FISH FACTOR: Salmon season set for May 17 start at Copper River

Alaska’s 2018 salmon season officially gets underway this week with the first 12-hour opener on May 17 for sockeyes and kings returning to the Copper River. The catch there this year calls for 19,000 kings and 942,000 sockeye salmon targeted by a fleet of more than 500 drift gillnetters. Here’s a primer of how fishery managers project the rest of Alaska’s salmon season may play out: Statewide, the 2018 salmon harvest is projected at 149 million fish, down 34 percent from the 2017 take of 226 million salmon. The shortfall this season stems from lower projections for hard-to-predict pink salmon. The Alaska Department of Fish and Game is forecasting a total humpie harvest of just more than 70 million, down by half from last year. For sockeyes, a statewide catch of about 52 million is down by 1.8 million fish from 2017, which was the fifth-largest red salmon catch since 1970. By far, most of the sockeyes will come from Bristol Bay’s nine river systems where a harvest of 37.5 million is projected. For chum salmon, this year’s Alaska catch is pegged at 21 million, down by nearly 4 million from last year’s huge 25 million haul, the largest catch in 47 years. The 2018 coho catch should be nearly 6 million, an increase of 600,000 silvers from last season. For chinook salmon, a catch of 99,000 is projected in areas outside of Southeast Alaska, where the numbers are determined by treaty with Canada. The Southeast harvest will be just 130,000 fish for all users, down 80,000 from last year. For commercial trollers the take is 95,700 taken from a few select areas. The salmon market outlook is good heading into the 2018 season. “Demand for Alaska salmon is fairly strong and competing farmed salmon prices are high. And despite catching over a billion pounds of salmon last year, there are no big inventory concerns,” said longtime fisheries economist Andy Wink of Wink Research and Consulting. Alaska sockeye could face some competition in its expanding fresh market sales from fish at the Fraser River in British Columbia. “Their runs have popped every four years and this is an up year for that system. That would bring a significant volume of fish to market this year,” Wink said, adding, “I’m not too concerned because demand for Alaska sockeye is robust and farmed prices are providing a lot of support.” The average sockeye price paid to Alaska salmon fishermen in 2017 was $1.13 per pound. The price for chinook salmon was $5.86; coho salmon at $1.19, pinks at 32 cents; and chum salmon averaged 66 cents per pound at the docks. The total value of the 2017 salmon fishery was nearly $680 million for Alaska’s fishermen, nearly a 67 percent increase over 2016. Clam diggers get down Razor clams from Alaska are a rare delicacy and are snapped up by restaurants on the west coast and Canada. The giant clams, which can reach more than 10 inches, are harvested by hand from a single 10-mile stretch of beach on the west side of Cook Inlet at the southwest corner of Polly Creek. The fishery, which opens in May and can run into August, is the only commercial razor clam fishery in Alaska. The diggers are allowed to take 350,000 to 400,000 pounds of clams in the shell this year and are paid 65 cents to 75 cents per pound. “About half of that is clam meat. Any broken clams go to the pet food market,” said Pat Shields, regional manager at ADFG in Soldotna. Coolers filled with whole clams are flown four to six times per day from the beach to the Pacific Alaska Shellfish plant in Nikiski, where they are immediately processed and sent to awaiting markets. “The processors also get 60 cents to 70 cents a pound to shuck them. Then they are vacuum packed and sent fresh or frozen to a lot of markets. It’s a really good product,” Shields said. Nearly all of the clam diggers out on the Cook Inlet flats are from out of state. “Most of the diggers are Hispanic from California,” Shields said. “It’s such hard work that we have a hard time finding local folks to participate.” “You put this big bag on your belt and you’re stooped over for hours at a time,” Shields explained. “Most of them use their hands or a very small spade. They dump them into a bucket and the clams get sorted in coolers.” Other Cook Inlet beaches have been closed to clam digging since 2014 due to a drop off in the stocks. More recently state fishery biologists have found encouraging signs of lots of juvenile razors signaling a potential rebound of the delicious clams. Cash for tags Hook a sablefish (black cod) with a bright orange or green tag and you would win cash. State fish managers awarded $3,000 to seven lucky winners in cash prizes ranging from $250 to $1,000. Their names were drawn by lottery among all those who had returned tags over the past year. Fishery biologists at ADFG have been tagging sablefish in Southeast Alaska since 1979 to learn more about the fish’s movement, growth, and abundance. The farthest north returned sablefish tag was from St. Matthew Island in the Bering Sea; the farthest south came from Humboldt, Calif. But for the most part, most sablefish stay close to home. “You have your sablefish that are like I love my home, I’m just going to stay here,” said Naomi Bargmann at ADFG in Sitka. “That is about 85 to 90 percent of the fish that we get in Chatham (Strait), they stay,” she added. “The rest of them will pick up like Magellan and go explore other places.” One of the oldest tags was 34 years old, returned in 2013, and nearly 35,000 have been recovered in all. This month 7,000 more tagged sablefish were released, bringing the total to more than 140,000 tags since the project began. To qualify for the lottery, the returned tags must include the latitude and longitude where the sablefish was caught and the capture date and method. Anyone who returns a tag receives a T-shirt. Laine Welch lives in Kodiak. Visit or contact [email protected] for information.

FCC funding shortage imperils telecoms, health providers

The hospital in Cordova has received a shut-off notice from Alaska Communications for its broadband services unless a balance of nearly $1 million is paid by June 30. Now Federal Communication Commission Chairman Ajit V. Pai has stepped into the dispute and warned the Anchorage-based telecom provider that it’s against the Communications Act to shut down services. “Alaska Communications is prohibited from engaging in unjust and unreasonable practices or from discontinuing service to a community without prior Commission approval,” Pai wrote to CEO Anand Vadapalli on May 8. The exchange is “at least is shedding a light on a lack of funding problem,” said Cordova Community Medical Center Administrator Scot Mitchell. Alaska Communications Vice President of Finance Laurie Butcher wrote to Mitchell on May 2 stating that a 10-month outstanding bill of $964,370 needs to be paid or service will be shut off on July 1. Alaska Communications hasn’t received funding for going on 11 months through a federal program that bridges the high cost of bringing broadband service to rural Alaska, called Rural Health Care, or RHC. The Cordova hospital is just one of about 40 rural health care facilities that Alaska Communications supplies broadband services. In Cordova’s case, the total hospital Internet bill is $80,100 per month. After the RHC subsidy is paid to the telecom, “what we pay is $1,060 per month,” said Mitchell. The remaining $79,040 per month would fall under the category of the RHC funding portion, he said. “In the past, the Rural Health Care division of USAC made funding decisions in a short enough time that we could provide your service and only charge you the urban rate,” Butcher wrote to Mitchell. “This was not the case the past two years. We are now 10 months into the current funding year and your funding request is still being put through an ‘enhanced review’ by USAC.” USAC is the Universal Services Administration Company, which disperses the RHC funds. “USAC has not yet acted on the vast majority of our rural healthcare customers’ funding requests,” Alaska Communications stated in its first quarter report. In December, Alaska Communications laid off 30 workers, instituted wage cuts and put employees on furlough just to stay afloat under the loss of RHC revenue, said Leonard Steinberg, the company’s vice president of legal, regulatory and government affairs. The layoffs represented 5 percent of its workforce. As of Dec. 31, 2017, according to its first quarter earnings report, Alaska Communications was owed $8.6 million in RHC funds, a total that has now grown to $11.8 million as of March 31. “We’re almost all the way through the current funding year without receiving anything since last July,” Steinberg said. “Every month we’ve taken money out of our pockets. This company and its employees have put their lives on the line to subsidize health care services. We’ve been willing to do it for a while to resolve funding issues, but we can only go so long,” he said. In its first quarter report released May 10, GCI Liberty also reported a huge shortfall in RHC funding of $5.5 million. “We may need to further reduce the RHC Program support receivable as we pursue avenues for payment of the shortfall,” according to the GCI Liberty filing. “USAC’s assessment of the program funding shortfall caused a program-wide delay of support payments, which has continued during the review of rates charged by Alaska carriers.” In a statement, GCI Liberty spokeswoman Heather Handyside called the situation “troubling” and said that the company, “has been working with rural providers, the FCC, and the Alaska congressional delegation to develop a solution to maintain this critical source of support for rural Alaska health care. “Because this year’s funding reduction is much greater than last year, it is causing deep concern for our rural health care customers,” Handyside wrote in an email. “GCI has not proposed reducing or terminating service to any of our customers. We are continuing to work with them and other concerned parties to secure a responsible, long-term solution. We agree with the bipartisan group of 31 U.S. senators who are proposing an overhaul of the Rural Health Care program to meet the growing demands of connectivity for rural providers.” USAC funding help All of Alaska’s telecoms get funding support for rural services through the USAC, which allocates from four budgets. One is the E-Rate funding for schools and libraries to make internet more affordable; another provides the Lifeline telephone-internet funding. A separate category is the RHC funding. For the past 20 years, rural communities in Alaska and the Lower 48 split an annual pot of about $400 million for the RHC funds alone. Alaska’s portion of that was $122 million in 2016, according to FCC spokesman Mark Wigfield. But the funding help hasn’t been enough over the past two years after Rural Health Care funds ran out. The new filing window for telecoms to receive funding goes from Feb. 1 to June 29, 2018. USAC put a notice on its website alerting telecoms that the “net demand of all funding requests received by the close of the FY2017 filing window period exceeded available RHC Program funding.” The 2017 funding year runs from July 1, 2017 to this June 30. But there will be a prorating “percentage of funding” for the next funding year, the notice stated. In other words, telecoms can expect to get about 84.6 cents on the dollar, rather than the full amount of RHC funds after an invoice is submitted. One of the problems is that technology, needs and services have broadened the reach of broadband in the past 20 years, while the RHC funding never stretched with it, Steinberg said. “For first time, the demand for RHC funds exceeded the budget,” Steinberg said of funding year 2017. “That woke the FCC up. They wanted to look at how to reduce the demand to stay within our budget. They’ve been applying what they call ‘enhanced scrutiny’ to filings.” Steinberg said he’s had direct communication with FCC Commissioner Pai over the current crisis, hoping to bring the Alaska telecoms’ funding crisis to light. Pai’s letter wasn’t without sympathy. He recalled his own childhood “as the son of two doctors in rural Kansas. I understand how connectivity can play a transformative role in the provision of medical care,” he wrote to Vadapalli. “I recall my father driving many miles at times to see patients in remote areas.” But the Communications Act makes clear that “Alaska Communications must continue to provide services to the rural healthcare providers it serves upon a bona fide request for service.” To put it another way, he wrote, “Alaska Communications many not deny or cut off service to any of its existing rural health care provider customers.” If it does so, the FCC could cite it for violating the federal Communications Act. Cordova’s medical needs Mitchell said he’s surprised Pai has gotten involved. But he hopes this means solutions are on the way. “For us, if this does happen (a broadband cutoff) we will probably have to close our hospital,” Mitchell said. “Our electronic health records are on the cloud. We rely on it for X-ray and CAT scans, our entire telemedicine system. Our payroll system uses the internet. We won’t even be able to pay our staff.” Cordova’s famous Copper River salmon season starts May 17. That means the year-round population of 2,200 will swell to 5,000 as the fishing season and canneries crank up. The Cordova Community Medical Center is the only 24-hour emergency care in the active commercial fishing hub region, 300 air miles from Valdez and 200 air miles from Anchorage. Mitchell said he doesn’t have harsh feelings against Alaska Communications. “My understanding is that ACS is for us, and the other facilities,” he said. “They are paying out of their pocket the money the FCC has been withholding.” Cordova isn’t the only facility that received a letter calling bills due, said Becky Hultberg, the president and CEO of Alaska State Hospital and Nursing Home Association. “The fallout from the FCC’s decision to impose funding cuts to the USAC Rural Health Care fund is significant,” she said, and added that Alaska congressional delegation is working on resolving the shortage of RHC funds. And there may be a legal argument Alaska telecoms can make, she said. “It is ACS’ opinion that the FCC neglected to mention in their letter that the law also states that telecommunication carriers are entitled to the difference between urban and rural rates,” Hultberg wrote in an email. “We do not know who would prevail in court, but we do know that health care in Alaska will suffer greatly if internet services are disconnected.” Naomi Klouda can be reached at [email protected]

Lower costs, federal tax cut boost producers’ share of profits

For at least one quarter, the total taxes paid by Alaska’s largest oil producer appear to contradict a longstanding argument against raising them, but ConocoPhillips maintains that the results jive with its previous statements to the Legislature. Alaska oil industry advocates have fought attempts to raise North Slope oil production tax in part by insisting that “total government take,” an all-in calculation of combined taxes, royalties and fees paid to the state and federal governments, consistently exceeds the share of profits large companies are allowed to keep on the oil they produce at all prices. That claim has generally applied to the three major producers of BP, ConocoPhillips and ExxonMobil, which own the Prudhoe Bay, Kuparuk and Alpine oil fields that provide the lion’s share of North Slope production. More recently Hilcorp has joined those three as a large producer by state taxing standards with more than 50,000 barrels of production per day. ConocoPhillips reported net income of $445 million in the first quarter, while paying $400 million to governments — $298 million to the State of Alaska in royalties, property, income and production taxes, and $102 million in federal corporate income taxes — for a government take of 47 percent while the company correspondingly kept 53 percent of its taxable revenue. Before a one-time $79 million special item expense related to a Trans-Alaska Pipeline System tariff settlement, the company had $524 million in net earnings from Alaska. The company, Alaska’s largest oil producer, is required to break out its Alaska operations in its regular corporate financial reporting to the Securities and Exchange Commission because its activities in the state account for significant segment of its worldwide business. ConocoPhillips Alaska representatives emphasized that total government take is still greater than what the company retained based on its first quarter 2018 earnings. Spokeswoman Amy Burnett wrote in an email that on a net cash flow basis, which has been the basis of its presentations over the years to the Legislature, the company kept $367 million during the first quarter, or 48 percent of its total net cash flow of $767 million. The end net cash flow is calculated, according to Burnett, by adding back a $185 million depreciation expense on the company’s assets to the $445 million profit before deducting $263 million in capital expenditures for the quarter to arrive at the $367 million figure. Alaska Tax Division Director Ken Alper said total government take should generally be in the “low 50s range” at recent prices, but noted that “if you’re in a low 50s paradigm it doesn’t take that much to get further into a high 40s paradigm.” However, on the most basic level, “If in fact they’re now below 50 percent in the first quarter that’s going to be a hard admission for them because their reports are always caveated with how much taxes they pay.” Alper said that the changes in the numbers are driven by lower company costs and federal tax reform, which cut the top corporate tax rate from 35 percent to 21 percent as of Jan. 1. Before the federal corporate tax rate cut, the state share was larger than the producer share at all prices. The federal tax cut now puts the producer share larger than the state’s at prices up to $85 per barrel. Total take The complex state production tax is geared to support small companies and those producing oil from new developments while capturing revenue from the owners of the large, aforementioned legacy fields. ConocoPhillips Alaska leaders asserted in an April 2017 presentation to the House Finance Committee about a proposal to increase production taxes that the company’s share of taxable revenue peaked at 38 percent at oil prices between $70 to $80 per barrel. The company’s share shrank to 15 percent at roughly $45 per barrel and quickly became negative at prices of about $40 per barrel when costs outpaced revenue and the company began losing money on each barrel it produced. Companies and supporters of the current system note the royalty and gross tax require the producers to pay hundreds of millions each quarter during such exceptionally low price periods when they are losing money on each barrel of oil they produce. Burnett stressed, as others in the industry have, that the state’s tax and royalty levels must remain competitive with other regimes around the world so the producers will continue to invest in Alaska’s high-cost North Slope. BP paid $464 million to the state in 2016 when it lost $358 million in Alaska overall, with operating expenses combined with low prices more than erasing the $85 million North Slope upstream profit, according to BP Alaska Region President Janet Weiss. ConocoPhillips paid $492 million to the state in 2016 when it made $319 million here but lost $3.6 billion companywide. State royalties of 12.5 percent to 16.6 percent, depending on the leases where the oil is produced, and the gross 4 percent minimum production tax are collected regardless of a company’s profitability. During its April 2017 presentation at the Legislature, ConocoPhillips estimated the federal government would take 20 percent to 21 percent of the taxable revenue while the state would collect the remaining 41 percent to 42 percent in the $70 to $80 per barrel price band. More recently, during a Jan. 29 House Resources Committee meeting on another oil tax increase bill, company representatives showed a similar slide indicating a company’s would “take” peak at 48 percent when oil prices averaged $65 per barrel when the state got 39 percent and the feds took 13 percent. The chart also shows a large producer is likely profitable at lower prices as well, with the company not going into the red until $35 per barrel oil and still retaining 23 percent of taxable earnings at $40 per barrel prices. While the federal corporate tax calculation is seemingly a simple one — 21 percent of a company’s net earnings after state taxes and royalties are deducted — federal tax credits and depletion allowances mean companies are likely to not always pay the full rate, which would lower the government’s share from the high-level charts ConocoPhillips Alaska leaders used in their testimony to the Legislature, according to Alper. BP reports less-specific Alaska results to the SEC in its public annual reports and ExxonMobil, which discloses very little on any matter as its general practice, does not need to disclose its Alaska financials. BP netted $830 million in upstream Alaska profits, according to its 2017 annual report published in late March — on the back of $3.2 billion in operating revenue — is due to a roughly $500 million federal corporate tax accounting benefit stemming from the tax reform Congress passed in December. BP Alaska held a deferred tax liability of nearly $1.3 billion in 2016; that liability fell to $838 million in 2017, according to the report. A BP spokeswoman referred further questions about the company’s taxes in the state to the annual report. Gross versus net ‘crossover price’ The major producers were not eligible for the state’s now-scrapped North Slope refundable tax credit program, but they can purchase un-refunded credits from small companies to reduce their own production tax liability — potentially at steep discounts. The Department of Revenue estimates roughly $100 million of credits will be sold to the large producers over the next several years. Alaska’s oil price-linked production tax is structured to act as a progressive net profits tax at higher market prices and as a gross tax that ensures the state makes some revenue at lower prices. Whichever calculation between the net profits calculation, with the per-barrel credit that grows at low prices, and the simpler 4 percent gross tax is the one the state applies to tax North Slope oil. Currently, that “crossover” price, where the applied tax switches from the gross to the net tax calculation, is currently at about $65 per barrel based on the latest aggregated data reported to the state by the producers, according to Alper. The crossover price has been falling in recent years as companies have cut costs to while prices have been mostly less than $70 since late 2014 and bottomed at $26 in January 2016. In fiscal year 2015, North Slope operators deducted on average $43.60 in lease expenditures per barrel from the net taxable value of their produced oil, according to the Revenue Department. Today, those lease expenditures have fallen to about $25 per barrel, according to Revenue Department estimates. As a result, the state’s take is at its smallest percentage in relation to the profitability of the oil when near the gross-net crossover price as was the case in the first quarter. ConocoPhillips reported an average realized price of $68 per barrel in the first quarter on its Alaska oil. “There has been more efficiency in the industry and that has made them money but that has also made us money because it lowers the breakeven price of a barrel of oil,” Alper said during January testimony to the House Resources Committee. Unrestricted state petroleum revenue is expected to total $1.8 billion in the current 2018 fiscal year, with $654 million of that coming from oil and gas production taxes and the remaining majority coming from property and corporate taxes and royalties, according to the Revenue Department’s Spring 2018 Revenue Forecast. The state took in $876 million of discretionary petroleum-derived revenue in 2017 and the forecast is for $1.6 billion in unrestricted petroleum revenue in 2019. Supporters of the current system point to the increases in production even amid lower prices from 2015-17 as proof the tax regime is working for both the companies and the state. Alper said in an interview that the numbers between the companies would differ at least slightly because each has different spending patterns, noting ConocoPhillips is generally spending more than the other majors on capital expenditures as it is working to evaluate and develop several large prospects at once. ConocoPhillips drilled six separate exploration and appraisal wells this past winter, its busiest season in 15 years. Members of the Democrat-led House Majority Coalition have cited Department of Revenue reports that the effective production tax rate since 2015 has been as low as at any point in the state’s history as a reason to reform the current tax structure. The average tax rate during the last phase the state relied on a gross production tax prior to 2006 was as low as 6.4 percent in 2004 but generally higher. The economic limit factor, or ELF, tax rates varied depending on the field it was produced from. Alper added that the state paid $50 million in production tax true-ups in April on 2017 tax payments because of “migrating” per-barrel credits that companies can earn in one month and apply to another during years when oil price fluctuations push the tax between the gross and net systems. A similar situation occurred when prices collapsed in the latter half of 2014 and pushed the Walker administration to propose changes that would limit the ability of companies to use “migrating” per-barrel credits. As a result, just a few months of prices above the crossover point does not necessarily lead to additional state revenue, according to Alper. “I think the issue for the people interested in re-engaging in oil taxes is (government take) used to be deeper into the 60s and even into the 70s,” he said. Anchorage Democrat Sens. Berta Gardner and Bill Wielechowski cited a Legislative Research Division memo in a May 4 press release that states Alaska is ConocoPhillips’ most profitable region worldwide “by a wide margin.” “As this state continues to deflect billions of dollars in oil revenues in the form of per-barrel credits, the burden to balance the budget and provide necessary services is solely, and erroneously, forced upon working Alaskans,” Gardner said. “This is not about one company making significant profits. It’s about providing a balance to fixing our economic situation, and it takes all of us to achieve that.” The $445 million first quarter profit in the state, which is after the $79 million TAPS tariff special item deduction, was 39 percent of the company’s overall profit of $1.1 billion despite Alaska accounting for just 15 percent of its global oil and gas production. Further, ConocoPhillips netted an average of $26.18 per barrel of oil equivalent in Alaska during the period, compared to a $10.06 net per barrel average globally. Elwood Brehmer can be reached at [email protected]

As AGDC makes deals, details remain confidential

Those leading the state’s effort to commercialize its North Slope natural gas resources have touted recent agreements with key potential players in the $43 billion Alaska LNG Project as proof the project is viable and ever closer to coming to fruition, but what is in those agreements and how it impacts the state remains largely unknown. Gov. Bill Walker and Alaska Gasline Development Corp. President Keith Meyer signed the Nov. 9 joint development agreement, or JDA, with the government-owned Chinese mega corporations of Sinopec, an oil and gas company, the Bank of China and China Investment Corp. While a nonbinding agreement meant to set the framework for further negotiations, Walker and Meyer have characterized it as a watershed agreement because — in addition to being signed in front of the leaders of both countries — it brought entities into the fold that could finance a majority of the project in exchange for purchasing most of its end product, liquefied natural gas. Specifically, the JDA outlines the prospect of Sinopec signing up for up to 75 percent of the project’s liquefaction capacity with the Bank of China and China Investment Corp., the country’s sovereign wealth fund, providing a corresponding level of debt and equity financing to fund it. It also sets a soft May 31 deadline for the parties to have better defined the roles of each before finalizing those roles with binding deals later this year, as it notes Sinopec could also potentially participate in engineering, constructing or managing the project. It expires Dec. 31. As envisioned, the Alaska LNG Project would produce 20 million tons of LNG per year at full production, but Meyer has said the project could be built in phases if the market, financing or gas supply prevents full up-front development. Other, similar nonbinding agreements with potential Asian LNG buyers Korea Gas Corp., or Kogas, PetroVietnam Gas Corp. and Tokyo Gas have been announced ahead of and after the China JDA, but the details of those deals remain sealed. Walker said at the time that he insisted the JDA be made public despite objections from Chinese officials. On March 27, AGDC announced it had secured two of the world’s largest banks, again, the Bank of China, and Goldman Sachs, to assist the state-owned corporation in raising multiple rounds of debt and equity investment for the project. AGDC officials denied records requests for the memorandums with the other potential LNG purchasers and the contracts with the Bank of China and Goldman Sachs, citing the commercially sensitive information the documents contain. Spokeswoman Rosetta Alcantra wrote in a prepared statement that “Both Goldman Sachs and Bank of China will serve as AGDC’s financing arrangers, underwriters and placement agents for Alaska LNG. Bank of China will focus on raising funds from Chinese sources and Goldman Sachs will focus on U.S. and other international investors.” Additionally, Alcantra wrote, “The two companies will be paid a reasonable fee for services provided. Additionally, they will receive a success fee upon procuring necessary financing for Alaska LNG.”. The Legislature provided the public corporation exceptionally broad authority to withhold documents and information for commercial reasons in Senate Bill 138, the legislation that established an operational path for AGDC to participate in the prior, producer-led iteration of the project, and passed with broad bipartisan support in 2014. However, AGDC has released other contracts it has signed to media outlets, including agreements with Washington, D.C.-based consultants providing services as liaisons between Congress and the Trump administration. In an interview following the Bank of China-Goldman Sachs announcement, Meyer said the corporation works hard to be as transparent as possible through its board of directors meetings and legislative hearings in which AGDC officials testify and update the Legislature on Alaska LNG progress. “We’re dealing with public money and the money is to get a project done and we’re operating in a very, very competitive arena and we’ve got to recognize that. We’ve got to recognize that we’re somewhat handicapped because of this need to be so public,” Meyer said. “We’ve got people who can take pot shots at us in the public arena — having all of our commercial agreements out there posted on the internet by the press. We’ve got to recognize there’s some justification for that, no doubt, but at the same time it hinders us in this very, very competitive landscape and it’s getting increasingly competitive.” Working as a public entity in the closed-door oil and gas realm where success is measured in billions of dollars, Meyer said he welcomes the critiques and comments from Alaskans in positions of power or the public at-large and wants to be responsive whenever possible. “It pains me to get a request for information and not be able to comply. In spite of what you may have been led to believe we’re trying to be as transparent as we can at every turn,” he said. AGDC leaders have been willing to conduct interviews when their schedules allow. Additionally, Meyer noted he instituted a strict policy of following best business practices when he took the helm at the corporation in June 2016. “To me, and I’ve told the folks here, we’ve got to make decisions based on business fundamentals and they’ve got to be scrutinized on that basis. We don’t do a single thing here that has a political motive or has some appearance of something like that. It is strictly focused on execution. We’re trying to build America’s largest energy export project; that’s what we’re focused on; that’s what we’re doing and we’re fighting lots of people bigger than ourselves,” he said. The bank contracts have been withheld at the request of the banks, which didn’t even want their deals with AGDC shared between the two, according to Meyer. He further stressed that when it comes time to spend significant amounts of state money — during a time when the state is running budget deficits — the commitments the corporation makes will be “quite open.” “In terms of the banker deals, those guys get paid when they bring in third party money, not Alaska money; they don’t get paid for Alaska money,” said Meyer, who added they won’t get paid with State of Alaska money, either. “They get paid with a slice of the third party funds they bring in. If they don’t bring in funds there’s no slice that they get.” Most recently, AGDC announced May 7 it had inked a binding agreement with BP on the primary terms of a gas sales contract including price and volume to supply the Alaska LNG Project. As expected and generally understood, the key terms of that deal are confidential given — beyond BP’s desire that they remain classified permanently — AGDC would not want to compromise the similar negotiations it is still in with ConocoPhillips and ExxonMobil. Meyer and Walker said in separate interviews that the gas supply terms, which presumably commit AGDC to buy BP’s produced gas just before it enters the project’s North Slope gas treatment plant, are likely to be made public eventually, but neither could say exactly when. Legislators who have followed AGDC’s progress closely said they are most concerned about the project’s netback to the state treasury and how that might be impacted by the gas supply agreements. Anchorage Democrat and House Resources co-chair Rep. Andy Josephson said he expects AGDC will be required to disclose the terms of the major commitments it makes closer to when the corporation is ready to make its final investment decision, but he wouldn’t want those disclosures to run afoul of any agreements to the contrary. AGDC has pegged its final investment decision for early 2020 to coincide with when the Federal Energy Regulatory Commission has said it will rule on the Alaska LNG environmental impact statement. Meyer has said the state should expect at least $250 million per year in revenue from the project based on high-level financial modeling, while some legislators are wondering what happened to consultant reports that pegged the state’s annual income from Alaska LNG in the billions of dollars when the producer companies were directly involved in the project prior to 2017. A major change in the revenue estimate is largely to due global natural gas and LNG spot market prices that were twice as high in 2014 as they are currently, with delivered LNG prices to Asia now in the $7 per thousand cubic feet range, according to FERC. Senate Resources chair Sen. Cathy Giessel, R-Anchorage, said she appreciates why the gas sale terms are kept close to the vest, but said she wants to know how those terms relate to oil and gas taxes in addition to also having questions about state revenue from Alaska LNG. “What if the state of Alaska during this (project) raises production taxes? Will those added tax liabilities by passed on to AGDC or the LNG buyer?” she questioned. Giessel is the only legislator to have signed a confidentiality agreement with AGDC to review sensitive documents, but she did so prior to the state entity taking control of the project in early 2017 and said it’s her understanding that agreement is not valid for the current iteration of Alaska LNG and the documents produced to support it. She also noted the state taking over the project is not what the Legislature agreed to when it passed SB 138 and may not have given AGDC such broad authority to withhold information. “I believe had we ever envisioned it becoming a state-led project like this we would have structured it differently,” Giessel said. “In (Meyer’s) hands is the sole authority to commit the state and its resources for decades.” ^ Elwood Brehmer can be reached at [email protected]

Final budget deletes receipt authority for state gasline corp.

The Legislature left plenty of items in Gov. Bill Walker’s budget and added to others, but it took out a key provision in the Alaska Gasline Development Corp.’s effort to bring the Alaska LNG Project to fruition. Lawmakers pulled language allowing the gasline agency to accept outside funds from investors, known as receipt authority, for the $43 billion project in the 2018 and 2019 fiscal years. AGDC President Keith Meyer said in a statement to the Journal that he and his team look forward to working with the Legislature on the important aspects of the project as it advances. But lacking a substantial injection of new money could potentially challenge the ability of the corporation to stay on its desired schedule. AGDC leaders expect to have $52.5 million at the start of the 2019 state fiscal year that starts July 1, according to documents from its May 10 board of directors meeting. The state-owned corporation took over control of the Alaska LNG Project in January 2017 with $106 million remaining from prior gasline appropriations. An austerity program instituted by AGDC leaders at that time has helped them under-spend on their budget by $35.7 million since, Finance Manager Philip Sullivan said at the meeting. As a result, the corporation should be able to continue operating on its existing funds through June 2019, according to Sullivan. Senate Resources chair Sen. Cathy Giessel said in an interview that she believes AGDC can continue to advance the project’s environmental impact statement being drafted by the Federal Energy Regulatory Commission. Senate Republicans by and large have been the most skeptical legislators about the administration’s plan for the state-led gasline. FERC is expected to issue a record of decision on the project in March 2020. Meyer said May 10 — before the final operating budget was passed — that the corporation would soon initiate work drafting contracts for engineering, procurement and construction, or EPC, management firms to finish designing and build the project. The different aspects of the complex project — a North Slope gas treatment plant, 807 miles of buried, 42-inch pipeline, a very large LNG plant and marine terminal — will likely require multiple firms with varying areas of expertise to complete, according to Meyer. He has said AGDC has been in discussions with EPC firms for some time. Additionally, AGDC will soon be getting ready for an equity offering, Meyer said May 10. Giessel said she wouldn’t expect the corporation to secure EPC firms with its remaining funding, adding that third-party receipt authority shouldn’t be confused with financing for the corporation. “AGDC has plenty of revenue to continue on with the FERC process,” she said. “That’s what they need to focus on.” With AGDC seeking non-recourse debt and equity to finance the vast majority of Alaska LNG from banks and third-party investors, many legislators are concerned granting the corporation the ability to accept those funds would be ceding most of lawmakers’ oversight of the project. Giessel said AGDC leaders have yet to answer questions regarding how much equity ownership the state will have to give up and for how substantial an investment return among others. “These questions have to be answered before the Legislature gives up its appropriation authority on this project,” she said. The Legislature could revisit funding the project when it convenes next January if AGDC can provide more details on it, Giessel suggested. AGDC spokesman Jesse Carlstrom wrote that as corporation officials work with Goldman Sachs and Bank of China to arrange third party funding they will continue to keep legislators informed on all aspects of the project. “AGDC understands Alaska’s lawmakers are committed to making decisions that are in the best interest of all Alaskans,” Carlstrom said via email. “Throughout the remainder of 2018 and into 2019, AGDC will continue to present the Legislature with the information lawmakers need to make appropriate decisions for the responsible development of Alaska’s vast amounts of proven, stranded, North Slope natural gas.” The House originally limited the receipt authority to $1 billion per year rather than the open-ended language in Walker’s budget. However, some in the Legislature were still concerned the administration could use a procedural maneuver to request unlimited receipt authority through the Legislative Budget and Audit Committee outside of the regular session — a request the Legislature would have no authority to deny. Giessel also noted the Legislature did approve AGDC to use $12 million previously committed to the smaller, in-state Alaska Standalone Pipeline, or ASAP, project for the larger Alaska LNG export plan as the corporation had previously requested. House Resources co-chair Rep. Andy Josephson, D-Anchorage, said he shares AGDC’s concerns about the appearance of the Legislature’s hesitancy to support the project. “Markets and investors may be squeamish that we wont even agree to accept someone else’s money,” Josephson said. “I’ve been told it puts AGDC in a light they don’t want to be in.” He said Walker could call a special session to resolve the matter if he feels it warrants such an action, but Walker said after the session ended May 13 he had no intention to do so for any reason. Josephson noted further that if the Legislature would have acted before this year to implement a fiscal plan and drastically reduce the multibillion-dollar budget deficits it covered with the state’s savings for four years, lawmakers would have more flexibility to control the project. “With $10 billion in savings we could’ve done it ourselves,” Josephson added. Elwood Brehmer can be reached at [email protected]

Former UA Regent sues state over tax credit bonding plan

(Editor's note: This story has been updated from its orginal version to include comments from Eric Forrer, who filed the lawsuit, and his attorney Joseph Geldhof.) Questions regarding the constitutionality of the Walker administration’s plan to pay off the state’s $800 million-plus oil and gas tax credit obligation will likely be answered sooner than later. Former University of Alaska Regent Eric Forrer filed suit against the administration May 14 in Juneau Superior Court, just two days after the Legislature passed House Bill 331 authorizing the Department of Revenue to sell bonds to pay the credits. The lawsuit, filed in Juneau Superior Court, alleges the bond sale would commit the state to debt outside of the restrictions the Alaska Constitution puts on the Legislature’s ability to incur financial liabilities. Administration officials, including Attorney General Jahna Lindemuth, contend the plan is legal because the 10-year bonds would be “subject to appropriation” by the Legislature, which the bond buyers would be aware of, and therefore would not legally bind the state to make the annual debt payments. Department of Revenue officials testified in hearings on the matter that the arrangement has been used in the past to fund other projects. However, Forrer’s complaint argues that “Failure by future legislatures to make funds available to repay the ‘subject to appropriation’ bond scheme contained in HB 331 will have a negative impact on the credit rating of the State of Alaska,” just as not repaying more traditional general obligation bonds would. “The implied promise in HB 331 that future Alaska legislatures will make appropriations to satisfy the ‘subject to appropriation’ bond scheme contained in the legislation essentially amounts to an impermissible dedication of funds contrary to the Alaska Constitution,” the complaint continues. The state Constitution generally limits the Legislature from bonding for debt to general obligation, or GO, bonds for capital projects, veterans’ housing and state emergencies. In most cases the voters must approve the GO bond proposals before the bonds are sold. State corporations can also sell revenue bonds, but those are usually linked to a corresponding income stream and only obligate the corporation to make payments, not the State of Alaska as a whole. Legislative Legal Division attorneys in an April 13 opinion questioned whether the Alaska Tax Bond Corp. that HB 331 authorizes Revenue Commissioner Sheldon Fisher to set up would truly have a revenue stream that could pass legal muster given it would rely on annual legislative appropriations to fund the debt payments. Sen. Bill Wielechowski, D-Anchorage, raised the potential constitutionality issues in the first hearing on the plan in February. Fisher said in testimony on the bill that the department planned to sell roughly $800 million in bonds sometime in late July or August and another, much smaller bond sale would be needed in a couple years to pay off the remaining credits that companies have earned but not yet claimed from the state. The Walker administration hopes that paying off the credits in a lump sum would restart investment by small producers and explorers in Alaska’s oil and gas fields that has been slowed by three years of less-than-full credit payment amounts while the Legislature and the administration debated how to resolve the state’s large budget deficits, according to Fisher and supporters of the plan in the Legislature. The 72-year-old Forrer said in an interview that he filed the lawsuit in the public's interest, adding that "atta boys are pouring in over the transom" since it became public. It's clear the state owes the credit money, he said, but noted it has also lived up to the law by making annual appropriations in line with the statute that spells out the calculation for the oil-price driven minimum credit payment formula in the past two budgets. "The pressure point is coming, we presume, from the banks and the oil companies holding credits," Forrer said. He suggested the Legislature and the Walker administration should have put the bonds up to a vote of the people, as is required for GO bonds, and that they should've expected a court challenge in the absence of additional measures to quell the constitutionality questions surrounding the plan. An amendment to HB 331 by Rep. Scott Kawasaki, D-Fairbanks, that called for a public advisory vote on the bonds was rejected during debate on the House floor. Questions to the Department of Revenue regarding how the suit might impact the bond sale were responded to by the Department of Law. Spokeswoman Maria Bahr said the Revenue Department will review the issue with its legal counsel and, as is general practice, the Law Department would not comment further on the active litigation. One matter state attorneys will likely analyze is whether or not the issue is “ripe” for a challenge given Walker has yet to sign HB 331 into law. The complaint notes that given it is the administration’s bill “the likelihood that HB 331 will become law is as certain as anything can be in the political context.” Forrer's attorney Joseph Geldhof acknowldeged there is a pottntial ripeness issue in filing the suit before HB 331 is officially the law of the land, but said they wanted to give Walker an opportunity to veto the bill and call the Legislature into a special session to address at least this year's credit payments. He said there is "a strong moral obligation" for the state to pay the tax credits, but turning that into a debt that could impact the state's credit rating is not the proper, or legal, way to do it. The suit also alleges a provision in the bill attempting to limit legal challenges to a period within 45 days after approval of a resolution to authorize a bond sale is an unconstitutional restriction on citizens’ abilities to seek judicial review. The provision was added to the bill by the Legislature after the constitutionality issues were raised. "It shows we're running the state like a clubhouse gang and not a real state," Geldhof said. The administration has 40 days to respond to the complaint. Elwood Brehmer can be reached at [email protected]

Alaska shoe startup ready to step into production

Alaska startup Pandere Shoes has reached a milestone: the business met its goal to pre-sell $30,000 worth of online orders to fund production of the first run of shoes for direct retail. The three women who invented the patented shoe designs — Laura Oden, Celia Crossett and Ayla Rogers — are believed to have created the first closed shoe designed to expand three-dimensionally up to 1½ shoe sizes. Their market research shows 23 million to 45 million people suffer from some kind of foot ailment caused by cancer treatment, birth defects, edema, poor lymphatic systems or any number of causes. “These shoes expand where feet swell,” Crossett said. “When your feet swell, they get bigger from the top. But shoes aren’t designed to expand in that direction; they are only designed for length and width.” Think of the classic Italian and Portuguese footwear expertise that’s dominated style since the Middle Ages. “Pointy-toed shoes just don’t cut it,” Oden said. “This business was borne out of my own frustration at not being able to find shoes.” For the past 40 years, Oden has suffered from lymphedema that meant no one pair of shoes would fit both feet. Looking for a shoe that fits well set Oden off on her quest within the nurturing community of Anchorage startups. Two women, Rogers and Cossett, joined her at a January 2016 Startup Weekend, one of the events meant to brainstorm and fine-tune new entrepreneurial endeavors. Rogers, raised in Houston, Alaska, is a One Million Cups facilitator, a realtor and a “serial entrepreneur” who’s helped launch other businesses. Both Oden and Crossett are business planners at the Southcentral Foundation. Cossett earned two master’s degrees and did social justice work in Kazakhstan before returning home to Alaska where she earned yet another degree, a master’s in business at Alaska Pacific University. “When we were doing the research, we found we have a real strong business case when we started hearing all the stories. The first day after we created our Facebook page, we already had 100 followers,” Rogers said. “It was a gold mine of information: we heard from people saying ‘I have an aunt, I have a friend that needs those shoes.’” From that first startup weekend, they’ve attracted a following of 1,200 people on Facebook who continue to share stories of woeful footwear options. The current market offers only orthopedic shoes, which leaves out those who need to dress for a corporate setting and multiple other functions. The Pandere partners found people wearing slippers or painful footwear or two size shoes that pinched or left them with other health problems. After the Startup Weekend, the three women stuck together, meeting at least once a week. They did this while working their full-time jobs. The trio refined their business plan and shoe designs over the next two years. Along the way, Pandere won awards at six entrepreneurial competitions, including Startup Weekend and the Alaska Business Plan Competition. The money provided enough funding to help them through designing the shoes and finding a Portuguese manufacturer to work up a prototype of each shoe design. At the end, the cost per shoe was $2,000 because they are hand stitched and adhere to an expanded design specific for the heel, arch and toe areas. After several prototype tries, they settled on two designs. Pairs of shoes range from $99 to $200 but currently most sizes are sold for around $120. There are only two styles for women so far, “but we’re working on more and on making them for men,” Oden said. “We were told we wouldn’t be able to mass produce these shoes because there are more parts than to traditional shoes,” Cossett said. “They expand in three different areas, the toebox, the midfoot and the heel or ankle.” And mistakes were made along the way. A drawing that showed an opening at the so-called toe box came back as a shoe with a small window-like opening that missed the point of expanding in that area. They went through four shoe designers. They encountered language barriers. “It was a big learning curve on both sides,” Oden said. “You fail a lot at first.” Plus, they couldn’t post photos of their inventions until they had received the patent. But they were armed with market validation and stories of people out there wearing sandals in cold climates — the only thing that fit — as well as suffering painful feet, lifelong embarrassment and immobility. The stories didn’t just come from Alaska. They came from around the U.S. and the world, men and women. “Our mission plan is to always keep our customers’ mobility, dignity and comfort in our thoughts,” Rogers said. On April 18, Oden, Crossett and Rogers launched a 30-day Kickstarter campaign with a funding goal of $30,000 as a way to introduce the innovative shoe line to the world and raise funds for production of the first round of shoes for retail sale. They met the goal, and now will launch their first manufacturing run using a shoemaker in Portugal. Pandere works out of The Boardroom in downtown Anchorage, a “co-working” space for a community of people who share ideas in financing and resources. Katherine Jernstrom, founder of The Boardroom and fund manager at Alyeska Venture Management, said the launch of Pandere Shoes is a great representation of an Alaskan innovation ecosystem that has made a lot of gains in the past five years. “They found a global customer-base looking for a unique solution to their problem and with grit and determination, and a little luck, Pandere will create new jobs and will create new wealth for its employees, owners, investors, vendors, and contractors,” she said. Naomi Klouda can be reached at [email protected]

Movers and Shakers for May 20

Alaska USA Federal Credit Union has selected three individuals to fill executive level positions. Scott Cherktow has been selected for the position of senior vice president, IM Applications. Chertkow has worked at Alaska USA for more than 10 years, most recently as vice president, IM Operations. Doug Horner has been selected for the position of vice president, IM Operations. Horner has worked at Alaska USA for more than six years, most recently as Anchorage Data Center Manager. Shannon Conley has been selected for the position of senior vice president, Branch Administration. Conley has worked for Alaska USA for more than 12 years, most recently as Dealer Loan Center manager. The Alaska Association of Elementary School Principals announced Michael Angaiak, principal of Anne Wien Elementary School in Fairbanks, as its 2018 National Distinguished Principal. Angaiak was nominated and selected by his fellow principals through a statewide search process conducted by the Alaska Association of Elementary School Principals. Angaiak has a graduate bachelor’s degree from University of Notre Dame, and a teaching certificate and master degree from University of Alaska Anchorage. He has been a principal for eight years, serving as principal of Anne Wien Elementary School for the past five. Angaiak, a Yup’ik Alaskan Native, has previously been recognized as an outstanding principal by both the Fairbanks Principals’ Association and the Fairbanks Daily News-Miner. Christine White, CPSM, has been promoted to communications manager at R&M Consultants Inc. White first joined R&M’s Marketing Department as a marketing coordinator in January 2012. As the communications manager, she is responsible for the strategic development and implementation of firm communications, public relations and content marketing programs. White has more than nine years of business‐to‐business marketing, including strategic planning, public communications, graphic design, website design and proposal preparation. She has also led the proposal efforts for many of R&M’s current projects, including the Big Lake Pedestrian Study, the Midtown Corridor Improvements: Denali Street Area-Benson to Tudor Road project, and most recently, the 2018 Statewide Hazardous Waste and Environmental Services Term Agreement with the Alaska Department of Transportation and Public Facilities. White has a bachelor’s degree in journalism and public communications from the University of Alaska Anchorage. She is a member of the Society for Marketing Professional Services and currently serves on the board as the immediate past president. MSI Communications announced several personnel changes. Art Director Tara Storter was promoted to associate creative director, a role in which she will share responsibility for crafting and overseeing the agency’s creative work alongside Creative Director Jim Coe. Storter has long been one of MSI’s leading graphic designers, having created some of its most visible work during her 10 years at the agency. Account Executive Ashley Brinkman was promoted to account manager after a year and a half with the agency. As an account manager, Brinkman now works directly with clients to develop and implement multi-media communication plans. Keith Baxter was hired in the role of account executive. He will assist the client-services team in managing daily projects and creating long-term advertising and public relations plans. Born and raised in Soldotna, Baxter is an alum of University of Alaska Anchorage. For the past seven years, he has been the director of member relations for the Kenai Peninsula Tourism Marketing Council. Dylan Faber joined MSI in March as an account coordinator. He will support to the client-services team in day-to-day management of accounts and projects. A graduate of Northeastern University, Faber spent the last two years as a special assistant to Sen. Lisa Murkowski. Brady Siegel was hired as MSI’s new administrative assistant. Born and raised in Palmer, Siegel graduated from University of Georgia last May, then returned to Alaska.

Draft complaint prompts mediation in Rogoff bankruptcy

The long-running bankruptcy case filed by former Alaska Dispatch News owner Alice Rogoff might be near an end after the public trustee found grounds for an official complaint of wrongdoing against her and all parties agreed to go into a mediation set for June 4 in Anchorage. The purpose of the settlement conference is to find a resolution of the case without further litigation “by providing a forum for private and informal discussions,” according to a filing May 10 issued out of the U.S. Bankruptcy Court for the Eastern District of Washington. It’s a process that promises Rogoff little public exposure in a look at her financials or how much income she received that was not parceled in with the newspaper’s holdings. “Prior to the settlement conference, each party is to e-mail their confidential statement of position,” wrote Judge Frederick Corbit, of U.S. Bankruptcy Court for the Eastern District of Washington. Afterwards, all the documents will be destroyed, he wrote. The case remains in the U.S. Bankruptcy Court, Alaska Division, explained Christine Tobin-Presser, an attorney in the Seattle law firm of Bush Kornfeld LLP, who represents the public trustee. The mediator who agreed to oversee the process just happens to be out of Spokane, the Eastern Washington District of the U.S. Bankruptcy Court, she said. These moves indicate a settlement may be near. Rogoff originally filed for Chapter 11 bankruptcy reorganization on Aug. 12 before selling the Alaska Dispatch News to the Binkley Co. for $1 million on Sept. 11, 2017, after she purchased it in 2014 for $34 million from McClatchy Co. Under Binkley ownership, the historic daily newspaper was then changed back to the Anchorage Daily News. (The Binkley Co. has since acquired the Alaska Journal of Commerce in a deal that closed Feb. 23). The bankruptcy was converted to Chapter 7 liquidation later in September to pursue assets that could be used to pay those still owed money. As of the deadline on March 19, a total of 29 companies or individuals submitted claims for bills they say are owed them, a collective total of just less than $9 million. Rogoff listed herself as a creditor for up to $23 million owed. Nacole Jipping, a court-appointed public trustee, examined Rogoff’s finances to see how her financial decisions may have contributed to the bankruptcy. Jipping’s role is to recover any monies possible to repay the debts left behind, and if she found fault with Rogoff’s handling of finances that contribute to bankruptcy, her role calls for her to file that finding with the court. Just prior to the mediation agreement, in late April, Jipping provided Rogoff with a draft complaint “setting forth a variety of asserted causes of action against the Rogoff entities and Northrim Bank.” Whatever Jipping found as error on Rogoff’s part in her financial dealings isn’t publicly available because it was filed confidentially in court documents, Tobin-Presser wrote in an email response to a Journal question. Further, the complaint is still in draft form. “We have not filed the complaint. It is not public at this time,” Tobin-Presser wrote in an email. As for the upcoming June 4 settlement conference, all communications there also are confidential, Corbit wrote in his order. Even paperwork submitted for the settlement conference will “be maintained in Judge Corbit’s chambers and will be destroyed after the conference.” Confidentially claims on Rogoff’s part have played a big part in the plodding progress thus far in the case. Rogoff has maintained that her private finances are off-limits to this court examination in the manner that legally protects owners of limited liability corporations. How much she received through a 2005 separation and later, a 2017 divorce settlement with her former billionaire husband David Rubenstein is not “the court’s business,” her attorney James Lister has argued. In March, U.S. Bankruptcy Court Alaska Division Judge Gary Spraker ruled that Rogoff’s financial documents at Northrim Bank were not off limits. The bottom line of Spraker’s March 21 decision is that Rogoff’s finances are not confidential as it relates to the $13 million loan from Northrim Bank used to purchase the Anchorage Daily News from McClatchy Co. In mid-April, Lister submitted an appeal to the Ninth Circuit Court of Appeals bankruptcy section asking the court to decide on whether Spraker erred in his ruling. The 9th Circuit hasn’t yet agreed whether to hear the appeal, Lister said. “All I can say is that all the parties agreed to mediation but there is no certainty that what would happen would result in settlement,” Lister said in a phone call with the Journal. “In the stipulation agreement, we asked to be issued a mediator to see if he can mediate the dispute. In the request for mediation, she (Jipping) has claims against Rogoff.” The appeals question remains separate and could become moot, depending on the outcome of mediation, Tobin-Presser said. If the complaint against Rogoff is finalized, it would be available for public view, the attorneys said. Naomi Klouda can be reached at [email protected]

GUEST COMMENTARY: Alaskans deserve process, not knee-jerk opposition, to Ambler Road

A recent House Resources committee hearing on the Ambler Mining District Industrial Access Project served as a reminder how prevalent a role outside environmental groups play in Alaska politics, particularly when it comes to mining projects. Perhaps nowhere else in America do environmental groups spend as much time, money and effort to insert a voice into how — or even if — we manage our own resources. Knee-jerk opposition to resource development often ignores the needs and best interests of Alaskans. It also discounts that these projects, in this case a potential road leading to a mining district in Northwest Alaska, make huge regional economic contributions to fund education, healthcare, and opportunity for future generations of our state. The Red Dog Mine, one of the largest lead and zinc mines in the world, has been in operation since the 1980s. It’s the only non-government tax contributor to the Northwest Arctic Borough and plays a critical role in supporting important services, especially schools. Since mining began at Red Dog over 25 years ago, more than $140 million has been provided to the borough. During that same period, over $880 million has been provided to the state and over $695 million to the federal government. Seven hundred-fifty Northwest Arctic Borough jobs are connected to Red Dog; accounting for roughly $75 million in annual wages. In addition, over $160 million is spent annually on goods and services from Alaska-based businesses. The economic and social benefits that the Red Dog Mine has brought to the region go on and on. Roughly 150 miles to the east of Red Dog is the mineral rich Ambler Mining District. The topic of recent legislative hearings was the feasibility of an access road being pursued by the Alaska Industrial Development and Export Authority, or AIDEA. The road project is important because it would allow responsible development of mineral resources used in everything from solar panels to windmills and electric cars. The Ambler Access Project road alone would create hundreds of local jobs during the construction phase. Once built, providing industrial-only access to known mineral deposits, mining development could account for thousands of direct jobs during mine construction and operations. The benefit to the region would be a multiple of the long-term positive benefits the Red Dog Mine has brought. Despite the significant employment and economic benefit potential the project represents, the House Resources hearing included testimony from naysayers, arguing about the economics of the advanced-stage exploration project and challenging the return on investment of a proposed private toll road paid for with other people’s money. The Wilderness Society representatives, while generally stating support for the access road itself, had a lengthy presentation disagreeing with the economic model presented by AIDEA. AIDEA still has a lot of work to do, and they have detailed the rigorous process necessary to finalize a financing package for private investors interested in purchasing bonds to build the access road. Similarly, Trilogy Metals just finished a pre-feasibility-level study that demonstrates robust project economics, and as the Wilderness Society testified, more drilling work is needed at the potential mining projects. That work will continue this summer with recent news that the mining companies pursuing these opportunities have the funds in hand to do that. AIDEA and its proposed Ambler Access Project are going through the National Environmental Policy Act, or NEPA, process to complete scoping requirements for an environmental impact statement, or EIS. This includes comments from the public relative to concerns and issues that must be addressed in the permitting process. This is followed by a draft EIS; another public comment period; a final EIS; a third public comment period; and then ultimately a record of decision. Nothing can be built before then. The NEPA process is incredibly rigorous, incorporating local input into project design and decision making, and has always resulted in a better project. At the end of the day, Alaskans should support this process to ensure that — once all the facts are made available — those who stand to be most affected by the road have a say in how it’s designed and developed. Nobody is building a road or a mine at this point, and none of the numbers are final, but Alaskans, especially residents of the region, deserve this process to play out. They deserve to hear all ideas, concerns and options for the road moving forward. What they don’t deserve is to have another resource project shut down by outside special interest groups before all the facts are available and the permitting process complete. John MacKinnon is the Executive Director of AGC of Alaska, a construction trade association representing over 640 companies in Alaska. Jim St. George is the President of AGC of Alaska. He is founder of STG Incorporated, an Anchorage-based construction management and services company specializing in heavy industrial construction projects in rural Alaska.

Legislature passes budgets, ends extended session

JUNEAU (AP) — Alaska lawmakers ended the extended legislative session early Sunday after passing state spending plans and a flurry of other bills in the waning hours. Despite running long, the session lacked the drama of the past several years, which were marked by drawn-out special sessions and bitter fights over the budget and taxes. House Speaker Bryce Edgmon said legislators in both chambers decided they would have to trust one another, work together and compromise "in order for us to get out of here in an orderly manner." The Senate has a Republican-led majority. The House majority coalition is composed largely of Democrats. The end of session merited a "fist pump in the air for everybody," Edgmon said. Saturday started slowly, with lawmakers meeting behind closed doors and trying to reach final agreement on what would be needed to finish up. Floor sessions scheduled for the morning started hours late. Heading into the day, the major unresolved pieces were the operating and capital budgets. A tentative agreement had been reached on the operating budget earlier in the week but needed House and Senate approval. The capital budget was being worked on in the House Finance Committee. When Edgmon announced on the House floor Saturday that it would be last day of work, it drew a smattering of hands pounding on desks — the legislative equivalent of applause. The operating budget that was ultimately approved Saturday would be paid, in part, using Alaska Permanent Fund earnings, an outcome lawmakers were essentially forced into after years of drawing down on savings to fill a budget deficit that has persisted amid slumping oil revenues. The measure calls for a withdrawal of $1.7 billion from Permanent Fund earnings to help pay state government costs and another $1 billion for the yearly dividend checks residents receive from the oil-wealth fund. Lawmakers chose to cap dividend checks at $1,600 for this year, a level Gov. Bill Walker has said he supports. The dividend calculation in state law already had been ignored the past two years amid gridlock over how best to fill the deficit. Legislative leaders have said there was insufficient support this year to pay out a full dividend under that calculation, which would have been about $2,650. The permanent fund is a nest egg, seeded with oil money, which has grown through investments. The fund's principal is protected, but fund earnings can be spent. Use of earnings in the past, however, has been limited to things like paying out dividends. Lawmakers also agreed to use money from the constitutional budget reserve, a state savings account, to help fill the deficit. Senate discussion on the budget included hopefulness about a recent rise in oil prices and the positive impact that could have on the budget. North Slope oil was about $77 a barrel on Thursday. It was around $50 a barrel at this time the past two years. On the House side, Republican critics of the budget said the package was too large and unsustainable. The operating budget included $10 million above what Walker proposed for the University of Alaska. It included funding for additional prosecutors and law enforcement positions and for 20 positions to address a backlog in public assistance applications. The capital budget, which emerged from House Finance late Saturday, isn't solely an infrastructure package. It also includes health and safety projects and school funding — an additional $20 million for public schools for the fiscal year starting July 1, and $6 million over two years for pre-kindergarten programs. The package also includes another $28 million for Medicaid, though Walker's budget director Pat Pitney said that falls short of what is needed and could lead to delays in provider payments. The capital budget also puts money toward two projects Walker had previously halted: a bridge over Knik Arm to provide another way of connecting Anchorage to the state's fastest-growing area and a project to help connect Juneau to the road system. The budget bills now go to Walker for review. Lawmakers also passed a flurry of other bills, including a statewide smoke-free workplace bill that had languished for months in the House despite widespread support. Legislation passed, too, setting up a raffle to benefit schools, which Alaskans could enter using all or a portion of their Permanent Fund dividend checks. Seventy-five percent of entry dollars would go toward public schools and a new education endowment. The remaining 25 percent would go toward a prize fund. On Friday the Legislature passed a measure aimed at paying off the state's oil tax credit obligations through bonding. Legislators also approved a package aimed at addressing crime concerns. The bonding bill passed despite constitutional concerns. Attorney General Jahna Lindemuth has said there isn't a constitutional problem. Walker told reporters he had no plans to call a special session, which he said was a testament to the work lawmakers accomplished. Senate Majority Leader Peter Micciche said lawmakers wanted to complete their work and get back to their districts. He said he wasn't happy with the outcome but said compromise was needed — and demanded by Alaskans tired of gridlock. Lawmakers worked past the 90-day, voter approved-session limit in mid-April. They finished within the constitutional time limit; the constitution permits sessions of up to 121 days, a limit that would have been reached Wednesday.  

House-Senate conference releases operating budget

JUNEAU (AP) — A tentative agreement on the state operating budget was reached Thursday, moving Alaska legislators one step closer toward adjourning the extended session. A conference committee reached agreement on the last budget items in dispute between the state House and Senate. Those included providing an additional $10 million for the University of Alaska system beyond what Gov. Bill Walker had proposed. The university funding was in the middle of what the House and Senate had earlier proposed. The committee also agreed to provide funding for additional prosecutors and law enforcement positions and to fund 20 new positions to address a backlog of public assistance applications. The bill will now go to the House and Senate for final consideration. The operating budget is one of the last major items remaining in the extended legislative session, which lawmakers hope to end soon. Senate President Pete Kelly said lawmakers are aiming to complete their work Saturday. Other remaining issues include the capital budget and a bill to allow for bonding to pay off the state's remaining oil and gas obligations. A version of the capital budget has already passed the Senate and was being worked on in the House. The bonding bill, which previously passed the House, is scheduled for the Senate floor on Friday. The Senate on Thursday passed legislation rolling several crime bills — including several of Walker's priority bills — into one big package. Provisions sought by Walker include allowing the attorney general to schedule new drugs as controlled substance by emergency regulation if the attorney general deems that necessary to protect public safety. The bill also would allow judges to consider out-of-state convictions when making pre-trial release decisions. The additional crime bills were grafted onto a bill that previously passed the House. That means that House will have to decide whether to approve it as is. Legislators worked past the 90-day, voter-approved session deadline in mid-April. The constitution permits regular sessions of 121 days. That limit would be hit Wednesday.  


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