Bay and Kuparuk legacy fields. The Senate majority summarily rejected that bill during the regular session. The revised HB 110 provisions are viewed by most Democrats and several Republicans in both bodies as unnecessary or too generous. They exclude 40 percent of legacy field gross revenues from consideration in the calculation of the progressivity tax. They also cut the cap on the maximum progressivity tax rate to 60 percent from 75 percent of production value and extend to the North Slope the 40 percent well lease expenditure credit now available in Cook Inlet. PFC Energy, the Legislature’s contract consultants, projected a $1.45 billion decline in revenue from what the state would have received under current tax law if the bill had been in effect last year. The incentives that have bipartisan support give new North Slope fields a 30 percent gross revenue exclusion from base and progressivity tax amounts, but not from the progressivity calculation formula, for 10 years. Sen. Bert Stedman, R-Sitka, co-chair of the Senate Finance Committee, called SB 3001’s legacy field provisions “almost identical” to HB 110. Paskvan agreed. “It appears that they are advancing a policy but are not prepared on the detail or the substance of that policy, and so that is part of the further questioning that we’ll have to engage in,” Paskvan said. PFC Energy spokesmen have given the House committees a mini-seminar on multinational oil and gas company investment decision-making, and global strategy and portfolio overviews of Alaska’s three major producers. PFC Senior Director Ton Reinsch suggested Alaska should reach agreement with the majors on the rate of decline in the legacy fields and offer incentives for incremental production. “It’s a tried and true method, but you have to incent that additional production. At the end of the day it is critical for the government to be perceived as getting a fair deal, but equally or more important that those flows continue,” Reinsch said. He noted that the approach has been applied on a project or field-specific basis elsewhere and could be complicated if attempted basin-wide. Reinsch also noted that the lag time from legislative action to field response to money in the treasury the state’s near term oil revenue future is already written. PFC “can speak so firmly,” he emphasized, because “if it is going to turn the dial for any of these companies in the next five to seven years, they’ve already discovered it and we modeled it.” Whether the committee will take Reinsch’s advice remains to be seen. “It seems obvious more than half the committee understands this is not a good thing,” Rep. Berta Gardner, D-Anchorage, said of HB 3001. With sufficient data that she emphasized she has not yet seen, Gardner, a Resources Committee member, said a bill with new field credits could pass the House. Gardner suggested the major producers couldn’t justify tax cuts because they have rarely applied for royalty relief under a long-standing option that would require them to disclose to the state detailed economic data. Rep. Lance Pruitt, R-Anchorage, co-chair of the Energy Committee said, “It seems to be there’s alignment on (incentives for) outside of the legacy fields or the new producers, or everything that’s new. There seems to be a fairly good understanding that we probably need to make something to attract them there. I think the legacy fields, that’s the huge hiccup.” The Senate is also holding on to HB 9, Speaker Mike Chenault’s bill to build a southbound natural gas bullet line from the North Slope to the Mat-Su Valley. The Senate Community and Regional Affairs Committee released its version of the bill shortly before a one-hour hearing April 19. Chairman Donny Olson, D-Nome, cancelled the next day’s session and had no meetings scheduled through April 25 at least. As passed by the House, HB 9 creates the Alaska Gasline Development Corp. as an independent subsidiary of the Alaska Housing Finance Corp. with the authority to plan, design, build and operate a natural gas pipeline. Olson’s rewrite requires legislative approval before any construction, which Rep. Mike Hawker, the bill’s co-sponsor, panned. Hawker said lawmakers’ interests are too local to give them control of project of state importance. “We are essentially obligated, when a project comes forward, if it’s not the one that absolutely benefits me to the greatest degree possible, I’m obligated to challenge it,” he said at the hearing.

Parnell removes oil taxes from special session

JUNEAU (AP) — Gov. Sean Parnell on Wednesday pulled oil taxes off the Legislature's special session call, saying the Senate "appears incapable of passing comprehensive oil tax reform." The stunning decision came just one week into a special session intended to deal with three issues: oil taxes, an in-state gas line and human trafficking bills. The trafficking bill was taken care of last week, so that just leaves HB9, the pipeline bill. Senate President Gary Stevens said Senate leadership would meet Thursday morning to discuss what they want to do with the measure, which is in the Senate but faces a tough road. Parnell's announcement on a 6 p.m. TV news broadcast came amid mounting criticism of his bill and what some lawmakers, particularly senators, saw as an inability of his administration to adequately defend its plan. Parnell's bill borrowed from a proposal the Senate passed during the last weekend of the regular session, providing a tax break, or "production allowance," for the first 10 years of production from new fields on the North Slope. But it also cuts taxes for existing producers and allows tax incentives for well-lease expenditures, provisions more in line with HB110, a tax-cut bill he pushed last year that stalled in the Senate. His proposal faced skepticism, if not outright rejection, from senators from the start of the special session. Some saw it as nothing more than a repackaged version of HB110. A legislative consultant this week said it takes an approach that winds up giving oil companies "quite a lot" of money for projects that are economically viable today. Sen. Lesil McGuire, R-Anchorage, who said she agrees philosophically with Parnell on the need to make Alaska a more competitive place for industry investment, last week called the plan "half-baked" and told Revenue Department officials she didn't think they understood the ins-and-outs of the bill. "And we all know it's going to end in a train wreck, and now it's just a matter of who gets to be blamed for it, and I think that's silly," she said. The Senate spent two months during the regular session delving into the oil tax issue, but an overhaul of Alaska's tax structure stalled in the Senate's bipartisan majority during the last days. A major stumbling block was how best to address legacy fields like Prudhoe Bay and Kuparuk, the mainstays of Alaska's oil industry, where production has been declining. One of the concerns was with giving too much money to oil companies, particularly for oil they would have produced anyway. Sen. Bert Stedman, R-Sitka and co-chair of the Senate Finance Committee, said before Parnell's announcement that he felt that lawmakers increasingly were moving away from tax breaks for legacy fields. He said if there was a choice between Parnell's plan and nothing, it would be nothing. Parnell, in a statement, said, "Given the hardline position of some in the Senate against increasing production from both existing and new fields, the Senate appears incapable of passing comprehensive oil tax reform." Sen. Bill Wielechowski, D-Anchorage, learned of Parnell's decision while at the gym. He said it's "factually untrue" to say senators had taken a hardened position, noting that the Senate had passed a bill intended to encourage new-field oil. Parnell, he said, "completely and utterly failed to make his case" for a broader tax break. "I'm a little disappointed and surprised the governor gave up on the people of Alaska," Wielechowski said. What all this means is it could be a year or more, given the upcoming legislative elections, before the Legislature tackles the tax issue again. The end goal of the oil tax debate has been to produce more oil. Alaska relies heavily on oil revenues to run, but production has been declining, and high prices have helped mask the decline in recent years. While not everyone agrees the current tax structure is broken, there had been a growing recognition — particularly on the Senate side — about a need to address progressivity. Alaska's tax system features a base tax rate of 25 percent and a progressive surcharge triggered when a company's production tax value hits $30 a barrel. That's been a main complaint of the industry, especially at times of high oil prices. Earlier Wednesday, industry officials testified before the House Resources Committee that Parnell's plan represented a meaningful change. The committee, in conjunction with the House Special Committee on Energy, had been delving into the specifics of Parnell's tax-cut plan and trying to understand its implications. "Meaningful" has become the buzzword in the oil tax debate but it means different things to different sides. Revenue Commissioner Bryan Butcher, in an interview about 24 hours before Parnell's decision, said things hadn't gotten to a point where there seemed to be "no hope of it passing. That may very well be the case but that's not the way we've been working forward yet." When asked what would happen if the bill stalled, Butcher, the public face of the tax plan before legislators, reiterated that dealing with oil taxes remains Parnell's top goal. "It's the future of Alaska, and if something substantive doesn't happen in this special session, I would imagine we're going to continue to take the time and figure out what the best way to go forward is," he said. "However, the issue is still of vital importance to the state, and it's still something we're going to be focused on trying to get accomplish."  

Parnell removes oil taxes from special session

JUNEAU (AP) — Gov. Sean Parnell on Wednesday pulled oil taxes off the Legislature's special session call, saying the Senate "appears incapable of passing comprehensive oil tax reform." The stunning decision came just one week into a special session intended to deal with three issues: oil taxes, an in-state gas line and human trafficking bills. The trafficking bill was taken care of last week, so that just leaves HB9, the pipeline bill. Senate President Gary Stevens said Senate leadership would meet Thursday morning to discuss what they want to do with the measure, which is in the Senate but faces a tough road. Parnell's announcement on a 6 p.m. TV news broadcast came amid mounting criticism of his bill and what some lawmakers, particularly senators, saw as an inability of his administration to adequately defend its plan. Parnell's bill borrowed from a proposal the Senate passed during the last weekend of the regular session, providing a tax break, or "production allowance," for the first 10 years of production from new fields on the North Slope. But it also cuts taxes for existing producers and allows tax incentives for well-lease expenditures, provisions more in line with HB110, a tax-cut bill he pushed last year that stalled in the Senate. His proposal faced skepticism, if not outright rejection, from senators from the start of the special session. Some saw it as nothing more than a repackaged version of HB110. A legislative consultant this week said it takes an approach that winds up giving oil companies "quite a lot" of money for projects that are economically viable today. Sen. Lesil McGuire, R-Anchorage, who said she agrees philosophically with Parnell on the need to make Alaska a more competitive place for industry investment, last week called the plan "half-baked" and told Revenue Department officials she didn't think they understood the ins-and-outs of the bill. "And we all know it's going to end in a train wreck, and now it's just a matter of who gets to be blamed for it, and I think that's silly," she said. The Senate spent two months during the regular session delving into the oil tax issue, but an overhaul of Alaska's tax structure stalled in the Senate's bipartisan majority during the last days. A major stumbling block was how best to address legacy fields like Prudhoe Bay and Kuparuk, the mainstays of Alaska's oil industry, where production has been declining. One of the concerns was with giving too much money to oil companies, particularly for oil they would have produced anyway. Sen. Bert Stedman, R-Sitka and co-chair of the Senate Finance Committee, said before Parnell's announcement that he felt that lawmakers increasingly were moving away from tax breaks for legacy fields. He said if there was a choice between Parnell's plan and nothing, it would be nothing. Parnell, in a statement, said, "Given the hardline position of some in the Senate against increasing production from both existing and new fields, the Senate appears incapable of passing comprehensive oil tax reform." Sen. Bill Wielechowski, D-Anchorage, learned of Parnell's decision while at the gym. He said it's "factually untrue" to say senators had taken a hardened position, noting that the Senate had passed a bill intended to encourage new-field oil. Parnell, he said, "completely and utterly failed to make his case" for a broader tax break. "I'm a little disappointed and surprised the governor gave up on the people of Alaska," Wielechowski said. What all this means is it could be a year or more, given the upcoming legislative elections, before the Legislature tackles the tax issue again. The end goal of the oil tax debate has been to produce more oil. Alaska relies heavily on oil revenues to run, but production has been declining, and high prices have helped mask the decline in recent years. While not everyone agrees the current tax structure is broken, there had been a growing recognition — particularly on the Senate side — about a need to address progressivity. Alaska's tax system features a base tax rate of 25 percent and a progressive surcharge triggered when a company's production tax value hits $30 a barrel. That's been a main complaint of the industry, especially at times of high oil prices. Earlier Wednesday, industry officials testified before the House Resources Committee that Parnell's plan represented a meaningful change. The committee, in conjunction with the House Special Committee on Energy, had been delving into the specifics of Parnell's tax-cut plan and trying to understand its implications. "Meaningful" has become the buzzword in the oil tax debate but it means different things to different sides. Revenue Commissioner Bryan Butcher, in an interview about 24 hours before Parnell's decision, said things hadn't gotten to a point where there seemed to be "no hope of it passing. That may very well be the case but that's not the way we've been working forward yet." When asked what would happen if the bill stalled, Butcher, the public face of the tax plan before legislators, reiterated that dealing with oil taxes remains Parnell's top goal. "It's the future of Alaska, and if something substantive doesn't happen in this special session, I would imagine we're going to continue to take the time and figure out what the best way to go forward is," he said. "However, the issue is still of vital importance to the state, and it's still something we're going to be focused on trying to get accomplish."  

Legislature passes human, sex trafficking bill

JUNEAU (AP) — Alaska lawmakers have unanimously passed a bill stiffening penalties for sex trafficking, removing the label of "prostitute" from victims and changing court procedures as an effort to expedite justice and make the process easier on victims. Gov. Sean Parnell introduced HB359 in February. The bill passed the House during the regular legislative session, but time ran out before the session ended. The governor included the bill as part of the call for the special session, which started Wednesday. The Senate on Thursday made short work passing the bill and sending it on to Parnell. If he signs the measure into law, a person will be guilty of sex trafficking for three actions: forcing anyone to engage in prostitution, inducing a person under 20 years old into prostitution or inducing someone under their legal custody into prostitution. The crime will be classified as a "serious felony offense." Parnell said during an earlier interview with The Associated Press that he became aware of the issue while in Italy last November. He said he visited a shelter run by Sister Eugenia Bonetti, a Consolata Missionary who has helped create more than a hundred anti-trafficking shelters around Italy. Parnell and his wife, Sandy, began exploring the extent of the problem in Alaska and ultimately formed the bill as a response. "In many cases we have been lax as a state in punishing those who take advantage of our most vulnerable," Parnell said. "This bill changes that." The only concern raised before the Senate passed the bill was on a section more broadly allowing witnesses to testify by video rather than in person. Sen. Hollis French, D-Anchorage, said in a floor speech that courts are likely to question whether a Sixth Amendment right to confront witnesses is violated. French mentioned a split decision by the Supreme Court establishing that allowing video testimony does not necessarily violate the confrontation clause in the Constitution. French read from Justice Antonin Scalia's opinion on the 1990 case, Maryland v. Craig: "Seldom has this Court failed so conspicuously to sustain a categorical guarantee of the Constitution against the tide of prevailing current opinion," Scalia wrote. With that concern expressed, French voted in favor of the bill. He said, after the session, that there is a lot of good in the bill, and that the plan to allow video testimony in more circumstances is narrow enough not to cause great concern.

Pass the hemp vodka this 4/20

WASILLA (AP) — During at least one 420 celebration in Alaska on Friday, you'll be invited to pour yourself a drink instead of lighting up. In the counterculture world, "420" is the code for cannabis consumption, and April 20 — or 4/20 — is the holy day. But instead of passing around a joint, why not pour a drink of hemp seed vodka? Purgatory is the newest flavor from the Alaska Distillery, the Wasilla-based company which made a mark two years ago with the introduction of its smoked salmon-flavored vodka. "We have a mad scientist who kind of runs the joint here, and he seems to have brilliant ideas," said Bella Coley, the distillery's chief operating officer. "To compete in the alcohol industry these days, you have to be innovative and you have to bring in new products and you have to be imaginative," said Toby Foster, the company's chief executive officer and said mad scientist. "This product right here lends itself to all three things." He expects this to quickly become the distillery's biggest seller. The product is available in 18 states as of this week with nine more signed up, and after winning a "Hot New Spirits" award at an industry convention in Las Vegas this month, they are adding staff to the small Wasilla production plant. The company says it's the first to use hemp seed to produce vodka in the United States. Coley says distillers in Canada and Poland don't distill with hemp seeds, and only add them into the bottles. "We wanted to be the first and the pioneers to do something with hemp seed, a real honest and earnest hemp seed vodka," she said. And before you think you're going to get an extra buzz with your buzz, hang on, dude. They get sterilized hemp seeds from Canada for the distilling process, and there's no THC — the active ingredient in marijuana — in it. "It goes through a lot of government processes in order to test it and to make sure it doesn't have THC, and there's no 'wink wink' on that one," Coley said. In fact, a sample from each batch has to be sent to federal regulators to make sure there's no THC before they can proceed. Flavored varieties now account for 20 percent of all vodka sold in the country, according to the Distilled Spirits Council of the United States. Sales increased about 20 percent in 2011. In all, the council reports 62.7 million 9-liter cases of vodka were sold last year, accounting for more than $5 billion in revenues. Purgatory should be seen as a positive for the hemp cause in the United States. "It shows that there are high quality products that can be made on a less-than-industrial scale, and that it reiterates that hemp should be grown and processed in the U.S. once again, and we shouldn't have to import hemp seeds from other countries to be able to make a product like this," said Tom Murphy, a spokesman for the 300-member Hemp Industries Association. The marketing possibilities aside, the hemp will only make the vodka taste a little sweeter. "I like it straight quite a bit because it just has a more refined taste than regular vodka," Coley said. However, if you're inclined to use it to mix it with something, she says it makes a nice Cosmo and can be used with anything. The Alaska Distillery is hosting a kickoff party Friday at the Chair 5 restaurant in hippy-friendly Girdwood, Alaska, and at a hemp seed event in Colorado.

FDA: Gulf seafood safe despite oil spill concerns

WASHINGTON (AP) — Photos of fish with sores may raise concern about long-term environmental effects of the massive BP oil spill — but federal health officials say the Gulf seafood that's on the market is safe to eat. After all, diseased fish aren't allowed to be sold, said Dr. Robert W. Dickey, who heads the Food and Drug Administration's Gulf Coast Seafood Laboratory. "It's important to emphasize that we're talking about a low percentage of fish," Dickey stressed. "It doesn't represent a seafood safety hazard." Two years after the oil spill, scientists cite lesions and other deformities in some Gulf fish as a sign of lingering environmental damage. They can't say for sure what's causing the fish ailments or if there really are more sick fish today than in the past. As marine biologists study the threats to the fish, here are some questions and answers about the safety of seafood: Q: What keeps sick fish off the market? A: Every wholesaler and seafood processor must follow longstanding FDA rules on what constitutes a safe and usable catch. Fish with lesions or signs of parasites or other disease aren't allowed, Dickey said. Q: What about oil contamination that's not visible? A: Federal and state laboratories tested more than 10,000 fish, shrimp and other animals for traces of certain chemicals in oil to be sure they were far below levels that could make anyone sick before commercial fishing ever was allowed to resume. Gulf Coast states are continuing that testing today as a precaution. Some species clear oil contaminants from their bodies more rapidly than others, the reason that fishing resumed before the oyster harvest. The FDA says that someone could eat 9 pounds of fish or 5 pounds of oyster meat a day for five years and still not reach the levels of concern for a key set of chemicals. Q: But what about the oil compounds that scientists have reported finding in the bile of some fish? A: Bile shows what a fish recently ate, but the fish's digestive system goes on to process and eliminate contaminants so they don't build up in edible tissue, Dickey said. Q: Are there other reasons to pay attention to seafood safety? A: Definitely. A California company recently recalled some yellowfin tuna used to make sushi because it was linked to an outbreak of salmonella food poisoning. And every year, health officials warn people with certain health conditions to avoid eating raw oysters — they may be contaminated with the Vibrio vulnificus bacteria that typically is found in warm coastal waters between April and October.  

April-Issue-4 2012

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