Anchorage files suit against MARAD over port management

The Municipality of Anchorage is broadening the reach of litigation to include the federal government among the defendants in the ongoing port expansion drama. During a March 3 press conference, Anchorage Mayor Dan Sullivan discussed his administration’s decision to file a lawsuit Feb. 28 against the U.S. Maritime Administration, or MARAD, in the U.S. Court of Federal Claims. The U.S. Department of Transportation agency was in charge of managing the construction project at the city’s port when cost overruns and questions about construction and design techniques brought the critical infrastructure project started in 2003 to a halt in 2010. No significant work has been done on the port in nearly four years. The latest legal action by the municipality brings the total number of defendants involved in the port work to four in two cases. The municipality sued PND Engineers, CH2M Hill, owner of former port design consultant VECO Corp., and Integrated Concepts and Research Corp. on March 8, 2013, in state Superior Court. That case has since been moved, despite protest by municipal counsel, to federal Alaska District Court in Anchorage. The Court of Federal Claims in Washington, D.C., where the municipality has sued MARAD has jurisdiction over contract disputes with the federal government. The business relationship between the municipality and MARAD ended unceremoniously in 2012 when the agency was “kicked out” of the port project, Sullivan has said. The municipality now has oversight responsibility of the port expansion. “As we all know the management of (MARAD’s contract) was not handled competently and we’re seeking damages as a result of that,” he said. Damages in excess of $10,000, but ultimately to be determined by the court, are being sought on two counts of breach of contract and one count of “breach of the implied covenant of good faith and fair dealing,” according to the municipality complaint. MARAD signed memorandums of agreement with the municipality in 2003 and 2011 detailing its responsibilities at the port. MARAD also signed contracts in 2003 and 2008 with Integrated Concepts and Research Corp., the firm it hired as a management partner under the Small Business Administration’s 8(a) program, which has special provisions for Alaska Native corporations. ICRC was owned by Koniag Inc., the Alaska Native Regional corporation for Kodiak, at the time of the first contract, but was sold to a Virginia company prior to the 2008 contract. Improper application of the preferential 8(a) rule by MARAD in 2008 was one of several issues raised in a scathing Inspector General audit released in August 2013, reviewing the agency’s involvement in port projects in Guam, Hawaii and Anchorage. According to the complaint, MARAD agreed to pay ICRC $11.3 million in September 2012 as part of a negotiated contract adjustment agreement without the municipality’s knowledge. “At the same time MARAD was secretly negotiating a settlement with ICRC, MARAD was pretending to work with (the municipality) to reject the ICRC claim and to prepare a counterclaim with (the municipality’s) assistance,” the complaint alleges. The settlement released MARAD and ICRC from liability and recourse against each other regarding contract work at the Port of Anchorage, the municipality claims. Per the agreements between MARAD and the municipality, the federal agency took 3 percent of the $302 million appropriated for the project as fees for its work, amounting to just more than $9 million since 2003. On Feb. 25, the Anchorage Assembly approved CH2M Hill as a project manager for the port on an initial five-year, $30 million fee-for-service contract. CH2M Hill prepared the 2013 study that deemed PND Engineer’s patented Open Cell Sheet Pile design unsuitable for seismic and design-life criteria at the port. That study was cited extensively in the first lawsuit. PND has claimed from the outset that faulty sheet pile installation was to blame for the project’s challenges. Over the next few weeks, a project management plan will be drafted and Sullivan said he hopes to have a new design approved within a year. First, some of the projects expired permits must be re-acquired. “We’ve got this project back on track, but it’s important that any and all entities that were responsible for previous mismanagement or mishaps in construction are held accountable,” he said. The general statute of limitations on disputes in Federal Claims court is six years; Sullivan said the case falls within that time frame. He said the municipality is standing up for the people of the state that depend on the Port of Anchorage. Outside of Southeast, roughly 90 percent of all the goods that enter the state go through the Anchorage port. So far, the Anchorage Assembly has approved $1.75 million for legal proceedings dealing with the port project, he said. Overall, $439 million in combined funding has been appropriated to the project that started with an estimated cost of less than $300 million in 2003. Of that, $138.6 million was federal money appropriated through various channels over nine years. During his Feb. 18 report to the Legislature, the Anchorage mayor said it would probably need another $250 million to $300 million in addition to the roughly $130 million the municipality has set aside for work now. The money available now will last for some time, Sullivan said, as his plan has scaled back the scope of the project. A brand new $280 million “north berth” dock has been taken off the table and future work will focus on traditional, pile-supported structures to mainly replace what is at the port now, he has said several times. As the 50th anniversary of the 1964 earthquake approaches, port officials have said the aging structure that withstood that disaster likely wouldn’t fare so well if a similar quake were to happen now as corrosion and general age have taken their toll. Sullivan told state lawmakers that he thought that the likelihood of the project receiving federal funding similar to past levels going forward — $138.6 million over nine years — is “very slim,” he said. Because the Defense Department has deemed the Port of Anchorage is a strategic port, $60.4 million of the federal funds the construction project has received to date came from the department, which requires dredging to a mean depth of 45 feet at such ports. The port is currently dredged to about 35 feet at the dock face. That might make the project available for some Defense and federal grant dollars, but he added that he plans to meet with the Gov. Sean Parnell and officials with the Alaska Industrial Development and Export Authority and the Alaska Housing Finance Corp. in the coming months about alternative funding. He said the municipality will prepare its plans for next legislative session and the port would almost certainly be its largest single request to the state in 2015. “We need to really strategize on what are the best sources of money that may again include some additional local debt,” Sullivan said at his press conference. The city has contributed $80.3 million to port construction. Sullivan also may have hinted to the Legislature that action against MARAD was being planned. “We are not going to go quietly into that good night when it comes to legal options with MARAD,” he said at the time. Elwood Brehmer can be reached at [email protected]

Municipality to go after MARAD over port

The Municipality of Anchorage is broadening the reach of litigation to include the federal government among the defendants in the ongoing port expansion drama. An announcement Monday morning from municipal spokeswoman Lindsey Whitt stated Mayor Dan Sullivan would hold a press conference from City Hall at 11:30 a.m., March 3 to discuss his administration’s decision to file a lawsuit against the U.S. Maritime Administration, or MARAD. The U.S. Department of Transportation agency was in charge of managing the construction project at the city’s port when cost overruns and questions about construction and design techniques brought the critical infrastructure project started in 2003 to a halt in 2010. No significant work has been done on the port in nearly four years. In a Feb. 18 presentation to the Alaska Legislature’s Joint Transportation Committee, Sullivan referenced an August 2013 Inspector General’s audit of MARAD’s involvement in port projects in Guam and Hawaii as well as Anchorage. “Essentially, (the IG audit) said MARAD failed in every single aspect of their project management duties,” at Anchorage, he said. The municipality is currently seeking damages from project designer PND Engineers; CH2M Hill, owner of former port design consultant VECO Corp.; and Integrated Concepts and Research Corp., hired by MARAD to oversee the project for the agency. Sullivan told state lawmakers that he thought that the likelihood of the project receiving federal funding similar to past levels going forward — $138.6 million over nine years — is “very slim,” he said. Overall, $439 million in combined funding has been appropriated to the project that started with an estimated cost of less than $300 million in 2003. During his Feb. 18 report to the Legislature, the Anchorage mayor said it would probably need another $250 million to $300 million in addition to the roughly $130 million the municipality has set aside for work now. He also may have hinted that action against MARAD was being planned. “We are not going to go quietly into that good night when it comes to legal options with MARAD,” Sullivan said at the time. On Feb. 25 the Anchorage Assembly approved CH2M Hill as a project manager for the port on an initial five-year, $30 million fee-for-service contract. Elwood Brehmer can be reached at [email protected]

CH2M Hill gives detail to role of VECO in port expansion

A CH2M Hill spokesman issued a statement Feb. 18 in an effort to clarify confusion over the role of VECO Inc. in the Port of Anchorage expansion project. CH2M Hill purchased VECO Inc. in September 2007, and the Colorado-based engineering giant with nearly 3,000 employees in Alaska now has a contract pending with the Municipality of Anchorage to manage future construction at the stalled port project. Approval of the contract has twice been delayed by the Anchorage Assembly as members have expressed concern over a possible conflict of interest regarding the municipality’s ongoing lawsuit against CH2M Hill regarding consulting work VECO Inc. performed on the sheet pile design used at the port. The municipality is also suing PND Engineers and former project manager Integrated Concepts and Research Corp. Assembly members have agreed to take up CH2M Hill’s contract bid Feb. 25. The municipal Bidding Review Board met Jan. 23 and unanimously approved the contract proposal and found no conflict of interest in regards to the pending litigation. In a statement provided to the Journal, CH2M Hill spokesman John Corsi wrote: “VECO was one of several sub-consultants engaged by (Open Cell Sheet Pile designer) PND (Engineers) in 2006 to complement their design team. VECO’s scope of work was to provide technical support to project scheduling and estimating, review of soil test data and properties provided by others and to conduct a single seismic stability analysis of an early OCSP concept design. VECO completed their scope of work in March 2007 and had no other participation in the subsequent design changes and completion of final design by PND, the engineer of record. “VECO also had no role in the oversight of the pile driving and other construction.” As part of its consultant work, a report prepared by VECO dated March 15, 2007, determined that the sheet pile design proposed at the time met seismic stability criteria for the project. The initial construction management contract now pending before the Assembly at the port is for five years and up to $30 million, with extensions that could make it up to a nine-year, $54 million deal for CH2M Hill. If it isn’t approved, municipal officials have said the bidding would have to start over, something that could delay the process up to an additional six months. CH2M Hill was also commissioned by U.S. Army Corps of Engineers for the municipality to evaluate the suitability of the sheet pile design employed at the port after construction challenges halted the project in 2010. That work was completed in February 2013, according to Corsi. Further, the company was tasked in October 2012 to produce conceptual design alternatives for the Corps of Engineers and municipality, which were released in February 2013. Attempts made throughout 2013 to contact CH2M Hill Alaska representatives about the company’s layered involvement in the Port of Anchorage project were unsuccessful. CH2M Hill is coming forward now so its involvement, particularly as it relates to VECO’s work, is fully understood by the Assembly, Corsi said. The February 2013 suitability study prepared by CH2M Hill was cited numerous times in the complaint filed by the municipality March 8, 2013, against PND Engineers, former project manager Integrated Concepts and Research Corp. and CH2M Hill. At a special Feb. 7 Assembly meeting held to discuss the management contract, Mark Lasswell a senior vice president for CH2M Hill said the company planned to move Lon Elledge, the program manager for CH2M Hill’s work on a port reconstruction and expansion project at Gulfport, Miss. Lasswell said Elledge is “one of the select few we have, probably in the world, who is actually managing a project identical to (the Port of Anchorage).” He referred to Elledge as “unique” and “qualified” to lead the Anchorage project. The Port of Gulfport was damaged considerably during Hurricane Katrina in 2005. CH2M Hill’s contract for the Gulfport work, signed in 2008 for $3.03 million, has been amended in scope and schedule to total $35 million by 2015. A copy of Elledge’s resume submitted as part of the contract management bid proposal provided to the Journal by CH2M Hill states that he has overseen environmental permitting, design, construction, budget and scheduling among other tasks since he started on the roughly $570 million Gulfport project in 2009. It states that Elledge has 35 years of experience managing marine and general construction projects. A request to interview Elledge was denied until the Anchorage management contract is resolved. Mississippi state officials have raised concerns over some of CH2M Hill’s expenses claimed at Gulfport. Mississippi State Port Authority Commissioner Bobby Knesal said in an interview with the Journal that CH2M Hill is “doing a good job as far as managing and everything,” but that some of their fees have been “excessive.” An invoice from the company to the Port Authority for the four-week period from June 1, 2013, to June 28, 2013, listed travel, lodging, office and apartment rental, telephone, parking, and equipment charges totaling $14,690. After meeting with CH2M Hill officials, Knesal said they agreed to “cut back” on some of their expenses. “We were paying the lease for an apartment they were renting for people who flew in a couple times a month and I just thought that wasn’t appropriate,” he said. “They’ve been here long enough; they should have established their residency.” The average wage for 18 CH2M Hill managers and engineers listed on the invoice was $150.70 per hour. Knesal said the wages were not in line with local companies, as he said they should be. Elwood Brehmer can be reached at [email protected]

CH2M Hill selected as program manager for Anchorage port reconstruction

CH2M Hill has been selected by the Municipality of Anchorage to manage the design, engineering and reconstruction for the troubled Port of Anchorage expansion project, Anchorage Mayor Dan Sullivan announced Thursday. The company will take over management responsibility from MARAD, a federal agency that previously managed the project, and will help the municipality develop a Request For Proposals for design and engineering services, select a firm to provide the services, and then manage the construction, Sullivan said. “The program manager responsibility is to provide day-to-day oversight of contractors and subcontractors, and does not include development of a design or engineering,” Sullivan said. CH2M Hill will help select a firm for the port construction design, although it could also be a firm to do a design/build project, he said. Because the port is owned by the Municipality of Anchorage, municipal officials will retain overall responsibility for the port project, including legal issues, the mayor said. “The MARAD relationship has not ended, but the agency is not longer the program manager. The federal legislation that allowed MARAD to take on the project remains in effect, however, so any new federal money for the project would come through the agency,” Sullivan said. While MARAD had responsibility, major construction defects occurred on some of the work done through 2010, which will now have to be repaired. Some of the previous construction can be used, however, the mayor said. Sullivan said he hopes to get construction restarted by 2016 and that the rebuilding would likely take three to four years. Environmental permits will have to be acquired once again, he said. The $30 million contract is for five years with options for two extensions of two years, with $12 million for each extension. The contract must still be approved by the municipal assembly, which will take up the matter at its Jan. 14 meeting. Sullivan said the municipality has $130 million on hand for the project in remaining federal, state and port funds. The state has been asked to provide an additional $100 million next year but Sullivan said this was just a “placeholder” to keep the project in the minds of state legislators. The request will likely be modified when engineering and designs are completed, and construction costs estimates can be made. Sullivan said he hopes to keep the over cost of the reconstruction at $500 million or less.

ConocoPhillips building sells for $104 million

A team including Cook Inlet Region Inc. and Anchorage-based JL Properties Inc. has purchased the Downtown Anchorage ConocoPhillips Alaska office tower for $104 million, according to a brokerage firm involved in the deal. Also included in the deal was Washington Capital Management Inc., headquartered in Seattle. JL Properties announced the sale in a Dec. 16 release. “We are pleased to add this prominent property to our portfolio of commercial, retail and residential properties in Alaska. We are excited to partner with astute real estate investors such as Washington Capital and CIRI,” JL Properties Chairman and CEO Jonathan Rubini said in a formal statement. The building complex, at 700 G Street, was constructed in 1983 and is more than 677,000 square feet on 1.7 acres. The 22-story main tower is the tallest office building in the state and ConocoPhillips Alaska is the primary tenant. National brokerage firm Stan Johnson Co. represented the previous building owner in the transaction and reported the $104 million sale price in a Nov. 20 release. JL Properties real estate and investment portfolio is more than $2 billion, according to the company. CIRI is currently working on a new 110,000 square-foot, eight-story office building at the corner of Fireweed Lane and the Seward Highway in Midtown Anchorage. That project is expected to be completed in about a year, CIRI has said.   Elwood Brehmer can be reached at [email protected]

Sealaska land bill awaits congressional votes

The Sealaska land selection legislation was inching towards votes in the House and Senate, but now must wait for congressional action on pressing budget and health care issues. Sens. Lisa Murkowski and Mark Begich introduced the 2013 version of the Sealaska land bill, as it has come to be known, in February. If passed, the bill would transfer about 70,000 acres of federal land to the Southeast Native corporation under provisions of the Alaska Native Claims Settlement Act. Rep. Don Young also introduced mirroring legislation in the House. The land selections made by Sealaska are primarily tracts of timberland intended to support the corporation’s logging industry. When they were introduced, Sealaska Executive Vice President Rick Harris said the company and its subsidiaries spend nearly $60 million per year on timber operations that support up to 400 jobs. The selections include approximately 18,000 acres in the Tongass National Forest’s roadless areas. Murkowski said in an August release that the bill had made significant progress after it passed the Senate Energy and Natural Resources Committee. “It has taken six years, but we have taken the first major step to finally complete the Native land conveyance for Southeast Alaska’s 20,000 Native (Sealaska) shareholders,” Murkowski said. “Some 42 years after the passage of the Alaska Native Claims Settlement Act, there is now a good chance that the federal government will finish paying the debt we owe Natives after they settled their aboriginal land claims.” Murkowski is the ranking Republican on the Energy and Natural Resources Committee. Alaska’s congressional delegation has introduced various forms of the land bill in both houses since 2007. Young’s House version of the bill passed the House Natural Resources Committee in June. The House passed a Sealaska land bill last year that died in the Senate. Republican Energy Committee spokesman Robert Dillon said in May that he was optimistic the bill would make it to the Senate floor — its next step — for the first time this year. In an October email to the Journal, Dillon wrote that moving it forward might be a challenge now considering the issues facing Congress. “I don’t have an estimate on when the Sealaska bill might be brought up, but we continue to look for opportunities,” Dillon wrote. More than 100 changes have been made to the bill from its 2012 version, Harris said, including withdrawing 26,000 acres of selected tracts on Prince of Wales Island noted as areas of concern by fisheries and environmental conservation groups. Additional changes have been made to the bill since its introduction that increase easement rights on proposed Sealaska tracts for hunting and fishing. Elwood Brehmer can be reached at [email protected]  

Tongass access, management on tap at annual convention

Newly proposed timber management strategies should be a conversation driver at the Alaska Forest Association Convention Oct. 23 to 25 in Ketchikan. Forest Association Executive Director Owen Graham said much of what will be proposed will be interim solutions until a long-term combined state and federal forest management plan can be agreed to. That includes a plan put forth by the Southeast Conference community coalition. “The Southeast Conference has been working hard to develop an alternative management strategy that the (U.S.) Forest Service could adopt that would allow them to maintain all their fish and wildlife protections and at the same time increase the timber sale program,” Graham said. A Forest Service silviculture, or forest management, program director is scheduled to present options for how to best regenerate timber growth from harvested areas, Graham said. Managing harvestable areas for future timber production has become a priority for the Southeast timber industry as accessible old growth stands are harvested. Additional Forest Service officials will be at the meetings to give their yearly Alaska timber supply and upcoming federal sale reports if the federal government shutdown has been resolved. In the event that the shutdown is ongoing during the meetings, Graham said he was given the Forest Service’s reports and can provide their updates himself. “We’ve got an excellent relationship with the Forest Service and I know they’ll do everything they can to honor their commitments to us,” he said. Foresters with the state Division of Forestry will also be on hand to give their state land reports. Graham said the Forest Association is continuing to push a proposed land transfer between the state and federal governments of Tongass National Forest land. The state-initiated proposal is to turn up to 2 million acres of federal land into state forest to be managed as available timber land. The federal Roadless Rule, put in place in 2001 under President Bill Clinton, has limited the areas where financially viable logging can occur in Southeast’s 17 million-acre Tongass National Forest. The land transfer was one of the recommendations in the June 2012 report issued to Gov. Sean Parnell by the Alaska Timber Jobs Task Force. Alaska Forest Service officials are supportive of the land transfer as a way to provide the state’s timber industry with a long-term timber supply, Graham said. However, he said its something that may be several years away from getting done. “I just don’t see the land transfer happening with the current (presidential) administration,” Graham said. According to the Task Force report, the Forest Service offered 43 percent of the timber volume for harvest needed to meet its volume under contract sales objectives from 2001 to 2011. Since 2008, the Forest Service has been able to offer only 33 percent of the timber volume necessary to comply with federal management policy because of challenges imparted by the Roadless Rule, the report states. Other annual presentations on University of Alaska and state Mental Health Trust land timber sales will be made as well. The Mental Health Trust manages approximately 130,000 acres of state-owned commercial timber land for the Department of Natural Resources. According to the Trust officials, commercializing Southeast state lands near Petersburg, Ketchikan and Wrangell has been a top priority in recent years. Revenue from timber sale leases can account for up to half of the Trust’s total income in some years, according to the Trust Land Office website. In traditional Forest Association fashion, Graham said the member convention will end with a “red suspender party.” Donated items are auctioned off at the party to raise money for college scholarships offered to Forest Association members’ families. Graham said the auctioned items garner $20,000 to $30,000 for the scholarships most years.   Elwood Brehmer can be reached at [email protected]  

Official: More Fort Greely interceptors possible

FAIRBANKS (AP) — The number of interceptor missiles at Fort Greely could rise beyond the level announced earlier this year, depending on threats from other nations, the director of the Missile Defense Agency said. In March, Defense Secretary Chuck Hagel said the Obama administration had decided to increase the number of missiles at Fort Greely to 44 in response to actions by North Korea. But last week, the director of the Missile Defense Agency, Vice Admiral James Syring, told a U.S. Senate subcommittee that number could go higher as the department evaluates additional threats, the Fairbanks Daily News-Miner reported ( ). Fort Greely is near Delta Junction. "The 44 is important; it addresses what we are seeing from North Korea today," he said in response to a question from Sen. Lisa Murkowski, R-Alaska, who serves on the panel. "What you'll see is the department evaluate the need or the requirement to go beyond the 44 as we evaluate the threat from Iran and other nations like that." Syring also was questioned by Murkowski about progress toward the expansion at Fort Greely, including the restoration of Missile Field 1, which the administration mothballed in 2011, with the additional ground-based interceptor missiles to be installed by 2017. Syring said contracts for work could be released this summer. "The first step is for us to complete on schedule the Field 1 refurbishment and to get those silos ready for the GBIs we're going to buy," he said. "There would be growth possibilities beyond that if we decided to go beyond 44 missiles; 44 gives us a roughly 50 percent increase in terms of the defense of our homeland, against a ballistic missile attack." Murkowski reiterated her criticism of the decision to mothball Missile Field 1, calling it short-sighted. "My concern is that we not leave Greely at less than full capacity and capability," she said. Last week's hearing was related to the Missile Defense Agency's request for about $7.7 billion for the next fiscal year. The budget request includes $51 million to continue radar work at Clear Air Force Station, near Anderson, Syring said. Murkowski also asked Syring about an interceptor missile test failure earlier this month, the third straight such failure. "We understand what the problem is through ground testing," Syring said. "We're confident it's been completed and adequately addressed." Another flight test is planned in March.  

Parnell signs bill for residential housing at ANMC

(AP) — Gov. Sean Parnell on Thursday signed a bill that authorizes $35 million in bonds to build a residential housing unit on the Anchorage campus of the Alaska Native Medical Center. The housing facility will have 170 rooms and will have a pedestrian bridge to the hospital. The medical center currently has a 110-bed capacity. Parnell signed the bill in front of about 200 tribal health leaders at the Alaska Native Tribal Health Consortium office on the same campus. Also attending were two main sponsors of the legislation, state Sens. Pete Kelly, R-Fairbanks, and Kevin Meyer, R-Anchorage. "With 143,000 Alaskans already using this medical center, the great need for health-related housing is well established here," Parnell said. The bill authorizes financing, construction and equipping the residential center. Construction is scheduled to start in March Parnell said the new housing unit will allow families to stay closer together while getting care in Anchorage, and gives Alaska Natives and American Indians greater access to health services. Besides family members of people receiving care at the hospital, patients like a high-risk pregnant woman, an elder recovering from a stroke or an accident victim in long-term recovery were examples given of those who would use the facility. Another important aspect of the building will be a kitchen, where families can prepare traditional foods, which Parnell said would aid in a patient's recovery. "With the new housing facility that SB 88 authorizes, people can support their families in a homelike environment, and this will be a place where cultures and traditions are not only accepted, but they are honored," said Valerie Davidson, a senior director of the Alaska Native Tribal Health Consortium. "They can even cook their own traditional food when they're tired of eating Anchorage food," she said. She noted the importance of housing from her own experience. When she was 4, she was burned over 20 percent of body. While she spent nearly four months at the Alaska Native Medical Center, her mother could only stay for two weeks because other families needed the space.

State awaits key decision from producers on large LNG export project

June 20, 2013 State officials are hoping to hear any day, perhaps as soon as June 20, from companies working on a large natural gas project that they are ready to go to the next stage of preliminary engineering on the project. Earlier this year in his State of the State address, Gov. Sean Parnell laid out a series of milestones for the project including a commitment to undertake a preliminary Front End Engineering and Design, or “pre-FEED” in the first half of 2013. The deadline for that, June 30, is fast approaching. Companies involved are producers BP, ConocoPhillips, ExxonMobil and independent pipeline company TransCanada Corp. So far the companies have met other milestones, such as reaching agreement on a scope of the project, and key design parameters of the gas treatment plant, the pipeline and a large liquefied natural gas plant at an as-yet undesignated Southcentral Alaska port. Moving to “pre-FEED” is significant because it would be the first substantial financial commitment to the latest version of the project, and would require an expenditure of several hundred million dollars. Meanwhile, the project manager for the industry-led group, Steve Butt of ExxonMobil, told a state legislative committee in a briefing on May 30 that part of the gas project is actually under construction. These are the facilities at Point Thomson, a large gas field 60 miles east of Prudhoe Bay, now being built. While this will initially produce a liquid gas condensate with the produced gas injected back underground the long-term plan is for it to be part of the larger gas project. Butt said 1,200 people were working last winter on the Point Thomson project. Work is continuing through this summer, with about 550 people working, be said. ExxonMobil, which is leading that project, achieved a 90 percent Alaska-hire rate through the 35 contractors employed last winter, Butt said. State Sen. Click Bishop, R-Fairbanks, one of the legislators being briefed May 30, said the local-hire rate was impressive. “A 90 percent local hire on the project of that size is almost unbelievable,” Bishop said. Butt said a lot of progress is also being made on planning for the larger gas project. The industry group is now spending about $3 million per month in its work with more than 300 people employed from the companies and contractors. The overall project would involve an investment of between $45 billion and $65 billion, and would ship between 16 million tons and 18 million tons of LNG annually. It would be operating after 2022, if it is built. Expenditures in the last year and a half, since work began on the latest pipeline/LNG version of the project, have totaled about $35 million. This is on top of about $700 million spent by the companies on a previous project to build an all-land pipeline to Alberta so that Alaska gas would be shipped to the Lower 48 states. The fast buildup of shale gas at low costs have taken away the Lower 48 market for now, however, so the companies shifted to an LNG export project partly at the urging of Parnell. Most of the LNG would be shipped to Asia. Project progress In the latest effort the companies have pooled information gathered by the Denali pipeline project, which was pursued by BP and ConocoPhillips but then ended, and the Alaska Pipeline Project, which was being pursued by TransCanada Corp. and then joined by ExxonMobil. Technically, the project that is continuing is still the Alaska Pipeline Project with its new plan for a pipeline to an LNG project, with BP and ConocoPhillips in support of that. Those companies have not yet formally joined the APP. One impediment to that, which will eventually be resolved, is that TransCanada is committed to special terms under the state’s Alaska Gasline Inducement Act, or AGIA, under which the state is also paying up to $500 million to support the companies’ work. AGIA requires that the companies agree to certain terms on tariff structures and financing to which the three producers have objected. ExxonMobil, BP and ConocoPhillips have said they cannot agree to AGIA’s terms and that the agreements will have to change if the project were to eventually move forward. Parnell has said he is open to changes in AGIA once the companies are all in agreement to move forward with the project. Meanwhile, Butt said May 30 that in achievements so far the companies have completed an integrated design for the gas treatment plant, pipeline and LNG plant, have finished needed hydraulic modeling, and have worked out the heat and materials balancing. “This assures us that the project can work, from a technical standpoint,” Butt said. Each of the major components is a mega-project on its own, with the Gas Treatment Plant requiring about 270,000 tons of steel and five sealifts of equipment and materials to the North Slope, he said. Alaskans have seen previous efforts on large pipeline projects, all failing to advance for various reasons, but what is different now is that all parties are working together, including the state. Coordination has also been established with the Prudhoe Bay field operators, which comprise the same three producers but in a different organization. This is important because the gas treatment plant is being integrated with the existing Prudhoe field gas processing facilities, Butt said. There is agreement that 42-inch pipe will be used on the main pipeline. “This is a standard size of carbon steel pipe that can be sourced from a lot of steel mills in different places. It really opens up the market,” in terms of procurement, Butt said. Previous efforts have included plans to use larger pipe sizes including more than 50 inches that would have drawn from a very limited pool of suppliers. The LNG plant in Southcentral Alaska would have three LNG process trains, or production modules, taking an average of 2.5 billion cubic feet a day of gas although the pipeline is being designed to transport up to 3.5 billion cubic feet daily so as to allow for increased seasonal production. Gas plants are more efficient in cold weather, Butt said, so production might be ramped up in winter, which also coincides with periods of peak demand from customers. “Our core challenge is to reduce the uncertainties and risks for the project,” Butt told the legislators May 30. He didn’t mention it, but the uncertainties include the state’s fiscal terms on gas production, on taxes and administration terms of the royalty. Tax terms Now that legislation has passed adjusting the state oil production tax, in Senate Bill 21, state officials have said they are ready to discuss special terms on gas production taxes for the big gas project. Talks on those are believed to be underway now. The oil tax change is important because it will help ensure that oil production will continue and that the infrastructure of the North Slope will be maintained, and paid for by oil production, for the gas project. Meanwhile, there are still other uncertainties for the gas project itself, Butt told legislators. A big one is a stretch of several hundred miles of discontinuous permafrost soils extending through Interior Alaska. Continuous permafrost, or permanently frozen soil, that exists on the North Slope creates a stable soils environment for a buried gas pipeline, which will be cold. However, discontinuous permafrost that freezes and thaws, which exists in the Interior, creates challenges is that it may cause the pipeline to move. The soils south of the Brooks Range, “are a little messy,” Butt said. A buried 42-inch pipeline is heavy, so it is believed that this problem can be handled, but it will still be an area of special focus for state and federal regulators. Last spring, in a previous legislative briefing by the pipeline and LNG group, the possibility that parts of the pipeline might have to be built above ground, similar to the Trans-Alaska Pipeline System, was mentioned. “TransCanada (a member of the industry consortium) has a lot of experience in building Arctic pipelines and has been in discussions for three years with government agencies about this,” Butt said. Permitting itself is a challenge, particularly with a special federal permit now required for Arctic pipelines. “We’re just starting to talk with the regulators about this,” Butt said. Above-ground construction at selected points is also a concern for the state-owned Alaska Gasline Development Corp. in its work on a separate 36-inch pipeline that is a contingency in case the industry-led project fails to advance. Frank Richards, a senior AGDC manager, told the legislators May 30 that seismic hazards from potential earthquakes at the Denali Fault in the Alaska Range and the Castle Mountain fault in Southcentral Alaska, in the Matanuska-Susitna Borough, may require special construction above-ground so as to allow the pipeline to move in the case of an earthquake. The Trans-Alaska Pipeline System survived an earthquake in 2002 on the Denali Fault because of a special design incorporated by engineers when TAPS was built in the mid-1970s, Richards told the committee. The design allowed the oil pipeline to move laterally without breaking in an earthquake. Similar design concepts may have to be built into AGDC’s plan, Richards said. Butt didn’t mention seismic hazards but the large 42-inch pipeline would also cross the Denali Fault and, if it comes to Mat-Su-Anchorage region instead of Valdez, the Castle Mountain fault as well.  

Alaska Housing Finance Corp adds $10K energy rebate

June 20, 2013 On July 1, Alaska Housing Finance Corp., or AHFC, will add a sixth, $10,000 level to its Home Energy Rebate Program for new home construction, the state finance authority announced. Currently, the highest level a new home can achieve for energy efficiency is the 5 Star Plus rating, which awards homeowners up to a $7,500 rebate for investments made to reduce home energy usage. The 5 Star Plus rebate will drop to $7,000 on July 1, as well. “Previously, we had a system that rated homes on a hundred-point scale, zero to 100, and the top 92 to 100 points was our 5 Star Plus,” AHFC energy program spokesman Jimmy Ord said. “So we took the upper echelon of 5 Star Plus homes and went from 95 to 100 points is now 6 Star.” At a June 12 presentation to the public policy forum Commonwealth North, AHFC Executive Director and CEO Dan Fauske said rebates have been awarded for more than 1,900 5 Star-rated homes since the program’s inception in 2008. Ord added that “not many” of the homes enrolled in the Home Energy Rebate would have met the 6 Star requirements. The additional level to the new home rebate was done to further incentivize homebuilders and buyers to invest right away in energy efficiency, according to Ord. It was also done in conjunction with a rebuild of the computer program used to calculate a home’s energy rating, he said. This was done in an effort to incorporate renewable energy generated for home use into a home’s net energy use. Ord explained a scenario in which a home may not meet 6 Star efficiency standards, but solar panels or a small wind turbine offsets the energy loss and qualifies the home for the maximum rebate. “Builders have a product to sell,” Ord said. “It takes an informed consumer to ask for an energy efficient product and a lot of times people buy things on the up front cost as opposed to the operating cost — same thing with homes.” When the $51.5 million appropriated in the recent state capital budget to AHFC’s Home Energy Rebate and Weatherization programs is added to the total, the state has contributed roughly $500 million to AHFC for energy efficiency, Fauske said. Homeowners applying for the existing Home Energy Rebate have received an average rebate of $6,389 Fauske said. They can apply for up to a $10,000 rebate. The final rebate amount is determined by the home’s energy rating after the efficiency improvements are implemented. Fauske said changes made to existing homes have saved homeowners an average of $1,464 per year over the life of the program. He also cited a University of Alaska Institute of Social and Economic Research study that found 12 permanent jobs were generated for every $1 million the Legislature has appropriated to the rebate program. “(The rebate) program, I will defend it whenever someone wants to sit down and have a debate with me. I’ve never seen a better use of public money. Not only are you reducing the use of energy, you’re improving the quality of the home stock,” Fauske said. AHFC’s energy rebate program is unique to Alaska, Fauske said. “We stand alone in the country on this program. We have advised other states; we’ve advised the federal government. We’ve been copied, we’ve been emulated and we share the data,” he said. The change to the new construction rebate coincides with the implementation of an April decision by the AHFC board of directors to increase the Building Energy Efficiency Standards, or BEES, for homes, according to the corporation’s release. BEES sets energy standards for thermal resistance, air leakage, moisture protection and ventilation. Ord said all homes financed by AHFC are audited and must meet BEES. Elwood Brehmer can be reached at [email protected]  

CH2M Hill to pay $2.9M to settle hatchery claims

FAIRBANKS (AP) — The company that designed a new fish hatchery in Fairbanks has agreed to pay $2.9 million to settle the state's claims over alleged flaws. The Fairbanks Daily News-Miner reports ( ) that as part of the settlement reached in late May, the company, CH2M Hill Inc., also agreed to swallow as much as $2 million worth of extra work it said it performed on the hatchery. The Ruth Burnett Sport Fish Hatchery had initially been scheduled to open in 2009, but because of construction delays and problems with its water filtration system designed to remove iron and manganese, it didn't begin stocking lakes until recently. The project ended up costing roughly $50 million — about twice as much as first anticipated. The state leveled the blame at designer CH2M Hill and at the construction contractors Alaska Mechanical Inc. The settlement releases CH2M Hill from all liability from currently identified flaws in its design, but leaves open the possibility for new claims if further defects are identified, said Senior Assistant Attorney General Dana Burke. As part of the deal, CH2M Hill dismissed its claims for more money from the state for additional, uncompensated work it said it did on the hatchery. That work was estimated by the Department of Law to cost up to $2 million. The settlement allows the state to avoid taking CH2M Hill to court, which could have cost as much as $750,000. The Legislature had gone as far as appropriating the money for such an outcome, but Gov. Sean Parnell vetoed it once the settlement had been reached. The state, however, has paid out roughly $3.8 million to Alaska Mechanical for additional work needed to make the hatchery operational. The hatchery, in downtown Fairbanks across the street from the Chena River, was designed to raise Arctic char, Arctic grayling, rainbow trout and chinook and coho salmon.

Ketchikan shipyard business grows

KETCHIKAN — The development of Alaska Ship and Drydock in Ketchikan has been more than 30 years in the works. “What we’re doing today is what they proposed clear back in 1981,” company Shipyard Development Director Doug Ward said. Ward has been with Alaska Ship and Drydock, or ASD, since its inception in 1994 and also serves as the resident site historian. In 1981, the State of Alaska released its site development plan for what is now ASD on the northern edge of Ketchikan.  At the time, the state Department of Transportation was in search of a hub for year-round maintenance of the Alaska Marine Highway System ferries, Ward said. As a result, $54 million was appropriated to develop the shipyard. Of that, $38 million went in to building the first dry dock, he said. When the yard opened in 1987, it had the single dry dock capable of handling the largest of the system’s ferries, 1,000 feet of dock facing and one large shop building. “No restrooms, no indoor plumbing — nothing,” Ward said of the site’s amenities at the time. What a difference a quarter century makes. Today ASD boasts two dry docks; a towering assembly hall, which has become a landmark of sorts in Ketchikan; an operations center; and a modular fabrication hall that is under construction. Plans for another five-plus story repair hall are awaiting the $30 million needed for construction. In all, more than $130 million will have been invested in the 16-acre property. The modular fabrication hall should be done by this fall. Because the site is owned by the state Alaska Industrial Development and Export Authority, or AIDEA, any infrastructure development relies on public funding. After the initial development through the 1980s, funding began flowing for the shipyard site in the form of $25 million of federal economic disaster relief after the wood pulp mill in nearby Ward Cove closed in 1997. The idea for ASD came about in 1993. It was to be a winter repair yard for the state ferries and in summer to help maintain the Ketchikan Pulp Corp. mill. When the mill closed the disaster relief money became available. In 1999, ASD partnered with Norwegian shipyard builder Kvaerner Masa to design what the yard has become today, Ward said. It was originally meant to be a centralized location for all state ferry activity. “From the beginning this project has always been an economic development plan for the State of Alaska, and I think that’s important to note,” Ward said. AIDEA’s ownership of the property makes any investment in it an addition to the state’s portfolio, he said. Ward said sites throughout Alaska were looked at in 1999 but ASD was chosen partly because of its proximity to resources in the Pacific Northwest, along with its temperate winter climate. Portland, Ore.-based Vigor Industrial purchased ASD in February 2012. Vigor operates seven shipyards throughout the Pacific Northwest including ASD. While ASD still operates under its original name, Vigor provides it with financial stability and a workforce of some 2,000 professionals. Ward said prior to Vigor’s involvement, ASD had roughly 120 full-time employees. Since early 2012 that number has grown to 160. Of those, 98 percent are Ketchikan residents. In late, April Sen. Lisa Murkowski toured the shipyard with ASD President Adam Beck. He told the senator that with the expansion in infrastructure and new project opportunities on the horizon, ASD is looking to double its workforce to nearly 350 in the next two years. “Vigor being a non-Alaskan company and acquiring ASD from a local employer, people were rightfully concerned,” Beck said. “But it’s a win-win for us to hire local folks.” He said Ketchikan’s nature as an isolated community means hiring locally provides a certain assurance that the employees understand what life in the city is like and won’t leave after a short time. Ward said the growth ASD hopes to achieve in the near future would return the area’s wage base back to where it was before the pulp mill closed and nearly 500 jobs were lost. Beck worked for ASD from 2000 to 2005, he said, before he began working with Vigor in Seattle. He now runs four of Vigor’s shipyards and his connection with ASD made him a perfect fit to oversee the Ketchikan operation. ASD is trying to find schools to help train the employees it hopes to hire soon, Beck told Murkowski. He added that ASD has provided equipment and supplies to train some of its current employees, but will need help to expand training. “We’re willing to partner with any education establishment that’s willing to partner with us. The challenge is that we want people who are ready to put boots on the ground,” he said. “It’s time to put wire to steel and pliers in hand and train workers.” From the upper level of Alaska Ship and Drydock’s five-story assembly hall, Sen. Lisa Murkowski looks down upon the longliner F/V Arctic Prowler now under construction with ASD’s Adam Beck and Doug Ward. (Elwood Brehmer photo) Ships in the works In addition to maintaining Alaska’s ferry fleet, ASD is finishing construction of the first large fishing vessel ever built in Alaska to fish Alaska waters. The 136-foot longline vessel the F/V Arctic Prowler is in the assembly hall. The vessel will be owned by Alaska Longline Co. of Petersburg and will fish cod, sablefish and turbot in the Bering Sea and the Gulf of Alaska. The $20 million-plus Arctic Prowler is expected to hit water sometime later this summer, said ASD Project Manager Carl Smith. Designs for two “Alaska-class” day ferries are in the works. Alaska Marine Highway System General Manager Capt. John Falvey has said he hopes the vessels can be built in Ketchikan. Beck said the competitive bid process on the $118 million project should be completed by this fall. “We hope to be building (the ferries) sometime in the first quarter of 2014 if we’re able to successfully win the bid,” Beck said. Previous state ferries have been built in shipyards across the country. None have been built in Alaska. Vigor is also in the bidding process for a major Coast Guard contract that would involve multiple shipyards including ASD. The Coast Guard is interested in building over two-dozen offshore patrol cutter vessels, Vigor Vice President of Government Affairs Fred Kiga said. “$10 billion, 25 ships, over 15 years,” Kiga told Murkowski. Modular portions of those ships would be built in Ketchikan if Vigor were to win the bid, Beck said. Vigor officials are confident their hull design, one similar to a design already used in oil support services in Europe’s North Sea, will be picked from 13 bidders as one of three potential designs. Beck said the long-term Coast Guard project would assure a return on investment for future training and infrastructure development by Vigor. He added that even if the Coast Guard work is not secured, ASD has received seven requests for proposals, or RFPs, for other ship-build projects in the past year. ASD’s Ward said building the now idle M/V Susitna for the Navy is a source of pride for ASD even though its inactive status has led to criticism of the ferry as a boondoggle. “The M/V Susitna, as a Naval prototype, is an absolute success,” he said. He said Naval officials were impressed after testing the ship, and with its capabilities and the quality of its construction. Most prototypes are destined to be scrapped, Ward said. The fact that the Susitna will probably find use somewhere is a win. “The fact that (the Susitna) isn’t in operation doesn’t mean it wasn’t a success,” he said. “It drove innovation into Alaska.”   Elwood Brehmer can be reached at [email protected]

Defendants in port suit hold their ground

All three defendants in a lawsuit the Municipality of Anchorage filed March 8 over the bungled Port of Anchorage expansion project have firmly denied liability and asked for dismissal in court responses to the municipality’s claims. PND Engineers, Inc., designer of the Open Cell Sheet Pile dock system at the center of the controversy, and CH2M Hill, owner of former port consultant VECO Alaska, filed responses April 17. Integrated Concepts and Research Corp., or ICRC, filed a motion for dismissal in U.S. District Court in Anchorage April 15. ICRC was hired by the U.S. Maritime Administration, or MARAD, in 2003 to oversee the port construction. The Port of Anchorage project was at the time the first large construction project MARAD had led. CH2M Hill recently released two studies that claim PND’s sheet pile design is inadequate for use at Anchorage’s port and offer construction alternatives. The engineering firm was engaged by the municipality to conduct the studies for about $2.6 million. PND has refuted CH2M Hill’s findings claiming that the firm did not follow the same engineering criteria that PND was ordered to follow when it fabricated the sheet pile design for the port. PND’s stance continues to be that shoddy installation of the sheet piles by subcontractors caused the dock structure to not meet seismic and stability standards. The municipality originally filed suit in state court but the case has since been moved to federal District Court. Federal Judge Ralph Beistline is presiding over the case. While the suit does not specify specific damage amounts, it states the municipality has suffered “damages in excess of $100,000” because of actions by each of the defending parties. CH2M Hill and PND both ask for the case counts of negligence against them to be thrown out and request the municipality be required to pay all legal fees they incurred as a result of the suit. CH2M Hill claims it is no longer liable under VECO’s 2006 contract with PND because the statute of limitations on such an agreement has expired. Alaska law requires action over a disputed work contract be taken within three years under most circumstances. In its motion, ICRC disputes the municipality’s claim of a breach of contract by stating that it never actually entered into a contract with the municipality. Rather, ICRC purports that its role was to “provide discrete contract management assistance in support of the project,” the document states. ICRC adds that it never stepped outside the bounds of the contract it signed with MARAD. The municipality entered into a memorandum of understanding with MARAD to manage the engineering and construction of its port shortly before MARAD brought ICRC into the fold. ICRC also contends the municipality did not follow proper procedure by leaving MARAD out of the suit. “If the claims against ICRC are allowed to continue, MARAD would be a party to this litigation all but in name and in right,” the motion asserts. According to the ICRC, MARAD is obligated to pay its legal fees in accordance with the contract between the two. Lastly, ICRC states that because MARAD is largely immune from litigation because of its standing as a sovereign government agency unless a contract or law was broken. This means, from ICRC’s view, that because the municipality cannot go after MARAD for damages, ICRC is also safe. Elwood Brehmer can be reached at [email protected]

PND refutes port study, lawsuit

PND Engineers Inc. is taking issue with the results of a CH2M Hill study done for the Municipality of Anchorage that concluded PND’s Open Cell Sheet Pile bulkhead design is not suitable for the Port of Anchorage expansion project. “PND stands by our design,” company Vice President Kenton Braun said. The Anchorage-based engineering firm’s design was chosen by Integrated Concepts and Research Corp., or ICRC, for use on the roughly 6,000 feet of dock structure at the port. ICRC was named port project manager by the U.S. Maritime Administration, or MARAD, in 2003. On March 8, the municipality filed a lawsuit in state court against PND claiming its sheet pile design was faulty. The court documents referenced CH2M Hill’s suitability study several times as apparent evidence of design flaws. Braun said PND was “blindsided” by the CH2M Hill study and that after reviewing it his company is more confident than ever in their design. VECO Alaska, now owned by CH2M Hill, and ICRC were also named in the suit for alleged construction negligence. Methods used by ICRC’s subcontractors in installation of the sheet piles have been scrutinized in reviews of work done on the troubled port expansion project. PND President John Pickering said his company was contractually limited to direct conversations with ICRC —prohibiting PND from having direct communication with those handling the sheet pile. “There’s a lot of misstatements contained in that lawsuit and that’ll all come out in the process,” Pickering said. In its study conclusion, CH2M Hill wrote that, “the (Open Cell Sheet Pile) system is not adequately designed to meet the global stability and seismic displacements based on the design criteria. The study also concludes that the open cell system is adequately designed to meet initial internal stability structural design requirements, assuming it was constructed without defects. However, at the end of 50 years, it will be slightly over-stressed due to corrosion and will not meet safety standards.” According to Braun, the criteria that CH2M Hill claims the sheet pile design does not meet differ from those that PND was originally tasked with meeting. He said the municipality and ICRC consulted with multiple firms for more than two years to determine appropriate design criteria prior to PND’s involvement in the project. “You can show anything to not work by making unreasonable assumptions and changing the criteria,” Braun said. CH2M Hill has been unavailable for comment about the study. As for the corrosion problem, Braun said PND was not involved with the development of a corrosion prevention system for the sheet piles. He noted that while an electronic corrosion prevention system has been installed, it hasn’t been turned on for the several years the project has been stagnant. A March 26 presentation by PND to the municipality’s Geotechnical Advisory Committee was canceled several days prior by the municipality on the advice of its attorneys, according to Braun. The presentation was going to be PND’s opportunity to refute the suitability study’s claims, Braun said. He shared portions of the presentation meant for the municipality with the Journal. In it, PND lists six criteria that it designed the sheet pile system to meet but, as Braun claimed, CH2M Hill changed. The criteria are: the structure’s design life; its “live load” capacity, or the total amount of weight that the dock can handle at one time; the combined live load and seismic stability requirements; stability requirements in the event of sea floor scouring or over dredging; and others concerning groundwater elevation and the dock’s stability during an earthquake at specified tide levels. Braun noted CH2M Hill’s deviation from the previously agreed upon 50-year design life for the structure. In its study CH2M Hill referred to the 50-year timeframe as the “industry standard” for such projects. In the alternative design concept plans that it presented to the municipality March 8, CH2M Hill used 75 years as the standard for structure life. He said PND designed its sheet piles to last 50 years per project criteria to limit cost. Braun and Pickering both questioned CH2M Hill’s status as an unbiased third party since the municipality contracted with the company to develop design alternatives after it determined the sheet pile design is unsuitable. CH2M Hill’s was paid $2.2 million by the municipality for its suitability study and slightly more than $450,000 for its design concept work. “The municipality has said they are going to do an independent third party review (of the CH2M Hill study). However, the validity of that review will be highly dependant upon how much money they spend in doing that review,” Braun said. In a previous interview with the Journal, Anchorage Mayor Dan Sullivan said while the municipality does plan on having the study reviewed, a budget or timetable for such a review has not been established. Assistant municipal attorney Robert Owens said any reviewer will have no past or future involvement in the port controversy. “That doesn’t mean we’re going to pay another $2 million to have CH2M Hill’s work duplicated, but certainly it would be tested and evaluated,” Owens said. Braun contended that the yearlong CH2M Hill study process could not have evaluated all the essential criteria that other consultants spent several years debating prior to determining PND’s sheet pile system was appropriate for the port. “The independent reviewer needs to have access to the previous work and be able to talk to all the previous people who worked on (the project),” Braun said. He also said he wondered how a thorough review of all work would be feasible given the possibility of legal constraints put on stakeholders due to the municipality’s lawsuit. According to Owens, the ability for a reviewer to contact previous consultants hired by ICRC regarding criteria and design issues has not been discussed by municipality officials. However, he said extensive records of past work would be available. “PND’s going to hire their experts, we’re seeking a third party evaluation, and once litigation is under way (communication) becomes a little more isolated,” Owens said. Pickering returned to construction issues to sum up the mess. “If the thing had been built correctly, we wouldn’t be having this discussion,” he said.  

Amended permitting bill advances

JUNEAU (AP) — A state senator on April 8 questioned the judgment of a Senate Finance Committee co-chair in advancing an amended version of a state permitting bill. Sen. Donny Olson, D-Golovin, suggested co-chair Kevin Meyer’s judgment may be “somewhat clouded” by end-of-session pressure to move bills. The Legislature was scheduled to adjourn April 14. House Bill 77 has generated at-times intense discussion in the committee, particularly surrounding a provision that would remove the ability of individuals or groups to apply for water reservations to maintain or protect certain water levels for such things as fish habitat, recreation and water quality. Sen. Lyman Hoffman, D-Bethel, has said he believes that’s a constitutional right but Natural Resources Commissioner Dan Sullivan has said state attorneys are confident in the provision’s constitutionality. The bill, from Gov. Sean Parnell, is aimed at improving the permitting process and deals with things such as land exchanges and permitting procedures. Critics say it could hurt the public’s ability to participate in permitting decisions. The latest version of the bill, unveiled April 8, would allow for a feasibility study for a hydroelectric project at Chikuminuk Lake within a southwest Alaska state park. It includes language similar to a bill earlier proposed by Sen. Lesil McGuire, R-Anchorage. A 2002 management plan referred to the lake as one of the most scenic and remote in the park. It had been studied in the past as a possible hydro-power site with distribution lines running to Bethel but studies found such a project would not be economically feasible, the management plan says. Nuvista Light & Electric Cooperative Inc., in a presentation to legislators earlier this session, said it is seeking to build off past studies. In 2011, it received $10 million from the state to study the feasibility of the lake as a hydroelectric site. Executive director Elaine Brown said the group was denied a special use permit by the Department of Natural Resources to do geotechnical and geophysical work, such as bringing in a rig to drill bore holes in rocks. But she said Nuvista has gotten other permits to do raptor, fish and other research in the park. Olson said the changes made a controversial bill more controversial. But Meyer, R-Anchorage, characterized the changes as minor, a view echoed by co-chair Sen. Pete Kelly, and Meyer said he didn’t see the need to hold the bill over any more. Neither Olson nor Hoffman objected to the bill ultimately leaving committee but Olson, in the committee report, recommended the bill not pass. Hoffman recommended it be amended.

Multiple fisheries studies under way for Watana hydro

Editor's note: Since this issue went to press, the Alaska Energy Authority announced Wednesday that the Federal Energy Regulatory Commission had approved the 14 remaining study plans. Now, 58 studies are approved, to be conducted over the next two years. Fisheries studies are under way on the Susitna River north of Talkeetna as part of the regulatory process for the proposed Susitna-Watana Hydro project. The Susitna-Watana Hydo project’s fish and aquatic resources technical workgroup held a quarterly meeting March 26 to discuss the fisheries study plan. The Alaska Energy Authority, or AEA, is studying a 735-foot high dam on the Susitna River, above Devil’s Canyon. That would create a reservoir about 42-miles long, and have an installed capacity of 600 megawatts, although actual output year-round would likely not meet that peak value. With those details set out, AEA is now working on studies of what the dam means for the surrounding environment — including fish.  Most of the currently available information about the dam is from studies done in the 1980s. But now AEA has hired R2 Resource Consultants to assist with a new round of scientific work. Although AEA and R2 are developing the studies, in conjunction with other partners, and ensuring the plans comply with regulatory requirements, the working group brings together a variety of participants, including state and federal agency representatives and members of nonprofits, to discuss the plans. As proposed, the study plan calls for more than 50 studies, which must be approved by the Federal Energy Regulatory Commission, or FERC. Of the studies, 13 are specifically categorized as pertaining to fish and aquatic resources, although others, including two looking at in-stream flow, could also be significant in determining the dam’s impact on fisheries. AEA filed its study plan with FERC on Dec. 14. So far, FERC has signed off on 44 of the studies, and asked AEA to do further work developing the others. The National Marine Fisheries Service, or NMFS, filed a study dispute request in February regarding three of those studies, two of which are set to look at fisheries resources. AEA has also updated some of the plans as FERC requested, but was waiting for a response from FERC as of March 26. Other plans will be finalized later this spring, with an opportunity for the public, and agencies, to comment at that time. The authority has also been instructed to include input from certain federal agencies as it modifies study plans, a point that attendees emphasized at the March 26 meeting, and asked the authority to remember. At that meeting, AEA offered an update on each fish study. The plan is to look at fish distribution and abundance for all parts of the river, salmon escapement, river production, the future reservoir area, fish passages and barriers, fish harvest downstream of the proposed dam, a genetic baseline study being done in conjunction with the Alaska Department of Fish and Game, euchalon distribution and abundance, and a beluga whale study. The studies NMFS is questioning look at fish escapement and fish passage at the dam site, according to Mary Louise Keefe from R2, who provided an overview of the work. FERC had scheduled a technical conference for April 3 to discuss the proposed work, and differences of opinion. Several studies, including the salmon escapement project, are currently in the field planning stage, while some, such as the fish passage barriers work, are still being modified to meet FERC’s comments. The workgroup is also assisting with developing the studies, although it doesn’t have the final say. AEA’s Betsy McGregor reminded the agency participants that ultimately it is not a consensus process. Ultimately, AEA will be responsible for the final plan, and may or may not be able to incorporate every comment made during the meetings, she and others said. FERC has instructed the authority to include some specific participation from federal agencies. The final, approved, versions of the authority’s study plans will eventually be made public, although a timeline for that has not yet been set. Some of the research has already begun. Last year, scientists began baseline studies of the area and worked to pinpoint some study sites. AEA also has video of the area that will become a reservoir, and other parts of the river that could be affected by the dam. That’s available to the public, but must be checked out from AEA’s Anchorage office either in person or via mail. In March, some winter work was conducted, including trips to study sites, installation of some technology. In April, scientists are set to continue the study effort by working on early life history sampling using fish nets and minnow trapping to look at juveniles in the river, and catch their movement out of spawning areas and into rearing areas. Over the next few years, the working group will meet quarterly. Although the March 26 meeting was just one day, future meetings could take longer as the studies begin and there’s more to discuss. The working group’s next meeting will be a fish passage workshop in Washington, on April 9 and 10.   Molly Dischner can be reached at [email protected]  

Bids come in high for new Kodiak High School

(AP) — All three bids received to build a new Kodiak High School have come in over what the Kodiak Island Borough School District had estimated. The Kodiak Daily Mirror reports ( the project, considered the largest ever on the island 200 miles southwest of Anchorage, was budgeted at $58.5 million. The lowest bid came from Watterson Construction of Anchorage, at $61 million. Roger Hickel of Anchorage bid $63.7 million, and Omaha, Neb.-based Kiewit Building Group bid $64.2 million. The project was bid with 11 items, like a music room or running track, which could be dropped if the bids came in too high. The school board will now consider which of the 11 could be dropped to make the bids work, and submit a formal recommendation to the borough assembly.

Turnagain Pass power lines to get upgrade

(AP) — Extreme snowfall, avalanches and icing wiped out power lines across Turnagain Pass on the Kenai Peninsula again this winter, and a project is underway to replace them. Alaska Public Radio reports ( ) in all, 21 spans of the transmission line sagged to the ground during a storm. The fifteen miles being replaced this winter will add to the amount of the 90-mile line that was replaced after 2011 avalanches. A $15 million appropriation from the Legislature will pay for replacing the highest priority section of the line, through the mountains above Turnagain Arm along the Seward Highway. Chugach Electric Association Spokesman Phil Steyer says the line was built in 1962, and is badly in need of replacement.  

Federal appeals court allows railroad extension

Work on a railroad extension in Southcentral Alaska will move forward after the 9th Circuit Court of Appeals on Wednesday reversed its earlier order to halt work. The court lifted the stay on the Alaska Railroad's extension project to Port MacKenzie in the Matanuska-Susitna Borough. A three-judge panel of the court on Oct. 1 agreed with environmentalists, who argued they and the natural environment would suffer irreparable harm if the emergency order had not been issued to stop construction. Attorneys for the petitioners — the Sierra Club, Alaska Survival and Cook Inletkeeper — had argued that an environmental review by the U.S. Surface Transportation Board was inadequate and that the board "merely parroted" the purpose and need for the project articulated by the Alaska Railroad Corp. At the time, the court found there was a "serious question" as to whether the board complied with a federal environmental law, the National Environmental Policy Act or NPEA, in determining the purpose and need of the extension. "Upon further review of the record, the panel concluded that the Board's 'purpose and need' statement complied with the act and that petitioners no longer raised 'serious questions,'" the court wrote in Wednesday's decision. An official opinion will follow later. The court noted that further delay would prevent awarding construction contracts, postpone hiring and increase costs of the project — proponents saying by as much as $12 million. "Because this project is funded largely with taxpayer dollars, these increase costs of construction .... will burden the public upon continued delay," the court wrote. Justices said since they have determined the Surface Transportation Board acted within the law, that agency and not the court should "balance the justifications of planned economic progress in improved rail service against the possibilities of environmental harm." Matanuska-Susitna Borough spokeswoman Patty Sullivan welcomed the news. "We're very happy, and we knew the (Surface Transportation Board) had acted accordingly and had followed NEPA." Bob Shavelson, with Cook Inletkeeper, said there are already three tidewater ports in Southcentral Alaska. "It doesn't make sense to continue pouring hundreds of millions of public dollars into an unneeded project," Shavelson said in a statement. "Port Mac's business model rests on pie-in-the-sky assumptions, and Alaskans cannot afford another public funding disaster." Sullivan said Cook Inletkeeper is against development of any kind. "If you can't build a railroad in Alaska, where can you build one?" she said in an email to The Associated Press. The Surface Transportation Board last November gave final approval to the railroad to build and operate about 35 miles of new rail line in the borough north of Anchorage. The proposed line would run from Port MacKenzie to near Houston. The board said the proposed line would provide rail freight services between the port and Alaska's Interior and said it also would support the port's development as an export-import facility for intermodal and bulk-material resources. In September, the U.S. Army Corps of Engineers issued a permit allowing the railroad to fill in nearly 96 acres of wetlands for the line. Opponents have argued the project would open the door for shipping Alaska coal overseas, but they say that would come at the expense of local families, landowners and salmon fisheries.  


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