DJ Summers

Alaska Communications posts positive net income to close 2015

Alaska Communications Systems Group Inc. posted strong final quarter for 2015 closing the year after the sale of Alaska Wireless Networks to General Communication Inc. in a move that reduced the company’s debt by $240 million and primed it to focus on increasing business revenues. Balance sheets still reflect the sale and the departure of wireless revenue. Total operating revenue for fourth quarter 2015 declined, from $77.5 million in 2014 to $56.6 million in 2015. For the year, operating revenue declined from $315 million to $233 million. Operationally, the divestiture of wireless expenses led to an income bump. Net income increased for the quarter compared to last year. In 2014, Alaska Communications had a $5.4 million loss, while fourth quarter 2015 produced a net income of $339,000. For the year, ACS had a net income of $13 million in 2015, rising above a $2.8 million loss in 2014. Since selling its one-third share of the Alaska Wireless Network, which combined the wireless infrastructure of Alaska Communications and GCI, the company made strides focusing on business broadband and managed IT services. Total broadband revenue reached $19.4 million from $17.5 million, up 10.4 percent. Business and wholesale service revenue grew to $32.2 million from $27.8 million, a 15.7 percent gain.  The company’s business services focus does come with a cost, as consumer revenues have dropped. Consumer revenue declined 6.3 percent and consumer broadband revenue declined 7.6 percent. Alaska Communications expected the dip in customer revenue, CEO Anand Vadapalli said. Consumer services – less than 20 percent of the total revenue – rely heavily on consumer broadband. More and more households cut traditional broadband and cable connections in favor of streaming directly from their wireless connections. Vadapalli said Alaska Communications’ consumer revenue drop comes in part from a service change. Rather than a host of packages, ACS now only offers one broadband package serving 10 megabytes per second, the fastest connection speed available. “We have dramatically simplified our product,” said Vadapalli. “We have one product, one price, the maximum speed you can use, and all the data you can use.” The trend of declining consumer revenue will continue in 2016, Vadapalli said, but he expects to stabilize in 2017. Vadapalli said Alaska Communications’ contract as broadband provider for ConocoPhillips, in partnership with wireline provider Quintillion, has yielded positive results since it began in 2015. Alaska’s market is unlike Lower 48 broadband markets in that it has only two major providers, ACS and General Communications Inc. Vadapalli said the company hopes to leverage this market scenario for a greater presence in oilfield and state government operations. DJ Summers can be reached at [email protected]

GCI posts record revenue, but net income loss, for 2015

General Communication Inc. finished the fourth quarter of 2015 strong, with record revenues but negative income, courtesy of the purchase of Alaska Wireless Network. GCI posted a $10 million net income loss for 2015, following a $7.6 million net income in 2014. Alaska Communications Systems Group Inc. sold its wireless subscriber business and its 33 percent share of the Alaska Wireless Network to General Communications Inc. for $300 million in cash in a deal finalized Feb. 2, 2015. In the second quarter of 2015, GCI folded the 87,000 acquired wireless subscribers into its coverage. The purchase has increased revenues, particularly in the consumer wireless segment in which GCI no longer competes for business with ACS. Total revenue increased from $910 million in 2014 to $979 million in 2015. Between 2014 and 2015, GCI wireless lines in operation increased from 149,600 to 227,800. The increase yielded expected results. Revenues for consumer wireless plans spiked in 2015 to $75.8 million, $45 million more than in 2014. Business wireless revenue increased $4 million from 2014 to $8.1 million in 2015. Wireless data plans for consumers also increased by $27 million, along with a $22 million bump in managed broadband data plans for businesses. During an earnings call, an investor asked whether GCI plans to use its existing TERRA fiber optic network to potentially increase presence on the North Slope now that ACS and Quintillion provide broadband services for ConocoPhillips. Chief Financial Officer Peter Pounds said GCI will continue to explore North Slope opportunities, and that GCI was not aware enough of Quintillion’s operations to comment. “The Slope, in spite of the low oil prices it’s still a very important region for us, both for wireless and for commercial customers,” said Pounds. “It’s one of the few places in the state where we have a non-redundant network, and much of our investment this year both on the TERRA Network and on the North Slope fiber designed to eliminate the remaining of pockets of single thread service.” CEO Ron Duncan, when asked about whether the state economy would eat into GCI’s bottom line, said he expected to see the economy contract quickly if the Legislature cuts too deeply into the state budget. “Right now the outlook for the industry is that it’s going to see some shrinkage in the economy,” said Duncan, who has co-founded the group Alaska’s Future to advocate for using Permanent Fund earnings to close the state’s massive budget deficit that’s nearing $4 billion for the current fiscal year. “This could be a very mild recession and we could have a reset and continue to build a core economy, or if the Legislature takes irresponsible actions and drives the budget off the cliff, you could see much more adverse results on the state economy probably before the end of this year.” DJ Summers can be reached at [email protected]

New GE salmon labeling bill requires third party review

Sen. Lisa Murkowski introduced a bill on March 3 that would require all genetically engineered salmon to carry the words “genetically engineered” or “GE.” The bill’s language resulted from discussions between Murkowski and the U.S. Food and Drug Administration, strengthening earlier FDA language that made the labeling voluntary rather than mandatory. Beyond labeling requirements, the bill would also require the Secretary of Health and Human Services to mandate a third party review of the previous FDA decision that declared AquAdvantage salmon fit for human consumption. The third party review would focus on ecological effects as well as human consumptive safety. Rep. Don Young introduced a companion House bill. Murkowski said in a press release that she still denies the scientific basis of the FDA’s approval of the AquAdvantage salmon – which grows at twice the rate of wild salmon, Alaska’s most valuable foreign export. “We have had success in the fight against Frankenfish, but I won’t let up until it is mandatory to make clear to consumers whether they are purchasing Frankenfish or the wild, healthy, sustainably-caught, delicious real thing,” said Murkowski in the release. “I still adamantly oppose the FDA’s approval of GE salmon, for the health of both consumers and fisheries. But at least with this legislation, Alaskans and consumers across the rest of the country won’t be deceived and will be aware of what it is they are seeing on store shelves.” Cosponsored by Sens. Dan Sullivan and Maria Cantwell, D-Wash., Murkowski’s bill could end the drawn-out squabble between Pacific Northwest lawmakers and the FDA.   Murkowski recently lifted a nomination hold on Dr. Richard Califf as FDA chief, having held his nomination until the FDA mandated labeling requirements. At the time, Murkowski said she’d been working with the FDA to come up with a stronger labeling requirement. Last year’s omnibus package ordered the FDA to ban the genetically engineered salmon from the U.S. market until the FDA publishes final labeling guidelines. The FDA legal department, however, said the omnibus language wasn’t strong enough to fulfill Murkowski’s intent of mandatory labeling. The FDA, as a show of good faith, worked with Murkowski’s office to provide them the language that would force mandatory labeling, culminating in the March 3 bill. The FDA approved genetically engineered salmon – manufactured by the Canadian company AquaBounty – for human consumption in 2015. Alaska politicians doubt the science and fear the economic consequences. Alaska fishermen’s wild-caught sockeye will have to compete with genetically altered fish, which splice salmon and ocean pout genes to grow at twice the rate of wild salmon.

Legislative legal, CFEC question Walker’s adminstrative order

Ed. note: An earlier version of this article referred to Rep. Stutes' bill as not having passed the fisheries committee. The bill did pass that committee in 2015 and is currenlty awaiting a hearing in the House Resources Commitee.  The Commercial Fisheries Entry Commission is once again fighting to stay abreast of fisheries officials who want to narrow its scope of duties. Gov. Bill Walker signed an administrative order on Feb. 16 that folded several of the Commercial Fisheries Entry Commission’s key duties into the Alaska Department of Fish and Game, effective immediately. These functions include licensing and permitting, IT, accounting, payroll, procurement, and budgeting. The order moves personnel associated with these services into the Alaska Department of Fish and Game, or ADFG. The most identifiable operational change – ministerial licensure – also causes the administration’s biggest legal hurdle; both CFEC officials and Legislative legal support question Walker’s order’s constitutionality. Fishermen have opposed such rearrangements of CFEC in the past, fearing that the independent agency could be swept into the politics enmeshing the Alaska Department of Fish and Game. Walker’s administration says the order is a cost-saving move in a grim financial climate, but CFEC doubts the order’s sense. A letter from CFEC officials accuses the administration of deceit and says the plan is vague, possibly unconstitutional, and cuts the Legislature out of the decision-making process. According to Walker’s press release, the reshuffling will save the state an extra $1.3 million. The House Finance Subcommittee cut ADFG’s budget by 14 percent on March 1. This included a $650,000 cut to CFEC, less than Walker’s $1.3 million but still beyond the phased-in approach recommended by the CFEC Legislative audit. The Limited Entry Act, passed by the Legislature in 1973, established a limited entry permit system for state fisheries, establishing a set number of permits for fisheries and the Commercial Fisheries Entry Commission, or CFEC, to issue and monitor them. Three commissioners serve as judges; they decide who’s eligible for permits, oversee the permit transfer process, and handle appeals for those fishermen who are denied. Currently, one of the positions – each with $200,000 in salary and benefits – is vacant. Bruce Twomley and Robert Brown fill the two remaining positions. The order will make the commissioner positions part-time. A long time coming CFEC has been under increasing scrutiny since 2014 after two bills to disband it legislative audits that call it inefficient. Both Rep. Paul Seaton R-Homer, and Rep. Louise Stutes, R-Kodiak, introduced separate bills that would have disbanded the commission. The bills were sandwiched between a scallop fishery scandal in late 2013 and two separate audits in 2015. Both reports complimented CFEC’s past work, but also pointed out CFEC’s inefficiency so long after the Limited Entry Act. In each of the last two years, CFEC only adjudicated three contested permits per year. It maintains a backlog of 28 permit applications, most of which have been in the adjudication stage for 15 or more years. “Both reviews outlined the good work that CFEC has accomplished, but also noted that the workload of the agency has diminished over time and that the organizational structure of CFEC is no longer efficient or effective,” reads Walker’s budgetary request for CFEC. The audit points out that the original mission of the CFEC – to establish limited entry fisheries – has been largely completed since the 1980s. Alaska has 68 current limited entry fisheries, most of which were established by CFEC in the 1980s and the last of which was established in 2004. Part of the order delegates CFEC’s research duties to ADFG. Stutes, who chairs the House Fisheries Committee, worries Walker’s order could present a “conflict of interest” between CFEC’s licensing research adn ADFG’s biological research. ADFG commissioner Sam Cotten said he doesn’t understand how research performed under one body would be different under another. “We do research too, we could combine the research needed for the Board of Fisheries,” said Cotten. “It’s another effort to streamline…I don’t see at all that it presents a conflict.” In 2015, Stutes introduced a bill that would have disbanded CFEC entirely and folded its duties into ADFG. Stutes’ bill passed committee and is currently waiting for a hearing in the House Resources Committee. In the interim between sessions, however, Stutes said she rewrote the bill to a more toned-down version that would keep several of CFEC’s duties but still hand over a portion to ADFG. Permit adjudication, fishermen told her, should remain in CFEC’s hands, while ADFG could easily take over tasks like ministerial licensing.  Under the current CFEC system, commercial fishermen must send away to the Juneau office for their permits. Stutes’ change, which Walker’s order incorporates, allows fishermen to renew permits at their local ADFG office. Stutes forwarded her rewrite to the governor, but said she didn’t know Walker planned his own action. “I didn’t even know the governor had intended to take that bill until he had done it,” she said. Order’s constitutionality Walker’s plan saves money, but legal opinions say the administration exceeded its authority simply by making it an administrative order instead of an executive order. CFEC staff circulated two separate letters to the Senate Fish and Game Finance Subcommittee on Feb. 17, one draft and one final – both expressing dissatisfaction with the administrative order. “(The order) ignores entirely the audit’s recommendations, and instead seeks to transfer a vast array of power, functions, and staff to (ADFG),” the letters read. Both letters challenge Walker’s legal authority to make a “de facto rewrite of the Limited Entry Act,” and ask the subcommittee to budget the CFEC according to a legislative audit. CFEC contends that the administrative order skirts the Legislative budgeting process.  “We would further ask the subcommittee to consider the means employed by the Governor to enable (ADFG) to take over the vast majority of CFEC’s operations. Use of an administrative order and not an executive order, denies the Legislature a role in crafting CFEC’s budget for the coming year,” the letters read. The letters, sent by CFEC chair Bruce Twomley and commissioner Robert Brown, accuse Walker’s administration – ADFG commissioner Sam Cotten and deputy commissioner Kevin Brooks – of “actively misleading the (Senate Finance Fish and Game) Subcommittee” at a Feb. 15 hearing, the day before Walker issued the administrative order. CFEC argues that the Legislature should assign CFEC’s budget according to the Legislative audit’s recommendation, not Walker’s order. Furthermore, Brown and Twomley contend Walker’s order could be unconstitutional, both by stripping an agency of several key functions and shuffling employees between two disparate agencies. “The question of whether it is constitutional or otherwise lawful and appropriate for an Administrative Order to deprive an autonomous agency of its ability to perform explicit statutory duties and assign that performance to a separate agency deserves an answer, but that answer will not be forthcoming in time to allow the Subcommittee to act in obeisance to A.O. 279,” the letter reads. Indeed, the Legislature’s legal council seems to agree with Twomley and Roberts. Rep. Cathy Muñoz, R-Juneau, asked the legislative law office for its opinion of Walker’s order. The opinion, drafted by Legislative Affairs Director of Legal Services Doug Gardner, finds a potential constitutional snag. According to the Alaska constitution, the governor is indeed authorized to “reorganize” administrative duties in the executive branch, which includes both ADFG and CFEC. If the reorganization requires “force of law” – a change in statute – then it requires an executive order subject to the Legislature’s approval. Most CFEC duties are statutory, put in place by the Limited Entry Act. In particular, Walker’s administrative order could give ADFG the statutory duty to issue licenses under certain circumstances. This would require a statutory change – a force of law – which means Walker’s order should have been executive, according to Gardner. “Based on the language in (Walker’s order),” wrote Gardner, “it is hard to evaluate how ADFG can perform either of these licensing functions which are 1) specific statutory duties of CFEC that in some cases affect the rights and liabilities of permit holders; and 2) where these statutory functions could be more that purely ‘ministerial.’” DJ Summers can be reached at [email protected]  

Valley bills seek fishing dollars

Gov. Bill Walker’s commercial fisheries tax bill is stalled in committee, but legislators continue digging into the industry for revenue. Two bills, sponsored by legislators from the Matanuska-Susitna Borough, would impose new taxes on either the entire industry or the longliners and trawlers in the federal and state fisheries. HB 358, sponsored by Rep. Mark Neuman, R-Big Lake, and Rep. Les Gara, D-Anchorage, would require non-salmon and non-halibut trawlers and longliners to pay a tax on halibut and salmon bycatch. The bill was passed to the House Fisheries Committee on Feb. 24 but has not yet been scheduled for a hearing. On the same day, Rep. Scott Kawasaki, D-Fairbanks, signed as a bill cosponsor. Rex Shattuck, Neuman’s chief of staff, said the bill doesn’t intend anything more drastic than starting the conversation. “This is a very fundamental bill, and we honestly can’t say we have all the answers,” Shattuck said. “It’s a basic framework to start the conversation. If it’s a resource we own as Alaskans, and we always have this concern about bycatch, let’s have a discussion.” Neither bill is expected to move quickly in a Legislature buried under a fiscal bill landslide, but Shattuck said he hopes the bycatch bill will spark a conversation to have over the summer. Though the extra funds would go into the general fund and not directly into fish and game management, Neuman’s position as vice-chair of the House Finance Committee guarantees that the funds will be used for fisheries management and research.  “You can comfortably know those are going into related management,” said Shattuck. “From our perspective, Neuman’s sort of been clear in that. We should be looking at putting them into funding things like research.” Bycatch happens when fishermen incidentally harvest a non-target species while chasing the main catch. The bill would require both state and federal fishermen to pay 1 percent of the total value of their bycatch. In federal fisheries – those from three to 200 miles off the coast – federal law bars vessels from selling bycatch salmon and halibut. It therefore has no existing value on which to base a tax. To fix this, the bill would direct fisheries managers to assign it a value, defined as “the market value of the fishery resource as determined by the prevailing price paid to fishermen for the unprocessed fishery resource of the same kind and quality by fisheries businesses in the same region of market area where the fishery resource was taken.” According to this formula, fishermen could end up paying thousands at the individual vessel level and millions altogether. A 1 percent tax on halibut bycatch would have extracted up to $1.7 million from the federal groundfish fisheries alone in 2014. The price paid to fishermen, or ex-vessel price, varies from region to region and year to year. For chinook salmon, the Alaska Department of Fish and Game estimated an average price of $2 per pound for chinook salmon in 2015 – lower than the average $2.80 per pound over the prior four years. Halibut varies, but industry sources say the current ex-vessel price is between $5 and $6 per pound. In 2014, federal groundfish fisheries harvested 27.6 million pounds of halibut, according to catch data from the National Oceanic and Atmospheric Administration. At $5 per pound, the total value of halibut bycatch would be $138 million. At $6 per pound, it would be $166 million. Federal groundfish fisheries also harvested just under 34,000 chinook as bycatch in the Bering Sea and Aleutian Islands and Gulf of Alaska in 2014. Assuming an average weight of 30 pounds, the value of chinook bycatch in federal groundfish fisheries is $2.9 million, or $29,000 in tax value. The bill would exempt those fishing vessels that donate their bycatch halibut to food bank programs like SeaShare. Federal law, however, forbids some vessels are forbidden from making such donations. Groundfish fisheries in the Bering Sea and Aleutian Islands are disallowed from keeping bycatch halibut. Representatives from this fishery view the proposed tax as a penalty. SB 198 The second bill, sponsored by Sen. Mike Dunleavy, R-Wasilla, would affect all Alaska fishermen regardless of bycatch. SB 198, introduced Feb. 22, levies a 12.5 percent royalty on all limited entry license holders’ catch. The bill requires seafood buyers to collect the royalty upon purchase, keep detailed records, and remit the money to the state at the end of each month. The bill was referred to the Senate Resources Committee on Feb. 22. Dunleavy’s bill would bring in a hefty chunk of cash for the state, and a hefty chunk of cash from fishermen’s bottom lines. According to Commercial Fisheries Entry Commission data, limited entry permits for both Alaska resident permit holder and non-residents pulled a collective $957 million in 2014. At the proposed royalty rate, Alaska limited entry permit holders would have paid $120 million to the state. The royalty would hit Alaska permit holders on an individual basis. CFEC records for 2014 show an average Alaska resident limited entry permit holder earnings of $50,451 per permit. Under the proposed royalty, Alaska fishermen would have paid an average $6,307 apiece in 2014. Non-residents would have paid slightly more at $6,525. Though the Anchorage and Mat-Su boroughs host over half the state’s population – 54 percent, according to the most recent U.S. census data – they only host 10 percent of the resident commercial fishing permits. Of 38,192 limited entry permits issued in 2014, only 1,141 – 3 percent – were issued to Mat-Su Borough residents. CFEC issued 2,647 permits to Anchorage municipality residents, or 7 percent of the total permits issued.

Gov’s bill would double strict liability commercial fines

Fishermen worry that Gov. Bill Walker’s industry taxes hikes may fall on them alone as a litany of fish bills stacks up. The Senate Resources Committee heard SB 164 on Feb. 22, also from Walker’s office. The complex bill concerns hunting and fishing permits – specifically, how ADFG can discourage wildlife violations while making extra money off them. The bill includes measures to increase commercial fines and recoup money lost in the recreation hunting and fishing licensing process. It will have a second hearing March 3. The bill doubles commercial fishing violation fines, raises the fine schedule for illegal wildlife harvest, prevents wildlife violators in other states from purchasing Alaska fishing and hunting licenses, and allows the state to take restitution from hunting and fishing violators. The committee had mixed feelings about what the bill aims to accomplish. Some elements seemed administrative, while others seemed targeted specifically for revenue. Major Bernard Chastain of the Department of Public Safety and Bruce Dale, ADFG’s wildlife division director, sold the bill as a “flexibility” package with elements of restorative justice, but committee members saw other intentions in the language. “Is this a revenue bill? Is this a deterrence bill?” asked Sen. Bill Stoltze, R-Chugiak. “I may missed what the overlying theme or motive is.” Chastain said the bill is solely for deterrence. The bill’s fiscal notes provide no estimates for how much revenue the state could raise. Among the largest-scale changes, the bill doubles commercial fishing strict liability violation fines. The new fine schedule would charge $6,000 for a first conviction, up from $3,000; $12,000 for a second conviction, up from $6,000; and $15,000] for a third or subsequent conviction within a 10- year period, up from $9,000. Chastain described the current fine schedule as “inadequate” to keep fishermen from violations. Fishermen have already voiced some concern over the possibility of raising the fine schedule. In a House Fisheries Committee hearing, on Sitka fishermen testified against raising the commercial fishing tax rates, saying that taxes alone are enough to cripple an industry already suffering from the strong U.S. dollar’s downward pressure on seafood exports. Doubled fines could hurt fishermen even worse, Some of ADFG’s budget comes from federal matching funds. Pittman-Robertson funds, for example, earmark three federal dollars for every one Alaska dollar. The federal funds are reserved for wildlife conservation. Part of Walker’s bill would allow the state to take restitution payments that can be funneled back into ADFG funds for the federal match. According to Dale and Chastain, the state loses tens of thousands of dollars a year from petty license fraud. Non-residents often move to Alaska and purchase resident hunting and fishing licenses for the cheaper resident rate. The bill would allow the state to charge the violators for the entire history of the difference. “Over time, we lost the ability to leverage that money into federal funds,” said Dale. “This provides the state appropriate opportunity to restore those funds.” Most times, the losses are fairly small; Sen. Bill Wielechowski wondered aloud if the restitution payments are “figurative.” Dale, however, said several violators each year amount to tens of thousands of dollars apiece. Other bill elements give judges the ability to fine some wildlife violators up to $10,000 rather than the current $5,000 fine schedule. DJ Summers can be reached at [email protected]

Walker orders mariculture task force

Gov. Bill Walker issued an administrative order on Feb. 29 establishing a mariculture task force for shellfish and sea plants. Walker’s order responds to both economic and ecological concerns. The release touts the potential economic benefits to coastal communities and the Alaska fishing industry. Further, as ocean acidification continues to impact shellfish, Walker said the stocks need all the help they can get in recovering. “Mariculture represents a tremendous opportunity to diversify our economy, strengthen our coastal communities, and provide healthy food to the world by using sustainable practices that are a foundation of our current fishery resources,” said Walker in a release. “The goal of this task force is to bring key stakeholders together and determine how the state can help this industry prosper with Alaska-grown products.” The task force carries no additional cost to the state – rather than establishing a budgeted agency, it asks for officials and stakeholders to meet a minimum of once every quarter to come up with a mariculture development plan. The governor will appoint members to the eleven-member task force. These will include the commissioners of the Alaska Department of Fish and Game and the Department of Commerce, Community and Economic Developments, a University of Alaska representative, the director of the Alaska Sea Grant Marine Advisory Program, seven at-large stakeholders with backgrounds in seafood farming, marketing, or harvesting, as well as experience in Alaska Native corporations, tribal governments, or Community Development Quota groups. Task force members will not receive compensation from the state. The Alaska Mariculture Task Force will be required to submit a comprehensive plan to the governor by March 1, 2018 Mariculture farms marine life in saltwater, as opposed to aquaculture, which farms in fresh. Alaska, though it has 30,000 miles of available coastline, has a wary relationship with seafood farming. The Legislature banned salmon farming in 1989 as other seafood-based economies overseas began experimenting with it. Commercial fishermen in Alaska voiced concerns of market competition, product safety, and ecosystem impacts. Only state-run hatcheries may rear salmon, and these are released into the ocean and provided as common harvest for Alaska fishermen. Nations like Norway, Iceland, Canada, and Chile now produce a majority of the world’s farmed salmon. The majority of U.S. salmon is farmed salmon imported from these nations. Alaska’s mariculture output lags behind with an average annual value of less than $1 million. Shellfish and sea plant mariculture, however, is legal in Alaska. Walker’s mariculture task force follows the Alaska Crab Research, Rehabilitation, and Biology Program, which released an experimental batch of red king crab in 2013.   DJ Summers can be reached at [email protected]

Committee chair refuses to advance gov’s fisheries tax hike

Commercial fisheries may see taxes increase, but only if other resource industries do, too. Under a budgetary thundercloud, Gov. Bill Walker is trying to squeeze funding from any source. A commercial fisheries tax bump, part of nine such bills in the Legislature, has slowed to a crawl in committee as fishermen decry it. Fishermen, and House Fisheries Committee chair Rep. Louise Stutes, R-Kodiak, fear Walker’s tax plan could disproportionately pinpoint the commercial fishing industry while other resource taxes die. Stutes said during a Feb. 23 committee hearing that she’ll hold the bill in committee until further study. “I have some reservations about passing this bill out of committee,” said Stutes. “I’ve been seeing a lot of the other resource tax bills faltering. I’m going to hold this in committee until I’m comfortable that the fishing industry is not being singled out. I would like this committee to assimilate and digest what they’ve heard.” United Fishermen of Alaska, the state’s largest fishing industry group, brooked little opposition to the bill during a February meeting, but cracks appeared once Stutes opened the committee to public comment. The committee heard from fisherman that the tax plan seemed poorly thought out. Richie Davis, a representative for the Seafood Producers Cooperative, said the tax bump is proof that either the Walker’s administration doesn’t fully grasp the social and economic aspects of the fishing industry, or “or somebody is using Alaska’s fiscal crisis as a springboard to cripple our industry.” 1 percent across the board House Bill 251 would levy a 1 percent increase on commercial fisheries taxes. Current rates range from 1 percent to 5 percent, depending on the category. Comment from two separate hearings on Feb. 18 and Feb. 23 called the tax plan too simple, too rushed, and too ignorant of the other resource taxes in the state. A 1 percent across-the-board raise, fishermen said, ignores the industry’s nuances and unique challenges. The fisheries tax schedule is one of the more complex in Alaska tax code. The fisheries business tax and fisheries resource landings tax sprawl across different categories and sectors. The state levies a fishery business tax and a fisheries resource landing tax, which distinguish between established fisheries and developing fisheries, each with different rates for floating processors, salmon canneries, and shore based processors.  The 1 percent tax rate increase doesn’t make enough distinctions, industry said. “The approach HB 251 takes is quite frankly oversimplified,” said Vince O’Shea, vice president of Pacific Seafood Processors Association. O’Shea, along with Icicle Seafoods representative Kris Norosz, pointed out that a 1 percent increase could conceivably work for some sectors but would stress salmon canneries, which are glutted with oversupply and having trouble profiting at the current 4.5 percent cannery rate. “There hasn’t been quite enough analysis on the proposed action,” said Norosz. “I’m not quite sure how we got to this.” Ken Alper, director of the state’s Department of Revenue Tax Division, said the 1 percent tax rate bump aims to bridge the gap between the state’s spending on fisheries management and its revenue. The state splits half the fisheries resource landings tax with the municipalities where the fish were landed. According to an Institute of Social and Economic Research report, the state spent about $78.3 million to manage commercial fisheries in fiscal year 2014 while taking in about $70.2 million in its share of fisheries taxes. Local municipalities received about $50.8 million from their share of the taxes. Combined with management and capital spending, the state spent about $96.8 million on commercial fisheries versus the $70.3 million in revenue. Despite accusations from fishermen and committee member Rep. Charisse Millett. R-Anchorage, that the tax rate is a “dart thrown at a dartboard,” Alper said the tax rate was chosen for simplicity and to “to generate $15-$20 million of (unrestricted general funds) for the state.” “Obviously there was no dart board,” Alper told the committee. “One percent across the board tax on developing fisheries develops $18 million.” Taxes piled on taxes and cutbacks Taxes, some said, will pour more economic hardship on the commercial fishing industry, along with management cuts, market factors, and tax plans in other areas such as fuel. The Alaska Department of Fish and Game, or ADFG, has already had its budget reduced 15 percent from last year. Budget cutbacks limit resources vital to fisheries management, including field workers and stock survey study methods. Without a full breadth of surveys, ADFG will manage more conservatively and allow fewer fish for commercial harvest. Committee members asked the public if ADFG would manage differently in the face of budget cuts. Most said it would. “With cuts at (ADFG), it’s hard not to manage more conservatively if you think you have less data to go on,” said Norosz. Fishermen said they will feel the state economy’s sting more harshly than other groups. The commercial fishing industry’s current market climate has created some anxiety in the industry even absent a tax hike. “There’s literally a perfect storm in the seafood industry now,” said O’Shea. Alaska exports 70 percent of its seafood harvest. The U.S. dollar’s strength over key export markets like Europe, China, and Japan has softened seafood prices, notably the 2015 Bristol Bay sockeye harvest for which fishermen received half the average price per pound. New state regulations have and will squeeze this bottom line even further. A $2 per hour minimum wage hike, fishermen said, eats away revenue for processor workers and low-level crew. Further, they said, new fuel taxes will drive up operation costs for all fishermen. Fear of a potential Permanent Fund Dividend reductions and a statewide income tax lurk behind the narrowing profit margins. Fishermen asked why the Legislature wasn’t writing a comprehensive resource taxation bill that includes other industries as well. Piecemeal legislation, they said, could combine with politics and leave fishermen to foot the bill if other taxes don’t pan out. Equity concerned some fishermen. Many asked why Walker’s bill doesn’t include a tax on charter angler guides. Alper said Walker’s goal was to “increase what we already have” instead of creating new areas to tax. “It was not part of the administration’s agenda for this session to try to find new areas to tax,” said Alper. “Once you’re in there, dealing with tour operators, the natural extension is to say, ‘Well what about other tour operators?’” “Fishermen are paying for the privilege of extracting that resource,” said Jonathan Kress-Tomkins, D-Sitka. “The difference is that charter operators make their living from extracting a public resource.” Stutes said the fisheries committee would address charter taxation at a later point. “This committee is aware that there is a charter fleet that is not being taxed in any capacity,” she said. “That issue will be addressed,” but not in the context of Walker’s tax bill. DJ Summers can be reached at [email protected]

Assembly eases Anchorage marijuana setbacks

The Anchorage Assembly freed up more marijuana space for Anchorage on Feb. 23, but further limited the already scarce zones in Chugiak and Eagle River. The new rules seem a win-win for the two Assembly members it concerned, Amy Demboski and Patrick Flynn.  The reconsideration holds the intent of the final Assembly land use package passed on Feb. 9 — which was packed with amendments adding additional restrictions to Chugiak and Eagle River — while partially responding to industry panic of overregulation in Anchorage. The reconsideration concerns setback distances between marijuana businesses and sensitive areas like schools, churches, and child-centered facilities like daycares. These distances will be measured by shortest pedestrian route through the municipality. The new amended land use package requires that Chugiak and Eagle River marijuana businesses maintain a distance of 1,000 feet from such areas, which now includes residential districts, dedicated parks, and the McDonald Memorial Center. In Anchorage, rules were somewhat loosened, though the breadth of sensitive areas could prove limiting. Marijuana businesses must maintain the state-mandated 500-foot separation from school, churches, correctional institutions, community centers, recreation centers, playgrounds, public housing, day care centers, and homeless shelters. Both area’s setback requirements will be measured by the shortest pedestrian route between the front entrance of a marijuana establishment and that of the special use property. This eliminates the “as the crow flies” measurement passed earlier — from property line to property line — which could conceivably have zoned marijuana business out despite being separated from sensitive areas by multi-lane highways or other obstacles. Atypical for public meetings involving marijuana, the meeting was quick and quiet, with little discussion among Assembly members and no public comment from the industry throng in the audience. Assembly member Flynn had called for reconsideration on marijuana zoning after noticing inconsistencies between an amendment he passed and those introduced by Assembly member Demboski in an earlier meeting finalizing land use requirements. One of Flynn’s amendments defined the pedestrian route measurement, while Demboski’s — one of 18 she introduced — specified “as the crow flies.” Industry in Anchorage and community councils in Chugiak and Eagle River had each expressed dissatisfaction with the original ordinance. Flynn, who plans to have direct stakeholder involvement in the marijuana industry, said he’d received outraged messages from cannabis entrepreneurs saying the original Anchorage rules zoned their planned buildings out overnight. Cannabis business attorney Jana Weltzin said the Assembly opened itself to legal challenge by making the industry “impracticable.” Marijuana land use is already restricted enough, industry believes, with a limited number of available retail and industrial buildings even by the least restrictive rules. Sara Williams, chief executive officer of Midnight Greenery, said she’d visited 47 retail properties in Anchorage without finding one both properly zoned and with a willing landlord. One business planner’s building would be just less than 500 feet from the nearest school by shortest pedestrian route, but just more than 500 feet if measured by lot line. In Chugiak and Eagle River, however, community councils said the rules didn’t go far enough. Largely conservative and with a sizeable bedroom contingent of military workers from Joint Base Elmendorf-Richardson, the area lobbied Assembly members Bill Starr and Demboski for more restrictive measures. DJ Summers can be reached at [email protected]

ADFG closes early Kenai kings

The Alaska Department of Fish and Game issued an emergency order on Feb. 18 closing the Kenai River early king salmon run to sport fisheries. The closure will be in effect May 1 – June 30.  The closure responds to a low forecast. Biologists forecast a return of 5,206 fish for the early king run. The optimal escapement goal for early-run Kenai River king salmon is 5,300 to 9,000. If the run does come in as forecasted, it will rank one of the lowest on record, 29th of the 31 years ADFG has been counting. ADFG said that the closure matches the standard for the previous year, and will be maintained unless the department makes more optimistic measurements during the season. “Since the 2016 total run forecast is similar to the 2015 run forecast when the fishery remained closed, and the forecast is less than the lower end of the optimal escapement goal, closing the fishery preseason is warranted until data from inseason assessment projects indicate that fishing opportunity can be afforded without jeopardizing achievement of the optimal escapement goal,” ADFG’s report reads. Low king runs have kept the early-run fishery closed since 2013 when it was open briefly to catch and release angling. The Kenai is part of a statewide decline in chinook salmon stocks. Low king runs will also affect the Kasilof River early king sport fishery. ADFG “prohibits the retention of naturally-produced king salmon except Tuesdays and Saturdays, and limits sport fishing gear to one unbaited, single-hook, artificial lure while sport fishing in the Kasilof River beginning 12:01 a.m. Sunday, May 1 through 11:59 p.m. Thursday, June 30, 2016.”   DJ Summers can be reached at [email protected]

Algal toxins found in Alaska marine mammals for first time

Algae toxins are creeping north, scientists say, and marine mammals could potentially pay the price. The National Oceanic and Atmospheric Administration released a study Feb. 11 that used samples from more than 900 different marine mammals between 2004-2013 to test for toxic presence. The samples came from all over Alaska, from the Beaufort Sea to Ketchikan. Domoic acid and saxitoxin — two neurotoxins found in algae blooms — were found in a majority of the tested species. NOAA doesn’t attribute any deaths directly to the algal toxins, but points out more than 40 percent of marine mammal unusual mortality events come from toxic algae. Kathi Lefebvre, a NOAA scientist who spearheaded the study, said that number is fairly conservative. Domoic acid and saxitoxin move quickly through the body and resulting deaths are difficult to attribute. “I feel very confident that yes, there are likely deaths of marine mammals by toxins we cannot identify.” said Lefebvre. The report verifies that algae toxins are spreading northward. Reports have tied algal toxins to California sea lions since 1989 — more than 200 died or had seizures from algae toxins last year — but until now Alaska has had no documented domoic toxicosis and rare saxitoxin poisoning in its marine mammals. Last year, NOAA documented a sea lion seizing from algal toxins in Long Beach, Wash., the first time any such case had been recorded north of California. Lefebvre clarified that the study finds no causal link between toxic presence and marine mammal deaths. The future, she said, is the concern. “The risk is there,” Lefebvre said. “If we get increasing blooms, the risk will increase. That’s the concern. We know that warming waters and the loss of sea ice is more favorable for growth of algae.” Part of the concern is food security; marine mammal die offs could affect subsistence communities who depend on them. The study found the toxin levels far below regulatory limits for human consumption. Animals die long before muscle and blubber absorb enough toxins to affect humans. Some communities do harvest shellfish from mammal stomachs, however, which could cause problems. The Alaska Department of Health has made no changes in guidance to seafood safety. The study surveyed 13 species including humpback whales, bowhead whales, beluga whales, harbor porpoises, northern fur seals, Steller sea lions, harbor seals, ringed seals, bearded seals, spotted seals, ribbon seals, Pacific walruses, and northern sea otters. “Domoic acid was detected in all 13 species examined and had the greatest prevalence in bowhead whales (68%) and harbor seals (67%),” reads the report. “Saxitoxin was detected in 10 of the 13 species, with the highest prevalence in humpback whales (50%) and bowhead whales (32%).” Domoic acid, first documented in Alaska with Kachemak Bay razor clams in 1992, causes amnesic shellfish poisoning in humans. Saxitoxin causes paralytic shellfish poisoning. The two toxins have been documented in Alaska shellfish for decades, and the human effects of shellfish poisoning with them. Domoic acid and saxitoxin sneak into the mammalian food chain through algae-eating phytoplankton. Shellfish and plankton-eating fish like herring, pollock, some juvenile salmon, and sand lance, then pass the toxins to the marine mammals that eat them. The food chain explains certain variations in domoic acid and saxitoxin rates. Cook Inlet beluga whales, for instance, had relatively low rates of both domoic acid and saxitoxin due to a diet of chum and coho salmon and other non-plankton eating fish. NOAA found higher toxicity in mammals that prefer planktivorious fish.  “Bowhead whales feed on small zooplankton consisting mainly of calanoid copepods and euphausiids,” the report reads, “both of which consume phytoplankton and are likely the source of the high occurrence rates of (domoic acid) and (saxitoxin) in fecal samples.” Algal blooms and their accompanying toxins usually feel at home in tropical or temperate waters. Alaska’s sub-Arctic and Arctic waters aren’t so friendly. Warming ocean patterns, however, appear to be changing how much algae makes its way into the North Pacific. Bering Sea shelf waters have risen by as much as 3 degree Celsius in the last 10 years, the report says, and a patch of warm water crept through the Gulf of Alaska in 2015. Sea ice plays an additional role. Warming, ice-free waters allow more algae-friendly sunlight into the sea, and open shipping lanes through the Arctic. Cargo vessels can transport algal species into new waters through ballast water discharge. Several events in 2015 served as a prelude to the release of the NOAA study. The warm Gulf of Alaska water known as “the Blob” allowed a massive red algae bloom to move north from Pacific Northwestern waters. The algae led to toxin scare. Marine scientists at the time attributed no deaths to increased levels of algae toxins, but did see an increase in toxin levels in shellfish. Researchers and fishermen haven’t positively connected anything sinister to the warm water, but it coincided with an unusual mortality event, 40 percent of which Lefebvre said are caused by algal toxins. Dead whales cropped up near Kodiak, Chignik, Katmai, Seldovia, and False Pass during the summer, along with dead sea lions in Dutch Harbor and Amalik Bay. Dead puffins and other seabirds abounded along the Gulf, as well as washes of dead baitfish including sand lances and herring. “Those large whale die offs, we couldn’t get to them (to take samples),” Lefebvre said. “That investigation is still ongoing.” The study will continue. The next step is to analyze temperature variations, sea ice composition, and a host of other factors against the presence of algae toxins and link the two in a predictive model. NOAA will also continue to monitor subsistence harvests.  DJ Summers can be reached at [email protected]  

Anchorage Assembly to reconsider marijuana land use rules

Anchorage marijuana regulations could get a makeover only two weeks after their final passage by the Anchorage Assembly, potentially revising the 500-foot distance marijuana businesses must be from sensitive areas and how that distance is measured. The Assembly will hold a meeting on Feb. 23 to reconsider its marijuana land use ordinance, which established zoning regulations for cannabis businesses including setbacks from schools. The Assembly will not take public comments, as they are not required for ordinance reconsideration. Assembly member Patrick Flynn called for reconsideration after noticing inconsistencies between an amendment he passed and those introduced by Assembly member Amy Demboski. “One amendment defined distance based on pedestrian routes from front door to front door, the other based on lot lines,” said Flynn. “We as a policy making body need to come up with a final answer so that we can resolve that incongruity and give clear direction to zoning.” On Feb. 9, Anchorage tightened certain regulations while holding off on others. Among other restrictions, the new regulations redrafted the measurement standard between marijuana businesses and sensitive areas. The Assembly narrowly approved a 500-foot separation distance from schools, which halved the earlier proposed 1,000-foot separation. However, that distance is no longer measured by the shortest pedestrian route, but “as the crow flies,” from property line to property line instead of from entrance to entrance. As a result, many businesses’ previously selected retail and cultivation buildings became illegal overnight. Industry panic ensued. Flynn said he’d been contacted by several people in the marijuana industry whose buildings ride the line of legally and illegally placed; one business planner’s building would be just less than 500 feet from the nearest school by shortest pedestrian route, but just more than 500 feet if measured by lot line. Cannabis business attorney Jana Weltzin said the Assembly’s actions made three clients’ buildings illegal. Demboski and Assembly chairman Dick Traini did not respond to calls for comment. DJ Summers can be reached at [email protected]  

Marijuana industry faces steep lease rates in tight market

Marijuana business can expect a hefty square footage price for retail, cultivation, and manufacturing leases within the Municipality of Anchorage once they open for business. On Feb. 24, the Alaska Marijuana Control Board will start accepting business license applications. In the meantime, several industry sources report being charged several times the average per square footage lease rate for their planned marijuana operations, or entering into lease agreements that give a percentage of business profits to the landlord. This follows an observed pattern of real estate investment in both Washington and Colorado, where real estate brokers and media reported industrial warehouse space in marijuana-zoned areas being leased up to four times the average rate. A combination of market factors and regulations drive prices up for marijuana-friendly buildings and make owning such buildings a lucrative enterprise. On Feb. 9, the Anchorage Assembly passed an amended land use ordinance requiring setbacks between marijuana business and schools, churches, recreational facilities, and child-centered facilities. However, the assembly will reconsider those land use regulations at a Feb. 23 meeting. Market rates for these zones go up as scores of marijuana businesses vie for limited space. The land restrictions create pockets of proper zoning in B-3 business zones for retail and industrial zones for cultivation facilities, largely concentrated in Midtown-Spenard and South Anchorage. Wasilla’s recent ban on commercial marijuana intensifies the demand for space in Anchorage as Mat-Su entrepreneurs look for opportunities farther south. In turn, landlords see an opportunity to charge two or three times the average rate, in keeping with real estate patterns in other states where commercial marijuana has been legalized. Because of residency restrictions on licenses, Outside investors eyeing Alaska cannabis have no other route beyond real estate speculation, seeking to make profits through lease rates. Beyond profit motive, investors have a familiarity with real estate they don’t have for marijuana. Lower 48 real estate investors already control a sizable portion of Anchorage industrial space. Seattle’s Slattery Properties owns 15 industrial buildings in Anchorage, and has been present in Anchorage since 1989. Slattery Properties recently outbid Chris and Rick Euscher, who are planning the marijuana cultivation facility RC Tinderbox, on an industrial building, leading to some industry speculation that the company plans to corner the cultivation market. Michael Slattery, the owner of Slattery Properties, said his company is not actively courting the marijuana industry, and that his properties’ conformity with marijuana zoning requirements is happenstance. “We have not purchased anything outside of our core competency,” said Slattery. “The properties we have purchased add synergy to the other seven properties we own in the Cinnabar Loop (in South Anchorage). It’s not our intent to specifically target that industry.” Insurance rates are too high for Slattery to want a large portfolio of marijuana businesses — Lloyd’s of London charges rates up to 250 percent above average for marijuana-related coverage — and Slattery himself said he has “moral issues renting to marijuana types.” The building in question sits in South Anchorage, home to the vast majority of marijuana-zoned industrial space. Slattery has owned properties in Cinnabar Loop dating back to 1989, according to municipal records. Though the company isn’t looking for marijuana clientele, Slattery said he does “keep an eye” on market trends. “I’m not saying we’re going to be looking for them, but as market forces bring the industry out, if they’re socially responsible, and if they meet the regulatory requirements…they need to go somewhere,” he said. Real estate investment and the resulting price increases for marijuana entrepreneurs has been a fixture of the market since Colorado legalized recreational marijuana in 2014. Investor networks from the Lower 48 say real estate is often the first choice for potential investors, as it doesn’t require any knowledge specific to cannabis business and bypasses the residency restrictions in each state. “Probably some of the most prominent and prolific investment in the cannabis industry has been done in real estate,” said Steve Berg, who co-founded ArcView Group, an investor network geared explicitly for cannabis business investment. “The residency restrictions many states prohibit or at least restrict the ability of non-state residents to acquire interest. But there’s nothing to stop them from being landlords to a cannabis companies.” Berg said cannabis investors view real estate as the least risky and least restrictive ways to seed their money. Residency restrictions like Alaska’s — which bans all non-resident money from Alaska marijuana licenses — channels investment dollars that might otherwise have gone directly into business expenses. Cannabis businesses make for attractive tenants, Berg said. Beyond the newness and novelty, they are sound investments, with business plans and good profitability. If regulations or market conditions turn the business belly up, the investor still has the building. “From a risk-reward perspective, that’s very attractive to many investors that are coming out… If it plays out in Anchorage as it does in every other jurisdiction, the areas zoned for cannabis business inevitably see premium lease rates,” said Berg.” Already-legal marijuana markets experienced both an organic growth in marijuana-zoned building values and an increase in marijuana-specific premium rates from landlords. Real estate owners raised prices on marijuana industry businesspeople in Washington when it rolled out its recreational cannabis industry. In Washington in 2013, Seattle area landlords charged marijuana real estate deals of 150 percent to 200 percent premiums, reported the Seattle Times. "One unnamed party recently paid a $50,000 premium — above the lease rate — for a storefront outside of Seattle," read the Times article. "Greta Carter, a Seattle marijuana activist who passed on the tip, said the leaser paid it because the location was a prime spot, albeit grudgingly. 'We’re accustomed to paying a premium in the cannabis industry, but you cross a line when you want $50,000 up front,' she said." In Denver, the “green rush” spiked prices for properly zoned industrial areas to highs not seen since 2004, reported the Denver Post. In 2015, industrial lease rates climbed to $7.05 per square foot. Like Seattle, marijuana tenants were often asked to pay two or three times the average lease rate. DJ Summers can be reached at [email protected]  

Mat-Su mapping study doubles borough stream miles

A new study found 50,000 miles worth of streams in the Matanuska and Susitna valleys, or enough to encircle the world with room to spare, and 28,000 more miles than previously thought. Critically, the maps identify previously unknown salmon-spawning grounds. With more accurate information, authorities can make more informed habitat conservation decisions. In particular, wildlife managers now have better information about where to install culverts, as well as better flood management information. The mapping project cost $330,000, but spread between state and federal agencies and non-profits, undercutting the typical mapping project expense by a third. “The Mat-Su is the fastest growing area in the state by a large margin,” said Larry Engel of Palmer, a retired Alaska Department of Fish and Game biologist and member of the Mat-Su Borough Fish and Wildlife Commission. “How do you conserve habitat if you don’t know where it is? You have to identify where your streams are and that’s what The Nature Conservancy’s new stream map does for the Mat-Su.” The U.S. Fish and Wildlife Service, Mat-Su Borough, Gordon and Betty Moore Foundation, The Nature Conservancy, National Fish and Wildlife Foundation, and the U.S. Geological Survey contributed to the total cost. “These smaller streams are very important to salmon,” said Kacy Krieger, a geospatial scientist at the University of Alaska Anchorage who coordinates the state’s stream map database. “The new maps now coming online present a great opportunity for the people of Alaska and the Mat-Su to plan a future in which salmon and our communities will co-exist.” The Alaska Hydrography Technical Working Group oversaw the project. The group, which oversees all such projects, is comprised of technicians from state and federal agencies including the Alaska Department of Fish and Game, Alaska Department of Environmental Conservation, Alaska Department of Natural Resources, U.S. Fish and Wildlife Service, U.S. Geological Survey, Bureau of Land Management, National Oceanic and Atmospheric Administration, National Park Service, U.S. Forest Service, and the University of Alaska. Alaska’s maps are behind the times, technologically speaking. Adding the latest methods gives planners a host of new information for borough matters, including storm water discharge permitting process and installation of habitat-saving culverts. In the valley, new information is crucial for managing woodlands alongside Alaska’s highest-growth area. The official National Hydrography Dataset, part of the USGS National Map, has already incorporated the new stream lines. USGS will release a set of revised 7.5-minute series topographic maps featuring the updated stream lines later this year. A similar project is already being planned for the Kenai River area, in part because of the cost savings the project’s collaborative model implements.   DJ Summers can be reached at [email protected]  

Walker signs order merging CFEC duties with ADFG

Gov. Bill Walker signed an executive order on Feb. 16 that folds certain duties of the Commercial Fisheries Entry Commission into the Alaska Department of Fish and Game. According to estimates, the streamlining move will save the state $1.3 million in administrative costs. Walker said in a release that he’s taking every opportunity to cut state expenses and “do more with less.” “With a $3.5 billion budget deficit, we are leaving no stone unturned as we look for efficiencies in state government,” said Walker. “By moving administrative functions of the Alaska Commercial Fisheries Entry Commission to the Department of Fish and Game, we will save over $1.3 million a year. While that alone will not solve our budget challenges, it is another step towards streamlining government and getting the most out of our public dollars.” The Commercial Fisheries Entry Commission, or CFEC, creates and licenses the limited entry commercial fisheries in Alaska state waters. The Alaska Department of Fish and Game, or ADFG, manages the fisheries in season and performs the scientific studies necessary to do so. The order will fold several of CFEC’s administrative duties into ADFG’s domain, including: licensing and permitting services (ministerial services only); information technology services; accounting services; payroll services; procurement services; and budget services. This administrative streamlining is a cost-saving measure, but follows to bill introduced in the last two years that would have dismantled CFEC altogether. During the 2015 Legislative session, Rep. Louise Stutes, R-Kodiak, introduced a bill that would have completely disbanded CFEC and delegated it responsibilities to ADFG. The bill came on the heels of an ADFG report on CFEC released on Feb. 4, 2015, which was spurred by a similar bill in 2014. The report, completed by former Administrative Services director Tom Lawson, praised CFEC’s relationships with commercial fishermen, but criticized inefficiencies, including sluggish adjudication of contested permit applications and an outdated licensing system. CFEC has since sent a rebuttal to several of Lawson’s findings with detailed explanations for various inefficiencies. Between the 1980s and the early 2000s, the CFEC churned through permit adjudications at the rate of a 75 to 100 per year, according to the Lawson report. In the late 2000s and early 2010s, the pace slowed to a crawl. “In each of the last two years, the commissioners adjudicated only three permit applications,” reads the 2015 report, “which is an unprecedented low number and five in 2011. From 2006 through 2013, the commissioners averaged 23 permanent and emergency transfer cases per year. Among all adjudications, on average these are the most simple and typically consist of an administrative review of a hearing officer’s decision.” The Supreme Court chastised the CFEC in 2006 over the “glacial pace” of Henry Brandal’s limited entry permit adjudication that began in 1978 and stretched 22 years, though the commission did win that particular case. In 2014, the Supreme Court made a similar statement about yet another lengthy adjudication for Mark Fitzjarrald. “The case threatens to become a fisheries version of Jarndyce v. Jarndyce, Dickens’ version of endless litigation,” the court wrote. “Judges and commission members have retired, the original hearing officer has died, and still this court is trying to glean information from a sparse record of a twenty-year-old hearing.” According to Lawson, the CFEC has a backlog of 28 permit applications, most of which have been in the adjudication stage for 15 or more years.   DJ Summers can be reached at [email protected]  

NOAA study finds algal toxins in Alaska marine mammals

Algae toxins are creeping north, scientists say, and marine mammals could potentially pay the price. The National Oceanic and Atmospheric Administration released a study Feb. 11 that used samples from over 900 different marine mammals between 2004-2013 to test for toxic presence. The samples came from all over Alaska, from the Beaufort Sea to Ketchikan. Domoic acid and saxitoxin — two neurotoxins found in algae blooms — were found in a majority of the tested species. NOAA doesn’t attribute any deaths directly to the algal toxins, but points out more than 40 percent of marine mammal unusual mortality events come from toxic algae. Kathi Lefebvre, a NOAA scientist who spearheaded the study, said that number is fairly conservative. Domoic acid and saxitoxin move quickly through the body and resulting deaths are difficult to attribute. “I feel very confident that yes, there are likely deaths of marine mammals by toxins we cannot identify.” said Lefebvre. The report verifies that algae toxins are spreading northward. Reports have tied algal toxins to California sea lions since 1989 — more than 200 died or had seizures from algae toxins last year — but until now Alaska has had no documented domoic toxicosis and rare saxitoxin poisoning in its marine mammals. Last year, NOAA documented a sea lion seizing from algal toxins in Long Beach, Wash., the first time any such case had been recorded north of California. Lefebvre clarified that the study finds no causal link between toxic presence and marine mammal deaths. The future, she said, is the concern. “The risk is there,” Lefebvre said. “If we get increasing blooms, the risk will increase. That’s the concern. We know that warming waters and the loss of sea ice is more favorable for growth of algae.” Part of the concern is food security; marine mammal die offs could affect subsistence communities who depend on them. The study found the toxin levels far below regulatory limits for human consumption. Animals die long before muscle and blubber absorb enough toxins to affect humans. Some communities do harvest shellfish from mammal stomachs, however, which could cause problems. The Alaska Department of Health has made no changes in guidance to seafood safety. The study surveyed 13 species including humpback whales, bowhead whales, beluga whales, harbor porpoises, northern fur seals, Steller sea lions, harbor seals, ringed seals, bearded seals, spotted seals, ribbon seals, Pacific walruses, and northern sea otters. “Domoic acid was detected in all 13 species examined and had the greatest prevalence in bowhead whales (68%) and harbor seals (67%),” reads the report. “Saxitoxin was detected in 10 of the 13 species, with the highest prevalence in humpback whales (50%) and bowhead whales (32%).” Domoic acid, first documented in Alaska with Kachemak Bay razor clams in 1992, causes amnesic shellfish poisoning in humans. Saxitoxin causes paralytic shellfish poisoning. The two toxins have been documented in Alaska shellfish for decades, and the human effects of shellfish poisoning with them. Algal blooms and their accompanying toxins usually feel at home in tropical or temperate waters. Alaska’s sub-Arctic and Arctic waters aren’t so friendly. Warming ocean patterns, however, appear to be changing how much algae makes its way into the North Pacific. Bering Sea shelf waters have risen by as much as 3 degree Celsius in the last 10 years, the report says, and a patch of warm water crept through the Gulf of Alaska in 2015. Sea ice plays an additional role. Warming, ice-free waters allow more algae-friendly sunlight into the sea, and open shipping lanes through the Arctic. Cargo vessels can transport algal species into new waters through ballast water discharge. Several events in 2015 served as a prelude to the release of the NOAA study. The warm Gulf of Alaska water known as “the Blob” allowed a massive red algae bloom to move north from Pacific Northwestern waters. The algae led to toxin scare. Marine scientists at the time attributed no deaths to increased levels of algae toxins, but did see an increase in toxin levels in shellfish. Researchers and fishermen haven’t positively connected anything sinister to the warm water, but it coincided with an unusual mortality event, the kind 40 percent of which Lefebvre said are caused by algal toxins. Dead whales cropped up near Kodiak, Chignik, Katmai, Seldovia, and False Pass during the summer, along with dead sea lions in Dutch Harbor and Amalik Bay. Dead puffins and other seabirds abounded along the Gulf, as well as washes of dead baitfish including sand lances and herring. “Those large whale die offs, we couldn’t get to them (to take samples),” Lefebvre said. “That investigation is still ongoing.” The study will continue. The next step is to analyze temperature variations, sea ice composition, and a host of other factors against the presence of algae toxins and link the two in a predictive model. NOAA will also continue to monitor subsistence harvests.   DJ Summers can be reached at [email protected]    

Murkowski lifts hold on FDA nominee

The FDA could require mandatory labeling for genetically engineered salmon as soon as March. Sen. Lisa Murkowski has lifted a nomination hold on the nomination of Dr. Richard Califf as U.S. Food and Drug Administration chief, saying the administration has guaranteed mandatory labeling requirements for genetically engineered salmon. The FDA is not implementing its own guidelines, but providing Murkowski’s office with the necessary language to force it to require mandatory labeling. Murkowski’s office said it plans to introduce a bill in March adding the FDA’s language, and expects little resistance to its passage. “I placed my hold on Dr. Califf’s nomination until my concerns regarding labeling guidelines for GE salmon had been resolved,” said Murkowski in a release. “Since then, I have been working closely with the FDA to develop labeling guidelines, and I have received the assurances I need that the FDA is taking this matter seriously. Today I am officially lifting my hold on Dr. Robert Califf, and I look forward to working with him in the future for the health and well-being of Alaskans.” Last year’s omnibus package ordered the FDA to ban the genetically engineered salmon from the U.S. market until the FDA publishes final labeling guidelines. Currently, the FDA allows for voluntary labeling of genetically modified fish, but does not require it. The FDA legal department, however, said the omnibus’ language wasn’t strong enough to fulfill Murkowski’s intent of mandatory labeling. The FDA, as a show of good faith, worked with Murkowski’s office to provide them the language that would force mandatory labeling. The FDA approved genetically engineered salmon – manufactured by Canadian company AquaBounty – for human consumption in 2015. Alaska politicians doubt the science and fear the economic consequences. Alaska fishermen’s wild-caught sockeye will have to compete with genetically altered fish, which splice salmon and ocean pout genes to grow at twice the rate of wild salmon.

Wells Fargo report bleak for Alaska on strong dollar, weak oil

Wells Fargo economists released an investment update for 2016, and little of the news looks pleasant for Alaska. The report, entitled “Navigating Risk in a Year of Change,” advises investors to shrug off the appearance of market volatility in 2016. “We started the year very differently than we started the year ever before,” said JoEllen Weatherholt, an Alaska investment strategist with Wells Fargo. Weatherholt said the market’s recovery from economic doldrums beginning in March 2009 has been abnormally smooth. Market volatility now, she said, only feels intense by comparison. “We’re back to more normal volatility,” she said. “It feels like super volatility when you haven’t had any in awhile. We are going to continue to have volatility, we’re not going to be in that smooth sailing environment.” Investors, she said, should calculate their appetite for risk and try not to get sucked into pessimism. “Quit watching TV and just hang tough,” Weatherholt said. The volatility, the report says, traces back to several themes. Most crucial for Alaska, commodity prices including oil remain low with little sign of an upswing, and the U.S. dollar’s strength causes problems in export markets. In terms of Wells Fargo’s report, Alaska more closely resembles the bank’s definition of an “emerging economy”: one dependent on low-value bulk resources without a substantial proportion of 21st century business drivers like technology and internet development. With political unrest and low commodity prices, these emerging economies have a negative outlook. The dollar’s strength hurts for Alaska as a foreign export producer, notably for the state’s largest foreign export, seafood, and for it’s largest revenue source, oil. Alaska also exports other commodities such as gold, lead and zinc. In 2015, the dollar’s strength factored into Bristol Bay fishermen — the world’s largest sockeye run — receiving half the average price for their fish. Wells Fargo doesn’t predict the dollar will weaken anytime soon, though early 2016 saw it beef up less than the previous year as foreign economies strengthen. “The dollar’s two main supports are stronger economic growth and widening interest-rate differentials across countries,” reads the report. “The U.S. economy has outperformed the Eurozone and Japanese economies since 2014 as the dollar has surged in value against the euro and the yen. The economic-growth gap across these regions should narrow somewhat in 2016.” Europe is a key export market for Alaska seafood along with Japan and China, but outlooks for their currencies look dim. Political unrest driven by the European refugee crisis contributes to the euro’s weakness, said Mike Serio, Regional Chief Investment Officer for Wells Fargo Private Bank. The dollar’s strength has been a factor in the price of oil’s decline, colliding with a glut in supply. Global production increased in 2015 from 94.5 million barrels to 95.5 million, with no equivalent increase in demand to raise prices back up. “The problem is our storage facilities all over the U.S. are just bloated with oil,” said Serio. Rather than depress supply willingly, oil-producing regions continue to yield. “We’ve got Russia continuing to pump, Saudi Arabia continuing to pump, and Iran continuing to pump,” he said. Oil prices are good for the U.S. consumer, but there’s been no equivalent buildup in other areas to benefit. Wells Fargo estimates an annual household savings of $92 billion per year. Typically, economists theorize that gas pump savings fuel growth in other sectors, but the U.S. consumer appears to have learned a savings lesson from the Great Recession. “People are saving 5.5 percent of their income,” said Jon Snare, a regional investment manager. “It’s one of the mysteries in the U.S. that consumers since the crisis have been less willing to go out and spend the money they save.” For Alaska, this could dampen tourism expectations. Tourism, nearly a third of the state’s private economy, comes from discretionary spending, especially lengthier and more expensive trips to remote locales like Alaska. With that extra money socked away in savings, it may be less likely to be spent on glacier cruises and halibut charters, although the state is forecast to have another strong year of visitors in 2016. DJ Summers can be reached at [email protected]

Cotten, council get earful from trawlers

PORTLAND, Ore. — An administrative push to keep fishing jobs in coastal communities is butting heads with the trawl industry claiming they provide the jobs in the first place. The North Pacific Fishery Management Council will continue studying a bycatch reduction plan unpopular with Gulf of Alaska trawlers. The option, known as Alternative 3, would allocate individual bycatch caps to groundfish vessels in the Gulf of Alaska rather than the target species. The council is making changes at the fleet’s insistence. The council passed a series of chinook salmon bycatch limits and halibut bycatch reductions in 2011 and 2012, leading to bycatch-related shutdowns of the trawl fleet. Following a two-day public comment marathon that spilled into an impromptu town hall-style meeting, the council approved an amended version of the original alternative. The amended Alternative 3 narrowly passed the council 6-5 along the state lines. All six Alaska members voted in favor of including the alternative, while members from Washington, Oregon, and the National Marine Fisheries Service Alaska Region voted against it. Even with changes, trawl industry representatives say Alternative 3 is the short route to crippling the Gulf of Alaska groundfish fleet. “If the goal of the council is to hamstring the trawl industry, then Alternative 3 it is,” said Bob Krueger, executive director of Alaska Whitefish Trawlers. Trawlers say the council process is skewed towards small boat Alaska interests, a disservice in their eyes, as the fishery is federal. Council members said that may be true, but Alaska plays the biggest role in the North Pacific. “The majority of the people that have LLPs (limited license permits) now don’t even live in Alaska,” said Alaska Department of Fish and Game Commissioner and council member Sam Cotten. “But the fishery is prosecuted from Alaska ports. The fish are brought to Alaska harbors. The fish are processed in Alaska communities. There are people who live in these towns who are affected by fishery management plans. We’re gonna listen to them, too.” After the vote, trawl industry stakeholders clustered together to vent against what they said was harmful anti-trawl rhetoric that will shoot Alaska in the foot. “All my boats that are ported in Kodiak deliver to Kodiak for decades,” said Heather Mann, executive director of the Midwater Trawlers Cooperative. “They spend money in Kodiak. The fish is being processed in Kodiak. They’re buying groceries and fuel in Kodiak, and getting services in Kodiak. We’re as much a part of that economy as someone who was born and lives in Kodiak. To discriminate against us…harms Alaskans.” Cotten said the trawlers are right; Alaska interests, in his mind, are the council’s top priority. “If not us, then who will protect the economic interests of Alaska?” he said. Alternative 3 Roughly 85 percent of North Pacific groundfish fisheries are rationalized. A big chunk of the remainder is in the Gulf of Alaska. Rationalization assigns blocks of fish quota to individual vessels or to fishing cooperatives. Managers often pinpoint rationalization as the best way to ensure safety and to minimize bycatch; vessels with their own quota can harvest at their leisure instead of the derby style fisheries of the past, thus allowing more time to avoid prohibited species like chinook salmon and halibut. Coastal communities, however, have a bad aftertaste of some rationalization programs. When the council rationalized Bering Sea crab, the number of boats in the crab fleet shrank by two-thirds in one season and eliminated 1,000 crew jobs. Though not to the dramatic level as crab, halibut rationalization also produced some consolidation of vessels and harvest quota. Quota is also extremely expensive, which has limited the ability of new entrants to join the fisheries. In state fisheries, the Alaska limited entry permit system saw many rural permits migrate to urban areas.  “Those that live in the community are very concerned about duplicating and magnifying the negative experiences we’ve had in the past,” said council member Duncan Fields. “Our experiences create a very clear philosophical demarcation on the council.” Alternative 3 creates an individual quota system for bycatch, rather than for the target species. Trawlers say this does nothing to end the race for fish, as vessels will simply fish up to their individual bycatch limit instead of the fleetwide limit. Trawlers understand the fears of consolidation, but say their fishery isn’t analogous to crab or halibut. Groundfish are low-price, high-volume product not subject to the same harvesting or market structure as the higher-end seafood products. As evidence, they point to the Gulf rockfish fishery, which produced little consolidation when it was rationalized in 2007. Fewer than 40 trawlers currently operate in the Gulf of Alaska groundfish fishery, but potentially as few as 10 could harvest the whole quota. Fields said this is exactly the kind of consolidation Alternative 3 wants to avoid. Trawlers say an existing option, Alternative 2, already incorporates certain guarantees for preventing consolidation, including vessel usage caps. To prevent the kind of consolidation of the crab or halibut, each vessel would be restricted to hold no more than 1 or 3 percent of the total target quota – allowing for increased efficiency but preventing the fleet from shrinking below about 25 vessels. Among other concerns, trawlers also say Alternative 3 doesn’t recognize individual vessels’ or cooperatives’ historical take of prohibited species catch, or PSC, or of target species; they worry a PSC-only allocation will be a kind of redistribution of wealth to those entrants without their lengthy investment of time and finances. To fix this, Cotten amended the final Alternative 3 to recognize dependency, but not history, which trawlers said “molests” their concerns. Only recognizing dependency without history, they say, goes against the tenets of the Magnuson-Stevens Act, which states the council must make allocations with history as a consideration. Cotten put in a concession to history: any allocation of history would use only the historical share from the year before. Trawlers say one year of bad fishing shouldn’t guarantee another. Both trawlers and the National Marine Fisheries Service, or NMFS, oppose Alternative 3, believing it doesn’t address the stated goal to make fisheries safer and lower bycatch. Merely adding it to the discussion, they said, will cost crucial time for the trawl fleet, which has had two bycatch-related shutdowns already and anticipates more. NMFS Alaska Region Assistant Administrator Glenn Merrill, who sits in place of Alaska Region Administrator Jim Balsiger on Gulf-related matters because Balsigers’s wife Heather McCarty works for the City and Borough of Kodiak on fisheries matters, voted against Alternative 3 and said analyzing the option will add up to a year’s more time to a final plan’s passage. Stakeholder input Trawlers heatedly testified against moving Alternative 3 forward, both in the Advisory Panel and in front of council. The AP, a group of 21 stakeholders who provide input to the council, almost passed a recommendation to the council to drop Alternative 3, but the motion failed on a 9-12 vote.  Virtually everyone affiliated with a trawl operation spoke against the option, most with the same criticism: only allocating bycatch caps will not encourage trawlers to slow their operations and avoid prohibited species. “I feel that time is the most effective and powerful tool to reduce bycatch,” said trawl captain Jason Chandler. “If only PSC is reduced, the fleet will continue to race upwards to the limit. I can’t honestly believe we’re even talking about a program that doesn’t take out the race for fish.” Most public comment was against the alternate with a few notable exceptions. Those who supported it spoke to the alternative’s ultimate goal: boosting coastal community stake in the fishery. “Everyone has figured out that owning a public resource is a really groovy tool,” said Alexus Kwachka, a Kodiak fisherman and AP member. “I don’t know if Alternative 3 would work, but I think it has merits to consider. I think there has to be some kind of happy medium. If we do it wrong in the Gulf, we wipe out other businesses.” Trawlers organized a voluntary stand down from Feb. 3-6 in order to testify and show solidarity. The masses hinted that the stand down was taken seriously, but Alaska council members probed to find out if the stand down’s timing was too convenient. Prior to the council meeting, pollock prices pushed trawlers to target non-pollock fish in the Gulf instead, leading to a halibut bycatch spike of 100 metric tons, or about 242,000 pounds, over the same period last year and spurring trawlers to stop targeting non-pollock species such as Pacific cod. Accounts for when the trawlers decided to stand down to participate in the council meeting differed; some said last year, others said earlier in January. “Are their any other reasons you would stand down,” asked Cotten, “perhaps because of bycatch?” Trawlers acknowledged the halibut bycatch spike, but said the two stand downs were purely coincidental. “I just want to point at that that agreement was entered prior to the beginning of our fishing season,” said Jason Chandler, a trawl captain. Alaska council members seemed to think the much-publicized stand downs skewed reality. There’s a critical distinction, they said, between the largely Seattle-based trawl industry and the actual residents of Gulf of Alaska towns like Kodiak, Sand Point, and King Cove. Few such residents testified before council or wrote letters of support. Trawlers, meanwhile, resented the implication that they aren’t community members, too. The council’s Advisory Panel wrote in its recommendation that “no industry” voiced any support for the alternative, earning a scolding tone from council member Duncan Fields. “Is the AP of the opinion that (supporting) written comments do not count as stakeholder input?” Fields asked AP co-chair Art Nelson. The letter Fields referred to came from the Sitka-based Boat Company, which describes itself as a “non-profit educational organization offering luxury eco-cruises through Southeast Alaska.” Of the 20-odd letters submitted to council, the Boat Company alone supported Alternative 3. The remaining letters came from processors, trawl captains and crew, or from industry groups. Some Kodiak residents within the council process had argued a similar point in the AP discussion preceding the council’s. Certain “community protections,” they said, are merely protections for trawlers and processors. “I consider myself a stakeholder as a resident of the community of Kodiak,” said Theresa Peterson. “I don’t see stakeholders as being limited to the stakeholders in the trawl industry. Granted, people not directly represented in the trawl industry have not shown up en masse, but I feel like the state was responsive to a lot of community concerns.” The council’s public comment period — spanning two days with more than 50 speaking — was highly charged, and the Benson Hotel’s conference room temperature rose. The sheer volume of public comment spilled into an impromptu town hall-style meeting with Cotten. Trawlers crowded the commissioner and some had trouble keeping voices below an on-deck volume. Paddy O’Donnell, a Kodiak resident and trawl owner who introduced the motion to scrub Alternative 3 out of the package as an Advisory Panel member, told Cotten he hates being treated as a second class citizen. Fixed gear fishermen, he raged in a brogue-soaked shout, are just as important to the Alaska economy — and the Alaska identity — as the more romanticized hook and line fisheries. “I’m branded because I’m a trawler. I’ve lived in Alaska for 26 years, longer than I ever lived in Ireland,” said O’Donnell. “I’ve got two kids going to school there. You are throwing out the future of my livelihood, the future of my kids, the future of the community of Kodiak.” Fishy politics Trawlers accuse the North Pacific council of letting itself be dominated by Gov. Bill Walker’s interests through Cotten, and weren’t shy about telling Cotten they felt betrayed by Alternative 3. “You, as commissioner to the State of Alaska, you’ve got a job to do, but you’re throwing me under the bus,” said O’Donnell. “You’re the guy we look up to, to protect us. You’re our man in Juneau, and you need to look after us.” Council members don’t necessarily disagree that the process is weighted for Alaskans; that’s the way it’s supposed to be, they said. Alaska was given the majority of the voting seats on the North Pacific council when the eight regional councils were created by the Magnuson-Stevens Act. Cotten introduced Alternative 3 in October 2015. Former commissioner Cora Campbell, who Cotten replaced following Walker’s election, had forwarded Alternative 2 to the council the year before. Trawlers support Alternative 2, which they said is still flawed but had the benefit of two years of substantial public comment. Trawlers said the council discriminates against them. The decision to move Alternative 3, opponents said, demonstrates an Alaska-stacked, philosophically anti-trawl council process. Cotten, they said, controls the majority of Alaska votes and has rearranged the council’s Advisory Panel to reflect anti-trawl interests. At its December meeting, the council removed Mitch Kilborn of Kodiak’s International Seafoods of Alaska and Anne Vanderhoeven, fisheries quota manager for Bristol Bay Economic Development Corp., a Community Development Quota, or CDQ, group. In place, the council appointed Ben Stevens of the Tanana Chiefs Conference and Angel Drobnica of the Aleutians Pribilof Islands Community Development Association, another CDQ group. Before the Portland meeting, the AP changed leadership roles, voting to replace Ruth Christiansen with Ernie Weiss of Aleutians East Borough as chair, with co-chairs Matt Upton from U.S. Seafoods and Art Nelson from Bering Sea Fishermen’s Association.  Only eight of the 21 AP seats come from outside Alaska. “This meeting just underlined how dysfunctional the council is becoming,” said Krueger. “People are not voting the way they really feel. We have council members up for reappointment. Voting contrary to the wishes of the commissioner would end any hope of being reappointed.” Council members disagree that the council bears hatred for trawl interests. Fields said the trawlers, more than any other group, began working the council process in 1976. The appearance of anti-trawler bias through increased regulation is more an example of long-absent equity between North Pacific user groups and stakeholders than some kind of targeted attack. “They structured fisheries that generally advantaged the trawl fleet and perhaps disadvantaged others,” said Fields. “There is a perspective on the council that the trawl fleet needs to be regulated in ways that minimize impact to other stakeholders.” Clem Tillion, a lobbyist for the city of Adak and Alaska political fixture, said the trawlers simply don’t like the taste of sour grapes. “They had everything going their way under (former Gov. Sean) Parnell,” he said. “Well, Walker won, and they’re having trouble facing up to that.” Walker’s limited involvement with fisheries has typically been in favor of Upper Cook inlet commercial fishing interests. He has repeatedly emphasized the importance of coastal and rural economies dependent on fishing. Julie Bonney, executive director of Alaska Groundfish Data Bank, submitted a letter to Walker on Feb. 5 and passed copies around to council members during public comment. “Your Administration’s proposal jeopardizes these benefits and yet does nothing to better manage bycatch and improve conservation,” the letter reads. “There is absolutely no support for this approach by the current participants in the fishery.” Cotten said Walker is aware of the council’s actions and supports them. Alternative 3 hits the main points of Walker’s objectives for Alaska fisheries, he said: the health of coastal communities and fish-first management. Other items The Gulf of Alaska bycatch issue took the majority of council’s time, but it also revisited several ongoing issues peripheral to halibut fisheries. Like the Gulf, the Limited Access Trawl Sector yellowfin sole fishery in the Bering Sea is not rationalized. New entrants have been coming into the fishery, leading to both economic concerns for the historical participants and to halibut bycatch concerns – yellowfin sole is one of the “dirtiest” fisheries for halibut bycatch, and the Bering Sea and Aleutian Islands yellowfin grounds are nurseries for halibut.  The council’s discussion paper examined possibly closing off the fishery to new entrants. For trawl vessels in the Bering Sea and Aleutian Islands, the council passed a motion that allows vessel in the partial observer category to voluntarily opt into full coverage. Also in the coverage category, a discussion paper examined the possibility of putting observers on tender vessels, which deliver fish from offshore vessels to onshore processors. The council will continue to review observer data and move forward a rule for tenders to file landings reports. The council’s next meeting will be held in Anchorage from April 4-12, where it is tentatively slated to hold an initial review of halibut Recreational Quota Entities, a discussion paper of salmon genetics, and another review of the ongoing halibut management framework. DJ Summers can be reached at [email protected]

Anchorage Assembly finalizes marijuana business regulations

Anchorage’s marijuana industry is set to begin, with a final package of municipal requirements coming weeks before the Marijuana Control Board starts accepting licenses on Feb. 24. Anchorage tightened certain regulations while holding off on others. New regulations increase buffer zones in Chugiak and Eagle River, add new buffer zone triggers to Anchorage marijuana businesses, bar small-scale commercial home grows, prohibit onsite consumption, and redraft the measurement standard between marijuana businesses and sensitive areas. Most restrictively, property buffer distances have changed. The Assembly narrowly approved a 500-foot separation distance from schools, which halved the earlier proposed 1,000-foot separation. However, that distance is no longer measured by the shortest pedestrian route, but “as the crow flies,” and from property line to property line instead of from entrance to entrance. This shortens distances some marijuana upstarts said they’d already counted on having nailed down, and nixes marijuana facilities adjacent to a sensitive area’s property line. “Many of my clients’ spaces were fine this morning,” said Jana Weltzin, a marijuana business attorney. “And as of tonight, many are now back to square one after months of careful property location scouting and efforts.” Weltzin said the Assembly’s final regulations make the industry impracticable — echoing earlier claims that the Assembly opens itself to legal challenge. Assembly members emphasized that the ordinances will be an ongoing project and certainly be revised as time passes. Members maintained earlier sentiments about wanting to start slowly with the new industry, rather than open floodgates too quickly and have to scale them back. Caution, they said, should not be misinterpreted as antagonism. “Politics is the art of the possible,” said chairman Dick Traini. “It’s a compromise. We’ve got a better document now. We’re going to have to tweak it. We want to see you guys successful.” 500-foot buffers Restrictions tempered an early concession to cannabis industry concerns. Introduced by assemblyman Patrick Flynn, an amendment recalls the city’s earlier insistence that it avoid federal scrutiny with a 1,000-foot buffer zone from schools. Flynn argued that the best way to thwart the black market is to make the industry as easy as possible for the regulated market. With a land crunch in Anchorage making retail and industrial space scarce, Flynn said the industry needs more lax rules to avoid being priced out of existence. “There’s just limited land available in the Anchorage Bowl,” said Flynn. “We’re already seeing a premium charged on facilities available under the 1,000-foot standard.” Members Amy Demboski and Paul Honeman both argued the federal government’s scrutiny should steer the Assembly to caution, but member Bill Evans said the fear is misplaced; if the feds want to bust marijuana businesses, they need little reason, as the substance is still federally illegal. Encouraging the regulated market, he said, will help the schools’ children more than a 1,000-foot distance. “The feds can (shut down a business) if they make it 10 miles away,” said Evans. “The regulated industry doesn’t sell to kids, whereas the black market does…the 500 (foot) limitation…is the safest way for the kids; 1,000 feet, I’m not sure there’s any magic, really, about that distance.” Cannabis less welcome in Chugiak and Eagle River Several amendments introduced by Demboski effectively zoned Chugiak and Eagle River out of the industry, according to marijuana industry stakeholders. Demboski, who attended meetings with Eagle River community council members last weekend, said she chose conservative rules specifically to meet the needs of the community she represents. Her district largely disapproved of legalization. “This is one of those moments, this night, there may be some things I would do differently if I was acting individually,” said Demboski at the meeting’s prelude. Eagle River residents looking to enter the legal marijuana market said they feel cheated as Anchorage taxpayers. “I feel like an overprotected Eagle River child that’s not able to participate in the recreational marijuana market,” said Jessica Jansen, co-founder of Canna Farm Co-op. Demboski submitted a battery of amendments with varying degrees of success. Some, like a 500-foot buffer for video arcades, died a quick death with a majority vote against it. Others received more consideration and more favorable votes. In the end, Demboski succeeded in securing a 1,000-foot buffer from an Eagle River community center, a removal of marijuana retail stores from all B-3 zones in Chugiak and Eagle River, and a 1,000-foot buffer from all dedicated parks in Chugiak and Eagle River. Other Demboski amendments applied to Anchorage at large and revived previous restrictions the Assembly’s Planning and Zoning Commission had stripped out of its recommendation to the Assembly. Demboski tried to reinstate a buffer trigger for dedicated parks — of which Anchorage has roughly 10,000 acres — but was voted down. The Assembly forwarded the special land use package to the Planning and Zoning Commission late last year, complete with the setbacks for parks, childcare centers, and homeless shelters. After a round of outraged industry comment, the commission loosened some of the proposals in their final recommendation to the Assembly. Another amendment introduced by Demboski added childcare facilities back into the buffer zone. The Planning and Zoning Commission had stripped this provision out of the assembly’s packet earlier after industry complaints that the measure would remove too much available land. These specifically apply to businesses license to provide care for nine or more children, according to Demboski. Demboski admitted during debate that she disagreed with the Planning and Zoning team’s recommendations, saying they “drastically altered” the Assembly’s “original intent.” The ballot initiative included an opt-out clause for localities, and several have already done so. Chugiak and Eagle River, however, are not their own municipalities or villages. Traini said closing off specific areas for specific businesses is allowed by Title 21. Pot clubs and home grows Pot Luck Events — the Anchorage marijuana club that allows members to bring and share product — will continue operations for now. The Assembly opted not to go through with ban on clubs, which are neither prohibited nor approved by state regulations. However, the Assembly did opt to prohibit state-regulated onsite consumption licenses, saying they plan to review the state’s final provisions when licenses become available. Assembly regulations also put a halt on small marijuana cultivators. An amendment to allow limited commercial marijuana grows in residential areas failed. Pete Petersen, the amendment’s author, said he wanted to acknowledge a reality of the black market and try to collect tax dollars the city may be missing. “The more of the black market growers that become legitimate business people, the more taxes the municipality is going to collect,” said Petersen. “Right now, there are no warehouses growing marijuana. All the marijuana being grown in Anchorage is grown in residential areas. It’s been going on for decades.” The amendment failed overwhelmingly on a 9-2 vote, however. Assembly members acknowledged the same black market reality, but said the dynamics change when people openly profit from it. “People do not want this in residential areas,” said Hall. “I understand what Mr. Petersen is saying. I think it becomes a totally different situation when you legalize them and everybody knows they’re there.” DJ Summers can be reached at [email protected]

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