DJ Summers

Year in Review: Telecoms

The state’s lack of budget solutions has dug into telecommunications growth. General Communications Inc. is cutting 20 percent to 25 percent of its planned capital project spending next year in light of the State of Alaska’s failure to implement a fiscal plan during its 2016 marathon legislative session. This implies 2017 capital expenditures of $158 to $168 million compared to previous plans for up to $210 million in spending. GCI President and CEO Ron Duncan has been an outspoken supporter of plans such as those put forward by Gov. Bill Walker and approved by the state Senate to restructure the Permanent Fund to use earnings to pay for state government. The House failed to have a floor vote on the Senate bill, leading Walker to veto $1.3 billion in state spending, including $666 million from Permanent Fund Dividends to reduce this year’s check from more than $2,000 to $1,022. Duncan is the founder and one of the co-chairs of Alaska’s Future coalition, which has organized a campaign to encourage legislators to approve a fiscal plan and for the public to support such a plan. GCI spokesman David Morris said the company doesn’t plan on shedding employees as a result of capital expense reductions, but acknowledged things can change. The capital expense cut at GCI will dig into statewide utilities construction. According to forecasts by the Institute of Social and Economic Research at the University of Alaska, private spending for utilities construction in 2016 will total $459 million. GCI accounts for nearly half that amount.  No. 2: Quintillion starts laying offshore Arctic fiber Wireline wholesaler Quintillion’s plans for an intercontinental subsea fiber system connecting Asia and Europe evolved in 2016. The company sets the project into three phases, each of which representatives said are independently viable financially. The first phase connects an undersea fiber system from Nome to Prudhoe Bay with an existing terrestrial fiber line running north from Fairbanks. The second will entrench a subsea line from Nome spur to Tokyo, while the third lays line from Prudhoe Bay to London. Ships from France began laying the subsea cable for phase one in mid-July and continued through October. Rather than sell directly to customers, Quintillion hopes to draw Alaska’s telecommunications providers to the fiber system. Companies like GCI or Alaska Communication, representatives said, should see the value of fiber over less robust platforms built and used internally. Along with Cooper Investment Partners, Alaska Native organizations Arctic Slope Regional Corp., and Calista Corp. bought into the Alaska portion of the project, previously led by Canada’s Arctic Fibre. Now the project is entirely Alaskan. Costs have shifted since the project started. Previously estimated at $250 million, Quintillion vice president of external relations Kristina Woolston can only say now the project is a “considerable investment.” No. 3: Rural broadband continues to expand Rural internet connectivity grew in 2016. Broadband networks and provider contracts for Alaska’s largest telecommunications companies are slowly expanding in rural markets, focusing on large contracts with federally funded Alaska Native organizations and municipal customers. GCI announced on June 21 the addition of 10 new Northwest Alaska villages into its now-completed TERRA network. Buckland, Kiana, Noorvik, Selawik, Koyuk, Elm, Golovin, White Mountain, Stebbins and St. Michael will now have access to internet connection speeds far faster than 6 megabits per second standard in many rural Alaska communities, which is well beneath the FCC benchmark of a minimum 25 megabits per second. TERRA is a hybrid of broadband cable and microwave transmitters in stretching from Southwest to Northwest Alaska. The expansion is the second this year to build on the existing system. The TERRA-Northwest project extends from Nome to Kotzebue. The Southwestern portion of TERRA began upgraded June 8 with new microwave radio networks from Levelock to Bethel — which allows 3G wireless data service in 28 communities in Southwestern rural Alaska villages, including Aniak, St. Mary’s, and Marshall. GCI already has operating contracts with the Northwest Arctic Borough School District, Norton Sound Health Corp., and Maniilaq Association, an Alaska Native health and social services organization. Outside the North Slope and away from the areas of coverage provided by the TERRA project, Alaska Communications is supplying Alaska Native health providers with coverage in Southcentral. Alaska Communications representatives confirmed on June 21 that the company has drawn up a new five-year contract with Kodiak Area Native Association following the expiration of a previous three-year contract. The Federal Communications Commission will help Alaska Communication with rural broadband buildout with money from the Connect America Fund Phase II, granting $19.7 million a year for the next 10 years.  

Year in Review: Fisheries

After a hectic fisheries year in 2015 involving felony charges, forced retirements and resignations, the 2016 Board of Fisheries confirmation cycle was mild, with few of last year’s inflamed arguments. This board shakeup precedes the Board of Fisheries Upper Cook Inlet finfish meeting in early 2017, which is held once every three years and is highly charged by the conflicts between user groups. The last two years took a toll on fisheries leadership, including one botched interview, one forced resignation, three failed nominations, a fistful of felony charges against one of those nominees, and two recent resignations — one by chairman Tom Kluberton who cited political burnout and stress, the other by Bob Mumford, coming before he even had the chance to be confirmed by the Legislature. Unlike 2015, Board of Fisheries appointees had no trouble being confirmed in a rare occurrence for the Legislature. In April 2016, the Legislature unanimously confirmed Al Cain, Israel Payton, and Robert Ruffner to the Board of Fisheries, replacing Mumford, Fritz Johnson and Kluberton. Last year, Ruffner’s confirmation hearing went especially wrong after a sustained campaign by sportfishing groups to characterize him as holding commercial fishing sympathies. The Legislature failed to confirm him on a 29-30 vote in 2015 but unanimously approved him in 2016. No. 2: Drifters win lawsuit challenging Cook Inlet salmon management A federal court tossed a North Pacific Fishery Management Council rule that will change the tenor of the upcoming Upper Cook Inlet Board of Fisheries meeting in February 2017. A three judge panel of the U.S. Ninth Circuit Court of Appeals sided with commercial fishing groups against a 2011 decision by the North Pacific Fishery Management Council to remove several Alaska salmon fisheries from the federal fishery management plan, or FMP. Industry group United Cook Inlet Drift Association filed the lawsuit in 2013 to repeal the council’s decision, which was officially Amendment 12 to the Alaska salmon FMP. The initial suit was rejected by U.S. Alaska District Court Judge Timothy Burgess. The 9th Circuit remanded the case back to Burgess with instructions to find for the plaintiffs. Federal fisheries policymakers and state managers will now have to work together on a suitable FMP, which the council had hoped to rid itself of in 2011 by passing Amendment 12 in the first place. In December 2011 the North Pacific council, one of eight councils that oversee fisheries in federal waters from three to 200 miles offshore, gave the Alaska Department of Fish and Game management authority of Cook Inlet, Prince William Sounds, and Alaska Peninsula salmon fisheries, removing the historic fisheries from the federal oversight. Only Southeast Alaska remained under direct federal oversight due to the Pacific Salmon Treaty with Canada. No. 3: Another Bristol Bay bumper crop; salmon markets start to improve For the third season in a row, the world’s largest sockeye salmon run featured above-average numbers, a late run, and sub-average prices for the fishermen. Unlike last year, however, the fishermen’s pockets so far aren’t as empty in 2016, and the overall market outlook seems to have improved. In terms of output, the summer of 2016’s 51.4 million fish run blew previous sockeye seasons out of the water, second only to last year’s run of 59 million. Along with being an above average run, the 2016 Bristol Bay sockeye harvest surpassed ADFG forecasts. The 37.3 million sockeye salmon taken in the commercial harvest was 26 percent greater than the 29.5-million preseason forecast. The 2016 season repeated that of 2015 not only in quantity, but also in run particulars that made last year’s harvest so strange, including late timing and smaller fish size. The ex-vessel price for the salmon — what processors pay the fishermen — was above the final price for the 2015 season but still 25 percent below average. Processors paid 76 cents per pound for Bristol Bay sockeye. The run’s volume drove the overall value. ADFG estimates the ex-vessel value at $156.2 million, which is 40 percent better than the 20-year average of $111 million. A new market analysis had an optimistic outlook for the 2016 salmon season — and goes a long way in explaining why Bristol Bay sockeye salmon received a low dockside price for last year’s catch. Juneau-based economics firm McDowell Group completed the report under contract from the Alaska Seafood Marketing Institute. The report says processors simply had less capital to spread to fishermen in 2015, as they were beset by a host of negative market factors. Strong U.S. currency values lessened purchasing power for key foreign export markets, important export markets vanished, and massive supply caused led to a decrease in overall value. No. 4: Pinks miss forecast in big way Sockeye salmon mostly had a good year in 2016, but pink salmon performed miserably. Around the state, biologists are unsure of what led to the lowest pink salmon harvest since the 1970s in a season that led Gov. Bill Walker to seek a disaster declaration from the federal government to bail out beleaguered pink fishermen. “We caught 39 million pinks this year,” said Forrest Bowers, the Commercial Fisheries Division director for the Alaska Department of Fish and Game. The department forecasted a harvest of 90 million pinks. Bowers said he had to comb records back to 1977 to find a year that bad. In terms of overall value, pinks salmon pale beside sockeye, Alaska’s most valuable salmon species. Walker, urged on by Kodiak Rep. Louise Stutes, requested that U.S. Secretary of Commerce Penny Pritzker declare the season a disaster. This would pour millions in disaster relief funding for Kodiak, Prince William Sound, Lower Cook Inlet and Chignik, all areas with high dependence on pink salmon. Prince William Sound is almost entirely hatchery-produced pink salmon while the other fisheries saw their wild pink salmon runs decline. ADFG biologists note that inaccurate pink salmon forecasts are common. Unlike sockeye salmon, pink salmon have less predictable migration patterns and life cycles. No. 5: Crab cut way back Cuts and cancellations are causing anxiety for Alaska’s valuable crab fisheries, and even though prices will rise they will not likely make up for the sinking quota. The Alaska Department of Fish and Game closed the 2016-17 bairdi, or Tanner, crab season on Oct. 5, following a 15 percent cut in the harvest quota for Bristol Bay red king crab and a 50 percent cut in the snow crab fishery. Without intervention from the Alaska Board of Fisheries, requested by Tanner crab stakeholders, the millions of pounds and millions of dollars of bairdi will remain in the sea. Last year, the fishery’s total ex-vessel value was $45.3 million. Crab stocks are managed jointly between the Alaska Department of Fish and Game and the North Pacific Fishery Management Council. The North Pacific council sets the overfishing limits and annual catch limit for crab. ADFG then sets the total allowable catch, or TAC. Tanner crab was one of two stocks the National Oceanic and Atmospheric Administration charted as having a declined biomass. Always a costly product, the sharply reduced Alaska crab quota will surely raise prices, though nobody will know by how much until the season wraps up and processors set prices. The average dockside price paid to fishermen for bairdi Tanner, snow crab, and Bristol Bay red king crab from 1985 to 2015 is $2.17, $1.37 and $5.08 per pound, respectively, and have been rising for snow and red king crab over the same timeline.  

Charter rules set for halibut anglers

The North Pacific Fishery Management Council adopted charter management rules for the guided anglers of Alaska’s coastline. The actions follow several years of tightening restrictions for the fleet in the face of a declining biomass of legally sized halibut. This year continued the trend. In Area 2C, or Southeast Alaska, the Council recommended an array of management measures, all of which carry a one-fish bag limit. The options will depend on what actions the International Pacific Halibut Commission takes in January. The joint U.S.-Canada commission that sets halibut allocations came up with a recommended number, or blue line, during its interim meeting in November. The charter options will depend on whether the commission adopts the blue line or sets allocations less or greater than that number. If the halibut charter allocation is at the Blue Line, Area 2C will have a reverse slot limit of one fish of 40 inches or less or one longer than 80 inches, a two-inch loss from last year’s management set, with an annual limit of three halibut with a recording requirement. If below the blue line, there will be an annual limit of three fish and a reverse slot limit with a maximum size limit of 80 inches. If above the blue line, there will be a reverse slot limit of less than 40 inches and over 80 inches with an annual limit of five fish. In 3A, or Southcentral Alaska, anglers can take two fish per day a two fish bag limit with a maximum size limit of one fish of 28 inches, one inch less than last year. Anglers can take four fish per year, the same as last year. Wednesdays will be closed all year. The council also adopted a rolling closure of Tuesday in addition to the mandatory Wednesday closures. Between late June and early August, if the projected charter halibut harvest in Southcentral Alaska is over certain projections, managers will close as many as eight Tuesdays to charter anglers. Guided anglers in Southcentral Alaska went over their allocation by 8 percent in 2016. Groundfish quotas The council adopted the catch limits for groundfish in the Gulf of Alaska and Bering Sea and Aleutian Islands, dropping the limits for the two largest harvests in the North Pacific. Groundfish — which includes pollock, Pacific cod and flatfish — makes the bulk of the volume pulled from the federal waters off Alaska’s coast. Harvest quotas totaling two million metric tons of those species are set each year in the Bering Sea and Aleutian Islands fisheries. Pollock, the largest groundfish harvest and the greatest volume of North Pacific fisheries landings, will maintain a relatively unchanged 1.35 million metric tons in the Eastern Bering Sea. Pacific cod, the second most voluminous species in the groundfish fishery, took another cut after moving from 240,000 metric tons in 2015 to 238,680 metric tons in 2016. For 2017, the BSAI Pacific cod harvest will be 223,704 metric tons. Some of that tonnage will be made up for with other species. Atka mackerel will increase from 55,000 metric tons to 65,000 metric tons in the Bering Sea. Arrowtooth flounder maintained a 14,000 metric ton limit, same as in 2016.  Northern rock sole dropped 10,000 metric tons from last year, from 57,100 metric tons in 2016 to 47,100 metric tons this year. Yellowfin sole increased limits from 144,000 metric tons in 2016 to 154,00 metric tons in 2017. Flathead sole went from 21,000 metric tons to 14,500 metric tons. In the Gulf of Alaska, groundfish harvest limits dropped from 727,688 metrics tons to 667,877 metric tons. However, pollock quota took a larger hit in the Gulf of Alaska, moving from 248,000 metric tons to 199,000 metric tons. This follows a season where Gulf of Alaska pollock fishermen only harvested 175,000 metric tons of their harvest limit. The pattern followed suit in the Gulf of Alaska, where the TAC dropped 10,000 metric tons from 98,600 metric tons to 88,300 metrics tons. DJ Summers can be reached at [email protected]  

Gulf rationalization dies a quiet death

Gulf of Alaska groundfish will remain an open access fishery indefinitely after the North Pacific Fishery Management Council tabled a policy package that has enraged fishermen of all stripes over the last year. Depending on who is asked, the council acted at either its best or its worst with the decision. “The council process didn’t work. They didn’t solve the problem,” said Julie Bonney, executive director of the Alaska Groundfish Data Bank, an industry group of trawlers and processors. “They just took the political part first and ignored the management. I have to keep reminding myself, this isn’t about management. It’s about politics.” Others said the council did exactly what it should have done in the face of so many contentious decisions on which so many people expressed opinions. “I think this is actually the best illustration of council process, rather than the worst,” said Duncan Fields, a Kodiak attorney and former council member who was among the most vocal on this subject. “It shows that one gear group with a particular ideology and particular economic interest with very good advocates can’t just jam something through the council,” he said. “The council allows other participants, small boat fishermen, community, stakeholders to also have a voice, and that voice has said a catch share program is not the best public policy. You don’t always get the result you want.” Sam Cotten, the commissioner of the Alaska Department of Fish and Game, advanced the motion to table the package. Cotten said he didn’t have much of a choice considering how intensely divided Gulf of Alaska fishermen and community members were on the issue. “I think we had to make or break to inspire recognition that we’re divided, that we need to consider a different direction,” Cotten said. “The advocates just weren’t going to offer any compromises or any concessions. We are in a different place now. I’m hopeful people will reconsider their stances, and we will to.” Gulf of Alaska rationalization The plan would have enacted one of several options to reduce the amount of halibut and chinook salmon bycatch in the Gulf of Alaska groundfish fishery. Groundfish includes pollock and non-pelagic, or bottom-dwelling, species such as Pacific cod, Arrowtooth flounder and rockfish. In the end, the plans satisfied no one. Cotton introduced the motion to table after another marathon session of grievances from trawlers, processors, Kodiak residents, Southeast Alaska residents and various small boat fishermen. The plan aimed to fix a bycatch issue in the Gulf of Alaska. Bycatch happens when groundfish fishermen pulling up Pacific cod, pollock, and flatfish haul in non-target species. In the Gulf groundfish fisheries, chinook salmon and halibut are the main species taken as bycatch, also known as prohibited species catch, or PSC. Conservation concerns led the council to lower the halibut bycatch limits by 15 percent in 2012; the council created chinook salmon bycatch caps for the pollock and non-pollock trawl fleets in 2011 and 2013, respectively. Hitting limits ends fishing, which happened to the non-pollock fleet in the Western Gulf last year, leading to an emergency council action to allocate some salmon bycatch from the pollock fishery to the non-pollock fishery to allow fishing to continue. Groundfish fishermen from the trawl sector argue in favor of quota systems, which they say will slow the “race for fish” that makes it difficult to reduce bycatch. Alternative 2 resembles a traditional catch share program, where fish are divvied out to fishermen in the form of quota. Small boat fishermen fear the effects of catch share programs, as they have a documented tendency to consolidate quota into the hands of better-capitalized fishermen. Alternative 3 would have only created quota for bycatch, not for the target species. Without a fix for the bycatch issue, trawl representatives say they have to wait until either a new governor and new commissioner of Fish and Game, or for their fishery to continue closing over bycatch concerns. “The fishery structure is broken and the council just couldn’t find a solution,” said Bonney. “Either you have a change in the administration or you have some kind of economic disaster. Those are the two things that would promote change. I can’t guess (which would happen first).” DJ Summers can be reached at [email protected]  

Council allows sport guides to buy commercial halibut quota

Culture shifts, as does policy. The North Pacific Fishery Management Council, master of the nation’s most valuable fishing region, decided on Dec. 10 to implement a new plan that in some ways reflects changing attitudes and economies in the North Pacific and in Alaska. The plan involves allowing guided recreational halibut fishermen to buy up commercial quota through a system called an RQE — a recreational quota entity. This differs from an existing program that allows sport guides to lease, but not buy, commercial quota. Commercial fishermen don’t welcome the change, and in fact see it as one more nail in the coffin of a historical Alaskan enterprise that is more expensive and more difficult to enter that it ever has been. Commercial fishermen think the RQE will usher in the absolute death of Southeast Alaska coastal village fleets in a matter of five years, all at the hands of the tourism behemoths that control more and more of the island economies. “This is the death of a small boat, owner-operator fishery. It’s over,” said Clem Tillion, a North Pacific fisheries fixture and longtime advocate for coastal quota ownership. “Holland America and Carnival (Cruise Line) will buy the quota and hired hands will fish it, and the small boat fleet out of villages is gone.” Tillion has a dim view of human nature. Though nobody is forcing commercial fishermen to sell their quota in this new program, or forcibly giving to another group of users, he says the temptation of money might as well be force. “I watched the Natives who had all that salmon quota, and they sold to the highest bidder without giving it to their kids,” said Tillion. “The temptation of selling to Carnival will be too high. Mankind is a weak animal.” Guides, meanwhile, said the RQE is an innovative economic means to loosen up quota — one the rest of the country and the North Pacific might use more often as recreational fisheries grow. “The North Pacific council provides guidance to the rest of the country about how to provide allocations between different sectors,” said Ricky Gease, executive director of the Kenai River Sportfishing Association. “The complaint at many councils is that many allocations have been frozen shut. This provides a market-based approach for willing sellers, willing buyers, to bypass the deadlocks that are common in allocation issues across the country.” Andy Mezirow, a council member and charter captain in Seward, agreed. “It’s a sign that our sector is growing up,” he said. Shrinking halibut availability Halibut was at the center of nearly every touchy issue the North Pacific council dealt with over the last two years. The never-ending stew of halibut-born conflict is understandable. Halibut is one of the most valuable fish in the sea — even though only 2 percent of fisheries landings are halibut, 18 percent of the total value of North Pacific’s fish value comes from the fish. Scarcity has added to the value. Due to either natural fluctuation or environmental issues, halibut catch limits took a nosedive between 2004 and 2014, from 76.5 million pounds to 27.5 million pounds. Sharing is hard. Along with holding the most value per pound, halibut, alongside salmon, has one of the most diverse groups of fishermen looking to catch it. The commercial halibut fishermen who put the fish onto menus and high-end stores share the harvest with guided charter vessels, non-guided recreational fishermen, subsistence users and non-halibut fishermen, mainly trawlers, who incidentally catch halibut in the process of fishing their own quota, known as bycatch. Recreational quota entity The council’s 11 voting members approved the RQE plan 8-3, with only Roy Hyder of Oregon, Kenny Downs of Washington, and Buck Laukitis of Alaska opposing. Southeast charter lodge owner Richard Yamada planned RQEs to keep the charter fleet within its yearly allocations, as a “market based solution” that matches up willing buyer with willing sellers. Under the plan, a recreational quota entity, or RQE, can buy commercial quota to be held in a common pool for charter operators to draw from as needed if they’re in danger of fishing over their harvest limit. Prices for quota typically run about five times or more the current ex-vessel value per pound, making purchases particularly expensive — a fact not lost on the commercial fleet. This would differ from the current Guided Angler Fish, or GAF, program, which only allows charter permit holders to lease commercial quota rather than buy it. Under the plan passed by the council, the RQE can hold 10 percent of the total commercial quota pool in Area 2C, or Southeast Alaska, and 12 percent of the total commercial quota pool in Area 3A, or Southcentral Alaska. The latter was bumped down from 15 percent. This would take 10 years to happen — Southeast Alaska can only transfer 1 percent per year, and Southcentral 1.2 percent. If the RQE can find commercial quota holders willing to sell, these quota pound transfers will eventually allow the charter fleet to regain some of the size restrictions they’ve lost, potentially going back to one fish of any size in Southeast Alaska. It will also make the RQE the single largest halibut-holding entity in the North Pacific. Stakeholders still don’t know where the RQE will get the money to make purchases in the first place. Estimates place the cost of the necessary quota up to $25 million. Several self-funding options like a halibut stamp from the Alaska Department of Fish and Game exist alongside publicly funded options like a voluntary tax.  Opportunity lost, opportunity gained Well-worn arguments ping-ponged back and forth throughout the council’s Advisory Panel hearing and the council’s own public testimony. Like all halibut fishermen, both charter operators and commercial operators have felt the sting of increased restrictions. In Southeast Alaska, available commercial halibut quota dropped 78 percent over an eight-year period — too big a decline for the fleet to handle even if prices had risen another 38 percent in the same time. The commercial fleet’s profile shows the impact. Between the start of the IFQ program and 2014, the number of commercial vessels and crew dropped by half. For commercial operators, the entire concept of an RQE smells like a week-old slime line, a fancy acronym to disguise a hostile reallocation of valuable halibut quota. If we suffer, they said, charter fishermen should suffer too. “Who in the industry at low levels of abundance doesn’t experience additional restrictions?” asked Linda Behnken, executive director of the Alaska Longline Fisherman’s Association. “Does making the charter sector whole again, making the charter sector great again…justify the impact this would have on other sectors of the industry?” The so-called graying of the fleet looms large in halibut fishermen’s minds as well. The term refers to the climbing average age of Alaska’s quota holders. Young fishermen looking to follow in the family footsteps incur greater and greater expenses purchasing quota and boats, leaving fisheries managers looking for ways to encourage new participation. The RQE could worsen the situation if it drives up quota prices even further. “RQE would be a new entry to an industry that’s already competitive,” said Carina Nichols, a 28-year-old fisherman from Sitka. “I find the idea of individuals such as myself competing with a publicly funded entity concerning.” Guides are in a similar boat, and say they have every bit as much at stake as the commercial fishermen and contribute every bit as much to the economy. Functionally, charter captains in Southeast and Southcentral Alaska are trying to maneuver to get back to normal days. Southcentral guides have every Wednesday closed to fishing now, which they say is a mathematically simple cut in their business — one-seventh of their days are no longer viable. They also have size restrictions, which they say can make or break a client’s decision to book a charter trip in the first place, or end a trip when they have to call a booked client with the regulatory news. Ben Martin, a second-generation Homer-based charter captain of an age with Nichols, said he’s sunk upward of $65,000 into his operation in the last few years. Mel Grove, a Valdez guide, spoke of several suicides in his social circle due to a worsening economic outlook in the small Alaska town. “We’ve gone from 9,000 anglers days to barely over 3,000,” he said. “When times are tough, people take drastic measures. It’s those folks in town that are really seeing the greatest impact.” Everybody vs. everybody Fishing conflicts in the North Pacific reflect Alaska’s economic and cultural development in some ways. Tourism has always been a part of Alaska’s economy, but it continues to grow. In 2015, Alaska had a record 2 million visitors come to the Last Frontier. Meanwhile, recreational fishing grows. The National Oceanic and Atmospheric Administration, part of the U.S. Department of Commerce that control the North Pacific council along with seven others, has begun detailing the billions in economic impacts of recreational fisheries in its annual reports. In 2014, 301,000 marine recreational anglers took more than 583,000 trips and caught a total of nearly 2.3 million fish. Samantha Weinstein, executive director of the Southeast Alaska Guides Organization, told the North Pacific council the battle is really about staying on top of the halibut heap. Times change, and the fish is good for more than just eating, she said. “Much of the opposition to the RQE Program is based on the primacy of the commercial sector in Alaska history,” she said. “Essentially, we’re seeking to buy something another group feels a historical right to hold.” Halibut’s current regulatory system, the Individual Fishing Quota or IFQ program, started in 1992, though commercial halibut fishing in Alaska dates back to the 19th century. Like most North Pacific fish, halibut used to be a derby fishery, where whoever wanted to try his luck could catch as much as possible in the season window. Also like most North Pacific fish, halibut management had to switch to a so-called “catch share” system, where fisheries managers gave blocks of quota to historically dependent halibut fishermen. By comparison, guided anglers are relative newcomers of the last 30 or so years. Guides have their own arguments for Alaska’s coastal health. Halibut is worth $7 per pound to a commercial fishermen, but guide businesses multiply that, they say. Outsiders looking for a trophy stay in town and spread money around, feeding a bustling tourism industry in Southeast Alaska towns like Ketchikan, Sitka and Juneau. “Buying halibut off the shelf is not the only way people want to get it now - they want to visit Alaska for the halibut fishing experience of a lifetime,” said Weinstein. “Fisheries management needs to take actions that recognize this.” DJ Summers can be reached at [email protected]

Blood Bank of Alaska sells old building, lowers loan payment

The Blood Bank of Alaska has sold its old Laurel Street building, cutting a large chunk from the debt it owes to the Alaska Industrial Development and Export Authority for its new building. “We consider this absolutely spectacular news,” BBA board chairman and Bristol Bay Native Corporation CFO Ryan York said in an interview. “We were calling it an early Christmas present.” The Southcentral Foundation bought the building for unspecified purposes for a sum of $2.4 million.  Chris Bryant, a special assistant to SCF’s Resource and Development Department, didn’t give away any specifics in a statement to the Journal. “Many of Southcentral Foundation’s programs are outgrowing their current facilities,” he wrote. “SCF purchased the Laurel Street building because it has ample space to support a clinic or medical office and is strategically located to the SCF campus. This building will help to continue to meet the growing needs of our customer-owners. The next step is to determine the highest and best use of the facility. We will then reconfigure the existing property to best provide for our expanding programs.” The foundation, or SCF, is a subsidiary nonprofit of Cook Inlet Region Inc., one of 12 Alaska Native regional corporations established by the Alaska Native Claims Settlement Act of 1971. ANMC is 63 years old and was established by the Indian Health Service in November 1953. The new location and the transfer of ownership from IHS to joint management by SCF and ANTHC occurred around 1997/1998. The Laurel Street building housed the Blood Bank of Alaska until February 2016, when BBA moved into a new 57,000 square foot facility adjacent to Alaska regional Hospital. Blood Bank management said the Laurel Street building was inadequate for blood banking regulations that had developed heavily since the AIDS outbreak of the 1980s. York said the building is “not really usable in its current form,” though he doesn’t know what SCF intends to use it for. Agreeing with Bryant, he said he expects the building will need renovation for its new use. SCF’s payment is less than the $2.7 million the Blood Bank had originally hoped for in its financial plans. “We’ve only been out of the building for 10 months, he said. “In a good market you expect a building to move in 12 months, and we’re definitely not in a good market.” In practice the difference boils down to $1,700 per month on the 35-year loan, which York said is relatively insignificant. The building sale removes a large chunk of overhead from the AIDEA loan payment. At the beginning of the year, BBA CEO Bob Scanlon estimated the monthly loan service payment around $40,000 a month. With the building sale, York said the payment is now $212,000 per year, or $18,700 per month. Though BBA’s capital campaign officially ended earlier in the year, York said the nonprofit still has ongoing two- to four-year pledges coming in. The now-lowered AIDEA loan payment was central to a series of employee allegations against the Blood Bank of Alaska in the latter half of 2016. In late summer, word surfaced that BBA was exporting 100 units of blood a week to LifeStream, a California blood bank. Such agreements are common within the industry of blood banking. Blood Bank employees, however, filed two complaints to the U.S. Food and Drug Administration tying the export agreement to the loan payments. Employees alleged a shortage of blood on the bank’s shelves and a host of operational problems, including overly aggressive donor recruitment and unethical or illegal blood drawing practices. Blood Bank leadership denies there have ever been any blood shortages. BBA provides blood for 22 of 25 Alaska medical centers, and each has filled its orders in a timely fashion. In response to the employee complaints, BBA launched an internal investigation performed by three of its board members. The board members said in a detailed report that they could not substantiate any of the claims of Linda Soriano, the blood bank’s former grant writer who spearheaded the first complaint. DJ Summers can be reached at [email protected]

Federal judge tosses another fisheries management rule

Federal judges keep smacking down the North Pacific Fishery Management Council’s decisions. For the second time in the last three months, a federal court has overturned a management decision made by the North Pacific council and enacted by the National Marine Fisheries Service, or NMFS. The United States District Court of Washington overturned a 2011 decision relating to halibut quota shares harvested by hired skippers on Nov. 16. Federal courts have overturned several council decisions in recent years. In September, a the 9th Circuit Court of Appeals overturned the council’s 2011 decision to remove Cook Inlet, Prince William Sound and Alaska Peninsula salmon fisheries from federal oversight.  In this case, the North Pacific council made a decision in 2011 regarding which halibut quota holders can use a hired skipper instead of being required to be on board the vessel. Due to the court’s ruling, NOAA will have to open that group back up after limiting it in 2011.  Julie Speegle, the NMFS Alaska Region spokesperson, said the agency will change the impacted halibut fishermen’s quota shares to reflect the court’s ruling and that the council itself will review the issue. “The court order does not require any immediate change to regulations,” wrote Speegle. “NOAA Fisheries is in the process of modifying those halibut QS permits to allow the use of hired masters for any halibut QS acquired before July 28, 2014. NOAA Fisheries is also considering how to respond to the court’s order to assess the rule’s consideration of the national standards. The (North Pacific) council and NOAA Fisheries will have further discussions on the order at its December council meeting.” The ruling relates to halibut quota. The halibut and sablefish Individual Fishing Quota program, or IFQ program, was approved by the North Pacific council in 1992. Managers assigned quota shares to fishermen who commercially fished halibut or sablefish between 1988 and 1990. The program allowed for shares to be transferred. The program has certain limits on the use of hired masters — people who don’t own the halibut quota themselves but who man the vessel on behalf of the people who do. Concerned about consolidation of quota and desirous to maintain an owner-operator fleet, the North Pacific Fishery Management Council approved changes to the hired master regulations in 2011; NMFS published the final rule in July 2014, effective that Dec. 1.  Under the council’s rule, quota holders couldn’t use a hired master for fishing any quota they acquired after February 2010. The rule hurt certain fishermen who didn’t make the cutoff and had warned the council that the rule wouldn’t follow several of the 10 National Standards of the Magnuson-Stevens Act, the law of federal fisheries. Fairweather Fish Inc. and Captain Ray Welsh filed a lawsuit against the National Marine Fisheries Service. Fairweather got halibut quota in 1995 when the IFQ program began and relies on a hired master to harvest its fish; the company also purchased additional quota after February 2010. Welsh, an Anchor Point resident, also received halibut quota when the program was instituted and in July 2010 sold it and received sablefish quota by transfer. Welsh has physical disabilities and relies on hired masters to fish his quota. Because the rule affected only a small number of fishermen, it’s unknown what kind of impact the court’s ruling will have. The court ordered that any quota shares transferred before July 28, 2014, could be fished under the previous hired skipper rules. Bob Alverson, a commissioner on the International Pacific Halibut Commission, said the ruling means very little for the fishery itself. “I think it’ll have very little impact, myself,” he said. “It’s so far down the road. It’s down to a very small minority of people, a few people that may have a problem with what the council decided.” The real issue, he said, is the council itself. Alverson said the decision was hasty, as it ignored the guidance of its Advisory Panel and members of the public who wanted a different cutoff point known as a control date. “They hurt some people that didn’t need to be hurt,” he said. “There’s that old adage: Don’t inflict pain without gain. I think some people were unnecessarily injured in this, and that’s why you got the lawsuit.” Chris Oliver, the North Pacific council’s executive director, was unavailable for comment. This is the latest in a string of federal judicial decisions overturning council decisions. In September, the U.S. 9th Circuit Court of Appeals overturned a 2011 decision by the council to remove several Alaska salmon fisheries from federal oversight, which is required by the Magnuson-Stevens Act for all federal fisheries. United Cook Inlet Drift Association, or UCIDA, filed the lawsuit in 2013 to repeal the council’s decision, which was officially Amendment 12 to the Alaska salmon fishery management plan, or FMP. The court ruled that the council must have an FMP for the Alaska salmon fisheries and it could not ignore the Magnuson-Stevens Act by turning over total control to the state. In 2012, the State of Alaska and several fishing groups won a lawsuit against the National Marine Fisheries Service for improperly imposing fishing closures in the Aleutian Islands to protect food sources for Steller sea lions. In that case the North Pacific council was bypassed by NMFS to create the closures through emergency action. In 2014, another federal court ruled that NMFS did not use the best scientific information and therefore violated the Administrative Procedures Act in the implementation of a revised observer program that did not account for loss of data quality when coverage on trawl vessels dropped to 13 percent from 30 percent under the previous program. DJ Summers can be reached at [email protected]

Guns, marijuana users, and the feds

Federal courts and the nation’s highest legal official both agree that marijuana will have to shed its status as a Schedule I controlled substance before its users can buy a gun.    But Alaska Sen. Lisa Murkowski hinted that talk on the subject isn’t over. “With the change in administration coming in January further discussions on this issue will have to wait until a new team is installed in the Justice Department,” said Murkowski in a statement to the Journal. During 2016, two pieces of judicial guidance have squashed objections to the Bureau of Alcohol, Tobacco, Firearms and Explosives rules that forbid marijuana users from buying a firearm without lying on their federal application. ATFE Assistant Director of Enforcement Programs and Services Arthur Herbert sent a letter to federal firearms dealers on Sept. 21, 2011, expressly forbidding them from selling to marijuana users, both medical and recreational. Letter from the Department of Justice Cannabis is still a Schedule I Controlled Substance, meaning it has no federally accepted medical use. Until that changes, other federal laws have to toe the line, according to a Department of Justice letter sent to Murkowski. However, the letter has a few winks and nods, mirroring the tone of other federal marijuana guidance that suggest the feds won’t devote too much time to enforcement.   Murkowski, who represents the state with the highest per capita gun ownership in the country, wanted the U.S. Department of Justice to reexamine the ATFE rules in a letter to U.S. Attorney General Loretta Lynch sent in March 2016. On Oct. 27, 2016, Murkowski got a letter back from assistant attorney general Peter Kadzik saying the law is clear: no firearms purchases for marijuana users. “The department is also committed to enforcing the Gun Control Act of 1968 (GCA), which inter alia, prohibits the sale of ‘any firearms or ammunition to any persons knowing or having reasonable cause to believe such a person…is an unlawful user of or addicted to any controlled substance,’” the letter reads. “By its explicit terms a controlled substance for the purposes of the GCA is defined by reference to the CSA (Controlled Substances Act), and marijuana remains an illegal, controlled substance under federal law.” Murkowski said the Department of Justice talks from both sides of the federal mouth, crushing the ability of states to determine their own laws. “The Justice Department’s response is disappointing and reflects a bias against firearm owners,” Murkowski wrote to the Journal. “One the one hand, the Justice Department expresses respect for state regulated markets in marijuana, yet on the other it continues to insist that one who uses marijuana consistent with state law can neither acquire nor possess a firearm.” Kadzik’s letter has an undertone common in federal marijuana communications, both upholding federal law and downplaying the DOJ’s desire to actually enforce the law. Like the 2011 Cole Memorandum, which directs banks on marijuana-related actions, Kadzik’s letter hints that federal law enforcement doesn’t have all the time in the world to focus on marijuana laws in states where it is legal. “Note that the department generally has not focused its limited resources on individuals who use of possess marijuana consistent with applicable state law,” Kadzik wrote. Kadzik also pointed out that the U.S. Department of Justice doesn’t charge drug users with illegal firearms purchases very often, and doesn’t really know how many of those cases involved marijuana rather than some other controlled substance. In Alaska, Kadzik writes there’s no record of it happening at all. “The United States Attorney’s Office for the District of Alaska has not identified any cases where it filed charges under §922(d)(3) or §922(g)(3) in fiscal years 2015 or 2016 based upon an individual’s use of marijuana consistent with applicable state law,” Kadzik wrote. Winks and nods aside, the DOJ’s letter clearly upholds the federal law for the second time in 2016. The 9th U.S. Circuit Court of Appeals issued a decision on a Nevada case on Aug. 31 that upholds the ATFE guidance from 2011. Cardholders meet the definition for “unlawful drug users,” according to the court decision. The case concerned a Nevada woman, S. Rowan Wilson, who attempted to buy a gun but was prevented from doing so by the storeowner, who knew she had a medical marijuana card. Nevada is one of 29 states that have legalized medical or recreational marijuana. The next administration With the DOJ reply to Murkowski and the 9th Circuit Court decision, little wiggle room and little support seems to exist for marijuana users. Murkowski hinted she will discuss the matter with the new administration, but so far the new DOJ scares marijuana legalization advocates. President-elect Donald Trump nominated Jeff Sessions as attorney general, sending shockwaves throughout the developing marijuana industry. Sessions has an established anti-marijuana stance, once remarking “good people don’t smoke marijuana.” The National Rifle Association has remained silent on the issue of marijuana users buying guns. DJ Summers can be reached at [email protected]

Halibut stock stable, flat harvest likely

Stocks have stabilized and bycatch is as low as it’s been since 1960, however the halibut quota for next year will edge down after being raised for the first time in years in 2016. The International Pacific Halibut Commission held its interim meeting in Seattle Nov. 29-30 to review the 2016 catch, status of the stock, and to recommend how much halibut fishermen will be able to take in 2017. Overall, biologists and managers gave a view of a responsible group of users responding well to a trough in the historical ups and downs of halibut abundance, which has flattened after a decade of downward movement. IPHC biologist Dr. Ian Stewart painted a more secure picture of halibut than the last two years have seen, emphasizing decreased bycatch and a firm outlook for abundance. “I think it’s pretty clear that we’ve seen the stock stabilize,” Stewart said. The commission set a recommendation, called the blue line, of 26.1 million pounds, a slight decrease from last year’s blue line of 26.7 million pounds. The commission will meet again in January to adopt official limits, which may or may not match the blue line. In 2016, the IPHC adopted official limits of more than 3 million pounds beyond that of the blue line. Fishermen have, for the most part, been responsible in the pursuit. Commercial halibut fisheries in each of the regulatory areas in Alaska collectively caught 3 percent less than their catch limit. Guided anglers in Southeast Alaska, or Area 2C, caught 13 percent less than their limit, while the guided anglers in Southcentral Alaska went over their allocation by 8 percent. Reports detailed that overall landings have been fairly static over the last three years, with a total landing of 32.2 million pounds in 2016. Only Area 2A, the West Coast between California and Washington, went over the combined catch limit for all user groups, by 1 percent.  Halibut has persisted as a fisheries politics hot button as more users than ever split the resource. Commercial halibut fishermen share the harvest with guided charter vessels, non-guided recreational fishermen, subsistence and non-halibut fishermen who incidentally catch halibut in the process of fishing their own quota, known as bycatch. The overall removals are more divided among user groups than they have ever been, Stewart said, with only 60 percent of removals going to the directed commercial fishery, while guided recreational fisheries and bycatch each made for 17 percent apiece. The remaining halibut was divided amongst subsistence users.  Notably, the hotly argued issue around halibut bycatch could ease as the bycatch rates for groundfish trawlers drop. Since 2014, bycatch has dropped nearly two million pounds. “We’ve seen a substantial reduction in bycatch from almost 9 million pounds in 2014 to just over 7 million pounds in 2016, Stewart said. “That pattern in 4CDE (Central Bering Sea) is what’s driving the overall reduction in bycatch.” Regulatory Area 4CDE became the focus of IPHC and North Pacific Fishery Management Council action in 2014 over the amount of bycatch taken in that area by groundfish trawlers. The directed halibut fishermen in the Central Bering Sea begged the council to lower bycatch caps for the trawlers so more halibut could go to the small Pribilof Island communities whose economies rely on fisheries. The council took regulatory action, but Stewart pointed out that the area’s bycatch rates dropped 1.5 million pounds from 2014 to 2015 — before the regulatory actions even kicked in for the groundfish fleet. The recent drop in bycatch is part of a larger trend. Bycatch in non-halibut fisheries has fallen steadily from a height of 20 million pounds in 1990 to the present level of 7 million pounds — the lowest bycatch level on the chart Stewart presented, which dated back to 1960.   The IPHC divides the Pacific into several regulatory areas. The areas in the central Gulf of Alaska will see increases, as biologists observe more halibut in those regions, while those regions hugging the U.S. and Canada coast will see theirs drop slightly.  Area 2A (West Coast): 750,000 pounds, down from 1 million pounds last year Area 2B (British Columbia): 4.72 million pounds, down from 5.22 million pounds last year Area 2C (Southeast Alaska): 4.08 million pounds, down from 4.62 million pounds last year Area 3A (Central Gulf of Alaska): 9.41 million pounds, up from 9.27 million pounds last year Area 3B (Western Gulf) – 3.08 million pounds, up from 2.71 million pounds last year Area 4A (Aleutians): 1.28 million pounds, down from 1.3 million pounds  Area 4B (Eastern Bering Sea): 1.12 million pounds, up from 920,000 pounds Area 4CDE (Central Bering Sea): 1.69 million pounds, up from 1.64 million pounds. DJ Summers can be reached at [email protected]  

2017 Bristol Bay sockeye forecast in line with recent average

Bristol Bay can look forward to a regular season in 2017 after two years of hard work, if the forecast is to be believed. Alaska’s largest sockeye run has blown past projections the last two years, but next year the Alaska Department of Fish and Game predicts an average harvest. “A total of 41.47 million sockeye salmon (range 31.20–51.73 million) are expected to return to Bristol Bay in 2017,” according to an ADFG report released Nov. 15. “This is virtually identical to the most recent 10-year average of Bristol Bay total runs (41.39) and 27 percent greater than the long-term mean of 32.76 million.” For commercial fishermen, this means next year’s harvest will also be average, with a commercial harvest of 29 million. “A Bristol Bay harvest of this size is 2 percent lower than the most recent 10-year harvest which has ranged from 15.43 million to 37.53 million, and 34 percent greater than the long-term harvest average of 20.52 million fish (1963 to present),” the report states.  The forecast predicts an average run and average harvest, but the last two years have put a stain on forecasting accuracy. In 2014, 2015 and 2016, the Bristol Bay sockeye run has returned in massive numbers past those predicted by ADFG. In 2016, commercial fishermen harvested 26 percent more than what the department predicted. In 2015, ADFG predicted 14 percent less fish than what ended up returning. In 2014, fishermen caught 11 million more than forecasted.  Bristol Bay fishermen familiar with the region’s ups and downs expressed little surprise that the forecasts were off during the last two years of massive sockeye hauls. The history of ADFG Bristol Bay forecasting shows that the methods are usually off by a fair margin.  “Historically, sockeye salmon runs to Bristol Bay have been highly variable,” ADFG reported. “Forecasting future salmon returns is inherently difficult and uncertain. We have used similar methods since 2001 to produce the Bristol Bay sockeye salmon forecast.  “These methods have performed well when applied to Bristol Bay as a whole. Since 2001, our forecasts have, on average, under-forecast the run by 10 percent and have ranged from 44 percent below actual run in 2014 to 19 percent above actual run in 2011. Forecasted harvests have had a mean absolute percent error of 15 percent since 2011.” Depending on the size of the actual harvest, the 2017 Bristol Bay run could either ease or intensify an ongoing pricing situation. Ex-vessel prices for commercial fishermen have dropped while retail prices have remained largely the same due in part to a supply glut from the massive runs in 2014 and 2015. Processors still had stores of salmon products to unload when the large harvests came in, leading to a disparity in ex-vessel price versus retail prices. In 2015, area fishermen received 50 cents per pound, half the average, though this price was later adjusted to 99 cents per pound in the postseason. In 2016, they received 76 cents per pound, and are still waiting to hear what the postseason adjustment will be.  DJ Summers can be reached at [email protected]  

Banks see slowing loan growth in third quarter 

Alaska’s fiscal climate continues to chip away at the loan growth and income of the state’s financial institutions, slowing somewhat over the last year. Wells Fargo, which has a bit more than half of Alaska’s deposits, has noticed loan demand start to slow, though they are still up from the same point in 2015. “Although we are beginning to see a softening in loan demand, total loans (consumer and business) for Wells Fargo in Alaska are up six percent year-over-year,” said Greg Deal, Wells Fargo Alaska Region’s new president. “Total Alaska deposits have shown modest growth through October. Consumer deposits are up five percent year-over-year.” The Alaska-only banks have been seeing the same.  First National Bank Alaska, or FNBA, continued an upward trend in loan and income growth year over year, though loan growth was modest like that of Wells Fargo. FNBA’s stock was $37.25 per share this quarter, compared to $31.12 per share for the same quarter in 2015. FNBA had a net income of $32 million through the third quarter of 2016, up from $26.8 million in the third quarter of 2015. For the quarter income was $11.8 million versus $9.9 million in the third quarter of 2015. The bank grew to $3.7 billion in assets in the third quarter of 2016, up from $3.6 billion last year.  The bank secured $1.6 billion in net loans and leases, up from $1.5 billion the year before. Other real estate owned stayed flat from last year at $14 million. Not all banks had the same positive outcome for income. Northrim Bancorp posted decreases in profitability, with the same slow loan growth noted by Wells Fargo and FNBA. Net income for Northrim dropped by nearly half year-over-year, from $5.3 million in third quarter 2015 to $3.1 million this year. The bank’s total assets have remained flat year over year at $1.5 billion. The bank grew its total loan portfolio from $974 million in 2015 to $997 million this year.   In a release, Northrim explained that the income downturn is due to an accounting shift and to lower mortgage demand relative to last year, reflecting Alaska’s overall economic outlook in the face of a state budget crisis and declining oil production.  “New construction projects in the Anchorage market are coming in at a slower pace than in the past few years, as the economy contracts mainly due to the effects of continued low oil prices,” said Joe Schierhorn, Northrim’s president and CEO.  “Construction loans were down 30 percent year-over-year in the third quarter of 2016, primarily due to approximately $84 million in projects which were completed and termed out in the last 12 months.” Joe Beedle, Northrim’s chairman, said the employment stagnation is connected to the bank’s slowing loan growth. According to the Alaska Department of Labor, the average employment in the Alaska economy was down an estimated 0.2 percent or 689 jobs in the first nine months of 2016 compared to the same period in 2015. “While the decreases in both average and period end estimated employment represent a more moderate overall impact from the decrease in the global price of oil compared to what other energy producing regions in the nation have experienced thus far, this is a larger decline than was originally predicted for 2016. Our loan demand has slowed moderately, as the Alaska economy contracts,” said Beedle. Credit unions are faring worse in terms of income in 2016. With the exception of Juneau’s True North, each of Alaska’s six largest credit unions saw a decline in net income compared to the same quarter last year. Alaska USA saw net income for the quarter drop 16 percent, from $39.5 million in 2015 to $33.1 million this year. Credit Union 1’s net income dropped 51 percent to $2.2 million this year. Denali Federal Credit Union dropped 83 percent, from $4.9 million to $835,000.  Along with dip in net income, each credit union saw a rise in past due loans. Alaska USA has 4.7 percent more past due loans than the same quarter last year, and Credit Union 1 saw a 17 percent rise year over year. The credit unions are continuing to grow their loan portfolio, however, collectively adding 8.3 percent compared to the previous year, fueling an over 3.7 percent total asset growth. DJ Summers can be reached at [email protected]

GCI roaming income drops under new deals with Outside carriers

Financial agreements made in late 2015 are still eating into the bottom line for General Communications Inc. Most of GCI’s numbers sank in the third quarter of 2016. Company executives said the financial drops are due mainly to roaming and backhaul contracts sapping some of the usual seasonal turnaround, along with less revenue from wireless consumers. Net income increased $5 million from the second quarter but dropped by $10 million over last year, from $17.6 million in third quarter 2015 to $7.9 million this year. Total revenue declined as well. By September 2015, GCI brought in $259 million in total revenue. This year, total revenue went down to $237 million, an 8.5 percent decline. Earnings before interest, taxes, depreciation and amortization, or EBITDA, went down along with rest of the numbers by $16 million year over year, though the this is up $7 million over last quarter. GCI said year-over-year comparisons for EBITDA are misleading due to financial agreements. Late in 2015, GCI renegotiated its roaming agreements with Outside carriers whose customers travel to Alaska. The new deal secured the lucrative agreements by lowering the cost to the carriers. This cost $25 million for GCI, but also cemented the $100 million the contracts are worth.  “Year-over-year revenues were down $22 million as a result of our roaming and backhaul agreements,” said chief financial officer Peter Pounds in a Nov. 3 earnings call. “Recall that in previous years roaming seasonality significantly increased our second and third quarter results. The new contracts remove most of our seasonality.” Instead, GCI points to sequential EBITDA growth, which in the third quarter grew by $7 million. Cell phones contributed to a bug chunk of the revenue drop. Wireless revenue fell $28 million compared to the same quarter in 2015, and $2 million compared to last quarter. GCI has been shedding its total number of wireless lines over the last year. At the end of September 2015, GCI had 231,900 lines in service. This year, that number dropped by 5,500 lines to 226,400. Not only has the total number of wireless lines dropped, but the amount of money GCI makes from each line has declined by 16 percent. Total ARPU, or average revenue per user, went down $7 year over year, from $44.24 per user to $37.21 per user. The company has had to curtail some of its planned expansions. In September, GCI announced that it would cut as much as one-fourth of its planned capital project spending next year in light of the State of Alaska’s failure to implement a fiscal plan during its 2016 marathon legislative session. GCI accounts for nearly half the amount of private utilities-related capital construction in the state. In an earnings call, Chief Financial Officer Peter Pounds explained that GCI will focus on cutting capital costs in its two biggest projects, which connect remote areas to wireline. “The two primary areas where we’ll be reducing capital expenditures next year is, number one on the fiber going to the North Slope where we’re forward funding,” said Pounds. “It’s a two-year project but more than half of that is being spent this year, so year-over-year we should experience a decline and number two the spending on the TERRA project will decline next year with some of the significant spending that we’ve had this year.” DJ Summers can be reached at [email protected]

After internal investigation, Blood Bank clears itself

The Blood Bank of Alaska leadership has investigated itself and found nothing wrong.   Board of directors chairman Ryan York and chief executive officer Bob Scanlon held a press conference on Nov. 18 to publically release the results of an internal investigation. Investigators said they could not verify most claims made by former BBA grant writer Linda Soriano in a complaint to the U.S. Food and Drug Administration. The committee doing the investigating was made up of Dr. Ian van Tets, Charles Coulson, and Donald McClintock, each of whom is a member of the Blood Bank of Alaska board of directors. Specifically, the investigating BBA board members found no evidence to support Soriano’s claims including blood shortages as a result of the expense of BBA’s 57,000 square foot building, improper donor recruiting methods, negative reactions to blood collections and falsified financial information. “BBA’s procedures were audited by blood banking experts at the points in time that were most relevant to this investigation and those experts were satisfied that BBA’s operations were being carried out in a safe and appropriate manner,” the investigation concludes. “The committee’s own review of the specific allegations (described above) found no evidence of inappropriate blood banking management, no evidence of inappropriate financial management, and no evidence that BBA’s management is acting in any was contrary to BBA’s mission of service to the Alaskan community.” Upon reading the results of the investigation, Soriano said she and another former BBA employee said the report was “just so many lies.” Soriano said the investigation’s findings have little substantiation behind them. In particular, Soriano draws attention to the audits completed by the FDA and CPA firm Swalling and Associates PC, which used information from 2014 and 2015. Both audits covered information from before BBA’s export agreement with California blood bank LifeStream, which Soriano alleges was the catalyst for further problems.   “He’s just persisted in deny, deny, deny,” said Soriano. Soriano was among a group of Blood Bank of Alaska employees filed a complaint with the U.S. Food and Drug Administration in August, charging the BBA leadership with mismanagement and financial impropriety leading to dangerous donor conditions and blood shortages. According to the complaint, filed Aug. 28, the BBA allegedly could not fill the order of Providence Medical Center when it had its grand opening because too much blood had been shipped to California the day before. A second FDA complaint filed by a different employee came weeks after. Neither employee works at the blood bank anymore, and at the press conference Scanlon declined to answer whether or not they had been fired or left willingly, though Soriano admits she resigned. It has yet to be seen whether the FDA will look into the matter. The FDA will not comment on ongoing investigations, but Scanlon said conversations with the FDA led him to believe it is “reasonable to assume” the licensing organization would not investigate because Soriano’s claims are “without merit.” In its conclusion, the committee took pains to point out that managers they interviewed saw no problems whatsoever in what BBA does. “When the Committee interviewed three member of BBA management as part of this investigation, one of them emphatically stated ‘there is not one thing, one thing, that I have a regulatory concern with’ (emphasis in original),” the report’s authors wrote. “This opinion was clearly shared by the other two members present and similar opinions were voiced by many of the other employees interviewed by the committee.” This narrative conflicts with reports of morale from former and current employees, but BBA leadership said the organization is open to complaints. Scanlon and York emphasized that BBA has robust whistleblower protections and an open door policy that encourages employees to run complaints to the board of directors if needs be. York had no speculation on why several employees would bypass the board in favor of direct complaints to the FDA and the press. “We ask ourselves that 100 times a day,” he said. “I wish I had answers.” York and Scanlon both expressed repeatedly that BBA serves Alaskans first with a health matter of paramount importance. “I, my family, the board of directors and every staff member at the Blood Bank of Alaska is dependent on the blood supply that the Blood Bank of Alaska collects, tests, processes, distributes as any other citizen of the state of Alaska,” Scanlon said. “It would be foolish to think that we as blood bankers would do anything to jeopardize the safety of our families, of our neighbors, of ourselves and of our state. I just wanted to make sure that something as obvious as that is also put out on the table.” DJ Summers can be reached at [email protected]

The Great Cannabis Divide

More Americans than ever have legal access to marijuana, but the cherry glow highlights a gap between the way voters think and what federal lawmakers say and do, according to policy reformers. Paul Armentano, deputy director of the National Organization of the Reform of Marijuana Laws, or NORML, said cannabis legislation confirms one of the sore spots that drove the 2016 federal election cycle — the sense of a growing schism between voters and their federal representatives. Armentano is happy with the statewide results, but only to a point. “They key point is that when you get through with the lovey-dovey, feel good responses, it’s also indicative of a breakdown of the democratic process,” he said. Along with Donald Trump’s prediction-defying win in his presidential bid over Hilary Clinton, Nov. 8 wove more changes into the U.S. political fabric when eight of nine states legalized either recreational or medicinal cannabis. Voters who hot-boxed the voting booths with support dramatically changed the national cross-section. One-fifth of the country’s population now doesn’t need a prescription to buy marijuana. Americans in three in five states — 29 overall — can access medical marijuana. By 2020, the National Cannabis Industry Association projects a national marijuana market of $22 billion. The voter turnout reflects a growing national trend. In the eight states, ballot measures passed with an average 58 percent of voters in favor, confirming Pew and Gallup polls that say six of 10 Americans support marijuana legalization or letting states decide the issue. Because of these numbers, however, the largest marijuana policy reform group in the nation is uneasy with what the state-by-state movement says about U.S. democracy in 2016. Congressional inaction Pundits and media think pieces said the 2016 presidential race was the boil over of years of belief among the electorate that Washington D.C., elites don’t care, don’t listen or don’t move. Decriminalizing marijuana is part of that divide, Armentano said. “I can’t think of a single issue that would so clearly represent it,” he said.  Armentano’s aggravation puts a dark cloud over the otherwise joyful post-election week when cannabis industry media outlets and legalization supporters trumpeted 2016 as a watershed year. Armentano bristles that the states have to take action in the first place. “In a healthy democracy, when a significant portion of the public takes certain policy decisions, their elected officials go to the halls of Congress, carry bills and lobby for bills that are reflective of the views of their constituency,” he said. “The reason we had nine states in this election with voter initiatives…was because in every one of those states, lawmakers were unwilling to address the issue. That’s problematic.” The public is holding an open rebellion against federal law. Polls say six out of 10 Americans support legalizing marijuana; 29 states have some form of legal medical use, not counting the states allowing marijuana plant-derived cannabidiol oils for medical purposes. One-fifth of the country’s population doesn’t even need a prescription for cannabis, thanks to California and its nearly 40 million residents. State laws defying federal laws have led to an uneasy truce involving banking and law enforcement. Marijuana is listed as a Schedule I Controlled Substance, meaning it has no accepted medical use. In direct conflict with federal law, a majority of states now approve medical marijuana and growing numbers are legalizing it for adult use including Alaska, which just had its first legal sale in October after a voter initiative was approved in 2014. And yet, Armentano said, federal legislators do not respond. “I’ve been doing this for 21 years,” he said, “and I’m still waiting for a single piece of legislation addressing medical marijuana to receive a vote at the federal level. Not a floor vote, a committee vote. I’ll take a subcommittee vote — any actual recorded vote. It has not happened.” Armentano’s frustration takes root in congressional inaction. Congress has had many chances to take up marijuana-related issues, both in the past and in the present. In 1981, the late Rep. Stuart McKinney tried to reschedule marijuana with a bill co-sponsored by 84 House members, including Newt Gingrich, who went on to become Speaker of the House and is now a key advisor to President-elect Donald Trump. After the bill died in committee, Rep. Barney Frank began annually introducing nearly identical legislation, which failed each time. Since then, successive attempts to deschedule or reschedule marijuana have failed.  Currently, marijuana-related legislation is suffering the same fate. The Compassionate Access, Research Expansion, and Respect States Act of 2015, or CARERS Act, would move marijuana to a Schedule II substance and protect banks doing in marijuana business. It has lingered in the Senate Judiciary Committee without action since New Jersey Democrat Sen. Cary Booker introduced it in March 2015. The House version was kicked to a handful of subcommittees, none of which have taken any action. Californian Republican Rep. Dana Rohrabacher introduced the Respect State Marijuana Laws Act of 2015 in April. Like the CARERS Act, the House divvied it up among half a dozen subcommittees where the bill sits inactive. Even marijuana-related subcommittee actions in other areas have yielded nothing. In a 2015 appropriations bill, legislators including Alaska Republican Sen. Lisa Murkowski voted to include a provision that would prevent the federal government from prosecuting banks for dealing with marijuana businesses. The addition, passed with a 16-14 subcommittee vote, ended up stripped from the final bill. Republicans and states’ rights Besides a divide between the voter tide and federal inaction, Armentano sees hypocrisy as well. Republican lawmakers are typically full-throated about states’ rights and federal overreach. NORML tracks voting records and public statements to see which lawmakers support legalization directly or at least the rights of states to make up their own minds. “About two-thirds (of Republicans) disagree with that position,” Armentano said, “despite their longstanding propensity to generally argue that the government that governs best governs least, and that so many of these issues are best addressed on a state and local level. They clearly don’t believe that’s the case concerning marijuana policy.” The voter-policymaker divide is especially distinct in the GOP, where lawmakers haven’t kept up with their electorate’s evolving attitudes. As a voter issue, support of marijuana legalization is largely non-partisan, though young Democrats and independents top the charts, according to Gallup data. In the most recent poll, Gallup reported than 42 percent of polled Republicans support legalizing marijuana — a number that has doubled over the last 10 years. Among the states that have legalized medical marijuana, there is a roughly even split between red, blue and swing states. West Coast blue states and New England blue state Maine and Massachusetts each have recreational marijuana, along with swing state Colorado and deep red Alaska. Red states like Arizona, Montana, Arkansas and North Dakota count themselves among the legal medical marijuana states. Florida, which swung red this election, legalized medical marijuana in 2016 with 70 percent of voters in approval. Red states like Mississippi, Missouri, North Carolina and Nebraska have removed jail sentences for possessing small amounts of marijuana. Some Republicans, notably Rohrabacher and Alaska’s Rep. Don Young, have stuck to the states’ rights argument on the issue by sponsoring or cosponsoring marijuana-related bills. In a May 2016 forum, Young said marijuana legalization was “is very frankly dear to my heart, because I do believe in states’ rights and individual rights,” and that, “Either you’re for states’ rights or you’re against it. You can’t have it both ways.” During the Republican presidential candidate debates, Sen. Rand Paul supported states’ rights regarding marijuana along with Carly Fiorina and former Florida Gov. Jeb Bush. Others seem to bend that belief where marijuana is concerned. After Arkansas became the first Southern state to legalize medicinal marijuana, Gov. Asa Hutchison, a former head of the U.S. Drug Enforcement Agency, expressed fear of tax burden and discomfort with the state-by-state nature of legalization. “It’s an example of the states innovating in a risky area, and certainly the states are leading on this, but we’re to a point that the federal government is going to have to readdress this,” he told reporters form the Arkansas Democrat-Gazette after the election. “This does not call for a state-by-state solution, it calls for...a national solution.” Trump on pot Federal policies aren’t expected to change one way or another in the coming years, both from an unchanged Congress and a lukewarm White House. Most experts have a “wait and see” approach to what will happen under Trump, but they don’t think his cabinet could muster enough support to scale back legalization. Morgan Fox, communications manager for the Marijuana Policy Project, said he isn’t particularly worried about a newly Republican-dominated Washington. “This is a bipartisan issue, and while support has always been a little less strong with Republicans, we also have a lot of Republican support in a lot of states as well as certain people in the legislature,” he said. Experts have no real hints for what Trump will do. As far back as 1990, Trump advocated for legalizing all drugs.  In interviews throughout his election campaign, Trump didn’t give any solid guidance about his support for a recreational market, though he has firmly stated his “100 percent” support of medical marijuana and his support of states’ rights in determining whether or not to legalize. “But I know people that have serious problems and they did that they really — (medical marijuana) really does help them,” he told Bill O’Reilly of Fox News in February 2016. Reformers from NORML, the Marijuana Policy Project and the National Cannabis Industry Association don’t so much fear Trump as his possible cabinet. “The reality is, if we look at the small cadre of individuals guiding Trump presently on public policy, we see a veritable murderers’ row of long time, stalwart prohibitionists,” Armentano said. Trump’s advisers include New Jersey Gov. Chris Christie, a former federal prosecutor who promised during Republican presidential debates to enforce federal law in all states that have legalized marijuana, along with medical marijuana opponent and former New York Mayor Rudy Giuliani. Both were once considered frontrunners for Attorney General, although Guiliani is reported to be interested in Secretary of State and Christie has been sidelined from his previous prominent post in the Trump transition team. Presidents have rarely taken a supportive side to medical or recreational marijuana legalization. Marijuana has had only a brief respite at the federal executive level. Former presidents Bill Clinton and George W. Bush, whose presidencies covered 16 years total, both took hard stances against medical marijuana development. President Barack Obama has had a spotty pot record, being dubbed the “worst president on medical marijuana,” by Rob Kampia, executive director of the Marijuana Policy Project, in an interview with Rolling Stone. Under his presidency, federal drug law enforcement steeply stepped up threats, raids, prosecutions and confiscations of marijuana cultivators in Colorado, Washington, Rhode Island and California.  In his second term, however, Obama’s administration started embracing a more lenient platform of encouraging states to experiment with marijuana as they wished. DJ Summers can be reached at [email protected]

Alaska Communications grows revenue; awarded FCC funds

Alaska Communications Systems Group Inc.’s financials are still smoothing out as the company adjusts to its new focus. Year-over-year, the company’s net income has dropped, but the new focus of business broadband and managed IT services is starting to make more money after the company got out of the wireless market by selling those assets to GCI in 2014. Meanwhile, the Federal Communications Commission agreed to give $19.7 million per year over the next 10 years for Alaska Communications to continue developing rural broadband projects. Net income in the third quarter was $300,000, which is a 75 percent decrease from the $1.2 million it made in 2015, but Alaska Communications increased its total revenue from $54.7 million in 2015 to $56.5 million, a 3.2 percent increase. This revenue bump came mainly from 8.3 percent growth in the company’s business, wholesale and managed IT services revenues, which have become Alaska Communications’ focus since shedding its wireless connections. Business broadband revenues shot up more than $2 million over last year, from $12.7 million in 2015 to $15.1 million in 2016. Managed IT services rose from $708,000 in 2015 to $1.1 million this year. Wholesale broadband rose by $1.2 million since last year, from $6.8 million to $8 million. Alaska Communications is making more money from each business broadband connection than it did a year ago. The amount of consumer broadband connections has stayed flat over the last year, along with the average revenue per user, or ARPU. Business ARPU, however, has risen from $268.30 in 2015 to $328.83 in 2016. CEO Anand Vadapalli said the numbers will smooth out as Alaska Communications adjusts to its new focus, he said. “Voice will continue to decline,” he told an investor during a Nov. 2 earnings call. “This is really a shifting and repositioning of the business that is taking a couple of years to play itself out.” Alaska Communications spent less on capital projects in the third quarter of 2016 than it did a year ago. Capital expenditures fell from $12.1 million in 2015 to $8.7 million in 2016.  Vadapalli said this was not conscious decision — the company got lucky and will keep its capital expense guidance steady at $35 million in the next year. “This year, the nature of sales opportunities that we got required us to spend less capital that we had originally thought,” he said. “This is a little nice surprise for us, a favorable stunt and we’ll take it.” Capital expenses could potentially rise, however, as the Federal Communications Commission will help Alaska Communication with rural broadband buildout with money from the Connect America Fund Phase II. The money isn’t new, but rather a continuation of what Alaska Communications already gets from the federal government to enhance rural broadband connectivity. “The order is generally consistent with our expectations wherein our current level of support of $19.7 million per year will continue for the next 10 years,” said Vadapalli. “The order covers approximately 31,500 locations and unserved and partially served census blocks in our service area. In exchange for receiving this support, we expect to deploy broadband to about 26,000 new unserved locations over this 10-year period. We have to report detailed deployment plans to the FCC by October 2018.” DJ Summers can be reached at [email protected]

ADFG predicts lowest sockeye salmon harvest in 15 years

Forecasts for Upper Cook Inlet sockeye salmon have dropped precipitously, just in time for the state’s fishermen to have another beef with Alaska’s fisheries managers in a few months. “In 2017, a run of approximately 4.0 million sockeye salmon is forecasted to return to UCI with a commercial harvest of 1.7 million,” reads an Alaska Department of Fish and Game release. “The forecasted commercial harvest in 2017 is 1.2 million less than the 20-year average harvest.” The Upper Cook Inlet sockeye salmon harvest of 2.4 million, which was 17 percent less than the recent 10-year average, fetched an ex-vessel price of $1.50 per pound for a total value of $21 million. With an average weight of 5.8 pounds per fish, 1.2 million sockeye are worth $10.4 million in 2016 prices. For commercial Upper Cook Inlet sockeye fishermen, the forecast plays into a long-standing management feud the Alaska Board of Fisheries will have to pick up at the beginning of 2017, largely concerning whether or not management policies have been harming the sockeye stocks — and fishermen — by allowing too many to escape to their spawning grounds. Managers predict the overall size of the expected run, then chip away how many spawning fish they need to send back up the river, then divide the rest between commercial, sport fishing, subsistence and personal use fisheries. For all users, the forecast is 2.6 million fish, about 21 percent below average and among the lower third of harvest forecasts going back to 1985. Eight of the last 27 years have had forecasts as low or lower. The commercial harvest expectation is 1.7 million. If the fleet harvests that much, it will be the lowest harvest since 2000 and 1998, when Cook Inlet fishermen harvested 1.3 million and 1.2 million sockeye, respectively. Prior to that, the harvest hadn’t dipped below 1.7 million fish since 1981. “It’s gonna be pretty tricky,” said Aaron Dupuis, the assistant area management biologist for the commercial section of the Upper Cook Inlet ADFG office. “Things will be much more restrictive.” This small of a forecast triggers the most tightly controlled management tiers. Sockeye setnetters will only have 24 hours to fish in addition to their normal Monday and Thursday 12-hour openings. Drift netters will have to stay within certain sections, instead of fishing in the middle of Cook Inlet. Commercial fishermen aren’t happy with the forecast. “It’s pretty alarming,” said Andy Hall, a sockeye setnetter and president of the Kenai Peninsula Fishermen’s Coalition. Hall said he can’t remember off the top of his head the last time a season forecast gave his fleet so little. “I had a couple fishermen write to me and say they’re alarmed. It’s going to color how we respond to some of the proposals that go to the Board of Fisheries this year.” ADFG biologists acknowledge that high escapements might be a part of the low forecast, but say the situation is still too complex and murky to know for certain. “Yeah, it’s possible (that overescapement led to a small forecast),” said Dupois. “We won’t really know until we have complete brood information for the most recent escapements. It’s definitely a possibility.” Pat Shields, the commercial fishing management biologist for the Kenai area ADFG office, went into more detail about the causes of next year’s small forecast. Large escapements, he said, tend to produce smaller fry — the baby salmon waiting in river systems to swim out into the ocean to grow up. If fry survival drops, it could intensify low returns. “There can be multiple reasons,” he said. “It appears ocean conditions have not been as favorable in the last couple years. I know it’s not satisfying for even me to say that…but there are different things that affect that.” Water temperatures for the Gulf of Alaska and its river systems have been rising in certain areas, leading in 2015 and 2016 to a patch of water 2 degrees Celsius over the average, called “the Blob” by scientists. This warmer water, said Shields, looks to be a contributing factor to salmon marine survival. Rising temperatures only mask the problem of overescapement, according to Dave Martin, president of the industry group Upper Cook Inlet Drift Association. Martin said the forecast validates the group’s long held claim that ADFG and the Board of Fisheries have let too many sockeye salmon escape over the years, which both hurts the fleet’s bottom line and future salmon returns. “It kind of goes along with what we’ve been saying all along,” he said. “You keep grossly overescaping the systems then it’ll produce smaller returns. If we managed the fishery scientifically, we wouldn’t have these ups and downs.” By “scientifically,” Martin means managing to the federal fisheries standard of maximum sustainable yield, a different metric with more economic considerations than in state management. Hall agreed. “We’ve been overescaping these rivers year after year, and you have to wonder,” he said. “I’m not a scientist, but I’ve spoken with former and retired ADFG biologists who say, ‘we can’t keep doing this, this is going to come back on us one of these days.’” Both Martin and Hall want the Alaska Board of Fisheries, which sets management playbooks for Alaska’s in-state fisheries within three miles of the shore, to use this forecast as an example of failed, allocation-driven policy making. “It’s frustrating to see this happening,” said Hall. “I just wish all these political proposals weren’t there and the biologists could just manage. But a lot of what’s happening isn’t driven by science. It’s driven by politics.” The Board of Fisheries will hold a meeting in February for Upper Cook Inlet finfish, which includes salmon. These meetings, held once every three years, are typically among the most combative and political in the state’s fisheries, and have already been the subject of heated discussions in 2016 simply around where the meeting will be held. In 2017, the Board of Fisheries will also have to deal with a recent federal court decision that will require state managers to have a federal fishery management plan and stick to the standards required by federal law. DJ Summers can be reached at [email protected]

Obama to appoint Behnken to International Pacific Halibut Commission

In a final round of appointments before his second and final term comes to a close, President Barack Obama announced on Nov. 3 his intent to appoint Linda Behnken to the International Pacific Halibut Commission. Behnken is an Alaska fishing fixture and has served as an interim commissioner since July. The commission’s upcoming Nov. 29-30 meeting will be her first. She currently serves as executive director of the Alaska Longline Fishermen’s Association, an industry group that promotes the interests of Alaska’s small boat fishermen, and formerly served three terms on the North Pacific Fishery Management Council that handles all federal fisheries from three to 200 miles off the Alaska coast.  Behnken has a full schedule ahead of her, as halibut management is complex and has several issues needing fixes. “My goal there is to work with other commissioners and stakeholders to update the harvest policy for the directed fishery, rebuild stocks, and reduce bycatch,” she said in an interview with the Journal. Among other priorities, Behnken said she wants to revisit the harvest policy for halibut fishermen by expanding the range of information factored into harvest guidelines. She would prefer a harvest policy that accounts for fish of all sizes and ages instead of the current focus on fish over 32 inches, and accounts for mortality of all sizes and ages of fish. Alaska halibut stakeholders say they have high hopes for Behnken’s commissionership. “I think the industry is pretty pleased,” said Tom Gemmell, executive director of the Halibut Coalition. “She’s been a long time advocate for the industry.” Gemmell praised Behnken’s grasp of management science, and in particular her involvement with an ongoing policy overhaul involving abundance-based halibut bycatch management. “She’s always had a good grasp of the numbers,” said Gemmell. “I know she’s pretty engaged with the council process in this idea for abundance-based management and fixing this whole problem in the Bering Sea. It’s going to be a long-term process. But I think she’s got a good handle on that.” The commission, or IPHC, is a joint Canadian-U.S. body that governs halibut management in the Pacific. Three commissioners from each country sit on the commission to set quota levels for halibut fishermen and perform the science necessary to run the fishery. Obama announced Behnken’s appointment along with that of Charlie Swanton as a commissioner of the U.S. Pacific Salmon Commission, which jointly manages Canadian and U.S. salmon in Southeast and the Yukon River. “The talent and expertise these individuals bring to their roles will serve our nation well,” wrote Obama of the appointments. “I am grateful for their service, and look forward to working with them.” Behnken was already serving as interim commissioner after another halibut fisherman left the post. She took the job after commissioner Jeff Kauffman resigned. National Oceanic and Atmospheric Administration law enforcement had charged him with a halibut fishing violation, settled out of courts for $49,000. This is Obama’s second honor for Behnken in 2016. In October, Behnken was named a “Champion of Change” for her work “promoting sustainable fishing and improving the lives of fishermen in Alaska and around the nation.” Behnken’s appointment comes at a time when halibut managers are looking for solutions. The North Pacific fishing world has focused heavily on halibut the last several years. Stakeholders have scrutinized the dual management of halibut between the IPHC and the U.S. North Pacific Fishery Management Council as clumsy and problematic. Groundfish trawlers take halibut as incidental catch, or bycatch. Groundfish includes pollock and non-pelagic species such as Pacific cod, Arrowtooth flounder and rockfish. The North Pacific council sets the caps for how much halibut the groundfish trawlers can take, while the IPHC sets the caps for how much the directed halibut fishermen can take. The IPHC’s caps shift according to how many halibut they predict are in the sea, but the North Pacific council’s caps stay largely the same from season to season. This led to a situation in 2015 in which halibut fishermen ended up taking less halibut than the groundfish trawlers, who aren’t allowed to sell the incidentally caught fish. Behnken was one of the most vocal proponents of slashing the groundfish bycatch caps so the directed halibut fishermen could get more harvest.  The IPHC and the North Pacific council are currently working towards a solution where their management methods are more in sync and the bycatch limits will be set according to halibut abundance as the directed harvest caps are. DJ Summers can be reached at [email protected]

Why did Marijuana Control Board deny this company a license?

Outsiders aren’t allowed to invest in Alaska’s marijuana industry, but like Lower 48 states, they’ll sure try. Alaska saw its first open attempt at an Outside company finagling its business structure to get into the Last Frontier’s burgeoning cannabis industry.  At the most recent Marijuana Control Board meeting on Oct. 28, the board rejected a license application for Wild Flower Holdings LLC, the first time the board has rejected anything since opening the application process in February. Few items stacked up to the board’s or Alcohol and Marijuana Control Office’s eyes. Board Executive Director Cynthia Franklin said she dealt mainly with Outside parties over the license. The license application itself was duplicate of Dream Green Farms’s successful application; Wild Flower had even left Dream Green Farms’s name on the application. The application also listed plans for only 10 plants, which licensed Alaska growers later said was so uneconomical as to be highly suspicious. Further, it appeared to the board that the LLC owner, Andrea Gribbons, had little knowledge of the industry. Franklin and board members probed the applicant for information about how the business would operate, but she seemed to have little idea. Rather, she ceded certain information to management consultants from Arizona company Happiedaze LLC, which owns the property proposed on the license. Board members voted the license down. “You know me,” said board member Brandon Emmett, who holds an industry stakeholder seat. “I’ve advocated pretty hard in the past for Outside investment just because I think it’s so important that these businesses have access to capital. But it seemed clear to me that this applicant really didn’t know the business, and I think as a board it’s important we have knowledgeable people owning these licenses.” The concept of the owner-operator lives strong in Alaska regulation. Alaska bars non-residents from any indirect or direct financial investment in a marijuana license, intended to prevent both criminal money laundering and to give Alaskans a foothold in the industry without being overwhelmed by the beginnings of Big Marijuana. Regulations breed loopholes There are two main types of workaround for residency requirements, involving either management agreements or real estate. Management agreements, where a business owner cedes operation to consultants or contractors, are both legitimate and common ways for businesses to get needed expertise or to get hold of tax certain tax advantages. They also create a window for non-residents to maneuver into controlling positions by skirting regulation language. Real estate is the easiest and most above-board way for nonresidents to invest. State and local zoning regulations have caused a space crunch, especially in areas with low vacancy rates like Anchorage, Seattle or Denver. Deep-pocketed nonresidents can offer a solution. They buy the property and lease it to cannabis growers at up to four times the average rental rate, or ask for a portion of the license’s revenue along with the rent.  Vince Sliwoski, an attorney with law firm Harris Moure, said residency requirements in Oregon produced the same kind of workarounds. “People are always scheming to find ways around the residency requirements,” he said. “Usually they go against either the spirit or the letter of the law.” Sliwoski said the workarounds typically involve some kind management agreement like the one seen by the Marijuana Control Board. Usually, he said, regulators pry until they find out who’s making the actual money. “Eventually they figured out the residency rules weren’t really doing anybody any good,” said Sliwoski. In 2016, Lower 48 marijuana markets have been scaling back their residency restrictions. Oregon removed residency requirements entirely in March 2016. Washington eliminated a requirement for non-resident investors that made them fill a six-month residency before being allowed to invest in Washington businesses. In Colorado, a bill passed in April that has not yet been signed that lifts the current two-year residency requirement for all license holders. Instead, it simply requires one of the company’s officers be a Colorado resident.

Trump shocks world, wins presidency

Donald Trump is the president-elect of the United States after a shocking election night Nov. 8 that sealed not only his own White House bid but locked up U.S. Congress for the GOP. For Alaska, the conversation now veers towards how Trump can help minimize federal hurdles to the natural resources from which the state derives most of its economic base. Many media outlets and political analysts were flabbergasted at the election result, having predicted a victory for Democratic candidate Hilary Clinton. Alaskans both in and out of the political theater were no less surprised. “Count me among the millions who were surprised by what’s happening,” said Republican Sen. Lisa Murkowski, who won her reelection bid and will retain her powerful chairmanship of the Energy and Natural Resources Committee in a GOP-controlled U.S. Senate thanks to Trump. “My sense is they (Democrats) are probably pretty stunned.” Against predictions, Washington, D.C., is now monochrome red. Not only did Trump upset the predicted Clinton victory, but Republicans also retained control of the U.S. Senate as well after the Trump wave in blue states led to victories for GOP incumbents thought to be in danger. In the end, only Sen. Mark Kirk of Illinois lost. Sens. Ron Johnson of Wisconsin, Richard M. Burr of North Carolina and Patrick J. Toomey of Pennsylvania each made late returns that clinched holding the chamber for the GOP. Murkowski wasn’t wrong about the results blindsiding election handicappers. Analysts had predicted a Clinton victory up to hours before the election results came rolling in. Democrats at Williwaw restaurant in Anchorage, where the state Democratic Party sponsored a viewing party, were deflated from an electric mood the moment Trump won North Carolina. Watching Trump’s victory speech, the club was silent. Nobody moved except to hug the person next to them, lift a drink, or to shake or hang their heads. “Well the national was a little disappointing,” said Anchorage Democrat Les Gara, who ran unopposed in his House reelection bid, after Trump’s victory speech. “But there’s still work to be done at the local and state level.” Culture, not policy, dominated the reactions. “I don’t know how you can support a person supported by the KKK,” said Victoria Manning, a University of Alaska Anchorage student. Trump’s core voting block of white working class males turned out in force. A base ingredient of the 2016 presidential race was race. Think pieces and policy wonks characterized Trump supporters as uneducated or bigoted whites from traditionally working class areas who felt left behind by the demise of U.S. manufacturing, abandonment by formerly labor-friendly Democrats, and vilification by cultural progressives. The cultural component of Trump’s run frightened or repelled Democrats, while Republicans had a more sympathetic view. Manning chalked up Trump’s victory to misogynistic white men afraid of losing status. “I think they’re voting out of fear, fear of losing control,” she said. “White men have been in power in this country ever since it started. They already lost it for eight years to a black man. They don’t want to lose it again to a woman.” A pair of indigenous Alaskans expressed fear that the culture could shift to allow more open racism. “I feel motivated. I feel like it’s a fight,” said Aiko Brandon. “There’s more of an urgency for it. I’m scared of how it might empower racist people. As an Alaska Native I’ve experienced a lot of racism.” Republicans leaders, even those like Murkowski who withdrew her support of Trump after a 2005 tape surfaced of him making crude comments about women, understood where his voters were coming from. Murkowski spoke to Trump’s draw as an anti-institutional figure that strikes a chord with a working class full of “anger and distrust of the establishment.” “What we’re seeing are people who really felt the need to express where they are with the lack of jobs in manufacturing states,” she said. “When Trump says he’s going to make that change, it resonated.” Focus on resources Alaska Republicans, many of whom had not endorsed Trump or openly opposed his candidacy, had higher hopes for what the president-elect can do for Alaska’s resource development. Trump is obviously a much better outlook for resource development in the state, according to Rep. Mike Chenault, R-Nikiski, who is the outgoing speaker of the house. “Let us as a state develop our resources and we’ll be less of a burden on the rest of the country,” referring to Alaska having the highest per capita federal spending in the nation. Eagle River area Rep. Dan Saddler, who didn’t face opposition in the general election and only a minor challenge in the primary, saw Trump’s election as great news for Alaska, where the federal government owns two-thirds of the land and industry, state and federal goals clash constantly. “Tremendously excited to have a federal machinery that is even and fair in evaluating our resource development projects,” he said. “It’s a huge win. Just having a fair shot is all we can ask for.” Murkowski, who won her reelection bid with 44 percent of Alaska votes in a four-way race, had openly expressed disgust with Trump’s behavior and statements in October. Despite her objection to the now president-elect’s personality, she agreed with Saddler’s take. “This is an opportunity on the energy front to move ahead,” she said. “We don’t know what he’ll do about energy but what he’s said is encouraging.” The senator noted that a Trump presidency could “clear a path” for the King Cove road connection to Cold Bay, a project that’s been continually stymied by the federal government. Murkowski believes cooperation with Democrats will still be a key issue. With control of Congress and the White House, Republicans will have to govern with a mind for solutions. Murkowski noted that the GOP has held the Senate, House and White House before while she’s been in office (from 2004-06) and did not deliver. “This isn’t Christmas,” she said. “We still have to govern. We have to work with those on the other side of the aisle. It doesn’t mean we run them over.” Gov. Bill Walker’s oil and gas advisor John Hendrix agreed that the GOP needs to collaborate and listen to Democratic partners to eliminate federal overreach, rather than use their position to bully change. “It’s a good time to educate people about resource development in Alaska,” he said. “If we run people over, given that everything’s red (Republican) now, it’ll be a short term victory. We need to use facts and not emotion in describing the need for the state to access its resources.” DJ Summers can be reached at [email protected] Journal staff Elwood Brehmer and Andrew Jensen contributed to this report.

Live Election Results

While the nation elects a president, Alaska will decide whether it votes for familiar faces or throw out the incumbents in the Legislature. Although there is a total of 50 races, the competititve races are far fewer. Republican Sen. Lisa Murkowski is running against the Libertarian candidate Joe Miller, Democrat Ray Metcalfe and independent Margaret Stock. Going for his 22nd term as the state’s lone representative in the U.S. House, Don Young, Republican, faces off against the Democrat candidate, Steve Lindbeck, a former Anchorage newspaper journalist and more recently, a general manager of Alaska Public Media, and Libertarian candidate Jim McDermott of Fairbanks. Fairbanks senator and Republican Majority Leader John Coghill of North Pole is challenged by former Democrat mayor Luke Hopkins. Anchorage Sen. Cathy Giessel is challenged by Vince Beltrami, president of the Alaska AFL-CIO. Justin Parish and Cathy Muñoz, once considered a safe incumbent, are battling it out for House District 34 More than a dozen races are not being contested because there are no party opponents. (For example, Dean Westlake of District 40, who won a hotly contest primary, will automatically represent House District 40 instead of North Slope Rep. Benjamin Nageak.)  The Alaska Journal is on the scene: 12:30 a.m. FInal update: With 100 percent of the votes in, Democrats failed to knock off most all of their big targets. Former House Majority Leader Lance Pruitt won by just more than 100 votes against Harry Crawford; current House Majority Leader Charisse Millett held off Pat Higgins by 45 votes; Sen. Cathy Giessel defeated AFL-CIO President Vince Beltrami by nearly 600 votes; and Sen. John Coghill of Fairbanks had no problem with former Democrat Mayor Luke Hopkins with a winning margin of 10 percent, or about 1,300 votes. 11:40 p.m. With 100% precincts reporting, Cathy Muñoz loses House District 34 to Justin Parish. 11:33 p.m. With just 39 votes separating Beltrami from Giessel in state Senate district race N, perhaps those write-in votes may have made a difference. (With 64.7% reporting, 58 write in votes have been tallied.) 11:19 p.m. Watching Trump's speech, Williwaw in Anchorage is as silent as it's ever been. Nobody moves except to hug the person next to them or lift a drink. Or to shake or hang their heads. A pair of indigenous Alaskans expressed fear for the future but resilience. "I feel motivated. I feel like it's a fight," said Aiko Brandon. "There's more of an urgency for it. I'm scared of how it might empower racist people. As an Alaska Native I've experienced a lot of racism." "Seeing what's happened in this election has made me scared for the next four years," said Maka Monture, "but It's our duty to not give up and abandon ship." 10:57 p.m. Beltrami has overtaken Giessel in state Senate district race N with lead of about 70 votes....but still a long way to go. 10:48 p.m. Regarding Donald Trump winning, Sen. Lisa Murkowski said, "This is an opportunity on the energy front to move ahead. We don't know what he'll do about energy but what he said is very encouraging." And, "Count me among the millions of Americans who were suprised by what's happening. My sense is they (Democrats) are pretty stunned." 10:45 p.m. Hillary Clinton has called Donald Trump to concede election. Trump to speak soon, but even Alaska is falling asleep. 10:40 p.m. Party seems to be losing steam at Williwaw in Anchorage. Democrats are putting on coats and going home while the national results linger. Meanwhile, Alaska Young Democrats president Laura Herman ran down the results for local elections. Only a handful wanted to keep the national coverage going. (And no one cared what John Podesta had to say. He spoke at the Javits Center in New York, advising Clinton supporters to go home and get some sleep.) 10:28 p.m. Vince Beltrami pulls ahead of incumbent Anchorage Sen. Cathy Giessel. 10:13 p.m. Incumbent North Pole Republican Sen. John Coghill has a comfortable lead over challenger and former Fairbanks Borough Mayor Luke Hopkins with more than half the precincts tallied. 9:47 p.m. Song mix at Sen. Lisa Murkowski event ranges from Miley Cyrus' Party in the USA, to Neil Diamond's Coming to America, to Staying Alive by the Bee Gees. Festive. 9:34 p.m. State Senate incumbent ANC Republican Cathy Giessel has a strong lead over independent challenger Vince Beltrami with about 20% of precincts reporting 9:30 pm. A cheer went up at 49th State Brewing Co. as the first numbers in the Alaska US Senate race show Lisa Murkowski with a large early lead. As she headed in to her party she offered a quick take on the national races. "I just got confirmation we're still in the majority, which is a good thing." (She was referring to Pat Toomey of Pennsylvania who won relection, clinching the majority hold.) 8:55 p.m. What could Trump's win mean for Alaska? At Republican watch party on prospect of Trump pulling it off, Eagle River Rep. Dan Saddler said he's "tremendously excited to have a federal machinery that is even fair in evaluating our resource development projects, a huge win for Alaska." "Just having a fair shot, that's all we can ask for." House Speaker Mike Chenault said it "might not mean opening ANWR but it's a much better outlook. Let us as a state develop our resources and we'll be less of a burden on the rest of the country." (Alaska has highest per capita fed spending.) 8:48 p.m. The young progressive crowd sips wine and shakes their heads. "I don't know how you can support a person supported by the KKK," said Victoria Manning, a University of Alaska anchorage student. Manning chalks up Trumps strong numbers to white males afraid of losing control. "If this was a man saying the same things and doing the same things it wouldn't even be close," she said. "I think they're voting out of fear. Fear of losing control. White men have been in power in this country ever since it started. They already lost it for eight years to a black man. They don't want to lose it again to a woman." 8:30 p.m. The Republican party at the ANC Hilton is just getting underway with Trump in the lead. 8:25 p.m. Democrats at Williwaw in Anchorage seem pessimistic and gearing up for a loss as Trump is within striking distance of the presidency. "Tonight sucks so far," said Laura Herman, president of the Alaska Young Democrats. "But there are lots and lots of local elections that are actually more important to our everyday lives." A singer playing songs in a vein similar to Woodie Guthrie echoed the sentiment. "If this plays out like we're afraid it plays out, it just means job security for the next four years. You'll all have a lot of work to do." 7:45 p.m.: "Nationally, things are going great, but we are monitoring our race," said Robert Dillon, campaign manager for Sen. Lisa Murkowski. "We've been focused on Alaska and that hasn't changed."  7;34 p.m. Restrained happiness for Trump happening at the 49th State Brewing Co. However, the camp is more than delighted about Ron Johnson, the Republic incumbent from Wisconsin. Robert Dillon campaign manager for Sen. Lisa Murkowski, said Johnson did a "miraculous job" because many polls had him for a loss. Without this seat, the Republicans could have lost the Senate. Now, should Murkowski win, she will remain Chair of the Senate Energy and Natural Resources Committee, a crucial position for Alaska.  7:30 p.m. The numbers are closer than Democrats would like. "How's everybody doing?" said Wigi Tozzi, a spokesperson with the Anchorage Democrats, the party's sponsor. "Not so good, I know." Tozzi implored the crowd to get in all the votes they can still muster, asking to text friends and family to fill still open voting booths. "If you haven't voted, take a moment, go down the street and vote...There's still lots of ways we can win this." 7:25 p.m. Senate races are shaping up well for GOP Majority as Sen. Murkowski looks to join victory party at 49th State Brewing Co. in Anchorage.   7:12 p.m. All eyes at Anchorage's Williwaw are glued to MSNBC's analysis. With the West Coast reporting, Clinton pulls ahead. If Trump wins Wisconsin and Michigan, he wins the presidency, they say. There are audible hisses of people taking in nervous breaths. 7:08 p.m. The official Republican election party at the Anchorage Hilton is quiet, but the same cannot be said for the Trump party as Fox projects him leading with 216 electoral votes to Clinton's 202 after she claims California. 6:56 p.m. The Trump party at Flattop pizza erupted when Fox News projected North Carolina and Ohio as wins for their Republican candidate. "I was in the U.S. Military," said Taylor Feece, who cheered the loudest. "That should say enough. I'm not voting for Hilary." 6:30 p.m. This election has ended friendships - both on and off Facebook.  Frenetic conversation carried a desperate edge at Anchorage's Williwaw where the Alaska Democrats are holding their viewing party for the national, and later the local, elections. Democrats in pantsuits and flannel plaid and business attire rehashed arguments they've had for months. “We're not voting for her just because she's a woman; we voted for Obama over her before.” “We don't want to take anybody's guns. We don't want a redo on Roe v. Wade. We fear for the Supreme Court. We fear for the LGBTQ community and for women and for people of color. "She knows how to work. She knows how to get things done. She's the right person for a job, this job." "She can't even forward a Yahoo article on relationship advice without her aides, let alone mastermind a complex server takeover." "Benghazi wasn't her fault. If she'd been evil for so long, why is she still in politics?" A single thread emerged while they watched the numbers roll in, the familiar tune of the lesser of two evils the 2016 election has amplified to a justification of its own. "I just don't want this election to be about electing Hilary just because we don't want Trump," said Dr. Christine Hallas, an Anchorage pediatric nurse practitioner. Clinton takes Virginia and the crowd lets out a roar.

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