Opinion

Judge puts brakes on the EPA

In a remarkable twist to the decade-long saga over the Pebble mine, a federal judge ordered the Environmental Protection Agency to halt its work on the effort to preemptively veto the project before any plans have been submitted. It is a ruling that should be cheered by everyone in the resource development community — in Alaska and around the nation — as the beleaguered company carries on its legal challenges against the EPA’s attempt to establish precedential powers under the Clean Water Act that will no doubt eventually go beyond Pebble and chill investment across the country. The heart of this case — and why Judge H. Russel Holland’s ruling is significant — is the routine behind-the-scenes collaboration between government agencies such as the EPA and anti-development interest groups to fix the outcome of decisions. The Freedom of Information Act responses obtained by the Pebble Limited Partnership and relied upon by Holland in issuing his injunction Nov. 24 reveal an EPA process that dates back to at least 2008 when Phillip North of Region 10 began laying out a roadmap for how to stop the project. One of the major arguments the EPA has advanced over the years since it announced in 2011 it would conduct an assessment of mining impacts in the Bristol Bay watershed is that the agency was compelled to undertake the process because it had been asked to by Alaska Native groups in the region. However, the emails by and among EPA officials and anti-Pebble groups reveal that the idea for having Native groups ask for the assessment originated because the agency knew it could not independently begin the process without a permit application and so the plan was hatched to have stakeholders in the region make the request. What is abundantly clear from the emails and records obtained by Pebble is that the EPA was never committed to an unbiased evaluation of mining in the region and in fact was seeking evidence to support its predetermined outcome. Reaching a conclusion before conducting the research is in fact the opposite of science, and the anti-Pebble groups and EPA officials who state the Bristol Bay assessment is a scientific document should rethink that claim. It has been written in this space that Pebble may very well be the wrong mine in the wrong place, and without discussing the merits of the project it is apparent that the overzealous and potentially unlawful effort to preemptively stop the mine may very well end up doing more harm than good to its opponents. If Holland eventually rules in Pebble’s favor and against the EPA, the entire multi-year assessment process and millions of taxpayer dollars will have been wasted leaving the leaders of that effort with no one but themselves to blame. When a judge issues an injunction, the key pillar of the decision is whether the party seeking it is likely to prevail on the merits of the underlying claim. Holland’s issuance of an injunction against the EPA reveals that he believes this to be case. It is also important to note that the same Judge Holland in September dismissed another case brought by Pebble against the EPA challenging the Bristol Bay assessment as not ripe for consideration. Holland’s decisions reaching opposite outcomes in the two Pebble cases reveal he is considering each case on the merits according to the law, which is the sort of unbiased demeanor that federal agencies such as the EPA are also obligated to bring to bear on issues such as Pebble. His injunction against the EPA and its process for producing the Bristol Bay assessment is a sign that the agency failed to meet that neutral obligation and may finally be held to account for it. Andrew Jensen can be reached at [email protected]

Obama makes a sucker's deal with China

There is a simple way to tell if the deal on carbon emissions between the United States and China announced Nov. 12 is good for them and bad for us: the Chinese agreed to it. Unlike our “citizen of the world” president, China always acts in its best national interests while Barack Obama has made it his practice for six years to lower American standing and influence around the world. On its face the deal is a joke. China agreed to begin lowering its emissions — in 2030. At the same time, Obama agreed to cut U.S. emissions by as much as 28 percent before 2025. What that means is that China’s growth in emissions — and it is already the world leader at 25 percent of carbon emissions compared to America’s 15 percent — between now and 2030 will entirely offset any cuts made in the U.S. and then some. That makes the whole agreement pointless and entirely detrimental to the American economy in return for exactly nothing in terms of reduced carbon emissions. Brilliant! It is discouraging to see the American president pushed around so easily by the world’s dictators in China and Russia, who flaunted their new close ties throughout Obama’s visit and put a lie to the idea that Vladimir Putin has in any remote way been isolated as a consequence of his invasion of Ukraine that has led to thousands killed and his military’s role in the downing of a commercial airliner that killed 298 people. China’s state-run media ridiculed Obama in advance of his visit, and during the visit the Chinese unveiled their new stealth jet fighter based on technology they stole from the United States via hacks into military subcontractors. Meanwhile the Chinese military continues an unrelenting series of cyberattacks on everything from the Post Office to the White House. The Chinese are squashing dissent in Hong Kong and flexing muscles against their neighbors in the South China Sea where they are stirring up conflicts with Japan, Vietnam and the Philippines. Throw in their role as the escape route for NSA leaker Edward Snowden as he made his way to safe haven in Russia and it is clear that Obama is neither feared nor even respected by the likes of Xi and Putin. And how does Obama respond to the repeated Chinese provocations, which when targeted at our military are direct threats to our national security? He chomps gum and talks unironically about “taking our relationship to the next level.” If only Xi and Putin were Republicans, or maybe the prime minister of Israel. Then Obama would have no trouble playing hardball. Unfortunately in his permanent state of belief that America is no more than just one of 200 or so nations around the world, he only appears comfortable when he is directing the force of his office and his bully pulpit against his domestic political rivals rather than America’s foreign adversaries. As much as Obama refuses to come to terms with the Nov. 4 election results, the American people are putting the brakes on his administration and when the new Republican-led Senate takes over in January one of the first orders of business should be to kill this sucker’s deal. Andrew Jensen can be reached at [email protected]

AJOC EDITORIAL: Turnout doesn't measure up to options on the ballot

I usually don’t buy into post-election hand-wringing over voter turnout for a simple reason: If you don’t care enough to vote then I really don’t want you having a hand in the outcome anyway. That said, however, the extremely low turnout for the 2014 general election is mystifying. After 100 percent of the precincts were counted by the wee hours of Nov. 5 and a lonely correspondent from CNN had the vacated Egan Center all to himself at 7 a.m. Eastern time blearily reporting on the Alaska results, only 44.8 percent of the state’s nearly 510,000 registered voters had cast a ballot. Even adding in the 20,000 or so outstanding absentees and questioned ballots only gets turnout to a bit less than 49 percent. Leading up to Tuesday, I’d mentioned more than once at my local watering hole — where talking politics is allowed — that given the smorgasbord of issues and diverse candidates on the ballot that it should be the highest turnout in Alaska history (of course that was before I looked up the numbers, which I’ll discuss below). After all, if you couldn’t find something on this year’s ballot that could get you out to the polls then I can’t imagine another set of choices that could. There was a governor’s race that suddenly became competitive in the last two months of the year through an unprecedented and opportunistic combination of a Republican and a Democrat ticket with Bill Walker and Byron Mallott. That alone was enough to change a yawner of a race into a nail-biter, but throw in the central issue of the emerging Alaska LNG Project between Walker and Gov. Sean Parnell and there was far more than a just four-year term on the line. While the governor’s race featured a contest between two Republicans, there was a U.S. Senate race featuring the highest spending ever in the state that offered as clear a choice as can be imagined. The stakes were no less than the control of the upper body of Congress, the demotion of Majority Leader Harry Reid and the ascendency of Sen. Lisa Murkowski to the most powerful position for Alaska since the late Sen. Ted Stevens chaired Appropriations. Even our eternal congressman Don Young made his challenge from Forrest Dunbar interesting with his increasingly rough and reckless pronouncements that were possibly once endearing but now are more than a little wearisome. Throw in not one, but three statewide ballot measures alternately known as “pot, pay and Pebble” or “weed, wages and watersheds” plus the hotly debated Anchorage labor union ordinance repeal for the state’s population hub and there really was something for everyone. But in the end it looks like turnout won’t crack 50 percent for this race, which would make it the lowest turnout in a nonpresidential/gubernatorial general election for any cycle going back to 1978. (Division of Elections records don’t break down turnout before 1976). The previous best was 74.9 percent in 1982 when nine bond issues were on the ballot, and the previous low was 50.1 percent in 1998. As I mentioned at the top, if you didn’t vote because you don’t care then I’m glad. But for the first time I’m actually curious why.

Obama not choosing 'all of the above' in Alaska

Editor’s note: This column is in response to an Oct. 8 New York Times article about Alaska titled, “As Energy Boom Ends, a Political Identity Crisis.” We certainly accept the premise of the New York Times article. Falling production is provoking economic anxiety, bordering on an economic crisis, in Alaska. Yet, it is also completely unnecessary, because there’s plenty of oil in Alaska. In its “Annual Energy Outlook for 2014,” the Energy Information Administration estimates that Alaska — alone — has 38 billion barrels of technically recoverable oil. Some of that oil is located on state lands, in the form of reserves at existing fields. But the lion’s share is in the Outer Continental Shelf (23 billion barrels), the non-wilderness portion of the Arctic Coastal Plain (over 10 billion barrels), and the National Petroleum Reserve-Alaska (roughly 1 billion barrels). It’s also important to keep in mind that whenever Alaskans are actually allowed to look for oil, we tend to find more than expected. So in a massive state with huge swaths of land that remain unexplored, 38 billion barrels could ultimately prove to be an underestimate. Certainly, that was the case with Prudhoe Bay, which is now at 17 billion barrels produced and counting. For today’s purposes, though, we’ll stick with EIA’s number: 38 billion barrels of oil. How much is that, exactly? Well, if produced at a rate of 1 million barrels per day, Alaska’s oil would last for 38,000 days — or about 104 years. If production is allowed to reach even higher rates, Alaska could have enough resource in the ground to replace nearly 30 years of oil imports from OPEC or more than 50 years of oil imports from the Persian Gulf. The problem is that the federal government, which controls more than 60 percent of the land in Alaska, has repeatedly blocked efforts to develop our resources. Despite President Obama’s willingness to take credit for rising production on state and private lands in the Lower 48, his real record is best revealed in places like Alaska. He and his administration have repeatedly denied access to promising lands; blocked or delayed the approval of roads and bridges needed so that production can begin; and issued regulations that fail to hold up in court. It’s usually more instructive to judge someone by their actions rather than their words, and the Obama administration is no different. The administration has now locked up half — more than 11 million acres — of the NPR-A, an area explicitly reserved for energy production. The administration is “revising” the management plan for the Arctic coastal plain; most interpret that as a plan to lock the area up as wilderness after the election, even though Congress has repeatedly rejected bills seeking the same. The administration is also rewriting its rules for offshore exploration in Alaska and subsequently delaying efforts to return to an area that was safely explored and successfully drilled more than 20 years ago. President Obama is not pursuing an “all of the above” strategy in Alaska. Instead, his administration’s restrictions are now inducing levels of economic anxiety in local residents that the New York Times has deemed worthy of the national spotlight. We appreciate the coverage, but what we’d really like is a president and a Senate that will work with us to solve the problem — by producing more of Alaska’s energy. Robert Dillon is the Senate Energy and Natural Resources Committee communications director and a spokesman for Ranking Member Alaska U.S. Sen. Lisa Murkowski.

Alaskans deserve reform that cuts costs, improves services

It has now been more than four years since then-Speaker of the House Nancy Pelosi explained to Americans why she had to push the health care reform bill through in such a rush: “We have to pass the bill to find out what’s in the bill … and get away from the fog.” Now it is 2014, the fog is lifting, and we are watching the “Affordable Care Act,” or ACA, fall apart under its own weight, and contradictory legal interpretations. The Administration has now unilaterally delayed or changed over 30 of the health care law’s provisions. Earlier this month, MODA, one of our two health care insurance providers, announced it would not extend noncompliant “bare bones” policies past this year. Of course, they would not have been put in the position to offer these policies in the first place if the president had not postponed a piece of the law for two years to keep his, “If you like your health care, you can keep it” promise from becoming demonstrably untrue — at least until he is on his way out of office. On the legal front, it is unclear who is eligible under the law for subsidies — premium tax credits — to help defray the cost of health insurance. In July, the Court of Appeals for the D.C. Circuit ruled that only those who purchase insurance through state-based exchanges may qualify for subsidies, while the Court of Appeals for the Fourth Circuit held that subsidies may also be applied to plans purchased through federally facilitated exchanges (i.e. the national Healthcare.gov site). Given the split in the circuits, this issue could reach the U.S. Supreme Court, but that just means more uncertainty for the time being. We also recently saw the Alaska Division of Insurance announce that “rates for health insurance plans covering nearly 16,000 Alaskans will increase substantially in 2015 as a result of the Affordable Care Act.” In 2015, Premera Blue Cross insurance rates will increase between 35 and 40 percent, and the middle “Silver” plan will see an increase of 37 percent on average. According to the Alaska Director of Insurance Lori Wing-Heier, MODA premiums will increase between 22 percent and 28.8 percent. The agency also announced that even with these cost increases, the health insurers were still going to be losing millions of dollars. How did we get here? If you remember back to 2009, the health care law was sold on a promise to reform our nation’s health care system, reduce premiums for families by $2,500 a year, and make health care more accessible and affordable for all Americans. That sounded great then and sounds great now, but unfortunately these promises have not come to fruition for many Alaskans. Four years later, we have dealt with a botched website, skyrocketing premiums, greater out-of-pocket costs, and employers dropping coverage and sending employees to state-based or federally facilitated exchanges instead of complying with burdensome and expensive federal mandates. The key reason I opposed the health care law when it was proposed and jammed through Congress? Not politics; just simple math. The basic economics of being a high-cost rural state with limited providers has resulted in the costly outcomes we are seeing today. Like storm clouds approaching on the horizon, this was a problem many people could see coming. With the mandate to require that every Alaskan buy coverage — or force them to pay a tax — the ACA was doomed to fail our state and make health care coverage even less affordable. In high population states with many providers and participants, expenses can be spread out across thousands or millions of residents; but in Alaska, just a few expensive medical cases can ripple across the state and hit Alaskans’ pocketbooks. If you have been watching this debate unfold, you are likely aware that enrolling young, healthy Americans in the health care exchanges is the key to making the equation work. These “young invincibles,” as they are referred to by policymakers, would pay their premiums, be less likely to need care and stabilize the overall cost structure. Before enrollments got underway, insurance providers said they needed a third of Alaskans between the ages of 18 and 25 to enroll, however, only 9 percent have yet to do so. When you look at the costs involved, it is tough to blame them. For example, MODA premiums for 19-year-old Alaskans increased in all three categories: up 55 percent in the basic “Bronze” category and double for the “Silver” plans — from $1,092 per year in 2013 to $2,268 per year in 2014. Health insurance costs for younger Alaskans have increased the most because the ACA prohibits insurers from charging a 64-year-old more than three times the premium they charge a 21-year-old — so the entire formula gets inflated. Worse still, the law imposes an added, costly tax referred to as the “Cadillac Tax” on high-dollar insurance plans — meaning most of the plans available to older Alaskans — which tacks on an added 40 percent charge to insurance plans valued at $10,200 (individual) and $27,500 (family) starting in 2018. Even before the premium increase was announced, Jason Gootee, the head of MODA’s Alaska operations, said, “An independent actuarial study commissioned by the state in 2012 projected premiums to rise between 30 percent and 80 percent. The one piece of good news for Alaskans is that a high percentage of them who purchase through the exchange qualify for a subsidy.” But, a policy that forces Alaskans to utilize government subsides should not be considered sound policy — and I have heard from many Alaskans who do not like being put in the position of asking for a subsidy for a basic expense like health care. With more troubling data from the Alaska Division of Insurance coming out regularly about the surging costs, providers are acknowledging that the economics are not working out and Alaskans are paying the second-highest premiums in the nation. According to Eric Earling, Spokesman for Premera, “We’ve been working on a number of initiatives to control rising medical costs in Alaska, but major challenges exist. We’re very concerned about that impact on our customers and all Alaskans. The Affordable Care Act adds more to the cost of healthcare coverage and the cost of the ACA’s individual market changes in states with smaller populations like Alaska is not sustainable without action.” This means many Alaskan individuals, families and employers are asking tough questions: Do we make cuts to our family budget to buy health insurance? Do we skip buying health insurance and pay the tax instead? As a small employer, do I drop coverage for my employees because of all the federal mandates? Alaskans deserve better. Doctors are required to take the Hippocratic Oath before they practice medicine, which boils down to “First, do no harm.” Unfortunately, this bill to create “affordable care” is causing real harm to thousands of Alaskans, whether by premium increases or the real risk of a detrimental change in employment or benefits. The Affordable Care Act has evolved from a controversial partisan power play to a late-night punchline to a major economic drain on our state. Alaskans deserve true health care reform that cuts costs and improves access to services. I will continue to fight for this Alaskan priority in Washington, D.C. Lisa Murkowski is the senior U.S. senator from Alaska.

Cook Inlet comeback reflects state, local leadership

For those who love comeback stories, it is difficult to find a better example than Cook Inlet. Just a few short years ago, Alaska’s oldest oil and gas basin was in a death spiral. Years of declining production of both oil and gas jeopardized Southcentral’s longtime energy supply, to the point that serious discussions were underway about importing liquefied natural gas, or LNG. I found the situation entirely unacceptable in a state that is still so rich in natural resources. Fast forward to today, and I can say with confidence that bold leadership and decisive action have turned Cook Inlet around. Just this year, Cook Inlet oil producers have boosted output 25 percent. More impressive, production has essentially doubled in Cook Inlet since fiscal year 2010, increasing from 8,900 barrels per day in fiscal year 2010 to 16,288 barrels per day presently. This means Southcentral residents and businesses are now assured of a reliable source of energy for years to come. This dramatic turnaround is not just a happy accident. As governor of the state, I realized years ago the situation was serious and needed immediate action. On both the state and local level, I worked alongside members of the Legislature and with municipal leaders, like my running mate, Anchorage Mayor Dan Sullivan, to create incentives to attract new investment in the aging basin. This proposal was broadly supported in the Legislature, with key Republicans and Democrats endorsing the effort. House Bill 280 passed in 2010 and was quickly signed into law. The resulting positive effects were almost immediate. Investment by Inlet oil producers came flooding back into Cook Inlet by independents like Hilcorp and Cook Inlet Energy, among others. The two companies have been drilling new wells and upgrading platforms acquired from others steadily, with solid results that benefit all Southcentral Alaskans. ConocoPhillips was even able to restart the mothballed LNG export plant near Nikiski. An additional benefit of all this activity and the resulting production was the creation of a natural gas storage facility. This allows gas producers to store excess gas that is extracted from the basin in the warmer months when demand is low, and save it for the colder months when demand spikes. The storage facility offers an additional level of security for Southcentral residents who rely on Cook Inlet’s gas every day for heat, lights and electricity. Perhaps just as important as energy reliability is the economic impact this legislation has made on the Kenai Peninsula. Ask anyone in Kenai, Soldotna or Nikiski, and they will tell you how much their local economies have picked up since oil and gas activity began surging on the Peninsula. Alaskans eager to take advantage of the economic boom have launched new businesses, hiring hundreds of locals eager to meet the needs of the newly revitalized industry. The Alaska Support Industry Alliance, a trade organization made up of small businesses that supply Alaska’s natural resource industries, has seen its membership grow on the Kenai Peninsula by 50 percent in just four years. More opportunity and prosperity for Alaskans, combined with a secure supply of energy, is the recipe for continued economic growth in an area previously depressed. None of these positive developments would have been possible without strong state and local leadership. Had I not taken quick, decisive action to protect Southcentral residents a few years ago, the circumstances could have been costly and unsafe. I’m proud of the work we did to breathe new life into Cook Inlet and to provide a secure energy future for the residents who call Southcentral Alaska home. This is my record. This is what Alaskans can count on with Parnell-Sullivan. We’re committed to building the right support for decisive actions that provide opportunity for Alaskans. Parnell is the governor of Alaska running for reelection.

Gasline an important part of the governor's race

The governor race in Alaska has taken an interesting turn with independent Republican Bill Walker jumping out of his party and platform to team with Byron Mallott, the Democrats' candidate aligned with Sen. Mark Begich and President Obama. If this alliance wins, then it will have a major impact on the ongoing gasline projects. Some say that this race is now reminiscent of the Palin or Hickel races, but there are major differences. Sarah Palin ran against proven corruption in the Legislature and won with the conservative populist vote, never abandoning party or principles. Hickel ran a conservative campaign against a liberal Republican opponent. Walker is running a liberal populist campaign based on an appeal to perceived evils in our successful oil and gas industry. He believes the state should just take over many facets of the industry, reminiscent of third world nationalization. He’s running against an incumbent governor whose optimism and focus on increasing oil production and a gasline have created an economic boom with jobs increasing every year. We currently have a gasline deal moving forward with buy-in from the producers and approval of the Legislature. From an energy perspective, the most important issue that the next governor will address is a gasline project. Bill Walker has for many years been a driving force behind the Alaska Gasline Port Authority, established in 1999 by the Fairbanks North Star Borough, the North Slope Borough and the City of Valdez. It was created to support a gasline effort, and early on chose to support the one that the voters had asked for that year, the line to Valdez. That project never garnered the support that was necessary to see it to fruition. Other gas projects were later proposed and gained political backing. Walker’s Port Authority chose a scorched earth policy, working to defeat many proposals that weren’t their own. They advertised with public dollars and personally lobbied the Legislature and administration to kill all other gas projects, instead of modifying their plan to fit the new situation. Personally, I’ve always been a supporter of the line to Valdez, and voted for Walker in 2010 because I thought that the specific gasline was the defining issue. What I don’t understand is refusing to adapt when the situation changed, delaying the chance for a gasline, due to a desire for a particular plan. Sometimes perfect is the enemy of good. Consider the following questions: How is Walker going to advance the gasline project that is already in motion? The Alaska LNG project, a project to construct a gasline and the facilities to export gas and provide for Alaska’s energy needs, has achieved cooperation with the oil companies and they have been doing field work for it all summer. The planned route goes to Nikiski, on the Kenai Peninsula, not Walker’s hometown of Valdez, and the environmental impact statement work is underway. There are more negotiations still to be done. How will a man who has consistently worked for the last 15 years for a specific project to Valdez and against all others handle those negotiations? How will he make the win-win deal that is needed in our free enterprise system to advance a gasline, when he has taken an adversarial position with the oil companies, going so far as to sue the state after the Point Thomson settlement took place? This settlement that would supply the gas for a line has caused the oil companies to invest billions in infrastructure and had 700 people working this summer. If Walker mandates a change from what was previously approved and intended by the legislature, how will he be able to get legislative approval? For most of Alaska, a gasline is just an important source of future revenue, but for us in Fairbanks it is life or death, as many of our long-time citizens are leaving for places with cheaper utility bills. Sean Parnell helped the Interior by proposing and supporting the Interior Energy Project to truck gas to Fairbanks. This is a bridge project that will prove helpful, but does not diminish the need for a long-term solution such as a gasline. If you examine the record of the candidates then it’s pretty easy to see that the choice you’ll make in November is Walker or a natural gas pipeline. Lance Roberts is an engineer, born and raised in Fairbanks. He is a member of the Fairbanks North Star Borough Assembly. The views expressed here are his own and do not represent the assembly or borough administration.

Is Begich this afraid of Dan Sullivan?

It sure didn’t take long for the Alaska U.S. Senate race to turn ugly. The charges traded so far between incumbent Sen. Mark Begich and former Attorney General and Natural Resources Commissioner Dan Sullivan over carbon taxes, Alaska residency and the permitting process look like love taps compared to the downright awful attack ad the Begich campaign briefly ran and was forced to pull on Sept. 1. Perhaps stung by recent Sullivan press releases noting increases in violent crime in Anchorage during Begich’s tenure as mayor, the campaign unleashed a shot against Sullivan blaming him for the early release of felon Jerry Active and the eventual heinous crimes he will stand trial for this fall. Active is accused in the 2013 sexual assault of a two-year-old and the murder of the child’s grandparents in Anchorage. But rather than hit his target, Begich shot himself in the foot. The ad wasn’t rooted in anything resembling the truth but was born out of apparent desperation. Sullivan was able to easily counter the attack by noting he wasn’t even attorney general when the error that led to Active’s release was made. Begich stood by the ad until an irate letter from the victims’ family attorney stated Begich’s ad “shocked them,” was “tearing the family apart” and made them want to leave the state forever. The Democrat Senatorial Campaign Committee response to Begich pulling the ad rated “Pants on Fire” by Poltifact was to laughably attack Sullivan for pulling his own response ad that obliterated the baseless charge. All of this begs the question: Is Mark Begich really this scared of Dan Sullivan? Is this how low he is willing to go to save his Senate seat? Unfortunately we now know the answer. An ad like this one based on lies and exploiting the victims of horrific acts produced by any candidate, especially by an incumbent, can only be seen as a sign of weakness. Mark Begich may not like it that ads against him note that he votes with President Barack Obama 97 percent of the time, but that’s true. He may not like it that he’s been attacked for signing a letter supporting a price on emissions and for voting against an amendment that would have required a 60-vote threshold to approve a carbon tax, but that’s also true. A carbon tax that is “revenue neutral” by redistributing the revenue to American households — as Begich defended it — is still a tax. Whether he agreed with “100 percent” of the letter he signed is irrelevant. The fact is he signed it. He may not like it being pointed out that his mere presence in the Senate enables the leadership of the equally truth-ambivalent Harry Reid and the Democratic agenda that is destructive to Alaska, but that’s true, too. He may not like it that Sullivan is attacking him for not signing an agreement to attempt to limit Outside spending in their race, but the fact is he won’t while he reaps the benefits of millions from Reid’s SuperPAC and its attacks on Sullivan. We haven’t even gotten to Begich’s refusal to admit where he stood on Ballot Measure 1 to repeal the oil tax reform passed in 2013 that was defeated in the Aug. 19 primary. We can be forgiven for noting the hypocrisy of refusing to take a stand on the biggest issue of the year even after he was perfectly willing to come out against the Pebble mine in January. The attacks on Begich to date have been well within the realm of political hardball even if they can be argued on the margins. Politics is not, as they say, beanbag. It’s also not supposed to be a no-holds barred death match featuring low blows and eye gouging. Maybe Begich does have reason to be afraid of losing if the worst of the true things he can find to say about Sullivan are that he’s supported by pro-economic growth, small government organizations and that he hasn’t been in Alaska as long as Mead Treadwell’s mayonnaise. That’s still no excuse for making honesty the first casualty of his campaign. Andrew Jensen can be reached at [email protected]

AJOC EDITORIAL: Wielechowski keeps digging

Democrat Sen. Bill Wielechowski has a response to my editorial from last issue. It’s at this link, so go ahead and read it first. I’ll wait. OK, you’re back. A week after his misleading characterization of the ConocoPhillips second quarter earnings report was exposed here, he wastes no time repeating his faulty grip on the facts in the very first sentence. Sen. Wielechowski alleges that an “entire column” was spent “trying to dispute that Alaska is a very profitable place to do business for the oil industry.” As usual, Wielechowski has it wrong. It was never disputed that Alaska is profitable for the oil industry. Nor was it disputed that ConocoPhillips makes $34 per barrel in Alaska. What was disputed was Wielechowski’s declaration that Alaska is a more profitable place to produce oil than the Lower 48. He conveniently fails to acknowledge in his response that it was pointed out ConocoPhillips makes more than $40 per barrel in the Lower 48. North Slope oil sells for $109 per barrel and Lower 48 oil sells for $94 per barrel, so that means ConocoPhillips has a 31.1 percent margin in Alaska and a 42.5 percent margin or better in the Lower 48. The bottom line is ConocoPhillips makes more per barrel of oil in the Lower 48 than it does in Alaska even at a lower price. On oil. I emphasize “on oil” because Wielechowski cannot credibly cite references such as chairing the Resources Committee or reading a lot of financial reports while continuing to wrongly conflate barrels of oil with barrels of oil equivalent. I won’t use the space again to explain why this is all kinds of wrong, but I have to flag Wielechowski’s assertion regarding the Lower 48 that ConocoPhillips “made the poor choice to invest in a place where oil sells for a lower price and where they find more gas than oil.” He then wonders, if he were a shareholder, why ConocoPhillips “keeps investing in a place where oil sells for much less and where they keeping finding less profitable natural gas while looking for oil, such that it drags down their total profits by so much.” For someone who says he admires what the oil industry does, he sure has a low opinion of how ConocoPhillips grosses more than $2.5 billion and spends more than $1.3 billion per quarter in the Lower 48. His implication is that the company is spending billions per year drilling holes without knowing whether gas or oil is going to come out. That $1.3 billion figure cited here last week — the spending Wielechowski claims is dragging down profits — is for capital expenditures. Those are different from operating expenses. Capital expenditures are investments in increased future capacity as compared to operating expenses that sustain existing production. How does Wielechowski imagine that CP is spending this much money per quarter on cap-ex? Where does he think the “skyrocketing production” in the future is going to come from? Unlike the federal government, ConocoPhillips doesn’t have a printing press. It seems strange to have to state the obvious to someone who says he has a degree in finance, but the company is reinvesting its revenue. Reinvesting revenue reduces taxable income. Reducing taxable income reduces net income, or profits. In Wielechowski’s bizarro financial world, though, a company that has $1.3 billion in revenue to reinvest every quarter isn’t profitable. In the real world, that is how companies grow. It’s how real people have jobs. It is certainly a strange take for someone who claims he wants ConocoPhillips to reinvest its revenue in Alaska. By his logic, it would be a “poor choice” for ConocoPhillips to invest in an Alaska natural gas pipeline. Speaking of cap-ex and future production, Wielechowski claims I didn’t address his statement about ConocoPhillips telling investors production was going to keep declining in Alaska. I actually quoted that paragraph, like his entire Aug. 1 press release, word for word. He can go back and read it. Maybe he was mad and didn’t finish the entire column, but his response doesn’t address the fact that ConocoPhillips capital expenditures have increased 47.7 percent in Alaska so far this year, from $545 million in 2013 to $805 million in 2014. He does however claim that the 10-year production forecast accounts for “all of the supposed new production from SB 21.” I’ve avoided calling anything else of Wielechowski’s a lie, but this statement is, and he knows it. The note accompanying the forecast explicitly states that a full year of SB 21 won’t be accounted for until December. There is almost nothing in the state’s April forecast that includes production from SB 21, as it had been in effect for only four months. Meanwhile, as Wielechowski points to a hypothetical number 10 years away, we have an actual number this year that shows the production decline was 0 for the first time in more than a decade. Talk about sticking your head in the sand. Andrew Jensen can be reached at [email protected]

Editorial misses the mark, state deserves fair share from oil

Last week, Andrew Jensen of the Journal of Commerce spent an entire column trying to dispute that Alaska is a very profitable place to do business for the oil industry, even under SB 21. Recently, ConocoPhillips released its second quarter financial results. For years, since I was the Co-Chair of the Senate Resources Committee, I’ve made it a point to analyze these results so Alaskans can have a better understanding of whether Alaska is indeed a profitable place to do business. The oil and gas leases require oil companies to produce our oil when they can make a reasonable profit. I admire the work the oil industry does. I also understand they have a fiduciary duty to make as much money for their shareholders as they can. As legislators, we have a constitutional obligation to get the maximum benefit for Alaskans from the sale of our natural resources. While some would prefer that we simply believe the $13 million the oil industry has already spent in advertisements on ballot measure one, I believe it’s our responsibility to dig a little deeper. Unfortunately, the oil industry has long refused to provide the legislature much financial information. For years Exxon has testified Alaska needs to cut its taxes yet has flat out refused to say during committee hearings how much profit they even make in Alaska. Our experts have expressed shock at how little information the State gets from the oil companies so that we can manage our leases properly. And Republican-controlled legislative majorities have refused to pass legislation so we can even get access to this information. So we are left with analyzing oil company financial reports. Any objective analysis of those reports shows that Alaska was an extremely profitable place to do business under ACES. While Mr. Jensen may not think so, even oil company executives have admitted that. For example, on March 23, 2011, during an investor conference call, Greg Garland, Senior Vice President at ConocoPhillips, said Alaska had “strong cash margins” that were “higher than average” and Alaska investments offered “very good rates of return.” Of course, this is very different than what they have been telling Alaskans. So back when ACES was being developed, we hired a company that worked predominantly for oil companies to figure out what the oil industry rates of return and profits were at Prudhoe Bay. Experts and attorneys have told us that if an oil company can make a 10-30 percent rate of return, it should be developing our oil. The numbers under ACES according to Gov. Parnell’s experts: a 123 percent rate of return at $80 barrel oil at Prudhoe. Slope-wide rates of 55 percent for incumbent producers. Compare this to what Gov. Parnell’s experts have told us about our “competitors”: Norway (15 percent), Canada (15 percent), and North Dakota (25 percent). It’s hardly a surprise then that it’s been estimated that BP, ConocoPhillips & Exxon made over $40 billion in profits under ACES. In my press release, I noted that “Conoco’s Alaska profits per barrel rose from $29 in 2012 to $31 in 2013 to $34 so far in 2014.” This is data directly from the nonpartisan Alaska Legislative Research Agency. I also noted the Agency’s finding that in the Lower 48 and Latin America, ConocoPhillips made about $6 per barrel of oil equivalent.  All 100 percent factual data. Mr. Jensen pointed out that ConocoPhillips produces more gas in the Lower 48, which sells for less, and also noted that oil prices were lower in the Lower 48 than Alaska. While these are true, it completely misses the point. It is not Alaska’s fault ConocoPhillips made the poor choice to invest in a place where oil sells for a lower price and where they find more gas than oil. These are things that make Alaskan investments that much more attractive. If I were a ConocoPhillips investor, I’d be quite frankly wondering why ConocoPhillips keeps investing in a place where oil sells for much less and where they keep finding less profitable gas while looking for oil, such that it drags down their total profits by so much. And those total profits are very important: while ConocoPhillips reported producing 191,000 barrels a day of crude oil in the Lower 48, 21,000 barrels a day more than it produced in Alaska, it made $363 million more in Alaska. This is not some sort of one-time fluke. ConocoPhillips made billions more in Alaska under ACES than it did in the Lower 48 during the same time frame. But if Mr. Jensen has heartburn comparing Alaska’s $34.36 profit per barrel to the Lower 48’s $6.21 (up from $4.21 in 2013), let’s compare it to Canada, where ConocoPhillips made $10.54 per barrel. Or Europe, where Conoco made $15.50 per barrel. Or Asia Pacific/Middle East, where Conoco made $27.40. Or Conoco’s worldwide average profit per barrel of $14.69. Compared to Alaska’s $34.36. I won’t even get into the $2 per barrel profit BP agreed to in Iraq. In fact, Alaska routinely makes up about 12 percent of Conoco’s worldwide oil and gas production. Yet that 12 percent routinely generates about 25-35 percent of Conoco’s worldwide profits — in some years over 50 percent. Alaska, by any measure, was an extremely profitable place to do business under ACES. And we saw this by the oil companies’ actions. Oil company investment increased 70 percent under ACES to all-time highs every year. Jobs increased to all-time highs every year under ACES. And with Alaska getting our fair share for our oil, we were able to save $18 billion, improve our credit rating, and create 148,000 one-time jobs through building and maintaining our infrastructure all across Alaska. And there was a 383 percent increase in the number of oil company tax returns filed under ACES. Yes, production did decline under ACES. And we were told SB 21 would fix that. It hasn’t. Interestingly, Mr. Jensen’s editorial failed to mention the other part of my press release — the part that talked about Conoco recently admitting oil production will continue to decline in Alaska — while spiking everywhere else in the world. Gov. Parnell set a goal of 1 million barrels within 10 years, saying oil tax cuts were “vital.” He got his tax cuts. His latest estimate, as of April, including all the supposed new investments from SB 21 — 285,000 barrels per day. A 45 percent decline in the next decade. A bigger decline than was projected under ACES. The Legislative Finance Division is projecting Alaska will be broke within eight years under SB 21, even under curtailed spending. I can’t imagine Alaskans families and businesses will look forward to that day. SB 21 takes us back to a failed policy we had in place for 30 years, when we had a tax structure called ELF — with one of the lowest tax rates in the world. The philosophy was that low taxes would lead to more production, more jobs, and more investment. By 2006, 15 of 19 oil fields paid ZERO production taxes. How did it work? Oil production plummeted from 2 million barrels per day to 858,000 by 2006. At a time when oil was at all-time highs, jobs and investment dropped. Alaska lost hundreds of billions. The oil industry was harvesting oil out of Alaska as fast as it could and not reinvesting here, instead investing in places like Venezuela, where Hugo Chavez had a 95 percent tax rate and Libya, where Gaddafi charged a 95 percent tax rate. And the Journal editorial complains of Alaska’s now 50.3 percent tax rate under SB 21. I guess Mr. Jensen can continue to urge Alaskans to stick our heads in the sand and just believe what we are told in 30-second television commercials. I don’t think that would be in the best interests of Alaskans though. Senator Bill Wielechowski has served in the State Senate since 2007. He was co-chair of the Senate Resources Committee, and has a degree in Finance. Journal Managing Editor Andrew Jensen's response to Wielechowski can be read here.

Wielechowski blows it again on ConocoPhillips

If there is one thing Anchorage Democrat Sen. Bill Wielechowski is good for, it is providing column material with his reactions to ConocoPhillips earnings reports. This quarter is no different, and he definitely isn’t making the task any more difficult. • “Yesterday ConocoPhillips announced $627 million in 2nd quarter profits from their Alaska operations or nearly $7 million per day from Alaska alone. On an hourly basis that equates to almost $300,000 in profits each and every hour.” So? Here Wielechowski is simply trying to appeal to the dark impulse of envy in his audience. According to the report, the company paid an effective tax rate of 50.3 percent in Alaska for the quarter, so the government also made about $7 million per day and $300,000 per hour. Unlike ConocoPhillips, however, it didn’t have to do anything to make that money other than sit back and collect the checks. • “At the same time, they announced Lower 48 profits of only $265 million from a greater volume of crude oil production – 191,000 barrels per day in the Lower 48 compared to 170,000 in Alaska. “This proves beyond a shadow of a doubt that Alaska remains one of the most profitable places in the world. Oil profits in Alaska are more than double what they are in the Lower 48.” It’s difficult to know where to begin with all the wrong here. The $265 million in profits for the Lower 48 does not just count profits from crude oil production; it also includes less profitable natural gas and natural gas liquids that account for nearly two-thirds of ConocoPhillips’ global production. More on this to come as Wielechowski erroneously compares per barrel oil profits versus per barrel of oil equivalent profits. Wielechowski also doesn’t tell you that Alaska North Slope crude fetched about $109 per barrel in the second quarter compared to about $94 per barrel in the Lower 48. You don’t have to be much of a financial guru to understand that a greater price can bring more revenue even at a lower production level. On a gross revenue level, ConocoPhillips made about $1.63 billion from oil in the Lower 48 and about $1.68 billion in Alaska. It will not take much of an increase in Lower 48 crude oil production before the gross revenue exceeds Alaska even with the North Slope price premium. Add in that the effective tax rate for Lower 48 operations is 38.7 percent compared to 50.3 percent in Alaska and it isn’t difficult to figure which jurisdiction is more profitable for oil production, as you’ll see below. • “Conoco’s Alaska profits per barrel rose from $29 in 2012 to $31 in 2013 to $34 so far in 2014. ‘While Alaskans face growing deficits and cuts to essential public services, the industry’s profits swell,’ said Senator Bill Wielechowski. ‘In the Lower 48 and Latin America, they make about $6 per barrel of oil equivalent. In Canada, they make about $10.50 per barrel. In Alaska this year, they are making $34 per barrel.’” Wielechowski continues to ignore the price for natural gas and liquids on a barrel of oil equivalent basis as if “equivalent” means gas and crude oil sell for the same price or have the same margins. There are 6,000 cubic feet, of 6 mcf, in one barrel of oil equivalent. At a price of $4.43 per mcf for the Lower 48 in the second quarter, ConocoPhillips received $26.58 per barrel of oil equivalent for natural gas sales. The only true comparison is the profit per barrel in Alaska versus the profit per barrel of oil in the Lower 48. According to a ConocoPhillips presentation to investors May 27, the company makes more than $40 per barrel from Lower 48 production. So, no, Alaska is not more profitable. He is also ignoring the capital expenses and the depreciation, depletion and amortization, or DD&A, that reduce ConocoPhillips’ Lower 48 taxable income. Out of ConocoPhillips’ daily global production of nearly 1.6 million BOE, 605,000 barrels per day was from crude oil and about 6 billion cubic feet per day was from natural gas products. Boosted by more than $1.6 billion in oil revenue, the company spent more than $1.3 billion on capital expenditures in the second quarter and took DD&A of $939 million in the Lower 48, where it produced about 1.5 billion cubic feet of natural gas per day. Those deductions based on large capital expenditures reduced its Lower 48 taxable income to about $434 million. Again, you don’t have to be an accountant to see that ConocoPhillips mostly a gas company, so comparing oil profits in Alaska with natural gas profits in the Lower 48 is nonsensical. • “Wielechowski noted that Conoco’s Alaska profits rose even as their Alaska production fell.  ConocoPhillips produced six thousand barrels per day more in the same quarter last year, but made $42 million more this 2nd quarter than last.” Wielechowski must have really, really hoped nobody else read the earnings report. In fact, ConocoPhillips’ income in the second quarter last year was $682 million compared to the $627 million this year. It is only after a one-time settlement writedown of $97 million in that same quarter last year that net income decreases relative to this quarter. One-time expenditures are irrelevant to a year-to-year income comparison, so he is just full of it on this one. • “’They call it the More Alaska Production Act, but really it should be called the Make Alaska Poor Act,’ he said.  Had Senate Bill 21 been in effect for the past six years, Alaskans would have lost $8.5 billion, according to the Parnell Administration.” Alaska lost a cumulative 80 million barrels of production in the past six years, also according to the Parnell Administration. • “Despite television commercials ConocoPhillips and others have been running trying to convince Alaskans they plan to increase oil production in Alaska, ConocoPhillips recently told a group of investors it actually plans on continued decreasing production in Alaska. In that same presentation, ConocoPhillips touted plans for skyrocketing production in the Lower 48, Latin America, Canada and Europe. (see attached slide)” Yet again, Wielechowski was really hoping nobody fact-checked him. On Page 2 (yes, Page 2), of the ConocoPhillips earnings release it states relative to Alaska: “In an effort to increase production and as part of the increasing investment in Alaska, we signed a contract to build a new rotary drilling rig for the Kuparuk River Unit with drilling expected to commence in early 2016.” Even in the slide he cites, it shows ConocoPhillips planning to add about 40,000 barrels per day in new projects in Alaska to keep production close to 200,000 barrels of oil equivalent per day (this includes the resumption of LNG exports from Nikiski, which accounts for about 23,000 BOE per day in its earnings in the second quarter). • “Meanwhile, as Alaska’s savings accounts are being rapidly depleted, Wielechowski noted that ConocoPhillips just this month announced a 6% increase in its quarterly dividend to shareholders. ‘It would appear that instead of reinvesting in Alaska to increase oil production, the windfall profits are simply going back to ConocoPhillips’ shareholders,’ Senator Wielechowski lamented.” Aww, he lamented. Sad face. If he’d bothered to do any math whatsoever, he could have calculated that the dividend increase amounts to an additional $50 million per quarter. Meanwhile, ConocoPhillips’ capital spending in Alaska has increased by $260 million in the first half of 2014 compared to the first half of 2013. What that means is that even if ConocoPhillips made an extra $42 million this quarter compared to last (which it didn’t), the company has invested more than six times that much into Alaska projects this year versus what it spent last year. And they didn’t even need a law telling them to do it. The only thing worth lamenting is that Wielechowski and his ilk are trying to sway an election with this kind of garbage. Andrew Jensen can be reached at [email protected]

SB 21 is a bad deal for Alaska

In the oil revenue debate we’ve heard and read misleading statements and distorted facts. As long time Alaska residents, business owners, and grandparents, we are very concerned about Alaska’s future economy. The “Vote No on Proposition One” group paints an “almost too good to be true” picture if Senate Bill 21 prevails in August. The group repeatedly alludes to Alaska’s partnership with the oil companies, assuring us that this new deal, SB 21, will result in more jobs as well as economic growth. Although this paints a rosy picture, it also raises questions. Does this partnership have Alaska’s best interests in their long range planning? Will this “partnership” with Alaska develop a plan for future sustainable, safe energy for Alaskans? How can Alaska’s government, mandated by its Constitution to develop its resources for the maximum benefit of Alaskans, partner with corporations, mandated to provide profits for their shareholders? Do they share revenue information with Alaska? Can we rely on the oil companies for a good deal? In the past, foreign corporations exploited Alaska’s rich natural wealth with projects that harvested Alaska’s wealth but left little for Alaska.  The Kennecott Copper Mine is one example. Alaska’s past “boom and bust” economy resulted in resource extraction solely for exploitation and profit with no concern for permanent growth and development. That remains the same today. The state now faces huge deficits if we continue to sell our oil to multinational corporations at bargain prices. Alaska, under SB 21, receives less revenue than other owner states. The glossy ads, paid by the oil corporations, fail to compare their share of the profit in Iraq or Mexico to their share of the profit from Alaska’s oil. These multinational corporations, along with their CEOs, investors and stockholders, have been the beneficiaries of Alaska’s oil for many decades. At a recent Chamber of Commerce debate, oil and gas attorney Craig Richards pointed out the decline in pipeline throughput of oil characterizes aging fields. The solution lies in new production, exploring and developing new fields and pools in existing fields. Reports show Alaska has substantially more oil in the ground and will be able to produce for years to come. Alaska’s Clear and Equitable Share encourages this kind of development. SB 21 rewards increasing the rate of extraction from the old, declining fields. Mr. Richards pointed out much of last year’s increased activity required long range planning. Oil rigs had already been bought and shipped to Alaska under ACES. “Vote No” says we want to go back to a flawed law. Darn right we do. We want to make a good law better and return to a law (ACES) from which Alaska received $8.5 billion more than it would have under SB21. As business owners, we want audits of the state’s oil revenues and unbiased research made available to our elected citizen representatives. Our legislators require accurate, up to date accountability to make informed decisions. As an owner-state Alaska needs that information. Alaskans must take a principled stand no matter our political affiliation. We will not have a democratic, citizen-represented government if we continue to allow multinationals to dominate our government, our laws, our policies, and our elections. “Whenever the people are well informed, they can be trusted with their own government; that whenever things get so far wrong as to attract their notice, they may be relied on to set them to rights.” — Thomas Jefferson 1788 The repeal of SB21 will put Alaskans on the path to “setting things right.” We can empower our legislators to represent the resource owners, not the oil companies. In the August 19th Primary election, we will use the strongest voice we have. Thirteen million dollars have already been spent to sway your vote. Please make your decision based on fact, not money-fueled ads, glossy fliers, and glitzy infomercials. Vote Yes on Proposition One for Alaska’s long-term best interests. Hal Gazaway attended grade school in the territory of Alaska and high school in the state of Alaska. After nine years as an Assistant Attorney General and Administrative Law Judge, he went into his own law practice in Anchorage. Barbara Gazaway had a long career in education, teaching music at all levels elementary through University. She taught in the European DOD schools, Pennsylvania, Utah, California, and Alaska. She now teaches piano and works part time as a legal assistant.

Production is the only number that matters

Those driving the effort to repeal oil tax reform on the Aug. 19 primary ballot like to talk numbers, but the only one that matters is the one they can’t talk about: production. They will point to state revenues under ACES, or jobs or corporate profits during a time of record-high oil prices. What they won’t talk about is the 6 percent annual production decline under ACES that was zeroed out this past fiscal year after just six months of oil tax reform being in effect. What they won’t talk about is the steep decline in drilling in the first year after ACES and an eventual bottoming out in the average number of working rigs from about 10 before ACES to just 6 in 2011. They won’t talk about an all-time high of 17 rigs working during February this year, or that an average of 11 were working throughout this winter season when Slope activity traditionally spikes because of the ability to move heavy equipment around the frozen tundra. The most rigs working during any single week last winter was just 10, and the weekly average was 8. Of course, the repeal supporters will claim that all this new Slope activity was planned under ACES and is somehow proof Sarah Palin’s plan worked. What nonsense. ACES was in effect from 2008 to 2013 and if producers were in any way incentivized to stem the annual decline we would have seen them do it long before the first six months of this year. It may take years of planning to develop a new field in the NPR-A, but it certainly doesn’t take six years to mobilize a rig for a well workover or to drill a new one in a producing field such as Kuparuk. Oil that isn’t produced doesn’t benefit anyone in Alaska. Reverting to a policy that keeps oil in the ground certainly doesn’t satisfy the Alaska Constitution requirement that resources be developed for the maximum benefit of its people. The only time the repeal supporters want to talk about production is when they point to the Revenue Department forecast for 10 years from now. What they never mention is that the forecast is based in no small part on the production decline that took place under ACES and barely accounts for the current tax policy at all. They are shamelessly trying to convince voters that the projected decline is based on oil tax reform instead of what it is actually based on: their preferred, and failed, policy called ACES. They know this is dishonest, but they are doing it anyway. When the proponents of repealing tax reform aren’t spinning numbers or ignoring the inconvenient ones such as production or drilling, they just make them up. A July 28 press release from Vic Fisher claimed that “125,000 jobs were created” under ACES. Twisting facts and personal attacks have been central to the repeal effort as they attempt to gin up anger as a motive to vote “yes,” but this claim is so far out it may as well have come from Pluto. According to the Alaska Department of Labor, the state had 316,900 jobs at the end of 2007, the last year before ACES took effect. At the end of 2013, the final year of ACES, the state had 335,800 jobs. That’s a difference of fewer than 19,000 jobs gained and certainly nowhere close to Fisher’s claim of 125,000 jobs created under ACES. Among those gains, more than twice as many jobs were created in health care (6,200) than were created in the oil and gas sector (2,600). Even conceding the point that jobs and Slope spending increased under ACES, the key question that repeal supporters cannot answer is this: Why didn’t production keep pace? The repeal supporters want voters to believe that the Slope decline is inevitable and that we should tax what’s left of “our oil” to the maximum level possible. It is a sad but unsurprising position from the believers in Big Government that they interpret the state Constitution’s “maximum benefit” clause only in terms of tax revenue and PFDs instead of measuring it by production growth and paychecks. We have seen a conclusive demonstration in the last year that the decline is not inevitable. In fact, far from it. The first step toward growing production is stopping the decline. That has now been achieved, and there is no shortage of new projects and legacy field expansions underway that have finally put the state in a position to see annual increases in production instead of the decline that accelerated under ACES. The people who want you to vote “yes” on 1 are running a cynical campaign based on emotion and falsehoods because that’s all they have. The cold, hard, indisputable evidence that matters — increased production and drilling — is what they don’t want you to consider because it makes the case clear to vote “no” on 1. Andrew Jensen can be reached [email protected]

EDITORIAL: Another election, another frivolous complaint

Apparently, defending your good name is an ethics violation — if you’re governor, that is. Following a misinformed opinion column penned by lieutenant governor-hopeful Craig Fleener, where he accused Gov. Sean Parnell of skipping a planned event at the National Congress of American Indians conference in Anchorage earlier this month, a state Democratic party officer has now filed an ethics complaint against Parnell. There’s not much of a story here, really, other than the state will now waste time, resources and money on a frivolous complaint that came about because the running mate to one of Parnell’s challengers thought he saw an opportunity to slam the governor but failed in knowing the facts first. An email provided to the Empire shows that Parnell’s scheduler declined the opportunity to speak at the NCAI conference on May 19 so he could attend his in-laws’ 60th wedding anniversary. NCAI event programs had Parnell listed as the opening speaker, and when rumors swirled that the governor was a no-show, Fleener saw an opportunity to help out running mate and Independent candidate Bill Walker by wagging his finger at the governor. Parnell released a statement accusing Fleener of spreading lies, but he did so through his press office and not his campaign office. Alaska Democratic Party member Lynda Zaugg saw another opportunity to poke Parnell in the eye and filed the ethics complaint. Calling the governor a no-show can be construed as an attack on Parnell’s character, not just as a candidate for governor but also as the governor. It’s bad for the state if the public is erroneously led to believe its highest elected official stood up a gathering of Alaska’s First People. Zaugg’s complaint of state resources being misused, in our opinion, will only lead to the misuse of state resources as the complaint is investigated. We’ll let you know how much it cost once the state is done investigating. An apology and correction from Fleener was published June 24 in the Anchorage Daily News, where his commentary first printed. “When (Parnell) did not take the stage after he was introduced and I was told by an organizer that he was delayed in traffic, the universal opinion was that Gov. Parnell was a no show. ... While I did check my sources all the way to the top of those in charge at the conference and made the statements I made in good faith, I apologize for stating Governor Parnell was an unexcused no-show.” Running mate Walker sent out his own release defending Fleener’s original column, placing blame on NCAI for the inaccurate program and on Parnell for not addressing the crowd by video. “It’s disappointing that Governor Parnell personally attacks Craig Fleener’s integrity, stepping over the true message raised by his article,” Walker said in the statement. “ ... Parnell’s absence from the candidate forum hosted by AFN was known in advance to all candidates and is not the absence mentioned in Fleener’s article.” It’s unfortunate that not only did Fleener step in “it,” but Walker refuses to acknowledge the smell. Regardless, state dollars will be used to clean up the mess it has caused.

Press should defend Citizens United, 1st Amendment

In reading some of the coverage here in Alaska, it seems that some have a hard time figuring out how Republican Senate candidate Dan Sullivan can support the Citizens United decision while proposing he and Sen. Mark Begich make an agreement that worked to curb some Outside spending the only time it has been tried. Citizens United vs. the Federal Election Commission was decided 5-4 by the U.S. Supreme Court in 2010. It overturned the bans on corporate-funded political speech within 30 and 60 days of primary and general elections under the McCain-Feingold bill passed in 2002; it also overturned a 1990 case that allowed limits on corporate spending on political speech. Citizens United has been a rallying cry for the left ever since, kicked off by President Obama ragging on the Supreme Court justices to their faces at his State of the Union address a few days after the decision. I called Sullivan’s challenge to Begich a “silly” move in this space last week because I find such “pledges” silly on general principle. Secondarily, it is silly because even if Sullivan is on the high ground it will do no good when the media will predictably dismiss or diminish the idea based on his proper support for the Citizens United decision. The fact that many in the media (and certainly the whole Democratic party) cannot reconcile the two positions shows a fundamental lack of understanding about the superiority of agreements among private individuals and groups versus government mandates to address an issue such as Outside spending. Such mandates inevitably encroach ever further onto our freedoms to the point where a government attorney actually argued before the Supreme Court in favor of a Constitutional authority to ban a wide spectrum of political speech beyond the sort of ubiquitous television ads running in Alaska. That is where the Federal Election Commission came down on Citizens United. Back in 2008, the nonprofit corporation Citizens United intended to use its general funds, which included some donations from for-profit corporations, to offer a negative movie about Hillary Clinton — creatively titled “Hillary: The Movie” — for free through video on demand service. Therefore the political speech was deemed prohibited under McCain-Feingold by the FEC and upheld in the D.C. Circuit Court. On appeal to the Supreme Court, the government attorney, Deputy Solicitor General Malcolm Stewart, argued that the Constitution would allow for the prohibition of political speech across mediums including books if any of the funding came from corporations. The McCain-Feingold campaign finance law being challenged only banned corporate spending for electioneering activity on “broadcast, cable and satellite,” and Stewart was asked by Justice Samuel Alito to answer the Citizens United argument “that there isn’t any constitutional difference between the distribution of this movie on video [on] demand and providing access on the Internet, providing DVDs, either through a commercial service or maybe in a public library, providing the same thing in a book? Would the Constitution permit the restriction of all of those as well?” Stewart responded: “I think the Constitution would have permitted Congress to apply the electioneering communication[s] restrictions … to additional media as well.” Justice Anthony Kennedy, who would be swing vote in deciding Citizens United and wrote the majority opinion, asked whether a non-media advocacy corporation could publish a book (media corporations are exempt from McCain-Feingold). Stewart responded that, “Yes, [the government’s] position would be that [any] corporation could be required to use PAC funds rather than general treasury funds.” Chief Justice John Roberts then asked, “And if they didn’t, you could ban it?” to which Stewart said, “If they didn’t, we could prohibit the publication of the book.” Those who take it as conventional wisdom that the Citizens United decision is a bad thing should consider the chilling alternative argument advanced by the Obama Administration: that the Constitution allows the government to ban political speech in any medium based on the source of the funding. Corporate-owned media (that would be all of it) enjoyed the grace of an exemption under McCain-Feingold. Yet the biggest media companies with the greatest reach are often of the multi-national, corporate conglomerate variety that are just as capable of pursuing interests that don’t reflect the public will. The majority opinion in Citizens United rightly observed that, “the exemption would allow a conglomerate that owns both a media business and an unrelated business to influence or control the media in order to advance its overall business interest. At the same time, some other corporation, with an identical business interest but no media outlet in its ownership structure, would be forbidden to speak or inform the public about the same issue. This differential treatment cannot be squared with the First Amendment.” No matter what the source of the funding for making “Hillary” available on demand, banning political speech that requires an independent decision to consume it is a drastic expansion of government authority without a compelling interest and demanded to be struck down. The fact that corporate funding alone gave the government grounds to ban political speech demanded those rules be struck down as well. An administration that claims such authority and a Congress that would grant such power to the Executive should not find its advocates among an American press that is protected under the First Amendment for the purpose of holding the government accountable. The systematic and illegal targeting of conservative groups by Obama’s IRS in the wake of the Citizens United decision is proof of the lengths an administration can and will go to silence its political opponents through the force of government. And where have the supposed guardians of free speech been throughout this assault on the First Amendment? Largely, they have gone along with the distortion of the free speech issues at the heart of Citizens United and looked the other way as the Obama Administration stonewalls the IRS investigation and makes the absurd claim that it has lost years worth of emails for a half-dozen agency employees and ringleader Lois Lerner. Attacks by politicians on free speech are to be expected. It’s downright depressing when the people who claim to be the biggest fans of the First Amendment go along with it. Andrew Jensen can be reached at [email protected]

EDITORIAL: US foreign policy a drifting disappointment

Barack Obama reaffirmed his belief in American exceptionalism in a speech (last) week aimed at reframing his foreign policy. This was no small point coming from a President who won office partly by capitalizing on a decline in the U.S.’s global standing. When he accepted the Democratic nomination in August 2008, Obama made a bold promise. “I will restore our moral standing,” he declared, “so that America is once again that last, best hope for all who are called to the cause of freedom, who long for lives of peace, and who yearn for a better future.” Now that he is well into his second term it is difficult to offer a positive assessment against this mission statement. The U.S. under Obama has been slow, recoiling and tentative in international affairs. Because of the global leadership role the President accepts, this is a cause for concern. Make no mistake, Obama is himself an embodiment of the very exceptionalism he embraces. That a one-time slave-trading nation, not so long ago riven with state-sanctioned racial inequality, can elect an African-American to the White House shows the power of the ideas that form the Great Republic. His election, of itself, did much to revive US standing as the bastion of democracy and freedom. But looking for repercussions in American foreign policy achievements, we are bound to be disappointed. Unless he shows more resolve in his final two years, his presidency will be seen as a period of drift when global threats from Iran and Russia went unchecked, the Middle Eastern quagmires deepened and China ever so surely began to feel emboldened. To be sure, Obama points most proudly to scaling back and ending military engagements in Iraq and, in the coming two years, Afghanistan. But there is little evidence sufficient work has been done in either theatre to consolidate the gains. In his speech to graduating officers at West Point this week the President even promised to close Guantanamo Bay; the same turning point his predecessor aspired to and that Obama pledged in his 2008 campaign. In his reference to America’s age-old argument between isolationism and adventurism, at least the commander-in-chief seemed to comprehend that in this age of global threats the U.S. cannot realistically isolate itself from its role as an international force for order. But he placed great emphasis on multilateral approaches; a surprising priority when his current nemesis, Russia, has played such a spoiling role with its UN Security Council veto on issues such as Syria and Iran. In Obama’s own words: “A new century has brought no end to tyranny.” An end may have been too much to ask for, but we are entitled to question the lack of meaningful progress. Obama sounded dewy-eyed when holding out a “very real chance of achieving a breakthrough agreement” with Iran. He also boasted of how the American “ability to shape world opinion helped isolate Russia right away.” That is not much of an achievement, or deterrence, thus far. In our region, the U.S. pivot to Asia — somewhat forgotten with distractions in eastern Europe — has done little to stymie provocative actions by the Chinese navy. And North Korea remains unchastened. The President speaks of a world where “hopes and not just fears” govern. But for solutions he cannot afford to be fearful of U.S. power.  

Gambling with lives in the name of green gospel

Cowboy humorist and vaudevillian Will Rogers was ahead of Jon Stewart by at least 70 years when he once said, “Everything is changing. People are taking the comedians seriously and the politicians as a joke.” Some of Rogers’ best barbs were aimed at the absurdity of government, among them, “I don’t make jokes. I just watch the government and report the facts,” and “There’s no trick to being a humorist when you have the whole government working for you.” Rogers, as many Alaskans know, died in a plane crash near Barrow in 1935. It was an event that shocked the nation as he was one of America’s most beloved celebrities and had just the prior year been named the most popular male actor in Hollywood. To this day, aviation accidents and fatalities are a grim reality for Alaskans, and there is nothing funny about that. Alaskans live in a state with the most pilots per capita and where more than 80 percent of its communities are not connected to the road system. We all know it is only a matter of when, and not if, the next tragedy will strike. Tragedy does not discriminate among the famous or the anonymous, as the deaths of Rogers, Alaska U.S. Rep. Nick Begich and House Speaker Hale Boggs in 1972, and former Sen. Ted Stevens in 2010 remind us. Nor does tragedy discriminate between experienced or inexperienced pilots. Last March 30, two Alaska State Troopers and the man they were rescuing were killed when their helicopter crashed near Talkeetna. The chopper was piloted by Trooper Mel Nading, who’d flown hundreds of rescue missions over the years and often flew federal officials to the scene of other aviation accidents. The risks of flying are far more immediate to us than those in the Lower 48, who can drive almost anywhere and if they fly will typically do so in robust jet aircraft capable of rising above bad weather. Such missions from King Cove are not unique to that area. The Alaska Air National Guard has flown more than 5,000 missions and saved more than 2,000 lives since 1994, and Alaskans are forever thankful for the Guardsmen and the U.S. Coast Guard who routinely risk their lives in the effort to save the lives of others. Alaskans are willing to accept risk, but we are not reckless. The same cannot be said, though, of the stubborn band of Washington, D.C., bureaucrats and dogmatic green groups who are stopping the construction of an 11-mile strip of gravel to complete a connection between the communities of King Cove and Cold Bay on the Alaska Peninsula. Personally, if I was current Interior Secretary Sally Jewell or former Interior Secretary and King Cove hatchet man Bruce Babbitt or any of the PR greenies pounding out press releases, I would live every day in fear that someone is going to die during one of these dangerous medical evacuations, either for lack of care as they await help or if the worst happens and an aircraft goes down. It must take a pretty hardened heart to be willing to roll the dice with human lives facing an actual, predictable risk in favor of the purely theoretical and in any case minimal threat that waterfowl might be disturbed by an occasional passing vehicle. A great irony is that the members of the so-called “science-based community,” as they so lovingly dub themselves, are in actuality no less of a slave to their ideologies than any of the opponents they so routinely and smugly dismiss. And just as organized religion is rife with its hypocrisies, so, too, is the environmental left and its puppets in this government who raise nary an eyebrow over thousands of bird kills at wind or solar farms because it fits their green energy gospel while at the same time preventing the construction of an ordinary one-lane road that won’t harm a feather. We should also be certain about this: The opposition to the King Cove road is not because Jewell or anybody else really believes it is going to destroy waterfowl habitat. It’s not about conservation; it’s about preservation of a precedent that no road has ever been built through a national wildlife refuge. Green groups have advanced their cause over the years by never giving an inch, and the Izembek road is one of those inches they are determined not to cede no matter how many people with broken pelvises or babies with breathing problems or our heroic “Coasties” they put in harm’s way. Will Rogers, who was 55 when he died near Barrow, had another one-liner worth remembering: “If you live life right, death is a joke as far as fear is concerned.” If living life right is the mark, then Jewell and the opponents of King Cove should have a lot to be afraid of. Andrew Jensen can be reached at [email protected]

Changes to HB 77 meant to allay stakeholder concerns

A little over three years ago, the Department of Natural Resources recognized that the status quo for permitting wasn’t working. More than 2,600 of our permits and authorizations were backlogged, to the detriment of many businesses and individual Alaskans seeking to access state lands and resources, and to the detriment of our economy. In 2011, DNR committed to Gov. Sean Parnell and the Legislature to drive down the backlog. In return, they supplied additional personnel and resources to DNR. All parties recognized that new funding wasn’t a silver bullet to end the backlog. This is why DNR committed to undertake a comprehensive permitting initiative to make its process more timely and efficient — without compromising any standards. We hosted eight forums around the state in 2011 to gather public input on the permitting initiative, and in 2012, secured a first set of statutory reforms that improve our process for land leasing and material sales. In 2013, additional DNR and legislative proposals to support timelier decisions for oil and gas projects passed the Legislature. However, DNR’s efforts through House Bill 77 to increase the efficiency of our land and water-use authorizations did not pass last year. It is important to note that most provisions of the bill did not trigger wide opposition. However, three did, regarding general permits, water reservations and appeals. DNR staff, along with legislators, met with the public and stakeholder organizations to look for ways to address their concerns about HB 77. We are pleased to support amendments recently incorporated by the Senate Resources Committee chair for consideration. These include the following notable changes: • The “notwithstanding any other provision of law” clause is removed to end concerns that DNR could trump other agencies in issuing a general permit. • DNR’s authority to issue a general permit is limited to activities that DNR can already authorize through a permit under specific provisions of the Alaska Land Act. • The process for establishing a general permit is clarified and defined to include public comment. • Individuals, Tribes and others will continue to be able to apply for water reservations. • If the department approves a water reservation sought by a “person,” the certificate will be issued to an appropriate state agency. This ensures that public resources are managed by public agencies. Nothing in HB 77 reduces environmental standards or changes laws administered by the Department of Fish and Game that protect our fisheries and wildlife habitat. However, some have argued in op-ed pieces and articles that DNR, through HB 77, is seeking to exclude the public from making public comments or appealing decisions.  To the contrary, if the Legislature authorizes general permits with public comment periods, and such permits are established by DNR, the public will be notified and given opportunity to comment on activities for which no notice was previously required. Furthermore, we believe that appellants should describe how they are harmed, and this is why we have not sought to amend HB 77 provisions pertaining to a person’s eligibility to appeal. We hope the amendments to House Bill 77 will remove the primary concerns that prevented its passage last year, but we are under no illusion that the state’s goal of increasing the efficiency of its permitting system is accepted by all. This is unfortunate because many Alaskans are harmed by government inefficiency. The issue isn’t just private developers who navigate a large array of state and federal permits before launching a resource extraction project. Inefficiencies in the permitting process hurt individuals, small businesses and local governments.    Since 2011, DNR has cut its backlog of more than 2,600 permits and authorizations by more than 50 percent — not with a silver bullet, but a variety of actions that include investing in our staff, new business process management tools, and permit reform legislation. Passage of HB 77 will be very useful as we continue our work to improve and modernize our permitting system while simultaneously striving to eliminate the backlog. We look forward to discussing the amendments as the Alaska Legislature takes up HB 77 in the coming days and weeks. Joe Balash is Commissioner of the Alaska Department of Natural Resources.

Bill threatens Alaskans right to know

Your right to know what’s happening in your local government and in your community is at risk. And while it’s in a holding pattern today, that risk still is there. First the context. Alaska’s Legislature is tackling some daunting tasks, with a $1 billion budget shortfall and the elusive natural gas pipeline among the great whales that fill the calendar and news bites. Beyond the huge issues are some innocent sounding, but dangerous bills that usually never gain momentum. House Bill 275, with an innocent title, “electronic publication of certain municipal notices…”  is just such a dangerous piece of legislation. The bill reputedly would reduce paperwork, especially for Legislators who say they receive 1,000 pages of printed documents a day. But it also would allow Alaska Municipalities to move key public notices from printed newspapers to only muni websites. And to stop publishing key financial events, like changes in Mil rates (the taxes you pay to fund schools and muni operations) and real estate transactions including foreclosures. It’s an easy sales pitch—small municipalities are scratching to save money, to do more with less staff, to find a cheaper option. But it’s absolutely a dangerous concept attacking Alaskans’ right to know what their local government is doing. In reality, HB 275 would directly harm the transparency of government that is at the core of our state’s and our nation’s constitutions. This legislation would also disenfranchise the significant number of elderly, lower-income and Native Alaskans who do not use the internet, whether by choice or lack of access. As seductive as it is to claim we’re all web savvy, that every Alaskan is living online, that’s just not reality.  Posting notices on a seldom-visited, website is not adequate notice. Transactions as basic as Mil Rates and real estate foreclosures should not be hidden. HB275 provides no specifics about how or exactly where online notices would be published, but it’s a certainty they would be less available or visible to those citizens most impacted by them. It’s also unclear who would bear liability for damages from failures in municipal-on online publication.  Printed and online newspapers still have the largest and most diverse audience statewide. With print and digital readership combined, no other medium comes close to the readership of daily and weekly newspapers—where public notices are already published.  This is especially true beyond Alaska’s urban areas. Citizens deserve to know what their government is doing. The obligation of requiring public notice of government action goes back to the first days of our democracy. HB275 is a threat to the public’s right to know, a right that Alaskans take very seriously.  Today the bill is back in the House Rules committee, sent back by its sponsors after concerns about the bill’s risks become obvious. That’s a good place for it to die. That’s good for every Alaskan. It you’re one of those Alaskans who wants to know what your municipality is doing, let your Representatives and Senators know. It’s your right. Lee Leschper can be reached at [email protected]

Property management: The other side of real estate coin

Arguably, real estate’s most tangible segment is residential sales — the buying and selling of homes. Why? Likely, this connection can be contributed to the immediacy that most individuals have with the concept and process. It is part of the “American Dream” to own a little piece of land with a three-bedroom, two-bath house, white shutters, and a picket fence — right? However, ignoring the other side of the real estate coin means missing out on a world of economic drivers, career opportunities, and investment potential. The other side I’m referring to is property management – the leasing or renting of real estate as a means of producing income. Disclaimer: Be careful not to let the image of landlords, or more accurately “slumlords,” narrow your vision of what property management actually involves. This global industry is comprised of both commercial and residential income-producing property. If it’s leased, it’s being managed. Commercial applications involve the management of where people work — office buildings/parks, retail structures, even medical, research, and industrial facilities. Residential involves the management of where people live — apartments, condominiums/townhomes, single-family houses, or manufactured housing. Looking closer at certain segments, roughly 35 percent of Americans rent their housing — this number is closer to 40 percent for the local Anchorage market. Nationally, renters form over 40 million households, and about one-third of those renters live in an apartment — those buildings with 5+ units. The National Apartment Association and the National Multi Housing Council released a report from their partnered effort to quantify the economic impact of the apartment industry. Their findings indicated that 19.3 million apartment homes across the nation directly contributed $67.9 billion in existing apartment operations and directly employed 686,000 on-site positions to manage and maintain its assets in 2011, alone. These numbers are impressive, but they are only one submarket of one segment of this industry. Locally, the Municipality of Anchorage has 10,412 commercial properties with a total assessed value of $9.9 billion. BOMA International estimates that the office market in Anchorage, alone, contributes $103 million to Alaska economy and supports over 5,000 jobs. With recent improvements in technology, shifting legislation, and evolving density needs, income-producing assets continue to increase in scale and complexity. Today’s property managers can be responsible for tens to hundreds of millions of dollars in assets with annual operating revenues in the millions. Historically, these managers were promoted from entry-level positions with no requirements for a college degree. Even today, only a handful of universities across the nation have a property management degree offering. Ball State University and the University of Wisconsin-Stout, two schools with four-year degree programs in property management, will be the first to tell you that companies are excited by the great strides these programs and their students have made. Several quote rapid progression, along with a refreshing commitment to the profession as reasons they keep coming back to recruit from these schools. Respectively, graduates of these programs boast about the experiences they had as students, citing the job shadowing opportunities, internships, and focused curriculum that gave them a real competitive advantage entering the workforce. More importantly, many graduates will tell you they received multiple offers prior to graduation, and their only worry was choosing the company that would be the best fit for them. In Alaska, Dean Weidner, the founder and owner of Weidner Apartment Homes, has endowed $4 million to the University of Alaska Anchorage to create and support a property management and real estate program in the College of Business and Public Policy. The college has been reaching out to national organizations like the Institute of Real Estate Management and the National Apartment Association, along with local real estate providers to build, promote, and support the program. Today, Alaskan students have the opportunity to study this exciting field in one of only a few property management programs in the nation, and Alaskan companies are taking notice. Joe Beedle, president and CEO of Northrim Bank, says, “Quality property managers are essential to a strong real estate industry and UAA’s new program will allow students an opportunity to receive training that will better equip them for a job that will fill a demand in Alaska. The management program’s specialized focus on real estate and property management will be an asset to the community.” The economic impact that this industry has, coupled with the ongoing sophistication of its management and career opportunities, certainly gives reason for many to be excited. Terry Fields is Term Assistant Professor of Property Management and Real Estate at UAA’s College of Business and Public Policy. Andrew Romerdahl is the Weidner Chair of Property Management and Real Estate.

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