CFEC responds to scrutiny of scallop limited entry program

In the March 17 article in the Journal of Commerce titled “Shell game,” under the heading “Seaton questions constitutionality,” the article states: “The scallop fishery is the only vessel-based limited entry program in the state, and it was made vessel-based because assigning permits to individuals with fishing history would have resulted in 10 or 11 permits. That number was greater than the nine determined to be the most vessels the fishery could support.” This statement does not convey the magnitude of the problem faced by the commission. Based on the same period used to establish vessel eligibility, some 43 individual captains had participated in the fishery and would have been eligible to apply for permits (and hold interim-use permits) under traditional limited entry. Even under a shorter, hypothetical four-year period, 27 captains would have been eligible to apply. If the commission had implemented traditional limited entry, each of those captains could have brought a vessel into the fishery during the period of time required to adjudicate their claims to permits (with judicial appeals, at least 6 years). In good conscience, the commission could not have risked visiting that much fishing power on (in the words of ADFG Commissioner Cora Campbell) “a hard bottom dredging” fishery, which could potentially do terrible damage if not very carefully controlled. The possibility of 43 vessels (or even 27) compared to 9 participating vessels presented a stark choice to the commission. The article attributes the following statements to Rep. Paul Seaton: “Time does go on and things change, and there wasn’t consolidation to a very few select people at the time [in 2008 when the legislature extended termination of this limitation], which may run afoul of other parts of the constitution and a special right of fishery ... “For several years there seems to have been a philosophy at the CFEC that they are the chief supporters of a position of policy instead of implementing the policy that is set by the legislature. Although they were implementing the policy, to oppose a change in policy by the legislature is, I believe, beyond their real mission.” Some years ago during the course of a hearing, Rep. Bill Hudson made a somewhat parallel comment to the commission, but in the form of praise for being “proactive.” The comments attributed to Rep. Seaton fail to acknowledge (1) that the state waters fishery looks very much the same today as it did when the legislature extended the limitation in 2008, and (2) that the commission’s actions are solidly grounded in specific direction from the legislature and the Alaska Constitution. As it did in 2008, the state waters scallop fishery includes 7 permits, and, in full compliance with state law, no individual or entity holds more than one state permit. The article correctly cites Johns v. Commercial Fisheries Entry Commission, 758 P.2d 1256, 1266 (Alaska 1988), for the proposition that the Limited Entry Act directed CFEC to determine an optimum number to ensure that a limited fishery was not too exclusive. CFEC is prepared to examine an optimum number for the state scallop limitation. That opportunity will be destroyed if the limited fishery terminates at the end of 2013. Preserving CFEC’s statutory authority to perform an optimum number determination is a principal reason the commission supports extending the termination date for the fishery. The procedure would also be fair to Mr. Bill Harrington, Mr. Max Hulse, and the other permit holders. Extending termination would avoid a risk that the resulting open-to-entry scallop fishery may have to be closed to protect the stocks. Creating the risk of closure would breach the duty of the legislature and managers alike under Article VIII, Section 4, of the Alaska Constitution, to ensure that “Fish ... and all other replenishable resources belonging to the State shall be utilized, developed, and maintained on the sustained yield principle ... “ Current management of the fishery under limited entry has earned high marks. The Monterey Bay Aquarium Seafood Watch has bestowed upon Alaska Weathervane Scallops their “Best Choice” award based on a showing that the Alaska scallop resource is abundant, well-managed and caught in an environmentally friendly way. Bruce Twomley is the Chair of the Alaska Commercial Fisheries Entry Commission. Benjamin Brown is a CFEC Commissioner. Editor’s response: The Journal stands by its reporting. The CFEC writes that we understated the potential number of permits (and therefore the possible number of scallop vessels) that could have fished under traditional limited entry with interim-use permits. We believe CFEC is overstating the magnitude of the risk. Under open access from 1980 to 2002, the peak number of vessels that ever fished in state waters was 12 (in 1981 and 1994), with a typical range of about six to 10 vessels annually. There is no realistic possibility that 27 or 43 vessels would have entered the state water scallop fishery through operator-based interim-use permits. The range of possible permits we reported was based on the CFEC’s official position in 2004 regarding the number of traditional, operator-based permits that could have ultimately been issued for scallops. In any case, however, the only intent of the sentence referenced by CFEC was to describe why a vessel-based system was chosen over traditional operator-based limited entry. We agree — and reported — that would have resulted in more permits than the number of vessels the state wanted to participate in the fishery. We disagree with the CFEC assertion that the state waters fishery “looks very much the same” as it did in 2008 when the program was last authorized. The Washington-based partnership described in our March 17 issue purchased three federal licenses in 2008 soon after the legislature extended the state waters limited entry program, bringing their total holdings to five federal licenses. One of those federal licenses was held by individuals that relinquished their state permit eligibility in 2003 as a move to consolidate effort; another federal license was associated with a state permit that was relinquished in 2007; and the third state permit previously associated with the federal license is now in suspension because it has not been assigned to a vessel. Because many of the scallop beds straddle the three-mile boundary between state and federal waters, it is difficult to prosecute the fishery only in state waters. By controlling five federal licenses, we believe it is accurate to report that the partnership effectively controls the corresponding portion of the state waters harvest as well, and to a larger extent now than it did in 2008.   — Andrew Jensen Managing editor  

GUEST COMMENTARY: Balance must be restored to Alaska's oil tax system

  Oil production is the cornerstone of Alaska’s economic foundation and an engine of opportunity for Alaskans. As Commissioners of the Departments of Natural Resources and Revenue, we are charged with managing Alaska’s resources, finances and oil wealth for the maximum benefit of current and future Alaskans. When it comes to reforming Alaska’s oil tax system, we are guided by Alaska’s Constitution and directed by Gov. Sean Parnell’s guiding principles, which he has recently underscored: Oil taxes must be fair to Alaskans, must encourage new production, must be simple so they restore balance to the system, and must be durable for the long term. With these core principles in mind, our departments have extensively reviewed the current oil and gas tax system — taking into account the analysis we received from a broad range of experts. Alaska is blessed with world-class resources on the North Slope. We have billions of barrels of conventional resources that remain undiscovered, and billions more in unconventional resources that can sustain our economy for generations. Unfortunately, we are not the only resource opportunity available. There is great competition for investment dollars to develop resources around the globe, and while oil provinces are booming in North America and elsewhere, Alaska has been needlessly losing out. As we look toward new oil development in Alaska, we see that the current system creates a dilemma for the State. Since the State receives oil tax revenue from production, but awards tax credits based on a company’s spending, we incur significant costs to the treasury as projects are developed. Basically, the more companies spend, the more taxpayers must foot the bill. It seems counterintuitive, but in the near-term, significant new developments could lead to budget deficits depending on the price of oil. Under current law, in the next fiscal year, the state will pay out more than $1 billion in credits to either reduce a tax liability or to directly pay companies that are not producing oil. These payments negate two-thirds of the $1.54 billion the state will receive through the current oil and gas production tax’s “progressivity” rate. Meanwhile, companies that commit to producing new oil reserves in Alaska can expect to make a little more than $4 per barrel. At the same time, they can go to our competitors and make $7 to $9 per barrel. This is a key reason Alaska is considered to be in extreme harvest mode. We are not seeing the investment and development activity that we need to produce greater volumes of oil and greater economic opportunity. The International Energy Administration recently predicted the United States will be the world’s largest oil producer by 2020. Alaska should be leading this domestic energy production boom, given its world-class hydrocarbon basin, but instead we are falling behind North Dakota, Texas, and soon, California. Clearly, our complex tax system and uncompetitive tax rate is a major disincentive. The portion of the tax rate called “progressivity” is calculated monthly and varies significantly, making it difficult for any company to plan around or predict. Progressivity is primarily based on the price of oil. If oil prices drop, the revenue from progressivity declines but the taxpayer bill for credits remains the same. We can foresee a potential scenario, under our current fiscal system, where we seriously deplete the State treasury in the near term, while maintaining our downward production spiral. These elements of our current tax system create an imbalance that exposes the State to excessive financial risks. Our current system rewards private spending rather than new production. Does that mean that we should give up on exploration tax incentives? No. But we must restore balance — reducing the risks to our treasury and refocusing on effective incentives that secure new production. We also must enact tax reform that focuses on growing oil production, economic activity and jobs. With targeted reforms to the current system based on identified problems, we are confident that Alaska can increase its revenue stream and revitalize our oil and gas industry to create lasting opportunity for generations to come.

EPA study is shoddy, sloppy, biased

Roy Stein is no fan of the Pebble mine. Stein, a fisheries scientist from pretentiously prefixed “The” Ohio State University, penned a recent report describing arguments of mine developers and responsible resource development advocates as “specious,” “disingenuous” and “indefensible,” in addition to calling the prospect of other mines around Pebble “insidious.” Such rhetoric from the opponents of Pebble is hardly uncommon, and anything but newsworthy on its own. Stein, however, isn’t a typical Pebble opponent. Stein was not only a member of the peer review panel that examined the Environmental Protection Agency assessment of potential impacts from mining in the Bristol Bay watershed, he was also the chairman. While Stein was tasked with reviewing the quality of the EPA assessment, he instead used much of his peer review as an emotional diatribe against the Pebble developers and permitting process advocates, and pronounced himself more of a cynic than a skeptic when it comes to the regulatory system. To be sure, many of the reviewers stated that the EPA underestimated risks from mining to wildlife, flora, fauna, fish species other than salmon and human users other than Alaska Natives. But equally sure is that this was hardly a ringing endorsement of the agency’s work. Among the 12 peer reviews, Stein’s stood out not only for its lack of objectivity or attention to the assigned task, but for his eagerness to spout off on subjects for which he himself repeatedly wrote he had no expertise. Rather than critique the EPA work, as he was paid by our tax dollars to do, Stein actually offered advice to the government on how to counter mining company arguments. Referencing the position of mining proponents that failures at old mines cannot be applied directly to risks at Pebble because new technology and best practices will be applied, Stein wrote: “In my view, this is a specious argument and one that should be roundly put to bed by the authors.” At one point in his review, Stein showed he was not aware of reclamation bonding, and at another point suggested that Alaska Natives have “surely” been negatively affected by development, writing “perhaps the Fraser River?” It is a serious enough problem that someone came to chair a peer review panel on mining impacts in Alaska without knowing what a reclamation bond is or even that the Fraser River is in Canada, but what is more troubling than Stein’s lack of basic knowledge and professionalism is how the EPA is incorporating his review into its continuing work on the Bristol Bay assessment that it now says will be used to inform the agency’s options under the Clean Water Act. In its “Summary of Key Recommendations from Peer Reviewers,” the EPA placed heavy emphasis on Stein’s comments (without attributing them to him) to the exclusion of far more substantive and insightful statements from other peer reviewers. This was most obvious under the section for technical content revisions to the hypothetical mine scenario used in the assessment. The hypothetical mine was criticized on several fronts by multiple reviewers, yet four of the six bullet pointed “recommendations” highlighted by the EPA came straight from Stein’s review despite his admitted lack of experience in mine engineering, management or reclamation. The EPA grudgingly included the recommendation that it needs a more thorough discussion of what are best mining practices — this after asserting in the Executive Summary that its hypothetical mine reflected “best” practices but in the actual assessment described them as “good, but not necessarily best” practices. Not content to simply take its medicine from the reviewers and move on, the EPA then incorporated Stein’s assertion that “without a track record of ‘best’ practices, we cannot assume that technology, by itself without appropriate operational management controls, can always mitigate risk.” Nowhere did the EPA highlight the problems with the mine scenario raised by Dirk van Zyl, a mining engineering professor at the University of British Columbia. Van Zyl noted the scenarios for waste rock management were entirely inconsistent (at one point saying waste rock would be stored in open pit, at anther saying waste rock would be milled and placed in the tailings storage facility); its water balance calculations were incorrect; and that EPA stated non-acid generating rock will require wastewater treatment in perpetuity. “If all the (possible acid generating) material will be removed from the surface, as stated in the scenario in Chapter 4, and all the (non-acid generating) will not generate acid drainage, then it is difficult to understand why the waste rock piles and waste rock used for construction would be the major source of ‘routinely generated wastewater,’” van Zyl wrote. Van Zyl, as a mining expert, could be expected to be more critical of the EPA mining scenario, but he wasn’t alone among his peer reviewers. William Stubblefield, Oregon State University, toxicology expert: “Although interesting, the potential reality of the assessment is somewhat questionable. It is also unclear why the EPA undertook this evaluation, given that a more realistic assessment could probably have been conducted once an actual mine was proposed and greater detail about operational parameters available.” Phyllis Weber Scannell, Scannell Scientific Services, fish biology: “Some of the assumptions appear to be somewhat inconsistent with mines in Alaska. In particular, the descriptions of effects on stream flows from dewatering and water use do not account for recycling process water, bypassing clean water around the project, or treating and discharging collected water.” John Stednick, Colorado State University, watersheds: “A large tailings storage facility failure compared to a blocked road drainage culvert. The level of detail in the assessment of the potential system failures varies considerably and baits the question — why? Does this demonstrate lack of understanding of failure prediction, lack of failure prediction, or writing team expertise?” Stubblefield also noted the elementary findings of the risk assessment for multiple mines: “Short of concluding that ‘failures at one mine could be bad, and failures at multiple mines could be worse,’ little else could be concluded.” A number of reviewers observed that the EPA was using logging road impact studies from the 1970s to characterize risks from a mine transportation corridor, that it was using oil and diesel pipelines as a substitute for risk assessment of a slurry concentrate pipeline (while not, strangely, evaluating risks posed by actual diesel transport pipelines that could be in place) and there was unanimous sentiment to not use the Mt. St. Helens eruption as an analogy to a tailings dam failure. Even Stein, the unabashed cheerleader for the EPA effort, said the agency was on “tenuous” ground in assessing risk based on the high level of uncertainty throughout the report. I’d hope the EPA was at least somewhat embarrassed to include among its recommendations — based on consensus among its reviewers — that it must clarify the purpose of the document and rewrite the Executive Summary so that it matches the content of the report. Let’s face it: something is wrong when two main recommendations from a peer review are to define the purpose and make the Executive Summary reflect the actual results of the study. Two Stein comments that were showcased by the EPA, though, are so far short of the scientific rigor the agency claims it adheres to that they must be exposed. Under the technical content revision peer reviewer recommendations for risk to salmonids, the EPA writes under the first bullet point to “reflect on the non-linear nature of the relationship between habitat at salmon production; 5% of the habitat could be critical and thus responsible for 20% or more of salmon recruitment.” Here is what Stein wrote: “This exercise also will serve to counter the argument by the mining company that they are only destroying some small percentage of salmon habitat and hence … only some very small percentage of salmon. Because losing 2% of critical headwaters may translate to huge losses of salmon (say 20%), one cannot simply assume a linear relationship between habitat and salmon.” So, Stein pulls the 20 percent number out of his, um, hat, and the EPA blithely places it into the highlighted recommendations of peer reviewers as if that number is based on actual data. The second bullet point under risks to salmonids states: “Include a section on the impact of Global Climate Change with explicit reference to a monitoring program that will allow scientists, if the mine is built, to distinguish between effects of climate change and mining effects on the physical and biological components of the ecosystem.” Here is what Stein wrote: “My concern is that if the mine is built, all negative impacts of the mine on salmonids, etc., could be attributed to Global Climate Change rather than the true culprit which would be the mining activities.” It was natural that Stein’s climate change preoccupation and anti-Pebble attitude found a receptive audience and prominent inclusion in the peer review summary from the EPA assessment lead manager Richard Parkin of Region 10 in Seattle. Parkin also leads environmental justice efforts for EPA Region 10 and has had addressing Pebble on his to-do list since at least 2008. Back in 2000, Parkin wrote a letter to the Department of Transportation finding fault with a draft environmental impact statement for a highway bypass in Issaquah, Wash.,, because the EIS didn’t include “the proposed project’s contribution to the serious problem of global warming.” “As a transportation solution, the bypass offers no means to lessen or curtail the use of POVs (privately owned vehicles), consequently any emissions of greenhouse gases anticipated from easing congestion on Front Street will be more than offset by increasing vehicle miles traveled” resulting from increased vehicle capacity and “no incentives” to change travel behavior, Parkin wrote. If Parkin doesn’t believe that something as simple as a highway bypass can be built without destroying the planet, it is not an unreasonable conclusion that he is looking far from objectively at the Pebble prospect. Parkin and Stein would certainly have that in common, and based on the presentation of peer review recommendations it is clear the only thing “insidious” going on here is the EPA attempt to convince us that it is engaging in a fair process. Andrew Jensen can be reached at [email protected]

Use credit strategically as the recovery gains strength

The significant tightening of business credit brought by the recession has begun to lift. A recent analysis of FDIC data by the Investigative Reporting Workshop found banks have been increasing overall commercial and industrial lending for five straight quarters. However, lenders remain cautious in their underwriting, even with improving economic conditions and even as interest rates remain at near-record lows. Consequently companies seeking to ride the recovery, as uncertain and erratic as it may admittedly seem at times in the short term, must be strategic in their use of credit. External financing Managing your company effectively and growing strategically as you shift from defense to offense may depend on the quality of credit you can access more than on any other factor. And this often comes down to a question of how you manage your creditworthiness before reaching out to potential lenders to finance an expansion of facilities, capabilities, intellectual property, equipment, inventory or staff. Once you have actualized an expansion plan to achieve any of these growth measures, take a practical and honest inventory of internal resources needed to take on the additional debt you seek. • Review your staff resources to administer and pay back a lender, including the expertise to fulfill covenants consistently and reliably. • Realistically assess the cash flow your company has available to serve both existing debt and the new debt you seek. • Analyze your leverage ratio, before and after borrowing, as preparation for possible additional borrowing should contingencies or unexpected opportunities arise. This last consideration deserves underscoring, and some perspective. When business credit tightened initially, many companies found they were overleveraged and had no financial cushion to ride out deteriorating conditions. When sales and cash flow faltered, their debt service became unsustainable. Ensure that your company has sufficient, and sufficiently liquid, reserves to bridge temporary short-falls. Also, before borrowing, plan out your exit strategy, which means more than just the simple injunction to borrow only what your company can pay back. Be clear about how your company will pay back the new debt, taking into account possibilities such as appreciation in your collateral value or in cash flow, or the possible availability of a strategic take-out loan at better terms than currently apply. If your company has multiple credit facilities in place, be strategic about allocating resources to pay them down. Paying early may deprive your company of needed strategic reserves. Finally, strategically match new credit to new needs. Review the initial purposes for which you obtained term loans or lines of credit and reassess how suitable your existing credit exposure remains in light of current needs and plans. Then choose the form of credit that best fits current conditions, your exposure and your business objectives. Work with an experienced business banker to engineer the most appropriate financing for your company’s current cash position and future plans. When current conditions define new challenges, it is beneficial to have a partner help you think through those needs. One Key Bank client in Anchorage, a minority-owned business that fulfills a variety of contracted activities from janitorial services to telecommunications, needed to look for ways to increase its contracts even as economic conditions were uncertain. The business saw an opportunity to grow and improve its government contract prospects by moving its headquarters to a Historically Underutilized Business Zone (HUBZone). The HUBZone program helps small businesses in certain urban and rural communities gain preferential access to federal procurement opportunities. The client sought a commercial real estate mortgage to purchase a building in the HUBZone to house its key operations, and it also obtained a line of credit to manage cash flow fluctuations. The move not only helped improve the business’s competitiveness for federal contracts, and it infused new commercial activity in an area that needed it most – a win-win for the business and the community. Using credit strategically means looking at the long term benefit – for example, to create conditions that generate more revenue and save more money in the long run. Another Key Bank client, an Alaska Native Village Corporation in western Alaska, realized it needed to upgrade its village store to better serve its community. Although it could have paid for the construction on its own with cash, that approach would have depleted their funds, leaving them no financial cushion for other emerging needs. Working with a banker, they structured a construction loan and a long term mortgage that helped build a larger, more modern village store that provided greater amenities to the community, and at the same time, saved on operating costs thanks to more energy-efficient construction features. This preserved cash on hand for other immediate and emerging needs. Even refinancing an existing loan can be an effective long-term strategic use of credit. A marine transport company based in Anchorage recently refinanced a loan which not only saved money on the lower interest rate, it also gave the company access to new funds to replace older landing craft diesel engines with new, more environmentally-friendly and more fuel-efficient engines which had a direct impact on lowering expenses. Another good example of using credit to improve the bottom line. Work with your banker to determine whether debt or equity is most advisable, given your ownership structure, management and business type. Internal financing Your company may have internal financial resources available for powering growth. Identifying and using those resources can extend the effectiveness of such external financing as debt. Strategically use profits. Allocate them to those product lines, services and investments that bring the greatest return. This may sound overly conservative, and to some it may seem to preclude taking prudent risks in new product development and other initiatives. But these are times when careful resource allocation pays off. Enhance cash flow. Accelerate income by tightening your payment policy with customers, demanding deposits or cash up front, or offering discounts for prompt payments. Consider raising prices or increasing fees⎯but carefully, to preserve customer loyalty. Decelerate outgoing payments through negotiations or requesting discounts for paying promptly. Calculate and balance the value of the float against the need to preserve the good will of your suppliers and vendors. Craft strategic alliances. Similar companies can form marketing alliances to highlight the value of their products and services, and companies can cross-sell one another’s products, enhancing the attractiveness of both to new customers. Explore non-debt and non-equity financing. You can use accounts receivable funding/factoring, equipment leasing or purchase-order funding to raise capital; retailers can obtain cash advances against future credit card purchases. Expand products or services. Choose expansions that make strategic sense with your company’s existing offerings. Buy efficiency. Concentrate on your core business and outsource non−income-producing activities from your back office. Rely on professionals. Financial and business advisors can supply the expertise your company may lack, providing guidance on expansion as the economy recovers, and how to finance it. About the author: Phillip Reid is the Business Banking Sales Leader for KeyBank N.A. His office is located at 101 West Benson Blvd. in Anchorage, and he may be reached at (907) 564-0446 or [email protected] This document is designed to provide general information only and is not legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. KeyBank does not make any warranties regarding the results obtained from the use of this information.

Commentary: Back to the Capitol — what awaits?

The Legislature begins its return to the Capitol soon — and although the landscape has changed many of the key players have only changed committee positions. The clear result of the election, however, is that backers of Gov. Sean Parnell’s policies are in the driver’s seat. Republicans are inviting some Democrats to caucus with the majority — we can only hope this is a small break in the ice dam of partisan gridlock that has marked the last two years in Juneau’s halls of power. It’s time for Alaska’s Legislature to settle some important questions so we can move forward with securing Alaska’s future as a player in the oil business, as well as being a state that funds education and helps to meet the needs of rural areas with soaring fuel costs that cripple local economies. Our nation has been through a grinding election season, one that surprised some not only by the intensity of feelings on both sides of the traditional two-party system, but by the intensity with which Ron Paul supporters made incursions into the state Republican Party. While Mitt Romney took 51 percent of Alaska’s vote, 41 percent of voters with almost all the votes counted voted to re-elect Barack Obama. This state has changed a bit in four years, and the political polarization that has emerged across the nation has its impacts here as well. All is not well. The status quo in many cases has been upset. While our Legislature can’t save the world, it can get to work on Alaska. The Legislature faces some big decisions, decisions the public cares a great deal about. Gov. Sean Parnell’s plan to reduce taxes on oil companies needs some serious consideration, and this time around we expect the governor to bring to the table some hard facts and hopefully some promises for oil companies that they will indeed ramp-up operations here is the tax climate is made more favorable. Sen. Hollis French, a member of last session’s bipartisan coalition and a leading opponent of the governor’s plan, has held onto his Anchorage District J seat, according to preliminary results, by just 56 votes as of the most recent count. His challenger backed the tax reform package. We hope that French and others who have opposed the plan will take a look at the facts and do what is best for Alaskans, not what is best for a partisan agenda. And we hope this issue is not all the Legislature talks about and acts upon. There are other key issues that need attention: • Alaska needs a proper Coastal Management Plan that gives our state a seat at the table where decisions about our natural resources are being made. We need a plan that makes sense and serves as a one-stop shop for permitting so our interests are protected and business still gets done. • The Legislature has a chance to have a say in development of the Pebble Mine. We hope for statewide leadership on this issue, and we elect legislators to lead. A bill to give the Legislature say over that went nowhere last session. This is not the kind of question that should be settled by a ballot initiative where serious policy is decided in a popularity contest oiled with special interest money from all sides. • Cities and villages need access to natural gas, and the Legislature should provide incentives to get natural gas flowing as an alternative means of fuel for cold Southcentral winters. • Power supply is a crucial issue for Southcentral’s economic future. The hydroelectric project on the Susitna River must keep moving forward as long as it is proven the dam will not hamper salmon spawning. • Juneau needs permanent state offices for many departments housed in a patchwork of offices across Juneau. Build a new state office building here, and continue funding the new State Library and Archives project in Juneau as well. It’s time to centralize scattered state offices, in Downtown or in the valley. We look forward with optimism that, now that the silly season has passed and power has peacefully begun the process of transferring on national, state and local levels across our nation, that a new urgency to get down to business will strike the Legislature, and the bickering and posturing that led to very little will vanish like a faded campaign sign caught up in a Taku gust.

Interior voters dismantle Senate majority

Fairbanks voters saw to it that the Senate Bipartisan Working Group would not survive the 2012 election. As Anchorage voters cast ballots to preserve the status quo by reelecting oil tax reform opponents Sens. Hollis French and Bill Wielechowski, Interior residents sent two Democrat incumbents packing and elected Republican Click Bishop to an open seat. Eagle River voters flipped another Democratic seat to the GOP by electing Rep. Anna Fairclough against incumbent Bettye Davis, who was redistricted into former senator status. Of course it’s far too early to know how the structure and leadership of the Senate will shake out, but change is certain after the previous 10-10 party split with only seven Democrats remaining, five new Republican senators heading for Juneau and the four-member GOP minority fully intact after its leader John Coghill took out Democrat Joe Thomas in Fairbanks by a wide margin. Surviving GOP members of the previous majority include Senate President Gary Stevens of Kodiak and Majority Leader Kevin Meyer of Anchorage. Of the five new GOP senators, all but Bishop campaigned expressly against the 16-member majority controlled by Democrats. In fact, during his primary, Bishop declined to sign a pledge to caucus only with a GOP majority. However, all he needs to do is look around the Interior at the fates of Joe Paskvan and Thomas to understand the consequences of failing to deliver for his constituents. It’s not surprising that Interior voters, who are far more in touch with the resource industry and their electric bills, would vote to blow up the do-nothing Senate while voters in the service-based economy of Anchorage would have no problem sending a couple unproductive legislators like French and Wielechowski back to the capitol. French is holding on to a 249-vote lead over Bob Bell with absentee ballots still to be counted while Wielechowski crushed Bob Roses in a fine example of how adopting your opponent’s positions is a bad way to win an election. Thankfully, in their new minority status, this pair should have a hard time finding committee chairmanships or anything resembling the sway they had in the last legislative session. Even as it controlled the Senate by a huge margin against a four-member minority, the majority was unwieldy, incoherent and unable to produce any legislation to address the issues of oil taxes, coastal management, declining North Slope production or the unsustainable cost of energy throughout the state. Clearly, the Alaska voters spoke out against the gridlock in Juneau, preserving the GOP House majority and rejecting nearly half the Senate coalition between the primary and general elections. With President Barack Obama winning a second term, it is even clearer that Alaskans must take over their own destiny on our lands as we face four more years of this administration’s ideological and anti-resource EPA and Department of the Interior. We’ve never endorsed the oil tax proposal offered by Gov. Sean Parnell, but here’s hoping that new faces and the diminished role of his most vociferous opponents will finally allow something productive to be accomplished on a host of issues that are long past due for addressing.   The presidential race There’s not a lot to be said about an outcome that will undoubtedly hurt Alaska over the next four years, so I’ll just leave you with the words of the candidates and one wise Iron Lady: “If you’re looking for free stuff you don’t have to pay for, vote for the other guy.” — Mitt Romney to a heckler, March 20, 2012 “If you have a business, you didn’t build that.” — Obama, July 13, 2012 “I mean, I do think at a certain point you’ve made enough money.” — Obama, April 29, 2010 “Socialist governments traditionally do make a financial mess. They always run out of other people’s money.” — Margaret Thatcher, Feb. 5, 1976   Andrew Jensen can be reached at [email protected]

Commentary: Time for the U.S. to address mineral dependence problem

Access to critical minerals and metals is vital to America’s military strength and economic health. As we move further forward into the technology age, we need a range of non-fuel minerals - from antimony to zinc - for defense technologies that protect the homeland and project American power abroad. These same minerals and metals underpin our manufacturing sector too, and the cost of raw materials impacts everything from productivity and innovation to economic growth and job creation. Without smarter policies that increase access to resources under our own soil, America will continue to depend heavily on China, Russia, Kazakhstan, and other countries that don’t have our interests at heart. Based on reports by the Department of Defense and others, American Resources Policy Network, my organization, has found that the U.S. is at least 50 percent dependent on foreign supplies for 43 vital minerals and metals that feed our defense and manufacturing sectors. That’s a greater dependence than we have on foreign oil. For 19 critical minerals, we’re 100 percent dependent. The problem is crystal clear when we zero in on the Rare Earth elements, a group of 17 magnetic metals. Although the U.S. is once again producing Rare Earths, China still controls 95 percent of the global supply. According to the Congressional Research Service, 10 of these metals are essential to our modern military technologies - including guidance and control systems, electronic warfare, targeting, electric motors, and battlefield communications. We also use them for smartphones, LED televisions, automobiles, hybrid batteries, and other products that fuel the U.S. economy and sustain manufacturing jobs. The irony of U.S. dependence on China for Rare Earths is that 15 percent of available global resources can be found right here under American soil. Yet, right now we contribute to little more than one percent of global supply. Why? Because blessed as we are geologically with scores of metals and minerals, America is one of the toughest places in the world to bring a new mine online. Mining companies have to navigate a bureaucratic obstacle course to gain access to American mineral resources. According to the annual Behre Dolbear report on the top-25 mining nations, it takes up to ten years on average to obtain all the necessary permits to develop an American mine. By that measure, America ranks dead last year after year. Under the current administration, federal agencies have continued to delay or impede the development of major American mineral deposits. In Arizona, one mining company has been trying for over 15 years to obtain approval from the U.S. Forestry Service to mine a Copper deposit just south of Tucson that would create an estimated 2,900 jobs and $19 billion worth of investment in the state. The U.S. Environmental Protection Agency has even expanded its authority under the Clean Water Act to thwart mining projects — including before they’ve applied for a permit. In Alaska, another mining company has discovered what could be the largest ever U.S. copper deposit, and the EPA has preemptively drafted an environmental assessment of the nearby Bristol Bay watershed, which it seems bent on using to preemptively deny a permit to develop this resource. From a national security perspective, these policies make no sense. Copper is used extensively not only in construction, industrial machinery, transport vehicles, electronics, and power generation, but in next-gen energy alternatives like wind and solar power. It is also the second-most used material by the Department of Defense, and a key source of other strategic minerals through the refining process. And while U.S. Federal agencies have blocked efforts to develop domestic copper resources, China continues to stockpile more Copper in its warehouses than the U.S. consumes in an entire year. When it comes to our mineral dependence, President Obama has talked about Rare Earths, talked about strengthening manufacturing, and talked about the need for a modern military with state-of-the-art weaponry - all of which depend on a strong U.S. minerals access policy. But without taking more concrete steps, President Obama can only be judged by the obstructionist actions his Federal agencies have taken. Gov. Mitt Romney has directly addressed the permitting process on the campaign trail, promising to streamline it and move more authority from the Federal government to states. Yet his focus has been exclusively on energy independence. He should expand his agenda to include resource independence. Ready access to reliable supplies of metals and minerals is every bit as critical to America’s national security, manufacturing competitiveness, and job creation.   McGroarty, president of American Resources Policy Network, a non-partisan education and public policy research organization headquartered in Washington, D.C., served as special assistant in the White House and as a presidential appointee at the Department of Defense.

Sit, Hollis! Bad senator!

A recent campaign ad run by state Sen. Hollis French comparing oil companies to his dog pretty much sums up everything that’s been wrong with the discussion over reforming Alaska’s oil taxes for the last two years. “One thing I’ve learned is that you don’t give treats before she sits or stays,” French says. “Tax breaks for oil companies should be the same way.” French continues, “They should invest in jobs and new production first, then they can have a reward.” Forget the insulting nature of the ad and the fundamental unseriousness of it. Not to put too fine a point on it, but French’s argument is just plain ignorant. The Senate majority and its frontmen French and Sen. Bill Wielechowski are fond of putting out press releases touting the supposedly business friendly tax climate of Alaska, without, it seems, any awareness of the fact that oil tax revenue is the reason tax burdens on every other type of business are so low. They also seem not to be aware, or choose to conveniently ignore, the annual Fraser Institute oil tax rankings based on industry surveys that consistently place Alaska’s onshore regime at the bottom of North America jurisdictions. Perhaps they also missed the Oct. 23 story by the Associated Press reporting that the United States is on track to become the world’s No. 1 oil and gas producer before the end of this decade. What was conspicuously absent from the article? In 1,200 words, the word “Alaska” was nowhere to be found. The word “Alaskan” was present a single time, referring to booming production years from the Prudhoe Bay fields in the mid-1980s when the U.S. was producing about 11.2 million barrels of oil and gas liquids per day. Here is the key paragraph from the article: “A long period of high oil prices has given drillers the cash and the motivation to spend the large sums required to develop new techniques and search new places for oil. Over the past decade, oil has averaged $69 a barrel. During the previous decade, it averaged $21.” There is a simple and regrettable fact to be taken from the AP report. Since enacting ACES in 2007, Alaska has missed out on more than a half-decade of the capital investment boom in oil production. While oil companies are investing billions upon billions in the U.S. and around the world, throughput in the Trans-Alaska Pipeline System has continued to decline despite oil producers having — theoretically — the price incentive to do more. Unfortunately, the producers also have an incredible disincentive to produce more thanks to a ridiculously uncompetitive tax structure and a legislature that thinks of them as a pet to be commanded to beg and roll over. It’s a shame that this attitude has even trickled into the campaign of Bob Roses, the Republican running against Wielechowski. In his latest radio spot, Roses, too, asserts that he won’t support tax reform until production increases first. As French begs for his “treats” in the form of votes, perhaps he should first perform a trick by oh, I don’t know, actually doing something other than making silly arguments and defending the unsustainable status quo caused by declining production and burgeoning budgets. What the state is doing to the oil companies is actually no different than overfishing, a practice Alaskans understand well as one of the catalyzing forces behind statehood. When a resource is in decline, as North Slope production is today, you don’t take as much of it as you can before it runs out. That’s exactly what ACES does. Rather than encouraging companies to sustain and grow production, the state is greedily taking as much as possible while it can and robbing the companies of the capital they need to invest in increased production. As the owner of two dogs, I can sympathize with French’s effort to conflate human behavior with that of his cute black lab Allie. Also like most pet owners, that sort of feeling usually ends right about the time my dogs start sniffing the same kind of stuff that French is shoveling. Andrew Jensen can be reached at [email protected]

Cuts, tax reform, investments needed to tackle deficit

Over the last two weeks, I have met with Alaskans from all over the state. Whether it’s at a town hall meeting or the grocery store, Alaskans often come around to the same two questions: How did we as a country get into this trillion-dollar deficit mess? How do we get out of it? The first answer is easy. The second is difficult, but not impossible. Both political parties are to blame. Beltway “group think” got us here and Democrats and Republicans alike played along. Turns out it’s not free to wage two wars halfway around the world, launch a massive new prescription drug plan and give major tax breaks to everyone millionaires. You just can’t balance a budget that way. How we fix it starts with Congress My colleagues must recognize we are truly out of time and that this is the time to come together because the consequences of inaction are so dire. We’re facing the so-called fiscal cliff because we’ve put off tough decisions for too long. It’s like crashing your mom’s car – telling her will be painful either way but the pain worsens the longer you wait. It’s time to tackle the government’s bottom line with an understanding of your family’s bottom line. If Congress doesn’t pass a responsible plan after the elections, this country faces a grim forecast. Taxes will go up for everyone. And because last year’s deficit talks stalled out, the first round of $1.2 trillion in automatic budget cuts begins. To some, that might sound good. But because this fallback plan involves no new tax revenue, the cuts will be deep and severe: Major reductions in defense spending, fisheries management, schools, oil and gas permitting, heating assistance – the list is long. Resolving this will take sacrifice. Even a moderate deficit-reduction plan must include cuts to important services, and also some new taxes for those who can best afford them. We’ll still face a smaller cliff, but through bipartisan compromise we can make the landing smoother. Along with budget cuts the package must include tax reform and smart investments to build the economy. All federal agencies will have to be part of the solution – no free passes. Here are some of my ideas for budget cuts: A continued pay freeze for members of Congress; taking back unspent “orphaned” earmarks; ending a wasteful $400 million mobile missile-defense system the military doesn’t want; winding down the $700 million program that bailed out major banks. You can see more of my ideas at begich.senate.gov. On tax reform, we need to protect the middle class while asking the wealthiest Americans to pay their fair share. I am working on a bipartisan bill with Senators Wyden and Coats to simplify the tax code, hold down rates for families and provide tax relief for businesses to invest and grow. Our bill creates a single corporate tax rate, lowering it from 35 percent to 24 percent. For families and individuals, it lowers and replaces six tax brackets with just three. It protects mortgage, retirement and other tax incentives to give families financial security, and also encourages investment by protecting capital gains. Under our bill, American families can file their taxes on a simple one-page form. The final piece of deficit reduction involves smart investments to grow our economy – in education, infrastructure and energy. This will make us competitive worldwide, create new jobs, and bring back jobs from overseas. We can do all of this because the economy is slowly coming back. When I came into office the economy was hemorrhaging over 700,000 jobs a month. Today, the stock market is above 13,000; unemployment is below 8 percent for first time since the recession; housing starts are up and consumer confidence is improving. If we’re smart about deficit-reduction we can keep building on these positive trends. A steadily strengthening American economy is the best answer of all. We can get out of this trillion-dollar mess by working together to build a responsible budget, a fair tax system and a platform of investments to spur continued economic growth. Mark Begich is the junior U.S senator from Alaska.

Commentary: Alaska's Eye on Wall Street: Climbing the wall of worry?

The equity markets have been on a roll. U.S. stocks gained 6.4 percent in the third quarter and are up 16.4 percent year-to-date. The broader EAFE index of non-U.S. international stock markets did slightly better, up 6.9 percent in Q3 but only 10.1 percent year-to-date. Meanwhile bond yields in the U.S. seem stuck in a narrow trading range around 1.6 percent on the 10-year Treasury. The announcement that the European Central Bank would make unlimited purchases of troubled sovereign debt on the secondary market to reduce yields (with some fiscal strings attached) was greeted with a sigh of relief in Europe. Many believe this takes the “tail risk” of a really bad event off the table. Combine that with progress on the ESM (the permanent euro bailout fund) and the likelihood of a European banking union and you have the makings of an equity rally. That’s especially true given the depressed valuations in Europe. The Federal Reserve joined the party by announcing a QE3 bond-buying program with no definite end date. They also said that the economy remains weak, that inflation is well contained (it’s up 1.7 percent year-over-year) and offered to keep short rates close to zero through 2015. They expect the “wealth effect” from a rising stock market to save the day. Tell that to savers who are stuck with rock bottom interest rates when rolling their CDs. The question is how long can these easy monetary machinations continue to substitute for sound fiscal policies? No sooner had the ECB eased than we started to hear about Greece and Spain crawfishing on austerity measures. This seems too happen over and over again. Wash. Rinse. Repeat. Even in the U.S. you have to wonder if the Fed is just enabling the politicians to avoid making tough decisions with respect to the fiscal cliff. QE1. QE2. QE3. Wash. Rinse. Repeat. All this money printing has gold soaring to recent highs near $1,800 an ounce and commodities perking up despite slow economic growth. These facts — including general economic malaise, election year uncertainty, and the rapid rise in equity prices (in the face of a potential stall in earnings) — led us to reduce exposure to U.S. equities in September. We still like them longer term but think we will get a better opportunity to buy over the next several months at lower prices. It’s a tweak, not a signal that stocks are overvalued in the long run, especially compared to bonds. Muddle along, nothing to see here. Global economic growth remains subpar. In the U.S., continuing good news on the housing front is helping but other headwinds have kept growth in the 2 percent neighborhood and unemployment above 8 percent. Our fiscal cliff challenges are well known. Businesses remain wary and confidence is low. The most widespread drought since 1956 hasn’t helped. In an environment with lots of unused capacity in the labor and product markets it’s hard to see inflation kicking up, although we are in uncharted waters with respect to monetary policy. The eurozone is in recession. The unemployment rate is 11.4 percent, the highest on record. It’s at depression levels in Spain (25.1 percent) and Greece (23.1 percent). Recently we have seen more riots in the streets. Policymakers have several bazookas including a $625 billion bailout fund and an ECB that says it will do “whatever it takes” to save the euro. How this all ends is anyone’s guess. Asia is slowing. China has moved from a consistent 10 percent growth to 7 percent and that may be the norm going forward. We still don’t believe the hard landing stories out there. The Shanghai stock market is down this year and trading around the 2,000 mark, it has not closed below that level since January 2009. Japan has been described as a bug looking for a windshield. Poor demographics (population there has actually started to decline) combined with the largest debt burden in the world suggest a slow economy at best. ISI forecasts 1 percent growth in 2013. Other than that Mrs. Lincoln, how was the play? So the economic outlook remains challenging. What does this mean for the markets? Generally, the equity and bond markets reflect these difficult times. That is they are “priced into” the markets – that’s why risky stock markets are trading at lower valuations and safe haven bond prices are at record highs – interest rates at record lows. It’s because investors are worried. Contrary to what many investors might think, there isn’t a great correlation between economic growth and stock market returns. (Notice that the stock market has been strong recently while the economic recovery has been one of the slowest and weakest ever.) We believe that valuation is very important. In other words discounted cash flows, P/E ratios, earnings and dividend yields vs. bond yields, etc. really influence our decision making. Frankly we don’t see many asset classes that are jumping out as dramatically over- or under-valued. There aren’t many “fat pitches.” We do believe that emerging market equities are attractive and that bonds are unattractive. But both observations hold for the long term as short term trends and a very easy Federal Reserve may keep rates lower longer than we expect.   Jeff Pantages, CFA, is the chief investment officer for Alaska Permanent Capital Management, a $2 billion investment management and advisory firm located Anchorage.

Editorial: Romney gets in Obama's face over lies on energy

Back in September 2008 during the good ol’ days of Hopenchange, then-candidate Barack Obama gave the following instructions to one of his adoring crowds in Nevada: “I need you to go out and talk to your friends and talk to your neighbors. I want you to talk to them whether they are independent or whether they are Republican. I want you to argue with them and get in their face.” When it came to the issue of federal permitting for oil and gas development, Republican nominee Mitt Romney took that advice during the second presidential debate on Oct. 16 and produced one of the most compelling moments in the history of such events when he stepped across the town hall stage and peppered Obama with the facts of his disastrous energy policy. In the town hall format, Obama was at his best. Unfortunately, Obama’s best means he’s at his most demagogic and dishonest. Throughout this campaign, about the only accurate thing that has come out of this president’s mouth is: “I’m Barack Obama and I approve this message.” Other than that, it’s been an avalanche of lies and distortions about Romney that have unraveled in the space of just two 90-minute debates. One of his bigger whoppers has been exposed in both of them. Obama repeated his assertion that oil and gas production has increased in the U.S. under his watch. Romney, just as he debunked that claim in the first debate, again refused to let Obama get away with it and pointed out that the increase in domestic production is entirely attributable to development on private lands, not public. Romney correctly cited the U.S. Energy Department’s own numbers that oil production on federal lands was down 14 percent and gas production was down 11 percent in 2011. Romney also claimed that federal permits for oil and gas on and offshore have been cut in half. “Not true, Governor,” said Obama with a typically flippant gesture. “So how much did you cut it by?” Romney asked. Five times, Romney asked Obama by how much he’s cut back on issuing drilling permits and leases. Finally cornered, Obama went into some nonsensical answer about “use it or lose it” that bore no resemblance to an answer. It’s not surprising that President You Didn’t Build That would have a hard time distinguishing the difference between public and private lands, or that he would have no shame about taking credit for energy successes he had nothing to do with. According to a CNN fact check, federal leases are down 42 percent from President George W. Bush and drilling permits are down 37 percent. But that’s not “half,” so those objective fact checkers at CNN rated the claim as “off the mark.” In the world of fast-and-loose political statements, I’d call Romney’s attack on Obama “close enough.” After all, it was the Obama administration that issued illegal offshore drilling moratoriums in the Gulf of Mexico and the Alaska outercontinental shelf following the Deepwater Horizon disaster in 2010. It is the Obama administration that refused to approve the Keystone XL pipeline, which would have created 20,000 construction jobs in the U.S. and provided hundreds of thousands of barrels of oil from a friendly and stable source. It is the Obama administration that just withdrew half the area from the National Petroleum Reserve-Alaska and chose a plan that could prevent a pipeline from being built across the Slope from the Chukchi Sea to TAPS. It is the Obama administration’s U.S. Army Corps of Engineers that has blown off issuing a record of decision for Point Thomson, costing the state about 1,000 construction jobs this winter. The same Obama administration, though, from the same Interior Department that is closing off half of NPR-A, just announced a streamlined process for approving solar farms on public lands. The day of the second debate, another one of Obama’s green energy project companies, A123, filed for bankruptcy. As Romney has pointed out more than once, you can’t run a car on wind. Obama is proving that you can run a campaign on it though.

Commentary: Crab season under way Oct. 15; grant awarded for fishing energy audit

October is National Seafood Month – and it also marks the start of one of the busiest months for Alaska’s fishing industry. The state’s biggest crab fisheries get under way in the Bering Sea on Oct. 15. The Bristol Bay red king crab catch will hold steady at 7.8 million pounds, while the snow crab harvest has taken a dip to 66.3 million pounds, down from about 89 million pounds last season. The St. Matthew Island blue king crab fishery is also down a bit to 1.6 million pounds. Hundreds of divers in Southeast Alaska are plying the depths for 1.5 million pounds of sea cucumbers, 3.2 million pounds of sea urchins and more than a half million pounds of giant geoduck clams. A few dozen divers also target sea cucumbers and urchins in smaller fisheries at Kodiak, Chignik, the Alaska Peninsula and the Bering Sea (175,000 pounds total for cukes and 80,000 pounds of urchins). Fishing for big spot shrimp also opens in October throughout Southeast with a catch of just over a half million pounds. Also in Southeast: the Dungeness crab fishery reopened on Oct. 1, and trollers will be back out on the water fishing for king salmon starting on Oct. 11. Elsewhere, fishermen in the Gulf and Bering Sea continue fishing for pollock, cod, halibut, sablefish and various other groundfish. The halibut and sablefish fisheries close on Nov. 7 this year and will reopen in early March.   Fishing for fuel savings Diesel fuel is $5.27 per gallon in Kodiak and fishing boats elsewhere face similar or even higher fill up costs. Fishermen could soon find some relief from a state backed project that aims to find ways to reduce fuel needs for fishing vessels. “Fuel costs can really affect the bottom line for a fisherman when you’re skimming off 30-40 percent of your annual income for diesel fuel,” said Jim Browning, director of the Alaska Fisheries Development Foundation, which received $250,000 from the state to launch a three-year energy audit pilot project to begin next spring. AFDF will partner with Sea Grant marine advisory agent Terry Johnson in Homer to design and implement the project. The program will begin by obtaining baseline information on fuel usage by vessels of all sizes. It will then test various fuel additives, hydrogen generators and other new technologies aimed at saving fuel and increasing efficiency by up to 20 percent. AFDF is currently seeking industry stakeholders to serve on a steering committee, as well as vessel owners who would like to have an energy audit on their boats. Anyone interested can contact AFDF in Anchorage 907-276-7315. (see more at www.afdf.org)   Expo shift Football has forced a big change in dates this year for Pacific Marine Expo to after Thanksgiving. “The show dates rely on the Seattle Seahawks football schedule at Centurylink Field,” explained Expo director Bob Callahan. “This year there was a bit of a wild card – the Washington State Huskies are renovating their football stadium so they took up a few weekends in November at the Field. So between the Seahawks and the Huskies we had to move our dates.” The new Expo dates are set for Tuesday through Thursday, Nov. 27, and response has been “surprisingly positive,” Callahan said. Early registrations are up by more than 600 people compared to this time last year and the trade show continues to grow. “The show has been growing each year by about 10 percent and we are 4,000 square feet and 40 booths ahead of last year. We are actually in the running for one of the fastest growing shows in the country for its size,” he said. Expo is the West Coast’s largest marine industry trade event for 46 years and attracts over 400 companies and nearly 9,000 visitors. “Any trade show mirrors the success of the industry, so obviously, the industry is doing well and it is reflected in the growth Expo,” Callahan added. See the complete lineup at www.pacificmarineexpo.com.   Chinook salmon meetings Alaska Department of Fish and Game has scheduled a scientific symposium on Oct. 22 and 23 from 8:00 a.m. to 6:00 p.m at the Egan Center in Anchorage. The Department said, “The symposium will feature scientific presentations and panel discussions from a wide variety of experts from private, state, federal, and academic backgrounds. The goal is to discuss gaps in knowledge of Chinook salmon abundance and productivity, and assemble a targeted list of research priorities to fill these gaps. More details about this event will be forthcoming in the first weeks of October.”   BOF begins   The state Board of Fisheries had its annual work session on October 9 and 10 at the Egan Center in Anchorage. Its meeting cycle this session focuses on Bristol Bay, Arctic-Yukon-Kuskokwim and Alaska Peninsula/Aleutian Islands fisheries starting in December.   Laine Welch lives in Kodiak. Visit www.alaskafishfactor.com or contact [email protected] for information.

The bait-and-switch on Alaskan energy

An alliance of environmental activists and Democratic politicians has spent decades blocking the efforts of Alaskans to access the rich energy resources of our state. When Alaskans wanted to open the 1002 area of ANWR (Arctic National Wildlife Refuge) to exploration and production, opponents of progress stymied our efforts with fear-mongering and obstructionism. In so doing, they frequently pointed to the National Petroleum Reserve-Alaska in the northwest corner of the state as a preferable location for drilling. This, they argued, would protect the coastal plain of ANWR. But now that the focus has actually swung to the NPR-A, this same obstructionist alliance is supporting a plan to greatly restrict oil and gas exploration in the petroleum reserve. This is a classic bait-and-switch. If opponents simply don’t want Alaska to produce any energy, they should be honest enough to say so. A land management plan billed by the Interior Department as “opening” half of NPR-A would actually close oil and gas activity in half the Reserve. It would also make it very difficult to construct the pipelines and other infrastructure necessary to get oil from the Chukchi and Beaufort seas to the trans-Alaska oil pipeline. The environmental community is even trying to rename the petroleum reserve as the “Western Arctic Reserve.” The name itself declares their intention to wage war against responsible resource development in Alaska. If there is one thing that should offend us all, it is America’s dependence on the Organization of Petroleum Exporting Countries (OPEC). We import 4.5 million barrels of oil from OPEC each and every day. Our own continent, however, has been blessed with vast oil and natural gas resources that if responsibly developed could free ourselves from relying on imports from countries such as Saudi Arabia, Venezuela, Libya, Iraq and other familiar hotspots. According to the Energy Information Agency, the United States has 220 billion barrels of technically recoverable oil and condensates. Other estimates range far higher. The Mexican government estimates its own technically recoverable resources to be 31 billion barrels, while Canada boasts some 175 billion barrels in proven reserves alone. Alaska will necessarily play a large role in this energy revolution. NPR-A holds nearly 900 million barrels of oil, along with over 50 trillion cubic feet of natural gas, according to the U.S. Geological Survey. The Chukchi and Beaufort seas may hold an additional 23 billion barrels of oil. Unfortunately, much of the state’s resource bounty is locked up by its federal overseers. The benefits of permitting Alaska to access its potential should be obvious. North Dakota, for instance, boasts an unemployment rate of just 3 percent. Wyoming’s is just 5.7 percent. The budget situations in these states, which have benefited from the energy boom, is good. North Dakota actually has a $1 billion surplus. Oil and gas production creates thousands of jobs and fuels economic growth. Progress in the energy sector spills over into other areas of the economy as well. This is because equipment must be purchased, shipments must be transported, and workers must be fed. The result is a powerful multiplier effect. The World Economic Forum estimates up to four additional jobs can be created for every position in the deepwater or unconventional oil sectors. Oil and gas production also provides a revenue stream for both state and federal treasuries that can be used to help address budget deficits. The failure of the federal government to pursue a truly “all-of-the-above” approach to energy policy, however, is hindering the nation’s ability to climb out of this recession. Over the last four years, while permitting for oil and gas has been dramatically restricted, the national debt has risen by more than $5.4 trillion and high unemployment rates persist around the country. In the meantime, our reliance on imports persists. There is nothing noble about forcing oil production overseas where the environmental standards are weaker while blocking it here at home. Self-sufficiency is an integral part of the American pioneering spirit. It is certainly central to the Alaskan character. A durable, realistic form of energy independence is within our grasp if only we approach it with common sense. But too often decisions by the current administration, like the proposed management plan for the National Petroleum Reserve-Alaska, hobble American energy production and stop progress. Alaskans don’t need the federal government to protect them from themselves. We need reasonable access to the resources of our state to support a vibrant and growing economy that can support future generations. The bait-and-switch is wrong for Alaska and wrong for America. Lisa Murkowski is the senior U.S. senator from Alaska.

Editorial: Board must take up kings, take no more from setnetters

The — now official —disaster in Cook Inlet during the 2012 salmon season is back in front of the Board of Fisheries at its upcoming annual work session Oct. 9 to 11 in Anchorage. Issues between the sport and commercial users that are contentious in the best of times will be front and center against the backdrop of a record-low return of Kenai kings in 2012 with the Kenai River Sportfishing Association, or KRSA, pushing for a full evaluation of king salmon management while Peninsula setnetters and the statewide United Fishermen of Alaska are opposing the KRSA agenda change request. The issue upon which the two sides agree is the need to formally adopt new escapement goals for the Kenai and Kasilof river kings based on the new DIDSON fish counters deployed fully in 2012 after three years of side-by-side testing against previous sonar counters. The Alaska Department of Fish and Game, which originally planned to present new DIDSON-based escapement goals for the regularly scheduled 2014 Upper Cook Inlet meeting, now says it has the capability to present goals in time for 2013. The discussion around the new goals developed by ADFG, what current counts reveal about the status of the Kenai River king salmon stocks, and how ADFG will use existing authorities under the current management to achieve the goals should be a productive step toward achieving a more orderly 2013 season. In 2012, near total closures of the sport and commercial setnet fisheries were required to meet Kenai River king salmon escapement goals. The setnet fishermen lost out on 95 percent of their typical annual harvest while the tourism sector suffered from cancelations and lost visitor traffic. Both commercial and sport fishing industries recognize the need to conserve king salmon and achieve a sustainable fishery. It is certainly not in the setnetters’ interest — especially after a total loss in 2012 — for diminishing returns of king salmon and the restrictions to their sector that go along with it. However, the setnetters also believe that when KRSA is pushing for a change in management it is typically going to cost them money. At the 2011 Upper Cook Inlet meeting of the Board of Fisheries, setnetters were helpless as the four-member majority took measure after measure proposed by KRSA that included a new mandated closures on Tuesdays in addition to the current “weekend window” closures on Fridays, the decoupling of their sector from the drift fleet and a provision for a more expedient closure to their season after Aug. 1. The allocative shifts away from the setnetters were worth millions during the first season under the new rules in 2011, and with low forecasts for Kenai River kings in the near future they can anticipate even more of their historical catch going up the river or into the drift fleet’s pockets. It is important for the board to remember that when it comes to allocations, a bedrock principle of management is history in the fishery. For setnetters who have, in some cases, fished the same sites for generations, it is no easy thing to swallow to see their allocations consistently eroded by a relatively new user group as is the sport guide industry. A setnetter shouldn’t lose fishing opportunity merely by the nature of someone starting a guide business or building a fancy cabin along the Kenai River. They also shouldn’t be told that a dollar they earn to feed their families and support the local communities is less valuable than a dollar earned by a guide or a B&B. For the value of the Cook Inlet commercial fishery to the state economy goes far beyond the $50 million in ex-vessel value it is usually pegged at by the sport industry. Only considering ex-vessel value ignores the impacts of fuel and supply purchases, processing jobs, crew wages spent throughout the community, the transportation and logistics infrastructure necessary to move 25 million pounds of salmon to domestic and international markets, and the end-user spending at retail and fine restaurants where Alaska salmon is served. The setnetters have more than borne their fair share of conservation for Kenai River kings. As the board considers changes in management, they should not weigh them down any more.

Commentary: Alaskans shouldn't forget Permanent Fund's purpose

The Alaska Permanent Fund Corp. transferred $605 million to the state this summer to cover the cost of paying dividends to every eligible Alaskan. In 2011, it transferred $801 million. Everyone can see the result: The 2012 dividend amount, to be announced at 11 a.m. today, will be much smaller than last year’s. This might be a trend with which we should get comfortable. This year’s pay-out, scheduled for early October, will move a vast amount of money into the hands of individual Alaskans. For many people, the money will be a rescue bonus, allowing them to fill fuel tanks or buy some decent tires just in time for winter. Others will use it as a treat to pay for things they wouldn’t or couldn’t otherwise buy. This conversion of the state’s oil wealth into cash for individuals is a reversal of the usual flow. The state has no income tax, and, for many families, dividend checks more than cover whatever local taxes they pay. So, as individuals, most Alaskans in essence receive non-federal government services at no direct cost to themselves. It’s a nice situation for the moment, but Alaskans should understand that this annual pay-out is not the reason for the Alaska Permanent Fund’s existence. The people who designed the fund and the Alaskans who approved the 1976 constitutional amendment allowing the dedication of state money to it were not confused about its purpose. The fund is a savings account for some of the oil wealth so the state and its communities will have a source of income if the crude runs dry. The dividend came along several years later, with various justifications. Many people have the misimpression that the earnings of the fund can only be used for dividends. In fact, the Legislature can treat the fund’s earnings like any other state income. In the fiscal year that closed June 30, those earnings totaled $1.6 billion. Only the principal of the fund, which is now greater than $40 billion, is off limits to appropriation by the Legislature. For the moment, the Legislature has approved a formula that roughly averages the most recent five years of earnings and then divides by two to arrive at the amount it will spend on dividends annually. But there’s nothing sacrosanct about that formula. Alaskans will have many arguments about the precise moment when it makes more sense to use the earnings of the Permanent Fund to support their governments than it makes to put the money in our personal pocketbooks. It’s not a topic that politicians like to discuss. However, that day could be approaching if things don’t turn around in the oil patch. The state’s budget is already on the edge of imbalance and many local governments are struggling to make ends meet. As we marvel at the fact that the government pays us to live here today, we should keep in mind that things are looking different tomorrow.

Commentary: Markets perk up in August, but storm clouds still loom

After a very rainy July we have had a better August here in Anchorage. The markets also perked up this past month as stocks gained 2.3 percent in the U.S. That puts the S&P 500 up 13.5 percent year to date. Overseas the EAFE index of developed countries gained 2.7 percent and emerging equity markets lost 0.3 percent in August. European equities have snapped back on hopes of an ECB bond buying rescue package for Spain and others. Greece still looks like a goner to us. Bonds lost a bit of their luster. The 10-year Treasury jumped 10 basis points to yield 1.55 percent. Still, the Federal Reserve is more worried about unemployment (8.1 percent) than inflation (1.4 percent year-over-year). Other central bankers tend to agree. We are in the midst of a global easing cycle to combat subpar global economic growth. Interest rates remain close to all time lows. In so far as the outlook for the rest of the year; think cloudy with a chance of showers. The macro and political environment is quite uncertain. Despite this, stocks have been on a roll climbing the proverbial “wall of worry” so far in 2012. We expect the markets to be more challenging in Q4. The death of equities? The PIMCO bond king, Bill Gross, noted last month that “the cult of equities was dying” and that stocks would be poor performers going forward. Was he just “talking his position” (bonds) or is he on to something? It’s probably the former. GMO, an asset allocation firm par excellent, expects real returns to equities to be about 3.5 percent over inflation over the next 7 years which is down from their historical 5.5 percent average. They believe that nothing has fundamentally changed about the return generating ability of equities, but rather they are a bit overvalued now owing to very high, and unsustainable, profit margins. Still, stocks will beat bonds and cash by a long shot. There’s nothing certain in life except for death and taxes. Taxes are scheduled to rise in 2013. Investors might consider thinking about 2012 tax planning (sell appreciated investments now or later?) in light of this. We should get more clarity after the November election. Here is a summary of some key considerations from Barron’s: If the Bush era tax cuts expire, this would bring a spike in tax rates for most investors and those in higher income brackets. The ordinary income tax rate for the top earners would rise to 39.6 percent from 35 percent. That ordinary income tax rate will once again be applied to dividend income, eliminating the current rate of 15 percent. The tax on dividends would be equivalent to your ordinary income rate, anywhere from 15 percent to 39.6 percent. The rate for long-term capital gains is scheduled to rise from 15 percent to 20 percent. On top of those increases, a new 3.8 percent Medicare contribution tax will take effect in 2013 to help pay for Obamacare. That tax is imposed on investment income for individuals earning more than $200,000 a year or households earning more than $250,000. While a return to Clinton era tax rates would affect most investors, there are plenty of cases in which there are no tax benefits to selling. Owners of tax-deferred accounts such as IRAs, workplace retirement accounts, and annuities aren’t immediately affected by the tax increases, since investments in those accounts aren’t taxed at all until the money is withdrawn. If Congress takes no action in the coming months, the maximum estate and gift tax exemption will fall from $5.1 million to $1 million and estate and gift tax rates will jump from 35 percent to 55 percent. Our 70,000 page tax code is complex. Perhaps the best advice is to see your friendly local neighborhood tax expert and financial planner well before year end.   Jeff Pantages, CFA, is the chief investment officer for Alaska Permanent Capital Management, a $2 billion investment management and advisory firm located Anchorage.

Editorial: Obama, media friends are an embarrassment after 9/11 attacks

It has been a difficult week for those of us deeply concerned about our national security and the safety of our fellow Americans risking their lives as soldiers and diplomats around the world. And for those of us who still believe our chosen profession of journalism demands holding those in power accountable, it has been downright discouraging. As an al-Qaeda flag flew over our Egyptian embassy in Cairo and an affiliated group of terrorists attacked and murdered our Libyan ambassador along with three other Americans on the 11th anniversary of 9/11, President Barack Obama’s lapdog media were in a quandary. Blaming former President George W. Bush — as Obama and the mainstream media do for pretty much everything — wasn’t an option. Even Obama’s acolytes in the press couldn’t spin it that way given the situations in Libya and Egypt are wholly owned by the current administration that toppled those governments in 2011 and handed them over to roving bands of militias and the Muslim Brotherhood. Inspired by the ease with which American outposts had fallen on Sept. 11 — the real video that sparked the mayhem — violence spread to more than 20 countries from Algeria to Indonesia while Obama skipped his intelligence briefing on Sept. 12 to head off to yet another fundraiser, this one in Las Vegas. So with blaming Bush out, and blaming Obama forever out of the question despite mounting evidence of his incompetence, inattention to his duties and foreign policy failures, the dutiful media settled on the next best thing: Blame Mitt Romney. Romney, you see, had the temerity to issue a statement blasting the weak-kneed statements of the U.S. Embassy in Cairo, whose Twitter feed had issued and then stood by its condemnation of some film mocking Mohammed even as the American flag was being torn to shreds by a Muslim mob. The embassy did issue a perfunctory statement against the violation of our sovereignty, but that came alongside a full-throated denunciation of an American exercising his First Amendment rights that equated the actions of a mob to the act of free speech. Rather than ask the most basic questions on Sept. 12 — such as why our Libyan consulate and ambassador lacked even basic security despite coming under repeated attacks over the last several months, or why it had not been ensured the Cairo embassy would be protected by Egyptian forces with advance warnings of the impending attack — the vast majority of the media spent the entire day attacking Romney. You’d have thought Romney was actually the president the way his response to the 9/11 attacks was dissected by the press, who were caught on an open mic coordinating their questions to the GOP nominee but still asked the same question at least five times. Of course, they couldn’t ask anything of Obama, who issued a half-hearted statement about the attacks from the Rose Garden Sept. 12 and took no questions before jetting off to Vegas. Politicians can be expected to be politicians, and now, sadly, the media can be expected to do whatever they think is necessary to get Obama reelected. Sure, the media can be expected to carry water for liberals on their favorite social issues like gay marriage, but now we’ve learned that even American deaths overseas cannot shake the media’s infatuation with this president and their desire to protect him at all cost. With few exceptions, the media has been an embarrassment since the 9/11/12 attacks. They have continued to assert the violence is all the result of the Mohammed video — echoing the central talking point from a White House that can’t afford to be seen as weak on foreign policy less than two months from an election, and after spending its entire Democratic National Convention spiking the football over killing Osama bin Laden. U.N. Ambassador Susan Rice also beclowned herself on all four Sunday morning talk shows on Sept. 16, continuing to claim against all available evidence that the murder of our Libyan ambassador was part of a spontaneous uprising over the film. The mainstream, leftwing press has also stood idly by with barely a murmur of dissent as the White House admitted it asked YouTube to review the Mohammed video to see if it violated the terms of use, and federal agents began investigating the filmmaker for potential probation violations. In fact, rather than simply stand by, as contemptible as that is, the press has eagerly jumped into the fray by publishing the filmmaker’s name, his address and photos of his home. Local law enforcement arrived en masse for a midnight knock on the filmmaker’s door and took him in for questioning while covering his face because the White House and its media accomplices have now put this man and his neighbors’ lives in jeopardy. Dutch filmmaker Theo van Gogh was shot eight times, nearly decapitated and stabbed in the chest in broad daylight in Amsterdam in 2004 for the “crime” of offending Muslims. That doesn’t seem to matter to the media doing the White House bidding. But hey, did you hear the story about Romney’s dog?

Focusing on business big and small during August recess

The August congressional recess is an excellent opportunity for me to head home for the month and talk to Alaskans about their needs, concerns, and what they want to see from Washington and Congress. I spent my time seeing familiar faces over the long summer days, meeting with local community and business leaders, barbequing with family and friends, and discussing the issues most important to our unique state. It made for an informative and warm homecoming. My staff and I also set out on our “Growing Alaska” tour where we sent both Alaska and Washington-based staff to hold mobile office hours and meet with local businesses and community leaders from Ambler to Kodiak. As a team, we visited more than 60 communities and met with hundreds of people. One of my first trips in August was to Cold Bay on the Coast Guard cutter Bertholf. The Bertholf is a critical piece of the Coast Guard’s Arctic Shield mission which will increase its presence in the Arctic, an indication that Alaska’s northernmost shores are seeing more traffic and more development. Sen. Murkowski and I were pleased to join Coast Guard Commandant Admiral Robert Papp, Sen. Mary Landrieu, D-La., and Homeland Security Secretary Janet Napolitano on the Bertholf for an overview of the Coast Guard’s critical role in our state. Alaskans everywhere tell me they want to see Alaska’s vast resources developed and developed responsibly. As I write, Shell’s rigs are preparing to begin drilling operations in the Beaufort and Chukchi seas, and I am confident we will see that responsible development Alaska is known for moving forward in the Arctic. In Anchorage, I held a roundtable discussion with local business leaders and job creators to discuss potential markets, particularly Hawaii and Japan, for Alaska’s rich supply of natural gas. I was joined by representatives from the governments of both Japan and Hawaii, as well as local leaders from industry. While still in its early stages, I am eager to further discuss this idea. Hawaii understands, like Alaska, that as non-contiguous states, the cost of energy and the cost of bringing resources to our communities is greater and more complicated than in the Lower 48. Exploring future uses of Alaska LNG is important as we look for ways to reduce costs and use more domestic energy supplies. The Growing Alaska tour was successful as my staff and I talked to small business owners and operators across the state about what’s working and not working when it comes to growing, expanding and hiring more workers. We saw some amazing success stories in every community, and in many areas the importance of getting broadband Internet to our schools and towns was a hot topic. To explore solutions to these challenges, I invited Federal Communications Commission Commissioner Jessica Rosenworcel to Alaska to meet with educators, Alaska Native leaders, and state and local officials. One point became clear: when it comes to Alaska, a one-size-fits-all approach from the federal government just won’t do. I thank Commissioner Rosenworcel for her in-depth understanding of the various telecommunication obstacles in our state, like lack of roads and infrastructure. I’m looking forward to working with her and the FCC to expand telecom services to every corner of Alaska. The rich, unrivaled culture and kindness of Alaska was apparent everywhere the Growing Alaska tour stopped. Alaskans welcomed my staff with open arms and proudly showed them their towns. From community libraries to student art projects made of marine debris, Alaskans prove their resourcefulness and creativity again and again. In Nome, there are thriving small businesses and impressive progress being made on the new hospital (which kindly housed my staff during flight cancellations). In other communities we saw the unique and creative ways that Alaskans have found to deliver health care. At the Glennallen chiropractic clinic, which functions as an overall wellness center with classes for disabled children, Sheila Hay also runs a successful smoothie and organic food shop. Its success highlights the importance of preventative care and the vital role our small businesses play in our state. We also saw progress in the way the state receives energy. In Cantwell, my staff saw firsthand the windmills financed by the Recovery Act which now power Cantwell’s tribal hall. Similar efforts to diversify our energy sources are being seen on Fire Island, where Cook Inlet Region Inc. is putting in a wind farm, just outside Anchorage. To highlight Alaska’s commitment to energy independence, I invited Sen. Ron Wyden of Oregon, a top member on the Energy and Natural Resources Committee in the U.S. Senate, on a tour of Fire Island’s new wind turbines. This was followed by an in-depth discussion on our Bipartisan Tax Fairness and Simplification bill. The bill will reduce tax rates for individuals and families and keep it simple and fair for Americans. A highlight of the bill is the use of one, easy tax form which is clean and simple, whether you’re a billionaire or a middle class American. It was a busy and productive month. I look forward to seeing you on another trip home soon. Mark Begich is the junior U.S. Senator from Alaska.

EDITORIAL: Alaskans do their part to help economic climate

Although some candidates no doubt disagree, Alaskan voters got it right Aug. 28. Only 24 percent of the electorate turned out to vote on one of the last beautiful days of summer, but those who made it to the ballot box did their part to prevent negative impacts on the state business climate. By a resounding margin of nearly 2-to-1, voters rejected Ballot Measure 2, a 15-page initiative to create a new coastal zone management program to replace the prior regime that expired in 2011 when the legislature failed to renew it. Better than residents of any other state, Alaskans understand the obstacles thrown in our path from the federal government. To cite just a few fresh examples: The Environmental Protection Agency has slapped expensive new fuel standards on the transport companies and cruise ships that play a critical role in our economy, threatening to raise the cost of everything we consume and the cost for tourists visiting our state. The Interior Department has just withdrawn half of the National Petroleum Reserve-Alaska from development and chosen an alternative that may make construction of a pipeline from the Chukchi Sea to the Trans-Alaska Pipeline System extremely difficult. Most recently, the U.S. Army Corps of Engineers decision to delay a final record of decision on the environmental impact statement for Point Thomson will cost the state as many as 1,000 construction jobs this winter alone if the agency does not stick to its previously promised late September deadline. Nevertheless, Alaskan voters weren’t buying the argument that by failing to pass Ballot Measure 2 we were ceding our destiny to the federal government. Passing the measure would have only given a host of new tools to the litigious green groups to challenge permitting decisions or whether the eventual regulations comply with the intent of the initiative. We can’t blame backers of the measure for being frustrated with the legislature’s failure to extend the coastal zone management program, and we commend their effort to put the measure before voters, but if they want to effect real change in Juneau they’ll have their opportunity Nov. 6. The ballots still aren’t fully counted, but we were heartened to see the narrow margin in the decision over Ballot Measure 1, an initiative to allow cities and boroughs to raise the property tax exemption from the current $20,000 to $50,000. As of the most recent count Sept. 4, the “yes” votes were ahead by a mere 284 votes out of 115,774 ballots counted with absentee votes still being tallied. The result of local governments raising the property tax exemption would shift budget burdens on to businesses and renters, impacting job creators and those of lesser means who are typically pinched by high costs in low vacancy areas already. While it would certainly seem to serve self-interest to vote to lower taxes on yourself and higher taxes for others, no matter what the final tally eventually is we were glad to see so many Alaskans choose the greater good over their own. It’s a lesson our elected officials would do well to take to heart.  

After August in Alaska — A full mind and a happy heart

I can’t decide whether I am the luckiest woman in Alaska or the luckiest person in America. I have just had the best 30 days anybody could have in any place ever. I have been home. Home in Ketchikan where people know my family well. In Metlakatla where when the planes don’t fly and you just deal with it, or ask somebody to take you to the airport in Ketchikan in their boat and they don’t think twice about doing it. And they call ahead to the airport to tell Alaska Airlines to hold the plane because they know the guy who works the gate. In Barrow when the sun is up so high in the sky at 11 p.m. that you feel like bedtime is a catnap in the afternoon sun. In Kaktovik, where you buzz the coastline looking for polar bears but the only one you see doesn’t move cause he’s so satiated from gorging on a ring seal that he ate for lunch (taken from a fish camp that we just visited) that he can’t move. Flying over the North Slope in a helicopter, a land that is more water than terrain, walking on the tundra that is like a magnificent sponge filled with color and water and delicate flowers. Talking with whaling captains about their ice cellars that are thawing and worrying about their food security yet anxious for more development in the Arctic as it means job security. Then down to Kodiak with the Coast Guard — everyday heroes who are there for Alaskans day in and day out. We flew out to the brown bear refuge on the island and stalked a stream to come upon a sow and her cub relaxing in the sun. We were the intruders in her world and kept a respectful distance. Kodiak is indeed the Emerald Isle. Cold Bay was the next outpost, made even more so since the only fuel source (the truck from Frosty Fuel) was out of commission. We flew out to a national security cutter in the Bering Sea and all I could think of was that these were the waters that my boys fish in. I was proud of them and afraid for them at the same time. These are big waters. I visited big bears the following day in Katmai National Park. An old boar nicknamed “Ugly” showed us how real bears fish. In Kenai I spent the day with 80 kids from military families and shared their delight as they caught humpies and silvers in the Kenai River. For many, it was their first fish ever. Verne and I flew out to Healy Lake for a celebration of life for a WWII vet and trapper who’s lived in the Interior since the 40s. A beautiful tribute to a wonderful man, complete with 21-gun salute, military flag ceremony and bowling balls shot from the canon into the stratosphere. He would have loved it. The quiet at Healy Lake in the morning was amazing — your ears absolutely rang because the quiet was so intense. Intense and beautiful is the best way to describe the Aleutians trip. Flying in a C-130 for almost 6 hours from Anchorage to Shemya. A true outpost. Flat, 2 miles by 4 miles, old buildings from WWII next to buildings housing missile defense assets. Brave souls made the “double dip” — swimming in the Pacific and then running around the cove to jump into the Bering Sea. Not me. We took the helicopter 30 minutes out to Attu — the end of the chain, directly under Russia and on its own time zone. No inhabitants on the island since 2009.  Amazingly beautiful with mountains straight up into the sky, lovely harbors and beaches and streams with fish so thick you could walk across. We helped erect a monument to the Natives who had been captured by the Japanese during the war and later interned, never to return to Attu. For an island that gets rain almost every day of the year, we had blue sky and calm winds as we ate lunch on the mossy, pillowy tundra. Adak almost seemed like civilization after Attu. Buildings and people (just over 100) were outnumbered by caribou (3,500). These three Aleutian communities are like a forgotten world, left over from the war. Amazing history. Verne and I spent our 25th anniversary at Winterlake Lodge on the back side of Mt. Susitna. The floatplane trip out was like a science class as our pilot told about the land formations and topography. Chena Hot Springs was yet another reminder to pay attention to science.  Bernie’s place is the land of possibilities and big ideas. Next year he will have bananas growing in his greenhouse! I felt like a Japanese monkey floating in the mist of the hot springs, alone on a Sunday morning before the crowds came to talk about geothermal, hydrogen and methane. In Kenai I ate graham crackers soaked in liquified natural gas to demonstrate how safe it is and then went offshore on an oil/gas platform in Cook Inlet to see where the stuff comes from. Instead of going to Tampa for the convention, I went to the Yukon River where the air is clear and the people there are focused on energy and food. Pretty basic stuff. In Beaver, a village of 70, the students danced and were shy and proud. The tables were filled with food that people had brought to share. It was obvious that those who had the least brought the most to share. Stevens Village was equally small, with big ideas about governance. Tanana is proud of their innovation with biomass and how they have brought down energy costs and created jobs. Yet, they have a new cafeteria at the school that has never been used as they wait for funding for a cook and lunch program. Our pilot (the best I’ve ever flown with) flew at about 400 feet throughout the region following the Yukon as he navigated weather. What a way to see the country. Ruby was nestled in the high bank of the river, lovely even in the rain. Tales of domestic violence and suicide marred the natural beauty of the area. In Galena we were greeted at the airport by my old friend Sidney Huntington, now 97. He’s still driving and conceded to go live in the elders facility because his wife told him she was done cooking for him. He has only made it through the third grade and is passionate about education. He has spoken at every graduation in Galena since 1973 and attends every basketball practice and game at the school. His sister is 93 and looks about 65. Good genes. Downriver we were in Kaltag, Grayling and Holy Cross. At each village the sun came out when we landed and as we were leaving the rain started to fall. After the third village it almost seemed beyond coincidental. The history of early Alaska was still present, from the mining in Ruby and sawmill in Kaltag to the old missionary church in Holy Cross. Pictures of horses and cows in Holy Cross was a reminder of how little outsiders understood the area at the time. Now it’s moose and fish again. The kids are learning their Native languages and dancing while taking pictures on their cell phones. I spent Friday evening at home in Anchorage by myself making rhubarb chutney from my plant that came from our old house.  It was good to make something from something that I grew. As I cut and stirred I reflected on all the places and people I had visited over the past 3 weeks. I am truly overwhelmed by the generosity, the warmth and support that I find. I have never received so many hugs from total strangers who greet me like a sister. And oh, the places I’ve been! Majestic, awesome, breathtaking. There are no adjectives to sufficiently describe a wilderness like Attu, Teshekpuk, the Yukon tributaries. My mind is full and my heart is happy. The only sadness I have is that in order to experience this amazing place I call home, I have to leave it. From back to D.C. and then to a conference in Iceland before it’s back to work here where people call me by my title rather than my first name and we exchange handshakes rather than hugs and talk politics rather than things that really matter, like family and food. I’m blessed in so many ways, but it’s times like this when I realize that I walk in several different worlds. Glad to have you all anchoring me to the world that really matters.


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