Three years after Colorado mine spill, victims awaiting payment

DENVER (AP) — Three years after the U.S. Environmental Protection Agency triggered a massive mine spill that polluted rivers in three states, the federal government still has not repaid any of the victims for the millions of dollars in economic damage they claimed. The EPA said it is making progress on reviewing about 380 claims for lost income, fallen property values and other losses from the 2015 spill at the Gold King Mine in southwestern Colorado. But the agency has not said when it might finish the review or when anyone might be paid. Some business owners say they feel misled and doubt they’ll ever be compensated. Lawmakers are impatient. “The EPA’s response to the Gold King Mine spill has been unacceptable,” New Mexico Democratic Rep. Ben Ray Lujan said Friday. “This spill had devastating consequences for Navajo Nation and northwestern New Mexico, spilling millions of gallons of toxic, contaminated wastewater.” An EPA-led contractor crew was doing excavation work at the entrance to the Gold King near Silverton, Colorado, on Aug. 5, 2015, when workers inadvertently unleashed 3 million gallons of wastewater pent up inside the mine. The water sent a yellow-orange plume of pollution into rivers in Colorado, New Mexico and Utah. The Navajo Nation and other tribal lands were also affected. The EPA estimated the water carried nearly 540 U.S. tons of metals, mostly iron and aluminum. Farmers, rafting companies, fishing guides, homeowners and others filed for about $318 million in economic losses, according to EPA documents reviewed by The Associated Press. State, tribal and local governments said their losses were higher. “We weren’t asking for the sky. We were asking for what we lost,” said John Flick, co-owner of Duranglers, a fishing guide service and store in Durango, Colorado, about 50 miles downstream from Silverton. Flick and his partner, Tom Knopick, filed a claim for about $98,000 in lost income from guiding and retail sales when authorities put the rivers off-limits for several days. “Even if we’d got half of that, we’d have been happy. We got nothing,” Flick said. The EPA paid out millions of dollars to state, tribal and local governments for the cost of responding to the spill and for water tests. But the Obama administration, which was in charge at the time of the spill, said in January 2017 it could not pay for any economic damages. The administration cited sovereign immunity, which prohibits most lawsuits against the government. That provoked a furious political backlash, and the new Trump administration said it would reconsider. One year ago, then-EPA chief Scott Pruitt visited the Gold King mine and promised to review all the claims. “As far as I can tell, that was just talk,” said Alex Mickel, co-owner of Mild to Wild Rafting, which offers float trips and four-wheel-drive tours in Durango and in Moab, Utah. Mickel filed a claim but declined say how much. He said the EPA has never acknowledged getting it. He said he feels misled by both the Obama and Trump administrations. Under Obama, the EPA promised to compensate for the damage. ”’We’re going to make people whole,’ that was their words,” Mickel said. Pruitt resigned amid a storm of ethics scandals in July, and the EPA is regrouping under acting chief Andrew Wheeler. But the review is making headway, agency spokesman James Hewitt said. The EPA sent letters in June to 54 people who filed claims, or to their attorneys, asking for clarification or more information, Hewitt said in an email to the AP Thursday. Only a few have responded, he said. John Swartout, a policy adviser to Colorado Gov. John Hickenlooper, said he has been brief by the EPA on the review and believes the agency is making progress, but “it’s slow going.” The compensation requests were submitted under the Federal Tort Claims Act, which allows people and businesses to ask the federal government to repay them for economic losses and injuries caused by negligence or wrongful action by federal employees. Separate from the tort claims, at least four lawsuits have been filed against the EPA over the spill. Utah is seeking $1.9 billion, the Navajo Nation $162 million and the state of New Mexico $130 million. About a dozen New Mexico residents also sued, seeking a combined $120 million. The lawsuits are pending in federal court in Albuquerque, N.M.

Sullivan pushes back against partisan DC narrative

Sen. Dan Sullivan is adamant that news reports and sound bytes creating a perception of unprecedented partisanship on Capitol Hill ignore the underlying cooperation that continues in Congress. “Of course there’s some principled differences that you read about daily between Democrats and Republicans on key issues: resource development, ANWR, tax reform, health care, to some degree, but on some really big, important issues there’s a lot going on — that we’re getting done — and it’s bipartisan,” Sullivan said during an Aug. 3 editorial board meeting with the Journal and the Anchorage Daily News. For starters, he pointed to the National Defense Authorization Act, which lays out the spending plan for the Department of Defense each year. Sent to President Donald Trump Aug. 1, the $717 billion NDAA for the 2019 fiscal year that begins Oct. 1 passed the Senate on an 87-10 vote. The House approved it in late July on a vote of 359-54. It further reversed the sequestration cuts to Defense spending from 2010-16 and is an $18 billion increase over the 2018 bill. The bill includes a 2.6 percent pay increase for service members. Sullivan described it as “a generational shift that focuses more on China and Russia versus Al Qaeda and terrorism, although that’s still up there,” he added. The 2019 NDAA contains another roughly $300 million worth of military construction projects in Alaska, which brings the three-year running tally here to $1.3 billion, Sullivan noted. Most of money is headed to the Interior where work to add 28 new intercontinental ballistic missile, or ICBM, interceptors to Fort Greely’s existing missile defense system is ongoing. The interceptors are the country’s primary defense against ICBM threats from North Korea and Iran. Work is also continuing at Eielson Air Force Base near Fairbanks in preparation for the two squadrons of F-35 fighters scheduled to arrive at the base starting in 2020. More than 2,700 personnel will accompany the fighters, according to Defense reports, and preparing Eielson for the squadrons is estimated to cost a total of $453 million and generate more than 2,300 construction jobs in the state. Sullivan and Defense Secretary James Mattis toured Eielson and Fort Greely in late June. “It is smoking right now, which is great for the (Alaska) economy and for national defense,” Sullivan said of the construction activity at the Interior installations. In addition to the work at Eielson and Fort Greely, the Missile Defense Agency is in the midst of spending another $325 million over six years at Clear Air Force Station just south of Fairbanks. The money there is going towards installing a new power plant and missile detection radar system. Sullivan will be hosting the secretaries of the Army, Navy and Air Force as well as the new commandant of the U.S. Coast Guard following a four-day trip to 14 Western Alaska communities. He and Navy Secretary Richard Spencer will visit Nome and Adak as part of the Alaska congressional delegation’s continued push for the feds to assist in building a strategic “Arctic” port somewhere on Alaska’s west coast, he said. Sullivan also pointed to the NDAA as proof that Congress as a whole is finally warming on Arctic issues, as it provides the Defense Department the authority to contract for up to six polar-class icebreakers. A contract for the first DOD-funded vessel is to be awarded sometime in 2019 with construction of the second starting in 2022 and the rest coming on a one-per-year schedule. He acknowledged, however, that actually paying for the vessels will still be subject to the annual appropriations process, which has been bungled for years. “(Russian President Vladimir) Putin has called the Arctic the new Suez Canal and he’s going to own it with his 40 icebreakers. And they’re building 13 more and they’re weaponizing them; they’re making them nuclear-powered,” Sullivan said, noting China is also expanding its icebreaking fleet. “We’re clearly, clearly behind the curve, but the good news is Democrats and Republicans are starting to take notice and put things into law, which matters.” He also provided a little insight into the closed-door NDAA markup in the Senate Armed Services Committee, which he serves on. According to Sullivan, committee leadership from both parties were against his icebreaker provisions, fearing they would “gut” the Navy’s shipbuilding budget, but they survived with unlikely help. Sullivan admitted even he didn’t know how the vote would shake out after a spirited debate. “I asked for a roll call (vote) and it really was actually kind of funny because you just go to each member and there was completely no rhyme or reason — the chairmen of the committee voted against me, the ranking Democrat voted against me, some of my more hawkish Republican foreign policy allies voted against me and (Massachusetts Democrat) Elizabeth Warren voted with me and we won,” he recalled. If this year is any indication, there is reason to hope the icebreakers will be paid for, as the traditional process for funding the government is working again, for now, at least. Slow return to regular order Congress has passed seven of the 12 annual appropriations bills before August for the first time since 2000, another achievement which Sullivan noted requires bipartisanship as the bills need 60 votes to pass the Senate. He said newer senators, such as himself elected in 2014, have pushed particularly hard against further omnibus funding packages, which have become the norm in recent years and generate bipartisan disdain amongst rank-and-file legislators. “The only people in my view that like (omnibus appropriations) are the leadership, on both sides. Republicans and Democratic leadership — (Senate Minority Leader Chuck) Schumer, (Senate President Mitch) McConnell, (House Speaker Paul) Ryan, (House Minority Leader Nancy) Pelosi — because they negotiate the whole bill,” Sullivan commented. “I had no idea what was in the last one until I was given it and they said, ‘Here, you have 24 hours to read this;’ 2,400 pages, $1.3 trillion in spending and they’re like, ‘You have to vote for it,’ and I’m like, ‘No I don’t,’ so I didn’t.” Sullivan agrees with McConnell’s decision to cut the Senate’s August recess from the traditional five weeks down to one, a move fellow Alaska Sen. Lisa Murkowski has expressed unequivocal disdain for. Many in the Senate have complained about a simple lack of time to hear the spending bills or vote on presidential appointments, according to Sullivan, who dismisses that excuse. Murkowski said in June that she opposes cutting the recess because it’s difficult for senators from such far-flung states to meet with constituents — or family — on weekends during session when their colleagues can make a quick trip home. “My view is, well then let’s make more time. Sen. Murkowski says let’s work on weekends. I’m all for that but we also shouldn’t be taking a five-week recess,” Sullivan said. Coastal concerns As chair of the Senate Subcommittee on Oceans, Atmosphere, Fisheries and the Coast Guard, Sullivan is planning to hold a hearing on the causes behind Alaska’s numerous struggling salmon stocks shortly after the Senate reconvenes. He noted that salmon management is mostly a state issue, but the general belief that ocean conditions are playing a large role in poor returns — with little knowledge beyond that — makes it a federal concern as well. “There’s all kinds of theories but we need to get our arms around (poor salmon runs), which is really impacting a lot of people,” Sullivan said. National Marine Fisheries Service Administrator Chris Oliver, an Alaskan who served for nearly 20 years as the executive director of the North Pacific Fishery Management Council, will participate in the hearing, according to Sullivan, who added that he advocates for fully funding NOAA’s scientific research budget. Sullivan has been particularly focused on ocean acidification, which has the potential to disrupt shellfish fisheries as well as some species of plankton that are the diet foundation for numerous North Pacific fish stocks. Federal disaster declarations stemming from some of this summer’s weak sockeye and chinook runs are likely, he said. In June, Commerce Secretary Wilbur Ross allocated $56 million for Alaskans impacted by low pink salmon returns in 2016. That money was part of $200 million approved by Congress for nine fisheries disasters nationwide. Talking Trump Sullivan treaded lightly when asked if Trump’s routinely impulsive behavior and sharp denigration of his critics has contributed to damaging the country’s social discourse. He called the president “a true disruptor in a lot of ways,” while adding: “He’s kept a lot of campaign promises, even if a lot of people didn’t like those.” He emphasized a general need to be “respectful and civil” when addressing contentious issues. “I think that’s critical; and I’ve called the president out when I think that doesn’t happen,” Sullivan said. A supporter of many of the Trump’s policy objectives, Sullivan said he agrees with the president that the country’s trade deficit with China needs to be balanced, but he thinks the administration is taking the wrong approach. He said he calls the president directly when he has issues with policy or strategy, and the two have had multiple conversations about trade in recent months in addition to similar discussions with top Commerce officials in the administration. “I think on one hand these guys are raising the challenges, which I think is a long-term challenge in regards to China. But what I’ve been saying to them and him, very, very regularly, which is ‘look, you can’t have a tariff battle with every country in the world,’” Sullivan said. “You guys need to finish the NAFTA negotiations, which they’ve committed to me they’re going to soon; fix those issues with the Europeans and then, working together with our allies — these are our allies — turn to the general issue that China poses, all of us, together; that’s like two-thirds of the world’s GDP.” He said he specifically pointed to the 25 percent retaliatory tariffs China has imposed on U.S. seafood imports, which has hit Alaskan fish exports. In 2017 China imported $796 million worth of Alaska seafood, which accounted for nearly one-third of the state’s total seafood exports last year. “I’m like, ‘Mr. President, we’re having retaliation on a huge export market for me and my constituents and he and (Commerce Secretary) Wilbur Ross are saying, ‘Tell them we’re actually trying to open those markets for them in China,’ which I think they believe but it’s been a challenge,” Sullivan said. Still, he emphasized that major domestic policy victories on things such as oil exploration in the Arctic National Wildlife Refuge, regulatory and tax reform and judicial appointments and a strong national economy are all major positives. “Overall, as I think you can tell, I think things are going on a good path,” Sullivan summated. Elwood Brehmer can be reached at [email protected]

Movers and Shakers for Aug. 12

The Bristol Bay Regional Seafood Development Association hired Andy Wink as executive director. As an economist specializing in the Alaska seafood industry, Wink brings nearly a decade of expertise in analyzing seafood market trends and the effects of development efforts to the RSDA. His past work with the Alaska Seafood Marketing Institute and many other industry groups will lend a broad perspective to the mission of the BBRSDA. Wink has been a valued partner to the BBRSDA for years as the lead author of the sockeye market report series. RE/MAX Dynamic Properties added Gary Kutil, an award-winning realtor with more than 25 years of experience in real estate sales. He began his career at Jack White Real Estate where he received awards and recognitions including Associate of the Year, President’s Circle, Leading Edge Society, Hall of Fame and Top Producer. The company also added Cheryl Myers, who has a background in sport and orthopedic physical therapy. She is expanding her career path to include real estate sales. Myers is an active member and past president of the Downtown Rotary Club and a member of the ATHENA Society. University of Alaska Fairbanks Vice Chancellor for Research Larry Hinzman has been elected president of the International Arctic Science Committee. IASC is an international scientific organization that was formed in 1990 to encourage and facilitate cooperation throughout the Arctic research community. The nongovernmental institution, which includes representatives from 23 countries, promotes scientific cooperation and gives advice to the Arctic Council and other organizations on Arctic science issues. IASC champions critically important research programs that are either too big for any single nation to undertake or that require international collaboration to be successful. Hinzman has a long history as an Arctic researcher. A professor of civil and environmental engineering, he previously served as the director of UAF’s International Arctic Research Center and has conducted long-term hydrological and meteorological studies in the Arctic regions of Alaska, Canada and Russia. Hinzman was elected IASC president last month during the IASC Council meeting in Davos, Switzerland, succeeding Susan Barr of Norway. His four-year term as president runs through 2022. Taylored Restoration has hired Bob Manwaring as business development director. Manwaring was most recently CEO of the Alaska Association of Realtors. Previous positions include four years as business development officer for Stewart Title of Alaska and 14 years as customer relations liaison with Alaska Multiple Listing Service Inc. Taylored Restoration has branches in Anchorage, Wasilla and Fairbanks and provides their services statewide. Thompson &Co. Public Relations has expanded its offices in Anchorage and Houston. Sami Jo Bailey joined the Anchorage office as an account coordinator in June and Stephanie Giacometti joined the team as a digital marketing specialist based in the Houston office in early July. Bailey grew up in Palmer and graduated from Northern Arizona University with a bachelor’s degree in strategic communications and a double minor in journalism and criminal justice. While earning her degree, she worked as a media assistant and also as an intern at GCI. She is an account coordinator at Thompson &Co. PR’s Anchorage office, where she assists on multiple accounts including the Alaska Tourism Industry Association. Giacometti was born and raised in São Paulo, Brazil, and later moved to Boston to attend Northeastern University, where she earned a bachelor’s degree in communications with a minor in business. She interned in digital marketing while earning her degree and gained experience after college in product development and marketing. Based in Houston, Giacometti is currently working on the digital account team leading client brand and digital marketing strategies. Ephraim Froehlich joined Gov. Bill Walker’s administration as senior advisor on fish and game and as the deputy director for state and federal relations. Froehlich will be based in Juneau, where he was born and raised and graduated from Juneau Douglas High School before earning a bachelor’s degree in government at Dartmouth College. Froehlich worked for Sen. Lisa Murkowski in Washington, D.C., before getting his juris doctor at the University of Maryland School of Law with a concentration in environmental law. He returned to Murkowski’s D.C. office as lead policy advisor on fisheries, wildlife, maritime transportation, ports and harbors, environmental change, and the Arctic. Barbara Blake, also known by her Haida name of Wáahlaal Gidáak, has worked on fish and game issues for the administration since 2014, and is moving up to become Walker’s director of Native and rural affairs. Sen. Lisa Murkowski announced that Kellie Donnelly, who currently serves as the deputy chief counsel for the Energy and Natural Resources Committee, will succeed chief counsel Patrick McCormick, who has left the for an opportunity in the private sector. Lucy Murfitt will be promoted to deputy chief counsel and Isaac Edwards will be promoted to special counsel. Donnelly came to Capitol Hill in 1994 and shortly thereafter joined the Senate Committee on Environment and Public Works as majority counsel. She left to serve as counsel at the Department of the Interior and then spent several years in the private sector before joining the Committee on Energy and Natural Resources in 2003. She has since served the committee in a number of roles, most recently as deputy chief counsel since 2009. Murfitt is currently senior counsel and public lands and natural resources policy director for the committee. She previously spent eight years as senior counsel to former Sen. Jon Kyl, R-Ariz., and the Republican Whip, handling the energy, environment, and natural resources portfolio. She has also worked at the Ecological Restoration Institute at Northern Arizona University as its director of policy and partnerships. A veteran, Murfitt served as an environmental attorney during her time in the U.S. Army. Edwards, who was born and raised in Homer, began his career on Capitol Hill working for former Sen. Frank Murkowski in 1997. He became Sen. Lisa Murkowski’s legislative director in 2003, and moved to the Energy and Natural Resources Committee to serve as counsel in 2009. Prior to today’s promotion, he held the title of senior counsel, focusing primarily on Arctic, territorial, and international energy issues. Matt Woods, EIT, has joined the environmental group at Shannon &Wilson’s Anchorage office as an environmental engineering staff IV. Woods has five years of previous experience preparing spill prevention and countermeasure plans, storm water pollution prevention plans, and SARA Title 3; and conducting site investigation and remediation projects. Current Shannon &Wilson projects include site characterization and cleanup activities, and providing regulatory compliance support. Woods has a bachelor’s degree in environmental engineering from Michigan Technological University. Schylar Healy has joined Shannon &Wilson’s Anchorage office technical staff as an environmental scientist. Previous professional experience includes serving as a wetlands mapping specialist and wetlands ecology technician in Fairbanks, and GIS field technician in California. Healy is a 2015 graduate of James Madison University in Harrisburg, Va., with a bachelor’s degree in geographic science, and is a member of the Alaska Native Plant Society.

OPINION: Attacks on speech won’t end with Jones

This defense of free speech isn’t going to begin with the obligatory preamble denouncing Alex Jones. Over the past week, Jones and his Infowars site were simultaneously sent to timeouts of various lengths ranging from 30 days to three months from Facebook and YouTube while Spotify and Apple took down multiple podcasts from Jones’ show. Twitter — perhaps shamed by the daily exposure of the hate it tolerates from the left highlighted by recent New York Times editorial board hire and open racist Sarah Jeong — has refused to follow suit despite pressure to deplatform Jones. Twitter CEO Jack Dorsey, who himself succumbed to the left-wing online outrage mob earlier this year after he made the mistake of posting about eating at Chik-fil-A, did manage to nail the obvious problem with banishing Jones. Dorsey posted that Twitter will not take “one-off actions to make us feel good in the short term, and adding fuel to new conspiracy theories.” Bingo. There’s an old joke that goes, “just because I’m paranoid doesn’t mean everyone isn’t out to get me.” In a fell swoop of virtue-signaling, Facebook, YouTube (Google), Spotify and Apple made a “feel good” decision to silence Jones that is likely the biggest gift he could have ever asked for. What’s unlikely is that the disciples of net neutrality realize they are cheering on the tech titans for actions that are the polar opposite of their claimed desire for a free and open internet where content is treated equally. But then again, self-awareness isn’t a quality generally possessed by progressives now tolerating, encouraging or outright embracing the violence of the “antifa” movement that’s made its mission to shut down any speech falling to the right side of Mao on the ideological spectrum. Because make no mistake: this isn’t going to stop with Jones. The term “alt-right” has been used for more than two years now to degrade and delegitimize the supporters of President Donald Trump as a basket of deplorable racists. These tech corporations are carrying out the censorship that the left cannot achieve at the ballot box or the Supreme Court and have crossed the Rubicon into the territory of policing speech that goes far beyond the unprotected category of incitement to violence. They have every right to boot Jones from their platforms, temporarily or permanently, if they choose. But they’re going to need to hire a whole lot more cheap foreign H1-B interns if they are going to equally police content that falls in the category of “offensive” or “hateful.” I’ll pause so you can stop laughing. The Facebook page “Occupy Democrats” has 7.4 million followers and has a typically hyperbolic photo up featuring Uncle Sam that states “If you still support Donald Trump and plan to vote for him again, you are a traitor!” Quick quiz: what’s the federal penalty for treason? Answer: the death penalty. Follow up: what are the odds Occupy Democrats ever gets its account suspended for “bullying” or “hate speech”? Answer: zero. And the press, the supposed protectors of free speech, formed their own outrage mob last week when they pressured the Newseum in Washington, D.C., to stop selling T-shirts that said “You are very fake news” in its gift shop. This tweet from Boston Globe Deputy DC Editor Matt Viser perfectly illustrates the recent twisting of the First Amendment protection of the press into some sort of blasphemy law: “This T-shirt doesn’t belong anywhere. It particularly doesn’t belong at the @Newseum, a place that celebrates journalism and has the First Amendment etched in stone outside its building.” Viser clearly wasn’t the one respondent out of 1,000 in a recent survey that could name all five protections spelled out in the First Amendment. The press coined the term “fake news” in the aftermath of the 2016 election as a way to explain the loss of the inevitable Hillary Clinton and are now outraged that it has been co-opted and turned against them. What’s obvious is that their issue is not with the term itself, but with their inability to control whom it is aimed against. This is an industry that spent the past 20 years attacking and attempting to marginalize Fox News. They are members of a progressive movement that dubbed the network “Faux News” long ago, with Urban Dictionary entries on the term dating to 2003. They were the dutiful stenographers for President Barack Obama, who routinely called out his perceived enemies in the press by name from Fox News to Rush Limbaugh to Glenn Beck to Sean Hannity. None rushed to the defense of conservatives, and there was certainly no collective outrage about a president attacking the press as there is today about Trump. While there is plenty of hand-wringing over the supposed misleading information and conspiracies from the likes of Jones being pushed on the fringes of the internet, the mainstream press so offended at being dubbed an “enemy of the people” has been pushing the Mother of All Conspiracy Theories for the past 18 months accusing Trump of colluding with Vladimir Putin to steal a presidential election. This is the same press whose talking heads routinely compare Trump to Hitler, Joseph Stalin and Mao, who ironically were all leaders of the murderous left. Of course, if that were true, Jim Acosta would be against a wall with a blindfold and a cigarette, but realizing that would take a well of historical knowledge deeper than a thimble and a better memory than a fruit fly. In other words, don’t hold your breath. Andrew Jensen can be reached at [email protected]

FISH FACTOR: Year of the Salmon features major Gulf study

Alaskans celebrated Alaska Wild Salmon Day on Aug. 10, but plans also are underway for a much bigger celebration: the International Year of the Salmon set to officially begin in 2019. The theme is “Salmon and people in a changing world” and a key focus will be a winter salmon study in the deepest regions of the Gulf of Alaska. Both are sponsored in part by the North Pacific Anadromous Fish Commission, which for 25 years has promoted research collaboration among scientists in its five member countries of Canada, Russia, Japan, Korea and the U.S. “The main inspiration for development of this project is our awareness of the challenges salmon meet in the open ocean related to the climate and in the coastal areas,” said Dr. Vladimir Radchenko, commission director and one of the world’s leading salmon scientists. A primary goal of Year of the Salmon is to get more people involved in protecting salmon and “coastal societies.” The aim of the Gulf project, Radchenko said, is to better understand the ocean phase of the salmon life cycle. Doing so would improve knowledge to help forecast salmon abundance and carrying capacity of the North Pacific. Researchers have some fragmented understanding of salmon distribution in the deep Gulf area from several surveys starting in the late 1980s. But the surveys were small and the results contradictory, Radchenko said. The project set for next winter will be done with trawl gear and cover a vast area in international waters 200 miles from shore. “During the winter, all salmon species migrate off shore and we have compared patterns of distribution seen in previous surveys and found that the main spots of salmon aggregation should be located beyond the Exclusive Economic Zone in February and March,” Radchenko explained. He added: “It will be a deep survey at about 72 trawl stations and include oceanographic testing of temperature and concentrations of all physical and chemical elements as well as plankton cages so we will have information on the whole ecosystem. We also will take scale samples to determine the salmon origins.” Based on the survey results Radchenko said researchers “may conclude the current state of the salmon stocks which spend the winter in the Gulf of Alaska.” He said scientists in all countries believe that major salmon stocks are facing challenges from the impacts of climate change, especially in southern areas of the North Pacific where warming water circulation patterns are wreaking havoc with salmon food sources. “The warming could make some ocean waters unsuitable for salmon. It is one of the biggest climate changes problems evident now, maybe more important than ocean acidification,” he added. The 2019 winter survey will include scientists from all member countries and is set to be the first of many, depending on funds. Blue updates Alaska lays claim to over half of the nation’s coastline, nearly two-thirds of its seafood catches and more ocean than any other region. But Alaska’s economic output accounts for only about four percent of the U.S. ocean economy. The Alaska Ocean Cluster Initiative, or OCI, aims to create a more diversified and resilient “blue economy” by getting more value from our oceans. “Globally the oceans are being viewed as the last economic frontier and there is a big push to develop them. Our hope is that Alaska becomes a leader in this blue economy and sustainable development of our ocean resources,” said Joel Cladouhos, director of the OCI, which began a year ago in partnership with the Bering Sea Fishermen’s Association. The concept is modeled after a program used in Iceland since the 1970s that seeds an “economic ecosystem” of industry, academics, business and government to create a blue growth strategy. Cladouhos believes it is a good fit for Alaska’s well-developed marine infrastructure and can build upon many programs and projects that already exist, such as the Alaska Maritime Workforce Initiative and statewide expansion of mariculture. Blue startups can run the maritime gamut for businesses in or around the ocean, including coastal tourism, marine transportation and emerging sectors such as marine biotechnology and ocean technology. A blue economy also could help provide year-round employment in Alaska’s 200 coastal communities. The OCI believes going blue can provide 50,000 jobs and a $3 billion dollar payroll by the year 2040, making it as significant as the oil industry is today. “Oil has provided incredible economic impact in Alaska and we would not be where we are today without it,” Cladouhos said. “But we want the conversation to be around pipelines of innovation and entrepreneurship in the future. And that would drive economic benefit and job growth that is larger than the oil industry today.” The biggest roadblock, the OCI believes, stems from Alaska’s business model. Since the U.S. purchased Alaska in 1867, the approach has been to extract natural resources and export the raw materials out of the state. That commodity-driven extraction model produces boom and bust cycles. The solution is to build a new, forward looking economy that creates value from our natural resources in a way that is socially, environmentally and economically sustainable. The Ocean Cluster has launched several programs over the past year to enhance the Blue Economy mindset among Alaskans. Ocean Tuesdays are one-hour weekly webinars on a wide range of topics. Two-day Blue Storm workshops are customized to local areas. A virtual Blue Pipeline Incubator advises ocean based startups and so far has attracted several companies ranging from smokehouses to net hangers to fish fertilizers to vessel inspections using drones. A six-week Google Ocean Technology team event attracted nearly Alaska 30 sponsors. The OCI will use a $391,000 federal grant from the economic development administration to do outreach to more entrepreneurs. “We want to expand in Alaska,” Cladouhos said. “Anyone can reach out to us and we can start to move forward with developing their ideas.” Questions? Contact [email protected]/ More tariffs and eyes on endangered species President Donald Trump announced on Aug. 1 that he is escalating his trade war with plans to increase the tariff on Chinese exports to the U.S. from 10 percent to 25 percent. (That is in addition to the 25 percent tariff on U.S. goods being sent to China that went into effect on July 6.) The list of goods affected includes nearly every U.S. seafood product. In terms of a bailout similar to that being proposed for farmers, the U.S. Chamber of Commerce estimates an aid package for the commercial fishing and processing industry would cost more than $1 billion to offset the impact of trade taxes to their businesses. Public comments can be made the U.S. Trade Office through Sept. 5. Also on the federal docket: Trump and his team have turned their eyes to scaling back protections in the Endangered Species Act. Last week the U.S. Fish and Wildlife Service and the National Marine Fisheries Service proposed changes to the way species are listed or removed from protections, and how critical habitat designations are made. New language also would allow officials for the first time to consider the economic consequences of listing a species. The New York Times called it “the most sweeping set of changes in decades” to the regulations used to enforce the act. Comments on proposed changes to the Endangered Species Act can be made through Sept. 24 at Laine Welch lives in Kodiak. Visit or contact [email protected] for information.

COMMENTARY: Political shifts underscore need for habitat initiative

I have been thinking long and hard about the salmon habitat ballot initiative that will be on Alaska’s November ballot. I served as director of the Habitat Division of the Alaska Department of Fish and Game for seven years under Govs. Steve Cowper and Wally Hickel, and as commissioner of the department for eight years under Gov. Tony Knowles. I, and the professional biologists who work at Fish and Game, implemented the current anadromous fish habitat statutes. All three administrations I worked for had strong advocates for salmon and anadromous fish habitat. I am confident that we did a good job of protecting anadromous fish habitat. So, what has changed to make me want to see the Stand for Salmon ballot initiative pass? The initiative puts clear, science-based salmon habitat standards in statute and provides for a robust public process when resource development decisions that could have significant negative impacts on salmon habitat are made. These standards are the principles we used when we made decisions, but they had no assured standing beyond our tenure. Without clear science-based standards, each person’s judgment as to what constitutes “proper protection” can be different. Some administrations have shown strong support for salmon habitat protection. Others have emphasized competing uses over salmon. For example, Gov. Frank Murkowski’s administration went so far as to move the habitat division from the Department of Fish and to the Department of Natural Resources so the commissioner of DNR, not the Fish and Game commissioner, would be the ultimate judge of what constitutes “proper protection” of anadromous fish habitat. The Department of Fish and Game had help protecting fish habitat when I was there. We had the Coastal Management Program. There is no longer a Coastal Management Program in Alaska. The Legislature allowed it to expire. The Coastal Management Program provided habitat standards, local government participation, public involvement and an interagency process for resolving differences and finding ways for development projects to move ahead (or not) while protecting fish and other important resources. That is gone, and Fish and Game anadromous fish permits don’t require public notice. Many of Alaska’s salmon stocks are now stressed by changing ocean conditions. As global warming continues to affect ocean and freshwater salmon habitat, it is particularly important that Alaska protect freshwater anadromous fish habitat so we maintain salmon productivity and genetic diversity. Protecting freshwater habitat is something Alaska can do without help from anyone else. Managing ocean conditions will require federal policy initiatives. But, if Alaska takes care of our freshwater habitat, salmon will have a better chance to adapt to the long-term changes they face. The users of Alaska salmon and the developers of Alaska’s other natural resources, should not have to depend on me — or any individual — to use their judgment on a case-by-case basis to interpret the vague “proper protection” standard of the current anadromous fish habitat statute. They deserve science-based statutory standards, like those in the initiative, to clearly define what constitutes “proper protection” of anadromous fish habitat. I had hoped that during the last legislative session the fish habitat protection bill (House Bill 199) introduced by Rep. Louise Stutes of Kodiak would be the vehicle for Alaskans to develop science-based standards for anadromous fish habitat protection. In my opinion, the give-and-take of the legislative process is a better way to develop policy than the initiative process. But there was no serious consideration of HB 199 by the Legislature. The state Constitution gives the people of Alaska the initiative process to use the ballot box to address important issues when the Legislature fails to act. If this initiative passes, the Legislature has the ability to immediately clarify language in the initiative if necessary, and in two years, the Legislature can amend, or even go so far as to repeal, the initiative. Despite what I view as drawbacks in the initiative process, it is my hope that this initiative passes. The Department of Fish and Game can then work with the public and all affected interests to implement regulations. If during that process there are significant issues raised, or problems found, the department and the governor can work with the public and the legislature to amend the statute to address those issues. Without the stimulus of this ballot initiative, I do not think the Legislature will give the Department of Fish and Game strong, clear, science-based anadromous fish habitat standards and a robust public process that I think are needed to keep Alaska’s wild salmon healthy and sustainable in the face of climate change and ongoing development pressure. For these reasons, I will be voting “yes” on the salmon habitat initiative in November. ^ Frank Rue lives in Juneau. He was Habitat Director of the Alaska Department of Fish and Game from 1988-1994. He served as the Commissioner of the Department of Fish and Game from 1995-2002.

Division of Oil and Gas promotes North Slope SALSA sale

Attention oil explorers: State of Alaska officials have three flavors of SALSA they would like you to try. Painful puns aside, Department of Natural Resources officials for the first time have put together large chunks of available North Slope acreage that will each be auctioned off with a single bid during the state’s annual fall lease sales held by the Division of Oil and Gas. The three Special Alaska Lease Sale Areas, or SALSAs, are some of the only remaining swaths of unspoken-for acreage in the middle of one of the country’s preeminent hydrocarbon basins; and they come with a starter kit of data to inform drilling that any wildcatter should love. The idea to auction of tracts of leases via a single bid was borne out of discussions about how the state could use the massive amounts of 3D seismic data, well logs and other typically proprietary information that has become publicly available over the past few years. “You’ve got a whole bunch of treasure chests of gold in a dark forest and somebody’s wandering around aimlessly in the dark — here’s a flashlight. This might help you just a little bit. It’s a search tool that also focuses people around the particular areas that we want to promote interest in,” said Deputy DNR Commissioner Mark Wiggin. While the refundable oil and gas tax credit program the state started in 2003 ultimately grew into something that was just too expensive to continue — the Legislature killed it last year — part of the deal of the program was that the data gathered in part with the state’s assistance would become public after a 10-year period. And the state’s team of petroleum geologists and software experts has organized that information so it’s much easier to locate and use for anyone interested in exploring the Slope. “The 3D seismic data is kind of what got us rolling to find its highest use,” said Oil and Gas Geologist Kevin Frank. The three SALSAs, starting from the west, include the state waters of Harrison Bay on the Beaufort Sea at 66,430 acres; part of Gwydyr Bay and adjacent onshore areas near the manmade Northstar Island field totaling 23,040 acres; and an area of 30,720 acres dubbed Storms immediately south of Prudhoe Bay. Each is accompanied by a 3D seismic data set that has become public within the last four years. But wait, there’s more. The Division of Oil and Gas group also compiled all of the lease and land records for the SALSAs in addition to all the data available from exploration wells drilled in an around those areas into a “one-stop shop” of sorts for anyone who is sick of counting sheep to easily peruse. “There’s always a team of folks that are looking at things, so we’re trying to provide what would be important for a team that’s doing exploration. At some point you want to know what’s the underlying info for the lands and that’s what this and these tools get you,” Frank said. Much of the well data is from Alaska Oil and Gas Conservation Commission records, but a lot also comes from the state Geologic Materials Center. However, Frank added that there are also web links to any references made to exploration well tests in news articles — largely from the Journal’s friendly competitors at Petroleum News — or any other public reports. Cumulatively, the well data is presented in ways that indicate what geologic formation was targeted when the well was drilled, as well as whether or not mud and resistivity logs or core chips and analyses are available for a particular well. “You can imagine if you don’t know much about the Slope and you say, ‘Shucks, I don’t know where oil is;’ this says, that’s where oil is. We don’t know the reservoir quality but we know based on the reports something flowed to the surface,” Wiggin said. The vast majority of the well information is free, but DNR is charging what Wiggin describes as a “handling fee” for the seismic data. That’s because the state officials have spent significant amounts of time verifying the quality of the seismic data and money on new hard drives and servers to hold it. The data set to one seismic shoot ate up 278 terrabytes of hard drive space, according to Wiggin. Frank described the seismic information as “like the free puppy” that comes with the occasional vet bill. He noted that the tens of thousands of dollars in fees to access the 3D seismic should be compared against the tens of millions of dollars it would cost to shoot the areas and obtain the data. A 162 square-mile seismic set shot over Harrison Bay in 2006 can be accessed for about $32,256, for example. “Put your Visa number in and boom, you’ve got a seismic shoot,” Wiggin remarked. The final requirements for bidding on the SALSAs are still being hashed out; they’ll be released in a public notice later in August, according to Frank, but the bids will be taken and opened as part of the regular North Slope and Beaufort Sea sales. Neither Frank nor Wiggin were willing to say whether or not they have any expectations for the SALSA bids — Harrison Bay is in the part of the Slope that has become a hotbed for large Nanushuk formation oil finds. “We’re ready to be surprised anywhere different folks see different things and that’s kind of the beauty of how this whole thing works,” Frank said. All of the SALSA information is available through the Document Library tab on the Division of Oil and Gas homepage. Elwood Brehmer can be reached at [email protected]

FCC commissioner gets earful on internet service in Unalaska

UNALASKA — Even with the present low level of service, the internet is critically important to commerce and medicine in the Aleutian Islands, and maybe even the military if conflict ever heats up with nuclear-armed North Korea. War has struck the Aleutians before and it potentially could happen again, according to Unalaska residents who want the Department of Defense to step up to the plate and help fund improvements to the internet service in a remote yet strategically important location. At the Iliuiliuk Family and Health Services, telemedicine couldn’t happen without federal funding, according to executive director James Kaech who said the Unalaska clinic receives about $1 million in Rural Health Care funding, allowing local medical providers to consult with specialists at Providence Alaska Medical Center in an emergency situation involving life-threatening injuries. “Without it, we would not be able to afford the cost, and without it we would not be able to be online,” Kaech said. The clinic receives internet service through Alaska Communications Systems, and at one point a $100,000 shortfall in federal reimbursements left medical providers worried if the service could continue, although the funding did eventually come through. Federal Communications Commissioner Brendan Carr couldn’t hear enough bad things about the poor quality of internet service, during a community meeting Aug. 7 in Unalaska/Dutch Harbor, the nation’s busiest fishing port, as part of a statewide tour. There wasn’t enough time. Help is on the way, he said, cautioning there’s no “silver bullet.” “Broadband is critical” to the success of the fishing industry, he said. “This is a place that’s on our radar. We have to do a better job,” he told the crowd of about 40 at Unalaska City Hall. The federal government plans to send more of the $10 billion Universal Service Fund to Alaska, he said, which includes the Rural Health Care Funding. Vice Mayor Dennis Robinson said that even if a subsea fiberoptic cable finally brings fast internet to Unalaska, it it is still prone to disruption if the cable breaks along the rugged coast on the south side of the Alaska Peninsula, and asked a telecom executive in the audience about plans for “redundancy,” or a backup system. GCI Vice President Dan Boyette said the subsea fiberoptic cable is still at least two years away, and the company still hasn’t committed to the project to connect the town from Kodiak. While land systems have more redundancy, that isn’t available underwater, and the only backup is slow satellites, which he said his company will still maintain in addition to the underwater cable. Subsea cables break once every seven years, on average, and Boyette said it usually takes a week for ship to arrive and repair the rupture, once the damage is located. Robinson said it could take over two weeks, between the time it takes a ship to arrive and then locate the problem. Boyette said the south side route is advantageous because it is ice-free year round, easing vessel access. The company had previously considered a more economical route along the peninsula’s north side, from Levelock. Various commentators said they really didn’t want to engage in any unnecessary “GCI bashing,” but then proceeded to unload their frustrations. Optimera owner Emmitt Fitch said none of the complaints were coming from the customers of his start-up internet business. Carr said the FCC is working to increase broadband capability through regulatory reform to allow a network of thousands of low-orbiting satellites, plus wide distribution of small backpack-size antennas on buildings and utility poles supplementing the existing 200-foot towers. Local business officials complained about the difficulties with local cell phone service. Mike Lloyd said the what while the price of cell phone service has dropped, the greater availability of low cost plans make it hard to make calls. When the busy fishing season ends, and most workers go home, it’s a lot easier to get through, he said. Before GCI introduced economical plans making cellphones more affordable, Lloyd said he spent between $1,500 and $4,000 monthly on phone calls, when he worked for his former employer, Samson Tug and Barge. Lloyd estimated that lousy cell service has cost his shipping logistics business between $100,000 and $150,000 in lost business in the last five years. Unalaska Harbor Officer Tim Mahoney said cellphones were barely functional during a recent tsunami alert, when the community scrambled to high ground, producing “gridlock” on the network and a “perfect storm” of cellular dysfunction. “In an emergency we’re at our worse. We have no connectivity. Everything’s jammed up,” Mahoney said. No giant waves appeared, and the alert was eventually canceled. Unalaska Ports Director Peggy McLaughlin suggested finding funding from the U.S. Department of Defense, considering the town’s strategic location, in the middle of international shipping lanes and increasing international tensions. Unalaska Librarian Karen Kresh said the internet is so slow that at times it’s “almost unusable” at the public library where customers need it for online classes and job applications, adding that internet costs make up about 25 percent of the library’s operating budget. Alyssa MacDonald of Mac Enterprises said her office staff wastes about 25 percent of daily work time waiting for the internet to load, and otherwise struggling with the poor service, “stifling our growth.” “It would definitely be a game changer for us,” if fast internet arrived, said Unalaska City School /District Supt. John Conwell. He complained of a lack of access to federal internet funds because of the school system’s low enrollment and high income levels in the nearly full-employment industrial fishing port. He said grants should be awarded based on the unique needs of individual sites. “We need connectivity to be able to reach the East Coast without your call being dropped 57 times,” said local resident Lori Gregory. She cited the area’s military importance, past and present, from World War II to today given the Aleutian archipelago’s proximity to Asia and simmering international hostilities. Carr said rural America suffers even in the Lower 48 from slow internet speeds. He mentioned farmers in Indiana, with great amounts of their own digitized agriculture data, stored on thumb drives, sitting uselessly in coffee cups, as weak connectivity blocks access to “the cloud,” or offsite data processing locations. Carr visited Alyeska Seafoods, the school and clinic and historic sites during his tour of Unalaska. Carr said he visited Alaskan at the prompting of Alaska Sens. Dan Sullivan and Lisa Murkowski. He planned to visit Barrow and Wainwright on the Arctic Ocean on Aug. 9, and return to the southwest on Aug. 10 for a visit to Dillingham. Jim Paulin can be reached at [email protected]

State agency wants in on EIS review for Alaska LNG project

The Alaska Department of Natural Resources has asked federal regulators if its permitting office can join the environmental review team for the Alaska LNG Project as a “cooperating agency,” promising not to share anything with the project applicant, its colleague in state government, the Alaska Gasline Development Corp. The Federal Energy Regulatory Commission has been working toward an environmental impact statement, or EIS, for the state-led North Slope natural gas project since AGDC filed its application in April 2017. The commission is scheduled to issue its draft EIS in March 2019. Federal offices with permitting authority over a project are required to assist as cooperating agencies, such as the Army Corps of Engineers and U.S. Fish and Wildlife Service for the Alaska LNG Project. FERC is the lead for the federal EIS for the Alaska gas development. The law also allows non-federal agencies to participate, if they have “special expertise with respect to the environmental impact of the proposal.” Cooperating agencies must cover all their own costs of participating in the review. The Office of Project Management and Permitting at Natural Resources coordinates between multiple state agencies with such environmental permitting expertise, Department of Natural Resources Deputy Commissioner Heidi Hansen wrote in a July 13 letter to FERC, asking the commission to accept the state office as a cooperating agency in the federal review. The DNR office “routinely enters into agreements with the lead federal agency as the single point of contact for state regulatory agencies … participating in the deliberative process and compiling state agency comments,” Hansen wrote. The state’s letter included a draft agreement for FERC to consider, modeled on a 2011 agreement from a previous state-supported Alaska gasline effort. The draft commits DNR’s Office of Project Management to hold confidential any material in the federal environmental review not available to the public. “To the extent permitted by law,” the July 13 draft agreement said, the office would not release any confidential or deliberative information outside of state agencies that have permitting or regulatory authority over the project. The ban would prohibit sharing with the project applicant, AGDC. “There is clear separation between AGDC and the State of Alaska’s regulatory agencies for conducting the permitting process,” Hansen wrote in her letter to FERC. The state Legislature created AGDC in 2010 to promote, permit and finance a North Slope gas pipeline project. It has the power of eminent domain to acquire private property, and it has authority to borrow money for construction. Although federal regulators are far along in their environmental review, “we see significant value in participating in the EIS process to assist FERC and other cooperating federal agencies by providing additional information and data needed for their analyses,” the deputy commissioner wrote. To further address the potential conflict for an Alaska state agency to cooperate on a federal EIS for a project led by the state, DNR’s project office “acknowledges that it is FERC’s policy that an agency cannot be both a cooperating agency and an intervenor in the same proceeding.” In the draft agreement presented to federal regulators, DNR’s Office of Project Management agreed “to forego its right to seek intervention in the Alaska LNG Project EIS proceeding with FERC.” An intervenor in a FERC proceeding has the legal right to challenge not only the EIS but also any commission decision. However, the draft agreement continued, “this will not disqualify the State of Alaska or the Office of the Governor and other principal departments of the state … from actively participating as intervenors in the Alaska LNG Project certificate proceeding before FERC One state entity sitting on the review team for another state entity’s federal EIS is not unique — for Alaska. In 2011, when the state was an advocate and partial funder for a different North Slope gas development project, FERC accepted the State Pipeline Coordinator’s Office at Natural Resources as a cooperating agency for the environmental review. However, FERC rejected a request from the Fairbanks North Star Borough to participate as a cooperating agency. The state pipeline coordinator’s office joined the effort several months before FERC held public meetings in early 2012 — called scoping sessions — to learn what issues people and organizations wanted covered in the EIS. (The pipeline office closed in 2015 and its duties were reassigned within the department.) This time around, the state asked for cooperating-agency status almost three years after the FERC-led scoping sessions for the Alaska LNG project. Federal regulations instruct cooperating agencies to participate in the process “at the earliest possible time.” The 2011 proponents ExxonMobil and TransCanada, operating as the Alaska Pipeline Project, never advanced beyond the pre-file stage at FERC and formally withdrew their application in 2014 before regulators started drafting an EIS. The pipeline would have carried Alaska gas through Canada and into the North America pipeline system. Prolific U.S. shale gas production and low prices put an end to the effort to sell Alaska gas in the Lower 48 states. About the same time as the file closed at FERC on the North American pipeline project, Alaska oil and gas producers ExxonMobil, BP and ConocoPhillips turned their focus to the export market. The companies started the pre-file process at FERC in September 2014 for a project to pipe North Slope gas to Nikiski on Cook Inlet, where the methane would be liquefied and loaded aboard ships for delivery to Asian buyers. When the producers decided to slow down spending on the LNG project in 2016, due to weak market conditions and low oil and gas prices, the state took over and went ahead with the application to FERC. AGDC continues answering questions AGDC and its contractors have been working the past year to answer questions and data requests from federal regulators, filling in gaps for the environmental review. In its latest filing, the state project team on July 24 presented FERC with the same material it gave the Army Corps of Engineers a few months earlier, addressing wetlands, dredging and fill issues. The Clean Water Act requires AGDC to obtain a permit from the Army Corps. In addition to ensuring preservation or restoration of wetlands and identifying appropriate Cook Inlet disposal sites for dredged material from the Nikiski marine terminal, the Army Corps and FERC review will look at the state’s plans for streambed and bank restoration efforts at temporary bridges over waterbodies. AGDC plans 54 temporary bridges for construction access roads and pipeline work, ranging from a 20-foot-long span over an unnamed creek to two 300-foot spans over the Deshka River. Included in the state’s July 24 filing with FERC, the state team said it is “not practicable” to restore to their original condition and function all wetlands affected by the project, such as areas of gravel fill placed during construction. Some wetlands will be re-established with revegetation. “These wetlands could have a functional value that is equal to, better than, or less than the value of the wetlands they replace,” AGDC has told the Corps and FERC. Some property owners may not want the wetlands restored after construction, if the owner sees more value in retaining the gravel fill, the state team said. And, in some cases, removing fill placed during construction could “introduce open water and erosion” and “can do more harm than good.” Impacts to wetlands and other waterbodies “will be discussed in a Wetlands Compensatory Mitigation Plan, which will be provided after the draft EIS is issued,” AGDC told FERC. “The plan will be refined in coordination with the Corps, leading up to the final EIS.” As soon as the Army Corps decides what areas covered by the project would qualify as wetlands, AGDC will provide more detailed mapping of terrain and boundaries. The state team also noted that wildfires can turn areas “of discontinuous permafrost wetlands into uplands,” reporting that the pipeline would cross “several areas of discontinuous permafrost that were previously burned.” AGDC is waiting for the Army Corps to issue its determination of what still is considered wetlands. ^ Larry Persily is a former Alaska journalist, state and federal official who has long tracked oil and gas markets and projects worldwide.

Why adjusting capital gains for inflation makes economic sense

Editor’s note: The Conversation is an independent and nonprofit source of news, analysis and commentary from academic experts supplied via the Associated Press. The Trump administration is considering a significant change to the way capital gains on investments like stocks, businesses and real estate are calculated. The administration wants to allow investors to use inflation when determining the gain they get when they sell an asset, which would usually mean reducing the profit — as reported to the IRS — and thus the amount that’s taxable. Based on what is known about the plan, it would reduce taxes by about US$100 billion over 10 years. I’ll let others debate the implications for certain taxpayers and the impact it would have on the federal deficit. Instead, I’ll focus on why the proposal to adjust capital gains for inflation is a good one, the rationale for which has been argued by financial economists — including me — for decades. Capital gains and inflation Treasury Secretary Steve Mnuchin recently told The New York Times that his department is studying a regulatory change that would allow taxpayers to use inflation — or the change in the price of goods and services over time — in determining how much they owe when they sell an asset that has increased in value. Capital gains work like this. Let’s say you bought a stock five years ago for $100. Today you sell it for $150. Based on current rules, you’d have a long-term capital gain of $50, which would then be taxable at a rate as high as 20 percent. Gains on assets sold less than a year after purchase are taxed at individual rates. Under the proposed change, you could adjust the initial price, or basis, by the effect of inflation over that five years. The basis would thus rise to $108, reducing the gain to $42 and lowering the tax owed as well. Adjusting a financial “gain” for the effects of inflation is nothing new. In the late 1940s, unions were among the first to advocate for automatic adjustments to an income or other recurring payment. In their case, they wanted members’ wages adjusted for inflation every year to preserve their purchasing power. Since then, so-called cost of living adjustments have been applied to a variety of financial payments, such as rents, Social Security benefits and royalties. Why extending this to gains makes sense So why not do the same for capital gains? Let’s look at our example again. The effects of inflation mean you need $108 today to get the same purchasing power as $100 had in 2013. But let’s say instead of a sale price of $150, you can only get $109 for the stock. Under current rules, that would be a taxable profit of $9. But the real or inflation-adjusted profit, factoring in actual purchasing power, is only $1. At a capital gains tax rate of 15 percent, that would mean Uncle Sam would take $1.35, and you’d be 35 cents poorer than you started. The data suggest this is a big problem. A study of the impact of inflation on capital gains in 1978 by economists Martin Feldstein and Joel Slemrod showed that $4.5 billion in nominal capital gains on corporate stock in 1973 became a real loss of almost $1 billion. Some countries such as the U.K. and Ireland already adjust capital gains taxation for inflation. A study by economist Barry Bracewell-Milnes found that its use reduced the “burden and inefficiencies” of capital gains taxes, which he argued are economically damaging because they yield little revenue yet create many administrative and compliance costs. The benefits of adjustment is greatest, of course, when inflation is especially high, as it was in the U.K. around the time it introduced indexing. While inflation has been fairly low in the U.S. for decades, it soared in the 1980s and could climb again. As for the broader impact on U.S. tax policy, John Rico, a senior analyst at the Penn Wharton Budget Model initiative, concluded that even though indexing capital gains to inflation would accrue mainly to the top 1 percent of earners, it would not meaningfully alter the distribution of the tax burden. All in all, I believe it makes a lot of economic sense to index capital gains to inflation. By acknowledging that inflation does in fact change the economic value of these gains, this would optimize investment decisions by encouraging more long-term planning and help the economy run more efficiently. It would also, in a small way, discourage short-term thinking — something I’ve fretted about in the past. ^ This article was originally published on The Conversation. Read the original article at

US mends ties with allies, prepares for trade war with China

WASHINGTON (AP) — Gathering strength for a brutal trade war with China, the United States appears to be trying to patch things up with its friends. U.S. and Mexican negotiators met in Washington Aug. 2-3 to work on a rewrite of the North American Free Trade Agreement — an effort that looked virtually dead a few months ago. The prior week, President Donald Trump announced a cease-fire in a potentially destructive dispute with the European Union over trade in cars, trucks and auto parts. Meanwhile, the Trump administration ratcheted up the pressure on China by proposing a doubling in tariffs on $200 billion in Chinese imports. Beijing has vowed to counterpunch with trade sanctions of its own. “If you’re going to take China on, you’d better make sure you’ve shored up your base with your allies and made sure you kept other markets open,” said Michael Camunez, president of Monarch Global Strategies consultancy and a former U.S. Commerce Department official. Trump campaigned on a vow to overhaul the 24-year-old NAFTA with Canada and Mexico, a pact he called a job-killing disaster. NAFTA did away with most barriers, including tariffs, on trade between the U.S., Canada and Mexico. Trump and other NAFTA critics say the agreement encouraged U.S. manufacturers to move factories — and jobs — south of the border to take advantage of lower-wage Mexican labor. He vowed to pull out of NAFTA if he couldn’t a deal he liked. Talks on a new NAFTA began almost a year ago but got bogged down over the Trump team’s insistence on measures that would discourage investment in Mexico and shift auto production to the United States. Momentum suddenly resumed after Andres Manuel Lopez Obrador won the Mexican presidential election last month and expressed support for overhauling NAFTA. The Mexican negotiators are hoping to reach an agreement this month with the United States, then bring Canada back into the negotiations. Canada’s absence from this week’s talks raised suspicions that the United States was pursuing a divide-and-conquer strategy with its two trading partners, isolating Canada to pressure it into agreeing with whatever the U.S. and Mexico came up with. But David MacNaughton, Canada’s ambassador in Washington, told the AP it made sense for the U.S. and Mexico to negotiate first: “There are a couple of lingering issues between the U.S. and Mexico” that need to be settled “before we can move on,” he said. The most obvious is Trump’s push to require that autos contain more content made within the NAFTA trade bloc and specifically from countries that pay high wages (that is, not Mexico) to qualify for duty-free status under the agreement. But the two countries are whittling away at their differences. In June, Trump slapped taxes on imported steel and aluminum, hoping in part to pressure Canada and Mexico to agree to a NAFTA rewrite that was to his liking. But the two neighbors — and other U.S. allies and trading partners — have slapped back with tariffs of their own, often aimed at U.S. farmers who supported Trump in the 2016 election. The Mexicans, for example, targeted U.S. pork and cheese. The retaliation is beginning to take a toll. The Trump administration last week announced a $12 billion package to ease the pain on farmers. Daniel Ujczo, a lawyer with Dickinson Wright PLLC in Columbus, Ohio, said the U.S. has a big incentive to smooth over the differences with friendly countries and get the tit-for-tat tariffs removed. “The faster we get a deal with Mexico, the faster that relieves pressure on farm country,” he said. The Trump administration last week pulled back from the brink of a trade war with the European Union, suspending planned tariffs on European autos while it talks with the EU about tearing down trade barriers. As tensions with U.S. allies seem to ease, tensions with China are rising. On Aug. 1, the Trump administration proposed hiking planned tariffs on $200 billion in Chinese imports to 25 percent from an originally announced 10 percent. The world’s two biggest economies are sparring over what Washington says are Beijing’s predatory tactics to obtain American technology. Deals with allies like the EU, Mexico and Canada could give the administration “some breathing room on China and signal to the world that they aren’t looking to fight with everyone,” said Christine McDaniel, senior research fellow at George Mason University’s Mercatus Center.

Scoping starts for ConocoPhillips’ Willow development

ConocoPhillips’ westward push on the North Slope took reached another milestone Aug. 7 when the Bureau of Land Management began asking for public input as it drafts permitting documents for the company’s proposed multibillion-dollar Willow oil development. The remote Willow prospect is west of the existing North Slope oil fields in the National Petroleum Reserve-Alaska. Largely a Nanushuk formation-focused play, ConocoPhillips announced its discovery in January 2017 after the company drilled two exploration wells the previous winter. Company leaders said during a July 16 investor presentation that appraisal wells drilled last winter indicate Willow likely holds between 750 million to 1.1 billion barrels of oil and pegged development of the isolated resource at $4 billion to $6 billion. The company has estimated it could produce up to 100,000 barrels of oil per day. With a shallow conventional target zone in the 4,000-foot range, ConocoPhillips also believes it can produce from Willow for less than $40 per barrel, according to a release accompanying the presentation. ConocoPhillips’ initial development plan calls for a central processing facility and pad, up to five drilling pads with up to 50 wells each, access roads, an airstrip and a gravel mine within the NPR-A, according to BLM. The proposal also contemplates a temporary island in state waters to facilitate module deliveries via sealift barges. The company sent BLM a letter in May requesting authorization for the development, a BLM release states. The federal agency will be drafting an environmental impact statement to evaluate the master development plan for the massive project and as such is asking the public what should be studied in the EIS. “Analyzing the proposed Willow prospect in a single (master development plan) EIS will result in a quicker and more efficient process for the approval of applications for permits to drill. Public input on this project is important and we look forward to hosting public meetings and listening to the comments people may have,” Acting BLM Alaska Directory Karen Mouritsen said in a prepared statement. Audubon Alaska issued a statement emphasizing that Willow is near the “globally-important Teshekpuk Lake wetlands complex, one of the most ecologically important habitats in the entire Arctic.” The 2013 NPR-A Integrated Activity Plan — the land-use plan for the entire 23 million-acre reserve — precludes oil and gas leasing and development in much of the northeast portion of the reserve to protect the area surrounding Teshekpuk Lake and the caribou herd and waterfowl that use it and are important subsistence resources for many North Slope residents. Audubon Alaska also notes the master development plan EIS is subject to an Interior Department directive issued by Trump administration officials to limit the review to one year and the EIS to 150 pages. “We urge the agency to go slow, think carefully, and adhere to the Integrated Activity Plan,” Audubon Alaska Policy Directory Susan Culliney said. “Using a hastened (National Environmental Policy Act) timeline for this massive development project will only gloss over the science and lead to a faulty decision. The complex and sensitive Arctic ecosystem deserves more consideration than can possibly be achieved through a quick and dirty fast-tracked analysis.” Public scoping meetings will be held in the North Slope communities of Anaktuvuk Pass, Atqasuk, Nuiqsut and Utqiagvik as well as Fairbanks and Anchorage, but meeting times have not been announced. ConocoPhillips is expected to bring its roughly $1 billion Greater Mooses Tooth-1 project in the reserve online this fall. When it does, it will be the first oil production from the NPR-A with an expected peak rate of 30,000 barrels per day. Its Greater Mooses Tooth-2 project is now in permitting and is also projected at 30,000 barrels per day at peak rate. Elwood Brehmer can be reached at [email protected]

State, feds agree to revise roadless in Tongass

State and federal officials inked an agreement Aug. 2 that could lead to scaling back the U.S. Forest Service’s long-debated Roadless Rule in Alaska. The memorandum of understanding signed by Department of Natural Resources Commissioner Andy Mack and Interim Forest Service Chief Victoria Christensen lays the foundation for the agencies to reopen the Roadless Rule on the prospect of working towards an Alaska-specific rule that could allow for more access to large swaths of federal lands that have ostensibly been off-limits to logging or other developments and activities since the early 2000s. Approved in early 2001 by former President Bill Clinton, the Roadless Rule prohibited new road construction on roughly 58 million acres of undisturbed national forest lands across the country. The “no new roads” edict has since been continuously challenged in court, particularly by western states that contend it has arbitrarily curbed logging and other activities on Forest Service territory and conflicts with the agency’s multiple-use land planning mission. In 2015, the U.S. 9th Circuit Court of Appeals upheld an Alaska U.S. District Court decision to overturn a 2003 exemption to the Roadless Rule for the Tongass National Forest put in place by George W. Bush’s administration. Alaska Division of Forestry Director Chris Maisch said the MOU to examine revising the rule was borne out of Gov. Bill Walker’s petition to Agriculture Secretary Sonny Purdue for a full, statewide exemption to the Roadless Rule. The MOU is focused in the 17 million-acre Tongass National Forest, according to Forest Service spokeswoman Dru Fenster, which encompasses the vast majority of Southeast Alaska and is by far the largest national forest in the country. At 5.4 million acres, the Chugach National Forest in Southcentral is the second-largest national forest, but its timber is much less suitable for large-scale commercial logging. The members of Alaska’s congressional delegation lauded the MOU in formal statements, insisting it is a big step towards getting “forest management and the economy of Southeast Alaska back on track,” as Sen. Dan Sullivan put it. “As I have said many times before, the Roadless Rule has never made sense in Alaska,” Sen. Lisa Murkowski said Aug 2. “I welcome today’s announcement, which will help put us on a path to ensure the Tongass is once again a working forest and a multiple-use forest for all who live in Southeast. “I thank Secretary Purdue for recognizing the need for economic relief in these communities and look forward to continuing to work with the administration, state officials, Sen. Sullivan and Congressman Young to see this process through to the finish line.” Murkowski chairs the Senate Appropriations subcommittee that covers the Forest Service budget and has inserted language to exempt Alaska from the Roadless Rule into recent budget bills for the agency. Those provisions have ultimately been stripped from the spending bills the president has signed. Specifically, the MOU directs DNR and the Forest Service to establish a State-Forest Service Executive Steering Committee to carry out the agreement. The Forest Service will lead development of an environmental impact statement to analyze the effects of prospective management changes to the Tongass, while the state will form a public advisory group of representatives from Southeast tribes and Alaska Native corporations as well as conservation groups and the timber, mining, tourism and commercial fishing industries. Colorado and Idaho are the only other states to have their own Roadless rules, but those came only after years of study and court challenges. Forest Service officials said they plan to have the Alaska EIS complete within 18 months, in part to keep stakeholders engaged in the process. Forest and fishing advocates criticized the agreement, claiming it will put some of Southeast’s largest industries at risk. Trout Unlimited, which has pushed for permanent protections for dozens of critical salmon-bearing watersheds in the Tongass — its Tongass 77 campaign — contends the fishing and tourism industries rely on unspoiled wilderness in the region provided by the Roadless Rule and currently support 26 percent of all the jobs in Southeast Alaska in addition to contributing about $2 billion per year to the region’s economy. TU Alaska Policy Director Austin Williams stressed in a formal statement that revising the Roadless Rule in the state would mean throwing out the 2016 Tongass Management Plan, which took more than four years to finalize. The Tongass Plan calls for a transition to strictly young-growth timber harvest in the forest over 16 years, a period Murkowski and timber industry leaders argue is much too short to provide an adequate timber supply for Southeast’s few remaining sawmills. “The current Tongass Forest Plan, which includes protections for roadless areas, was monumental and was perhaps the first time a diverse set of stakeholders successfully came together around a common vision for how to move forward on the Tongass and leave the timber wars behind,” TU Alaska’s Williams said. “The overwhelming majority of Alaskans that participated in that process voiced a desire for increased protections for important fish and wildlife habitat. Rather than flushing that hard work down the drain, we should look for lasting solutions that protect the remaining roadless areas.” Forest Service Associate Deputy Chief of Forest Systems Chris French acknowledged in an interview that any substantive changes in how the Roadless Rule is applied to the Tongass at the end of the EIS process will likely require another EIS to at least amend the Tongass Management Plan accordingly. French said the MOU provides “a wide open space” for forest managers to consider changes in how the rule is used. “It basically allows us a lot more flexibility in how we approach apply the protections of roadless that you see in the 2001 Roadless Rule,” he said. Any rule changes could apply to the 57 percent of the Tongass that was designated as roadless in 2001. About 35 percent of the Tongass has been granted “wilderness” protection by Congress and as such will not be impacted by any changes to the rule. The remaining roughly eight percent is set aside for other opportunities, according to Forest Service officials. “We don’t know what we’re going to propose yet. We don’t know what we’re going to hear at this point. We really want to start from the space of allowing folks to speak their mind; allowing folds to contribute their ideas — come to maybe some solutions — give us some proposals and all that will be considered as we go forward,” French said. Alaska Forest Association Executive Director Owen Graham said in an interview that the organization had been pleading with the Forest Service to revise the rule, but also lamented the fact that easing the land-use restrictions likely won’t change on-the-ground work for several years. “Just removing the Roadless Rule won’t let us cut one more tree because the Roadless Rule is in the forest plan,” Graham said. He has been critical of the 16-year transition to young-growth-only harvests in the current Tongass Management Plan, insisting most young-growth areas in the forest are at least 30 years from maturity. Graham said prematurely harvesting young-growth stands can necessitate cutting over twice the acreage to achieve similar harvest volumes, as stands of smaller trees simply do not offer the same amount of usable timber as mature or old-growth stands. “You have to have this economy of scale,” he said. Graham also noted that old-growth trees provide opportunities for Alaska mills to produce specialty and value-added products while lower-grade, young-growth logs from the Tongass are almost always exported to Asian markets for processing. State Forester Maisch said he doesn’t foresee old-growth harvests from the Tongass going away anytime soon, but also noted new technologies such as cross-laminated timber could open up new value-added opportunities around young-growth for Southeast mills. Maisch also stressed flexibility in management as a driving interest for the state to revise the Roadless Rule, saying the rule’s impacts go beyond traditional forest uses. “It’s about community access; it’s about energy; it’s about have the ability to be adaptable and flexible so we can make changes as technology changes,” Maisch said. “For example, cell towers and the need for cell towers in locations that are not so easy to do that in around communities right now. Hydro (power) is another good example. It’s difficult to build some of those types of utility infrastructures without having roads to support it for both construction and maintenance.” Additionally, French said Purdue’s vision of the Tongass as “a working forest” — as the USDA secretary said during a July trip to Prince of Wales Island with Murkowski — is not strictly limited to logging. “We also understand that industry is changing and the values that Alaskans hold for these lands is something that is changing as well and we recognize the importance that folks see with roadless. We also recognize the needs that other user groups and industry have for these lands. We want to be able to consider all of that,” French said. Elwood Brehmer can be reached at [email protected]

Gov, Meyer unfazed by China’s tariff threat on LNG

Gov. Bill Walker and Alaska gasline officials insist China’s immediate threat to slap an import tariff on U.S. liquefied natural gas should not impact the long-term viability of the $43 billion Alaska LNG Project. On Friday, the Chinese government announced a proposal to put a 25 percent tariff on roughly $60 billion of U.S. goods the country imports, including U.S. oil and natural gas. The potential tariffs are the latest move in a tit-for-tat trade dispute initiated by President Donald Trump earlier this year that has slowly been escalating through the summer. The face-off between the economic superpowers is in sharp contrast to the trade-focused trip Trump and Commerce Secretary Wilbur Ross made to Beijing last November. That trip culminated in a ceremony in which some of the largest companies from each country signed trade deals before Trump and China President Xi Jinping. Among those at the Nov. 8 deal-signing event were Walker and Alaska Gasline Development Corp. President Keith Meyer, who signed a nonbinding joint development agreement with Chinese oil and gas giant Sinopec, the Bank of China and China Investment Corp. to advance the prospect of the three state-owned Chinese companies buying from and investing in the Alaska LNG Project. Specifically, the agreement, or JDA, contemplates Sinopec buying up to 75 percent of the LNG produced from the project in exchange for the Bank of China and China Investment Corp. financing up to 75 percent of the project’s development costs. AGDC officials have said the Trump administration’s prior tariffs on Chinese steel would at worst have a nominal effect on the project. Exactly how a 25 percent tariff on U.S. LNG would impact the economics of Alaska LNG is unclear — it certainly wouldn’t be good — but the policy battle of today doesn’t upend the fundamental benefits of the project, according to Walker. “Alaska’s vast reserves of natural gas can satisfy market demand for nearly a century, and short-term trade tensions do not change this long-term value proposition. Alaska LNG would be the largest job-creating infrastructure project in the country, and would generate billions of dollars in revenue,” Walker said in a statement from his office. “My team and I will continue to work with the Trump administration to ensure that Chinese and U.S. officials strike a fair compromise so that Alaska’s natural gas reaches the market.” China is in the midst of a major transition away from coal to cleaner burning natural gas for electric generation. The country is expected to become the world’s largest importer of LNG next year. AGDC officials said in a corporate response to questions from the Journal about the potential impact of the LNG tariff that the project “will continue to present a win-win opportunity for both countries.” Meyer has often noted that exporting LNG to China would be a big step towards resetting the trade imbalance with China that Trump is focused on. “The Alaska Gasline Development Corp. believes the current trade tensions between the United States and China will be resolved well in advance of Alaska LNG exports to China. The Alaska LNG Project represents a multigenerational project that matches China’s 100 years of natural gas demand with Alaska’s 100 years of supply on the North Slope,” the AGDC statement reads. AGDC also notes it is progressing definitive purchase agreements with other prospective LNG buyers across the Asia-Pacific region. Though the Alaska LNG Project and the Prudhoe Bay and Point Thomson gas resources that would fuel it are currently planned for 25 years of exports, it is believed the project will spur subsequent gas exploration and development because there would finally be an avenue to get North Slope gas to market. Walker and Meyer met with Jinping in April 2017 when the Chinese president stopped in Anchorage on his way home from a meeting with Trump in Florida. It was that evening-long dinner and discussion that spurred the eventual framework deal around Alaska LNG, the governor has said. Elwood Brehmer can be reached at [email protected]


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