COMMENTARY: FCC is committed to rural telemedicine in Alaska

One of my earliest trips as a Federal Communications Commission commissioner was to a health care clinic in Fort Yukon, Alaska, population 554. The clinic may not have all the amenities of a big-city hospital, but it does have a broadband connection. High-speed internet access has made a big difference for this clinic. It’s meant access to doctors far away who can review medical information beamed to them by a local nurse. Fort Yukon’s story isn’t unique. Today, communications technology has fundamentally transformed the delivery of health care in rural America. Telemedicine can help address the workforce shortages that are too common in rural health facilities. Rural patients can use interactive videoconferencing to consult with specialists anywhere in the country — expert care that was unavailable and unimaginable not long ago. Chronic disease management has been revolutionized as wearable sensors can detect real-time complications and alert a family member or first responder to intervene. Digital tools can empower people with diabetes to monitor their blood-glucose levels. Bottom line: digital medicine helps rural communities increase access to health care, reduce costs, and improving patient outcomes. No state stands to benefit more from telemedicine than Alaska, which is home to many of the most remote communities in America. In a filing with the FCC, the Alaska Native Health Consortium estimated that 20 percent of Alaska Natives rely on telehealth, and that remote consultations within their network save $10 million annually in avoided travel costs. They put it simply: “(W)e cannot provide care in rural Alaska without telecommunications.” But there’s a fundamental challenge in Alaska, as in many parts of the Lower 48: promoting enough broadband to support digital health services. Nearly one-quarter of Alaskans can’t access fixed broadband service to support high-bandwidth applications like telemedicine. In rural areas, that number is dramatically higher. Established in 1997, the FCC’s Rural Health Care Program is an essential tool for closing these gaps in internet access. This program helps health care providers afford the connectivity that they need to better serve patients. But it’s facing some real problems. Most significantly, the program is currently underfunded. Its budget hasn’t increased a dime beyond its initial allocation of $400 million a year in the late 1990s. A second problem is that under today’s rules, if the program is oversubscribed (that is, if more than $400 million in reimbursements is requested from the program), every recipient sees a funding reduction. In 2016, program recipients saw a 7.5 percent trim in support. For funding year 2017, we’re looking at a chop of up to 26 percent. We need to update the FCC’s Rural Health Care Program to better reflect the needs of and advances in digital health care. That’s why I recently introduced a plan to increase the program’s annual funding cap from $400 million to $571 million. This new spending level reflects where the cap would be today if it had been adjusted for inflation all these years. This 43 percent increase would apply to the 2017 funding year in order to give rural health care providers immediate relief. Going forward, the plan would also give providers more certainty by adjusting the cap annually for inflation and allowing unused funds from prior years to be carried forward to future years. Notably, support for this approach is bipartisan. This May, Sens. Lisa Murkowski and Dan Sullivan joined a coalition of 30 U.S. Senators from Alaska to Alabama and New Hampshire to New Mexico in calling on the FCC to increase the Rural Health Care Program’s spending cap. And the Trump Administration has broadly recognized the value of telemedicine, especially for veterans. And this proposal is just a start. We also need to make sure that every dollar spent in the program is spent wisely to benefit health care providers in Alaska and their patients. That’s why the FCC is moving forward on a separate track to make sure that the program functions more efficiently. This proposal is also personal. I grew up in rural Kansas, the child of rural doctors. I can remember my father waking up early to make long drives to small towns in order to treat patients who otherwise would never see a specialist. For me, this issue isn’t about technology; it’s about people and their ability to access to basic care they need to lead healthy lives. As long as I am FCC chairman, one of this agency’s top priorities will be harnessing the power of communications technology to improve health care in rural America. Devoting the resources necessary to make the FCC’s Rural Health Care Program a 21st-century tool will go a long way toward achieving this result. ^ Ajit Pai is the chairman of the Federal Communications Commission.

Copper River crash will cost commercial fishermen millions

Copper River sockeye fishermen are facing historic low returns this year, prompting some commercial fisherman to target other species elsewhere in Prince William Sound, and leaving others waiting onshore in what is usually a profitable fishery to the tune of $15 million or more in ex-vessel value. Through mid-June, the commercial Copper River District drift gillnet fishery had landed just less than 26,000 sockeye salmon and a little more than 7,000 kings during three mid-May fishing periods. The Alaska Department of Fish and Game had expected a harvest this summer of nearly 1 million sockeye in the district, and about 13,000 kings. As the harvest stands now, it’s the second-lowest in the past 50 years. The Copper River fish typically fetch a premium price as the first of the season, and this year was no exception, with prices as high as $75 per pound for kings at the Pike’s Place market in Seattle after the May 17 season-opening period. But the district hasn’t re-opened after the first three periods because the sockeye returns are so poor, so the final value is likely to be far lower than the $20 million-plus the fishery often nets. ADFG Area Management Biologist Jeremy Botz said it would take a significant improvement for the fishery to re-open. “(There’s) not anything to support a commercial fishery at this time,” he said on June 19. Botz said there’s a chance the commercial fishery could re-open if the numbers improved, but that wasn’t looking likely in the near-term. Typically, the sockeye fishery winds down in late July. Coho management begins Aug. 15, and Botz said that should be unaffected by the slow sockeye run. Before the season began, the ADFG forecast noted that the wild sockeye and king returns to Copper River were expected to be smaller than in years past, with a total sockeye run predicted to come in about 16 percent below the 10-year average, and a chinook run estimated at 4 percent below the average. Through June 19, the sonar counter that is about 70 miles downstream of the popular Chitna dipnet fishery had counted just above 243,000 fish, with slow daily counts. The in-river goal past the sonar this year is 644,000 to 1.03 million salmon. The low end of the escapement goal is 360,000 sockeyes. Botz said it is still possible to meet that goal, but it will depend how the rest of the run shapes up. The count so far is about the eighth-lowest on record, Botz said. The department also does an aerial survey count on the Copper River Delta, which was well below the anticipated range, too. Re-opening the fishery would depend both on the aerial survey numbers, and the sonar count, Botz said. The low numbers have meant restrictions for the in-river fisheries too, not just the commercial side. The department has closed the popular personal use fishery at Chitna, as well as sportfishing in-river. The run does look close enough to meeting its escapement goals that the department has offered some subsistence fishing time, Botz noted. Ocean conditions impacting size, run strength The fish that are showing up also aren’t as big as they used to be. “Overall, the average weight has continued to remain down,” Botz said. That was seen in the first few commercial openings, and continues to be the case for the subsistence fishery, he said. Botz said this is about the fourth year in a row of small sockeye in the Copper River. In 2015 and 2016, the average weight was down to about 5 pounds. Last year, it increased slightly, to 5.5 pounds, still far smaller than the typical size, which is typically more than 6 pounds. Botz said there are several theories about what is causing the smaller fish, which have also been seen in other parts of the state in the last few years, but some things are certain. “The smaller size-at-age, there’s definitely some competition or shortage of food out at the ocean,” he said. It’s hard to say exactly what causes poor fish runs, but Botz said it’s likely that ocean conditions play a role, including warmer ocean temperatures caused by the “Blob” of warm water that moved into the Gulf of Alaska in 2015 and 2016. He noted that although there were some large escapements in the years producing the current sockeye run, the large number of stocks in the Copper River system typically mitigate any big impact coming from a large escapement. “Overall, the bigger driver is out in the ocean,” Botz said. Small run, lean earnings The Copper River isn’t the only struggling fishery in Alaska this summer. By mid-June, the returns in Kodiak were weak as well, and several king fisheries were shut down around the state including the early run of Kenai king salmon. Staff for Gov. Bill Walker did not respond to a question about whether he was likely to seek a disaster declaration for the Copper River fishery, or any other shortcomings in the state. More often, that happens after the season is over. The high Copper River prices could help mitigate some of the economic impact of the shutdown, but not all. Copper River drifters typically harvest 60 to 70 percent of total Prince William Sound drift-harvest of sockeye each year, and take home a slightly larger proportion of the drift sockeye fishery’s ex-vessel value, because the Copper River and Bering districts typically fetch a better price per pound than the rest of the sockeye caught by PWS drifters. In 2016, they landed 1.1 million sockeye out of a total 1.6 million for all Prince William Sound drift fisheries, worth about $13.3 million at the average price for that district of $2.30 per pound. That was then considered a relatively lean year for the fishery, but 2018 is unlikely to match it. Botz said many fisherman are also fishing elsewhere in Prince William Sound since they can’t fish the Copper River district, the western Prince William Sound enhanced chum and sockeye fisheries are seeing the biggest uptick in effort. “Most folks, even folks that don’t typically go over to the westside, are over there this year,” he said, noting that just a few “die-hard” Copper River drifters are waiting in Cordova to see if their favorite fishery re-opens. But that won’t completely offset the losses fishermen face from the slow year in what Botz said is “normally a reliable fishery.” The only comparable years were 1979, when the fishery shut down after just a few periods, and 1980 when it was pre-emptively closed. “Now it’s kinda wait and see if we see some improvements here,” Botz said in June.

Coastal Villages study renews fight over CDQ quota allocations

A new study reaffirms that large and long-standing inequities still exist in a federal program aimed at improving the economic situation in Western Alaska. Coastal Villages Region Fund commissioned the report conducted by the Seattle-based research firm Community Attributes Inc., which concludes the fisheries allocations in the Community Development Quota Program prevent the groups representing the poorest regions in Western Alaska from fully achieving their mission. Coastal Villages is the CDQ group for 20 villages on the Yukon-Kuskokwim Delta, which is one of the most economically depressed regions not only of Alaska, but the country as well. The Western Alaska CDQ Economic Needs Report notes that Coastal Villages serves 35 percent of the population meant to benefit from the program, yet has access to just 24 percent of the pollock, about 18 percent of the crab and 17 percent of the Pacific cod quota dedicated to the CDQ Program. Those fisheries quotas are allocated amongst the six CDQ groups that cover residents within 50 miles of the Bering Sea coast in an area starting north of Nome on the Seward Peninsula south and west through Bristol Bay and out the Aleutian chain. Overall, the CDQ Program is allocated 10 percent of federal groundfish fisheries quota as a means to keep more of the economic benefits from the fisheries in the region. The program was established in 1992 and is part of the federal Magnuson-Stevens Act fisheries management law. Comparatively, the Aleutian Pribilof Island Community Development Association, or APICDA, covering communities on the western Alaska Peninsula and the island chain, and the Central Bering Sea Fishermen’s Association, or CBSFA, dedicated to St. Paul Island, represent just 2 percent and 1 percent of the total CDQ population but get 14 percent and 5 percent of the program’s pollock quota, respectively, according to the report. It states further that Coastal Villages represents 41 percent of the total CDQ population that lives on incomes below 125 percent of the federal poverty line while APICDA and CBFSA again are in the 1 to 2 percent range of the metric. “From this report we’re seeing that the most economically disadvantaged people in the region are receiving less benefit from the program than others,” Coastal Villages Outreach Manager Michelle Humphrey said in an interview. The goal of the study, which reinforces a message Coastal Villages has long been sending, was to again illustrate the economic disparities between the CDQ sub-regions and motivate officials to restructure the allocations amongst the groups, according to Humphrey. CDQ allocations were last addressed by Congress in the 2006 Coast Guard authorization bill, which generally kept the allocations in place but also directed the State of Alaska to conduct performance reviews of the groups and recommend quota reductions if they aren’t meeting their mission. The last reviews published in January 2013 concluded that Coastal Villages, APICDA and CBSFA all met the goals of economic improvement in their regions to varying degrees and thus no changes to quota allocations were recommended. However, Humphrey said the study also highlights the fact that the Norton Sound Economic Development Corp. and the Yukon Delta Fisheries Development Association also receive allocations that are disproportionately small relative to the economic need in their regions, but the disparity is not quite as great as it is for Coastal Villages. She said the allocations have never been based on a formula that takes into account population or economic need. Exactly how the quota distribution was originally determined is unclear, but Coastal Villages insists “they were created in a very political atmosphere,” Humphrey said. Coastal Villages acknowledges changing the allocations is a challenging process as it requires an act of Congress, but notes similar assistance programs are often driven by needs-based calculations. “I think at this point we’d be interested in seeing what the best practice for (this) type of program is. There’s lots of formulas that are currently in place for housing funds and other federal programs,” Humphrey said further. “So I hope that we can start the discussion about what that formula would look like but I don’t think we have a formula at this time.” Members of Alaska’s congressional delegation have generally shied away from the issue, insisting the CDQ groups need to agree on the matter before they can act. Sen. Lisa Murkowski’s spokeswoman Karina Petersen wrote in an email that Murkowski has encouraged the group’s leaders to discuss the issue. “If a reallocation effort is to move forward, it should be consensus-based and flow out of a constructive dialogue between all six groups,” Petersen wrote. A spokeswoman for Rep. Don Young, who authored the 2006 Coast Guard bill through his leadership position on the House Transportation Committee at the time, did not answer emailed questions in time for this story. In the past, Young has been emphatic that the allocations will not change without the CDQ leaders reaching agreement on what the changes should be. APICDA CEO Larry Cotter did not respond to requests for an interview on the topic and — exemplifying its sensitive nature — neither did Norton Sound officials, despite the report’s conclusions that the Nome-area group is on the short end of the stick. And while the performance of the CDQ groups has generally been positive, they have drawn criticism over executives’ pay and investment decisions in some instances. In 2009 Coastal Villages opened a $35 million fish processing plant in the village of Platinum that was meant to employ 125 people and make the group the third-largest employer in the region. Coastal Villages said at the time the plant would likely operate at a deficit for the first five years. It has been closed since 2016 and Humphrey said the group does not foresee itself working in local fisheries in the near future. Instead, Coastal Villages is focused on programs that bring broader benefits to all of its region’s residents, she said. Yukon Delta Executive Director Ragnar Alstrom testified in August 2017 before the Senate subcommittee covering oceans and fisheries and chaired by Sen. Dan Sullivan that the program has enabled the region’s communities to directly participate in the commercial fishing industry and now provides more than 5,500 jobs and $60 million in wages and other forms of income. Yukon Delta is the largest private employer in its region, accounting for 615 direct jobs in 2016 and investments of $10.2 million into the region over the year, according to Alstrom. He said that overall the program has worked well and needs stability, but the Western Alaska Community Development Association established in 2006 to act as a collective body for the CDQ groups to interact with Congress “has ceased to function in any meaningful way.” At the same time, Alstrom said Yukon Delta is encouraged that all six groups want to make the association functional again. Elwood Brehmer can be reached at [email protected]

Rear Adm. Bell eager for third Alaska Tour

Orders to Alaska were a homecoming for Rear Adm. Matthew Bell and his wife Nancy. Bell took over as commander of the U.S. Coast Guard District 17 in early May and now works out of the district headquarters for Alaska in Juneau. A 33-year veteran of the Coast Guard, Bell said he requested the Alaska mission as the couple holds Alaska residency and still makes a home in Kodiak after two prior tours there in the late 1980s and early 2000s. He has also served as chief of staff and chief of operations for the Coast Guard’s Pacific area, which has afforded him further familiarity with Alaska issues. “I tell everybody they’re two-year orders but I asked for three even before I got here. We’ve been looking to get back here for a while,” Bell said during a June 18 meeting with the Journal and the Anchorage Daily News. “We like the people; we like the state; we like the challenges; we like the tyranny of distance and the weather, so to me that’s exciting work for us.” As the District 17 commander, Bell is responsible for nearly 1,900 active-duty personnel, 15 cutters, 18 aircraft and a $430 million-plus annual budget. He discussed a wide range of topics in an hour-long discussion, but the man tasked with protecting more than half of the nation’s coastline used the phrase “tyranny of distance” repeatedly. For starters, Bell said he is excited about the new vessels headed to the state that will help the Coast Guard combat that tyranny a little more effectively. Specifically, there are six 145-foot fast response cutters headed north, which will initially be split between the Kodiak and Ketchikan stations. Two other larger, offshore patrol cutters are also destined for Kodiak as well. Bell noted that the two fast response cutters that have already reached Ketchikan conducted more boardings in four months than the entire Alaska patrol fleet had done in a year prior. Most of the boardings, particularly in Southeast, are carrying out fisheries enforcement missions in cooperation with Alaska State Troopers and the state Department of Fish and Game, according to Bell. The Coast Guard also entertains National Oceanic and Atmospheric Administration fishery officers on some of its law enforcement patrols in the state. Further, the Coast Guard regularly coordinates with the Alaska Air National Guard, Civil Air Patrol and even “locals on ATVs” when conducting search and rescue missions, Bell added. “To me, one of the benefits of living in Alaska is everybody relies on their neighbor for something else. You’ve got to rely on them; well, we’ve got to rely on those partners,” he said. As for the longstanding issue of adding new vessels to the Coast Guard’s current, operable icebreaking fleet of one, there appears to be progress. The Senate passed the 2019 fiscal year Defense budget authorization bill June 19 with language authorizing the Coast Guard to contract for up to six heavy icebreakers and a directive for Navy officials to draft a report on what equipment they would like to see on those vessels. To that, Bell commented that he sees icebreaking as less of a mission and more of a capability, as a vessel with icebreaking ability will undoubtedly be called upon for numerous scientific, navigation and rescue tasks, among others. “That particular hull, that class of vessel, needs to be able to break ice. That’s not going to be it’s mission; it just has to be able to do that so it can exercise its mission,” he said. Bell also stressed the importance of mariners taking a note from their aviating counterparts and filing a float plan each time they embark on the water. He said it is still easy for vessels seeking shelter to inadvertently hide from responders as well as the weather along Alaska’s jagged coastline, with Southeast’s Inside Passage being the best example of that. “When you start a search it’s easy to say, ‘Well, this is where we’re going to start. We’ve got that nailed down and this is where we’re going to end,’” Bell said. “Well, (the vessel) could’ve gone in 50 different directions and as soon as you put an asset out in the water or up in the air, well, now you’ve taken that asset away from another search and rescue case.” In another example of the “tyranny of distance” he described that a helicopter deployed to a distressed vessel might have to travel hours just to get to the search area, leaving little fuel and time for the actual search, which makes being able to narrow the search area all the more imperative. The biggest takeaway Bell has from his prior tours in the state might be intuitive to many longtime Alaskans, but its importance can’t be overstated — Alaska’s weather is dynamic. “You could talk about weather in the state; well, you can’t, because there are five, six, seven different patterns (at once). “If you don’t have an appreciation for that it can set you up for mistakes,” he said, noting a similar recognition for daylight is needed as well. He is also familiar with some of the state’s most infamous maritime disasters, having responded to both the Exxon Valdez and Selendang Ayu groundings during his previous time in Alaska. In March 1989 Bell was part of a maritime border patrol in the Bering Sea when his vessel was ordered to turn south and steam full-bore for Prince William Sound. He recalled feeling “inadequate” when they finally arrived. “We were a big ship and we do fisheries law enforcement work and we show up in Prince William Sound, and, I mean, you could smell the oil — the ship’s still up on the rocks at the time,” Bell said. His patrol vessel ultimately became a temporary air traffic control center for all of the aircraft responding to the Exxon Valdez spill and the private pilots flying the area simply to observe the disaster. He described the traffic in and out of Valdez going from “three to 300 flights a day.” Bell was the skipper of the cutter Alex Haley in December 2004 when the 283-foot vessel responded to the grounding of the soybean-carrying freighter the Selendang Ayu of off Unalaska Island in the Aleutians. The 738-foot cargo ship lost power, drifted into shallow water along the island and eventually broke up on the rocks during a violent winter storm. Six Selendang crewmembers died in the wreck and a Coast Guard chopper was lost when it was hit by a breaking wave, but the pilot was rescued. “I’m very familiar, up close and personal, with the risks associated with those Great Circle (shipping) routes,” Bell said. He urged vessel captains experiencing problems in Alaska waters to notify the Coast Guard of their issues sooner than later even if it appears at the time that a rescue won’t be necessary. The responders would much rather embark on a rescue mission and turn around halfway through instead of arriving late to a scene — often hours away — that has become critical due to weather, injury or other factors. On a positive note, Bell said relations with the Coast Guard’s counterparts in the Bering Sea, the Russian Border Guard, remain mostly healthy despite the ongoing tensions between Moscow and Washington, D.C. “We’re maritime neighbors. We have the Bering Strait that’s 40-50 miles across. Their traffic could be our traffic. Their calamity could be our calamity very, very quickly, so to stay at that working level is much better for both nations,” he said. The nations routinely run communications drills and the Border Guard has expressed an interest in expanding those to include search and rescue exercises, according to Bell. On fisheries, he said the Coast Guard has a continual dialogue about monitoring shipments offloaded to at-sea processor vessels in areas near the international border. “Nobody really has eyes on what they caught or where they went so we’re continuing to work on those efforts,” Bell said. However, he added that based on what his knowledge, Russian officials take fisheries violations seriously. Bell referred to “a couple of instances where the master loses the vessel, catch gets sold off at auction and none of the guys go back to work. I know that’s happened in a couple of cases. That’s pretty extreme. NOAA can issue a fine but would we ever take somebody’s boat away from them and sell off the catch and never let them back on?” With a desire to visit every community in Alaska with a Coast Guard presence, Bell joked that it will take him three years just to do that. He also said Vice Adm. Linda Fagan, who took over command of the Pacific Area June 8, will be in Alaska in July and similarly new Coast Guard Commandant Adm. Karl Schultz will visit the state in August for a Coast Guard Foundation event. “I wish it was January or February because I think they would appreciate the tyranny of distance and the challenges of the weather a bit more but July and August — at least they’ll get to go all the places and they won’t get constrained by weather for the most part,” Bell commented. Elwood Brehmer can be reached at [email protected]

GCI seeks customers as it considers Aleutians fiber network

UNALASKA — Whether undersea or underground, the mixture of water and telecommunications is a continuing challenge for GCI’s TERRA Aleutian Program, aimed at improving internet and cellphone service in one of the most remote areas of Alaska. The telecommunications company is proposing an 869-mile underwater fiber optic cable route, along the south side of the Alaska Peninsula, stretching from Kodiak to Chignik and ending in Unalaska/Dutch Harbor. TERRA stands for Terrestrial for Every Rural Region in Alaska, and the company has completed its Southwest and Northwest projects that have connected 45,000 residents in 84 towns and villages. Bringing in Akutan, Cold Bay, False Pass, Chignik Lake, Chignik Lagoon, Sand Point and King Cove, the new route connects more people to high speed internet, compared to the former plan offshore of the north side of the peninsula, according to GCI Vice President Dan Boyette, the general manager of the TERRA Aleutian Program. The southern route, crossing the Shelikoff Strait from Kodiak Island’s Larsen Bay to the mainland at Chignik, is spendier than the $40 million previously proposed for the northern path leaving the mainland in Levelock, and top corporate officials still haven’t committed to laying hundreds miles of sunken cable. Kodiak gets the internet by subsea cable from the Kenai Peninsula, a more reliable delivery system than the satellites up in the air over the Aleutian Islands. It would bring significantly faster Internet connections, compared to the pokey satellite-based system now in place. “Backups and updates will take minutes, not days,” according to Anchorage-based GCI. Whether TERRA Aleutian pencils out is still unknown, though promising. “We don’t have the go-ahead yet,” Boyette said of the plan to greatly increase bandwidth. “We’re still in the approval process.” Already, GCI has spent $2.5 million planning the TERRA Aleutian project. Boyette said he is seeking five-year commitments from potential customers in the fishing and transportation industries. Already, seafood companies Unisea and Trident have pledged support, he said, among 15 businesses operating in the region between Chignik and Unalaska/Dutch Harbor, he said. If the project finds enough support, onshore work would start this year, and offshore cable laying would follow for the next two years. The planned completion date is Sept. 30, 2020. And with those commitments, the business plan is advancing into its final stages, he said. The latest big challenge is working with the Federal Communications Commission on internet services for rural health facilities, he said, and hopes that regulatory issue will be completed by the end of summer. 4G LTE activated Meanwhile, absent the subsea cable, faster service has come to Unalaska, even with satellites, from new antennas and towers bringing 4G LTE service. With 4G LTE, customers can access the internet on cellphones, a big improvement over the old 2G system, limited to voice and texts. But with 4G LTE up and running, that should take some pressure off the 2G service, leading to better voice communications, he said. But even on land, water is still a problem. The proposed cell tower in Unalaska Valley has been delayed again and again. This time it’s groundwater too close to a city drinking water supply. Last time it was neighborhood complaints on Stewart Road, for health concerns involving radio waves which are not grounds for denial per federal law, though impacts on nearby property values are a valid reason for local authorities to nix a cell tower, which the city council did on an appeal of the planning commission’s approval last year. Local resident Rufina Shaishnikoff opposed the tower adjacent to her property. The replacement site presented its own problems, with health concerns outside the jurisdiction of the Federal Communications Commission, but within the range of veto power of local authorities backed up by the Alaska Department of Environmental Conservation. GCI had to redesign the foundation for the tower on the city pipeyard site on East Broadway, because it’s within 200 feet of a city water well, according to Unalaska Department of Public Works Director Tom Cohenour. The new foundation would have been shallower than originally proposed, when it descended 19 feet to bedrock, below the water table eight feet down from the surface. The shallow foundation would have employed a 40 by 40-foot layer of buried geofoam, secured on the surface by big concrete weights. And now even that’s site been abandoned, because of the watery subsurface conditions. City Engineer Robert Lund informed GCI of the city water utility’s fears of contamination of the “relatively shallow” well. “Their concern is surface water intrusion where deep or driven pile foundations could act as a preferential pathway for surface waters or drilling fluids to enter Well 1A,” Lund wrote in a Nov. 22 memo. DEC’s Daniel A. Reichardt agreed, saying digging down to bedrock “presents a significant temporary risk of contamination of the aquifer.” He recommended that the well not provide drinking water during construction activities. The site was located across the street from the Unalaska Department of Public Works, on land leased from the city. And now, that site won’t work at all because the water table remains too high for a tower foundation. “We’ve decided to skip it, and we’re back to the drawing board looking for another location,” Boyette said on June 13. The new site will once again be in the residential neighborhood of Unalaska Valley, where GCI hopes to finally find a third site where a tower can finally rise. The issues with with the Valley site near the city drinking water well could have shutdown the seafood processing industry in the nation’s top volume fishing port, according to a scenario Cohenour spelled out in a letter to GCI. Basically, he described a perfect storm situation, with wind stirring up mud in the Pyramid Valley reservoir, in a region with the some of the world’s strongest winds, the Aleutian Islands, known as the “cradle of storms.” “During the seafood processing seasons a simultaneous shut down of well 1A and the Pyramid Valley System will shut down fish processing. Wind events regularly cause temporary shutdowns of the Pyramid Valley System due to high turbidity. If well 1A is is compromised the only solution is to replace it or install filtration and unknown impacts to the seafood industry,” he wrote in a Jan. 17 letter to GCI’s Cyndi Coughlin. But other 4G LTE tower projects are going well, Boyette said. That’s the new structure on Captains Bay Road at the private dock operator Offshore Sytems Inc., and new equipment on the existing tower on Haystack, a prominent hill overlooking the community. Unalaska is working with GCI as it seeks to install an underground wiring network. Boyette said GCI plans to develop a cable television service for residents, and that will mean the company will have a higher profile locally with trucks and more workers. Jim Paulin can be reached at [email protected]

Millions in federal funds flow toward opioid epidemic

Look for fairly consistent funding to flow into programs combating the opioid crisis over the next several years after Alaska was designated the recipient of three grants to pay for more treatment and more law enforcement. Gov. Bill Walker declared an opioid crisis on Feb. 14, 2017, prior to the national public health emergency declaration that came from President Donald Trump last October. Since then, the state has secured more than $5 million in funding for key rehab and law enforcement work ahead. A McDowell Group study estimated the costs of Alaska from the opioid epidemic to be more than $1 billion in 2015. Funds were made available through the Substance Abuse and Mental Health Service Administration, or SAMHSA. Alaska is utilizing two SAMHSA grants to support treatment expansion. One, under the 21st Century Cures Act, has provided the State of Alaska with $2 million annually for two years through a State Targeted Response grant. It is focused on increasing access to treatment and addressing unmet treatment and recovery needs, said Andy Jones, the director of the Office of Substance Misuse and Addiction Prevention in the Department of Health and Social Services. Another goal is reducing overdose related deaths through prevention, treatment and recovery activities for people suffering opioid use disorders. Three facilities that provide treatment for high-risk populations were awarded these funds: Interior AIDS Association in Fairbanks is providing medication assisted treatment, counseling, and case management; Cook Inlet Council on Alcohol and Drug Abuse in Kenai is providing comprehensive addiction services, including medication assisted treatment in the Kenai area who are struggling with opioid use disorders; Fairbanks Native Association began an integrated opioid treatment project that provides outpatient opioid use disorder treatment integrated with medication assisted treatment. A second grant came from the Medication-Assisted Treatment Prescription Drug and Opioid Addiction program sponsored by SMHSA. It provides the state with $3 million over three years to expand access to medication-assisted treatment services for those with opioid use disorder. Two grantees were awarded these funds: the Narcotic Drug Treatment Center of Anchorage to double capacity to 200 people; and the Bartlett Rainforest Recovery Center in Juneau, to increase the number of people it can serve to 75 per year. A third program, this one from the Department of Justice called the High Intensity Drug Trafficking Area, will go to law enforcement for increasing resources to fight against the illegal trafficking. The designation allows Alaska to share in a $275 million federal program that coordinates law enforcement efforts targeting the distribution and sale of illegal drugs. Alaska hasn’t yet officially received the final award amount, Jones said. “This gives us quite a few dollars to expand treatment,” Jones said. Work so far Jones said a coordinated effort began to build momentum after the 2017 declaration by the governor. The glue that held it together was weekly meetings of the Alaska Opioid Policy Task Force that included Walker and heads of state agencies, Jones said. “We didn’t talk about what we want to do,” he said. “We talk about what we are doing.” When Walker issued an administrative order that said the Department of Health and Social Services should look for federal grants and address the crisis head on, “he held our feet to the fire,” Jones said. “We met every week, and now we meet monthly. We are continually briefing the governor. He has been very involved in this,” he said. Dr. Jay Butler, chief medical officer at the Division of Public Health, said getting a handle on this kind of epidemic is different from other health emergencies. “It’s a complex disaster. Different from say, a response to an influenza pandemic. We have multiple levels of response that’s needed and it’s a very fluid situation,” Butler said. The practice of over-prescribing opioids by physicians was a relatively easier side to tackle than the demand and supply side of illegal drug use. “It means increasing access to treatment. Increase the providers who can treat addiction, and remove the stigma,” he said. “We’re working on it as a health condition, not just a bad habit but it actually is a condition that affects the brain so the behavior is different.” Butler said he draws on a comparison to get the public to understand addiction. Campaigns that teach people that “learning to just say ‘no’ would be just like saying a person with Alzheimer’s has to take a Dale Carnegie course and they’ll remember things. It’s not addressing the problem.” A disaster declaration means public resources are strained or insufficient to handle a particular problem. Police departments and emergency responders in Alaska describe their systems as overloaded during an opioid epidemic and the community can only react as opposed to planning safeguards. “Project Hope” was launched statewide as one of the first steps, Jones said. The Naloxone nasal spray that can save a person in the midst of an overdose was included in kits and distributed as part of the campaign. To date, the life saving doses have been administered to 644 people throughout the state, according to data collected between May 1, 2017, and April 30. In the same time period, about 100 people died of overdoses. “Instead of these kits going to a select group, anyone could get training and administer emergency treatment as a citizens,” Jones said. About 10,000 kits were handed out for police cars, clinics, parents and concerned citizens. “Many of the doses were done by citizens,” Jones said. “A woman in a grocery store bathroom saved a person’s life. The person was overdosing and the woman administered the dose in time to save her life.” Knowing CPR and first aid basics, along with the easy-to-administer Naloxone — it goes directly into the nostrils for quick absorption into the blood — can be all it takes to save a life, Butler said. One valuable grant came from the Centers for Disease Control. It made $750,000 available annually for three years, with a $600,000 supplemental grant, for data collection and strategic planning based on data collected. That allowed the Division of Public Health to create the Alaska Opioid Data Dashboard. Information collected over the past year shows 459 overdose patients were treated at Alaska emergency rooms. It also shows the number of prescriptions written by doctors that involved opioids: 504,616 from May 2017 to the end of April this year. The average number of prescriptions per month is listed as 42,051. The numbers should prove a valuable snapshot for gaging the epidemic, Butler said, and any progress that makes a dent in it. It lists how many 2,086 drug seizures by law enforcement took place in that year, for example. And as required by House Bill 159, which was signed into law by the governor in July 2017, it records the number of medical professionals registered with the Prescription Drug Monitoring Program, or PDMP. Small measures help Because most of the deaths are now resulting from fentanyl-laced heroin, the Division of Public Health will soon be making strips available that allow heroin users to test a drug for fentanyl. “We’re waiting for the strips to come in,” Jones said. “This will help in overdose prevention because they will be better informed. And we have to be knowledgeable about what is coming in.” Another new tool soon to be available to the public is called a “shark shaft” that encases spent needles when they are picked up off the ground so that they don’t infect members of the public that come into contact with them. The division wants to make these available for volunteers and others who help clean up homeless camps. Treatment tally Lack of treatment options is often cited as the biggest problem in the state. But programs are expanding based on public need and the urging of legislators and public health officials. A key program was instituted in Alaska’s prisons late last year. In a contract with the Salvation Army’s Clitheroe program, the Alaska Department of Corrections has expanded its prison treatment program to serve 1,400 inmates. The new program addresses opioid as well as other drug and alcohol addictions. Clitheroe also is expanding with the addition of new beds. A women’s treatment program will be relocated in late June to the Salvation Army Annex at 1700 C Street. “In October and November, we are moving the men from the current Clitheroe operations to our building which used to be the Adult Rehab Center,” said Salvation Army Communications Manager Robert DeBerry. The men’s facility will then be at 660 E. 48th Ave. “We will be going from 42 beds currently to 60 beds and we have opened a 15-bed women’s facility. So we have expanded that program to 75 beds total.” Another facility that recently added capacity at is at Set Free Alaska in Palmer. Joy Stein, interim executive director of Set Free Alaska said “the need for space is so great that we have even converted a closet under the stairs into an office.” A newly announced $350,000 grant from the Murdock Trust will help Set Free Alaska remodel and expand into a new building with a capacity to serve more than 1,000 outpatient clients annually that includes substance abuse treatment. At a total cost of $2.6 million, the building will also provide much needed space for counselors and administrative services. Added to the increased capacity at the facilities named as grant recipients by the Division of Public Health, Alaska is increasing its bed footprint, Jones said. “We have more grants coming out,” to serve more facilities. “The big question now is what are we missing?” ^ Naomi Klouda can be reached at [email protected]

FISH FACTOR: Alaska seafood exports hit with tariffs by China

Shockwaves rocked the Alaska seafood industry when China announced on June 15 that it will add an additional 25 percent tariff on seafood imports starting July 6 in retaliation to tariffs set by President Donald Trump. “The 25 percent will be added to the current base tariffs which typically range from 5 to 15 percent,” said Garrett Evridge, a fishery analyst with the McDowell Group. The list of seafood products includes all Alaska salmon, pollock, cod, herring, flatfish, Dungeness crab, snow crab, Atka mackerel, sablefish, geoduck clams and more. “This is devastating news,” said Frances Leach, executive director of United Fishermen of Alaska, which represents 34 groups. “The tariff will not just impact commercial fishermen but will also affect the more than 60,000 individuals who are employed by the state’s fishing industry.” China has been Alaska’s top seafood customer since 2011, purchasing 54 percent of all seafood exports valued at $1.3 billion in 2017. The bulk of Alaska’s fish harvests go to China for reprocessing before they are sent to customers around the world. Those also will be subject to the 25 percent tariff, said market expert John Sackton of SeafoodNew.com. “China has become the de facto export destination for virtually all seafood reprocessing done overseas. The cost of these tariffs will slam the seafood industry, because ultimately there is little choice but to continue to send these products to China,” he said. “So through no fault of our own, most companies will see a big hit to their bottom line because they will have to agree to lower prices in order to maintain marketability in the face of this 25 percent increase in costs.” “This represents the worst outcome feared by the industry,” Sackton added. “The Chinese are deliberately targeting smaller industries that have little ability to fight back.” Candidates mostly pan Pebble Five candidates for Alaska governor met up at the Bristol Bay Fish Expo in Naknek last week. The debate focused on a wide range of topics affecting rural Alaska, including two hot fish issues. Naknek is the hub of the world’s largest sockeye salmon run at Bristol Bay, which also is at the heart of the proposed plans for the Pebble Mine. Gov. Bill Walker said emphatically that he is not in favor of the Pebble mine. “I had an interesting discussion with a group that said it can be done safely. My response was ‘what if it doesn’t?’ Look at all that is at risk. I am very pro-development and pro-mining but not in that location,” Walker said. Mead Treadwell, a Republican candidate from Anchorage, said he will not trade one resource for another. As a former deputy commissioner of the Alaska Department of Environmental Conservation, Treadwell said he helped write state water quality standards. “If this mine cannot meet the kind of water quality and habitat protection standards that we have created to protect our fisheries, then it won’t happen,” he stated. “From what I’ve seen it is going to be very hard for Pebble to make it through the process…But it makes sense to have a strong public process where we get to analyze what is happening,” Treadwell added. Republican candidate Scott Hawkins of Anchorage said the mine has the legal right to go through the permitting process, but that it “very well may be the wrong mine in the wrong place because if anything goes wrong, there is just so much at stake.” “I think the mine is losing momentum,” Hawkins added. “All the big investors have decided that it just doesn’t work on several levels. A lot of it is just how controversial it is to the people in this region and that is hurting the mining industry.” Mark Begich, a Democrat from Anchorage, has long touted the “wrong mine/wrong place” meme, which was first stated years ago by former Sen. Ted Stevens. “When people say they are against it, they should be against it all the way,” Begich said. “The first thing I would do as governor would be to immediately make sure the Corps of Engineers knows that state land or state right of way or state access would not be part of their plans or participate in any way. I believe that would finally put an end to this project and end the divisiveness it has caused throughout all of Alaska. This issue is like Groundhog Day, it never goes away and just keeps coming back.” Mike Dunleavy, a Republican candidate from Wasilla, was more equivocal saying it was difficult for him to answer until Pebble goes through the study process. “Once we can examine that data, then I think a final decision can be made,” Dunleavy said, adding that if the mine is going to endanger fisheries or other resources in the area, “I think we all should be against it.” “I do think there is a danger in politicizing this study process that we have. In the end, if it is not a good project we shouldn’t have it permitted.” No backers for salmon initiative The Stand for Salmon initiative that aims to update habitat protections for the first time since statehood could go before voters in November. But the measure has little support from the gubernatorial candidates. “While I don’t support it, I certainly understand that local input is critical in the process,” said Walker. “I believe the reason we have Stand for Salmon is because the Coastal Zone Management Program died in the 2011 legislative session and that took away local input into the development process,” Walker added. “I think this is what happens when you take away input by the people: you meet them at a ballot initiative or you meet them in the court room and I think that is unfortunate.” Treadwell also said he does not support the salmon initiative. “This bill essentially assumes that every stream is anadromous when it’s not. This would take away your property rights without protecting the fish,” Treadwell said. “Do I stand for salmon and believe we need to protect salmon? Absolutely. I don’t think this is the right law to do it.” Hawkins said the “devil is in the details” and he believes the ballot initiative would have a lot of unintended consequences and “shut down a lot of things in this state.” “It’s not that our permitting process couldn’t do with some tightening up,” Hawkins added. “We need to have a process that knows how to say no. Just because you apply for a permit should not mean that at the end of the day you are going to get it. We need a very stringent permitting system that holds projects to very high standards, but I don’t think the initiative is the way we get there.” Dunleavy echoed those sentiments. “I believe there are a number of projects throughout the state that could be at risk. This is a resource state and we need to develop our resources,” Dunleavy said. “We need to do it responsibly and I think the projects should be reviewed separately and held to a permitting and processing standard. I just don’t think an initiative such as Stand for Salmon is good for Alaska.” Begich said he will take a position when a state court rules on the constitutionality of the salmon ballot initiative. “At that point I will make a decision. But I will say that the laws should be revamped and reviewed and that has not been done,” Begich said. “This is a clear symbol of what’s broken in Juneau,” he added. “When you have almost 50,000 Alaskans bring forward an initiative, you have to respect their views and figure out how to fix this problem and make sure our salmon preserved for generations to come.” The entire debate is posted at KTVA’s website. ^ Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

Interior gold mine gets new life, $100M expansion

It appears one of Alaska’s largest mines is going to get a little bigger and stay open a little longer. Kinross Gold Corp. announced June 12 that it has decided to move forward with a $100 million expansion to the Fort Knox gold mine about 25 miles northeast of Fairbanks. Fort Knox is on land owned by the state Alaska Mental Health Trust Authority; the expansion, known as the Gilmore project, is on a recently acquired 709-acre parcel of state land just to the west of the existing mine pit that was previously held by the federal National Oceanic and Atmospheric Administration. A feasibility the Toronto-based Kinross conducted on the prospect indicates the Gilmore project could yield 1.5 million ounces of gold and initially extend operations at Fort Knox to 2030. Milling at the mine is expected to stop in late 2020 without it, according to Kinross. Now, mining is expected to continue into 2027 with ore processing running to 2030. The mine opened in 1996. The prospect also increased the proven and probable gold reserves at Fort Knox by 2.1 million ounces to 3.4 million ounces overall, Kinross notes further. CEO J. Paul Robinson said the company will likely be able to fund the $100 million expansion with Fort Knox’s existing cash flow, which will help Kinross maintain financial flexibility. “With additional upside potential at Gilmore and beyond, Fort Knox is a significant asset in our portfolio located in an excellent mining jurisdiction,” Robinson said in a Kinross release. “The Gilmore project and the addition of estimated mineral resources improves value and is expected to be a key contributor to the future growth of our company.” Kinross operates eight mines across North and South America, West Africa and Russia. Gov. Bill Walker and Fairbanks-area legislators rejoiced at the news that Fort Knox, which currently employs about 630 people, will probably stay open longer. The mine is also the largest property tax payer in the Fairbanks North Star Borough, according to the governor’s office. “We are excited to see the Fort Knox mine plan, an extension onto newly state-owned land, potentially extending the life of the mine to 2030,” Walker said in a formal statement. “This is a significant development for Alaska’s economy, and was made possible by our administration, federal agencies and our congressional delegation cooperating to transfer these lands from federal ownership to State of Alaska ownership.” Kinross estimates the Gilmore project will generate a 17 percent internal rate of return with a net present value of $130 million and cash flow of $240 million, assuming an average gold price of $1,200 per ounce. At prices averaging $1,300 per ounce, those projections jump to a 26 percent return and a net present value of $239 million. Spot prices for gold are currently about $1,280 per ounce. The company has pegged the all-in operating cost of Gilmore at $950 per ounce. Combined with current operations, Fort Knox’s overall production cost from 2018-2030 is expected to be $1,005 per ounce with annual production averaging 205,000 ounces of gold. Early construction is expected to start in the third quarter of this year, with mining work starting next year and gold production from Gilmore being realized in early 2020.   Elwood Brehmer can be reached at [email protected]

Impromptu visit could open more China trade opportunities

A group of Chinese business delegates from the northeastern city of Harbin visited Anchorage June 8-9 to meet face-to-face with Alaska business leaders interested in opening more trade between the two cities. The Harbin group’s impromptu Alaska visit was arranged in five days time, said Emma Kelly, the Anchorage Economic Development Corp.’s business and economic director. The group of seven executives from the Hua Hong Group arrived eight days after Gov. Bill Walker’s China Opportunity Trade Mission returned to Alaska. “On Monday, (June 4) we received a phone call at 9 a.m. from Steven Lo (the executive director of Hua Hong Group), saying they would be in town Friday and Saturday and wanted to know if I could make arrangements for them to visit with businesses,” Kelly said.  The last-minute effort worked out fairly smoothly, Kelly said.  “This is undoubtedly related to the governor’s trade mission. And yes, it’s happening quickly,” she said. The Hua Hong Group, a conglomerate headquartered in Beijing, was interested in hearing about trade partnership opportunities in seafood, real estate, airport construction projects, air travel and tourism. Hua Hong is composed of about a dozen companies each specialized in the businesses of World Trade Center Harbin, which means real estate development, airlines, trading, logistics, investment and hospitality services, according to an information sheet they gave out at the meeting. Under discussion now are the logistics necessary to create a new direct-flight that puts Harbin and Anchorage 6 ½ hours apart, or half the time of the current more circuitous airline cargo routes. This would make it more easily possible to ship fresh fish and Alaska-made products that are then distributed throughout China from the World Trade Center Harbin, Lo said.   Eight Alaska businesses were able to introduce their businesses to the Hua Hong Group for a Friday morning meeting that started just after 8 a.m. at AEDC offices. Executives came from Pacific Rim Architects, DOWL Engineering, Matson Ocean Shipping, Stantec Anchorage, the Tanadgusix or TDX Corp., which owns crab processing facilities on St. Paul, and the Alaska Industrial Development and Export Authority. Zhang Hong Shan, chairman of the Hua Hong Group, asked questions of each person representing the various industries. Zhang, speaking through a translator, later said one of his top interests is finding a way to get fresh seafood from Anchorage to Harbin. “Specifically, we are interested in live seafood exported to Northeast Chinese markets,” Zhang said, referring to crab. These would be destined for restaurants, he added. But he would also like fresh-caught wild salmon made available to Chinese markets through Harbin. He’s also interested in construction companies that may be able to design cold weather architecture for residential and commercial needs in Harbin. The climates of Harbin and Anchorage are similar, he noted, though the Chinese city serves a population of nearly 11 million people and is the capital of Heilongjiang Province. He is also interested in hiring engineering and architect firms for airport construction that may relate to a new Harbin-Anchorage route.  In the “near term,” Zhang said he’s interested in the opportunities from Alaska’s liquefied natural gas proposal and more tourism ties. “I am looking forward to see what we can learn,” he said, noting this as his first trip to Alaska. One of the problems currently is that China imports a lot of farmed seafood, said Sui Jin Kon, director of global alliances at Hua Hong. But what they want is wild salmon, she added, in the “push for non-farmed, non-GMO-type products.” After the meeting at AEDC, the Harbin delegation went on a tour of Copper River Seafoods on the banks of Ship Creek, a processing plant for its famed salmon brand. They also visited Bambino’s Baby Food at the manufacturing operation on Spenard Road. Founder and CEO Zoi Maroudas traveled on the governor’s trade mission last month. Copper River and Bambino’s collaborate on the frozen baby food seafood products. AEDC’s Emma Kelly said after those visits, she arranged the group to go to a tourism presentation, then on an Anchorage Trolley Tour. They also met with officials at the Ted Stevens Anchorage International Airport. A presentation by regional vice president of Lynden, Rick Pollock, ended their airport tour. They then wrapped up the day with dinner at the 49th State Brewing Co. Owners Jason Motyka and David McCarthy are working on exporting their beer to China, and were also members of the  governor’s trade mission. On Saturday, the group was at Alyeska Resort for presentations. “These are people who are really poised to take action in regards to trade initiatives with China,” Kelly said, speaking of those she arranged the Chinese delegation to meet. Steven Lo, the chairman of the Hua Hong Group, said opportunities are arising rapidly and “we want to take advantage of that.” “This particular trip focused on possibilities that can be executed in the future between Anchorage and Harbin,” said AEDC Communications Director Sean Carpenter. “Everything they mentioned was in relation to a Harbin and Anchorage connection.” Naomi Klouda can be reached at [email protected]  

Impromptu visit could open more China trade opportunities

A group of Chinese business delegates from the northeastern city of Harbin visited Anchorage June 8-9 to meet face-to-face with Alaska business leaders interested in opening more trade between the two cities. The Harbin group’s impromptu Alaska visit was arranged in five days time, said Emma Kelly, the Anchorage Economic Development Corp.’s business and economic director. The group of seven executives from the Hua Hong Group arrived eight days after Gov. Bill Walker’s China Opportunity Trade Mission returned to Alaska. “On Monday, (June 4) we received a phone call at 9 a.m. from Steven Lo (the executive director of Hua Hong Group), saying they would be in town Friday and Saturday and wanted to know if I could make arrangements for them to visit with businesses,” Kelly said.  The last-minute effort worked out fairly smoothly, Kelly said.  “This is undoubtedly related to the governor’s trade mission. And yes, it’s happening quickly,” she said. The Hua Hong Group, a conglomerate headquartered in Beijing, was interested in hearing about trade partnership opportunities in seafood, real estate, airport construction projects, air travel and tourism. Hua Hong is composed of about a dozen companies each specialized in the businesses of World Trade Center Harbin, which means real estate development, airlines, trading, logistics, investment and hospitality services, according to an information sheet they gave out at the meeting. Under discussion now are the logistics necessary to create a new direct-flight that puts Harbin and Anchorage 6 ½ hours apart, or half the time of the current more circuitous airline cargo routes. This would make it more easily possible to ship fresh fish and Alaska-made products that are then distributed throughout China from the World Trade Center Harbin, Lo said.   Eight Alaska businesses were able to introduce their businesses to the Hua Hong Group for a Friday morning meeting that started just after 8 a.m. at AEDC offices. Executives came from Pacific Rim Architects, DOWL Engineering, Matson Ocean Shipping, Stantec Anchorage, the Tanadgusix or TDX Corp., which owns crab processing facilities on St. Paul, and the Alaska Industrial Development and Export Authority. Zhang Hong Shan, chairman of the Hua Hong Group, asked questions of each person representing the various industries. Zhang, speaking through a translator, later said one of his top interests is finding a way to get fresh seafood from Anchorage to Harbin. “Specifically, we are interested in live seafood exported to Northeast Chinese markets,” Zhang said, referring to crab. These would be destined for restaurants, he added. But he would also like fresh-caught wild salmon made available to Chinese markets through Harbin. He’s also interested in construction companies that may be able to design cold weather architecture for residential and commercial needs in Harbin. The climates of Harbin and Anchorage are similar, he noted, though the Chinese city serves a population of nearly 11 million people and is the capital of Heilongjiang Province. He is also interested in hiring engineering and architect firms for airport construction that may relate to a new Harbin-Anchorage route.  In the “near term,” Zhang said he’s interested in the opportunities from Alaska’s liquefied natural gas proposal and more tourism ties. “I am looking forward to see what we can learn,” he said, noting this as his first trip to Alaska. One of the problems currently is that China imports a lot of farmed seafood, said Sui Jin Kon, director of global alliances at Hua Hong. But what they want is wild salmon, she added, in the “push for non-farmed, non-GMO-type products.” After the meeting at AEDC, the Harbin delegation went on a tour of Copper River Seafoods on the banks of Ship Creek, a processing plant for its famed salmon brand. They also visited Bambino’s Baby Food at the manufacturing operation on Spenard Road. Founder and CEO Zoi Maroudas traveled on the governor’s trade mission last month. Copper River and Bambino’s collaborate on the frozen baby food seafood products. AEDC’s Emma Kelly said after those visits, she arranged the group to go to a tourism presentation, then on an Anchorage Trolley Tour. They also met with officials at the Ted Stevens Anchorage International Airport. A presentation by regional vice president of Lynden, Rick Pollock, ended their airport tour. They then wrapped up the day with dinner at the 49th State Brewing Co. Owners Jason Motyka and David McCarthy are working on exporting their beer to China, and were also members of the  governor’s trade mission. On Saturday, the group was at Alyeska Resort for presentations. “These are people who are really poised to take action in regards to trade initiatives with China,” Kelly said, speaking of those she arranged the Chinese delegation to meet. Steven Lo, the chairman of the Hua Hong Group, said opportunities are arising rapidly and “we want to take advantage of that.” “This particular trip focused on possibilities that can be executed in the future between Anchorage and Harbin,” said AEDC Communications Director Sean Carpenter. “Everything they mentioned was in relation to a Harbin and Anchorage connection.” Naomi Klouda can be reached at [email protected]  

Oil companies sue over tax calculation with $160M liability

A trio of oil industry companies is suing the state Department of Revenue over a 2017 interpretation of oil tax law that they contend wrongly results in an additional $160 million-plus tax liability for them. ExxonMobil, Hilcorp Alaska and SAE Exploration Inc. filed the lawsuit with the Anchorage District of state Superior Court June 7 alleging a March 2017 advisory bulletin written by Tax Division Director Ken Alper arbitrarily changed the state’s position on how oil production tax credits can be applied to a producer’s tax liability. They argue further in the 19-page complaint that the bulletin is being applied as a de facto regulation, for which there was no public notice and opportunity for public comment issued, and therefore is a violation of the Alaska Administrative Procedures Act. As a result, they want the court to void the bulletin and deem it unenforceable. The advisory bulletin posted on the division’s website lays out that use of the sliding scale credit, which grows from nothing at very high oil prices to $8 per barrel at prices less than $80 for oil produced from the legacy North Slope fields, and prevents a company from using tax credits to take their production tax liability below the 4 percent gross minimum tax floor. However, if a producer were to forgo the per-barrel credit or use a fixed $5 per barrel credit for “new” oil production, the new oil credit and others could reduce a production tax liability to less than the 4 percent floor, according to the bulletin. The companies insist the bulletin reinterprets production tax laws and regulations resulting in a liability that is roughly $110 million greater in 2018 and $50 million greater for 2014-2017 — plus interest payments on the back taxes — than it should be. They also note that Revenue’s own regulations allow taxpayers to choose the order in which credits are applied. State regulations do not spell out what happens when a taxpayer first applies the sliding scale credit to reduce its liability to the 4 percent minimum and then applies other credits to go below the minimum tax calculation, according to the complaint. “The 2017 advisory bulletin conflicts with this statutory and regulatory authority by prohibiting the use of the ($5 per barrel) new oil credit and other credits against the minimum tax in any tax year in which any sliding scale credits are also used,” attorneys for the companies wrote. They argue that a 2011 advisory bulletin, issued under former Gov. Sean Parnell’s administration, stated that North Slope producers could reduce their liability below the minimum tax by using new oil or other credits. Additionally, they assert that Alper testified in 2016 legislative hearings that the Revenue Department interpreted production tax laws to allow new oil and other credits to reduce a tax liability below the 4 percent minimum in the same year that sliding scale credits were applied. Revenue officials referred questions to the Department of Law, which does not comment on active litigation. The tax obligations would be borne by ExxonMobil and Hilcorp as producers; SAE Exploration is a support services company that contracts with exploring companies to collect geologic seismic data used to inform oil and gas drilling campaigns. SAE, which holds refundable tax credits earned through its seismic shoots, planned to sell those credits to producers, which in turn could use them against their tax liability, according to the complaint. However, because the bulletin “drastically reduces the circumstances in which a North Slope producer would purchase SAE’s other credits, the 2017 advisory bulletin has drastically reduced the value of SAE’s other credits,” the complaint states further. Elwood Brehmer can be reached at [email protected]  

FCC chairman proposes boost to rural health care funding

Federal Communications Commission Chairman Ajit Pai announced June 6 that he has circulated a proposal to his colleagues that would take immediate action to increase funding for the Universal Service Fund Rural Health Care Program.  The program helps rural health providers access affordable broadband services by covering the difference in rates between theirs and urban markets. The program’s current annual funding cap is $400 million, an amount that was set in 1997 and never adjusted for inflation. Recent demand for funding for the program has outpaced the budget in the past two years, which has created uncertainty for patients, healthcare providers, and communications companies. The chairman’s order — which still requires a vote of the other commission members — would increase the annual cap to $571 million.  This increase represents what the funding level would be today if the cap established in 1997 (when the program originated) included an inflation adjustment, according to the news release from the FCC.  “The order would apply the increased cap to the current funding year to immediately address a critical funding crisis and enable rural health care providers to continue offering telemedicine services,” said FCC spokesman Mark Wigfield.  If approved, it will also give these providers better certainty over RHC funding by adjusting the cap annually for inflation and allowing unused funds from prior years to be carried forward to future years, he added. As for when this will happen, Wigfield said that isn’t certain. The FCC met for its monthly meeting June 7, a day after Pai’s announcement, and the matter wasn’t taken up.   “For an item to be placed for a vote, it has to be provided to the other commissioners three weeks in  advance of the agenda,” Wigfield said. “He (Pai) circulated the order last week. That was too late to be on this agenda.” The two ways FCC commissioners issue key decisions is by either voting at meetings on agenda items or  “on circulation, an electronic vote,” Wigfield said. “They probably vote more on circulation. The chairman wants it voted on as quickly as possible, so it’s under consideration and we may hear anytime.” Alaskans became more familiar with the program when a telecommunications provider, Alaska Communications Services, threatened to shut off the internet at the Cordova Community Health Center last month. The difference between what the Cordova facility pays and what Alaska Communications says it is owed by the FCC is nearly $1 million for a year’s service. Mitchell said the hospital should not be the one paying the outstanding invoice that Alaska Communications claims is due. “The hospital doesn’t owe that money. The agreement with ACS includes the (Universal Service Administration Co.) program so the USAC would pay that,” Mitchell said. “They owe that, we don’t.” ACS laid off employees this past December while it was paying third-party carriers for contracts such as the Cordova hospital. The unpaid RHC invoices totaled $11.8 million through most of 2017 and the end of the first quarter this year after demand for the $400 million in funding failed to cover costs across the nation. Prior to Pai’s announcement, Alaska Communications, GCI Liberty and other telecoms were looking at receiving only 84.4 percent for its RHC invoices. The claims by telecoms have also triggered a national rate review that includes Alaska telecoms in the program. Under Pai’s plan, the $571 million total rural health care funding would pay “100 percent for the invoices,” Wigfield said. “Basically they are getting rid of having to cut everyone back across the board. Once they raise the cap, that will make everyone whole again.” In the meantime, the Cordova hospital’s chief administrator, Scot Mitchell, wasn’t taking the matter of possible shutdown lightly. Mitchell said Alaska Communications still intended to cut off services, although Pai has warned the company that would be illegal, but funding from the FCC would prevent that. In full summer swing as a major commercial fishery hub, Cordova would be at a severe loss in its medical facility if internet were cut “They did agree they would work with us if they planned on doing that,” Mitchell said. The three-year contract for Alaska Communications to provide the RHC services will be up in November, which means Mitchell’s task is to solicit bids from telecoms for a new contract. “We received two other bids from other telecoms – I can’t say who yet. This is going through the process that the FCC requires for USAC funding,” he said. “They are both Alaska-based telecom companies and we should have wrapped up an agreement with one of these two. They had told us that if ACS cancels at the end of the month they could get the service live, so there would be no lapse in service.” ACS officials were pleased at the news, calling it an important step forward out of the deadlock on funding that meant no payments for 2017 were coming to ACS for its RHC services to 40 hospitals and clinics. “Chairman Pai has proposed to increase the Rural Health Care Program budget, apply the increased cap to the current funding year and provide long-term certainty by adjusting the cap annually, adjusting the budget for inflation and allowing unused funds from prior years to be carried forward to future years,” Heather Cavanaugh, director of corporate communications summarized. “This is an important step forward for the Rural Health Care program, which is significant for our state. We look forward to working constructively with the FCC in ensuring robust participation from Alaska.” GCI, which is out $5.5 million in 2017 revenue from the funding shortfall, also expressed some relief. “Today’s announcement is welcome news for rural health care providers in Alaska and across the nation,” said Heather Handyside, GCI’s director of corporate communications. “Predictability and adequate funding are critical to the delivery of reliable connectivity for life-saving services in rural areas. GCI is committed to working with the FCC and our partners to develop a sustainable solution for the Rural Health Care Program so that our customers in rural communities can be assured of continued access to quality health care.”  GCI Liberty and Alaska Communications, like other telecoms across the U.S., were under FCC scrutiny to justify their costs for delivering broadband to remote Alaska locations. Because the process is confidential, the FCC couldn’t relate the status of those requests for information. But both telecoms issued statements last month that they are in full compliance with answering all requests for information. Naomi Klouda can be reached at [email protected]

Startup Sabrewing aims at Alaska launch

Sabrewing Aircraft Co. has plans to revolutionize the air cargo industry, starting with Alaska. The team behind the Camarillo, Calif. -based startup isn’t trying to replace the venerable Boeing 747, which has helped Anchorage become one of the busiest cargo hubs on Earth, at least not yet. And they aren’t trying to beat Amazon in realizing the concept of door-to-door deliveries via drone. Rather, Sabrewing’s business model falls in-between: it is built on regional cargo deliveries with the company’s large unmanned aircraft. Sabrewing co-founder and CEO Ed De Reyes, a former Air Force test pilot, has 40 years of aviation experience and has flown for McDonnell Douglas and Boeing. (Photo/Courtesy/Saberwing Aircraft Co.)   Co-founder and CEO Ed De Reyes said the concept of a large cargo-carrying unmanned aerial vehicle, commonly referred to as a UAV, is a byproduct of the “nascent dream” that is the flying car. A former Air Force test pilot with more than 40 years of aviation experience, De Reyes has flown for numerous aircraft manufacturers including McDonnell Douglas and Boeing. He said that while he is also engulfed in the “flying car craze,” the infrastructure needed to support a wholly new form of transportation for the general public means flying cars are many years if not decades away from becoming a common reality. “I thought, there needs to be another solution, a solution that’s much closer at hand and that’s how the thought of cargo came about, because cargo — there’s still a lot of requirements that are placed on air cargo carriers and air cargo manufacturers — but it’s a little bit lower hanging fruit, so to speak, from the fact that we’re not flying passengers,” De Reyes said in an interview. “What is it that we can do now? What are we capable of doing now and let’s build on that instead of trying to build a system that’s going to rely on massive amounts of, at this time, nonexistent infrastructure.” The ability to take off and land vertically is integral to the company’s model. It is named after Sabrewing hummingbirds, a Central American subspecies that can do just that. The company’s flight testers wear an insignia of a hummingbird while at work, De Reyes noted. “It goes back to that dream that humans have had since the beginning of time of being able to take off and land anywhere on Earth and fly to another location. The most remote locations on Earth would be accessible because you’d be able to get there by air,” he said. Sabrewing began to take shape in the summer of 2016 and has advanced quickly since then. The company is developing three UAVs of different sizes off of a single platform design. The smallest, dubbed the Rhaegal after a dragon from the popular television series “Game of Thrones,” is intended as a battlefield resupply vehicle for the U.S. military. With foldable wings spanning 20 feet when deployed, the Rhaegal will be able to fly up to 1,000 nautical miles with a payload of about 800 pounds. The key difference between the Rhaegal and Sabrewing’s other aircraft is it will fly autonomously, according to De Reyes. The Draco-2 is Sabrewing’s entrant in the Pacific Drone Challenge, an Orteig Prize-esque competition for UAV developers to test their craft against a nonstop 4,500-mile flight. (Rendering/Courtesy/Sabrewing Aircraft Co. Inc.) The mid-sized Draco-2, with a wingspan of 38 feet, is the company’s test vehicle, for which De Reyes has big plans. “We hope that one day, maybe it’ll go into the Smithsonian, we don’t know, but it’ll never go into production,” he said. The Draco-2 is Sabrewing’s entrant in the Pacific Drone Challenge, an Orteig Prize-esque competition for UAV developers to test their craft against a nonstop 4,500-mile flight. “The Orteig Prize, when it came about, was the first person to fly the Atlantic, you know; New York to Paris wins the Orteig Prize and that’s what’s going to happen with the Pacific Drone Challenge. The first person to fly the Pacific from Japan to the (continental) U.S. is going to win,” De Reyes said. The open-ended competition currently lacks a prize — New York hotel owner Raymond Orteig in 1919 offered $25,000 for the first nonstop trans-Atlantic flight — but is really about demonstrating the capability of UAV technology, according to De Reyes. “The ability to show our customers that we can do this and do it safely and do it repeatedly is really the goal here. We’d have to do this anyway for certification,” he said regarding the Pacific Drone Challenge. Sabrewing is aiming to make its challenge flight late next year, presuming the Draco’s flight tests go well. The company also has a scaled-down wind tunnel version that has performed well so far. Aimed at Alaska Named after another dragon, the Wyvern is what Sabrewing hopes Alaskans will eventually be very familiar with. With a 60-foot wingspan, it is the largest of the company’s UAVs. Its 4,400-pound payload, 1,600-mile range and 22,000-foot ceiling are comparable to that of the popular Cessna 208 Caravan that carries cargo and passengers all over Alaska every day. “(The Wyvern) was actually designed to be able to go from Anchorage to Barrow, discharge cargo and turn around and come back,” De Reyes said, while doing it all in weather conditions that would keep other aircraft grounded. He stressed that the Wyvern is not a means to compete with or replace traditional air cargo carriers. Instead, those carriers are Sabrewing’s target customers. As an aircraft manufacturing company, Sabrewing is intent on helping them grow their businesses by opening up new markets. Sabrewing’s aircraft are built on a composite airframe with a gas-electric hybrid power system that drives four electric motors, each turning a variable-position fan. While a hybrid system, the Sabrewing powertrain does not alternate between power sources in the way the popular Toyota Prius hybrid car does. Instead, a light, super-quick response rotary engine generates the power that is converted into electricity by the four motors in real-time. “There is a conversion loss, but it really is only apparent at takeoff and landing,” when the most power is needed, De Reyes said. There are no batteries in the system, he added, because the capabilities of the engine don’t necessitate them and battery technology is not advanced enough to store sufficient energy without greatly sacrificing payload capacity. Sabrewing officials investigated dozens of battery options before determining a viable option doesn’t yet exist, according to De Reyes. “The lighter you make the air vehicle the more cargo you can carry,” he said. “You’re being paid for every single pound that goes onto a cargo aircraft.” The rotary engine can be fueled either with Jet A fuel or ultra-low sulfur diesel. The Wyvern will be equipped with three independent “detect-and-avoid” systems to fly safely in airspace occupied by more traditional aircraft, or other Wyverns, for that matter. De Reyes said the detect-and-avoid mechanisms were among the first things the company settled on when starting to develop its aircraft. An automatic dependent surveillance-broadcast, or ADS-B, system common in modern aircraft will be the first, long-range instrument for detecting other aircraft. A camera system developed by Iris Automation, which develops avoidance systems for UAVs, will back up the ADS-B. The camera system well help the Wyvern pilot see smaller objects when flying at altitudes below 18,000 feet and in favorable visual flight rules, or VFR, weather conditions, according to De Reyes. Finally, a light detection and ranging, or LiDAR, system by Attollo Engineering, another Camarillo, Cali., company, which can detect objects as small as a hummingbird out to 1,000 feet, will be the last line of defense. “All those will send a signal back to the autopilot that will allow the autopilot to autonomously avoid anything that’s out there,” De Reyes said. “It’ll certainly avoid a goose or a Piper J-3 Cub that has no radio or transponder onboard so all those things that could possibly get by one won’t get by the other.” He said Sabrewing is exploring the possibility of adding a fourth detect-and-avoid system as well. The aircraft will also have cameras onboard primarily for takeoff and landing. And while the aircraft will have the ability to avoid potential hazards autonomously, it won’t be for lack of a pilot. Each flight will be operated by a pilot in a control room with a computer display that would resemble a simulator in most cases, but will amount to the cockpit of a Sabrewing UAV. De Reyes said the pilot will have the same altimeters, turn and bank indicators, vertical velocity indicators and other instruments and gauges afforded traditional pilots — even a virtual display of the terrain below the aircraft, if they so choose. And because it’s basically a flight simulator, all pilot certifications to fly the Wyvern will be conducted in a simulator, according to De Reyes. “It’s like being in (instrument meteorological conditions) at night. You don’t really see where you’re going as far as ground reference goes but the aircraft knows where it is because of the information you have in front of you,” De Reyes described. Though not yet in production, Sabrewing is targeting a base price of $2 million, possibly more, for a Wyvern, which again would be in line with the cost of a Cessna Caravan at the lower end. Despite the comparisons, De Reyes insisted his company is not in competition with Cessna, a message he has emphasized to Cessna representatives at industry conferences. “We can’t carry people, the Caravan can. That’s one of the things a Caravan does very, very well actually in remote places. The Caravan can carry infinitely more people than we can,” he commented, noting it will likely be decades before the Federal Aviation Administration approves unmanned passenger flights, if at all. Why Alaska? FAA regulation is one of the reasons Sabrewing turned to Alaska. The agency has made Alaska, through research done at the University of Alaska Fairbanks, a primary testing ground for small UAVs. De Reyes sees the same happening with larger unmanned craft, with commercial approvals for larger craft likely within five years. “We’re going to have to show safe operations in Alaska and show that we can deliver cargo safely in Alaska before they ever allow it in the Lower 48 and most Alaska cargo carrier recognize that too,” he said. “’Hey, we’re going to be the testing ground for this. We’re going to be so far ahead of our competition.’” The Sabrewing team pitched their plan in May to a gathering of cargo company representatives at the Alaska Air Carriers Association annual meeting in Anchorage. Shortly thereafter, the company was accepted as an associate member, the first UAV-focused company to be a member of the influential industry organization. De Reyes called the response from Alaska cargo carriers “overwhelming” after the presentation, noting that one executive told him, “if you had one (Wyvern) on the ramp that you could point to I’d write you a check for it right now.” “I thought, ‘Wow, that’s very forward thinking,’” De Reyes said. “These are people that operated DC-3s and C46s and that kind of aircraft. They’re looking at this and saying it really does open up new markets.” AACA Executive Director Jane Dale said the organization’s board members look at Sabrewing’s business model as simply another form of commercial aviation that is to be embraced. “I think it’s an inevitable transition; just like we’re seeing in automobiles and in the military,” Dale commented. “It’s another tool in the toolbox. That’s the light bulb that went off at the board meeting. I think we’re entering a modernization of aviation in Alaska.” Sabrewing is also a member of the Alaska Airmen Association. Most products intended for use in Alaska are made Outside. The economics of the situation dictate it. However, for Sabrewing, the opposite is true; and therefore the company has pegged Anchorage for its manufacturing facility. De Reyes acknowledged that the company will pay a small premium to get parts and raw materials to Alaska, but those prices will pale in comparison to the cost and logistical challenges of staying in the Lower 48. That’s because without approval to fly a large UAV over the crowded ground and through the busy Lower 48 airspace Sabrewing would have to construct, deconstruct, ship, and reconstruct every aircraft it would send to Alaska — its primary market. He added that western Canada, similar to Alaska in terms of geography and sparse, isolated communities, is a natural successive market opportunity. As a result, De Reyes and his cohorts have toured facilities at Kulis Business Park across the runways from the terminals at Ted Stevens Anchorage International Airport. Merrill Field is a possibility as well. “We’re hoping to do the ‘golden shovel’ (groundbreaking) so to speak, by early 2020. Right after the race we hope to be able to start,” De Reyes said. Before that, Sabrewing will be back in Anchorage next March to test the Draco-2 before heading to Japan for the Pacific Drone Challenge. “The more time that goes on the more sense it makes for us to be located in Anchorage,” De Reyes said further. “I can’t think of any other place in the United States that has that unique — not only position in the aircraft industry — but that unique place in unmanned cargo UAVs. It makes more sense than any other location that I can think of.” The company will look to employ about 200 people in the early years of production, he said, with the expectation they will be producing more than 100 UAVs per year based on demand for traditional, manned cargo aircraft serving remote areas. Ideal Sabrewing employees will be ex-military service men and women with experience in electronics systems and composite materials and eventually pilots, according to De Reyes. “People who want to remain in Alaska but are looking to continue with their aviation skill that they’ve picked up in the military would be great,” he said. Elwood Brehmer can be reached at [email protected]    

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