Meyer out as president of Alaska Gasline Development Corp.

Keith Meyer is out as the president of the Alaska Gasline Development Corp. Meyer was dismissed from his position on Thursday and replaced on an interim basis by Joe Dubler, who is currently the executive vice president of finance and administration for the Cook Inlet Housing Authority. Dubler worked for AGDC as vice president of commercial operations under former President Dan Fauske, who resigned from the position at former Gov. Bill Walker’s request in November 2015 after the Legislature approved a buy out of TransCanada Corp.’s interest in the $43 billion Alaska LNG Project. Continuing the shakeup, Doug Smith, who was appointed to the board by Gov. Michael J. Dunleavy on Monday, was voted the new chair of the board of directors and Dan Coffey, also appointed Monday, was named vice chair. Smith replaces Dave Cruz as chair. Cruz has served on the board of AGDC for the past three administrations after first being appointed by former Gov. Sean Parnell. Meyer has led AGDC since June 15, 2016. The Alaska LNG Project is nearing a milestone with the scheduled release of a draft environmental impact statement scheduled to be released next month. A joint development agreement with three large nationalized Chinese companies to invest in up to 75 percent of the project was signed in November 2017 but a recent Dec. 31 deadline to formalize commercial agreements was extended for six months. Laborers’ Local 341 union leader Joey Merrick, one of the board members replaced Monday, thanked AGDC staff for their hard work during the public comment portion of Thursday’s board of directors meeting and encouraged the new members to continue the work that has been done. “We’re close to having some customers, which is the key to this project,” Merrick said. Smith thanked Cruz for staying with AGDC, calling him “an integral part of this board,” during the meeting. He also said in a talk with reporters following the meeting that the leadership changes do not signal a change in course for the state-owned corporation. “We’re not looking to derail any progress,” Smith said, emphasizing that he wants that message relayed to those interested in participating in the project with the state. He declined to elaborate on why Meyer was let go, calling it a “personnel matter.” AGDC officials said during an update on the Alaska LNG Project that they are in active negotiations with six potential LNG buyers. Meyer had previously stressed 2019 would be the year AGDC would begin courting potential Alaska LNG investors with an “equity road show” in addition to continuing regulatory work and securing customers. Dunleavy was regularly critical of the state-led Alaska LNG Project structure during his time in the state Senate and while campaigning for governor, stressing that the private sector needs to play a larger role in the project, as was first envisioned. The state took over the lead role on the project in 2016 after the major producers partnered on the project wanted to slow the pace down as LNG prices collapsed along with oil. Officials in the governor’s office avoided answering questions as to why Meyer was terminated.  AGDC External Affairs Vice President Tim Fitzpatrick said Dubler would not be available for comment Thursday. Meyer joined AGDC from LNG America, a Houston-based energy logistics firm he founded in 2008 that focuses on increasing the use of LNG as a fuel for the maritime and transportation industries, according to an AGDC release. He was paid a base salary of $550,000 per year, making him the highest-paid state employee, and the board of directors voted last month to award him two years of performance bonuses totaling $296,000. Dubler will officially start at AGDC Feb. 1 with a base salary of $350,000 and will not be offered pay bonuses, according to state officials. Walker also shook up the board of directors at AGDC soon after taking office, firing two board members a month after taking office in January 2015, and replacing Fauske later that year.   Editor's note: This story has been updated from the original with additional reporting. Look for updates to this story in an upcoming issue of the Journal.  

Cook Inlet sockeye forecast improves; kings closed in North

After two disappointing sockeye seasons in a row, the 2019 season may look up for Upper Cook Inlet commercial fishermen. The Alaska Department of Fish and Game’s sockeye salmon forecast, published Jan. 4, predicts a total run of 6 million sockeye to Upper Cook Inlet stream systems, with an expected commercial harvest of 3 million and 1 million for sportfishing and subsistence harvest. If the forecast proves true, the run will be nearly double the 2018 run of 3.1 million. The Kenai River, the largest sockeye-producing river in the region, is projected to receive a run of about 3.8 million sockeye, the majority of which are the 1.3 age class (one year in freshwater, three years in saltwater). The Kasilof River, the second-largest producer, is projected to see about 873,000 sockeye come back, with a slight majority in the 1.3 age class. The Kenai’s forecast is greater than its 20-year average of 3.5 million, while the Kasilof’s is behind its 20-year average of 979,000 fish. The Susitna River is forecast to see about 343,000 sockeye come back, while Fish Creek is forecast with a run of 124,000 sockeye, according to ADFG. The Susitna’s forecast is less than its recent 20-year average return of 377,000, while Fish Creek’s is significantly greater than its 20-year average of 83,000. In salmon, age correlates to the size and weight of the fish. In the Kenai, the predominance of the 1.3 age class-fish tracks with the 20-year average, while the Kasilof’s 20-year average has seen more fish in the 1.2 age class. For the Susitna and Fish Creek, the predominant age class is forecast to be 1.2-age class fish, which falls in line with the 20-year average trend for Fish Creek. The Susitna River’s 20-year average usually sees more 1.3-age class fish than 1.2, according to ADFG. The commercial harvest is projected to be about 200,000 more than the 20-year average, and more than triple last year’s harvest of 800,000 sockeye. If the forecast holds true, it’ll be good news for Upper Cook Inlet’s commercial fishermen, who largely depend on sockeye salmon as their commercial species and have had two disappointing seasons in a row. Despite a sockeye run that turned out greater than the forecast in 2017, the commercial harvest came in about 1.8 million, which was close to the forecast but about 37 percent below the historical average in the fishery. The next year, a below-average forecast proved to be even worse than expected in 2018, with more than half the run arriving after Aug. 1 and commercial fishing management openings misaligned with the timing of the runs. By the end of the season, commercial fishermen had landed about $11 million worth of salmon, about 67 percent less than the previous 10-year average, according to ADFG’s 2018 season summary. The one exception was silver salmon, which arrived in large numbers late in the summer. “All species-specific exvessel values other than coho salmon were significantly below average in 2018 in UCI,” according to the 2018 season summary. Most of the failing was in two specific age classes — the age class 1.3 and 2.3 fish, also called “three-ocean” fish because they’ve spent one or two years in freshwater and three years at sea. The 1.3 age class fish returned at 10 percent of the forecasted level, while 2.3 fish returned at 50 percent, according to the season summary. Northern Cook Inlet closures Though sockeye forecasts in Upper Cook Inlet are looking up, the king salmon season in Northern Cook Inlet isn’t. ADFG announced preseason restrictions on Jan. 7 on king salmon fishing for sport, commercial and subsistence fisheries across the region, largely based on poor projected returns to the Deshka River. “The department must make these closures and restrictions because of a recent pattern of extremely poor returns for king salmon stocks in the NCI area,” said ADFG Acting Commissioner Doug Vincent-Lang in the announcement. “The outlook for this season is particularly worrisome with the Deshka River king salmon forecast well below the escapement goal.” The Deshka River is an indicator stock for king salmon in the region. The forecast projects 8,466 king salmon between age classes 1.2 and 1.4 to return to the river, far less than the lower end of the sustainable escapement goal of 13,000 to 28,000 fish. Like other rivers across Alaska, the Northern Cook Inlet streams have seen declining king runs in the last decade; the forecast is about half of the recent 10-year average of 16,647 kings and less than a third of the long-term average of 31,416 kings, according to Fish and Game. The Susitna River, Yentna River and Little Susitna River drainages will be closed to sportfishing for kings, as will the directed commercial salmon fishery in Northern Cook Inlet. Subsistence fisheries, which receive a management priority, will be restricted to two days per week during the respective subsistence fishery seasons, according to the announcement. ADFG will monitor the runs and provide more fishing opportunity should the run warrant it, Vincent-Lang said in the announcement. Elizabeth Earl can be reached at [email protected]

Movers and Shakers for Jan. 13

Alaska USA Federal Credit Union announced four executive level positions within the organization. Wayne Bailey has been selected to fill the new position of executive vice president and chief experience officer. Bailey has more than 25 years of experience with Alaska USA in positions of increasing responsibility, most recently as chief lending officer. He holds a bachelor’s degree in finance from the University of Colorado Boulder. Scott Hansen has been selected for the position of chief lending officer. Hansen has more than 40 years of consumer lending and collection experience, and has been with Alaska USA for more than 13 years, most recently as executive director, Consumer Lending. He holds a bachelor’s degree in economics from the University of Utah. Jessica Graham has been promoted to fill the position of chief risk officer, general counsel. Graham has more than 15 years of in-house corporate law experience, most recently as senior vice president, general counsel. Graham also clerked for the Chief Justice of the U.S. Court of Appeals for the Ninth Circuit, holds a degree in law from the Law School of Duke University, and has served on the board of the Alaska Bar Association. Maria Quick has been selected for the position of senior vice president, Accounting and Treasury. Quick has more than 13 years of industry experience, and most recently held the position of manager, Finance and Accounting. Quick is a licensed CPA with a bachelor’s degree in accounting from Northwest Nazerene University. Legislative advocacy veteran Thor Stacey was named director of National Federation of Independent Businesses Alaska. For the past six years, Thor Stacey has been the director of government affairs for the Alaska Professional Hunters Association and has also led legislative initiatives for Trident Seafoods, Alaska Air Carriers Association, Alaska Wild Sheep Foundation, and IPOP Mining. A lifelong Alaskan, Stacey served in the United States Marine Corps under Col. and Alaska U.S. Sen. Dan Sullivan. A graduate of AJ Diamond High School in Anchorage, he later attended the University of Alaska Southeast to study political science and government, Stacey also studied in the aviation maintenance program of the University of Alaska Anchorage. Central Council of Tlingit and Haida Indian Tribes of Alaska announced the promotion of Helene Bennett to Tribal Operations and Self Governance manager. Bennett previously served as the executive assistant to Tlingit and Haida’s Chief Operating Officer Ken Truitt. In her new role, Bennett will provide administrative support to and oversight of the Tribe’s Bureau of Indian Affairs Self Governance programs, provide support to compact communities in compliance with applicable regulations and fiscal policies, and oversee the day to day administrative functions of the Tribal Operations department. Bennett will also manage all facets of Tribal Assembly in collaboration with the Office of the President. She joined Tlingit and Haida’s workforce full-time in 2010 with the Head Start department, she later transitioned to the Native Lands and Resources Department before accepting a position in Tribal Operations in 2014. Prior to this, Bennett worked for the City and Borough of Juneau’s Parks &Recreation Department and the Juneau Police Department. Perkins Coie announced that Sarah Gillstrom of its Anchorage office has been promoted to partner. Gillstrom is a member of Perkins Coie’s Litigation practice. Gillstrom’s practice focuses on construction law and commercial litigation in both federal and state courts. In addition to representing clients in breach-of-contract litigation, she has experience assisting clients — including owners, contractors, and design professionals — in construction disputes. Gillstrom also drafts and negotiates construction agreements, and represents clients in real estate transactions and litigation.

Senate set to work as House in disarray

Another challenging session is fast approaching, but Alaska’s Legislature remains half-baked. That’s because at the time of this writing the House is still without a majority caucus despite the Supreme Court’s Jan. 4 decision to uphold a single-vote victory for Fairbanks Republican Rep.-elect Bart LeBon in District 1. In the Senate, leaders of the Republican majority are again preparing to tackle major issues on which they have made progress in recent years but significant work remains. Incoming Senate President Cathy Giessel, R-Anchorage, told a gathering of the Resource Development Council for Alaska at the group’s annual legislative preview meeting Jan. 3 that addressing crime problems in the state will be the top priority for her caucus in 2019, a position in line with Gov. Michael J. Dunleavy’s primary goal for his first session in office. Dunleavy and many legislators — some of whom first supported it — have pushed for a wholesale repeal the now-beleaguered criminal justice reform package in Senate Bill 91 passed in 2016. Giessel said in a brief interview that there are “significant flaws” in SB 91 and on the whole the public wants it repealed but continuing changes can be made that could be beneficial without sacrificing some of the more popular aspects of the law, such as tougher penalties for various felony convictions. She said prosecutors across the state have helped legislators identify some of the gaps in SB 91 that can be closed without a straight repeal. Finance Committee co-chair and operating budget leader Sen. Bert Stedman, R-Sitka, said he expects the omnipresent issue of closing the state’s large budget gap will keep legislators working well into overtime for a fifth consecutive year. The 2020 fiscal year deficit is currently pegged at about $1.6 billion, but Dunleavy’s final budget proposal should cut spending to the point of being balanced, according to Budget Director Donna Arduin. At that point it will be up to the Legislature to determine how many of the administration’s cuts it wants to implement. It’s those major policy calls — and the fact that there are little state savings to fall back on — that lead Stedman to believe legislators will work up to and possibly over their constitutionally allotted 121 days. With $1.7 billion left in the Constitutional Budget Reserve Fund it would be possible for legislators to turn to it one more time to fill the deficit but there is general agreement that the state needs to keep at least $1 billion, and ideally $2 billion, in reserve to respond to emergencies and for cash flow management purposes. That means legislative action will be needed to make the structural budget cuts required to resolve a deficit of that size, according to Stedman. “I’ve expressed concern and a desire to the administration to have legislation prepared and ready for legislative action. In my opinion, (big changes) should be led by the administration; the agencies are the ones with the expertise, with the more intimate knowledge of their operations,” he said. “The Legislature, the body of the people, doesn’t have the background.” Senate Republicans are looking to major changes to the state’s Medicaid program, for one. Democrats argue Medicaid expansion, accepted by former Gov. Bill Walker in 2015, is a win for the state because it has afforded upwards of 40,000 low-income Alaskans access to health insurance that is 90 percent funded by the federal government, a funding level legislators are happy to match for other federal programs such as highway funding. However, Giessel contends the expanded class of Medicaid recipients, which includes working-age men, takes money away from the individuals the safety net was originally intended for. “Working age men — we need to get them to work,” she said. On the other hand, Stedman said he wants to make sure the state is collecting all of the Medicaid funding that’s available. “I’m interested in seeing how much money we’re leaving on the table and I think it’s significant — in the tens of millions — and I think we need to clean up that area and try to get as much match as absolutely possible,” Stedman said in an interview. The Senate’s final Permanent Fund dividend amount will be a collective decision, he noted, but Stedman is of the opinion the PFD appropriation should be half of whatever the state’s percent of market value, or POMV, draw on the fund is in any given year. He believes splitting the draw 50-50 for dividends and government support would help alleviate the politicization of the issue. Stedman is more concerned about the size of the POMV draw; he said the current 5.25 percent draw is too large and it needs to be reduced to the 4.5 percent range to be sustainable over the long-term. At 5.25 percent, the Revenue Department estimates the 2020 fiscal year POMV draw will be roughly $2.9 billion. “We shouldn’t be looking at the Permanent Fund as a milk cow to milk it as much as we can and hope the historical (average returns) average out and we don’t have any abnormal hiccups in the financial markets,” Stedman stressed, recognizing a smaller draw means less revenue, putting more pressure on the state budget. “The Permanent Fund should be siloed and run as a portfolio regardless of our financial needs.” His biggest worry, though, is that legislators will use take “the easiest course of action” in the upcoming session and fill the deficit via an ad hoc draw from the roughly $16 billion available through a simple majority vote in the Earnings Reserve Account of the Permanent Fund, he said. “That issue of protecting the Earnings Reserve and protecting the Permanent Fund from appropriations is a very serious matter,” Stedman continued. “You can’t point at one party — the no-good SOBs down the hall, they want to take big chunks of money — it’s all the SOBs in the building. We have good intentions but collectively we’re very dangerous and hard on the savings of the state because it’s easier to make a 21 and 11 vote than it is to restructure our operations.” He emphasized that he is looking forward to a robust debate on how to best avoid overusing the fund. House disarray Because no one wants to show their hand, no one among House legislators is talking. There is very little legislators in the House can do until they settle on a majority caucus, according to Lt. Gov. Kevin Meyer’s Chief of Staff Josh Applebee. The lieutenant governor presides over the initial floor sessions of the House and Senate each year, swearing in new members and taking nominations for House speaker and Senate president pro-tems. “That’s all his duties are. It’s incredibly limited what the lieutenant governor can do,” Applebee explained. “The lieutenant governor as presiding officer is only empowered to do those things — maintain decorum, call them to order, swear them in.” Without a majority to nominate a speaker the House will not even be able to accept messages from the Senate or the governor, according to the Legislature’s uniform rules. Applebee noted that means “the body can’t conduct any business other than electing a speaker pro-tem and that includes being able to approve the governor’s appointment of Sharon Jackson” to the House District 13 seat vacated by now-Corrections Commissioner Nancy Dahlstrom. Applebee investigated what happened the last time — in 1963 — the House started a session without a majority, through reading the Legislative Journal from the time. “They really tried to explore other powers the (lieutenant governor) had and they came to the conclusion that there are none,” he said of the 20-20 caucus split in 1963. “There’s no committees to be appointed, communications from the governor and the Senate can be received but not acted upon; they basically sit on the clerk’s desk.” He added that it could go so far as to challenge votes to adjourn a floor session. “Back in ’63 they couldn’t agree on how long to take a recess,” Applebee recounted. How it eventually shakes out should add up to an interesting lesson on the inner workings of Alaska politics. ^ Elwood Brehmer can be reached at [email protected]

Southeast purse seiners to hold another permit buyback vote

Southeast Alaska purse seine fishermen are preparing to vote on another permit buyback, with an eye toward making the fishery more viable in an era of more efficient vessels and smaller salmon runs. The National Marine Fisheries Service is scheduled to send out ballots to fishermen starting Jan. 15 asking whether the fleet should take on $10.1 million in federal loans to buy out 36 permits, removing them from the fishery forever. If successful, the move would reduce the number of permits in the fishery to 279, down about 100 permits since 2012. Like many things in the U.S. right now, the vote may be delayed as a consequence of the ongoing federal shutdown because most NMFS employees are on furlough. Pending the resolution of the budget battles in Congress, proponents of the buyback are hoping to get the ball rolling soon. This would be the second buyback since the loan program was authorized by Congress in 2006, and so far, it’s been successful from the perspective of the fleet, said Bob Kehoe, the executive director of the Purse Seine Vessel Owners Association. “I think it’s been successful; we’ve removed permits,” he said. “We’ve been able to generate more than enough revenue to service the loan. The service rate has been decreased.” The purse seine permit buyback program in Southeast is something of an outlier; it’s a federally authorized loan program to buy back state-issued fishery permits. The Southeast Revitalization Association, a group of stakeholders formed to pursue the buyback, worked with former Sen. Ted Stevens to pass the authority through Congress, establish a floor for the number of permits with the state Commercial Fisheries Entry Commission and communicate with permit holders. The first fleet capacity reduction buyback happened in 2008, outside the loan program, through a federal grant. In 2008, about 415 permits existed in the fishery, though only about 200 were fished, according to information in the Federal Register. The Southeast Revitalization Association used a reverse auction to purchase 35 permits in 2008, reducing the capacity to 380. After the buyback program was authorized, NMFS worked with SRA to request bids for permits on a $13.1 million loan, which the fleet approved to buy about 64 permits. Kehoe said the original interest in fleet capacity reduction was because of very poor prices for salmon. “There was a lot of (pink and chum) salmon available for harvest, but the prices were so low that it was hard for people to make a living,” he said. “There was very little competition among the processing sector, and so it worked fine for the processors having more capacity than was needed for harvest, but it wasn’t working for fishermen. Back in the early 2000s, there were some fishermen that couldn’t even find a market to sell their fish.” With about $10.1 million remaining on the loan authority after the first buyback, the SRA asked for other bids to further reduce the size of the fishery. In 2016, after receiving 22 bids and asking the fleet if they cared to move forward with the buyback, the fleet voted it down and sent the second round of the buyback back to the drawing board. Susan Doherty, the executive director of the Southeast Alaska Seiners Association, said the vote didn’t fail by much in 2016, but many ballots weren’t returned and communication efforts about the buyback were low. Neither the Purse Seine Vessel Owners Association nor the Southeast Alaska Seiners Association boards of directors chose to take a position on the 2016 buyback and thus didn’t reach out to permit holders about the vote. The vote also took place over the Christmas holiday when people may have been away from home and did not see the ballots. “Last time there were several issues with the process,” she said. “We didn’t do enough with encouraging folks to return their ballots. Anything that’s not returned is an automatic ‘no’ vote.” This would be the last buyback for the foreseeable future, given that it would use up the remaining loan authority, Doherty said. The 279 remaining permits would still be greater than the floor of 260 set by the CFEC, which is the level at which it would be too exclusive. For the fishermen, it’s primarily an economic decision, Doherty said — the average vessel earnings in 2016 was $65,000. For scale, the average permit value at the end of 2016 was $163,400, according to the CFEC. The fleet now has several seasons of extremely poor runs under its belt since 2016, so that may increase interest in voting for the buyback, said Dan Castle, a seine vessel owner and the president of the Southeast Alaska Seiners Association board. “I think this time, after a few more mediocre to poor years, we have a full slate of people willing to extinguish their permits, and it will also extinguish all the money,” he said. “I think we have a much better chance of making the case … it’s going to grab more than 10 percent of the fleet. That’ll be permits that are not going to be fished, whether they’re latent or not … it’s going to be better.” Castle said the buyback program was unique to start and required jumping through a “containerload of hoops to approve.” One of the effects of the program, though, has been to overall increase the quality of the fleet, he said. Older boats, ready to retire anyway, left the fishery, and other concerns that people brought up over the buyback have proved to be non-issues, he said. One motivation for permit holders currently fishing is the hope to keep opportunistic fishermen from returning and ballooning the size of the fleet again when the runs return to larger numbers, he said. Overall, he said he’s more optimistic about the vote this time. “We’ve dispelled a lot of myths over the years,” he said. “Everybody’s familiar with how the process works. We have a lot better understanding in the fleet. This is going to be it … People can see the benefits of squashing the fleet down a little bit. We’re so efficient now, compared to how it was when the first issued the permit program.” The buyback program works as a reverse auction, with each bidder asking a price to be bought out, but the average price per permit would be about $280,555 if the loan is approved. At the end of 2018, the average value for a permit was $195,000, down from an average value of $307,000 in 2014, according to the CFEC. Kehoe said the price is based on bids, but there may some speculation going on as permit holders try to maximize the return based on the loan amount available. “You’re asking people to give up a permit that has value forever and then the permits that will remain assuming the fishery bounces back will have a higher value,” he said. “People are free to put in their bid amount. These permit prices change constantly. It could be when we put this program together, the permit values were higher. If you look at the permit prices now, you’re just coming off two consecutive poor seasons. In order to make this work, you’re going to have to remove permits.” Doherty said the value of permits may also be pushed down currently because people aren’t eager to get into a fishery that’s been hurting for the past several years. Addressing concerns The Alaska Department of Fish and Game raised concerns to NMFS about the reduction in the size of the fishery just before the 2016 buyback vote, according to a letter from former commissioner Sam Cotten dated Dec. 6, 2016. The letter raised concerns about the lack of fishery impact analysis after the 2008 and 2012 buybacks and the buyback increasing the value of permits, making it harder for new fishermen to buy into the fishery, exacerbating the problem of high entry costs blocking younger fishermen entering the fleet, among other concerns. “We are troubled by the lack of analysis informing this process, the lack of objective and measurable goals with which to measure the relative success of these buybacks, the potential impacts of this action, and the commensurate constitutional implications,” Cotten wrote. Castle said that the SRA worked with the CFEC based on fleet size concerns and exclusivity, and if the fishery is judged to be too exclusive, the state can always issue more permits. To pay for the loan, fishermen pay a levy to processors at the dock, who then pay the federal government. So far, the ex-vessel value has also proved itself able to service the loans, with NMFS lowering the loan service rate because the applied rate was generating more revenue than needed. The vote is currently scheduled to run from Jan. 15 to Feb. 14. Elizabeth Earl can be reached at [email protected]

Disagreements remain after on-site cannabis consumption approved

Though Alaska’s cannabis business owners have received the green light for on-site consumption endorsements, there’s still division on the Marijuana Control Board and in the public on the issue. The board members passed regulations for on-site consumption at the Dec. 20 meeting on a 3-2 vote. Industry representatives Brandon Emmett and Nick Miller and public safety representative Jeff Ankerfelt, the Sitka Chief of Police, voted in favor, while public health representative Loren Jones and rural public member Mark Springer voted against. It was a flip across the table for Jones, who helped draft the language of the regulations the board was considering. Last April, when the board first considered regulatory language, Jones told the Journal that he felt the regulation language covered public safety and health concerns well and included various voices in the process. During the meeting, he reversed and said he did not think the regulations went far enough and that to approve on-site consumption now would be a “terrible, terrible mistake for us to make moving forward on this.” “I worked on this with Mr. Emmett, and I was clear to him and clear to everybody else that if this were to pass, I wanted to have something that was enforceable and workable,” he said. “I think we went a long way … but I don’t think we’ve gone far enough.” Atop concerns about the definition of “public space,” Jones said he didn’t think the regulations as written would sufficiently protect people from the effects of secondhand smoke. Earlier in the meeting, he also raised concerns about the ability of citizens in unincorporated areas to protest on-site endorsements from being granted, as they do not have a local government to formally protest or opt out. Like commercial cannabis operations, local governments of cities or boroughs are allowed to opt out of allowing on-site consumption within their boundaries. Though much of the support came from the tourist industry, with business owners seeking a place for tourists to legally smoke cannabis, Jones said there were mixed feelings in Juneau about encouraging cannabis tourism. “We’re expecting 1.3 million tourists come off the cruise ships (in Juneau) next year,” he said. “About 90 percent of the tourists who come to Alaska come through Juneau. I don’t know that Juneau or the state of Alaska wants to be known as a cannabis tourist destination. Most of the people come up to us wanting the clean air, clean water. They want to do the wilderness … In my community, we have a very strong indoor air ordinance that we’re going to maintain.” Springer agreed with Jones, saying he gave weight to the comments of public health officials, joining Jones in voting against. While many hailed the vote as a victory for Alaska’s cannabis industry, which would be the first state to develop retail on-site consumption, there was broad opposition from public health professionals and from the public. Within the board, Miller and Emmett supported clarifying rules for retailers, who under the approved rules would not be able to sell more than a certain amount of marijuana to an individual per day. In a large retail setting, with multiple employees working, that will be difficult to track, he said. “We’re not allowed to keep customer data,” he said. “How do I know if someone came in this morning and came in at 3? I understand that that is not the intent … but is it still a violation? There’s just no way for the retailer to understand it at this time.” The board voted down Miller’s proposed amendment to remove the daily limit clause 3-2, with Emmett and Miller supporting it. Other members cited concerns that removing the language would allow people to buy too much in a single day. Under the current requirements, several of the areas that requested it — notably, downtown Juneau — most likely won’t see on-site consumption areas soon. The regulations the board passed require a retail store to be freestanding to apply for an endorsement, meaning there are no other establishments in the building, and have proper ventilation systems for the smoke. That likely won’t apply to anywhere in downtown Juneau, which is densely developed, Jones said. Springer agreed, saying there will likely be a small number of retailers who meet the requirements. “I think it will be a boon to a relatively small number of people who developed their original facilities with this in mind,” Springer said. “There are a lot of retailers that this is going to do nothing for. It’s not an across-the-board benefit.” The American Lung Association’s Alaska chapter, the Alaska Department of Health and Social Services’ Division of Public Health and the American Cancer Society Cancer Action Network wrote letters opposing the approval of on-site consumption, all citing concerns about the impact of secondhand smoke particularly and the recently passed smoke-free workplace law, which requires all smoking activity to occur outside of places of employment. “Secondhand smoke from combusted marijuana contains fine particulate matter that can be breathed deeply into the lungs, which can cause lung irritation, asthma attacks, and makes users more vulnerable to respiratory infections,” the American Lung Association’s letter states. “Exposure to fine particulate matter can exacerbate health problems, especially for people with respiratory conditions like asthma, bronchitis, or COPD. Secondhand smoke from marijuana has many of the same chemicals as smoke from tobacco, including those linked to lung cancer.” Advocates wrote that the public health studies cited are not reputable about the carcinogenic effects of marijuana smoke and that blocking on-site. Consumption areas just push smokers into their own homes, where they expose their families and roommates. Elizabeth Earl can be reached at [email protected]

OPINION: Court cases give Legislature carte blanche

Few would envy the position the Legislature and former Gov. Bill Walker found themselves over the past four years dealing with crashing oil prices and the ensuing multi-billion-dollar budget deficits. Reducing the Permanent Fund dividend, virtually eliminating the capital budget and reversing past practice by not paying off oil and gas exploration tax credits in full each fiscal year easily lead the way on the least popular actions that have been taken. Even with those moves, some $14 billion from the state’s savings accounts was still necessary to close the budget gaps for the fiscal years since 2015 to the present. In the aftermath of Gov. Bill Walker’s veto of half the Permanent Fund dividend appropriation in 2016 — reducing it from a projected $2,044 per Alaskan to $1,022 — Sen. Bill Wielechowski, D-Anchorage, and a few former legislators took a lawsuit all the way to the Supreme Court challenging the action as contrary to the formula for paying the PFD currently in statute. By the time the Supreme Court ruled in Walker’s favor, the Legislature had followed his lead in the 2017 session — and the Superior Court judge that ruled against Wielechowski, et al, on the same day the case was argued the prior November — by arbitrarily setting the PFD at $1,100 rather than following the statutory formula. In a nutshell, the Supreme Court determined that the constitutional authority of the governor to veto appropriations and the similar vested authority of the Legislature to make appropriations took precedence over any law such as the one that calculates the annual amount of the dividend. It is a similar reasoning that allows the Legislature to stay in session for the 121 days written in the constitution rather than the 90-day limit approved by voters through an initiative in 2008. While legally sound, the PFD ruling gave the Legislature the ability to ignore its own laws so long as whatever action it takes as an alternative does not conflict with the Constitution. The anger over three straight years of Walker, and then the Legislature, disregarding the PFD formula was ridden by Mike Dunleavy all the way into the governor’s mansion with the central promise of his campaign being a pledge to follow the law. Then on Jan. 2 a Superior Court judge handed down another ruling that, unlike the Supreme Court decision that allows the Legislature and the governor to disregard the law, allows them to violate the spirit but not the letter of the Constitution. One year before Walker vetoed half the PFD appropriation in 2016, he without warning slashed $200 million from the budget earmarked to pay off earned oil and gas exploration credits. A year later, despite assuring the financial institutions lending to small companies working in Alaska he wouldn’t do it again, Walker vetoed $430 million worth of the payments. In the aftermath, those banks stopped lending money to the independent explorers and before the Legislature finally eliminated the programs on both the North Slope and Cook Inlet the total tab for tax credits owed swelled to more than $800 million. Business arrangements the state had with BlueCrest in Cook Inlet and Brooks Range Petroleum Corp. on the Slope had to be reworked, while Caelus Energy, which is owed some $100 million for its work, has been forced to sell off acreage and assets as it appears ready to exit the state after buying Pioneer Natural Resources properties for $550 million in 2013. With the state’s business reputation in tatters, Walker’s administration finally came up with a plan to pay off the credits without a lump sum appropriation from the Legislature by instead creating a state entity to sell up to $1 billion worth of bonds that would be paid for by the companies owed money taking a haircut of 10 percent in exchange for receiving most of what they’re due sooner rather than waiting years to be paid in full according to the statutory formula. The only problem with the plan is that the Constitution has strict limits on how the state may issue debt such as for emergencies or through a vote of the people to approve general obligation bonds. Walker and the Legislature worked around these limits by creating an “independent” entity that would sell the bonds and using “subject to appropriation” language that would not legally qualify as binding the State of Alaska to debt according to the Constitution. A lawsuit ensued, and the workaround language was deemed sufficient by a Superior Court judge to not create the legal definition of debt and therefore “passes constitutional muster.” To call this a troubling precedent would be an understatement, as it essentially gives the Legislature a blank check to get around putting debt issues to a vote of the citizens. Nothing would stop it from creating a “Transportation Bank” that could sell “subject to appropriation” bonds to pay for infrastructure projects without having to seek the approval of Alaskans. That’s not to say that Judge Pate erred in his legal reasoning, but it is to say that it should not be so easy to get around the very plain intent of the constitutional framers to limit the ability to take on debt without a vote of the people. The PFD ruling has allowed the Legislature to ignore the laws it has passed, and the bond ruling allows it to get around the intent and spirit of the Constitution through nothing more than a shell entity and the three words “subject to appropriation.” In this respect, the solutions to the budget deficits that were crafted by Walker and the Legislature may turn out to be worse than the problems they were trying to solve. Andrew Jensen can be reached at [email protected]

FISH FACTOR: Few problems so far for fisheries amid partial shutdown

The government shutdown has caused few problems so far in Alaska’s fisheries, but concern is growing as it enters a third week. The shutdown of nine out of 15 federal departments and agencies on Dec. 21 has furloughed about 800,000 workers nationwide, most with no pay, including fishery oversight and research jobs. In many cases, that means there’s no one to issue fishing permits, licenses or other documents and services required before setting out. “I have not heard of any problems, but that’s not to say that there aren’t any,” said Forrest Bowers, acting director of the Alaska Department of Fish and Game’s Commercial Fisheries Division, referring to the cod fishery that opened on Jan. 1 and the ongoing Bering Sea crab fishery. State operations are not directly affected by the shutdown, but fisheries in Alaska waters intertwine and are closely timed with the federal ones. In the co-management case of Bering Sea crab, for example, the feds provide the surveys and science, the state does the rest. “The state sets the total allowable catch and we handle the in-season management of the fishery, including vessel registrations, observer coverage and harvest tracking,” Bowers said. The cod and crab boats had their paperwork in order prior to the shutdown, Bowers said, except for one straggler who needed the services of a furloughed electronic scale inspector and was stuck at the dock. “They haven’t been able to have that scale inspection done and it’s delaying them. We’re hoping we can get that resolved for them,” Bowers said, adding that other such “behind the scenes” unavailable services in the tightly regulated fisheries could cause problems as more boats come online this month. The shutdown also is causing a headache for federally contracted onboard fishery observers who collect stock data and track what’s coming and going over the rails. Regulators at NOAA are not holding debriefings for the observers when they return from a fishing trip, which are required before they can sign on to another. That’s sidelined five of her employees so far, said Stacey Hansen, program manager at Saltwater, an Anchorage-based company that provides observer services to the fleets. “I’ve got a group of people that are now stuck. They’re just sitting and waiting until they can get on with their lives,” Hansen told Alaska’s Energy Desk. Meanwhile, Alaska’s largest fishery, pollock, gets underway on Jan. 20 along with openers for flounders and myriad other whitefish. “I think there is uncertainty right now about what’s going to happen,” Bowers said. “Fortunately, we have a pretty sophisticated group of folks in the fishing industry in Alaska who are very professional and know how to do their jobs. It helps a lot when there is a good working relationship with the managers; it makes these uncertain times go more smoothly.” One is done Only one person applied for the Alaska Department of Fish and Game commissioner’s job and it’s the same one who’s holding it now. Doug Vincent-Lang was selected as acting commissioner in early December by incoming Gov. Michael J. Dunleavy. The governor said in a statement that he believed it was important to have someone managing the department while the boards of Fish and Game compiled a list of other potential applicants. State law requires that a new governor select a commissioner from nominees suggested by the joint boards and the group will fulfill that statutory obligation on the evening of Jan. 16 at the Anchorage Sheraton. It will be a quick meeting, said boards support executive director Glenn Haight. “For this particular year, we have one applicant so it’s a fairly simple task for the joint board to go through the review process,” Haight said. “Anyone could’ve applied, it’s up to the individuals. Sometimes in the past there’s been more than 10 names that have come into the department for consideration and sometimes there’s just five or so.” No testimony will be taken at the Jan. 16 joint board meeting but the public is invited to listen in. Vincent-Lang was director of the division’s wildlife department under former Gov. Sean Parnell and was assistant director of the sportfish division in the early 2000s. The ADFG commissioner oversees 1,700 employees at 47 offices across the state and manages approximately 750 active fisheries, 26 game management units and 32 special areas. The commissioner appointment must be approved by the Alaska Legislature at the end of the upcoming session. Got gas? Liquified biogas from dead fish and other organic wastes will soon power a fleet of luxury cruise ships as a way to save money and protect the environment. The 125-year-old cruise operator Hurtigruten, known for its trips to the Arctic, will operate at least six of its 17 ships using a combination of biogas, liquified natural gas and large battery packs by 2021. “While competitors are running on cheap, polluting heavy fuel oil, our ships will literally be powered by nature,” spokesman Daniel Skjeldam said in a statement. “Biogas is the greenest fuel in shipping and will be a huge advantage for the environment. We would love other cruise companies to follow,” he added. Concerns over the atmospheric impacts of high-sulfur fuel favored by the shipping industry led the International Maritime Organization to set a 0.5 percent sulfur limit on marine fuel by 2020. A 2017 report by the Nature and Biodiversity Conservation Union in Germany claimed that a midsize cruise ship can use more than 100 tons of fuel a day, producing as much particulate as a million cars. The Norwegian cruise ship company is taking other steps to boost its green credentials: it has ordered three new hybrid-powered cruise liners, has banned single-use plastics from all its ships and plans on becoming carbon neutral. Laine Welch lives in Kodiak. Visit or contact [email protected] for information.

ANALYSIS: Does new congress threaten Trump energy agenda? Not so fast

Congress returns with a renewed focus on climate change and clean energy under the direction of a newly minted House Democratic majority. But with President Donald Trump still in control of the White House and a Republican majority in the Senate, prospects for major shifts in policy in the 116th Congress are slim. Even in the House where a crush of new progressive freshmen are pushing the party further to the left, climate and energy issues may take a backseat to oversight and Democrats’ broader goal of serving as a check on the administration. However, even if a divided 116th Congress is powerless to forge consensus on legislation, the refocusing of the public debate around energy and the environment is worth noting. Unrequited priorities tend to pop up in other, unrelated debates as amendments or poison pills, infrastructure for example. Longshot policy proposals can also form the foundations of future law. Look no further than criminal justice reform to see how, with enough time, a minority proposal can evolve into the majority consensus. Climate change policy certainly fits that bill. Drawing the most headlines is a proposal championed by newly elected New York Democrat Rep. Alexandria Ocasio-Cortez known as the “Green New Deal.” While heavy on slogans and government spending, however, the Ocasio-Cortez plan is light on policy, other than calling for decarbonizing the economy by 2030. The idea of putting a price on carbon has been around for more than a decade. The details have changes slightly depending on the political winds, but while it has yet to stick, it also hasn’t disappeared. Its very existence in the public discussion means it shouldn’t be dismissed, especially if the next election cycle brings a new wave of Democrats to Congress — or even the White House. Later this month, House Democrats, who are resuscitating the defunct special committee on climate change under the leadership of Florida Democrat Rep. Cathy Castor are likely to begin to attempt to put meat on the bones of Ocasio-Cortez’s proposal. Democrats are attempting to pull the national conversation back toward climate change amid the backdrop of America surpassing both Saudi Arabia and Russia to become the world’s largest oil and gas producer. And output is expected to continue to grow for years, providing abundant and affordable fossil energy to consumers at home and abroad, with all the economic and political benefits that entails, including a boost to manufacturing that will play well in states Trump won in 2016. It will be interesting to see whether the revived climate committee, which lacks legislative or subpoena powers, will play a constructive role in developing a consensus proposal or if it reverts to serving as a stage for media attention and aspirations of higher office, as it did under then-Chairman Ed Markey of Massachusetts. The bigger question for Rep. Ocasio-Cortez and her followers is whether they will support more centrist proposals to improve the energy sector’s environmental performance and the market-based development of cost-competitive renewables. Historically, this has not been the case for progressives, who have typically labeled conservative support for innovation and market-driving proposals as insufficient. That’s unfortunate as the core fundamentals that drove growth in the renewable energy sector in 2018 will persist. These included the declining cost of wind and solar, advances in battery storage technology and grid operators’ growing expertise and expanding toolset for integrating intermittent renewable power into the grid. Continued growth in cost-competitive renewables is a good bet regardless the fate of federal tax credits. The Trump administration has helped renewables developers with efforts to deregulate and streamline permitting, in addition to fossil fuels. In February 2018, the Federal Energy Regulatory Commission finalized order 841, which requires grid operators to remove barriers hindering participation of electric storage resources in the capacity, energy and ancillary services markets. Much about energy policy in 2019 will be determined by the leadership changes of key energy panels in both chambers of Congress. In the House, the Energy and Commerce Committee under the leadership of Rep. Frank Pallone of New Jersey, has already said the panel’s first hearing will focus on climate change. Chairman Pallone is also unlikely to give much time to the permitting reforms previously championed by Republicans. In the Senate, much has been made over the ascension of West Virginia Democrat Sen. Joe Manchin, a centrist from the nation’s second-largest coal-producing state, to serve as the top Democrat on the Senate Energy and Natural Resources Committee. Environmentalists worry the move signals a shift away from clean energy as Sen. Manchin replaces Washington Sen. Maria Cantwell, a longtime champion of clean energy. The Energy Committee’s chair, Sen. Lisa Murkowski, has long been an advocate for renewables, low-carbon nuclear energy, efficiency gains and other climate-friendly legislation, so the pair of fossil-fuel state senators may prove a good balance that can win over skeptics on both sides of the aisle to move legislation. At least parts of the bipartisan energy package Sen. Murkowski has attempted to push uphill the last two congresses could also stand a better chance with Democrats in control of the House. Another potential beneficiary of a divided Congress could be the Nuclear Energy Leadership Act, which would extend the length of federal power purchase agreements for public utilities. The bigger challenge for Republicans may be keeping President Trump’s energy dominance agenda on the rails under fire from Democrats. Administration officials could easily find themselves spending more time trudging up Independence Avenue to testify before House oversight committees than advancing the president’s agenda. Trump’s efforts to make more federal areas available to oil and gas exploration and reform the regulatory rulebook won’t end completely — it is his agencies that are in charge of the changes, after all — but they will face stronger headwinds. The administration is likely to focus on completing deregulatory initiatives and reforms already announced rather launching new efforts, that includes EPA’s new Affordable Clean Energy rule, fuel economy standards. It will also look to finalize a new offshore and onshore leasing programs. Robert Dillon is Vice President of Communications for the American Council for Capital Formation, a pro-growth economic think tank based in Washington, D.C., and the former communications director of the U.S. Senate Energy and Natural Resources Committee.


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