Opinion

FISH FACTOR: High-end black cod taken for research donated to hungry

Needy Alaskans are enjoying a rare taste of sablefish, thanks to a science project that kept research fish from going over the rails. Sablefish, more commonly called black cod, are one of the world’s priciest, high-end fish, and Alaska waters are home to the largest stocks. The deep-water fish are found at depths of 5,000 feet or more and can live to nearly 100 years. The Gulf of Alaska fishery, which has a catch total of about 20 million pounds this year (18.2 million in 2015) is usually worth more than $90 million to Alaska fishermen at the docks. But the population — as measured by the amount of spawning females — has been decreasing about 3 percent a year since 2004, and researchers aim to find out why. In December, a team from the National Oceanic and Atmospheric Administration Auke Bay lab in Juneau tagged 40 female sablefish with satellite tags that will release on a set date.  “Sablefish movements have been tracked for decades, but this tagging will give us a better idea of where and when these females are releasing their eggs,” said Katy Echave, chief scientist for the sablefish project. “Accurate estimates of the amount of mature fish will give us better estimates of the number of spawners. And we also will have a better understanding of what environmental conditions are causing this period of low recruitment, which is likely due to low survival in their egg and larval stages.” Samples of sablefish ear bones, ovaries and livers and other survey data are being scrutinized in Auke Bay labs, but it will be a few years before it yields results. The ultimate goal, Echave said, is to have better assessments of spawners to abet fishery management and catches long into the future. Meanwhile, needy Alaskans are enjoying the sablefish right now. By federal law, all research fish must be tossed overboard but a quick collaboration sent this boatload of fish instead to feed the hungry. “I cannot rave enough about the F/V Gold Rush, who we contracted to do the sablefish survey,” Echave said. “They came to me and said ‘instead of tossing this fish overboard, is there any way we can donate it?’ And the crew went about coordinating all the logistics for getting the fish processed by Trident, who donated their facility and staff time, and then getting it distributed it to the Kodiak food bank.” In all, 4,000 pounds of research fish went to local hunger relief programs. “It was just a very neat example of healthy relationships in Alaska with members of the industry and researchers, all trying to do the good thing here,” Echave said. The fish donors were able to “do the good thing” because it dovetailed with Kodiak’s “bycatch to food banks” program, which reclaims fish that by law would be dumped at sea. Last year trawlers from Kodiak, Sand Point and King Cove donated nearly 42,000 pounds of salmon, halibut and black cod taken as bycatch to local hunger relief efforts. The program began with Gulf fishermen and processors five years ago in collaboration with Sea Share, the only organization that is federally authorized to retain and distribute fish taken as bycatch for hunger relief. A similar program has been operating in the Bering Sea since 1993.  “We make it very clear that we are not asking for bycatch. These are some of the best fishermen who work hard to avoid it. But when they do catch it, they want to see something good done with it. They want to utilize everything that’s in the net, so they donate it to us,” said Jim Harmon, Sea Share director. Since its inception, the nonprofit has become one of the largest protein donors in the nation. It has reclaimed 4.2 million pounds of fish that would otherwise have been thrown overboard, and grown to include a network of 138 fishing vessels, 34 at-sea processors, 15 shore side plants and countless packaging, freight, cold storages and national receiving agencies. Sea Share has donated over 630,000 pounds of fish to Alaska hunger relief programs in Anchorage, Kenai, Nome and Kotzebue over the last 3 years. That equates to 2.5 million servings of high protein seafood, Harmon said, and plans are in the works to increase that amount.  “We are now working on a distribution project in Western Alaska,” Harmon said. “The plan is to install freezers in four or five hub villages, and to accept larger quantities shipped via surface freight. That will reduce costs and improve distribution of seafood, which is one of the biggest hurdles.” It costs about 42 cents a pound, he said, to get the fish into the hands of the hungry. February fishing Fishermen have been hauling in thousands of pounds of cod from the Gulf of Alaska and Bering Sea since the year began. Alaska’s biggest fishery — pollock — got underway on Jan. 20. More than 3.5 billion pounds of pollock will be taken in Alaska waters this year. A lingcod fishery of nearly one million pounds is underway in Southeast Alaska, along with a fishery for seven different kinds of deep-water rockfish. Divers are still going down for sea cucumbers, urchins and geoduck clams. Southeast trollers are still fishing for winter king salmon — each worth more than a barrel of oil. The region’s golden king crab and Tanner crab fisheries will open Feb. 17. The big crab fisheries are still underway in the Bering Sea. Crabbers have landed about 11 million pounds of a 36.5 million pound snow crab quota. And as soon as unstable ice conditions improve, the year’s first red king crab fishery will kick off at Norton Sound, with a catch topping a half-million pounds. Grants for good works American Seafood Company is again taking applications for community grants throughout Alaska. A total of $38,000 will be available to projects that address issues such as hunger, housing, safety, education and cultural activities. Most of the awards range from $500 to $3,000 per organization. Deadline to apply is Feb. 12. Recipients will be selected by a community advisory board on Feb. 23. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

COMMENTARY: Cutting through clutter, buying LIO cheaper than Atwood move

The Legislative Information Office, or LIO, in Downtown Anchorage has become an easy target for those eager to find a scapegoat for excessive government spending in tough economic times. These attacks ignore the significant history of the LIO in Anchorage, and overlook potentially devastating financial implications for our State should a satisfactory solution not be reached. While breaking the lease and moving the Legislature elsewhere may be a popular or “easy” decision, truly independent economic analysis demonstrates that this “easy solution” would inevitably be a woeful mistake. As oil prices have rapidly plummeted, my partner and I have been actively working with the state to find a pathway to savings. We understand that we are in a different economic climate than when the Legislature opted to renovate the existing LIO. We have diligently explored numerous options and are willing to meet the Legislative Council’s request to purchase the facility at a cost below market value, which allows the state to finance at tax exempt rates.    The independent professional analysis by the Alaska Department of Revenue also shows purchasing the LIO provides savings compared to moving the Legislature to the Atwood building. We recognize the fiscal situation facing lawmakers and have worked with our bankers to allow lower rent payments until a purchase is completed, saving the state more than $230,000 a year. An analysis prepared by Legislative Affairs Agency staff and reported in the media recently suggests substantial savings if the Legislature moves into the Atwood Building. That analysis is neither independent, nor was it conducted by a real estate or finance professional. It does not include the cost of parking, ignores the significant value of owning the building and simply shifts the cost of financing the Atwood building to a different line item in the state budget. The last time Legislative Affairs staff prepared an analysis on the cost of Atwood versus LIO, it was thoroughly dismissed by third party analysis. Here is some history missing from the recent discussion. The LIO renovation was the result of 12 separate procurement efforts and 35 separate proposals since 2002. None of them were deemed acceptable. Then in 2013, the State issued one last procurement attempt, its 13th, to find an adequate space for the LIO. When that failed they asked us for proposals to renovate their existing space on 4th Avenue. As requested, we offered three distinct options: A) new carpet, paint and minor upgrades with the lease rate remaining at its then current rate, B) new carpet, paint, minor upgrades and several technology improvements; resulting in a slight increase in the lease rate or C) a full remodel – modernization and expansion. The Legislative Council voted unanimously on multiple occasions and directed us to complete option C. We then delivered the project that the Legislature chose — on time and within budget. Several independent appraisals were completed on the LIO by financial institutions, including construction lenders Northrim Bank and Wells Fargo at $44 million, Alaska Housing Finance Corp. valuation for the state at $48.5 million and long-term financing lender EverBank of Redmond, Wash., at $44 million. The proposal we have offered is to sell the LIO at the same cost that the Legislature certified was the true and accurate cost before we undertook the work to complete their requested improvements. We specifically refused to move forward unless they certified in writing that they agreed with the costs and that the procurement was legal. The certification, signed by Executive Director Pam Varni on Sept. 19, 2013, states: “The annual rental payment will be $281,638 per month or $3,379,656 annually, exceeding the 10 percent reduction in market rental value as required by AS 36.30.083. Our annual savings will be $528,342.” The offered certified sale price of $37 million is what was actually spent — it will mean no profit for us. But given the circumstances, we are willing to help. This offer is a price that is $11.5 million below the state’s own independent appraisal. The bottom line is that moving to the Atwood building costs more per square foot than buying the LIO. My partner and I have met the December request of the Legislative Council to show competitive cost on a “useable square foot basis” and we look forward to discussing this with Legislative Council. (Editor’s note: a hearing before the Council is scheduled for 5 p.m., Thursday, Feb. 11) Lastly, in an effort to focus on a solution to the LIO, we have worked with our neighbor Jim Gottstein and the Alaska Building Inc. for a voluntary dismissal of the claims of damage to his building and the claim that the lease extension violated the state procurement code. In order for the dismissal to be effective, we must complete the terms of the agreement no later than 5 p.m. on Friday, Feb. 12, 2016. We have agreed with Mr. Gottstein to end the litigation so that all parties can move on and do what is best for Alaska. All eyes are on what happens next. This LIO negotiation is being monitored well beyond the Last Frontier. National coverage of the potential negative impact of the state breaking the LIO lease appeared this week in the Wall Street Journal and a few weeks back on CNBC. It is time for the Legislature to make a decision. Sometimes, what may appear to be the least popular choice is actually the right one. Mark Pfeffer is a longtime Alaskan focused on improving and reenergizing our community through real estate development. His focus over the past three decades and today is renovating and reviving numerous blighted properties in downtown Anchorage. His projects include Historic City Hall for Visit Anchorage, transforming the Hub Bar property for Fire Station No. 1, remodel of the Unocal/Chevron building for NANA Development Corporation and the recently opened Williwaw. He was one of the partners who completed the Dena’ina Civic and Convention Center and the Atwood Building parking facility.  

AJOC EDITORIAL: Moda’s big Obamacare bet goes bust

Moda Health went all in on Obamacare, and it is now short-stacked and heading for the rail. On Jan. 29, the Alaska Division of Insurance followed suit of its counterpart in Oregon by suspending Moda from operating in the state due to its rapidly deteriorating financial condition caused by massive losses incurred operating in the health insurance exchanges created by the ill-named Affordable Care Act commonly known as Obamacare. Moda’s suspension leaves Alaska with only Premera Blue Cross Blue Shield offering individual health insurance policies. The Oregonian reported this past October on Portland-based Moda pulling out of the insurance markets in Washington and California after the company announced it would receive only $11 million of the $90 million it was expecting from the federal government to cover its losses from the exchanges. As the company sought a 25 percent premium increase in Oregon, it had also asked for and received a 39.6 percent increase for its Alaska policies. Premera received approval for a similarly large increase of 38.7 percent for 2016, citing losses from the policies sold in the state. In 2014, Premera lost $9 million serving the individual Alaska policyholders, and a similar loss of $9 million was projected for 2015 based on claims cost data in the first three months. “The bottom line is that we see another year of significant losses,” Premera spokeswoman Melanie Coon told the Journal last August. “It’s not getting any better.” Insurers across the country are warning they will consider pulling out of the insurance exchanges next year if the situation does not improve. The nation’s largest, UnitedHealth Group, is among those, and Aetna recently reported that it lost $100 million last year from its exchange business. Herbert Stein’s Law states: “That which cannot continue, won’t.” Insurers are not going to sit back and continue to lose hundreds of millions of dollars, which should be of grave concern in a state with one company that is currently losing money in the Obamacare exchanges. So what’s going on here? It starts with the way the Obama administration got insurance companies to buy in to the law in the first place. The ACA created a “risk corridor” by which the companies agreed to pay the government for profits in excess of their estimates for the year and if they lost money, the government would bail them out. Remember, Obamacare was sold as deficit-neutral at worst, and a deficit-reducer at best. Over and over we heard the pitch that it was going to save the country money (part of those “savings” came from the government taking over the student loan business, but that’s a whole ‘nother column). Well, Republicans in Congress led by presidential candidate Sen. Marco Rubio inserted language into the 2015 and 2016 spending bills that prohibited the Department of Health and Human Services from using discretionary funds to bail out insurance company losses from the exchanges. In other words, they held the Obama administration to its pledge that the ACA would not add to the deficit. Here’s how the Fiscal Times reported the results in December: “Last year, the insurance companies paid just $362 million into risk corridor program while submitting $2.87 billion in claims for reimbursement … The fiscal 2015 budget package approved last year specified that payments made to insurers under the risk corridors could not exceed collections. That is why the (DHHS’s) payouts this year were equivalent to just 12.6 percent of the claims.” President Barack Obama signed every bill with these spending restrictions, so while he may have vetoed the bill to repeal his namesake law, he did sign the bills that may have started its death spiral. Moda entered the Oregon market with the lowest premiums in 2014, betting on getting its losses covered by the federal government and gaining 100,000 customers in the process. It even signed a 10-year, $40 million naming rights deal for the basketball arena in Portland just a couple years after only clearing $10.4 million in net income. Barely two years later its bet went bust. Moda may be one of the biggest losers so far to gamble on Obamacare, but it will surely not be the last. Andrew Jensen can be reached at [email protected]

AJOC EDITORIAL: Market slide shows risks of counting on Fund earnings

Since oil first started gushing through the Trans-Alaska Pipeline System nearly 40 years ago, the Alaska has repeatedly failed to learn the lessons from the troughs in the price cycle. Now facing a yawning budget gap nearing $4 billion annually with crude collapsing to less than $27 per barrel as of Jan. 20, there is near-unanimous support to shift from oil income to tapping the investment earnings from the Permanent Fund to bridge the gap. Gov. Bill Walker’s proposal to use a so-called “sovereign wealth model” using the Earnings Reserve where the Fund income flows anticipates an annual rate of return of 6.7 percent essentially in perpetuity allowing yearly draws of more than $3 billion to pay for state government. At the beginning of the fiscal year, the value of the Permanent Fund was just more than $55 billion. As of Jan. 18, the value of the Fund was $49.2 billion. Rosy predictions of future returns are how governments get into trouble, particularly when they are facing looming unfunded liabilities such as pension obligations — of which the state has more than $12 billion — or budget deficits. After yet another rout on Wall Street Jan. 20 as the markets are off to their worst ever start to a year, we are now officially in a correction, which is defined as a drop of 10 percent or more from the high point in the indices. It wasn’t that long ago, back in 2009, when the Permanent Fund lost money for the year as the Dow dropped into the 6,000 range. The markets nearly tripled since then, creating a situation where the state was earning more money from its investments than from its oil income. Now that the bulls ran for more than half a decade, the bears are roaring back. Multiple investment firms are forecasting oil could keep dropping to less than $20 per barrel, some as low as $10 according to a Jan. 12 article in The Telegraph, as OPEC refuses to cut back production and Iran has stated it intends to start pumping 500,000 barrels per day into the market now that it has been relieved of sanctions. While there is consensus that oil prices will keep falling, whether the United States will enter a recession is still being debated. There can be no doubt, though, that the reeling energy sector that fueled so much of the economic expansion will drag down growth. More than 70,000 oilfield workers have been laid off — including hundreds so far here in Alaska — and more pink slips are coming. Hundreds of rigs have been idled and the ripple effects through the broader economy will be felt from everyone to contractors to homebuilders. There is also no doubt that lower fuel prices benefit multiple sectors of the economy, but industrial output is dropping as well. This from a Dec. 16 Reuters  report: “U.S. industrial production saw its sharpest decline in more than three and a half years in November as utilities dropped sharply, a sign of weakness that could moderate fourth-quarter growth. “Industrial output slipped 0.6 percent after a downwardly revised 0.4 percent dip in October, the Federal Reserve said on Wednesday, marking the third straight month of declines.” Alaska’s great gasline hope for economic growth and new revenue will also face major hurdles beyond the enormous cost. Prices in Asia have been halved since 2013, and current demand forecasts are being revised downward. Since shutting them down after the 2011 earthquake and tsunami, Japan has restarted nearly all of its nuclear reactors and is actually reselling LNG shipments; ditto for China amid its own economic growth slump. Korea is also lowering its demand forecasts as nuclear power is still a cleaner alternative when it comes to meeting lower carbon emission commitments. To say it’s rough out there would be the understatement of the year. Strong leadership from the governor and legislators is critical right now, but even if the competing sides can come together with a fiscal plan they must do so knowing that the fight for Alaska’s future is far from over — and that putting our faith in investment earnings may be just as risky a bet as counting on oil prices.

Budget challenge makes it time to put our wealth to work

By now, most of you know we have a budget challenge: Over the past two years, Alaska’s oil revenue has plummeted by 88 percent, mainly due to a sharp drop in oil prices. We’ve cut the budget from $8 billion in 2012 to $4.8 billion. Despite these reductions, our deficit amounts to more than half our annual budget. If we do nothing, we’re on a course to drain the constitutional budget reserve within two years — and the permanent fund earnings reserve within another two years. Dividends would likely end within four years, and we’ll be left with no source of funding for public services like troopers, teachers, and transportation. Here’s the good news: We don’t have a wealth problem, we have a cash-flow problem. And we have a plan. When oil started flowing through the trans-Alaska pipeline, the late Governor Jay Hammond and others recognized that oil wouldn’t sustain us forever. They created the Alaska Permanent Fund as a means to turn a temporary oil boon into a permanent income generator. Gov. (Jay) Hammond said, “I wanted to transform oil wells pumping oil for a finite period into money wells pumping money for infinity.” And he succeeded. We’ve reached a crossover point where our savings earn more income than our oil. It’s time to put our wealth to work. One of the problems that has plagued Alaska is our dependence on a volatile revenue source. We feast when oil revenue goes up, and it’s famine time when oil goes down. We need to get off the boom-and-bust cycle — we need to put government on an allowance, provide stability for our economy, and give investors confidence in our future. That’s what my proposal aims to do. A key piece of my plan is the Alaska Permanent Fund Protection Act. Instead of putting oil revenue into the general fund, the legislation puts most oil revenue in the Alaska Permanent Fund, which is big enough to absorb the revenue volatility. A set portion of the earnings would be used each year to support government services. That amount would go up (or down) with inflation – rather than with the price of oil. But first, half of all royalty revenue would be set aside for distribution to Alaskans as dividends. The first year, my bill provides a fixed dividend of $1,000. Future dividends are expected to be around $1,000 based on current projections. If and when new resource development comes on line, dividends will increase. The Alaska Permanent Fund Protection Act reduces the need for taxes. It does not touch the principal of the fund. Rather, my bill diverts more income to the fund, and sets up stable and sustainable use of earnings. This plan makes the Permanent Fund permanent. This gets us most of the way toward closing the budget gap. I am proposing other measures to get us the rest of the way there: oil tax credit reform, modest broad-based taxes, and other targeted tax increases. All who benefit from our great state — including nonresident workers — are part of the solution. The other key part of our plan is continuing to bring down state spending. On top of $900 million in cuts last year, we’re proposing more than $100 million in reductions in the coming year. We’ve instituted statewide travel and hiring restrictions. We’re establishing shared services agreements to reduce government overhead. We’re consolidating divisions. We’re doing away with some programs. This is just the beginning of a long-term effort to reduce the size of government without harming Alaskans or our economy. The question we’ve asked over and over as we’ve crafted this plan is, “Is it fair? Is it balanced?” We can and no doubt will debate what’s fair and what’s balanced. I welcome that debate. This plan is written in pencil, not pen. The only truly unacceptable course is to do nothing. Our credit rating was recently downgraded, and credit agencies have warned that we must take action this year to close the gap between our spending and revenues to avoid further downgrades. Lower credit ratings mean higher costs of borrowing for critical projects, and can have a chilling effect on investment. Ultimately, a balanced budget is just a means to an end. Alaskans have dreams and goals. Most of us want to live in a community that feels safe and healthy, where our children can get a good education, where there are jobs and opportunities – where our families can thrive. It’s hard to do that when the budget is so off-kilter and uncertainty looms large. Let’s roll up our sleeves and pull together to solve our budget challenge so we can move on to the goals and visions we carry for ourselves, for our families, and for our state.

EDITORIAL: Bundys, and the feds, need to be reined in

As the FBI seeks to end the citizen takeover of Oregon’s Malheur National Wildlife Refuge, it’s worth reflecting on what is behind the rising civil disobedience in the American West. The armed occupation of federal buildings is inexcusable, but so are federal land-management abuses and prosecutorial overreach. Activists on (Jan. 2) broke into an unoccupied building on the 187,000-acre federal refuge in eastern Oregon to protest the imprisonment of two Oregon ranchers. The group’s spokesman is Ammon Bundy, son of Cliven Bundy, a Nevadan who in 2014 came to national attention over his standoff with the Bureau of Land Management. The younger Bundy is a political grandstander, and many in Oregon oppose his illegal siege. The drama is bringing attention to legitimate grievances, especially the appalling federal treatment of the Hammond family. The Hammonds’ problems trace to 1908, when Theodore Roosevelt set aside 89,000 acres around Malheur Lake as a bird refuge. The government has since been on a voracious land-and-water grab, coercing the area’s once-thriving ranchers to sell. The feds have revoked dozens of grazing permits and raised the price of the few it issues. It has mismanaged the area’s water, allowing ranchlands to flood. It has harassed landowners with regulatory actions that raise the cost of ranching, then has bought out private landowners to more than double the refuge’s size. The Hammonds are one of the last private owners in the Harney Basin, and they have endured federal harassment over their water rights, the revocation of their grazing permits, restricted access to their property, and prosecutorial abuse. In 2001 the family told authorities it planned to set a managed fire on its land to fight invasive species. The fire accidently spread over 139 acres of public land before the Hammonds extinguished it. In 2006 the family tried to save its winter feed from a lightning fire by setting “back fires” on its property (a common practice), which burnt an acre of public land. Years later, in 2011, the feds charged Dwight Hammond and his son Steven with nine counts under the elastic Antiterrorism and Effective Death Penalty Act. A federal jury found them guilty only of setting the two fires they had admitted to starting, and federal Judge Michael Hogan sentenced the father to three months and the son to a year in prison. He said the federal minimum of five years would not meet “any idea I have of justice, proportionality” and would “shock the conscience.” The feds appealed the sentence and another judge ordered both Hammonds to serve the full five years. They also owe $400,000 in supposed fire-related costs. Many in rural Oregon view this as a government vendetta. Rusty Inglis, who worked for the Forest Service for 34 years and now runs a local Oregon farm bureau, recently told a trade magazine that it’s “obvious” that “the BLM and the wildlife refuge want that ranch.” The Oregon Farm Bureau called the sentences “gross government overreach.” The ideology of “national” land has become the club to punish private landowners who are the best source of economic stability and conservation. The Bundy occupation of federal land can’t be tolerated, but the growing Western opposition to government harassment of private landowners ought to be a source of political concern. Ted Cruz and others are right to caution the occupiers against their sit-in, but the federal bureaucracy also needs to be reined in.

FISH FACTOR: Mariculture industry hits milestone as sales top $1M

Alaska’s mariculture industry has passed some big milestones, and is getting set to head into the weeds. Aquatic farming, which was ok’d by Alaska lawmakers in 1988, topped $1 million in shellfish sales for the first time ever in 2014, coming in at $1.2 million. “This is the highest sales we’ve had since the inception of the program which is pretty exciting,” said Cynthia Pring-Ham, Director of Mariculture for the state Department of Fish and Game, adding that shellfish production increased 27 percent. That’s an average of $7,049 in sales per acre of active farm, most of which average about five acres. Combined production overall hit 8.3 million oysters and geoducks in 2014, along with 10,000 pounds of blue mussels and little neck clams. Pring-Ham added that 73 percent of the sales came from shellfish produced at 56 farms, and the remainder from the state’s seven nurseries and two hatcheries that sell seed to the aquatic farmers. Seventy percent of the shellfish farms are located throughout Southeast Alaska, 23 percent are in Kachemak Bay near Homer and seven percent are in Prince William Sound. Aquatic farmers also fetched a higher price for their bivalves: $9.60 per dozen for oysters, $5.74 per pound for blue mussels and $8 per pound for little neck clams. Several other mariculture milestones also were recorded, Pring-Ham said, including an 11 percent increase in jobs. “Although small, we have about 185 positions working on aquatic farms in Alaska,” she said. Based on the shellfish crops and seed stocks in the water now, Pring-Ham sees lots of potential for more production. It takes two to four years for oysters to grow to slurping size, depending on water temperatures, and 14.5 million are set to come online, along with millions of mussels, geoduck clams, little necks, and most recently, cockles. And plans for growing weed in Alaska extends beyond marijuana. Farming seaweeds, especially various kelps, is seeing a surge of interest, notably as Outside interests target Alaska products. Seaweeds, which can be harvested on 6-12 month rotations, are used in everything from sushi wrappers to biofuels to face creams to frothy heads on beer. Seaweed growers from Maine and California both made business pitches at the Alaska Shellfish Growers Association meeting last fall to convince Alaska farmers to grow seaweeds experimentally, and eventually contract to grow for their companies. Maine’s production of primarily rockweed is valued at $20 million annually, according to a 2015 report for the Ocean Sciences National Center for Marine Algae and Microbiota. The report said 30 to 35 countries are producing 28 million tons of seaweed crops globally, valued at $10 billion. Japan’s nori production amounts to $2 billion annually and is one of the world’s most valuable crops. According to the Cape Times, 30,000 seaweed products have been launched in Europe in the past four years alone. Pring-Ham said partnerships are “blossoming” between Alaska aquatic farmers, entrepreneurs and educators to test the waters for local seaweeds. A two-year Alaska Sea Grant project is underway at Oceans Alaska in Ketchikan that will create kelp hatcheries and provide seeded longlines to farmers to submerge on their acreage. “It will introduce the entire seaweed farming business to Alaska on a pilot scale and collect growing data,” said Julie Decker, director of the Alaska Fisheries Development Foundation. “And it will connect with buyers interested in purchasing seaweeds from Alaska.” Applications for aquatic farms are accepted by ADFG each year from January 1 through April 30 and Pring-Ham hopes more Alaskans will join the mariculture movement. “Alaska has a lot going for it in terms of aquatic farming,” she said. “We have clean waters, bountiful coastlines and one of the easiest regulatory processes for getting a permit to operate and utilize state lands in the country. This makes Alaska so appealing for anyone interested in starting this type of business and we will help people through every step of the process.” Fish on your dish Eating trends show some big plusses for wild seafood, but Americans are still eating far less fish than they should be. According to international market research firm NPD Group, the top trend going into 2016 is consumers want to know where their foods come from. The Group credits seafood for its improved traceability and move towards local sourcing, which will continue to boost sales. Good fats also are in. People now know that some fats are healthy, NPD said, such as those found in eggs, avocados and seafood. Consumers are seeking non-genetically modified foods “in droves” NPD said. Again, that will benefit wild seafood as people are demanding “authentic,” natural foods with fewer additives of anything, let alone genes. Watch for people to be reading labels like never before. Healthy and light entrees also are expected to grow at a faster rate through 2018, another opportunity for seafood. Technomic, another top market tracker, lists ‘trash to treasure’ fish as its #3 seafood trend, as more restaurants serve up bycatch and lesser known fish to appreciative diners. For decades more than 60 percent of Americans have eaten seafood while dining out, but market watchers said more are cooking fish at home. Maybe that will boost consumption, which has stalled in the U.S. at less than 15 pounds per person. A study last year by the U.S. Dept. of Agriculture showed only one in ten Americans follow recommendations to eat seafood at last twice a week. The USDA Dietary Guidelines for Americans released on Jan. 7 recommends eating at least eight ounces of a variety of seafoods with the aim to take in at least 250 mg per day of omega-3 fatty acids. Fish watch Hundreds of boats were braving harsh winds and high seas to bring home first of the year fish from the Bering Sea and Gulf of Alaska. Pacific cod starts the year off for fixed gears, meaning longlines, jigs and pots. The P-cod price is reportedly around 35 cents per pound, similar to last year. A lingcod fishery is underway in Southeast Panhandle; black rockfish is open there and at Kodiak, Chignik and the Alaska Peninsula. That tasty rockfish fetches closer to 45 cents for fishermen. Southeast trollers have taken about 30,000 winter kings at $7.23 per pound, according to fish tickets. Bering Sea crabbers are tapping away at a 35.5 million pound snow crab quota, 15 million pounds of Tanners and 6 million pounds of golden king crab along the Aleutians. Fisheries for trawlers targeting pollock, cod, flounders and other groundfish open Jan. 20. The state Board of Fisheries meets in Fairbanks Jan. 12-16 to take up Arctic, Yukon and Kuskokwim fish issues. On Sunday, Jan. 17 the joint boards of Fish and Game will meet again to hear more budget cutting ideas. All board meetings are streamed live on the web. The International Pacific Halibut Commission is holding its annual meeting in Juneau, Jan. 25-29. Alaska Sea Grant’s Sixth Young Fishermen’s Summit also will be in Juneau, Jan. 27-29 at the Baranof Hotel. Dates for the 2016 Alaska Symphony of Seafood are Feb. 10 in Seattle; Feb. 16 in Juneau and Feb. 19 in Anchorage, where all winners will be announced. See more at www.afdf.org. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

AJOC EDITORIAL: Time for Penney to drop vendetta against setnetters

Bob Penney is now 0 for 2 at the Alaska Supreme Court in his efforts to reallocate Cook Inlet salmon stocks at the ballot box, but he’s not giving up the fight against commercial fishermen. It’s past time that he did after some three decades of dividing the community with his nonstop efforts to drive his neighbors out of business and turn the Kenai River into his personal playpen. After the court emphatically rejected his ballot initiative that would ban setnetting from Cook Inlet beaches on Dec. 31, Penney released a statement that, “Maybe it’s time the federal government looked into this issue.” Later, Clark Penney, the executive director of the Alaska Fisheries Conservation Alliance started by his grandfather to push the initiative back in November 2013, said the group is looking into pursuing an Endangered Species Act listing for Kenai River king salmon. Anyone can petition for such a listing, but AFCA will have no better luck with the ESA than it had at the Alaska Supreme Court. Abundance of the late run of Kenai River kings is no doubt at a low point, but the stock has never failed to meet its escapement goal and in fact returned in strong enough numbers to allow all user groups more liberal harvest opportunity in 2015. The early run of Kenai River kings, on the other hand, has failed repeatedly in recent years to meet minimum escapement goals and was closed to all sportfishing in the past two years. Notice it hasn’t been closed to commercial fishing. That’s because commercial fishermen haven’t been in the water during the early run for decades as the stock abundance cratered under heavy pressure from the guided angler industry. That’s something Penney and his like-minded friends don’t ever talk about because they can’t blame it on commercial fishing. Oh, but they can spin a fish tale, though, and never was Penney’s win-at-all-costs mentality more evident than last legislative session when his advocacy outfit led a misleading smear campaign against a well-respected member of the Kenai Peninsula community who’d been nominated to the Board of Fisheries. The successful effort by the Kenai River Sportfishing Association to defeat Soldotna habitat advocate Robert Ruffner by a single vote based on a made-up criteria about not living in Anchorage and a ridiculous accusation that he was some kind of Manchurian candidate of the commercial fishing industry was the last straw for many in the community who saw his candidacy as an opportunity to break up what had become a polarized board dominated by factions instead of facts. KRSA, which is based in Soldotna, claims to be a conservation organization. The words “Kenai River” are in its name. Yet they waged a public relations war against a neighbor and conservationist despite his widespread endorsements from the local legislative delegation, municipal governments, and chambers of commerce. And they won, as they often have in the Cook Inlet fish wars they keep fueling. A similarly dishonest campaign was waged two years earlier, and succeeded in getting board member Vince Webster booted by an identical 30-29 vote. At both the 2011 and 2014 Upper Cook Inlet meetings, KRSA was able to essentially write the management plan for the Kenai River. In 2011, the group’s proposal severed the historical split between setnetters and drifters, turning what had typically been a 50-50 ratio into a 2-1 gap amounting to millions of dollars in reallocation. In 2014, KRSA was able to go further, getting the board to adopt a plan that removed almost all discretion from the day-to-day fishery managers in favor of the arbitrary hours and so-called “paired restrictions” designed to render setnetting uneconomic. One of the most damaging provisions KRSA was able to push through was a rule that after Aug. 1 the Department of Fish and Game must still restrict commercial fishing if the king salmon escapement is projected to be less than 22,500. That is the mid-point of the escapement goal, or 50 percent above the minimum. Last year, with the king salmon escapement goal ensured of being met, the sockeye run showed up in force at record late dates, and millions of dollars worth of fish went unharvested in August because of a rule in the management plan that has no basis in science but instead reflects the political muscle of KRSA to get what it wants at the Board of Fisheries. Penney couldn’t influence the Supreme Court with campaign donations and a Kenai River Classic perk package, though, and this time he’s going to have to take “no” for an answer. Andrew Jensen can be reached at [email protected]

FISH FACTOR: Annual best and worst of the past year in state fisheries

2016 marks a quarter of a century for this weekly column that targets Alaska’s seafood industry. At the end of every year, I proffer my “no holds barred” look back at the best and worst fish stories, and select the biggest story of the year. The list is in no particular order and I’m sure to be missing a few, but here are the Fishing Picks and Pans for 2015: Most eco-friendly fish feat: The massive airlift/barge project led by the Department of Environmental Conservation that removed more than 800,000 pounds of marine debris from remote Alaska beaches. Best new fish service: “Print at home” fishing licenses (and more) by the Alaska Department of Fish and Game. Biggest fish fake: Genetically modified salmon — Frankenfish Best fish financial potential: Mariculture for more shellfish, sea “vegetables” —shrimp? Worst fish kick the can: The Department of Natural Resources’ stall on a salmon vs. coalmine water rights decision at the Chuitna watershed in Upper Cook Inlet. DNR awarded a small reservation to protect salmon while allowing more time for PacRim coal to prove that building Alaska’s largest coal mine won’t hurt salmon and the ecosystem. Biggest fish raised eyebrows: Pacific Seafoods Processing Association among the appellants in a lawsuit against DNR’s decision to grant water reservation rights for the first time to a private entity, the Chuitna Citizens Coalition (See above) Biggest fish hurry up: Electronic Monitoring Systems to replace fishery observers on small boats. Not much extra bunk space on a 40 footer. Biggest fish phonies: Kenai-based sportfish enthusiasts bankrolling an effort to ban setnet gear in “urban” areas in the name of conservation. Their claims that setnets are an “outdated gear and devastating, indiscriminate killers” ignore 10 years of ADFG data showing that 99.996 percent of setnet harvests is salmon. Best fish quick fix: The JDBeltz, by Anne Morris of Sand Point — a horizontal Vicky knife holder that prevents leg pokings. Best fish sigh of relief: Federal fish managers allowing the use of pots, instead of longlines, to catch black cod. The gear shift prevents whales from stripping the pricey fish from hooks, leaving only the lips. Fishermen call it “getting whaled.” Best fish visionary: Tidal Vision LLC of Juneau, for their eco-friendly method of extracting chitin from crab shells, a first in the USA. Uses for chitin range from fabrics to pharmaceuticals and are too numerous to mention. Best fish fighters: The Genuine Alaska Pollock Producers, or GAPP, for fighting tirelessly to get tasty, “kid approved” fish meals into school lunch programs, and for getting the pollock name corrected on federal food lists to guarantee the fish is top quality. Best fish energy booster: Bob Varness of Juneau for the first in the nation electric powered passenger boat, the E/V Tongass Rain, set to be out on the water doing eco-tours this summer. Next up: all electric fishing boats. Best fishing career builders: University of Alaska/Southeast, Kodiak College for low cost courses in vessel hydraulics, electronics, maintenance and repairs, fish technicians and more — most are available on-line; Alaska Sea Grant’s Marine Advisory Agents. Best Fish Givers: SeaShare, on its way to donating 200 million fish meals to food bank networks since 1994. Trickiest fishing conundrum: Sea otters vs. crab and dive fisheries in Southeast Alaska. Best fish boosters: Juneau Economic Development Council for ramping up visibility of the local fishing/processing sector, and envisioning big opportunities in mariculture and fish “co-products.” Fondest fish farewell: Ray RaLonde, who retired from Alaska Sea Grant after decades of creating and nurturing the state’s fledgling mariculture industry. Best fish informer: Julie Speegle, Communications Director, National Oceanic and Atmospheric Administration Fisheries/Juneau Saddest fish story: The sudden and untimely death of Greg Fisk, fisheries advocate and newly elected Juneau mayor. Most earth friendly fishing town: Kodiak, which generates nearly 100 percent of its electricity from wind and hydropower. Kodiak also turns its fish wastes into oils and meals at a “gurry” plant owned by local processors, and the city plans to turn its sludge water into compost. Best fish gadget: SCraMP iPhone app with vessel stability indicators. It’s free. Most encouraging fish pols: Rep. Louise Stutes, R-Kodiak, Rep. Jonathan Kreiss-Tomkins, D-Sitka Scariest fish story: ocean acidification. The corrosion of crab/scallop/oyster/snail shells is documented and happening fastest in Arctic waters. Biggest fish brush off: Alaska’s Congressional delegation, which has voted to tank every climate change/clean air/clean water measure that has come before Congress in favor of fossil fuels. No comments on the 200+ nation climate accord in Paris. How will that play in Kivalina? Best fish to kids project: The fabulous Fish to Schools Resource Guide by the Sitka Conservation Society. Best fish ambassadors: Alaska Seafood Marketing Institute, or ASMI. Best global fish story: The U.S. and other nations cracking down on Illegal, Undocumented and Unreported, or IUU, catches by fish pirates—more 20 percent of the global fish harvest. Best daily fish news site: Seafood.com; Pacific Fishing Magazine’s Fish Wrap Best fish watchers: Trustees for Alaska, Cook Inletkeeper Best new fish writer: DJ Summers, Alaska Journal of Commerce Best fish economists: Gunnar Knapp, ISER; Andy Wink, McDowell Group Worst fish travesty: Halibut catches for commercial and sport users slashed every year while fishing fleets take millions of pounds as bycatch. It’s getting better, but still a long way to go. Best fish assists: Every person at ADFG and NOAA Fisheries offices in Alaska. Best go to bat for fishermen/fishing towns: Alaska Marine Conservation Council, for its Caught by Alaskan for Alaskans programs which aim to expand statewide. Most ambitious fish dilemma: The plan to reduce bycatch in the Gulf of Alaska, which will include apportioning 25 different types of groundfish among all user groups. Tastiest new family fish products: Trident’s Ultimate Fish Sticks, Pickled Willy’s Smoked Black Cod Tips Best fish partnership: Golden king crabbers and state biologists teaming up to do the first stock surveys that span 800 miles along the Aleutian Islands Best fish show offs: Alaska Symphony of Seafood, hosted for 23 years by the Alaska Fisheries Development Foundation. Biggest fish story of 2015: 50 cents for reds at Bristol Bay and a nearly 70 percent drop in Alaska salmon prices across the board. The perfect storm of adverse global currencies, big inventories and record U.S. imports of farmed salmon could stoke a similar trend in 2016. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

GUEST COMMENTARY: Fraser Institute: Alaska economic freedom on the wane

Editor’s note: This article originally appeared on AKHeadlamp.com, a website created by the Alaska Support Industry Alliance. Alaska: the land of mountainous expanses, tremendous natural resources, phenomenal wildlife, rugged and independent people, and lack of economic freedom. Wait, what? You thought Alaska was a land of opportunity, overflowing with economic freedom? Think again. The Fraser Institute recently released their 11th annual Economic Freedom of North America report and the findings concerning Alaska are grim. The report measures how economically free North America is at a national and sub-national level. According to the report, in terms of economic freedom, Alaska ranks 48th out of 50 U.S. states – just ahead of New York and California. Supporters of free markets and limited government should be exceptionally concerned that Alaska ranks anywhere near those two bastions of big government and tax and spend policies. The Fraser Institute defines economic freedom simply as the ability of individuals to act in the economic sphere free of undue government restrictions. The report measures a jurisdiction’s level of economic freedom by analyzing numerous variables from different policy areas such as government spending, taxation, and regulation of markets. Unfortunately, data from the report shows Alaska severely lacks a robust level of economic freedom needed to spur strong job growth, raise living standards, and create greater opportunity for all. According to the report Alaska is losing its competitive edge due to high levels of state spending, generous subsidies, government employee pensions, a sizeable state government workforce, and several other factors. The only policy area where Alaska shines is taxes, thanks to our lack of a state income and sales tax (though Gov. Walker and others are trying to reinstate the state income tax). It is worth noting that since the passage of oil tax reform under (Senate Bill) 21, our economic freedom measure concerning taxes has substantially increased! In 2016 the Legislature and Gov. Walker should have one major goal: increase Alaska’s economic freedom in order to facilitate a healthier economy, lift people out of poverty, fix our fiscal crisis, and increase general well-being. Right sizing government, by cutting spending to the sustainable level of $4.5 billion as developed by Dr. Scott Goldsmith, is one of the most important ways to achieve this goal. Not imposing new taxes, not raising taxes on industry, advancing the Alaska LNG Project, and increasing oil production will all help boost Alaska’s level of economic freedom. Headlamp hopes policy makers take notice of our dismal standing presented by the Fraser Institute, and will resolve to change it for the benefit of Alaska’s next generation.

AJOC EDITORIAL: Time to put up or shut up for Legislature

With just a couple weeks to go until the next legislative session begins, Alaska’s elected officials have a hefty to-do list. In no particular order, here it is: • Restructuring the Permanent Fund earnings in order to use a portion to pay for state government, and possibly reducing the annual citizens’ dividend. • Considering whether to raise or institute new taxes. • Cutting spending. • Reaffirming approval for the sale of pension-obligation bonds; and deciding whether to fund the capital budget with general obligation bonds subject to voters’ approval. • Allocating $15.7 billion in payments-in-lieu-of taxes, or PILT, between the state and municipalities for the Alaska LNG Project. • Reforming the oil tax credit program, and possibly raising or hardening the production tax floor. • Dealing with the Anchorage Legislative Information Office hot potato. • Funding the expanded class of Medicaid recipients that the House and Senate majorities are currently suing the governor to overturn. • Approving Alaska LNG Project fiscal terms, commercial agreements and a constitutional amendment securing those terms to be presented to voters in November. Any one or combination of the above items would bog down a Legislature that has gone down to the last minute or overtime just to pass budgets in healthy fiscal years. Taken in total mere months from a statewide general election, it would be wildly optimistic to expect a series of profiles in courage to be written from the halls of the Capitol in Juneau. Both sides are going to have to be realistic. Republicans should know they can’t cut enough, and Democrats should drop their incessant insistence on raising oil taxes. Reforming the credit program or hardening the tax floor is one thing; pretending that there’s some vast supply of money on the Slope that can be tapped at $35 per barrel is not. Republicans have stated Gov. Bill Walker’s budget doesn’t cut operating spending enough, by only $100 million compared to their desire for a $400 million reduction. If they can cut operating spending by another $300 million compared to Walker’s budget, it would eliminate the need for $200 million in revenue from a state income tax. Whether they have a plan or the wherewithal to execute such a reduction remains to be seen. If the Republicans can’t propose a budget that balances, or choose to move some of the Constitutional Budget Reserve into the Permanent Fund Earnings Reserve as part of the restructuring to fund government, then the House minority Independent Democrat caucus will still have the same leverage it exerted last session to protect its members’ funding priorities such as education or Medicaid expansion. Senate President Kevin Meyer, R-Anchorage, has said some in the majorities could be comfortable with a budget that doesn’t fully close the $3.5 billion gap, which could be a preferable compromise between not slashing state spending to the bone while reducing the annual draw from the CBR to a much smaller level. With a 15-5 advantage in the Senate, Meyer can pass such a plan without Democrats; such is not the case in the House. If the Republicans don’t want to raise or create taxes to fully close the deficit, the House majority is going to have to work far more constructively with the minority than it did last year when, at an impasse, the leadership proposed to transfer the entire Earnings Reserve into the Permanent Fund to eliminate the requirement for a three-quarters vote to pull from the CBR. Democrats are correct to be concerned that new taxes, higher taxes and a reduced dividend will impact low income Alaskans disproportionately. Taken in total, Walker’s fiscal plan would remove some $1.15 billion — $500 million in taxes, $650 million from the dividend payout — from the private economy to help fund government. But funding government is also a Democrat priority, and they’re not going to be able to have it both ways. Republicans are also correct that taking money out of the private sector and disrupting the oil tax system for the fifth time in 10 years is likely to chill investment and economic output at a time when state government can least afford it. None of the options are good, but legislators will have to remember what Hyman Roth said in The Godfather Part II: “This is the business we’ve chosen.” If they’re not ready to make the hard choices and compromise, the voters may send them into another line of work. Andrew Jensen can be reached at [email protected]

FISH FACTOR: Groundfish stocks look mostly healthy as season begins

“Tis the season for even bigger Alaska fish catches when groundfish seasons open at the start of the New Year. Catches of pollock, cod, flounders and other groundfish account for nearly 85 percent of Alaska’s harvest poundage, and 67 percent of the nation’s total groundfish harvests. Those numbers could increase due to boosts in several catch quotas in both the Gulf of Alaska and the Bering Sea for the next two years. For pollock, the nation’s largest fishery, the catch is up slightly to 1.3 million metric tons, or just under three billion pounds. The Pacific cod quota is down a bit to 525 million pounds, not because of stock declines, but to accommodate the catches of competing gears and fleets, said Diana Stram, Bering Sea groundfish plan coordinator for the North Pacific Fishery Management Council, which oversees fisheries from three to 200 miles offshore. Flatfish stocks also are very healthy, Stram said, but catches were lowered due to halibut bycatch concerns from trawl and longline vessels. “The fisheries worked voluntarily last year to reduce their halibut bycatch and they did a good job, but it still remains a concern,” she said. No matter how robust the stocks are, Alaska fish managers always opt for sustainable harvest numbers. In the Bering Sea, that means never exceeding a two million-metric ton harvest cap. “The biomass overall in the Bering Sea is extremely healthy for all of the stocks. In terms of the catch quotas, the balancing act is really the constraint of the two million metric ton cap,” Stram explained. “While a lot of the stocks could have higher TACs (total allowable catches), the Council balances between the different stocks and the different fleets in order to meet that limit.” There are 22 different species under the Council’s purview, Stram added, along, with non-targeted species like sharks, sculpin and squids taken incidentally in other fisheries. Fish stocks also are booming in the Gulf of Alaska where catches will be up overall by 6 percent. “It sure looks good. Pollock is up about 30 percent and Pacific cod is down just a smidge but nothing we’re too worried about,” said Jim Armstrong, plan coordinator for Gulf groundfish. Gulf pollock catches will be 572 million pounds in 2016 and 2017, and cod at about 158 million pounds. A total of 25 different species are tracked throughout the Gulf, he added, “and about 130 when various complexes, like rockfish, are broken out.” One red flag, Armstrong said, is sablefish, which is managed both in the Gulf and Bering Sea as a single unit stock. A continued downward trend has decreased those catches by 14 percent. “It’s a concern,” he said “One of the reassurances is that this coming year we’re going to have a sort of second opinion by the Center for Independent Experts who will review the sablefish stock assessment so we’ll better understand what’s behind the downward trend.” Both coordinators credit the Council for its ecosystem approach to fisheries management and always deferring to the best available science. “Our council has always valued the scientific input and the rigorous assessments that go into each fishing cycle, as well as taking into consideration other things that are going on in terms of bycatch of halibut, and also salmon and crab and herring. And just looking at the catch setting process on an annual basis is a really good example of that,” Stram said. Armstrong credits the multi-levels of scrutiny and review the Council scientists and advisory panels contribute each year. He is a newcomer to the NPFMC staff since July, after a 10-year tenure with the mid-Atlantic council. “This is the big leagues,” he said. “It’s 10 times greater in terms of the value and the quantity, the number of fish species that are managed, and I think it scales up the amount of energy that is put into management itself. Everything is bigger here.” Millions more pounds of groundfish also will hail from state managed fisheries within three miles of shore. Got jellies? Jellyfish abundances, or a lack thereof, can tell a lot about what is happening in the oceans on a larger scale. Researchers are now calling on “citizen scientists” to post jellyfish observations on a special website: jellywatch.org. “Citizen science in general is valuable because it is multiplied with such large numbers. To tap into that pool of has huge advantages for a data set,” said Dr. Steven Haddock, a researcher from University of California at Santa Cruz who studies marine bioluminescence, zooplankton and deep sea jellyfish. He hopes to gain more insights on near shore jellyfish varieties to model to add to the wider ocean range. Haddock also wants to test hypotheses that claim a warmer climate has boosted jellyfish blooms. There is a misconception that jellyfish thrive in warmer waters, but any seagoing Alaskan knows that’s not the case. “A common belief is that jellyfish like warmer water for some reason, but in Alaska, the species like the lion’s mane, are really restricted to colder water,” he told KTOO in Juneau. Haddock said it’s great if website postings include a photo, but descriptions alone are helpful, such as one from a Ketchikan diver. “He didn’t have a photo, but he gave a description of this jelly that sounds like a deep-sea species that we discovered here in Monterey. It’s called Tiburonia and we call it ‘the big red’ because it’s the size of a beach ball,” Haddock explained. “So this guy diving said ‘I feel like I’m reporting a big-foot sighting.’ I think it actually could be a sighting of this relatively newly discovered deep-sea species that he saw while scuba diving off Ketchikan.” Observations of no jellyfish sightings also are helpful. Haddock said “clean seas” reports make documented sightings more valid, as seeing none are as valuable as seeing many. Give salmon a brake Washington State is protecting salmon by removing copper from automotive brakes. A Better Brakes law passed in 2010 went into effect this year, and will phase out copper completely by 2025. “You touch your brakes and a little bit of material gets deposited on the road. And from there it washes into a stream or river where salmon may be spawning or trying to go home or getting back to the ocean,” said Ian Wesley, Better Brakes Coordinator at the Washington Department of Ecology. The program was spawned after years of research showed that even trace levels of copper in water will damage a salmon’s ability to smell. “The Northwest Fisheries Science Center has done a lot of work on how copper affects a salmon’s ability to smell, and juvenile salmon are particularly susceptible to these effects,” Wesley explained. “Even trace levels of copper will damage their ability to smelling, which inhibits their ability to avoid predators. They will release a hormone into the water that alerts other fish when there is danger nearby, and it prevents other salmon from being able to smell that. So they won’t know when danger is in the water and they won’t hide from it.” Wesley said the program was driven by a partnership between brake makers, water quality watchers and regulators. Brake manufacturers agreed that if it was shown their products were causing environmental harm, they would work to phase copper out of their brake pads. Now, any brakes sold in the state come with a Better Brake logo. “If you want to sell brakes in Washington State you need to mark your products with a three leaf logo,” Wesley said. “The brake manufacturers have registered it, and it shows the level of copper concentration in a brake pad. If all three leafs are filled in, it means there is no copper in the product, when two are filled in, it means there is less than five percent copper, and when one is filled in, it means there is no asbestos or lead in the product.” The copper-free brakes cost the same as the less fish friendly models, Wesley said. Penalties for noncompliance starting in 2025 will be applied to the brake makers, with a maximum penalty of $10,000 per violation. California has followed suit and the Better Brake program is going nationwide. “The break manufacturers have signed a memorandum of understanding with the EPA to voluntarily agree to comply with Washington’s requirements on a nationwide basis,” Wesley said. “The large retailers and distributors and manufacturers have agreed to only sell certified brakes throughout the country, and to make sure the copper requirements are met for all the brakes made.” Wesley credits U.S. brake makers for willingly making changes to give salmon a break. “The brake manufacturers really deserve a lot of credit, and they have been moving faster than we expected them to,” he said. “They’ve really gone above and beyond.” Washington laws also strongly encourage grassy alternatives to drains and pipes that let road runoff become cleanses by percolating through the ground, as it did before urban areas were paved over. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

COMMENTARY: Fossil fuels are a gift that keeps giving

The Paris summit on global warming ended with a triumphant, hands-holding, chipper vow to vastly reduce the world’s use of fossil fuels. Some who would love that, such as pioneering alarmist James Hansen, are nonetheless furious, saying the whole shebang was a fraud that will do next to nothing. Let’s hope so. Cheap, powerfully efficient fossil fuels are one of the best things ever to happen to humanity. Oil, natural gas and coal make the modern, industrialized world go. Without them, we wouldn’t have affordable computers, electric lights, TVs, effectively functioning hospitals, machines helping to produce gobs of needed food, transportation that gets you here, there and everywhere and more, much more, endlessly more. So says Alex Epstein in “The Moral Case for Fossil Fuels.” As a philosopher, his standard for what counts most in the climate issue is human life, and he clearly, convincingly shows how inexpensive, abundant energy is that without which you would not have the longevity, the nutrition, the health, the degree of safety and the flourishing that are with us now. At this stage of technological development, we aren’t going to obtain such benefits in more than a niche way with renewable fuels, he says. Windmills go only when the winds blow, and solar panels do their job only when the sun shines. That means they are unreliable on top of other problems. Nuclear energy is much safer than many think and could do a lot in time if it weren’t still so pricey. But aren’t fossil fuels themselves going to do enormous harm, eventually heating this planet to the point of it being uninhabitable? Secretary of State John Kerry once said “science is absolutely certain” of fearsome outcomes minus significant quelling of carbon emissions. He has cited a study supposedly showing 97 percent of climate scientists say so. It actually showed many merely believing greenhouse gas effects contribute to warming, as do most skeptics. The issue, Epstein argues, is that the weather system is enormously, puzzlingly complicated and that predictions of what’s going to happen with temperatures have repeatedly been wrong. Look at Hansen, who once said CEOs of fossil fuel companies should be “tried for crimes against humanity and nature” because they’ve known about the alleged harm they are doing. In 1988, when he was a scientist with NASA, he made prognostications about dangerous warming down the road. We are now at a point down the road where they are far from coming true. Epstein maintains that fossil fuels remain in large supply and should for a long time and that the industrial society they make possible is crucial in developing new technologies enabling adaptation as warming occurs. Kerry has said there would be only benefits in dramatically lessening fossil fuel use even without climate catastrophe. Epstein says there could be billions of premature deaths. Those deaths would happen mostly in poor countries, of course, and the solution of the Paris climate conference is for richer countries to join in sending those sacrificing countries $100 billion a year. The conferees should have listened to those pointing out how corrupt governments enlarge their dictatorial clout by hijacking such aid that can have other ill effects. As it turns out, the help to the poor countries is not binding. Nor is there anything binding in the rest of what the conference did. It set some goals based on the pledges of individual nations that will have to decide how much they want to disrupt their economies to keep their word. Some analysts say that even if they do follow the pledges, it wouldn’t make much climate difference. A good bet is that economic damage will in fact be done, but less than if people like Hansen had their way and maybe not enough to disable important innovations better helping to avoid the worst climate eventualities. Jay Ambrose is an op-ed columnist for Tribune News Service. Readers may email him at [email protected]

FISH FACTOR: Awards for crab shell clothes; boards hear advice for cuts

Alaska crab shells are fueling an eco-revolution that will drive new income streams for fabrics to pharmaceuticals to water filters. And for the first time, it is happening in the U.S. and not overseas. The entrepreneurs at Tidal Vision in October made the leap from their labs in Juneau to a pilot plant outside of Seattle to test an earth-friendly method that extracts chitin, the structural element in the exoskeletons of shellfish and insects. Their first big run a few weeks ago was tested on a 60,000 pound batch of crab shells delivered by Trident Seafoods from St. Paul Island. The end product they are going for is chitosan, a fibrous polysaccharide that, among other things, can be woven into fabrics and textiles, and has no end of commercial and biomedical uses. Chitosan can fetch from $10 to $30,000 a pound depending on quality and usages, and up to $150,000 a pound for pharmaceutical grades, said Craig Kasberg, former fisherman and now Tidal Vision’s Captain Executive Officer. Chitosan has been produced commercially in China and India since the late 1950s by using chemicals and waste methods that would never pass the muster of U.S. environmental regulators. That’s all changed with Tidal Vision. “We do not use harsh chemicals and we are able to recycle 89 percent of the chemicals we use. The other 11 percent reacts with everything else in the crab shell — the calcium, protein and lipids — and produces a fertilizer that several agriculture companies are doing trials with,” Kasberg said in a phone call from SafeCo Field, where Tidal Vision was claiming two awards. From the Environmental Protection Agency and the Washington Department of Ecology for Safer Manufacturing and Cleaner Products, he explained. Tidal Vision expects to process 100 million pounds of crab shells during its first year. Shortly after, it projects taking up to 200 million pounds of crab shells from Trident plants, and all shells from the Bering Sea crab fisheries by 2021. “Which is huge considering that with some species they are losing 35 percent in the guts and the shells. So we’re able to cut that in half by processing the shells,” Kasberg said. “I am a strong believer in 100 percent utilization of our resources and working with Tidal Vision has been fantastic,” said Joe Bundrant, Trident Seafoods CEO, in an email. The small company’s long term goal is to build full scale chitin plants next to existing crab processing plants in Alaska, along with mobile plants for areas with smaller catches and shorter seasons. More immediately, Kasberg said Tidal Vision is “vertically integrating into the textile, fiber and commercial filtration markets.” The group’s new clothing line, ChitoSkin, has caught the attention of Grundens, and by next summer, Alaska salmon fishermen may be wearing rain gear that won’t mold or smell. Kasberg said the company also is developing and testing a chitosan filtration system for a coal mining company in British Columbia. “Chitosan reacts very quickly to toxins and bonds really fast. Instead of filling manmade lakes with effluent that is acidic and full of heavy metals, they could instead be pumping out pure drinking water,” Kasberg said. “That’s close to my heart with all the trans-boundary river issues in Southeast, and we really are passionate about accomplishing that.” Board budgets The state Boards of Fisheries and Game got a helpful earful about ways to trim their budget in the face of next year’s fiscal onslaught, and feedback is continuing online. More than a dozen Alaskans shared ideas during a daylong listening session last week in Anchorage focused solely on cutting costs within the Boards’ annual meeting cycles. “Just based on the normal board meeting schedules, we don’t even have enough at status quo in terms of a budget to meet their needs,” said Glenn Haight, Executive Director of Fish and Game Board Support, adding that the combined meeting costs vary each year, but are roughly $500,000. One message was loud and clear at the Anchorage meeting: don’t cut the public out of the rule making process. “We’re not at all interested in helping the department diminish the public’s ability to participate in the regulatory process by supporting any cuts to the board,” said Gary Stevens on behalf of the Alaska Outdoor Council. “We have a hard time understanding why any of the cuts need to come out of the statutorily protected process of regulating fish and game.” Another unpopular idea was extending beyond the current three-year regional meeting cycles, which would save $100,000 for board support tasks. “Don’t move the three-year cycle to five-year cycles,” said Gary Cline of Dillingham. “I do agree that it is too long. Mainly because the decisions made at these meetings have such a huge impact on our Alaskan residents.” Maintaining local board advisory committees also was supported. Haight said that includes travel expenses of $200,000 to $230,000 for members of 60 to 70 active committees. Reducing the number of Fish and Game staff that attends board meetings also was suggested, and there has been much talk about reducing the number of regulatory proposals the boards address — upwards of 400 to 500 each year — or streamlining the process. “I think that individuals should still be able to submit proposals,” Gayla Hoseth of Dillingham told KDLG. “I really believe that one voice is a strong voice. Because one voice could make a difference and I don’t want it to change where we don’t have that voice anymore.” The joint boards plan to meet again in January. Meanwhile, more feedback and ideas are encouraged at an online survey. Cannery call The Alaska Historical Society, or AHS, is seeking sponsors and donors for its Alaska Historic Canneries Initiative. “This all started because people are worried about the state of the old canneries around Alaska, and they are scared that so many are disappearing from the landscape. So we really want to do more to document these places and their stories,” said Anjuli Grantham, a public historian in Kodiak and director for the Initiative. AHS is asking individuals, businesses, and communities to share photos, memories and stories from the canneries, salteries, processors, and herring plants that dotted Alaska’s coasts. “The purpose is to document, preserve, and educate about the history of seafood processing in Alaska,” Grantham said, adding that only two canneries are listed on the national register of historic places in Alaska. The AHS is offering grant money to help with the cause. “It’s a really broad program,” she added. “It could be an oral history project; it could be money to buy lumber if you want to restore a portion of an old cannery building. It could go toward a film or gathering photographs for an archive. If the project has anything to do with the history of the fishing industry in Alaska, you are eligible to apply for funding.” Deadline to apply is Jan. 1. www.alaskahistoricalsociety.org Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

AJOC EDITORIAL: Breaking LIO lease will signal state can’t be trusted

Legislators were rightly concerned when Gov. Bill Walker, without warning, vetoed $200 million in appropriations from the current fiscal year budget designated for the oil and gas tax credit program. Walker noted at the time — and his Revenue Commissioner Randall Hoffbeck had to spend a lot of time in the aftermath reiterating to the financial community — that the State of Alaska was not reneging on its obligation to pay the credits. The consequences of not honoring its debts would be terrible for a state trying to protect its top-notch AAA credit rating as it faces multi-billion deficits and now plans to finance its $13 billion share of the Alaska LNG Project. Yet here the Legislature is, through its Legislative Council that handles out-of-session affairs for the body, contemplating breaking a 10-year lease for its downtown Anchorage office building. Like all leases the state government enters, payment is “subject to appropriation,” meaning it can break the lease simply by refusing to pay the rent.  The Senate passed an operating budget last session that withheld the rent payment while the House passed a budget that did. That early April action by the Senate was so concerning that it spurred the Alaska Bankers Association to convene a meeting of its seven member institutions on Easter Sunday to craft a letter to the budget conference co-chairs Sen. Pete Kelly and Rep. Mark Neuman. The language was not ambiguous. ABA President Steve Lundgren of Denali State Bank wrote that, “We alert you that this action will likely impact the State’s credit worthiness and the cost of borrowing in the future.” Lundgren closed with this: “Alaska should not put itself in the position of having to react to a narrative that it will not live up to its commitments. How long creditors would remain accommodating is a great question to which we do not have the answer. What we do know is that some ideas have unintended consequences, and the current funding proposal would be as a good a bellwether as any signaling a risk aversion to the greater credit markets.” Thomas F. Klinker of the law firm Birch Horton Bittner & Cherot, was similarly blunt, citing Moody’s Investor Service guidance that states that “depending on the circumstances involved in a lessee’s decision to not appropriate, this risk could be reflected in that entity’s other debt ratings, including its general obligation and other tax-supported debt.” Klinker noted that while it is true the lease on the Legislative Information Office is not securitized, “a decision to not appropriate rent for the lease without a specific justification, such as the lessor’s failure to perform, could have a similar adverse effect.” He further stated that breaking the lease — which in this case is being contemplated for no reason other than public scrutiny, not because the state lacks the ability to pay — “could be considered material to investors in future state financings, and a required subject of disclosure to prospective investors in such financings under federal securities law, particularly financings based on a lease that is subject to annual appropriation.” Not only is the state considering financing its capital budget for the next two years with general obligation bonds, but Walker has also proposed issuing pension obligation bonds to help cover the 11-figure unfunded liabilities of the public employee and teachers retirement systems. Pension obligation bonds are also “subject to annual appropriation.” Hoffbeck said in a recent interview that while the Legislature has previously approved the issuance of such pension bonds in 2008, a new vote would reassure investors the state would make good on payment if the bonds are sold. “If the Legislature is not willing to voice support of it, we don’t want that kind of noise going into the market when we try to sell bonds,” Hoffbeck said. In other words, if the Legislature won’t pay what it owes on something as small as a $3.3 million annual appropriation, investors aren’t going to lend the state money to finance billions of dollars in bonds or they will do so at much greater interest rates. It is irrelevant at this point whether the decision to renovate and improve the downtown office space was right or not. The fact is the Legislature signed a contract and it should live up to it. If the Legislature can’t make what’s a difficult but necessary decision to pay its debts, how in the world will its members find the intestinal fortitude to do what needs to be done to put the state on a more sustainable fiscal path? A shortsighted action bowing to political pressure or just the optics of the whole thing will signal to private investors that the state can’t be trusted when times get tough, and they sure aren’t getting easier any time soon. Given the circumstances we find ourselves, that should be the last way the Legislature wants to ring in the new year. Andrew Jensen can be reached at [email protected]

FISH FACTOR: Fish 2.0 touts Alaskan fish; Begich condemns GE salmon

Caught by Alaskans for Alaskans is a business concept that bested 170 others in a global fisheries business competition last month at Stanford University in California. The contest, sponsored by Fish 2.0, awards creative approaches that build demand for sustainable seafood, reduce waste and support fishing towns. The Alaska Community Seafood Hub model, presented by Kelly Harrell of Anchorage, won $5,000 in cash and is in the running for more money to be awarded this month. Fish 2.0 builds the knowledge and connections needed to increase investment in the sustainable seafood sector, according to its website. “We noticed that investors were having a hard time finding fisheries deals, and fishery business owners were frustrated that investors had no interest. We created Fish 2.0 to build connections between the groups,” said Monica Jain, Fish 2.0 Founder. “Our goal is to create the business growth needed to drive social and environmental change in the seafood supply chain.” Harrell, who is executive director of the non-profit Alaska Marine Conservation Council, or AMCC, said: “We told the story of the really unique assets we have in Alaska, which include thousands of small boat fishing families. We have a giant seafood economy that provides one of the largest and most sustainable seafood supplies in the world. But the way our seafood supply chain is structured, it is very difficult to get the seafood harvested locally to our communities here in Alaska, because we are set up to export such large volumes.” The Walton Family Foundation, a Fish 2.0 sponsor, wrote: “When Kelly Harrell started crafting the idea of the Alaska Community Seafood Hub, she knew that improving business, people’s lives and the environment go hand in hand. Kelly pitched her business model to a room full of investors, ocean and fishing industry experts and grant makers who shared her vision of a sustainable seafood market. She walked away with $5,000 and countless connections to help build a strong community-based fishery and bring high-quality seafood from Alaskan fishermen to local consumers.” “We often overlook Alaska thinking that people have access to catching their own and a lot do, but in places like Fairbanks and Anchorage, and even in coastal towns, many people don’t. And in the case of species like crab, it’s really not practical to get their own,” Harrell said. The Alaska Seafood Hub concept expanded upon the Catch of the Season program and the Kodiak Jig Seafoods brand for cod and rockfish that AMCC has operated for several years.  “We began by selling Tanner crab and cod to consumers in Alaska and through wholesale buyers in a way that tells the story of the fishermen, the species, the community where it come it comes from,” Harrell said. “It helps build connections between our fishermen and fishing communities and our seafood consumers and buyers, and generates a higher price for the fishermen. It’s a real win/win.” About 20 fishermen are involved in the program so far, and they fetch 60 percent more than the regular dock price. Along with individual buyers, regular customers include the Bear Tooth in Anchorage, Alyeska Resort in Girdwood and Princess Tours Lodges. Harrell said fish offerings are expanding to include Tanner crab from the Bering Sea, king crab from Norton Sound and sockeye salmon.  “This summer we sold salmon from Bristol Bay for the first time in Fairbanks and it was a huge hit,” Harrell said. “People were extremely eager to have seafood caught by Alaskans for Alaskans and we sold thousands of pounds right away to an eager consumer base.” AMCC’s ultimate goal is to spawn umbrella seafood hubs for local brands in other Alaska fishing towns, such as halibut from the Pribilof Islands.  “We want to tell the story of halibut bycatch in the Bering Sea and how that is potentially putting these small communities out of business in terms of their halibut fishery. People in the state really need to hear it through something they can support and put on their dinner plates,” Harrell said. In the four rigorous rounds of the competition, Harrell said the judges were most surprised that many Alaskans don’t have access to local seafood, and that Alaska politics and the economy are not more connected to the state’s fishing industry. Fishing fees Alaska fishermen who hold catch shares of halibut, sablefish and Bering Sea crab pay an annual fee to the federal government to cover management and enforcement costs for those fisheries. The fee, which is capped at 3 percent, is based on dock prices for the fish through September and averaged across the state. Bills went out in late November to 1,983 longliners for a total coverage cost of $5.6 million, said Kristie Balovich, Budget Officer for the National Oceanic and Atmospheric Administration, or NOAA, Alaska Region based in Juneau. The dockside value of the halibut fishery went up this year while the value of sablefish went down.  “The 2015 halibut landings had an increase in overall value to $107 million, compared to $100 million in 2014. Sablefish had a slight decrease going from $76.7 million to $76.6 million,” Balovich said, adding that dock prices, or ex-vessel prices, were higher for both. Halibut was at $6.42 per pound this year, and sablefish was at $3.78 per pound. That compares to an average halibut price of $6.36 per pound and $3.59 per pound for sablefish in 2014. The fee system is different for the Bering Sea crab fisheries.  “NOAA doesn’t track dock prices for crab, only the total value of the fisheries,” Balovich explained. That added up to $229 million for the 2014/2015 season, an increase of about $300,000 from the previous fishery. The crab catches yielded $3.4 million in coverage costs, which are collected and paid by Bering Sea processors (19 last season) by the end of July. The coverage fee for the crab fishery increased to 1.48 percent this year and to 3 percent for halibut and sablefish, due to adding more management and enforcement personnel.  “We were able to hire some people so there were some increases in labor for those fisheries,” Balovich said. Balovich added that Alaska longliners are “great about paying their bills” and that 99.9 percent pay by the Jan. 31 deadline. There’s one change for all bill payers this year: credit cards are no longer accepted over the phone due to security reasons. “Everyone has access to their online landings, and if they go into their eFish account, it switches them over to a site called www.pay.gov. “It is very secure and they can pay with a credit card there,” Balovich said. Begich talks fish fights Former Alaska Sen. Mark Begich is continuing his fight against genetically modified salmon after its approval last month for U.S. sales by the federal government. “I think it is a very bad decision,” he said in a phone conversation. “When I was in the Senate I was able to stop it from being moved forward and being approved. So I decided I am no different than any other concerned Alaskan, and I decided to write a letter to every store chain that serves food in major quantities to ask them not to sell that product.” While many major stores in Alaska, such as Safeway, have pledged to not carry so called Frankenfish, others have remained noncommittal. In his letter to Walmart president Doug McMillon, Begich wrote: “At a minimum, this product must be labeled so Alaskans can make an informed choice about what they are buying and serving to their families. Consumers have a right to know whether they are eating something from the waters of Bristol Bay, Southeast, Cordova or anywhere else in Alaska…or a test tube…I hope you will join me in continuing that effort without compromising the most sustainable fishing industry in the world that exists right here in Alaska.”  “If the people making this fake fish believe it’s such a good product, then label it,” he fumed on the phone. Begich broadened the discussion of fish threats to North Pacific waters, which are getting warmer and more acidic.  “You can’t have sustainable fisheries without sustainable waters,” he stressed. “If we don’t have sustainable ecosystems, everything that lives or thrives on it or uses it will be at risk.” Alaska’s current delegation has voted against every clean air, clean water and climate change measure that has come before Congress, and Begich said it’s time for them “to accept reality.”  “Climate change is real and those who continue to deny it live in a world that doesn’t exist. And the fact that Sen. (Dan) Sullivan, who ran against me, continues to deny it 100 percent is a mistake,” Begich said. “I support the oil and gas industry, but that doesn’t mean you can’t support solid, scientific-based regulations to ensure that our air and waters are protected.” The former senator criticized the “knee jerk reaction to just say no to everything because it makes a good bullet statement in a TV ad or a brochure.” “Always opting for the negative is no way to govern,” he continued. “There is so much we should be focused on in the Alaska resource arena, and just being a no voice is not good enough. It should be a yes voice in trying to figure out how to improve everything from fisheries, oil and gas, all of it for the betterment of Alaskans and this country. What’s happening in Washington is the race to the negative, and not a race to getting things done for the long term benefit of the people we represent.” Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

GUEST COMMENTARY: Every Student Succeeds Act fixes No Child Left Behind flaws

Fixing the flawed No Child Left Behind Act, or NCLB, has been years in the making. This past week, we’ve reached a major milestone. On (Dec. 10), the President signed into law the Every Student Succeeds Act, referred to as ESSA. Congress passed NCLB in 2001, the year before I came to the U.S. Senate. It was intended to help states identify and focus on the educational disparities among students and take steps to improve schools that did not serve students well. That was necessary. Despite its obvious flaws, NCLB had good intentions. It delivered both a level of understanding about which children were being left behind and a realization that our schools must be accountable for each and every child. What was wrong with NCLB was that it imposed one-size-fits-all solutions from over 4,000 miles away. NCLB brought us “Adequate Yearly Progress”, or AYP, that gave our schools 31 ways to fail and almost no chance to succeed. It gave us a definition of a “Highly Qualified Teacher” that could not measure whether a teacher effectively engaged our children in learning. It brought the mandate that the first solution to improve a school was to fire the principal. And while Alaska received the Secretary’s “waiver” from NCLB’s requirement that every child reach proficiency by 2014, that “waiver” came with more objectionable conditions and mandates. Essentially, NCLB and waivers brought us a “national school board”. Since coming to the United States Senate in 2002, I have met with school board members, parents, educators, and students from across Alaska who were discouraged and sometimes just plain fed up with NCLB’s mandates, and who shared their ideas for fixing it. Throughout the past year, I have received phenomenal input from so many around the state as I played my part in writing ESSA as a member of the Senate Health, Education, Labor, and Pensions Committee. My focus in this work was for Alaskans to have the ability to make the decisions that impact our schools, educators, students, and parents. So what will ESSA do? First, it will maintain the idea that we must identify which schools are doing a good job of serving our children and which ones need to improve. But it will eliminate unattainable AYP standards and empower Alaskans to decide how to help our struggling schools. As we move away from the “national school board” we also ensure that mandates for national standards like Common Core are prohibited. Under ESSA, states and communities will decide what standards our students and schools are expected to meet, the skills teachers need, and how to evaluate them. In so many ways, ESSA brings control of our schools back to where it belongs — to our communities, school districts, parents, and tribes — so that school accountability starts and ends right here at home. No more federal control, no more “waivers with strings”, no more “one-size-fits-all” education mandates that never fit here in Alaska. ESSA also includes a number of provisions I crafted that are important to Alaska, like the After School for America’s Children Act that I co-sponsored with Sen. Barbara Boxer, so that parents can remain at work after the school day ends, sure that their children are safe and engaged in enriching activities. ESSA also fixes a conflict between the Impact Aid program and the Alaska Native Claims Settlement Act to relieve our rural districts of burdensome paperwork. And I made sure Alaska’s small high schools can calculate their graduation rate appropriately. I was also proud to make sure that Alaska’s Native peoples will have more say in their children’s education and that ESSA will help to revitalize Native languages. This legislation is another example that Congress is working for the American people again. ESSA was crafted over the course of a year by members of the Senate Health, Education, Labor, and Pensions Committee through open negotiations. Senators were given multiple opportunities in committee and on the Senate floor to have their ideas heard and voted on. Finally, it went through conference with the U.S. House of Representatives, where more changes were adopted. Perhaps that is why the final bill passed both the House and Senate with an overwhelming bipartisan majority. The changes enacted by the Every Student Succeeds Act will not happen overnight. The law gives Alaska’s stakeholders time to craft our own plans, discuss them, and come to a consensus. It will be hard work, but it is a responsibility I believe each Alaskan should take seriously. What happens next in Alaska’s schools will be determined by the Alaskans who show up and who share their perspectives. Together, I believe we can do right by Alaska’s children. Murkowski is the senior U.S. senator from Alaska.

Eye on Wall Street: Markets move sideways in November

Last month proved to be quiet compared to the big October rebound in equities. The S&P 500 gained 0.3 percent and is up 3 percent year-to-date, or YTD. Foreign equities lost a bit of ground mainly due to a strong U.S. dollar, which was up 3 percent on FX markets. U.S. interest rates climbed anywhere from 5 to 20 basis points, or bps, across the yield curve. Investors expect the Federal Reserve to hike rates on Dec. 16. The two-year Treasury jumped the most; it was up 20 bps to yield 0.93 percent at month end. The Barclays Aggregate Bond Index lost 0.3 percent. Commodities continued to take it on the chin. Oil fell over 10 percent and finished under $42 a barrel. Gold had its worst month since 2007, declining 6.8 percent to $1,065 an ounce. The Bloomberg Commodity Index lost 7.3 percent and is down 22.3 percent YTD. We’ll have much more about the economic and financial market outlook next month when we review 2015 and peer ahead to 2016. Antiques Road Show My wife and I have been watching this PBS mainstay for years. From time to time you’ll hear us yelling at the TV, “How much? Sell it! Hit the bid! Don’t keep it at that inflated price!” My pet peeve is when someone reports buying something for say $1,000 20 years ago and it’s now worth $2,000. The appraiser often comments, “not a bad return.” Actually, using the Rule of 72 (i.e. divide 72 by the growth rate to estimate how many years before an investment would double) the annual rate of return would be 3.6 percent — not particularly attractive. Really though, how have collectibles faired as investments? A recent comment by an analyst at ISI Evergreen got me thinking. He said: “Coin prices are dropping again and antique furniture prices are some 18 percent below the 2006 peak. Auction prices of classic restored automobiles are down 11 percent from their 2007 peak. Silver set prices are slipping lower as silver prices fall. High-end art prices, however, are starting to rebound from robust overseas demand. But most collectible prices are down from the 2007 peak.” More analytically, a recent article in the Financial Analysts Journal takes a look at collectibles, noting that by some estimates the average high net worth individual has almost 10 percent of their wealth in artworks, antiques, jewelry, fine wines and other luxuries. The authors quote the annual returns from 1900 to 2012 for stocks (9.4 percent) and bonds (5.5 percent) compared to art (6.4 percent), stamps (6.9 percent) and violins (6.5 percent). However, they caution that these numbers exclude transaction costs. Dealer markups and fees for collectibles can be high. For example, auction houses typically charge a “premium” to the buyer and a “commission” to the seller, which together can be 25 percent of the asset’s price! So you better have a long holding period in mind before taking the plunge. Furthermore, collectibles are very illiquid and often require insurance and storage fees. There is the danger of forgery and fraud, not to mention fads and bubbles. The standard indices also underestimate the true volatility of collectible prices. The actual return volatility is probably closer to that of equities. The authors note that diversification within collectibles is important. Yet for a variety of reasons (the difficulty of day-to-day pricing for example) they can find few examples of successful collectible mutual funds. Bottom line? The authors conclude that the, “after-cost, risk adjusted financial returns are low, which can be seen as an indication that the ‘psychic return’ on holding unique and aesthetically pleasing objects must be substantial indeed.” My advice? As an investment, collectibles leave much to be desired. From that perspective it is probably better to get your satisfaction vicariously by tuning into the Antiques Road Show. I’ll bring the popcorn! Jeff Pantages, CFA, is the chief investment officer for Alaska Permanent Capital Management, a $3.5 billion investment management and advisory firm located Anchorage.

AJOC EDITORIAL: Tax credit program would benefit from transparency

When the Legislature finally adjourned after a second special session to pass a budget this past spring, about 20 percent of the approximately $3.5 billion deficit was related to payments from the state’s oil and gas tax credit program. Unlike deductions, which the large producers use on a per-barrel basis to reduce their tax liabilities, the credits are direct payments from the state to mostly independent companies exploring for oil and gas in Cook Inlet and the North Slope. Gov. Bill Walker roiled the industry and lending circles with his move in late June to use his line item veto authority to reduce a $700 million appropriation for the credits by $200 million, deferring the payments to future fiscal years. The short-term effect was a credit freeze between lenders and explorers that required damage control by the state Revenue Commissioner Randall Hoffbeck to assure financial institutions and private equity firms that Alaska would make good on the payments owed. That’s according to the report released Dec. 1 by the Senate Oil and Gas Tax Credit Working Group formed among members of the Senate Majority and Minority member Sen. Bill Wielechowski, D-Anchorage. The report was short on recommendations to actually reduce the annual outlays and focused more on going slow with any changes so as not to disrupt projects in the development stage, protecting the state’s interests should a company go into bankruptcy as Buccaneer Energy and Cook Inlet Energy have, and firming up the tax “floor” on production taxes so companies cannot use a net operating loss, or NOL, deduction to reduce their liability to less than 4 percent. Cementing the tax floor seems to be a no-brainer and should be an easy fix by requiring companies to spread the NOL out over multiple years if necessary to ensure a minimum production tax is received. Ultimately, though, there is no silver bullet to fix Alaska’s revenue problem at the current oil prices under any current or prior tax system. Without question the oil and gas credits, or rebates, require examination along with every expenditure the state is making. There is also no question that the state’s oil and gas credit system has major successes to tout. The Cook Inlet gas supply resurgence led by Hilcorp would not have happened absent the credit system, nor would the recent start of gas production by Furie Operating Alaska that is now delivering gas to Homer Electric Association at a lesser price than some of Hilcorp’s customers from the first new production platform seen in Cook Inlet in more than three decades.  Looking to the North Slope, the independent Caelus is currently developing the Nuna prospect it acquired from Pioneer Natural Resources in 2014, and is scheduled for production in 2017. Hilcorp has entered also the fray by purchasing some smaller BP assets and has now submitted a development plan for the Liberty offshore field that could produce 60,000 to 70,000 barrels per day by 2020. The majors are also spending money on the Slope despite the price crash. ConocoPhillips has spent $1.5 billion developing Drillsite 2S in Kuparuk and the CD-5 field in the National Petroleum Reserve-Alaska. It also just sanctioned a billion-dollar project at Greater Moose’s Tooth-1, also in the NPR-A. When companies continue to spend money in the current price environment and bid on acreage as many independents did at the recent state Slope lease sale, something is working. While we can piece together a rough picture of how credits may be benefitting the state economy, the credit program needs to be more transparent. The public has a right to know how much in credits is being paid out and for what projects. That is the only way to tell if the state is getting something back for what it is spending. The working group reached a rather strange conclusion in its recommendations to disclose the amount of credits paid by project, but not the recipient of the credits. It is hard to understand what difference it would make to withhold the recipient of the credit while disclosing the project for which it was paid. Under the since-discontinued film tax credit program, the public was able to see the project, the recipient, the amount of the credit and the qualifying expenditures that led to the credit. If the oil and gas industry really wants to see this program continue, they should be disclosing how much they’re spending, what they’re spending it on, and how many people in Alaska are being hired as a result. A simple return on investment analysis of credits relative to production taxes does not capture things like local wages, their multiplier effects or the economic impact of ratepayers in Homer or elsewhere benefitting from lower utility costs. The best way to ensure a stable credit system continues — and it must continue — is to make it more transparent.

The Bookworm Sez: Attracting, and keeping, customers

A lasso just won’t do it. Neither will a harness, a come-along, or a whole pack of sheepdogs. No, there are better ways to get customers to your door, but what are they? What’s the secret to snaring new clients?  Author Joe Calloway knows, and in his new book “Magnetic: The Art of Attracting Business,” he draws it out. A long line down the sidewalk. For a business owner, there’s nothing better than to see customers waiting to give you their money. It’s irresistible and, says Joe Calloway, it’s “what magnetic looks like.” Magnetic is a way of business that attracts customers old and new. It’s a method for pulling in new clients by tapping into “the greatest marketing program of all time,” also known as word of mouth. “The single most important factor in the future success of your business,” he says,” is this: what your customers tell people about their experience with you.” Making sure that it’s positive is “the single most important thing… to grow your business.” That’s done by determining the three things you want your customers to say about you, and the three things that you “must get right every time.” Those, says Calloway, are the “guiding elements of” a successful business. They can’t be general; they must be specific and “intentional” because you can’t, of course, control people but you can control your corporation and its culture. Don’t rest on being “different,” however; Calloway says that being better is the key to magnetism. It’s also important to know that the greatest threat is irrelevancy: remember that your customers are connected, most will research you online, they know about the next new thing (even if you don’t), they have other choices in purchasing, and they won’t settle for anything less than immediacy. Don’t, therefore, sit on an email or tweet from a customer; to do so is to lose out. Finally, remember that while you should work to “re-earn” customer loyalty every day, there will be times when “no” is the proper response to a client request. Cultivate a “filter” and don’t feel guilty when you listen to it. Common-sense stuff?  Yes, it is, and somewhat repetitive but be patient. Once you get to the nitty-gritty of what’s inside “Magnetic,” there’s plenty to learn. Using his own business as an example, boosted by a plethora of stories from colleagues, author Joe Calloway gives readers sure-fire ways of changing the inside of a business in order to affect its outside success. There are no accidents or incidentals in the teaching in this book; Calloway is deliberate and, as it seems, politely short with problem clients. He doesn’t apparently suffer fools gladly; readers might actually find a few surprises on that note, which may lead to real empowerment. The repetition here can be a distraction, but I have to say that I learned quite a bit from this book. If, in fact, you’re looking to gain clients with the right amount of efficiency, I think you’ll find “Magnetic” to be quite attractive. Terri Schlichenmeyer is the author of The Bookworm Sez, which is published in more than 200 newspapers and 50 magazines throughout the U.S. and Canada. Schlichenmeyer may be reached at [email protected]

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