Bill would compel Big Tech to divulge user data value

WASHINGTON (AP) — As Congress bears down on big tech companies, two senators want to force giants like Google, Facebook and Amazon to tell users what data they’re collecting from them and how much it’s worth. The legislation floated June 24 by Sens. Mark Warner, D-Va., and Josh Hawley, R-Mo., goes to the heart of the tech giants’ lucrative business model: harvesting data from platform users and making it available to advertisers so they can pinpoint specific consumers to target. “When a big tech company says its product is free, consumers are the ones being sold,” Hawley said in a statement. “These ‘free’ products track everything we do so tech companies can sell our information to the highest bidder and use it to target us with creepy ads. Even worse, tech companies do their best to hide how much consumer data is worth and to whom it is sold.” The measure would require commercial services with more than 100 million active monthly users to disclose to their customers and financial regulators the types of data they collect. They also would have to provide their users with an assessment at frequent intervals of the data’s value to them. It comes as bipartisan support grows in Congress for a privacy law that could sharply rein in the ability of the biggest tech companies to collect and make money from users’ personal data. At the same time, a House panel has opened a bipartisan investigation of Silicon Valley’s market dominance. The Internet Association, the tech industry’s major trade group representing Facebook, Google and dozens of other tech companies including Netflix and Airbnb, said Monday that it supports a comprehensive data privacy law. “Data helps businesses, across all industries and of all sizes and business models, provide consumers with better products and services,” the group’s president and CEO Michael Beckerman said in a statement. “The internet industry supports a comprehensive, economy-wide federal privacy law that covers all companies … to give consumers the protections and rights they need to take full control of the data they provide to companies.” The group’s statement didn’t directly address the issue of mandating companies to put a value on users’ data. Unlike many industrialized nations, the U.S. has no overarching national law governing data collection and privacy. Instead, it has a patchwork of federal laws that protect specific types of data, such as consumer health and financial information, and the personal data generated by younger children. A national law would be the first of its kind in the U.S. and could allow people to see or prohibit the use of their data. Companies could be required to seek permission to provide the data to third parties. A law could shrink Big Tech’s crucial revenues from advertising. There’s no parallel legislation in the House for the new Senate bill, called the Dashboard Act, and its prospects are unclear. Warner, who amassed a fortune as a tech industry investor and executive before entering politics, and Hawley, a freshman and conservative who pursued investigations of Google and Facebook’s business practices as Missouri attorney general, have been especially active in the debate over big tech.

Legislative leadership rejects Dunleavy’s call to Wasilla

JUNEAU — Two weeks before an anticipated special session in Wasilla, the leaders of the Alaska Legislature say they are rejecting Gov. Michael J. Dunleavy’s plans in favor of meetings in Juneau and Anchorage. In an emailed announcement June 24, Speaker of the House Bryce Edgmon, I-Dillingham, and Senate President Cathy Giessel, R-Anchorage, said, “The Alaska Legislature announced today it will convene in Juneau on July 8th for the 2nd special session, with the majority of meetings to be held in Anchorage.” While lawmakers lack the votes to change the special session agenda or timing laid out by the governor in a June 13 proclamation, the leaders of the House and Senate believe they can change the location away from Wasilla Middle School. The legality of such a decision is a significant question. “Really, a lot of this is gray area. It hasn’t been tested,” Edgmon said by phone. Article II, Section 9 of the state constitution says, “Special sessions may be called by the governor or by vote of two-thirds of the legislators.” State law implementing that section says in part, “The legislature may call itself into special session if two-thirds of the membership responds in the affirmative to a poll conducted by the presiding officer of each house.” Currently, fewer than 40 of the Legislature’s 60 members support a change to the governor’s agenda. All 15 members of the Alaska House Republican minority support it, as do at least six of the 10 members of the Senate who voted in favor of a traditional Permanent Fund dividend this year. State law also says the governor can designate a location for the special session. The constitution does not grant the governor that power, and Edgmon said the doctrine of separation of powers trumps state law in this case. “The Legislature is exercising its right to the location,” Edgmon said by phone. “Although we are one vote short of the 40-vote threshold to call ourselves into our own special session agenda, the majority of legislators in both bodies considers it our right to determine the location and venue best equipped to conduct business on the Governor’s special session call, while providing the most access to as many Alaskans possible,” Edgmon and Giessel said in their joint statement. The decision to keep the agenda and timing but not the location is making the governor and some lawmakers unhappy. “I feel like the Legislative leadership is pulling an end run to try to move the venue when they don’t have the votes,” said Rep. Colleen Sullivan-Leonard, R-Wasilla and co-chairwoman of the Legislature’s nine-member Matanuska-Susitna delegation. Hours before the statement from Edgmon and Giessel, the delegation had issued a press release welcoming the Legislature to the region. “I think we probably need an independent legal opinion on this. To arbitrarily challenge the governor … I don’t know legally they can do that,” Sullivan-Leonard said. In the Senate, Senate Majority Leader Mia Costello, R-Anchorage, is among the lawmakers in favor of a Wasilla session. She echoed Sullivan-Leonard’s concerns about legality and added, “Frankly, we have a trust problem with the public already, and I think we should follow the law.” The governor came within a step of calling the House and Senate leadership criminal. “The Senate President and Speaker of the House admit they lack the votes to change the venue or call a special session of their own, yet they are committed to thwarting the law and the voice of the Alaskan people. This is all part of why Alaskans have lost trust in their lawmakers. How can we with a straight face expect people to follow the law when the legislative leadership ignores, breaks, and skirts the law at every turn?” he wrote in a prepared statement. The issue of the Permanent Fund dividend is the sole item on the special session agenda envisioned by the governor and the session envisioned by the House and Senate leaders. The governor supports a dividend paid using the traditional formula in state law. The Legislature’s leaders — despite dissent from many of their members — do not. According to revenue projections for the fiscal year that begins July 1, the state does not have enough revenue to pay both a traditional dividend and spending at levels proposed by the Legislature. (The governor may cut the budget via the veto process, and a final decision is pending.) With tax increases off the table and sufficient budget vetoes unlikely, that means lawmakers and the governor must spend from savings in order to pay the traditional dividend. A majority of the House is opposed to spending from savings for the traditional dividend, as is half the Senate. The governor supports it, however, and he chose Wasilla, a hotbed of support for the traditional dividend.

Furie back to supplying gas to Homer, but still short with Enstar

Furie Operating Alaska has returned to meeting some, but not all, of the natural gas supply commitments it has with Southcentral Alaska utilities. The small Texas-based gas producer resumed supplying Homer Electric Association with all of the Kenai Peninsula electric utility’s demand of approximately 12.4 million cubic feet of feedstock gas per day for its power plants on April 11, according to HEA Manager of Fuel Supply and Renewable Energy Mikel Salzetti. For about six weeks before that, HEA leaders were forced to purchase spot market gas from other producers in the Cook Inlet basin as well as draw on reserves stored in the Cook Inlet Natural Gas Storage Alaska facility commonly known as CINGSA. Furie had stopped supplying gas to HEA on about Feb. 25, Salzetti said in an early April interview. Enstar Natural Gas Co., on the other hand, stopped receiving gas from Furie on Jan. 25, according to utility spokeswoman Lindsay Hobson, and hasn’t gotten the amount of gas it contracted for in early 2016 since. Enstar’s parent company SEMCO Energy Inc. is the majority owner of CINGSA. Hobson wrote in a June 24 email that the Southcentral gas utility “has been able to negotiate the delivery of short-term volumes from Furie. These volumes vary week to week.” Hobson said previously that the less-than-contracted deliveries started in late March. Furie operates the offshore Kitchen Lights natural gas field in central Cook Inlet. Furie is one of the newer entrants to Cook Inlet that were supposed to ease Southcentral gas supply concerns by developing new fields and adding competition to the market. In 2015 the company installed the Julius R platform at Kitchen Lights, which was the first new production platform built in Cook Inlet in since the 1980s. The company is one of several small oil and gas operators in Alaska that were impacted by less-than-full payments of refundable tax credit payments by the state, which started in 2015 and are an ongoing issue. Furie officials said in 2017 they planned to work on developing oil prospects in the Kitchen Lights gas field, but those plans have largely been scuttled because of the state’s delay in paying millions of dollars in oil and gas tax credits the company earned for its previous work, according to the 2019 Kitchen Lights Plan of Development filed last October with the state Division of Oil and Gas. While Furie’s financial situation is unclear, the company’s website was offline as of June 25. Furie leaders did not respond to requests for comment in time for this story. In May, Furie produced an average of 14.3 million cubic feet of gas per day from the four wells it has in the Kitchen Lights field, according to Alaska Oil and Gas Conservation Commission records. A Feb. 11 letter from Enstar and Alaska Pipeline Co. President John Sims states that Furie has had problems proving up its gas reserves to meet its contract with Enstar and has had operational problems with its wells. The producer asked for a delayed delivery of more than half of its firm supply commitment to Enstar on Jan. 17 as it worked on issues at its facility, according to the letter. Elwood Brehmer can be reached at [email protected]

FISH FACTOR: Vessel owners scramble to comply with new registration law

A well-intended new Alaska law has gone awry from a botched rollout that has turned thousands of Alaskan fishing vessel, tender, barge and sport fish operators into lawbreakers. Since the start of 2019, all vessels longer than 24 feet are required to be registered with the state at a Department of Motor Vehicles office. Previously, vessels that were documented with the U.S. Coast Guard were not also required to register with the state. The registration costs $24 and is good for three years. “You need to get down to the DMV whether you’re documented or not,” explained Frances Leach, executive director of United Fishermen of Alaska. “If you’re documented you have to register, and if you’re not documented, you have to register and get a title.” The new rule stems from Senate Bill 92, the Derelict Vessels Act introduced last year by Sen. Peter Micciche, R-Soldotna, and passed by the Legislature. It is intended to help harbormasters and others track down owners of abandoned vessels. But virtually no mariners know about the new registration requirement. “We found out about it from DMV personnel in Haines who told one of our gillnetters and he told me, and we both called the troopers and they didn’t know anything about it,” said fisherman Max Worhatch of Petersburg. “Later they got back to us and said it was indeed the law.” Worhatch, who is executive director of United Southeast Alaska Gillnetters, said he’s directed queries to the departments of Administration and Public Safety. “Why weren’t we notified?” he asked. “Nobody found out about this and nobody would’ve found out about this if we hadn’t alerted people. There was no public notice, nothing.” The new law states that a derelict vessel prevention program shall, to the extent that general funds are available, establish education and community outreach programs. But the only outreach is coming from fishermen’s groups, said UFA’s Leach in a June 18 letter to Department of Administration Commissioner Kelly Tshibaka. “Since becoming aware of this new law in late May, UFA has been working with the Department of Motor Vehicles and State Wildlife Troopers to understand how they intend to implement the requirements of the law,” the letter says. “We have notified thousands of fishermen of the law’s requirements through emails and social media posts. As far as we can tell, the commercial fishing industry, spearheaded by UFA, is the only sector actively working to inform commercial fishermen of the new requirements, even though this affects thousands of non-commercial fishing boat owners around the state. Who is informing them?” It adds,“As fishermen attempt to comply with the law’s requirements they are discovering that many DMV offices are not ready to deal with the onslaught of this new bill.” Leach and Worhatch also point out that requiring vessel registration at a DMV adds an unnecessary layer of bureaucracy and is “reinventing the wheel.” “All the information on the DMV registration is available on a public database website at the Commercial Fisheries Entry Commission website. Everything,” said Worhatch. UFA, which represents 36 fishing groups, requested a one-year delay of the law “until all state agencies are better prepared and trained and adequate public notice and education are given prior to it going into effect.” That has the support of Representative Jonathan Kreiss-Tomkins, D-Sitka. “Running the DMV gauntlet is the last thing fishermen need to be thinking about as salmon season heats up,” he wrote by email. Kreiss-Tomkins voted against the new law, saying he was concerned that the bill, albeit well intentioned and addressing all too real a problem, would create more paperwork than it would solutions. “The fear about paperwork headaches is proving all too real,” he said, adding that it “makes heaps of sense” for the existing CFEC database to do “double duty” and relieve the DMV of those headaches. “If sound legislation will be forthcoming to this end, I’ll certainly support it,” he said. As to the botched rollout, Kreiss-Tomkins said: “There seems to be critical mass concern. Everyone — the fishermen, the agencies — is climbing a learning curve, so to some extent it’s understandable. I just hope that this recent attention can help everyone get on the same sheet of music.” Naknek does nets Fishing net recycling is expanding to Naknek. Nicole Baker, founder and operator of Net Your Problem, plans to meet with net menders, processors, gear sellers and landfill managers in early July to begin formulating a program. “These are people who have reached out to me or I have been communicating with over the last year or so,” she said, adding that the recycling start up is set for next summer. Baker, who is in Dillingham for three weeks taking a class at the University of Washington salmon research camp, also has met with the local Curyung Tribe which has managed a net recycle program at the Dillingham Harbor since 2008. Since 2017, Net Your Problem has shipped more than a half-million pounds of plastic fishing nets from Dutch Harbor and Kodiak for renewed life in Europe. “They grind them up, melt them down and turn them into plastic pellets that they then resell to buyers of recycled plastics who turn them into water bottles, phone cases or whatever they choose,” she said. Other updates: nets are still being taken in at Dutch Harbor and Kodiak has a net drop off deadline this summer of Sept. 1 due to shipping logistics. Petersburg will soon be sending out a container of nets collected by the Petersburg Indian Association. The Haines Friends of Recycling has collected seven nets so far and more are being dropped off at the Net Loft. Juneau will be sending out a container of nets at the end of summer collected by the Recycle Works Group. Fishing changes Fishermen are closest to the changes brought by a warming climate and talking about it is a first step in finding solutions. That’s the thought behind The Nature Conservancy’s second collection of audio stories in its Tidal Change series. “If we are not talking about the problems or the challenges ahead, we’re not going to start tackling them. This is a chance to generate conversation,” said spokesman Dustin Solberg of Cordova. The stories reveal a swirl of emotions. Here’s a sampler: “The environment is changing, undoubtedly. When I first fished there was a lot of ice and now most of the glaciers are receding,” said Leonard Leach of Ketchikan, who has been fishing since 1961. “If this whole warming trend keeps happening my understanding is that jellyfish will really come back and that would be a detriment to our gillnetting and seining.” “The water’s warmer and the fish get confused and they don’t know when they’re supposed to run,” said Lia Cook, who fishes with her family at Bristol Bay. “It really affects the peak and the amount of fish that comes through because there is confusion in the school of when are we supposed to go and spawn and do all these things.” Lauri Rootvik of Dillingham also spoke to the odd run timing at Bristol Bay. “When I was a child it was the 4th of July run and it was pretty predictable. It’s not predictable anymore and it hasn’t been for quite a few years,” she said. “Warm water produces more harmful algae blooms. It’s not something that’s coming, it’s something that we are experiencing,” said Bob Eder, a 45 year veteran of Dungeness crab fishing in Oregon. “In our industry there are people of all different political leanings but I don’t know any fishermen who don’t recognize climate change and the challenges coming.” Katrina Leary grew up at a fishing camp along the Kuskokwim River and called it “magical.” “It’s really emotional when you realize your livelihood is being threatened and your kids might not be able to do this. Fishing really is our life. I couldn’t imagine a summer without fishing and I hope I never have to.” Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

GUEST COMMENTARY: America’s energy, tech and defense future needs mining

As the recent trade war with China has escalated, Beijing has implied that it may retaliate by withholding rare earth minerals. Such a strategic vulnerability — and America’s alarmingly high reliance on imported minerals and metals — is now in the spotlight for all the world to see. China’s rare earth threat underscores just how perilous U.S. mineral import reliance has become. While rare earths are currently the focus, America’s overall reliance on imports of these minerals is indicative of a far larger problem. According to the U.S. Geological Survey, the U.S. is now 100 percent import-reliant for 18 minerals and metals, and 50 percent or more reliant for another 30. Despite ever-growing demand for these minerals and metals in defense technologies — such as stealth and night vision technologies — or consumer goods and green energy technology, U.S. import reliance has doubled over the past 25 years. Notwithstanding the nation’s vast mineral reserves, mining investment in the U.S., and production of essential minerals, has steadily declined. The atrophying of the nation’s materials supply chain shouldn’t just be chalked up to the march of globalization and large-scale economic integration. It’s also the product of a decades-long adversarial approach to domestic mining that can be seen in federal land-withdrawals and a mine permitting process that now regularly stretches to 10 years or more. Modern, responsible, and well-regulated mining should be encouraged in the U.S., not pushed aside. To meet the material needs of our advanced tech, manufacturing, energy, and defense sectors, America will need almost exponential growth in the mining and refining of a vast array of minerals and metals, many of which can be produced here at home. While materials recycling should be a key part of meeting this demand, it’s hardly a cure-all. It’s past time for the U.S. to place strategic importance on mining and the greater materials supply chain. China is already years ahead in this industrial arms race, prioritizing mining as a cog of its industrial policy. For example, China is the top resource holder for 10 of the minerals and materials vital to wind, solar and battery technologies. A new report from the Commerce Department stresses the urgency of action. It warns that the U.S. has become “heavily dependent” on foreign sources for 31 of the 35 minerals recently designated as “critical” by the Department of the Interior. While the U.S. has fallen far behind, there are signs of hope. Bipartisan legislation introduced by Sen. Lisa Murkowski and Sen. Joe Manchin, D-W.V., The Minerals Security Act, is an important step forward in responding to China’s dominance and beginning to right our supply chain. The legislation would streamline a variety of mine permitting and regulatory processes currently sapping U.S. mining competitiveness. Their leadership in beginning to address this issue deserves strong, bipartisan backing. The technologies of tomorrow — whether they’re energy technologies or the defense applications that keep us safe — are more materials-intensive than what they’re replacing. It’s essential we build a supply chain to support them. Failing to do so won’t just be an economic missed opportunity. It would be a geopolitical blunder that undermines our global leadership. The time for decisive action to encourage domestic mining, and rebuild our industrial base, has arrived. Retired U.S. Army Brig. Gen. John Adams served more than 30 years in command and staff assignments as an Army aviator, military intelligence officer, and foreign area officer in Europe, Asia, the Middle East, and Africa. He is president of Guardian Six Consulting.

GUEST COMMENTARY: Governor holds UA future in hands with veto pen

In this austere budget environment, and after intense scrutiny, the Legislature passed a budget that includes a reasonable $5 million general fund reduction for the University of Alaska. In the next few days, the governor will decide whether the state will continue its investment in the university — allowing Alaskans of all ages to carry on, uninterrupted, with their vocational, continuing, or higher education — or veto a large portion of the UA budget. Make no mistake, the university cannot absorb an additional, substantial reduction in state general funds without abruptly halting numerous student career pathways mid-stream, eliminating services, or shutting down community campuses or universities. An additional reduction of even $10 million — on top of the $51 million in cuts we’ve already taken — will mean the discontinuation of programs and services with little or no notice, and that in turn will have ripple effects, damaging UA’s ability to generate revenue and causing even greater harm across the state. Severe reductions in state Undesignated General Funds, or UGF, as originally proposed by the governor would require closure of hundreds of programs and affect thousands of students. To provide context for such a reduction, $134 million is nearly the equivalent of the total UGF budget for University of Alaska Anchorage and UA Southeast combined. At that level we may need to cut whole programs or close one or more of our universities, UAA, UA Fairbanks or UAS. But a university system is not like a typical corporation or factory; it needs a critical mass of faculty with different specialties to provide a quality education. Eliminating whole programs to reduce costs does not eliminate our responsibility to affected students. We are obligated to complete their programs, which carries costs that delay any immediate savings. The university’s total budget this year is comprised of $327 million from the state (about 40 percent). The remainder comes from tuition and fees paid by our students, research grants and contracts, proceeds from land development, and private donations. However, those private revenue sources will inevitably be harmed if general fund support is reduced. Prior cuts have had the effect of reducing opportunities for our students and services to our communities, while increasing tuition. The cumulative reduction in the university’s budget of $195 million over the last five years has resulted in significant reductions in administrative staff and services, to the point that further reductions will compromise UA’s ability to meet its many obligations. Indeed, the university’s statewide administration, which provides consolidated support services, has taken a 37 percent cut over the last several years, almost triple the average cut across the university system. Still, the university remains a highly accessible and affordable path to an excellent education and the opportunities that only education can provide in the workplace. However, that will not continue with further substantial reductions. We have had numerous meetings with the governor and his team, demonstrating how the university has focused its mission, reduced costs, increased private fundraising, developed strategic plans with measurable goals, created a task force to look at the university’s structure, and developed an exciting vision for how the university enables Alaskans to create a strong and sustainable future for our state. The governor was receptive, and I think impressed with the work that’s been accomplished by the university. However, he may feel compelled to follow through with his original proposal to reduce the university’s appropriation. As a result, if the governor vetoes a substantial amount, I ask that you contact your legislator to request that he or she consider overriding that veto. The educational investments and opportunities for thousands of Alaskans will depend on it. Jim Johnsen is the president of the University of Alaska.

Movers and Shakers for June 30

Perkins Coie announced that Danielle M. Ryman has been named managing partner of the firm’s Anchorage office. Ryman succeeds Eric Fjelstad, who served in the role since 2007. As a partner in the firm’s Labor and Employment practice, Ryman works with clients on the myriad issues affecting today’s workplace, including executive employment agreements, pay equity, restrictive covenants and enforcements, privacy and internal investigations. She has extensive experience with the Family and Medical Leave Act, the Fair Labor Standards Act, the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964, the Fair Pay Act and equivalent state laws. Ryman is an experienced trial lawyer having defended cases to verdict in state and federal courts. She also serves as management-side labor counsel in collective bargaining, representation before the National Labor Relations Board, and counseling on strategic union relationships. Perkins Coie’s Anchorage office provides a wide range of legal services, and its clients include energy and natural resources projects, Alaska Native corporations and national companies doing business in Alaska. GCI’s Stephanie Nichols has recently been selected from a field of approximately 1,000 U.S. applicants for the prestigious Marshall Memorial Fellowship for 2019-20. The Marshall Memorial Fellowship is the German Marshall Fund’s flagship leadership development program and was created in 1982 to introduce a new generation of European leaders to the United States. It now prepares leaders from both sides of the Atlantic for transatlantic relations. GMF selects fellows from all 50 U.S. States and across 39 European countries. Following a rigorous and intensive seven-month application process, Nichols was one of only 75 applicants chosen for the 2019-20 fellowship. Selected fellows engage in six months of preparation and a month of first-hand experience in several cities throughout Europe to facilitate knowledge and network opportunities for effective engagement and leadership development. As a MMF fellow, Nichols will join a network that includes notable alumni such as: President of France Emmanuel Macron; House Minority Leader for the Georgia General Assembly and State Representative for the 89th House District Stacey Abrams; and EU High Representative for Foreign Affairs and Security Policy Federica Mogherini. The fellows’ on-site engagement in Europe includes meetings with prominent national and local European political leaders and distinguished policy makers. Blaine Jenkins has recently been hired as a full-time member of the Great Alaskan Holidays vehicle maintenance technician team. Jenkins has several years of industry experience coming to Great Alaskan Holidays from Karen’s RV and will be responsible for inspecting, maintaining, and ensuring the safe operation of Great Alaskan Holidays’ entire fleet of rental motor homes. Jenkins is currently in pursuit of his Recreation Vehicle Dealers Association certification, as well as his ASE Certification. Lani Auelua was promoted to branch manager of the Credit Union 1 University Branch in Fairbanks. Auelua began as a teller with the credit union in 2013, with previous experience in retail service and management. In her time with Credit Union 1, she has served in various roles such as senior teller, member service officer and member service supervisor. She held the position of branch manager at the credit union’s Downtown Branch in Anchorage prior to her promotion to manager of their University Branch in Fairbanks. Alaska Pediatric Oncology, the state’s first private pediatric oncology practice, opened in Anchorage last week. The new practice provides comprehensive care to children and young adults diagnosed with cancer or blood disorders. It works in close collaboration with Alaska Pediatric Surgery, offering a comprehensive team of specialists solely dedicated to pediatrics. Alaska Pediatric Oncology’s medical team — Dr. Shannon Norman, Dr. Brenda Wittman, Dr. Laura Schulz and nurse practitioner Ronda Nakoa — previously worked at Providence Medical Group Pediatric Hematology and Oncology before shifting to private practice. With the same providers and the same high-level of care, the new clinic ensures a smooth transition for patients and families. Beginning in August, the new practice will share offices with Alaska Pediatric Surgery, the only locally-owned, full-time pediatric surgical practice in the state. The collaboration will bring additional resources to patients and families and allow specialists to work more closely on their patients’ care. Alaska Pediatric Oncology is currently located at 4100 Lake Otis Parkway, Suite 314. In August, it will relocate to Suite 312. Paula Bradison, CEO and founder of Bradison Management Group LLC, recently received her Gallup Certification. Kelly Stewart of BMG is also officially a Gallup Certified Strengths Based Coach.

Tax credit issue plods along toward Supreme Court

Alaska lawmakers are relying on the prospect of a favorable court ruling this year to pay down the state’s remaining and roughly $700 million obligation of refundable oil and gas tax credits. The 2020 state fiscal year operating budget the Legislature passed June 10 includes language authorizing Department of Revenue officials to sell bonds through the Alaska Tax Credit Certificate Bond Corp. that would allow the state to pay off the entirety of the obligation. The budget also reauthorizes a $27 million unused appropriation approved last year to make the first interest payment on the debt if the 10-year bonds are sold under House Bill 331. However, the budget approved last year — for the fiscal year that ends June 30 — also contained a $100 million contingency appropriation in case the bond sale didn’t occur or some companies holding the credits did not agree to the terms that come with participating in the bond plan. As it turned out, the bond sale originally set for last August was scuttled by a public interest lawsuit by former University of Alaska Regent and Juneau resident Eric Forrer challenging the constitutionality of HB 331. That led the state to pay just $2.8 million in tax credits during 2018, according to Department of Revenue documents, the smallest annual credit payment total in years. Previous tax credit payments totaled in the tens or hundreds of millions of dollars per year. In response, Revenue officials released the $100 million early this year as a means to provide the small explorers and producers eligible for the credits — several of which have had significant financial issues in recent years — some financial relief, according to Commissioner Bruce Tangeman. “These companies have gone through this process for too long,” Tangeman said in a brief interview. The bond plan was hatched by former Gov. Bill Walker’s administration early last year as a way to quickly pay off the credit holders, put what had become an extremely messy political issue to rest, and eventually restore the state’s reputation among private financial institutions that lent money to companies backed by the presumption of past credit payments. At the time, administration officials estimated the final tax credit obligation would total nearly $1 billion but Tangeman said the latest total after the $100 million installment is closer to $700 million. The reason for the discrepancy is unclear; however, some small companies could have sold their credit certificates to larger North Slope oil producers that are not eligible for payment but can use the credits against their annual oil production tax liability. Such transactions would not have to be publicly reported and would reduce the final amount of money the state is obligated to pay. Numerous oil and gas companies used the state credit certificates as collateral to secure loans from large banks to fund exploration and other work. A commonly used credit for explorers with no production and no tax liability had the state paying 35 percent of the cost of qualifying work in cash. When Walker diverted from the state’s prior practice — but not law — of paying off the annual credit bill in full each year by vetoing $200 million of a coincidentally $700 million appropriation in the face of a $3 billion-plus budget deficit in 2015, it ostensibly froze the market that had grown around the state tax credits. Walker vetoed another $430 million of the payments in 2016 when he also reduced the Permanent Fund dividend appropriation by half. Subsequent years of minimum tax credit payments based on a statutory formula that incorporates the state’s oil production tax revenue also pushed some companies to default on those loans. Many Republican legislators who were roundly critical of Walker’s approach to the refundable industry tax credit program now acknowledge the now-defunct policy became unaffordable when oil prices began to fall in late 2014, but still contend the state should make paying the remaining balance a priority. That’s where the tax credit bonds come in. To get paid sooner, the credit holders would have to accept a discount of up to 10 percent less than the face value of the certificates. The state Department of Revenue would then use the difference between the credit values and the discounted amount to cover the borrowing costs. Supporters of the bond plan insist it is a way to restart stalled investment by small companies in Alaska’s oil and gas fields; Forrer and some in the Legislature contend it flies in the face of strict limitations on the state’s ability to incur debt laid out in the Alaska Constitution. The state constitution generally prohibits lawmakers from taking on debt unless it is for capital projects that are also approved by voters, in response to a natural disaster or invasion, or it is in the form of bonds sold to support a specific project repaid through the eventual revenue of that project. State corporations such as the Alaska Industrial Development and Export Authority and the Alaska Housing Finance Corp. regularly utilize such revenue bonds. Superior Court Judge Jude Pate dismissed Forrer’s lawsuit in January, concluding that while the fiscal policy implications of the bonds are worthy of debate, the plan fits within the constitutional sideboards relating to state debt. Forrer appealed Pate’s ruling to the Alaska Supreme Court and has said he believes allowing the tax credit bond plan to move ahead would give lawmakers and local governments the freedom to employ the scheme in countless other situations, potentially strapping the state with substantial additional debt. State officials contend similar plans have already been employed to pay for capital projects, including the Goose Creek Correctional Facility in the Matanuska-Susitna Borough. State attorneys argue, and Pate agreed, that a provision in HB 331 establishing the plan that calls for the bond repayments to be “subject to appropriation” by the Legislature each year means the State of Alaska would not ultimately be liable for defaulting on the payments. Proponents acknowledge that not making bond payments would likely have a significant negative impact on the state’s credit rating but the state would technically not be liable for the bonds if the Legislature in any year decided not to repay the bonds. Instead, bondholders would have to sue the Alaska Tax Credit Certificate Bond Corp. — which Forrer notes would be comprised of a couple Revenue Department leaders and would have no money of its own — and not the State of Alaska for recourse because the state corporation would actually hold the debt. Forrer’s attorney, longtime Juneau lawyer Joe Geldhof, wrote in a 60-page May 16 brief filed with the Supreme Court that Judge Pate incorrectly overlooked the plain language and meaning of the state constitution. “The position advanced by the state and adopted by the trial court to the effect that the debt is not debt because the statute says it is not debt amounts to an unsupported argument resting on circular ‘logic’ that should be viewed with doubt when evaluating a constitutional claim,” Geldhof wrote. “The Alaska Constitution is our state’s guiding framework of law and policy and its intent should be respected; the state’s search for a clever loophole — some sort of technicality — to provide an end-run around the constitution’s clear intent should not be sanctioned,” he continued. “the state should be deterred from offensive attempts to disregard the known meaning of the constitution, now and into the future.” In a 49-page June 19 brief, state attorneys cited prior Supreme Court cases that permit the state to take on some forms of debt and contend that even if the court finds that HB 331 is prohibited by the constitutional limitations on debt, “it constitutes a refinancing of a pre-existing state financial obligation rather than the creation of a new one and the bonds are backed only by the resources of an independent public corporation rather than by the state treasury.” Oral arguments before the Supreme Court are scheduled for Sept. 12. ^ Elwood Brehmer can be reached at [email protected]

Woodrow officially takes director’s helm at ASMI

JUNEAU — Alaska’s seafood industry has a new captain at the helm of its main marketing agency. Jeremy Woodrow, previously the organization’s communications director, officially took over as executive director of he Alaska Seafood Marketing Institute this June. He replaces former executive director Alexa Tonkovich, who left the position in December 2018 to pursue a master’s degree in international business. In some ways, it’s the top of a long ladder for Woodrow. Born and raised in Juneau, he started as an intern with ASMI in 2001 and worked with the organization’s former public relations firm Scheidermeyer &Associates Alaska. After a stint in the communications department at the Alaska Department of Transportation and Public Facilities, he returned to ASMI as the communications director in 2017. Though he’s not in commercial fishing at present, he said his family has a long history in it. That connection has helped inform his involvement in the ever-changing fisheries of Alaska, and though ASMI stays out of fisheries policy, there are plenty of other tangles to sort out. High on that list is the increasing volatility in fisheries. Salmon fisheries in particular are always fluctuating from year to year, but fishermen have had unpredictable disasters followed by banner years followed by disasters, which is a relatively new phenomenon, Woodrow said. In response, some fishermen are looking to diversify their income or their fishing portfolios to help offset that uncertainty, he said. The fleet is consolidating as well, especially in the larger offshore fisheries. However, Alaska’s wild seafood products have never been more valuable. “While our fisheries have been fully exploited for several decades, we have seen the value continue to go up, and that’s a good thing,” he said. “That shows that there is value in the fish. There are other ways to gauge value than just the price of fish at the dock. More people wanting to get into it, the price of boats …. all that generates money to fisheries economies.” Part of that is due to increasing seafood consumption in the U.S., but part is also due to the increasing price wild Alaska salmon has been able to command in markets. Salmon is the most valuable commercial U.S. species, with a total value of $688 million in 2017, according to the National Marine Fisheries Service. Alaska salmon accounted for 98 percent of landings in 2017. The average landing price for all species — the majority of which were pink salmon — was 65 cents, according to NMFS, but once those salmon are sent to the supermarket, consumers are paying significantly more for them than for Atlantic salmon or salmon from elsewhere. That’s in part due to ASMI’s work over the years to promote the Alaska brand, Woodrow said. The state’s fisheries have a good story to tell: comprehensively managed fisheries, small communities and a fleet dominated by small boats and local fishermen. “We have such a great generational story to tell, a management story to tell, all that, wrapped into an incredible place,” Woodrow said. Things are changing there as well, though. The ongoing trade conflict between the U.S. and China has presented ASMI with a complex new marketing landscape. China is Alaska’s single large market for seafood, and the organization has spent about two decades building relationships with buyers and processors there. A significant portion of Alaska’s fish are exported to China and reprocessed there, with most bound for either export to other world markets and the U.S. or for domestic consumption in China. On top of that, other countries are increasing their salmon farming efforts and marketing in the U.S., attracting consumers with lower prices for salmon. Norway, for example, is ramping up efforts to market its salmon in the U.S., and Iceland is in the process of expanding its aquaculture industry for salmon. ASMI has been clear about its intentions to remain in China, Woodrow said. With 1.3 billion residents and a rapidly expanding middle class, the country is too big a market to abandon because of tariffs. While the disagreements over trade have merit, the tariff battles have impacted seafood demand there, Woodrow said. “We do agree that something has to change (in U.S.-China trade), but this conflict going on has definitely created extra headwinds for the Alaska seafood industry,” he said. ASMI received a $5 million grant from the U.S. Department of Agriculture to develop markets for seafood in other countries, focusing on Southeast Asia, Woodrow said. The organization has also established a presence in South America, with an office in Brazil and significant interest in seafood among people there. There’s also an opportunity to take some of the reprocessing market there, reducing some of the dependence on China for that service. There are also opportunities for marketing other products. Mariculture is a growing industry in the state, with expanding interest in kelp and geoduck clam farming. Most of those products are currently bound for foreign markets, but there’s growing interest in the U.S., especially among younger consumers, who are more open to tastes for different palettes. But it’s not only alternative products. Pollock — the single largest commercial fishery in the U.S. by volume — also has an opportunity. “A great example is pollock roe,” he said. “I guarantee you very few Alaskans or Americans have ever eaten pollock roe, but pollock roe is incredibly popular in Japan … the size of the pollock roe is very similar to the size of fish eggs that you see on sushi. That’s a perfect segment for it to come into the U.S. market.” The ASMI board announced Woodrow’s hire as executive director June 10, saying the board was excited to have a lifelong Alaskan to lead the agency. “The Alaska seafood brand is as strong as ever and we are confident that Jeremy’s leadership will advance the direction and mission of the agency,” said Jack Schultheis, chairman of the ASMI board of directors, in the announcement. Going into the role, Woodrow said one of the things he considers with each decision is how Alaska fishermen will accept decisions that ASMI makes, in part because the agency is ultimately paid for by the fishermen with state funding zeroed out over the past few years through budget cuts. “Anytime that we have a marketing plan, I always keep in the back of my mind how will an Alaska fisherman react to this, because they’re always our first audience,” he said. “We have to make sure they understand they’re getting good value.” Elizabeth Earl can be reached at [email protected]

Sub-500: TAPS throughput drops in 2019

Measured on the state calendar, Alaska North Slope oil production is about to be at its lowest level since the first days after startup of the Trans-Alaska Pipeline System. North Slope crude production averaged 499,103 barrels per day through June 24 for the 2019 state fiscal year, which ends June 30. The last time North Slope wells pumped that little oil was 1977 when oil first started flowing through TAPS in late June; production averaged 10,500 barrels per day in 1977, according to Revenue Department figures. It jumped to 789,600 barrels per day in 1978 and peaked at 2.1 million per day in 1988. Daily North Slope production dipped to about 501,000 barrels per day in 2015 but that was followed by two years of increases, which were celebrated by industry and state officials, as it was the first instance of production growth on the North Slope since 2002. The 499,103-barrel average for 2019 is unlikely to improve much in the last days of the month as the combination of warm weather and scheduled maintenance makes summer the least productive season for companies on the Slope. State production analysts in the Department of Natural Resources expected the average daily throughput to decline in their latest projection, but not this much. The Spring 2019 Revenue Forecast released in March pegged fiscal 2019 North Slope production at 511,460 barrels per day. Actual production has been off by about 2.4 percent. However, 2019 was originally supposed to be a bounce-back year after unexpected decline in 2018. The 2019 forecast released in December estimated 526,800 barrels of oil per day from the North Slope following the 521,400 barrels produced per day last year. In the end it means North Slope oil production this year will decline a little more than 4 percent instead of increasing about 1 percent as state officials once thought would happen. Alaska Oil and Gas Association CEO Kara Moriarty said the unexpected decline is probably the result of several smaller factors given the complexity and diversity of North Slope operations. She noted that the long-term production trend has improved, from the industry and state’s perspectives, in recent years and the state’s forecasts are often optimistic. “I do know that we are significantly higher than the forecasts of 2012 and 2013,” Moriarty said. In the fall of 2012, state officials expected North Slope production would be about 421,600 barrels per day this year. At that time, the annual decline rate was in the 6 percent range. Last year, state officials surmised the unexpected drop in oil flow could have been from higher than normal winter North Slope temperatures. Warmer weather decreases the efficiency and capacity of compressors used to process the natural gas that comes with the oil on the Slope, and thus has an impact on how much oil can be produced. BP Prudhoe Bay Production Manager Jennifer Starck said last January actually produced some record cold temperatures at the iconic oil field, but noted that March was warmer than usual. Last March is believed to be the warmest March on record across Alaska. “We live with the natural ambients,” Starck said. Currently, Prudhoe Bay is producing a calendar year 2019 average of about 275,000 barrels per day compared to about 279,000 barrels per day a year ago, Starck said. She added that BP currently has two drilling rigs working at Prudhoe and the company is also “working over” old wells. It also conducted a 3-D seismic shoot over the entire field this winter and believes it can recover another billion barrels from the basin. While the company does what it can to buck production trends for mature fields, she stressed that production from nearly all oil fields starts naturally declines — and Prudhoe is more than 40 years old. Hilcorp Alaska officials did not respond to questions in time for this story, but Moriarty and acting state Division of Oil and Gas Director Beckham also pointed out that Hilcorp’s Moose Pad development in the Milne Point Unit was originally slated to start producing in last fall, but didn’t come online several months later. The $400 million project is now producing about 7,000 barrels per day, according to AOGA and Hilcorp leaders have said it should peak at 16,000 to 18,000 barrels per day. ConocoPhillips’ Greater Mooses Tooth-1 project in the National Petroleum Reserve-Alaska, which started flowing oil last October, is off to a bit of a slow start as well. The company estimated GMT-1 could produce up to about 30,000 barrels per day at its peak; three wells are currently producing about 11,500 barrels per day. ConocoPhillips Alaska spokeswoman Natalie Lowman wrote via email that the company’s estimates are usually a mid-range figure of what a project could produce and the smaller projects generally see more variability because production is dependent upon fewer wells. As a counter to GMT-1, she noted that the company’s nearby CD-5 development, which started in late 2015, was first estimated to produce about 16,000 barrels per day but actual production has been more than double that. Monthly production from ConocoPhillips’ large and aging Kuparuk River field has also been roughly 6,000 to 8,000 barrels per day less than last year, according to Department of Revenue figures. Beckham said he had noticed the daily production totals for 2019 were approaching 500,000 barrels, but said he thinks focusing on the exact number is a bit unnecessary. “For years, for whatever reason, that 500,000-barrel level has been somewhat of a benchmark and it’s an arbitrary number but we do have concerns about low-flow in the pipeline, although I think Alyeska (Pipeline Service Co.) has most of those covered,” Beckham said. “I think the optic is more impactful than the actual volume but I do expect that we’ll have more production online this year and as other years come up.” Alyeska officials have said TAPS should run smoothly as currently designed down to production levels of about 300,000 barrels per day. Brooks Range Petroleum Corp. is expected to start its small Mustang field near Kuparuk this summer, among other work. Longer term, ConocoPhillips’ Willow, Oil Search’s Nanushuk and Hilcorp’s Liberty projects could collectively add nearly 300,000 barrels per day of production to the Slope over the next five-plus years. The Liberty and Nanushuk projects have federal approval and ConocoPhillips is currently in the process of permitting Willow with a final environmental impact statement scheduled to be issued in 2020. ^ Elwood Brehmer can be reached at [email protected]

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