DJ Summers

Telemedicine to reduce Medicaid travel costs

Sen. Pete Kelly’s Medicaid reform bill would remove some of the hurdles created by the state’s existing medical laws just in time to take advantage of the state’s growing telemedicine infrastructure. Kelly said in a March 21 House Finance Committee hearing that one Medicaid reform in his Senate Bill 74 that passed unanimously on March 18 — telemedicine, or telehealth, expansion — is a way of keeping up with the times to reach the best fiscal output for the state. “It’s like getting out of the buggy whip days and into the days of the automobile,” Kelly told the committee. Through video and digitally enabled biomedical readings, physicians and nurses in one area are able to provide primary, urgent, psychiatric, and even intensive care to rural patients without needing expensive transit for themselves or the patient. Over computer or mobile connections, care providers can relay remote diagnoses and treatment plans. Medicaid-related travel consumes loads of state and federal resources, Kelly said, and telemedicine is the 21st century route to cost savings. “Travel is not necessarily abused, but it’s so poorly used and so poorly coordinated that we use a lot of money,” said Kelly, who added he’s been told $79 million in travel costs weigh down the state’s Medicaid programs. According to estimates from two legislative reports, telemedicine would save $13.2 million in 2021 by reducing these travel costs. Per person, estimates say telemedicine costs about a third of an in-person visit and one-tenth of most emergency room visits. The bill would direct the Department of Commerce, Community and Economic Development to compile a business registry of state telemedicine providers, which would extend to Outside health providers for the first time. Currently, telemedicine providers have to reside in Alaska as well as carry Alaska licensure. The bill would allow Outside doctors licensed in Alaska but living elsewhere to provide care, and prohibit the state Medical Board from penalizing healthcare providers for making digital diagnoses. Heather Shattuck of Kelly’s staff said the telemedicine provisions of the bill are maintenance, rather than change. Indian Health Services already has similar allowances in its coverage. This bill would bring Alaska’s telemedicine up to speed with the federal rural-focused health providers. Apart from primary medical care, Kelly’s bill has specific provisions for mental and emotional care, including psychiatrists, psychiatrist aides, assorted behavioral counselors, and even marriage and family therapists. Along with access to primary care, one of the reform’s focuses, behavioral health has been targeted as a cost saving measure. Shattuck said the lack of such services in bush villages isn’t hard to understand for even Fairbanksans.  “In Fairbanks, we have a great shortage of behavioral health providers,” she said, “and if you can imagine this, we cannot get psychiatrists to move and practice in Fairbanks, Alaska.” Committee members expressed broad support for the telemedicine portions of the Kelly’s bill, but some had reservations that telemedicine could preclude actual physicians. Rep. Scott Kawasaki, D-Fairbanks, said he “would worry if a smaller town wanted to hire somebody but could get it done cheaper via this telehealth bridge.” Shattuck said Kelly’s office has considered this, but that she doesn’t expect telehealth to suddenly override traditional medicine. It’s more important, she said, to get healthcare to where it’s needed. “There are communities where you’re never going to get a doctor out there, we see that,” said Shattuck. “I don’t see telehealth completely taking away hands on primary care.” Federal and state government, as well as private industry, have been beefing up Alaskas telemedicine infrastructure in the last year. The U.S. Department of Agriculture announced Nov. 19, 2015 that more than $2.3 million in grants has been awarded to six Alaska groups for distance learning and telemedicine programs. Both GCI and Alaska Communications provide infrastructure for rural healthcare facilities to engage in telehealth. GCI’s TERRA network directly benefits the Yukon-Kuskokwim Health Corp. and Alaska Federal Health Care Access Network for telehealth connectivity. In July, Alaska Communications partnered with the Juneau Alliance for Mental Health, Inc., or JAMHI, and Sitka Community Hospital to provide the equipment and necessary bandwidth to give rural patients behavioral and primary healthcare access. Chugachmiut is a Tribal consortium serving the seven Native communities of the Chugach region with health and social services, education and training, and technical assistance. Akeela provides mental health and substance abuse treatment, as well as rehabilitation programs for inmates in every correctional facility in the state. Akeela has outpatient treatment facilities in Anchorage, Nome, Fairbanks, Kenai, Sutton, Juneau and Seward.   DJ Summers can be reached at [email protected]

Marijuana, tobacco public smoking ban passes Senate

A bill that would ban onsite marijuana consumption passed the Senate on March 30, before a House companion bill has a hearing in the Health and Social Services Committee. In public comment and in Senate testimony and debate over the legislation aimed at tobacco products, none of the public or senators addressed its affect on state marijuana industry regulations. Both Senate Bill 1 and its House companion, House Bill 328, come from American Cancer Society pressure to ban smoking statewide, rather than Alaska’s current local control system. Both bill’s definitions include any “plant intended for inhalation,” and would apply to chemical vaporization in addition to actual smoking. The bill also defines what constitutes a “public place” in a manner that would criminalize marijuana social clubs, which are currently in legal limbo, as well as currently legal onsite consumption at marijuana cafes allowed by the Marijuana Control Board. Sen. Pete Micciche, R-Soldotna, introduced the bill, which would prohibit tobacco or e-cigarettes in enclosed public spaces including places of employment, apartment buildings, hotels, and at schools and universities. It grants certain exceptions to tobacco stores where 90 percent of revenue comes from tobacco sales, but includes no language to exempt marijuana retail stores with the same sales configuration. The bill is at odds with state marijuana regulations, which explicitly grant onsite marijuana consumption to retail stores if the Marijuana Control Board approves the request. Alaska is currently the only state with such provisions for some kind of marijuana consumption outside the home. These “marijuana cafes” ignited considerable industry excitement as an allowance for Alaska tourists, who currently have no designated area to smoke cannabis. Micciche’s bill would effectively isolate marijuana consumption to private, stand-alone homes, giving tourists nowhere to consume. The bill would also outlaw the existing marijuana social clubs. Anchorage’s Pot Luck Events and Fairbanks’s The Higher Calling offer cannabis users a place to consume, but in which no marijuana is sold, in exchange for a membership fee. Onsite consumption provisions for retail stores are explicitly legal, but marijuana social clubs are in limbo. The Marijuana Control Board issued a ruling on marijuana social clubs in 2015, declaring that the board had no authority to either prohibit or to enable such clubs unless the Legislature created a social club license type in statute. Since then, clubs have continued operations, and no legal actions have been taken against them or their members. The bill passed the Senate by a 15-5 vote. The concurrent HB 328, as widely cosponsored in the House as Micciche’s bill was in the Senate, has already been moving through committee hearings. Rep. Adam Wool, D-Fairbanks, had not yet offered an amendment that would grant the same exceptions to marijuana retail stores as to tobacco retail stores, as the bill’s last hearing before the committee ran short on time. The House Health and Social Services Committee will review HB 328 at 3 pm, March 31. Now that it has passed the Senate, Micciche’s bill will move to the House for consideration. Because a companion bill is in the House, SB 1 will not need to be reviewed in any committee in which HB 328 has already been heard. The bill will need final House passage and gubernatorial approval.   This is a developing story. Check back at the Journal for updates.   DJ Summers can be reached at [email protected]  

Murkowski asks AG to review gun rules for marijuana users

Sen. Lisa Murkowski picked up an issue Lower 48 states with legal marijuana still haven’t resolved in a March 2 letter to U.S. Attorney General Loretta Lynch. The letter asks Lynch to reexamine federal gun regulations inconsistent with state laws where marijuana is legal. Along with banking — federal laws prohibit bank involvement with marijuana businesses — gun ownership exemplifies a schism between federal and state laws concerning cannabis. A 2011 directive from the Bureau of Alcohol, Tobacco, Firearms, and Explosives specifically prohibits federal firearms dealers from selling to marijuana users, both medical and recreational. Private gun sales between individuals, which are not federally controlled, do not have this restriction. As of December 2015, Alaska had 730 federal firearms license holders, about one for every 1,000 residents. According to a Columbia University study released in June 2015, Alaska also has the highest per capita gun ownership in the nation; 61.7 percent of Alaskans own one or more firearms. Alaska has some of the least restrictive gun laws in the nation with an entrenched hunting culture both for recreation and subsistence purposes. Alaskans are not required to have a concealed carry permit so long as they are a legal owner under state and federal law, but they must apply for a concealed carry permit if they wish to carry in states where Alaska has reciprocity agreements. Alaska also has more than 1,000 medical marijuana cardholders. This number, however, is an inaccurate metric for marijuana usage, as state laws have not allowed for marijuana cultivation or distribution until recreational use was approved by a voter initiative in 2014. According to a 2014 Washington Post report, 25 percent of 18- to 25-year-olds and 11 percent of those older than 25 in Alaska consumed marijuana within the past month. Murkowski didn’t support the voter initiative, which legalized recreational marijuana in Alaska in 2014, but she views the inconsistency as a state’s rights and safety issue. “If the cultivation, manufacture, and use of marijuana and marijuana products is to be lawful in Alaska,” the letter reads, “it must be undertaken consistent with the regulatory scheme, and proactive efforts should be taken to reconcile inconsistent federal laws with more permissive state laws.” A federal letter to states where marijuana is legal, called the Cole Memorandum, gives some guidance, but does not address firearm possession. Murkowski refers to the letter from ATFE Assistant Director of Enforcement Programs and Services Arthur Herbert that was distributed to federal firearms dealers on Sept. 21, 2011. The Herbert letter, Murkowski notes, specifically denies firearms possession to medical marijuana cardholders. “Any person who uses or is addicted to marijuana, regardless of whether his or her state has passed legislation authorizing marijuana use for medicinal purposes, is an unlawful user of or addicted to a controlled substance, and is prohibited by federal law from possessing firearms or ammunition,” Herbert’s directive reads. The bureau requires federal firearms license dealers to have their customers fill out Form 4473. This tracks address, date of birth, government-issued photo ID, and a federal background check, along with recording the serial number of the firearm being purchased. One question asks: “Are you an unlawful user of, or addicted to, marijuana, or any depressant, stimulant, narcotic drug or any other controlled substance?” Lying on a Form 4473 is a federal felony, punishable by up to five years in prison. Most individual firearms sellers are not federally licensed, but gun dealers and sporting goods stores are. Murkowski fears lawful marijuana users will turn into a class of criminals by answering “no” on the portion of federal firearms licensing forms. Gun buyers with medical marijuana cards, or even recreational users, would be opening themselves to criminal charges by providing a false statement in order to buy the gun. Murkowski wants the federal government to revisit the rules. “It is my judgment that denying Americans the personal Second Amendment right to possess firearms as articulated by the Supreme Court in (District of Columbia v. Heller) for mere use of marijuana pursuant to state law is arbitrarily overbroad and should be narrowed.” Murkowski’s office has not yet received a reply from the U.S. Attorney General’s office. Other states have battled with medical and recreational marijuana usage’s incompatibility with federal gun laws, which the National Organization for Reform of Marijuana Laws has considered one of the top priorities for lawmakers post-legalization. So far, none have successfully changed the effects of the ATFE’s cannabis usage prohibition, though some have changed state laws. In Montana, which legalized medical marijuana in 2004, state Attorney General Steve Bullock and the Montana congressional delegation roundly objected to the 2011 Herbert letter. Montana’s legislators looked for a fix. In 2014, Sen. John Walsh, D-Mont., tried to pass a bill that would bar any federal funds from being used to prosecute gun owners based on their status as medical cardholders. The bill failed. In Colorado, the Colorado Campaign for Equal Gun Rights tried to put a measure onto the November 2016 ballot that would bar Colorado sheriffs from refusing concealed carry permits to marijuana users. The campaign failed to collect the necessary signatures to put the issue onto the 2016 ballot. In 2013, Illinois passed a law allowing medical marijuana users to possess firearms, though a couple years later the state said it inadvertently sent out revocation letters to a few firearms permit holders with medical marijuana cards. In Willis v. Winters, a 2011 Oregon Supreme Court case, it was ruled that the “state law requires sheriffs to issue concealed gun licenses without regard to whether the applicants use medical marijuana.” This ruling means Oregon sheriffs are required to issue concealed carry permits to medical marijuana users, and the U.S. Supreme Court declined to hear the state’s appeal in what advocates celebrated as a victory for gun rights and medical marijuana users. DJ Summers can be reached at [email protected]

Pot permits wait on background check bill

A number of bills in Juneau are creating delays in completing approvals for marijuana business license applications. Prospective marijuana business owners began submitting license applications to the state on Feb. 24, with more than 200 received as of March 25, but their licenses will be held at the end of the process until one bill passes. Marijuana Control Board director Cynthia Franklin said her staff of four reviewers is still working on licenses, but that they run into a wall at the end of the process where criminal background checks must be performed. “The rumor that we’ve halted applications is false,” said Franklin. “We are working on them.” Without passage of House Bill 75, Franklin said her staff cannot request federal background checks to ensure marijuana licensees have not had any felony convictions in the last five years, a regulatory requirement. The bill gives statutory enabling authority for the Department of Public Safety to request the federal checks. Franklin said licenses are still in their early initiation phase. Only one of the 200-plus applications has reached the final stage of criminal background checks. Franklin said she believes the bill will have no trouble passing by April 19, and that the licensing timeline will not be significantly delayed. “We’re going to be just fine and dandy,” she said. In February, Franklin announced a revised timeline in which the state will issue licenses beginning June 7, an alteration from the voter initiative requirement of May 24. The state requires a “seed to sale” tracking system for all cannabis, meaning cultivators will have to possess marijuana licenses before even planting their first crop. Cannabis takes roughly 100 days to grow to maturity, so retail stores will not have legal product until mid-September at the earliest. Cultivation licenses have a hiccup of their own. HB 337 would require cultivators to pay a $5,000 bond to the state before their license is approved. If HB 337 passes, cultivators will have their licenses held until they provide proof of this bond. Franklin said she believes the bills will pass, but marijuana bills have moved slowly in a Legislature snowed under by a $4.1 billion budget deficit and an avalanche of budget cuts and tax proposals. HB 75, presented as an administrative fix-it bill from Rep. Cathy Tilton, R-Wasilla, amends statute to allow the state to request federal background checks, as well as opts unorganized borough villages out of commercial marijuana activity. State regulations require background checks for all marijuana business applicants. Specifically, rules approved by the state Marijuana Control Board will deny a marijuana application to an applicant with any felony on record in the past five years, any misdemeanor involving a controlled substance, weapons charge, or violence within the last five years, or a Class A misdemeanor relating to selling, furnishing, or distributing marijuana or operating an establishment where marijuana is consumed contrary to state law. Marijuana regulations do not currently specify Federal Bureau of Investigation background checks. Earlier Marijuana Control Board drafts incorporated this language, but the Departments of Law and Public Safety said such requests would require statutory changes, not regulatory ones. Franklin and Tilton argue an FBI background check is the only way to verify criminal records for federal or Outside convictions, which do not appear on Alaska’s court system.  The Municipality of Anchorage will need to play catch up with marijuana licenses. At a March 22 Anchorage Assembly meeting, member Ernie Hall recommended, based on conversations with Franklin, that the Assembly postpone marijuana business until the state has ironed out its own process. “There is a tremendous amount of work yet to be done at the state level,” said Hall, “which has been a concern on our part from the very beginning, that we would get our part of the work done and the state wouldn’t be up to speed. And that’s kind of beginning to become true.” Municipal attorney Bill Falsey confirmed that the municipality has discontinued its marijuana discussions until further notice, and that it has not received any completed applications from the state. To begin its own licensing process, the municipality must receive completed applications from the state. Both Fairbanks and Juneau have already approved conditional use permits for marijuana businesses, and are awaiting state license approval. 2016 pot tourism a moot point With delays, the cannabis market will miss virtually all of the 2016 summer tourists, one of the key demographics the industry hopes to capture. The Alaska cannabis industry has long maintained that tourists will find new reason to drop money in the Last Frontier now that recreational marijuana has been legalized. They won’t know until 2017, as the full marijuana industry rollout won’t present any legal sales until September at the earliest. With nearly 2 million visitors per year dropping $941 per person per visit, Alaska’s $2.4 billion tourism industry could be a vast revenue pool for the marijuana industry and its accompanying taxes. As of yet, the tourist industries have not marketed Alaska as a marijuana destination, or taken any kind of regulatory stance, until the industry has grown enough to establish marijuana as a selling point. Southeast Alaska communities and Fairbanks have expressed a drive for marijuana tourism dollars in the past, and are among the municipalities with the most lenient of local controls. Several Southeast communities have filed requests to lower the state’s 500-foot buffer zone from school and churches to 200 feet.  On-site consumption Hall focused on licensing, but also touched on marijuana social clubs and onsite consumption provisions. “It would be appropriate for the Assembly as a whole to kind of take a hiatus for a bit,” Hall said. “We’ve got our land use in place. We’ve got our licensing in place. We’ve got all of the major elements for marijuana in place. But when it comes to marijuana social clubs or on-site consumption, there’s a number of things that are happening currently.” Hall mentioned a “number of things,” but only one bill concerning these items is in the Legislature. An anti-smoking bill, HB 328, would effectively rescind the Marijuana Control Board’s on-site consumption provision, which allows retail marijuana establishments to apply for an on-site marijuana café license. The bill is aimed at tobacco use. Tucked into the bill’s definitions, however, is a ban on marijuana consumption anywhere but in private homes. Apart from banning tobacco, the bill would apply to any plant “intended for inhalation.” The bill has bipartisan support, with with co-sponsors from all over the state including the House majority and minority leaders.  Since being introduced on Feb. 22 by Rep. Dave Talerico, R-Healy, the bill has since been co-sponsored by the House Majority leader Charisse Millett, R-Anchorage, House Minority leader Chris Tuck, D-Anchorage, Reps. Bob Lynn, Bryce Edgmon, D-Dillingham, Bob Herron, D-Bethel, Lynn Gattis, R-Wasilla, Neal Foster, D-Nome, Cathy Munoz, R-Juneau, and Benjamin Nageak, D-Barrow. On March 24, Rep. Adam Wool, D-Fairbanks, planned to offer an amendment to the bill that would exempt retail marijuana stores from the provision the same way certain tobacco stores who maintain 90 percent of their revenue from tobacco sales are exempt. The meeting was cut for time, however, and Wool did not officially offer the amendment. Falsey said the municipality had planned to further discuss marijuana social clubs and on-site consumption provisions. “I think everyone understood that there was more to come on on-site consumption post February,” said Falsey. “The consensus seems to be now that we should wait to see what the state does.” Marijuana Control Board chairman Bruce Schulte, however, said the state has already decided, and that the board does not plan to revisit social clubs and on-site consumption. “We have taken the position that clubs are not our purview to either regulate or ban and on-site consumption requires only operating parameters,” he said. DJ Summers can be reached at [email protected]  

After bumper years, fewer reds forecast

The Alaska Department of Fish and Game has released statewide forecasts for salmon, and 2016 promises fewer fish than last year’s price-deadening sockeye glut.  Statewide, ADFG said 2016 will see a drop in the total salmon harvest, led by an especially sharp decline in pink salmon. Projections are for 161 million total salmon: 99,000 chinook in areas outside Southeast Alaska, 47.7 million sockeye, 4.4 million coho, 90.1 million pink, and 18.7 million chum. Southeast Alaska chinook salmon harvests are set by the Pacific Salmon Commission between the U.S. and Canada, and have not yet been released. Rivers will see a half-million more chum and coho salmon, but pinks and reds — Alaska’s money crops — will both decline. The projected harvest of pink salmon — which run strong every other year — is about 100 million fewer than in 2015 at 190.5 million. In Prince William Sound where pink salmon is the major harvest, the forecast is 23.4 million, less than average and a change of pace from the 2015 season that broke the 20-year record for the largest harvest with 96 million fish. Southeast Alaska will have a harvest of 34 million pinks. In Kodiak, 16.2 million is projected, and 13.4 million is forecast for the South Peninsula and Aleutian Islands. The sockeye salmon harvest is expected to be about 7.3 million fewer than in 2015, which could prove a benefit for the industry after Bristol Bay’s surplus driven ex-vessel price crash in 2015. ADFG forecasts the Bristol Bay sockeye harvest — the most valuable in the state — to be 29.5 million, far less than the 2015 harvest of more than 36 million but still greater than the 20-year average of 23.2 million. Both reds and pinks contributed last year to one of the largest overall salmon harvests on record. Statewide, the commercial salmon harvest of all species was 247 million fish, greater than the 2015 harvest projection of 220 million and the 2005-14 average of 179 million fish. The harvest was the second highest since 1994, following only 2013, when the harvest was 273 million fish. The Alaska all-species salmon harvest for 2015 totaled 268.3 million, about 47.5 million salmon more than the 220.8 million forecast. This included 522,000 chinook, 55 million sockeye, 3.9 million coho, 190.6 million pink, and 18.2 million chum salmon. Bristol Bay sockeye led in value with an immense but oddly timed run of sub-average-sized fish, while a bumper pink salmon harvest in the Prince William Sound matched exactly an inexplicable lag of Southeast pink salmon runs. Meanwhile, the international salmon market contended with price forces that included the U.S. dollar’s relative strength, Russian import bans, farmed fish and oversupply from the 2014 harvest. DJ Summers can be reached at [email protected]  

Army officially delays plan to slash Arctic Warrior force level

The U.S. Army has officially announced that it will delay the proposed reduction of 2,600 “Arctic Warriors” stationed at Joint Base Elmendorf-Richardson. Army officials first announced plans to cut 2,600 soldiers from the 4th Airborne Brigade Combat Team of the 25th Infantry Division, also known as the 4-25, last July as part of an Army-wide cut of 40,000 troops. Alaska’s congressional delegation and state political leadership hailed the delay as a win for national security. The full division stationed in Alaska is about 4,000 troops. All three members of the Alaska congressional delegation were sharply critical of the proposed withdrawal as short-sighted and potentially dangerous give current tensions on the Korean Peninsula and chilly Russian relations combined with that country’s military buildup in the Arctic. “This is good news for Alaska — from the moment the Army proposed to eliminate the 4-25 Airborne Brigade I knew that it was shortsighted and the direction of world events would ultimately prove that,” said Sen. Lisa Murkowski in a release. “Whether measured by North Korea’s provocative actions this month, our discomfort with Russia’s military path, the need for troop strength to support the strategic balance to the Pacific, or emerging challenges in the Arctic, maintaining Army strength in Alaska right now is the right answer.” Rep. Don Young praised the delay, but said Alaskans should not get too excited until the possibility of a troop withdrawal is completely off the table. “While today’s announcement comes as great news for Alaska and the nation, we must not rest on our laurels,” said Young in a release. “Instead, we must continue to fight to ensure this reduction is overturned so JBER’s 4-25 can continue its status as the only airborne brigade in the Pacific.” The announcement comes on the heels of U.S. Army Chief of Staff General Mark Milley’s public announcement that he wants to delay proposed force reductions at least a year in testimony to a Senate committee Feb. 24, and statements by Secretary of Defense Ash Carter to Sen. Dan Sullivan that he would support such a recommendation to halt the reduction if one were made by Milley. Sullivan also succeeded last December in adding an amendment to the defense spending bill requiring the Defense Department to draft a formal Arctic Operations Plan, which is a complex undertaking. He received verbal assurances from Army brass that the 4-25 would not be moved until the plan was complete, Sullivan told the Journal in December. Milley, who visited Alaska military installations in February, told Murkowski on Feb. 24 that increasing aggression and force buildup by Russia, particularly in the North Pacific, along with an “increasingly assertive” China and “very provocative North Korea” create heightened conditions for potential conflict in the region. “I think it would be contrary to U.S. national security interests to go ahead and pull out the 4-25 at this time,” Milley said to Murkowski. “My thought is that we should extend them at least a year to see how the strategic situation develops and then move from there.” He added that those beliefs were confirmed in conversations with on-site commanders and the troops themselves. “There’s a great joint strategic deployment capability with the Air Force up there. (The 4-25) can move by air; they can move by sea. We’ve got a national capability up there (in Alaska) that I think is worth keeping,” Milley said. The 4-25 also just completed a training exercise at Fort Polk in Louisiana with a full Airborne Task Force of nearly 1,600 troops to show the value of the full force, according to a U.S. Army Alaska press release. U.S. Army Alaska officials asked branch leaders to consider training with the full force last year after the Army directed the 4-25 to downsize to an Airborne Task Force of 1,046 soldiers as part of the effort to restructure to a smaller, more agile force, the release states. The release stated that the exercise at Fort Polk validated the 4-25 as “the only U.S. airborne unit in the Pacific region capable of performing forcible entry operations.” DJ Summers can be reached at [email protected]

Cultivation dominates marijuana applicants

The first batch of marijuana business licenses is available to the public, and so far Alaskans have more interest in growing than selling. The Marijuana Control Board began accepting license applications on Feb. 24, but only made them available to the public March 14. Public figures from various marijuana industry and political groups have filed, including members of the Marijuana Control Board itself and the Alaska Marijuana Industry Association. The Marijuana Control Board received 198 different applications as of March 17, but many applicants submitted duplicates, an issue raised by Marijuana Control Board executive director Cynthia Franklin the first week after submissions began.  After duplicates are removed, the board received applications for 175 individual licenses, submitted by 136 individuals or groups of individuals acting as a single agent. By far, more Alaskans have applied for cultivation licenses than any other license type. Of 175 licenses, 117 are for cultivation: 40 for limited cultivation, which applies to grow operations 500 square feet and under, and 77 for standard cultivation, which has no upward limit.  Retail licenses number 43. Marijuana product manufacturing licenses — which include edibles — number six, while concentrate manufacturing facilities number seven. Only three people have submitted applications for testing facilities, which all cannabis products must pass through to be legally saleable. Both are located in Southcentral Alaska: two in Anchorage and one in the Mat-Su area. The numbers expose several cracks in the ongoing struggle for marijuana businesses to get their establishments running quickly in spite of zoning regulations and local government actions. Some applications are submitted in unincorporated Mat-Su Borough areas, which could outlaw commercial marijuana as soon as October by ballot initiative, while others are using only tentative addresses. The numbers put Alaska to roughly half the concentration of marijuana licenses in other states. As of now, if every license were approved, Alaska would have one recreational marijuana license per every 4,200 residents. Colorado has one marijuana license per every 2,200 residents, though that ratio includes medical facilities, which do not exist in Alaska. Many applications are co-located with retail marijuana dispensaries and cultivation facilities a popular duo. Several license applicants even go for a triple, co-locating product or concentrate manufacturing with retail and cultivation. The Marijuana Control Board received 50 of these stacked license applications, or 25 pairs. Notable applicants Among applicants is Brandon Emmett, one of two designated industry representatives on the Alaska Marijuana Control Board. Emmett has applied with two associates for three separate licenses in Fairbanks, including limited cultivation, standard cultivation, marijuana product manufacturing, and marijuana concentrate manufacturing. Kim Kole, a member of both the Alaska Marijuana Industry Association and the Coalition for the Responsible Legislation of Cannabis, has applied for seven licenses, all in Anchorage, more than any other individual or group of individuals statewide. These include five applications for retail establishments, each located at different addresses throughout Anchorage. Two include co-locations with standard retail cultivation facilities. Rather than trying to dominate the Anchorage market, Kole said she’s only trying to keep her place in line by getting the ball rolling on all potential locations. She said she didn’t end up securing several of the addresses for which she applied, which she expected. Licenses cost nothing to initiate, and potential landlords are constantly pulling out of potential leasing opportunities to marijuana businesses. “Honestly I’m surprised more people didn’t seem to do that,” Kole said. Among other notable applicants is Sherman Ernouf, law partner of Anchorage attorney and former Anchorage mayoral candidate Dan Coffey, has applied for an Anchorage standard cultivation license. Coffey also acts as filing agent for other marijuana license applicants. Regional preferences Of 175 licenses, Anchorage claims the largest interest for marijuana business, with 50 licenses in Anchorage and one in Girdwood. In Anchorage, more interest lies in cultivating than in selling, but only by a hair. The board received applications for 21 retail stores, 18 standard cultivation licenses, and four limited cultivation licenses. Anchorage will feature quite a few of the brewpub-style co-located marijuana outlets. Of Anchorage’s 46 license applications, 18 are located at the same address, meaning nine retailers in the area will be growing their own product on premises. Two of the three applications for marijuana testing facilities are located in Anchorage. The Interior has a clear preference for cultivation. Of 22 license applications located in Fairbanks, 12 are for cultivation: 11 standard cultivation licenses and one limited cultivation license. Only five individuals have made applications for retail outlets. The two applications for North Pole businesses are both for cultivation, one standard and one limited. Fairbanksans also submitted four product manufacturing applications and one concentrates manufacturing application. A dozen of Fairbanks’s licenses are concentrated in only four addresses. The Mat-Su Borough will have a measure on the October 2016 ballot that would ban all commercial marijuana activity in the unincorporated borough, but evidently, would-be marijuana entrepreneurs in the area are optimistic it won’t pass. Both Wasilla and Palmer have already passed bans on commercial cannabis activity, but a number of licenses have been filed for addresses in each area. Most are attached to addresses that fall outside city limits. Wasilla, like the rest of the state, focuses primarily on growing, with eight standard cultivation licenses and five limited cultivation licenses. Only three retail outlets have been applied for, along with two concentrate manufacturing facilities and one product manufacturing facility. Palmer reflects the same balance, with two limited cultivation licenses, two standard cultivation licenses, two retail stores, and one testing facility. DJ Summers can be reached at [email protected]

After record price year, construction loans and permits dip

Editor's note: this article has been updated to reflect that the current 2016 average home sale price only includes January and February, which are historically the lowest priced months of the year.  Alaska housing prices peaked in 2015 – and according to statistics, so did homeowners’ willingness to pay them. With layoffs on the North Slope and a precarious fiscal situation for the state government, homeowners in Anchorage appear less willing to fund new residential construction projects than in 2015. Anchorage’s land shortage, along with new municipal land use rules, make the Anchorage market spendy, particularly for new construction. An existing home in Anchorage cost $368,012 in 2015, while a new home cost $574,333 to build, according to municipal data. Karen Kissik-Michelsohn, vice president of Michelsohn and Daughter Construction Inc., said her company is beginning to see a new reticence for home building projects. “We’re seeing a real hesitation,” said Kissik-Michelsohn. “Once they hire us and we get done with design and get to the costing component, they are so cautious.” Kissik-Michelsohn said the “cold feet” some of her potential clients get near the end of a contract negotiation loops back to concerns over the state economy and the oil industry. She said one Anchorage customer, a Slope worker asking for a large custom-built house, is waiting until April to finalize plans. He needs to make sure he has a job first. “Anybody in the oil industry…they’re all scared,” Kissik-Michelsohn said. “The state of the Alaska economy in general has really had a big impact.” Indeed, municipal records show a drop in new home building interest. In Anchorage, building permit records from the municipality show a decline in building projects from the same time in 2015. To date, only 13 single-family home building permits have been submitted for 2016, down from 21 during the same time period in 2015. Totals reveal an even bigger gap. In January and February 2015, applicants filed for a total of $66.6 million in building permits. In 2016, they applied for $35.7 million. The lack of enthusiasm for new construction collides with state fiscal woes and the highest housing prices on record for Anchorage. According to statistics, 2015 was the most expensive year ever for Alaskans looking to buy homes, with some of the lowest interest rates. According to the Freeman-Reed Index, an analytical tool used by the Alaska Multiple Listings Services, the average Anchorage residential price peaked in 2015 at $366,585, lower than the average provided by municipal data but still greater than any year in Alaska history and roughly double the average price in 2000. In Juneau, the average price for an existing single family home was $377,620 in the third quarter of 2015, and $414,717 for new construction. In Fairbanks, homes were cheaper, at $265,884 for existing homes and $287,833 for new construction. According to the National Association of Realtors, the average single-family home sale price for existing homes in 2015 was $267,300. Condominiums followed the same path as homes, with an average sale price of $213,071 in 2015, also the highest in Alaska history. Anchorage’s residential prices are now coming off their record highs. The lack of new construction coincides with the first dip in average housing prices this decade. The average residential sale price has declined for the first time since 2011. So far, Anchorage’s average residential price is $353,729, a 3.5 percent decline from last year. However, these numbers only include January and February - historically, the lowest point of the seasonal ebb and flow of home sale prices, as people are more willing to move in summer months. January and February combined have declined $2,000 compared to the January and February total from 2015. January itself actually increased in price compared to last year.  Going by three-year average, the prices of Anchorage homes peaked at $356,652 in 2015. That average has lowered to $353,729 in 2016. Similarly, condos’ three-year average lowered from $216,952 to $214,821 in 2016. Statewide, a steady roll in interest rates coincided with the housing prices climbing. Over 7 percent in 2000, the average Alaska mortgage interest rate came to 4 percent in 2015. Key indicators from the Alaska Housing Finance Corp. indicate that new construction took a downward bend at the end of 2015. Statewide, there were 14 percent fewer condos, single and multi-family homes, and mobile homes built in 2015 than in 2014, with each category declining year-over-year. Loan activity started strong in 2015, but went down in the back half of the year. In the first and second quarters, total loans for single family loans — the largest segment of the housing industry — increased from the same quarter in 2014 over $24 million for the first quarter and over $21 million in the second quarter. Loan activity for condominiums increased in both quarters, while multi-family homes lost in the first quarter but gained over $3 million in the second. That turned around in the third quarter. Loans activity for single-family homes dropped in the third quarter of 2015 by $55 million, and by $18 million in the fourth quarter. Loans for condominiums dropped by $14 million and $2 million in the third and fourth quarters. Only multi-family homes kept the momentum, increasing loan activity by $400,000 and $5 million. Anchorage took the biggest hits, posting loan declines as early as the second quarter of 2015. In total, the Anchorage real estate market saw a $73.2 million reduction in single-family home loans in 2015. In Fairbanks, single-family home loan activity declined in every quarter, resulting in an overall $29.2 million reduction in 2015. Single family loan activity fell by $3.5 million in Juneau. Loans for new construction of single-family homes increased despite the loan reduction. Statewide, $400,000 more worth of loans were used to build new single-family homes, but those numbers skew declines in home building activity in the state’s two largest population centers. In Anchorage, $8.4 million less in loans was used to fund the new construction of single-family homes compared to 2014. In Fairbanks, $1.6 million less was used. Juneau, however, saw an increase of $2.6 million in loans used for single-family home construction in 2015. DJ Summers can be reached at [email protected]

Board of Fisheries hopefuls, legislators playing nice in 2016

The 2016 Board of Fisheries appointees represent no one, and everyone, they insist. 2015 and 2016 took a toll on fisheries leadership. The last 12 months include one botched interview, one forced resignation, three failed nominations – including one denied by the Walker Administration – a fistful of felony charges, and two recent resignations – one of which chairman Tom Kluberton said comes from political burnout and stress, the other, Bob Mumford, coming before he even had the chance to be confirmed by the Legislature.  Gear group and regional allegiance bubbled underneath it all, and what the board should look like to best reflect them all. This year, Gov. Bill Walker’s appointees are eager to explain what little bias they carry onto a board that oversees Alaska’s largest source of private employment. Legislators offer none of the fire seen last year, public comments are gentle, and none of last year’s regional and gear group tensions have boiled over. The Senate Resources Committee forwarded Israel Payton on March 21 to a joint session hearing, moving the Mat-Su resident one step closer to being confirmed as a board member. Payton, along with former Alaska Wildlife Trooper Al Cain and Kenai area conservationist Robert Ruffner, was nominated to fill one of three available positions on the board left Kluberton, Mumford, and Fritz Johnson. This leaves Bristol Bay without a representative. Bay groups are angry, but so far haven’t led the same kind of campaign that derailed board nominations last year. Payton came out of the gate speaking directly of a lack of allegiance to user groups, gear types, and regions, describing a good board member as neutral above all else. A good board member, he said, “should be careful not to be seen as one user’s advocate,” and “realize that board members do not represent any specific interest group, fishery, but represent all Alaskans equally, and we all have very unique differences and perspectives.” Payton’s fisheries involvement extends to subsistence and sport, and he currently serves on the Board of Fisheries’ Mat-Su Fish and Game Advisory Committee. The committee, public commentators, and Payton himself focused mostly on affiliation, specifically, which if any he holds. Payton insists his time as a sportfishing guide has no bearing on his Board of Fisheries plans. “I’ve worked as a sportfishing guide in the past,” said Payton, “but it’s been 11 years since I’ve made any money related to any type of fisheries resource, and it does not define who I am or how I will vote.” Though he has little direct commercial fishing experience, Payton claims he will benefit commercial fisheries. Without any connections, he has no loyalties or prejudices. “I will not bring any preconceived ideas or conflicts between different commercial users or fisheries,” he said. Sen. Pete Micciche, R-Soldotna, the only committee member to question Payton, probed for Payton’s backbone, asking whether he would have trouble making tough allocative calls when needed. “You know the pressure that comes on you in the Board of Fisheries,” Micciche said. “Do you have any hesitation on limiting harvest opportunities to any or all of the four user groups to meet the (maximum sustainable yield) requirement?” Payton said his alliance was to Alaska’s Constitution first, not to user groups. “If there’s a biological concern, and there’s a resource in crisis or not meeting the MSY, I think that it’s time to act accordingly,” he said. “I realize the amount of pressure that the commissioners and managers currently face when they do things like emergency orders, but we are mandated by the statues, by the Legislature, and we have to follow it.” In the midst of the interview, Payton acknowledged the pressure Micciche spoke about. “I would be lying if I told you I wasn’t nervous about serving on this board,” he said, but that he could only try. Along with the committee itself, the public had little input. Only three people called in to the committee, two in support of Payton and one neutral. A March 10 hearing was similarly mild compared to last year. A Senate Committee Hearing for Al Cain and Robert Ruffner met calm receptions from Sens. Bill Wielechowski, D-Anchorage, and Bill Stoltze, R-Chugiak. Both senators counted among the most vociferous of Ruffner’s critics during his 2015 confirmation hearing, but recanted their earlier opposition. In 2015, they said, Walker had nominated Ruffner to fill a seat they feel sportfishermen had traditionally held. This time around, that’s not a problem. Both Stoltze and Wielechowski said they were glad to see Ruffner back and nominated for a commercial fisherman’s spot. The senators, representing the largely sportfishing and personal use interests of Southcentral Alaska’s largest urban population centers, had opposed Ruffner’s appointment on the grounds that it should go to an Anchorage resident and a sportfisherman. Wielechowski acknowledged that Ruffner’s failed confirmation – the joint committee failed to confirm him by a single vote – had less to do with Ruffner’s undisputed credentials and more to do with fish politics. “Last year was rough and it really had nothing to do with you at all, it was just simply concern over the seat designation,” Wielechowski said. “I’m certainly more open to this entry now that you’re applying for a different seat,” Stolze said. “The seat you are applying for is traditionally thought to be a commercial seat.” Ruffner, director of the habitat restoration focused Kenai Watershed Forum, reaffirmed what he’d said last year. The health of the fish and habitat are first and foremost in his mind. Likewise, Cain responded to committee questions maintaining a neutral position in the endless Cook Inlet fisheries allocation battles. “I’d like to hear input on all sides, and if we can improve something, make something more sustainable, I’m not interested in disenfranchising any user group or individual but seeing that the allocations … are as equally distributed as they can be is my goal,” Cain told the committee. “That is why I’m not opposed to listening to suggested changes for any user group.” DJ Summers can be reached at [email protected]

Army officially delays JBER force cut

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

Cultivation licenses dominate marijuana applications

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

Banks, CUs haven’t seen downturn yet

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

Alaska trawlers furious about Walker’s council nominations

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

Victors in suit against NMFS want hired skipper rule scrapped

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

Feds file to dismiss suit over Kenai River subsistence gillnet

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

Federal Subsistence Board restores Saxman’s rural status

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

University cuts could damage fisheries, Arctic research

A state fiscal crisis looms, and some of the Legislature’s budget cuts could send ripples into Alaska’s largest private employer and international political affairs. Rep. Tammie Wilson, R-North Pole, passed a series of university budget cuts out of her subcommittee on March 4 that would lop $50 million from the university budget, largely from research and outreach funding. The subcommittee ended up with a final university unrestricted general fund budget of $300 million, a $50 million cut from last year’s budget. The equivalent Senate subcommittee, chaired by Sen. Pete Kelly, R-Fairbanks, proposed a $325 million budget. The House and Senate will likely make amendments to the budget during a conference committee later in March. University of Alaska research functions reach far into trade and key political discussions. Alaska research plays a vital role in state and federal fisheries management as well as Arctic research, now in the political spotlight as the U.S. holds the chair of the eight-nation Arctic Council. Alaska Bering Sea Crabbers, an industry group that represents 70 percent of all crab harvested in the North Pacific, penned a letter to both the House subcommittee and the House Finance Committee urging legislators not to cut research funding. “If the proposed subcommittee recommendation is adopted,” the letter reads, “it will seriously jeopardize UA’s continued ability to support fisheries in Alaska. Everyone in the state will suffer as a result. Commercial, recreational, and subsistence users will have fewer harvest opportunities.” Mark Gleason, the organization’s director, calls the university research cuts a “one-two punch” combined with Alaska Department of Fish and Game budget reductions — proposed at 15 percent less than last year. Together, the cuts to fisheries management and research spitball into more conservative management, he said, resulting in lower fishing quotas in a time when Alaskans need income the most. Gleason said the cuts seem far too broadly focused, and didn’t solicit industry input. “I think the legislators pushing for this aren’t taking a targeted approach, they’re just slashing,” said Gleason. “No one’s talking about being creative. It’s just cut, cut, cut.” Fisheries management has private funding components; to partially fund the Alaska Seafood Marketing Institute, fishermen pay a voluntary landings tax. With general funding to ASMI cut and the state running a negative balance sheet for fisheries management, fishermen could consider what they can pay voluntarily to compensate for state reductions. Gleason, however, said he hesitates to go too far down that path, as science and industry politics make bad bedfellows.  “It would be somewhat problematic to do this,” said Gleason. “It’s important to have independent science. If the industry is funding scientists to be involved in the fisheries management process, at what point is that going to cease to be independent? When you start having industry fund scientists, you open up a can of worms. You don’t want the cure to be worse than the disease.” Federal matching funds in peril The University of Alaska Fairbanks School of Fisheries and Ocean Science is a leader in marine research, regularly ranked in the top three nationwide according to Gordon Kruse, director of the school’s fisheries division. As director, Kruse said most of his research concerns industry, not academics. “All of my work is focused on the commercial industry in Alaska,” said Kruse. “There’s nothing I do that isn’t related to them.” Most of the university’s research funding comes from Outside grants. A 2012 study by Juneau-based economics firm McDowell Group linked $1 billion in competitive grants to the University of Alaska system in the decade between fiscal years 2002 and 2011. Federal funds, however, require a direct state match. A drop off in state contributions could jeopardize them. “In (fiscal year) 2015, approximately $24.2 million was allocated from the state to UAF organized research,” reads a letter from UAF to the House subcommittee. “For every $1 of state general fund investment, UAF was able to leverage this investment and generate an additional $4.10 of external funding. This is a substantial return on investment. If state funds are not available for match, UA’s ability to receive external funding is severely limited.” Apart from the loss of programs themselves, Kruse is concerned about the potential impacts to staff and to research infrastructure. Faculty comes to the University of Alaska system in part because of the research opportunities, he said. As the line between academic work and research work gets drawn, Kruse anticipates that faculty will leave the university. “If they’re cutting state funding for research, that also cuts down on the amount of time researchers can write proposals,” said Kruse. “Without a doubt, we’d be losing people.” The university would not only use people, but necessary equipment those people use to carry out research. The University of Alaska uses the Sikuliaq, a marine research vessel, to perform field studies. One of the few ice capable research vessels in the nation, the 261-foot research Sikuliaq is owned by the National Science Foundation but under current use by the University of Alaska Fairbanks. Home-ported in Seward, it is in its first year of operations in the Arctic, including a test voyage to the ice regions of the Bering Sea and projects in the Aleutians and in the Beaufort and Chukchi seas. The Sikuliaq, Kruse said, falls into a “use it or lose it” scenario. As a prerequisite, he said, the university has to put down a $5,000 match on the vessel or else the National Science Foundation will accept bids from other parties looking to perform research. “There’s other universities that would snap that up,” he said. State and federal fisheries management Both state and federal fisheries managers rely on collaborations with university research faculty to craft regulations and set harvest quotas. Routine research functions play a large role in management for the Alaska Department of Fish and Game, which manages state fisheries up to three miles offshore, and for the North Pacific Fishery Management Council, which manages federal fisheries from three to 200 miles off the shore. ADFG and the council co-manage the crab stocks, with the federal Scientific and Statistical Committee creating models and adopting overfishing limits while ADFG ultimately sets the harvest quota. Virtually all management decisions on the North Pacific council depend on intensive quantitative studies. Economic and environmental impact analyses, stock assessments, and myriad biological studies all form the basis for the council’s regulatory scheme. The North Pacific council has two support groups, the Advisory Panel, or AP, and the Scientific and Statistical Committee, or SSC. Before either the Advisory Panel or the council even begin reviewing proposed regulations, the SSC vets each proposal to ensure it meets scientific muster. University of Alaska faculty comprises five members – a full third – of the SSC, two from Anchorage and three from Fairbanks, including Gordon Kruse. The council pays for travel, but university faculty look to research funding to foot the bill for their time. Kruse said cutting research funding could prevent university faculty from fulfilling their duties on the SSC, leaving the North Pacific council without any Alaskan scientists. “We would create a huge vacuum,” said Kruse. “Outside of us, there is a representative from ADFG. But all the others come out of state.” North Pacific council Executive Director Chris Oliver said he couldn’t guess how research cuts will affect the dozens of ongoing research projects the council is involved with. However, he said the potential impact to SSC membership alone is troublesome. “In this case there certainly are implications for our management,” said Oliver. “That would be a very direct and significant concern.” Like Kruse, Oliver is not only concerned with federal/university cross pollination, but that actual structure by which research is done. Many of the North Pacific council’s research projects depend on the Sikuliaq. Similarly, ADFG relies on university researchers for evaluations of quantitative studies. ADFG Deputy Commissioner Charlie Swanton said the department sends off for university assistance when it needs to review one of the many studies on which it bases management decisions. ADFG pays overhead costs for all its university research, so these collaborations would only be hindered by the department’s own substantial fiscal challenges. However, Swanton echoes Kruse’s concerns about research staff thinning out as budget cuts make the University of Alaska less attractive. “There’s levels of technical specificity that only they have,” said Swanton. “If you want a review of sonar program or a stock assessment, we go to the university and find the right person. If there’s not research dollars to support some of those functions, those researchers are going to go elsewhere.” Faculty and staff turnover translate to ADFG’s employment pool as well. The department’s Sportfish Division hires three university graduate students every year to study specific ADFG issues in collaboration — for credit — with the university. After they’ve completed the project, many come onto ADFG as full time staff, already having been trained during their graduate research. Arctic Council University cuts come at a bad moment for the Arctic, according to John Farrell, executive director of the U.S. Arctic Research Commission. “The timing is not good,” said Farrell. The Arctic Research Commission is an independent federal agency of presidential appointees that advises the White House and Congress on Arctic research matters and works with executive branch agencies to establish and execute a national Arctic research plan. The commission is an important gear of the international Arctic Council, an international study group of the eight countries that touch the Arctic Circle, founded by the Ottawa Declaration of 1996 to provide a means for its members to work on mutual Arctic-centric issues. The United States entered the chair position of the Arctic Council in April 2015, taking over for Canada. The chair position is held for two years before being taken by another of the eight member countries. The U.S. is a member thanks only to Alaska, along with the Russian Federation, Canada, the Kingdom of Denmark (including the Faroe Islands and Greenland), Iceland, Norway, Finland and Sweden. It makes no grants and builds no projects, focusing its efforts mostly on information gathering, sharing, and disseminating, both through collaborations among government bodies and working relationships with private advocacy groups, academic organizations, or any other organization who wants to contribute to Arctic study. In addition to leading fisheries and marine research, the University of Alaska Fairbanks has one of the premier Arctic research programs in the world. For Arctic research, no university is cited more that UAF. “The work of the Arctic Council is done largely by working groups and task forces. The working groups do assessments,” said Farrell.  “A fair bit of this is done in University of Alaska.” The U.S. is already a year into its Arctic Council chairmanship; Farrell said whatever research cuts eventually take place will not impact the current Arctic Council. Rather, Farrell worries how cuts will affect U.S. contributions later. “There’s a long lead time on science,” said Farrell. “It’s not going to be the end of the world for the U.S. chairmanship, but it could significantly diminish our contributions down the road.” Farrell said Alaska will have a high profile for the remainder of the U.S. Arctic Council chairmanship; up to a thousand scientists and government officials will attend a UAF Arctic meeting — actually dozens of meetings and workshops — over the university’s spring break in March. Among other meetings, Secretary of State John Kerry will be in Fairbanks for an Arctic Council meeting in 2017. With Alaska in the spotlight, Farrell said a lack of research capability could be bad optics. “The council has two pillars: sustainable development and conservation,” said Farrell. “What feeds those things is knowledge economy…those all link back to research. It would be an acute message to other member nations when they come here for research purposes and the locals have to say, ‘Well we really wish we could help you out but we’ve got no research funding.’” DJ Summers can be reached at [email protected]

Museum exhibit to celebrate century of Alaska banking

The Alaska Heritage Museum will feature exhibits and speakers on March 14 at Wells Fargo’s Northern Lights Boulevard headquarters to celebrate a century of banking in Alaska. Event speakers will include Ed Rasmuson, chairman of the Rasmuson Foundation, Terrence Cole, a professor of history from the University of Alaska Fairbanks, former Wells Fargo Alaska Regional President Richard Strutz, and current Wells Fargo Alaska Regional President Joe Everhart. The event will begin at 5:30 p.m. on the first floor of 301 Northern Lights Blvd. Museum manager Tom Bennett said the exhibit and speakers fall back on a rich history of financial institutions in Alaska that distills the patterns and attitudes of Western banks in the Lower 48, and marks the rise of the Rasmuson family, National Bank of Alaska and eventually Wells Fargo in the history of Alaska’s key developers. Wells Fargo traces its roots in the state back to the Gold Rush days, and National Bank of Alaska opened as the Bank of Alaska on March 20, 1916, in Skagway. Before the modern world of banking regulations, any frontiersman looking to earn extra cash could get into the business. “The banking history in Alaska is so complex it’s amazing,” said Bennett. “At the time of the gold rush, anybody could own a bank. If you were a barber, you could own a bank. You could just put a sign on your door that said, ‘I’m a bank.’” The territorial Legislature allowed branch banking, and the Bank of Alaska opened offices in Skagway, Wrangell and Anchorage. Edward “E.A.” Rasmuson moved to Skagway in 1916 after passing the bar and becoming an attorney in the then-territory, then took over Bank of Alaska in 1918 despite no banking experience. As World War I funneled resources towards the national war effort and shaky banks struggled even harder to stay afloat, Rasmuson bought up the boutique banks, enlarging the Bank of Alaska’s footprint. Wells Fargo at the time established itself as a transportation provider for the gold and furs coming from the Interior. When the federal government took over such transportation services at the onset of World War I, Wells Fargo shifted to a purely financial institution elsewhere. It wouldn’t resurface in Alaska until purchasing National Bank of Alaska in 2000. Wells Fargo is the largest bank in the state with 49 branches and 53 percent of total deposits totaling more than $6 billion according to the most recent FDIC reports. After passing away in 1949, E.A. Rasmuson left the bank to his son Elmer Rasmuson, and his widow Jenny Rasmuson established the foundation bearing the family name in 1955. Elmer Rasmuson eventually served as mayor of Anchorage and his interest in fisheries led him to the chair of the North Pacific Fishery Management Council, which governs the federal waters off Alaska’s coast. When Elmer Rasmuson passed away in 2000 not long after his son Ed negotiated the sale of National Bank to Wells Fargo, he left his personal fortune of some $400 million to charity and much of it to the family foundation. Until the 1960s, Alaska’s banks and its economy stood on shaky ground. Bennett said E.A. Rasmuson’s early lending practices foreshadowed his namesake foundation’s charity, signing loans on a handshake and even bartering goods and livestock for loans before statehood prohibited the practice. The spirit of Alaska solidarity, formed by mutual dependence in a harsh environment, remains in Alaska’s banking world today, Bennett said. “Even looking at other states, National Bank of Alaska and the Rasmuson family really stands out as extraordinary,” said Bennett. “Even if someone couldn’t afford a loan, they’d find a way to get them a loan. That bled its way into the whole banking industry.”

Fishing industry: Maximize existing rates before raising taxes

Gov. Bill Walker’s fisheries tax bill is still lingering in committee as fishermen and legislators try to stave off new taxes by turning the discussion to maximizing collections at existing rates. By this point, several of the state’s largest fishing industry trade groups — including the United Fishermen of Alaska, Alaska Salmon Alliance, and the Pacific Seafood Processors Association, or PSPA — sent letters to legislators supporting the concept of fishing taxes but calling the bill too simple and too rushed to not harm the fishing industry unfairly. The bill would raise taxes on all segments of the commercial fishing industry by 1 percent. During a House Fisheries Committee hearing on March 8, the conversation veered into existing tax territory, probing for more opportunities to increase existing tax revenues instead of raising rates. “It’s really a question of auditing,” said Department of Revenue Tax Division Director Ken Alper. “This is really one of those things where we don’t want to raise our existing taxes until we know we’re getting all the taxes we could have.” In particular, Specifically, offshore catcher processors harvesting yellowfin sole, Atka mackerel, and other groundfish are being taxed at the statewide average for those species instead of the market value specific to that vessel. “There is an offshore catcher processor fishery that catches yellowfin sole that right when they come out of the water that value is between 12-16 cents a pound (as opposed to the statewide average of 2 cents a pound),” said Vince O’Shea, vice president of the PSPA. “So the difference is potentially 14 cents a pound. In yellowfin sole, that overall tonnage is 298 million pounds. Another species, Atka mackerel, the statewide fish price is 10 cents a pound. But there’s estimates that the at sea is 32 cents a pound. That total tonnage there is 69 million pounds.” Nobody is gaming the system, O’Shea said. Instead, the state’s tax collection methodology creates such pockets of undervalued species. “It’s not an issue of underreporting,” said O’Shea. “The system is set up that the Department of Revenue operates off the statewide average price list. Let’s get everyone on a level playing field and get everyone paying the same rate.” PSPA’s notice is similar to an earlier Department of Revenue finding that a tax rate glitch let groundfish trawlers off the hook for more than $10 million of fishery taxes in the last half-decade. The fishery resource landing tax assesses groundfish based on ex-vessel price. Processors turn flatfish caught as bycatch into low-value fishmeal, so the only known ex-vessel price for certain flatfish species is artificially low. Nine species have this price uncertainty, but most flatfish volume comes from yellowfin sole and Atka mackerel. According to state research estimates, the state has lost out on $1.8 million to $2.5 million per year, or more than $10 million over the last five years. “That $2 million is serious money,” in an environment of nickel and dime tax raises elsewhere, Rep. Jonathon Kreiss Tomkins, D-Sitka, said. Alper said during the committee that the state is nearer to establishing a more reliable way tax rate for the offshore groundfish processing sector. Committee chair Rep. Louise Stutes, R-Kodiak, also questioned the practice of bonus or retroactive pay for fishermen part of a limited liability corporation or cooperative. “When they first deliver their fish, you get the minimum amount for your fish,” she said. Later when fish may have sold for a higher price, fishermen can receive retroactive pay for the difference. “That’s not a return on investment, that’s being paid for the fish,” Stutes said. “Call it whatever you want, those fish need to be accounted for tax dollar wise.” PSPA, along with Ocean Beauty Seafoods and Icicle Seafoods, proposed an equalization of taxes for each fishery sector by setting every sector’s tax rate to 4 percent. This would be a raise for some sectors but would lower the tax rate for others, including the floating processors and canned salmon sectors. The committee was lukewarm on the proposal; Alper insisted the administration’s intent was to support the bill as written. “I don’t see that there’s a need in this environment to cut those taxes,” said Alper. The bill’s next scheduled hearing on March 10 was canceled. It has not yet been scheduled for another. DJ Summers can be reached at [email protected]

Laukitis, Peterson nominated for North Pacific council

Gov. Bill Walker submitted nominations to fill two seats of the North Pacific Fishery Management Council on March 9. Walker has nominated Buck Laukitis and Theresa Peterson to replace Duncan Fields and David Long among the 11 voting members of the council, one of eight regional councils established by the 1976 Magnuson-Stevens Act to oversee federal fisheries from three to 200 miles off the coast. Fields has served his maximum of three, three-year terms, while Long has served just one. As alternates, Walker forwarded Eric Olson, Paul Gronholdt, Linda Behnken, and Art Nelson. “I am pleased to recommend Theresa Peterson, Buck Laukitis, and the four alternate nominees to the North Pacific Fishery Management Council,” said Walker in a release. “Each of these individuals provides balanced and insightful experience that will benefit the council, and contribute to fisheries management and conservation in the North Pacific region.” The U.S. Secretary of Commerce must confirm each nomination. Council seats are held for three years and may serve up to three terms. Of 11 voting members, six seats are reserved for Alaskans, including the commissioner of the Alaska Department of Fish and Game, currently held by Sam Cotten. The remaining seats are reserved for the fish and game officials from Washington and Oregon, as well as a designated seat for the National Marine Fisheries Service Alaska Region. Laukitis is a commercial fisherman from Homer and the owner of Magic Fish Company. While he has no previous fisheries management experience on either the Alaska Board of Fisheries or the council’s Advisory Panel, Laukitis said his experience dealing with proposals to the board and counci, and serving on various fisheries advisory groups has prepared him for the council membership. Laukitis holds permits for several fisheries, including salmon, halibut, and an inactive rockfish trawl license. “I’m pleased and happy and look forward to working with the other members of the council, particularly the other Alaska members,” said Laukitis. Laukitis said he views himself as a small boat Alaska fisherman first, and plans to lend that viewpoint to the council. Laukitis’ daughter and son-in-law both operate the family fisheries with him, and looking out for the next generation of fishermen will be paramount in his council actions. “I have the next generation right in my household who want to be a part of this, and so that’s always first and foremost in my mind how council decisions will affect them,” said Laukitis. Peterson, a Kodiak resident and commercial fisherman, currently serves on the council’s Advisory Panel. Peterson has been a vocal supporter of regulations that would directly benefit Alaska coastal communities and a critic of those she feels would damage them. Most recently, Peterson expressed opposition to a proposal to establish rationalization programs in the Gulf of Alaska groundfish fisheries she felt would impact Kodiak residents not tied to large-scale fishing operations. Instead, Peterson voted to have the council further examine a set of proposals that are universally unpopular with trawl industry representatives.

Pages

Subscribe to RSS - DJ Summers