Commentary: First oysters growing at Ketchikan mariculture operation

The OceansAlaska Marine Science Center has barely opened its doors and tiny oysters are already growing out at the new floating facility at George Inlet in Ketchikan. The 28-acre site was granted to the non-profit by the state and Ketchikan Gateway Borough in 2006. The Center houses the first home grown source of oyster “seed” for Alaska growers, and aims to be the go to place for mariculture research and training. There are 29 shellfish farms producing in Alaska so far in Southcentral and Southeast regions. The main crop is oysters, with sales valued at about a half million dollars last year. No shellfish farm applicants have ever come from Westward regions of Alaska, said Cynthia Pring-Ham, state mariculture coordinator. “I could sell all the oysters I could possibly produce and could double sales tomorrow with just a couple of phone calls, especially in New York. There is a lack of production throughout the country,” said Tom Henderson, OceansAlaska mariculture director, and a long time oyster farm near Kake, Henderson said the Center will begin working on geoduck mariculture projects and “then get into other things, among them seaweeds.” Seaweed is the second largest aquaculture industry in the world, second only to freshwater fish. Kelp is a multibillion dollar industry in Japan, and Henderson wants to work with the traditional, local black seaweed which he said tastes better than the Japanese nori, popular in sushi rolls Economists believe expanding mariculture just in Southeast Alaska could easily increase the industry’s revenues over time from the current $7 million to more than $100 million a year. Australia produces 80 million oysters a year worth $40 million; New Zealand’s government-funded mussel industry went from $15 million to over $100 million in 20 years, and scallop farming at Prince Rupert and Prince Edward Islands in Canada is a $60 million industry. See more at www.oceansalaska.org.   Catching small crabs Alaska’s most far-flung fishing fleet plans to catch lots of “small crab for a cause” when the golden king crab season gets underway next month. Golden kings are caught in deep waters along the 1,200 miles of the Aleutian Chain, a part of the Pacific “Ring of Fire,” and the westernmost region of the United States. Goldens are Alaska’s most stable king crab stock, with a harvest this season of 6.2 million pounds. The remoteness of their home turf, however, prevents managers from surveying the stocks as often as they’d like. To safeguard the fishery, the fleet of five to six boats voluntarily uses gear with larger mesh than required by law to make sure all small crabs can escape. And therein lies the problem. “By designing their gear to avoid juvenile crab during the commercial fishery, the information you get indicates there are no small crabs down there,” said Denby Lloyd, science advisor for the Aleutian King Crab Science Foundation, a harvester group. “To assess whether the population is in a productive cycle or not, you have to use a different method, such as the one in this project.” To help solve the riddle, the fleet will use 20 test pots made with small mesh to capture the juvenile crabs. Alaska Department of Fish and Game scientists will a collect the data and return them to the sea. “The fleet has a very stable fishery and they want to make sure it remains that way, as well as grow the harvest opportunity,” Lloyd said. “By using the commercial fleet directly it minimizes costs for the state and federal government and everyone benefits from the data.” Tracking golden king crab is tricky, no matter how it’s done. The crabs are down 1,800 feet or more and live amid steep underwater mountains. To prevent crab pots from tumbling down cliffs and getting lost, the fleet attaches them to longlines, “Rather than fishing one pot per buoy like other crab fisheries in the Bering Sea, the Aleutian fleet attaches 20-30 pots to a to a line that can be retrieved,” Lloyd said A $25,000 grant from the Bering Sea Fisheries Research Foundation paid for the test crab pots. The Aleutian Islands golden king crab fishery begins Aug. 15 and can run through February.   LAPP lapse IFQ holders will have a tougher time with any appeals issues and it will all be dealt with long distance. The laws that govern fishing limited access privilege programs, or LAPP, include an appeals process for fishermen who are eligible to receive shares of the fish. LAPPs are basically limited entry programs such as Individual Fishing Quotas (catch shares) for halibut and sablefish and Bering Sea crab. “It’s nothing new to Alaska. It’s been happening for over 30 years with the Alaska limited entry commission,” said Phil Smith, a retired limited access manager at NOAA Fisheries in Juneau. Among other things, Smith devised the appeals process for IFQ programs that began in Alaska in 1995. “That was a massive program with 8,000 applicants and built into the system was an administrative appeals process to make the determination if people were not eligible for any IFQ, or for as much as they wanted. There was a formal opportunity for people to appeal in the Juneau office at NMFS where they were treated fairly and got full due process. We handled hundreds of such appeals, some frivolous, some with merit,” Smith said. But the IFQ appeals process has changed. Two years ago the Alaska office was “centralized” and moved to federal headquarters in Maryland. At the same time, the new National Appeals Office devised a new list of regulations to govern the process. Smith called the new rules “punitive and non-user friendly” and said “it puts total control into the hands of a far away adjudicator.” Public comment on the appeals process ended June 9 and it may or may not make it to the law books. Smith said his advice is to pay attention. “I know the halibut charter catch share plan is coming down the pike... That is going to bring rise to certain entitlements and appeals — there always are with these things — and I would think that all of us in Alaska want our fishermen to be treated as fairly as possible.”

Editorial: King closures expose double standard on bycatch

A fisheries management nightmare is playing out across the state caused by weak king salmon returns. The social and economic harms have yet to be calculated, although we have no doubt they are immense. Sport and subsistence king fisheries have been shut down. The East Side setnetters on the Kenai and Kasilof rivers have been shut down as sockeye surge past the beaches. Commercial chum salmon runs in Western Alaska have been restricted and new fishing gear required — all to avoid killing any king salmon. Meanwhile, the Gulf of Alaska pollock fleet is about to hit the waters with an allocation of 14,527 king salmon as bycatch for the C and D seasons that begin Aug. 25 and Oct. 1. The Bering Sea pollock fleet, with until Oct. 31 to catch the rest of a 1.2 million metric ton quota, still has an allocation of 17,741 king salmon remaining as of July 14 with one-third of the harvest to go. To be clear: this is not meant to be an attack on the pollock industry, which is without question an important part of the Alaska economy. The Journal is not anti-pollock or anti-trawl fleet. What we are is pro-accountability, and in this time of extreme conservation measures nobody can escape their fair share of it. We find no fault in the fleet advocacy on behalf of its membership, which has entirely legitimate arguments. For instance, ocean conditions could naturally have a greater effect on productivity than interceptions, and it is true that the amount of salmon bycatch is indeed miniscule compared to the 1.2 million metric ton quota of pollock in 2012. However, consider the “bycatch” of king salmon taken by the East Side setnetters (which really isn’t bycatch because it can be commercially sold while pollock fleet takes cannot). In 2011, this group of setnetters caught more than 2 million sockeye compared to 8,356 king salmon, or a rate of 0.4 percent. Like the Bering Sea pollock fleet, that’s a pretty low rate, but they are still shut down because indications are not even the minimum escapement will be met for kings on the Kenai. King salmon conservation measures cost the setnetters about 500,000 sockeye from their historical split in 2011, or about $4.5 million in dockside value, and the 2012 closure to the East Side setnetters could wind up costing this group $20 million. The potential harm often cited by the pollock fleet in fighting against bycatch controls certainly stands in stark contrast to the very real economic devastation now being felt by salmon fishermen of all types around the state. While we don’t quarrel with the pollock fleet’s right to advance its interests, with its advocacy comes the need to either downplay or deny any impacts of bycatch on Alaska salmon runs. Again, this is their job, but their interests don’t always coincide with the public interest. This is where the federal regulators on the North Pacific Fishery Management Council are supposed to play their role. While drawn by design from industry stakeholders, their job is not to vote a constituency, but to use their knowledge of the fishery to make an informed decision. It is not an unreasonable observation that the trawl fleets for both pollock and groundfish wield major — and often decisive — clout at the council when it comes to management of salmon, halibut and tanner crab that are prohibited species catches for them. Nor is it unreasonable to note the glaring contradiction inherent in directed users being barred from even catching and releasing a single king salmon while a prohibited species user group catches them by the thousands. It may be true that the marine environment is a greater force than the pollock fleet in salmon abundance, but that only makes conservation of the kings that are out there more important. To argue that bycatch is not significant at a time of low productivity is to simultaneously ignore the disproportionate impact bycatch can have in such a period as well as the conservation burden now being borne by the direct users. The pollock fleet may argue that it isn’t practical or realistic to even consider shutting down their fishery as a conservation measure. A few months ago, the East Side setnetters would have probably said the same thing.

D.C. must deliver on nation's priorities — jobs, transportation, energy

Bashing Congress for its inability to get things done has been an American pastime for the 236 years as a nation we just marked on Independence Day. Now, in my fourth year as one of Alaska’s U.S. senators, I share Americans’ frustrations with Washington, D.C., being out of touch and seemingly unable to address our country’s enormous problems. So it comes as a pleasant and little noticed surprise the U.S. Senate in recent months actually has passed significant legislation which – if the House will only vote on several backed-up bills – will create millions of American jobs, including for Alaskans. The most important is reauthorization of funding for America’s transportation facilities – highways, bridges, ports and ferries. In March, the Senate on a 74-22 bipartisan vote, agreed to invest $109 billion into the nation’s deteriorating transportation network, supporting 2.9 million jobs. The measure is especially important for Alaska by paying for $1 billion worth of projects over the next two years, which will create or protect nearly 19,000 Alaska jobs. I was pleased to ensure key provisions for Alaska were included, such as nearly $50 million annually for rural roads, Denali Commission reforms, $67 million for ferries and van-pooling incentives. Our congressional delegation, led by Congressman Don Young, worked hard to protect $31 million for the Alaska Railroad, which some misguided senators had proposed eliminating. After refusing to act for four months, the U.S. House finally passed the transportation bill in late June, sending it to the president for final approval. Fortunately for college students across the nation, the House also agreed to the Senate-passed extension of affordable student loans. With the interest rate scheduled to double on July 1, final congressional action means loan rates will remain at 3.4 percent. As the former chair of the Alaska Student Loan Corporation, I worked hard to prevent the rate jump, which would have cost thousands of students in Alaska and across the country an additional $1,000. Another significant jobs measure is the Farm Bill, which supports 2.9 million jobs while cutting many bloated farm subsidies. For Alaskans, the fully paid for bill protects essential rural water and wastewater projects, expands disaster loans to shellfish and finfish harvesters and ensures that 91,000 Alaskans who rely on federal nutrition assistance remain healthy. In April, Senate Republicans and Democrats overwhelmingly passed comprehensive reform of the Post Office, which is losing billions of dollars. I fought hard to prevent the closure of 31 Alaska post offices and against an effort by Arizona Sen. John McCain to eliminate our Bypass Mail Program, which preserves the critical link to rural Alaska. Our bill puts the Post Office on solid financing footing. Yet another significant bill passed by the Senate this spring was the Violence Against Women Act. This landmark legislation funds efforts by communities and local law enforcement to prevent domestic violence. Shamefully, Alaska leads the nation in rates of domestic violence and child abuse. That’s why I fought to ensure Alaska tribes retain their authority to deal with domestic violence. I also have introduced separate legislation to create demonstration projects in nine Alaska villages to give rural communities more tools to fight alcohol, drug and domestic violence cases. Despite the enormous jobs-creating and other beneficial provisions, the Farm Bill, Post Office Reform and Violence Against Women measures remain bottled up in the House. We senators have been able to find bipartisan compromises to address some of the nation’s problems, so I’m hopeful House members will deliver for their constituents. In coming weeks, the Senate will be focused on growing the economy. First up is a measure to provide incentives for small businesses to add jobs. Economists say our proposal – a 10 percent income tax credit on new payroll – will help small businesses add new workers. We also want to crack down on companies out-sourcing jobs abroad. Our Bring Jobs Home Act provides companies a 20 percent tax credit for costs associated with returning jobs to America and eliminating tax loopholes for those who ship jobs overseas. Congress must work across party lines to get America’s economy moving again. Mark Begich is the junior senator from Alaska.

Editorial: Note to Politico: Fairbanks isn't 'nowhere'

The State of Alaska received welcome news at the end of June when Congress agreed on a two-year surface transportation bill that largely preserved annual federal funds for the Alaska Railroad Corp. Under the Senate version passed in March, the railroad was in danger of losing $30 million of the $36 million annual Federal Transit Administration funding it has received since 2006. The potential loss of funding put everything from hundreds of jobs, passenger service and the ability to repay $137 million in capital improvement bonds at risk. Well, Rep. Don Young was appointed to the conference committee and he won back nearly all of the funding cut, securing $31 million annually for the Alaska Railroad that will allow the company to continue capital projects, pay its debts and preserve passenger service. Apparently that didn’t sit too well with those ever-vigilant budget hawks at Politico, a Washington, D.C., news organization that started off as a relatively balanced outfit but is now indistinguishable from the rest of the left-leaning media who run interference for Democrats and President Barack Obama. In a July 10 piece headlined “Don Young’s Railroad to Nowhere,” Politico described the FTA funds as a “cash gusher” for the railroad and that Young pulled off a “trick” to preserve the money despite the House of Representatives ban on earmarks. This of course will come as news to the insulated cocoon of D.C. reporters, but Fairbanks isn’t nowhere. Denali National Park isn’t nowhere. Neither are Seward or Anchorage. It also may come as news to the crack Politico team that contrary to their reporting, the FTA funds are not dedicated to “mass transit” or “commuter” rail. The authorizing legislation requires an entity to be a “local government authority” — which the Alaska Railroad is — and that it offer “public transportation” — which it does. And in terms of bang for the buck, the Alaska Railroad delivers by supporting the state supply chain carrying jet fuel to our military bases and international airport, and transporting coal exports that reduce our trade deficit. The railroad is vital to deploy our military, and while the Politico hacks may scoff at the tourists who ride it, they represent hundreds of thousands of foreign visitors who come to this country to spend far more money than Congress just appropriated. Meanwhile, these same jokers at Politico reassure us that based on their review of $16 billion in Department of Energy loan guarantees that were part of the 2009 stimulus bill that didn’t stimulate anything but the national debt clock — “it’s too soon to judge the success or failure of most of the 26 projects that received aid.” That’s some hard-hitting stuff right there. That information came in an article reporting on Abound Solar, which went bankrupt last month after receiving a $70 million loan guarantee from DOE. This follows on the collapse of Solyndra, Obama’s poster child for green energy loans — coincidentally owned by Obama bundler George Kaiser — after it received $535 million in DOE loan guarantees. Then there’s Fisker, which has received $193 million from DOE to build a hybrid sports car. The company has laid off 100 workers around the country in an effort to get more of that sweet, sweet DOE cash because so far it has missed all its sales and development milestones. When Consumer Reports tried to evaluate the Fisker Karma (a deliciously ironic name, no?), the car wouldn’t start. So while it’s “too soon to judge” a DOE program that blew $800 million tax dollars on just three companies, Politico turns its fire on Young and the Alaska Railroad to make a cheap headline out of easy targets. Nevermind you could run the Alaska Railroad for 25 years with the amount of money Obama’s DOE has blown on three companies in less than two. Thanks to Young, the Alaska Railroad will still be here in 25 years. Solyndra won’t be, even though we’ll probably still be paying interest on the debt that funded this and every other “green” fiasco funded by the current administration. The only thing going nowhere is Politico’s credibility.

Commentary: Debris survey under way; salmon product smoothes skin

Marine debris trackers are taking to the air any day to get a better idea of where and what is washing ashore from last year’s devastating tsunami in Japan. Best “guesstimates” claim at least 1.5 million tons of debris are afloat on and under the current driven waters that routinely cover Alaska coastlines. The State has funded a $200,000 systematic aerial survey by Airborne Technologies Inc. of Virginia that will span waters and beaches from Cold Bay to Ketchikan to get a more complete view of the debris problem. “That should give a good picture of where the debris is concentrated and some idea of the makeup and quantities of it,” said Merrick Burden, executive director of the Marine Conservation Alliance. “That allows us to have the next conversation about what is it we are really talking about — is it a $1 million or a $40 million problem? Then we can start putting together a plan of attack. Right now we don’t have that level of information.” The MCA Foundation took the lead on debris tracking and radiation monitoring efforts in January when sightings began appearing a year earlier than expected. The group deployed experienced clean-up contractors over several months to multiple beaches at Sitka, Craig, Yakutat and Kodiak where debris was most likely to hit first. A report released last week said while heavy snow was a hampering factor in all regions, seven trips to Craig showed patterns of early debris; 12 trips to Sitka yielded 1,600 pounds of mostly Styrofoam debris, and 34 percent of the debris found in June was tsunami related. At Yakutat, in 10 trips, the crew hauled away 95 large Styrofoam blocks and 52 floats, along with 48 large black buoys; seven trips to Kodiak were foiled by bad weather. No radiation was detected at any of the Alaska sites. The amounts of Styrofoam are very worrisome, Burden said, because it breaks up into tiny particles that look like food and can be deadly when it accumulates in fish and birds. Much of what is coming ashore now are lightweight, wind driven objects, but many unknowns are riding below the surface. “What we do know is that it will be a different type of debris,” Burden said. “The next level will be more submerged and we don’t know what it will be, although it is likely to be docks and things of that nature like we have seen on the West coast. The third category should be almost entirely underwater and driven by currents. That will be something else entirely.” Meanwhile, questions remain over who will fund further debris monitoring and clean up efforts. “When it comes to the state and federal response, we see a bit of a road block,” Burden said. “There is an information gap that needs to be filled. Right now we have a lot of questions about the scope of the debris problem. With the aerial survey we can acquire enough information and data to put together a plan and that should get things moving.” The MCA Foundation plans to begin a “hot spot” clean up in Alaska by mid-September. Mariners can report debris sightings and see pictures of cleanup efforts at www.facebook.com/seaalliance. Find the marine debris report at www.marineconservationalliance.org.   Deadline sticks Fishermen and Alaska Native groups are jubilant at the Environmental Protection Agency’s refusal to extend the 60-day public comment period on its draft watershed assessment of the Bristol Bay region beyond July 23. The extension was requested by the Pebble Partnership and had the support of the Parnell administration. The EPA said in a draft assessment in May that the possible failure of a dam holding waste from a large scale mine near the headwaters of the world’s largest sockeye salmon fishery could wipe out or degrade rivers and streams in the region for decades. Since then the agency has held hearings in six Bristol Bay communities, as well as in Anchorage and Seattle. Nearly 2,300 people attended the meetings and provided more than 450 oral testimonies. More than 90 percent of the people at the Bristol Bay region meetings supported the watershed assessment and the current timeline, according to Bristol Bay Native Corp. “We commend the EPA for recognizing that further delay would not be beneficial,” said Jason Metrokin, President and CEO of BBNC. “It was the right thing for EPA to stay with their original timeline. There is overwhelming support for the Watershed Assessment,” said state Rep. Bryce Edgmon, who represents the region in the Alaska Legislature. Senator Lisa Murkowski was not pleased. She said in a press release that the July 23 deadline “doesn’t allow for Alaskans to offer their comments because of the busy summer season” and that “it demonstrates, once again, that the agency does not understand Alaska.” To the contrary, Sen. Mark Begich said he believes the public has ample time to have their say. “Believe me, Alaskans have never had a problem giving their opinions and meeting a deadline,” Begich said in a phone interview. Opponents to the Pebble mine are urging the EPA to use its power under the Clean Water Act’s to protect Bristol Bay from future large-scale mining developments. Since 1972, when the Clean Water Act became law, the EPA has used this authority 13 times. The EPA will provide another opportunity for public comment during a peer review meeting for the draft watershed assessment in Anchorage on August 7. The 12-member peer review panel will accept comments on several “charge” questions relating to the science used in the assessment. For more information and to read the charge questions, visit https://federalregister.gov/a/2012-13431. Submit your comments through July 23 at www.epa.gov/region10/bristolbay   Salmon skin cream A chance discovery by farmed salmon hatchery workers has spawned a line of skin care products that keep skin softer and younger looking. “Aquapreneurs” in Norway became curious several years ago after it was noticed that hatchery workers who spent long hours handling salmon fry in cold seawater had softer, smoother hands. Researchers at Norway’s University of Science and Technology discovered the skin softening component came from the enzyme zonase, found in the hatching fluid of the salmon eggs. The enzyme’s task is to digest the protein structure of the tough egg shells without harming the tiny fish. The scientists hailed this dual ability as the secret behind the beneficial properties for human skin. Now, Norway-based Aqua Bio Technology, which develops marine based ingredients for the personal care industry, has launched the zonase infused product as Aquabeautine XL to make the name more user friendly, and it has signed with a major distributor in South Korea. The product also is available in Europe. Another personal care product using salmon hatching fluid is also set to be launched at the end of the year, according to ABT’s website. (See more at www.aquabiotechnology.com/)   Salmon jam! Check out three days of fish and music at Salmonstock, Aug. 3 to Aug. 5 in Ninilchik.

Editorial: Coastal Villages uses coercion to score points for pollock

Something stinks in Southwest Alaska. By now you’ve probably heard about the weak king salmon runs around the state causing widespread closures to subsistence, sport and commercial fishermen. You also may have heard about the “Kuskokwim Rebellion” on June 20 when fishermen took to the waters in defiance of an extended subsistence closure by setting their nets at the end of the original seven-day period agreed upon in the preseason. Alaska Department of Fish and Game enforcement seized 1,800 pounds of fish and 21 nets, and when it did allow fishing it required six-inch mesh gear that isn’t widely possessed in the region. Into this desperate need stepped Coastal Villages Region Fund, the Community Development Quota group for the Kuskokwim region. CDQ groups are six tax-exempt organizations in Western Alaska representing 65 villages that receive 10 percent of the Bering Sea fishing quotas annually, including pollock, crab and halibut. Coastal Villages handed out 100 legal nets a week after the Rebellion at the request of the Association of Village Council Presidents, which includes all 20 CVRF communities and the 56 federally recognized tribes in the Kuskokwim region. But the nets were far from free. In order to receive a net from CVRF, fishermen had to sign an acceptance statement acknowledging the nets were being provided at the request of AVCP and paid for by revenue from the pollock fishery where bycatch of king and chum salmon has caused controversy for decades. The one-page statement included two paragraphs on salmon bycatch in the pollock fishery, including the claim that “the best available science shows that the pollock fishery is not a significant contributor to our salmon problems.” This statement authored by CVRF Chief Operations Officer and former pollock industry lobbyist Trevor McCabe is at best misleading, and forcing fishermen to sign it amid a disastrously weak king salmon run with their lives on the line is contemptible. We know the outrage would be off the charts if the Department of Fish and Game required anyone who wanted a king salmon stamp to sign a piece of paper saying that bycatch has nothing to do with poor returns around the state. What Coastal Villages is doing is no different, and the anger should be no less at the coercive action it has taken to extract supportive statements of the pollock fishery from the people it is supposed to be serving who are seeking to fulfill the most basic human right of subsistence. One thing is certain: the residents of Coastal Villages communities already own those nets, and they shouldn’t have to prove anything other than where they live to receive one. Neil Rodriguez of CVRF, who didn’t want his interview with Bethel radio KYUK to be recorded, told the station the claims about bycatch not being a significant contributor to salmon issues was based on an environmental impact statement, presumably the one prepared for the 2009 federal action to cap king salmon bycatch in the Bering Sea at 60,000. In fact, that EIS contains no such claim, and actually states that salmon bycatch “may be a contributing factor to the decline of chinook salmon” in Western Alaska but that the science is incomplete and prevents any definitive conclusions. While recognizing that cutting bycatch would not rebuild salmon runs, the EIS stated that every additional fish in-river would still benefit all users and aid managers in hitting escapement goals as well as meeting our treaty obligations on the Yukon with Canada. That same EIS also states that half or more of the Bering Sea king salmon bycatch is of Alaska origin, and genetic stock composition analysis released this past January based on 2010 sampling suggests it could be even higher. We caution that the 2010 sampling cannot be extrapolated to the entire bycatch. However, 94 percent of the 702 king salmon tested from the winter “A” season were of Alaska origin. Coastal western Alaska stocks represented 41 percent, and middle and upper Yukon stocks another 36 percent. For all 2010 samples, 87 percent were of Alaska origin. As of 2011, there is 100 percent observer coverage and full retention in the Bering Sea allowing for a rigorous sampling protocol that will more definitively establish origins for salmon bycatch. But until then, the stock composition released in January is the “best available science,” and it shows Western Alaska salmon are a significant portion of the bycatch, if not the majority of it. The CVRF “acceptance statement” then goes from misleading to flat-out dishonesty. It states that CVRF caught only 320 kings in the pollock fishery in 2011 and that “many were not from Western Alaska.” As we just discussed, nobody yet knows the composition of 2011 bycatch, so that CVRF claim holds less water than the nets it is distributing. Further, CVRF did not count the king salmon bycatch from five pollock trawlers it acquired along with the Norton Sound CDQ group in February 2011. According to 2011 cooperative reports, the CVRF 341-foot catcher processor Northern Hawk and the five other trawlers took 599 king salmon in addition to 13,121 chum salmon. The six CVRF vessels also spent a total of 19 weeks on the “dirty 20” list in 2011 for posting the highest rates of chum salmon bycatch. By volume, the Bering Sea pollock fishery is one of the cleanest on the planet, but that does not change the fact that Alaskans will never value pollock more than they do salmon. What is also indisputable is that the CVRF position on salmon bycatch that it required its residents to sign in exchange for a fishing net is in direct opposition to that held by the Alaska Federation of Natives, AVCP, the U.S. Fish and Wildlife Service, the U.S. Department of State, the Alaska Board of Fisheries, the Tanana Chiefs Conference, the Yukon River Drainage Fisheries Association, the Yukon River Panel and the Federal Subsistence Board. The CVRF statement also contradicts Calista Corp., the Alaska Native regional corporation for the Kuskokwim region. In a commentary published July 9 in the Tundra Drums, Calista President and CEO Andrew Guy wrote, “Perhaps the largest concern we share with the region is the bycatch from commercial fishing. The tremendous scale of bycatch is a major issue for the region, and our people feel that more attention and scrutiny is warranted.” CVRF, in the acceptance statement, reiterated its official slogan that “Pollock provides.” Pollock provides all right. It provided for CVRF President and CEO Morgen Crow to receive a salary of $832,000 in 2010 and to buy a 3,476-square foot, five-bedroom house in Anchorage worth about $1 million in 2009. Between Crow, McCabe ($504,000) and Chief Financial Officer Richard Monroe ($477,000), the top three employees of CVRF in Anchorage made a combined $1.8 million in 2010. These salaries paid to executives at a tax-exempt organization with a humanitarian mission are outlandish on their face, and become even more so when put in the context of the CVRF statements that pollock revenue subsidizes its crab, salmon and halibut operations. We have a hard time seeing how Crow, McCabe and Monroe can justify their lavish salaries based on the fact only one segment of their business manages to turn a profit. We also aren’t buying the claim that the acceptance statements are for education purposes. If the effort were purely educational, CVRF can hand out the information on bycatch or mail it to every resident in the region. By trading the net for a signature, CVRF gives every indication it is up to something else. A 10-year review of the CDQ program by the State of Alaska is under way right now. Whether CVRF is meeting its obligations or abusing its power is a question the review must answer.

Editorial: Deception becomes precedent in health care ruling

“But your critics say it is a tax increase.” — George Stephanopoulos “My critics say everything is a tax increase.” — President Barack Obama ABC News interview, Sept. 20, 2009 By the president’s assertion, then, Supreme Court Chief Justice John Roberts has simultaneously handed Obama the most significant victory of his term as well as given his opponents the most potent criticism possible for the sweeping health insurance reform bill passed in 2010. The individual mandate to buy health insurance that is the linchpin of the Patient Protection and Affordable Care Act was upheld June 28 when Roberts, who was appointed by President George W. Bush, joined the court’s four liberal justices in a 5-4 decision. Sensing — correctly — that the individual mandate would be struck down as a violation of the U.S. Constitution under the Commerce Clause, the weeks leading up to the Supreme Court decision were filled by preemptive vivisections of the Roberts court as corporate shills who were poised to take an “unprecedented” action by nullifying Obama’s signature achievement. Nevermind that Obama and the Democrats’ “achievement” was rammed through Congress by the most chicanerous of parliamentary machinations and the barest majority of 218 votes in the House of Representatives. Not to mention the use of reconciliation in the Senate to overcome Republican Scott Brown’s victory in Massachusetts in January 2010 that deprived the Democrats of their 60-vote, filibuster-proof majority. That Brown was elected to the late Sen. Ted Kennedy’s seat in the deep blue Bay State should have set off alarms among the more sensible members of the Democrat party, but unfortunately none of those types are in a leadership dominated by then-House Speaker Nancy “We have to pass the bill to find out what’s in it” Pelosi. The law was so popular that the nation handed Obama’s party the worst “shellacking,” in the president’s words, that any party had absorbed in a midterm since the 1940s. The Democrats lost 63 House seats, 6 Senate seats and saw the GOP take 10 governor’s races and win 19 state legislatures. The reason for the “shellacking” was simple. The American people knew Obamacare, as it came to be known, represented a trillion-dollar entitlement program destined to bust an already bloated budget and would inevitably drive up the cost of everything — including their taxes. Upon the news that the individual mandate had indeed been found unconstitutional under the Commerce Clause argument but was constitutional under Congress’ power to tax in what is surely one of the most tortured legal decisions ever rendered, the supporters of the law who’d only the day before been decrying the corrosive effect of narrow 5-4 decisions on public policy suddenly embraced the court’s wisdom and Roberts’ courage. Oh, please. No charge — other than “death panels,” probably — was fought harder against by Democrats than the tax argument. “I absolutely reject that notion,” Obama told George Stephanopolous in that ABC News interview about whether the individual mandate was a tax. But then the challenges to Obamacare, including the one Alaska joined among 25 other states, reached the courtroom and suddenly U.S. government lawyers were arguing precisely that the power to tax made the individual mandate legal. If the stakes for the nation weren’t so high, the absurd contradictions in both the government’s and Roberts’ arguments would be worth a chuckle. On one day before the Supreme Court, the government’s attorney argued that the mandate was not a tax and was allowed under the Commerce Clause because of the “unique” nature of the health care market allowed the government to regulate a citizen’s inactivity, or failure to purchase a certain product. The next day, the same U.S. attorney argued that that the individual mandate was a tax, and therefore couldn’t be challenged under the Anti-Injunction Act (which prohibits challenging a tax until it has been collected). So, it’s a tax when it suits one argument and not a tax when it suits another argument. That Roberts bought this nonsense will forever be a part of the legacy he is reported to care so much about. Rather than send the act back to Congress to pass the mandate as a tax, not as an exercise of Commerce Clause authority, the Supreme Court simply re-wrote the law from the bench and declared it to be a tax. Roberts famously compared himself to an umpire impartially calling balls and strikes during his confirmation hearings in 2005. In the Obamacare ruling, Roberts saw the catcher drop the ball on a play at the plate, and called the runner out anyway. What Roberts did on Obamacare was akin to calling the runner out because he would have been out if the catcher had held on to the ball. If Congress had passed the mandate as a tax, it would have been constitutional from the start. So too, would a baserunner be out if the catcher holds on to the ball. But this isn’t what happened. Congress couldn’t call it a tax because the Democrats didn’t have enough Cornhusker Kickbacks and Louisiana Purchases to pass it as a tax. So they told the American people it was something else. The American people saw through this transparent falsehood, and they proved it at the ballot boxes in 2010. What the Supreme Court did was legitimize bait-and-switch lawmaking, legislating from the bench as a substitute for a Congressional do-over, and an expansion of taxing power that can be used to compel any sort of behavior a temporary majority may deem fit. The American people won’t have any trouble seeing this decision for what it is, either.

Commentary: UAF research probes fishing views; salmon fillets still hot

If you had your life to live over again, would you choose a career in commercial fishing? That is one question in a survey circulating around Kodiak that aims to reveal a more social view of the fishing life, and how the occupation and lifestyle have changed over two decades. The survey, being sent to a random sample of 700 permit holders and 400 crewmen in all fisheries, is part of a two-year project by Courtney Carothers, an assistant professor at University of Alaska Fairbanks School of Fisheries and Ocean Sciences. Carothers said the project came about during her research at the University of Washington when she lived for a year in rural Kodiak villages. “I heard many stories about ‘big changes’ in fisheries, such as limited entry, the Exxon Valdez oil spill, low salmon prices, halibut (individual fishing quotas) — and how these changes affected access to fishing livelihoods,” Carothers said. “I wanted to understand how these big changes and transitions are perceived in Kodiak, the most diverse fishing port in Alaska, and how these changes are linked to the well-being of fishing families and communities.” The Kodiak survey asks fishermen to rank how satisfied they are with various aspects of fishing and compare it to 20 years ago. Some examples: Do you feel more satisfied with the safety of their job, the adventure or the ability to earn money? Would you encourage a young person to get into fishing, why or why not? What are some things about Kodiak you hope never change? Do you think that Kodiak is a healthy fishing community? The fishermen surveys combined with local interviews will provide data and perspectives that are often bypassed by fishery managers and decision makers. “Fisheries managers are increasingly called to include social measures of fishing community health and well-being,” Carothers said. “By assessing and documenting fishing changes in Kodiak, we will contribute insights into how those changes are linked to the well-being of individuals, families, and the community as a whole. We will share that with managers to try and get more input into some of the social dimensions of fishing policy.”   Fish leader The search is on for a new executive director at United Fishermen of Alaska. After five years at the helm Mark Vinsel is shifting to a new role as chief administrator, the position he was originally hired for 12 years ago. UFA is the nation’s largest commercial fishing trade group representing 37 different fishing groups and businesses Part of the reason for this change is that over the past five years there has been a big proliferation in the number of agencies and issues that have the potential to affect a wide range of fisheries, Vinsel said. “Things like (Environmental Protection Agency) discharge requirements, national ocean policies, new Coast Guard regs coming into place for fishing vessel safety,” he said. “The devil is in the details, and we have to pay a lot of attention so that we end up with things that make sense for fishermen in Alaska.” Vinsel said the UFA position will be advertised at the end of summer so more fishermen have a chance to apply. Vinsel said UFA is closely tracking national and state issues that affect Alaska’s seafood industry, with a close eye on resource development. UFA also heads up a relief mission for fishing communities hurt by disasters such as Hurricane Katrina. Most recently, UFA raised over $380,000 to assist Japanese fishing communities hurt by last year’s tsunami.   Salmon shape shifters It used to be that Alaska salmon went to world markets frozen whole or in cans. Those are still important products, but the fish has taken on different forms that are more trendy today. A six-year review of Alaska production shows that canned salmon accounted for just 20 percent of the pack in 2011, down from 26 percent in 2010 and 30 percent in 2009. Nearly two-thirds of all pink salmon caught last year was sold frozen, mostly to export markets. Ten percent of Alaska’s salmon pack last year was turned into pricier fillets, an all-time high. For sockeyes, fillet production has doubled since 2007, from 15 million pounds to 30 million pounds. The state Department of Revenue Tax Division tracks wholesale volumes and prices for six salmon forms by region throughout each year. Sales from January through April show the average price per case of canned sockeye talls at nearly $190, an increase of about $45 at the same time last year on similar volume. Canned pinks at $96 is an increase of $18 per case. Wholesale prices for fresh chinook dipped by $1.37 to $9.23 per pound, likely due to more kings this year coming from the west coast. Likewise, frozen kings were down a dollar to $3.10. To the contrary — frozen sockeyes were fetching $3.29 through April, up from $3; and chums topped $2 per pound. Wholesale prices for frozen and fresh fillets dipped a few pennies to $6.25 per pound for reds, but increased by nearly 45 cents for cohos to $5.44 per pound. Chum fillets at $4.37 were up by more than a dollar from the same time last year. Alaska salmon roe prices varied. On the down side: sockeye roe at $5.25 a pound was a drop from $7, pink roe at $6.20 was a drop of more than $3. The ups were coho roe, jumping $3 to $9.90 a pound, and the big favorite: chum roe was selling for $15.44 per pound, an increase of nearly $2 from the same time last year.   Death by sunscreen All that sun block being slathered on by beach-goers around the world is causing major damage to ocean corals. A study funded by the European Commission revealed that the mix of 20 compounds used to protect skin from the harmful effects of the sun causes rapid bleaching of coral reefs. The World Trade Organization reports that 10 percent of world tourism takes place in tropical areas, with nearly 80 million people visiting coral reefs each year. The WTO estimates that up to 6,000 tons of sunscreen lotions are released into reef areas each year – and that up to 10 percent of the world’s coral reefs are at risk of “death by sunscreen.” While Alaska’s deepsea corals face threats from ocean acidification, they are safe from sunscreens. Unlike tropical varieties, Alaska corals don’t form reefs – they grow into dense gardens and can live for hundreds of years. The waters surrounding the Aleutian Islands are believed to harbor the most abundant and diverse coldwater corals in the world.

Editorial: TAPS milestone marked by drop in Slope oil prices

June 20 was more than just the 35th anniversary of the first Prudhoe Bay oil flowing down the Trans-Alaska Pipeline System. That day saw the second-lowest TAPS throughput of the month, at 457,127 barrels. Only a one-day curb in production from the major fields at Prudhoe and Kuparuk when a mere 380,893 barrels flowed on June 2 was lower. The same day, Alaska North Slope crude fell nearly $4 to trade at a 52-week low of $96.40, a drop of more than $31 per barrel from its 52-week high of $127.90 set Feb. 24. Oil prices declined sharply across the board June 20 on the weekly inventory report from the U.S. Department of Energy that showed a 2.9-million barrel increase in crude stockpiles when analysts had been expecting a decline of 1 million barrels. The euro continues to weaken against the U.S. dollar — driving commodity prices down further — as the continent teeters between a recession and a full-on financial crisis. The U.S. also appears at risk of a “double dip” recession after the economy added only 69,000 jobs in May and first quarter gross domestic product growth was revised downward from an anemic 2.2 percent to an even sicklier 1.9 percent annual rate. Neither the jobs data nor GDP are enough to keep pace with population growth, let alone come near reducing an unemployment rate that has stayed greater than 8 percent for 40 straight months. What this confluence of events brings into sharp focus, if it wasn’t already clear enough, is the failure of the state’s political leaders over the past two years to do anything to prepare Alaska for the day when high oil prices can’t offset the declining production from the North Slope. North Slope crude must trade at least $100 per barrel or more to balance the state budget, which reveals the house of cards that is Alaska’s oil tax regime — an unsustainable rate of production requires an unsustainable price per barrel to make it work. On Feb. 23, the day before North Slope crude set its 52-week high of almost $128 per barrel, state Sens. Hollis French and Bill Wielechowski took turns peppering Revenue Commissioner Bryan Butcher about how much confidential information they could get from the producers during a hearing on Senate Bill 192. SB 192, which was supposed to be the By-Partisans (Non)Working Group alternative to Gov. Sean Parnell’s oil tax reform bill, couldn’t make it out of the 16-member caucus for a vote before the session ended April 15. Recriminations flew on April 16, as North Slope crude traded at $120.68 per barrel, roughly where the price stood on April 25 during the subsequent special session when ConocoPhillips executives took a lashing over having a profitable first quarter during which time the company paid $13 million per day in state and federal taxes as it made the more ballyhooed evil profit of $7 million per day. On May 4, Wielechowski put out an easily debunked press release claiming the capital spending since Alaska’s Clear and Equitable Share passed in 2007 had created 18,209 jobs. The only problem with that is state Labor Department statistics show 11,000 new jobs in the state from 2007 to 2011, with just more than half of those in the private sector. All that is missing from this scene is Bluto Blutarsky jumping out of a chopped up 1964 Lincoln Continental and Kevin Bacon’s Chip Diller screaming “all is well!” just before he’s stampeded by a mob at the end of “Animal House.” North Slope crude — which set another 52-week low June 21 at $92.44 per barrel — was trading close to that amount June 26 when the Fraser Institute released its annual survey of global oil and gas jurisdictions. The good news is the Alaska onshore jurisdiction ranking improved from No. 83 in 2011 to No. 61 in 2012. The bad news is that Alaska onshore is still next to last among 13 ranked U.S. jurisdictions, trailing only New York State, where anti-fracking hysteria is at its strongest, at No. 68. A few results of the survey stand out when determining how Alaska stacks up against other U.S. jurisdictions. While 69 percent of respondents said Alaska’s fiscal terms either encourage investment or are not a deterrent, the results to the same question for Alaska’s outer continental shelf where ACES does not apply were 94 percent. Here’s one that should catch the legislators’ eyes: When rating political stability, fully 28 percent of respondents described Alaska’s onshore environment as a mild or a strong deterrent to investment, placing it dead last in the U.S. in this measure. Only three of 13 U.S. jurisdictions even drew a response for “strong deterrent” in this category — Alaska (14 percent), California (6 percent) and New York (13 percent). The final question asked was to estimate how much exploration and production would increase if the jurisdiction moved to “best practices” on royalties, environmental regulations, cost of regulatory compliance, etc. A plurality of respondents, 43 percent, said Alaska’s onshore production would increase 20 percent to 50 percent if it moved to best practices. Another 7 percent said production and exploration could increase more than 100 percent. Some of those best practices are outside the legislature’s control. Others, such as a stable political environment and competitive fiscal terms, are well within its power. Who gets to wield that power will be up to Alaskans this fall.

Commentary: TAPS birthday wish — change policies to fill pipeline

The Trans-Alaska Oil Pipeline System, commonly referred to as TAPS, turned 35 years old this week. We should all wish the pipeline a very happy birthday, and most importantly, many happy returns. Since oil first flowed down the 800-mile pipeline on June 20, 1977, TAPS has delivered more than 16.6 billion barrels of oil. For Alaskans, that translates into more than $171 billion in revenues to the state treasury. About $130 billion of that has been used to provide government services; $31.4 billion has gone to the Alaska Permanent Fund and nearly $10 billion to the state’s budget reserves, providing both current dividends and savings for future generations. TAPS delivers more than just dollars, however. There would be no oil development in Alaska without a way to get the oil to market, and oil production is a major jobs engine for the state. According to the University of Alaska’s Institute of Social and Economic Research, oil production supports approximately 42,000 jobs direct jobs, 31,000 government jobs, and another 18,000 private-sector jobs. This adds up to three out of every 10 jobs in Alaska that can ultimately be attributed to TAPS. North Slope oil production allowed the state to do away with its income tax in 1980. And because of the forethought of state leaders at the time, the Permanent Fund was created that same year to manage the state’s oil wealth for future generations. Oil wealth has paid for improving our roads, water and sewer systems, building parks, renewing our cities, and improving life in our most remote villages. The riches that Alaskans have extracted from under the North Slope have also funded our schools, and helped bring our health care system into the 21st century. Oil production is not without risk. The 1989 grounding of the Exxon Valdez caused untold environmental damage in Prince William Sound. There have also been leaks, though the total amount equals about two ten-thousandths of a percent of the oil carried by the line and all spills have been cleaned up without lasting environmental damage. But as we count the blessings TAPS has provided, we must also think about the future. TAPS once carried nearly 2 million barrels of oil a day from the North Slope to the port of Valdez, but is now down to almost a quarter of that. Today, Alaska is no longer America’s second-largest producer of oil, having been surpassed by North Dakota. And North Slope production continues to decline by 7 percent annually. Without new oil production, throughput in the pipeline could fall enough to threaten its future viability. Shutting down the pipeline would mean closing up shop on the North Slope. Alaska’s oil – like its massive natural gas reserves today – would be stranded with no way to market, leaving the state scrambling to replace the 85 percent of its annual revenue that today comes from oil. Politicians ignore these warnings at their own peril. Alaska without TAPS would be a far different place, with far fewer state services, a far weaker economy, and, most likely, far fewer Alaskans. Luckily, there is an alternative. Alaska isn’t running out of oil, it’s simply running out of access. The easy oil at state-owned Prudhoe Bay has been extracted and what remains, is more expensive and challenging to produce. The federally owned lands and waters to the east, west and north of Prudhoe Bay hold tremendous resources, but access has been slowed by an administration more interested in designating new wilderness than shoring up Alaska’s economy. At the federal level, we must finally gain access to our resources in the Beaufort and Chukchi seas. And we must continue our battle to win approval for production from the coastal plain of ANWR – still the largest single prospective onshore source for conventional oil in North America. We also must perfect production from our sizable oil shale reserves. At the local level, the state must have a competitive tax structure to encourage new investment in aging fields. We must work harder to get a pipeline and transportation system under way to get North Slope natural gas to market – because gas exploration by itself will generate more oil for TAPS. But mostly, we must stop taking our economic lifeline for granted. It’s not just that TAPS generates the vast majority of our government revenues, accounts for 60 percent of direct private investment, or a third of Alaska’s gross state product – the pipeline and the oil it carries is still our best hope to have the ability to transform Alaska from a resource-dependent state to one that is technology-rich, location-blessed, and a leader in renewable energy. Alaska’s economy needs to diversify, but it can’t do so without oil revenue as its foundation. That is why we should wish the TAPS a long and full life.   Lisa Murkowski is the senior U.S. senator from Alaska and the ranking member on the Senate Committee on Energy and Natural Resources.

Commentary: Move on Bering Sea canyons a victory for subsistence

Recently the North Pacific Fishery Management Council passed a motion to go beyond simply reviewing the science and actually start developing new management options on the Pribilof and Zhemchug Canyons of the Bering Sea shelf. These two canyons are the largest underwater canyons in the world. From the Tribal Community perspective, we believe this to be one of the biggest victories in a Council process that has historically watched out for the interests of the large industrialized commercial fishing interests of the Bering Sea and other areas of the planet. The primary concern of Greenpeace, Alaska Inter-Tribal Council, Southern Norton Sound Fish and Wildlife Advisory Committee, The Bering Sea Elders Group and many other Tribal Communities who provided very strong and much needed testimony to the Council supporting this request is subsistence. Certainly there are major concerns about benthic habitat destruction and the need to protect them, but without a healthy ecosystem our foods we depend upon and have for generations will begin to go away. There are two “old sayings” that come to mind here — “Those who forget the past are doomed to repeat it,” and, “If we disrespect the animals we depend upon for food, they will go away.” I think we are all familiar with the first. The second one comes from an elder in my village of St. George Island when I was a child. He said: “if we disrespect the animals, and we knowingly allow others to do the same, the animals know it and will move away from us.” Let’s look at the first saying mentioned above. In 1990, over 22 years ago, Katie John and others filed a lawsuit against the U.S. government regarding subsistence rights. Let’s not forget the courage and wisdom of these people and what they did to protect our subsistence rights and needs. The Bering Sea is our source of subsistence foods. Almost everything we need to sustain our lives and that of our children comes from the Bering Sea. And although we look at the Bering Sea on a map and consider its size, in reality it is not that big. Only about half of the Bering Sea is really usable for economic development and sites for the foods our food need to sustain themselves. Of that half, there are only a few places where our foods can go. Perhaps it has always been this way, but certainly it does look this way today. If one part of this extremely productive marine system is damaged, other parts of this system will begin to fail as well. The problem is, we simply do not know, and thus the need to try to protect some of it. From the Aleutian Islands, up northwest past the Pribilof Islands and further north to Russia there is the Bering Sea shelf. On that shelf are six large underwater canyons, Pribilof and Zhemchug being two of them. And these two canyons, from all understanding, are extremely productive providing nutrients, nursery grounds, corals and sponges for almost the entire Eastern Bering Sea. And they have been hit hard in the last fifty years with deepwater commercial fishing, the most damaging of all by the bottom and mid-water trawlers. For the sake of our foods and that of our Tribal Communities, these canyons need to be protected from further destruction. Unless this happens we may lose much of our much needed subsistence foods. The second saying above is equally critical to our survival as Tribal Communities. Let’s not forget from whence we came. As indigenous peoples we have a long history with our ancestors, our cultures and our ways of living. Generations of our ancestors, our elders and our people sacrificed everything to fight the good fight, to protect who we are, our cultures, languages and ways of life. Without them, their insight, wisdom and courage we may be a lost people. Drifting and wondering who we are. Sometimes it is easy to forget, especially when we begin to believe we have all we need. Without remembering what they have done for us and how important what they fought for, we begin to stumble and fall and eventually lose who we are. As then, subsistence is critical to our people, especially now when there is so much demand for the resources of the Bering Sea, Chukchi Sea and the Arctic Ocean. The world is getting desperate for these resources, and unless we protect what’s important to us, so will we.

Editorial: Council gets it right on bycatch, more work to do

“Glacial” is the word most often used to describe the North Pacific Fishery Management Council process, but that’s actually unfair to glaciers. Not even time-lapse photography would reveal much movement on reducing halibut bycatch in the Gulf of Alaska until the council’s vote June 8 in Kodiak to cut it by 15 percent starting in 2014. The only previous cut in trawl halibut bycatch was a 27.4 metric ton reduction for the rockfish program passed in 2010 that represented about 1.4 percent of the 2,000 metric ton, or 4.4 million pound, trawl halibut bycatch allotment in place since 1986. Rather than compromise on the amount of the reduction, as many expected, the council compromised with the trawl fleet on time by phasing in the maximum cut under consideration over three years. We applaud the council action as an important first step, and encourage the members to continue pushing toward more meaningful measures to reduce bycatch even further. The trawl fleet made a series of self-defeating arguments against cutting halibut bycatch, taking the position the move was more allocation than conservation, pointing fingers at discards in the commercial halibut fishery, suggesting trawlers are balancing the ecosystem by removing arrowtooth flounder and juvenile halibut, and even attacking the International Pacific Halibut Commission. A majority of the council — namely, the Alaska delegation — didn’t buy any of that. However, we agree with the trawl fleet that some sort of organization of the Gulf fishery is necessary, and that a reduction in bycatch of much more than 15 percent is possible along with it. That said, the council acted properly to not trade a bycatch cut for a trawl catch share program that will take five years or more to craft and implement. Both the Bering Sea catcher-processor groundfish fleet and the Gulf rockfish program have demonstrated that significant bycatch savings are possible under a cooperative fishing program. Bycatch dropped 80 percent in the first year of the rockfish program in 2007 and the Bering Sea fleet has continued to cut its bycatch since 2008 despite an increasing biomass of halibut on their grounds. The council must use this time wisely to make real progress for a lasting management solution in the Gulf. Catch share programs of the type sought by the trawl fleet are inherently controversial based on legitimate philosophical differences about the degree to which a public resource becomes privatized, and at least in the case of the rockfish program the council has shown an ability to address some of those concerns. In the rockfish program redesigned over several years and passed in 2010, the council prevented consolidation through vessel use caps, cut mandated processor ties while also setting a minimum amount of companies that can take deliveries, and directed more of the harvest shoreside to Kodiak. The council also cut the bycatch allowance, incentivized more bycatch savings by limiting the amount that can be rolled over to subsequent seasons, and forced the fleet to work together by requiring membership in cooperatives to access harvest quota. The council also put a 10-year sunset date on the program to limit speculation and affirm public ownership of the resource. It remains to be seen whether the sunset date was the proper way to limit ballooning costs of entry that typically accompany rationalized programs where shares are bought and sold at 5-1 rates to dockside prices, but it was an action that showed at attempt by the council to address a real problem. The North Pacific council was once on a path toward Gulf rationalization early last decade. Then the Bering Sea crab rationalization took effect in 2005. Two-thirds of the fleet was tied up overnight, and 1,000 crew positions were gone from one season to the next. By allowing unlimited quota stacking and leasing, the program made millionaires out of a handful of initial shareholders and slashed crew pay by more than half from historical percentages in some cases. The fallout from the crab program, with ground zero centered in Kodiak, killed the Gulf rationalization efforts. If the council has trouble pursuing a rationalized management program in the Gulf because of public reservations, the failure to correct the crew situation in the crab program is a major reason why those hard feelings still exist. The current council didn’t construct the crab program back in 2003, but it hasn’t moved an inch to resolve this issue even after being confronted with compensation tables in 2010 showing the situation has deteriorated to the point at which crew who harvested 150,000 more pounds of lucrative Bristol Bay red king crab than others actually received less pay because of lease rates and quota stacking. A myriad of forms and regulations apply to federal fisheries, but this council hasn’t mustered the ability to require so much as a standardized settlement sheet for crew or the reporting of leasing data as a condition of receiving annual shares. This despite having the opportunity to do so in February when it adopted revisions to the economic data reporting system. Rather than require the kind of data that would have gotten more clearly at the issue of crew compensation, the council curtailed reporting requirements in an action that its own Scientific and Statistical Committee called a betrayal of the social contract implicit in the crab program. There is a direct correlation between the lack of an organized Gulf fishery today and the mistakes that were made — and continue to be made — in the Bering Sea crab fishery regarding the allocation of a public resource and how those benefits should be distributed. The council took a sensible action regarding halibut bycatch. Some would call it too little, too late. We consider it better late than never. When it comes to organizing the Gulf fishery, to borrow a title from Steppenwolf, it’s never too late to start all over again. But as the council embarks once again on this effort, it’s worth remembering why it has taken so long to return to this point — and that the underlying issue that set the council back remains unresolved.

EDITORIAL: Council, trawlers must be accountable for bycatch

Two out of three ain’t bad, unless you’re talking about trawl halibut bycatch. As this issue of the Journal went to press, the North Pacific Fishery Management Council was kicking off 20 hours of staff reports, public comment, and ultimately, final deliberations in Kodiak about the decades-old issue of reducing the allowable bycatch of halibut by trawlers and cod longliners in the Gulf of Alaska. Inside the thousands of pages of documents prepared over the years dealing with halibut bycatch is one bit of information that council members should keep at the top of their minds as they make a decision. According to data collected by the International Pacific Halibut Commission, 62.5 percent of trawl halibut bycatch by weight are fish larger than 26 inches. With an annual bycatch limit of about 4.4 million pounds that has barely been adjusted since 1985, that amounts to 2.75 million pounds per year of fish larger than 26 inches taken by trawlers. Why does this matter? It matters because the amount of halibut estimated to be larger than 26 inches is the basis of the harvest quotas set annually by the IPHC. Halibut must be larger than 32 inches, not 26, to be retained, but at current $6 per pound prices it’s a safe estimate that trawlers take legal-sized halibut worth upward of $10 million each year. Trawl fleet representatives have aggressively pushed the information from the same analysis that shows three out of four fish in their bycatch are less than 26 inches, but never do they mention the fact that roughly two out of every three pounds are not. They’ve also pointed fingers at wastage in the commercial halibut fishery where some sub-legal fish die after being discarded. Some comparisons are apples to oranges. This argument is more like apples to hamburgers. When a halibut is caught by a trawler, it’s a death sentence more than 80 percent of the time for fish big or small. The discard mortality rate for sublegal halibut by longliners is estimated to be 16 percent. This leads nicely to another argument the trawlers are making — that this is really about allocation and not conservation because the halibut they aren’t allowed to take will be harvested by the commercial and recreational users instead. Bycatch is not an allocation issue. Allocation fights are between directed users — commercial, sport and subsistence. For trawlers and cod longliners, halibut is a prohibited species catch. By definition, they shouldn’t be taking any of it. Fisheries management allows for takes of certain amount of bycatch, but the North Pacific council cannot allow for preserving the bycatch status quo for a few boats to take precedence over their primary responsibility to manage the Gulf of Alaska sustainably for all users. Some members of the council have attempted to cop out of bycatch cuts by arguing the North Pacific doesn’t have a halibut management plan. Indeed that is true, but it does have a groundfish plan that includes halibut bycatch limits and requirements for closures if a sector exceeds its limit. That begs a simple question: If halibut bycatch has no impact, why have a limit or require closures at all? In fact, it’s already an established part of council management that halibut bycatch has impacts and they must be controlled. Now is not the time for the council to shrink from its job to live up to the “Alaskan model” it so often lauds itself for, especially at a time when the IPHC is doing everything it can to conserve the halibut resource that provides a livelihood for thousands of Alaskans as well as our friends in Canada and the Lower 48.

EDITORIAL: Council, trawlers must be accountable for bycatch

Two out of three ain’t bad, unless you’re talking about trawl halibut bycatch. As this issue of the Journal went to press, the North Pacific Fishery Management Council was kicking off 20 hours of staff reports, public comment, and ultimately, final deliberations in Kodiak about the decades-old issue of reducing the allowable bycatch of halibut by trawlers and cod longliners in the Gulf of Alaska. Inside the thousands of pages of documents prepared over the years dealing with halibut bycatch is one bit of information that council members should keep at the top of their minds as they make a decision. According to data collected by the International Pacific Halibut Commission, 62.5 percent of trawl halibut bycatch by weight are fish larger than 26 inches. With an annual bycatch limit of about 4.4 million pounds that has barely been adjusted since 1985, that amounts to 2.75 million pounds per year of fish larger than 26 inches taken by trawlers. Why does this matter? It matters because the amount of halibut estimated to be larger than 26 inches is the basis of the harvest quotas set annually by the IPHC. Halibut must be larger than 32 inches, not 26, to be retained, but at current $6 per pound prices it’s a safe estimate that trawlers take legal-sized halibut worth upward of $10 million each year. Trawl fleet representatives have aggressively pushed the information from the same analysis that shows three out of four fish in their bycatch are less than 26 inches, but never do they mention the fact that roughly two out of every three pounds are not. They’ve also pointed fingers at wastage in the commercial halibut fishery where some sub-legal fish die after being discarded. Some comparisons are apples to oranges. This argument is more like apples to hamburgers. When a halibut is caught by a trawler, it’s a death sentence more than 80 percent of the time for fish big or small. The discard mortality rate for sublegal halibut by longliners is estimated to be 16 percent. This leads nicely to another argument the trawlers are making — that this is really about allocation and not conservation because the halibut they aren’t allowed to take will be harvested by the commercial and recreational users instead. Bycatch is not an allocation issue. Allocation fights are between directed users — commercial, sport and subsistence. For trawlers and cod longliners, halibut is a prohibited species catch. By definition, they shouldn’t be taking any of it. Fisheries management allows for takes of certain amount of bycatch, but the North Pacific council cannot allow for preserving the bycatch status quo for a few boats to take precedence over their primary responsibility to manage the Gulf of Alaska sustainably for all users. Some members of the council have attempted to cop out of bycatch cuts by arguing the North Pacific doesn’t have a halibut management plan. Indeed that is true, but it does have a groundfish plan that includes halibut bycatch limits and requirements for closures if a sector exceeds its limit. That begs a simple question: If halibut bycatch has no impact, why have a limit or require closures at all? In fact, it’s already an established part of council management that halibut bycatch has impacts and they must be controlled. Now is not the time for the council to shrink from its job to live up to the “Alaskan model” it so often lauds itself for, especially at a time when the IPHC is doing everything it can to conserve the halibut resource that provides a livelihood for thousands of Alaskans as well as our friends in Canada and the Lower 48.  

Commentary: Like Sierra Club, biz community holds leaders accountable

Holding elected officials accountable is an essential part of our democracy. Indeed, it is something we need more of, not less, in these days of political gridlock. The Alaska Business Report Card is an effort to do just that. Comprised of the Alaska State Chamber of Commerce, the Resource Development Council, the Alaska Support Industry Alliance and ProsperityAlaska, this group gathers each year to hammer out letter grades on Alaska’s state officials. Even though this is our third year of working together as a group, we are still relatively new to the grading and ranking process. The Alaska Conservation Alliance, the local chapter of the Sierra Club, the National Rifle Association, the Alaska chapter of the NEA, and many Alaska labor organizations have been grading legislators for a long time and using those grades to educate their members. This past week, the ABRC released grades on the individual members of the 27th Alaska Legislature, the governor, the group grades for the Senate Majority and Minority, and the House Majority and Minority. Please consider the following as you listen to reactions from individual legislators. First, the ABRC serves as collective feedback from Alaska’s largest business associations who represent thousands of Alaska businesses and tens of thousands Alaskan workers. These are the businesses and the workers who are the backbone of Alaska’s economy. More than 60 bills in the 27th legislature were identified by ABRC organizations and considered in the grading process. Letter grades are computed through an average of each participating organizations’ scoring based on their respective legislative priorities. Considered in the grading process are bill sponsorship, committee votes, floor votes, actions taken in committee (when applicable) and, especially, overall leadership inside and outside of the legislature. Second, each organization has its own scoring and weighting processes, using its own mix of key legislation. Interestingly, even with this diversity of scoring criteria and with numerous people involved, we come to remarkably similar conclusions before ever sitting down to compare notes. As it turns out, lawmakers who are pro-business on some issues tend to be pro-business on others. Third, to help elected officials know in advance how they will be graded, we share the top priorities of our combined organizations at the start of each legislative session. In fact, as a group we walk together through the halls of the capitol and hand-deliver them to each office. For the past two years our joint priorities have been: fiscal responsibility, oil tax reform, regulatory efficiency, litigation reform, general business climate and strategic transportation infrastructure funding. In addition to informing our members, the Report Card is intended to stimulate dialogue with legislators. It has been successful in that regard. Several legislators have used the Report Card constructively and strengthened their performance markedly. Even so, a number of elected officials will be disappointed by their grades. We share their disappointment. However, the Report Card is all about accountability. Nearly every candidate for elected office runs on a platform of economic prosperity. After the election, some successful candidates honor their pledges and some do not. Some have a view of prosperity that is defined by private sector growth and vitality, and some view it in terms of short-term public sector growth coupled with opposition to private sector projects. The Report Card brings accountability to our elected officials as viewed through the lens of private sector vitality. We realize that not every voter or campaign contributor will consider the business community perspective to be important, but those who are concerned about Alaska’s long-term vitality will.   Grades are posted online at www.alaskabusinessreportcard.com   Rachael Petro, Rick Rogers, Rebecca Logan and Scott Hawkins are the chief executives of the Alaska State Chamber of Commerce, the Resource Development Council, the Alaska Support Industry Alliance and ProsperityAlaska.org, respectively.

Editorial: Cuts to rail are a betrayal of federal commitments

For those of us among the vast majority of Americans who believe the current national debt and budget deficit are an immediate threat to our future prosperity, nothing is quite so maddening as the unending stream of red ink pouring out of Washington, D.C., and the political cowardice that allows it to continue unabated. We’re told that actual, tangible budget cuts are impossible and the best we can hope for is a cut in the rate of growth even as we spend $4 billion more per day than we take in as revenue. Nearly as infuriating is that when Congress isn’t wildly spending money we don’t have, its members are proposing cuts that don’t make any sense, are meant to score political points or are just flatout intended to settle old grudges. The current funding cuts facing the Alaska Railroad Corp. certainly fit into a couple of those categories, most notably in the Doesn’t Make Sense Department. The future of the Alaska Railroad — and by extension vast realms of the state economy and freight system — is in jeopardy because the Senate stripped out nearly all of the Federal Transit Administration funding it has received since 2005 in a two-year surface transportation bill passed in March. The cuts, which could amount to $30 million per year and could take effect this summer if the Senate language passes, leave the railroad without the ability to pay off its capital improvement bonds or comply with an unfunded federal mandate to install Positive Train Control by 2015. If the Alaska Railroad doesn’t have Positive Train Control, or PTC, installed by 2015 it will no longer be able to offer passenger service. ARRC has already spent $40 million on the $100 million PTC installation. (PTC was required in 2008 legislation passed after three deadly rail accidents. It is a GPS-based system that can override the train controls if the operator is unresponsive or an accident is impending.) Alaska Sens. Lisa Murkowski and Mark Begich voted for the transportation bill that cuts the railroad funding, but not without introducing amendments that would have prevented such deep reductions. The amendments failed to pass, partly on the mistaken belief that the Alaska Railroad funding is an earmark. Alaska doesn’t have a lot of room to point fingers about earmarks after the success its powerful former committee chairmen led by the late Sen. Ted Stevens and Rep. Don Young had in steering billions of federal dollars into the state. However, the only reason the Alaska Railroad is mentioned specifically in the existing surface transportation law is because it receives money for fewer track miles — not more — than other rail systems even though it qualifies by providing year round public transportation from Seward to Fairbanks. After only 10 percent of the railroad’s track miles (those around Anchorage) were considered eligible for FTA funding in 2000, Young, as Transportation Committee chairman, attempted to get 100 percent of its track miles eligible for federal grant funding in 2005. The wrangling over the railroad funding apparently got pretty ugly in the Senate between Stevens and then-Banking Committee Chairman Sen. Richard Shelby, R-Ala., before a compromise was hammered out to make 60 percent of the Alaska Railroad track miles eligible for annual grant funding. Since then, the railroad has received $36 million per year, of which $16 million services the debt on the $137 million balance in capital improvement bonds, $9 million goes toward operating expenses and the other $11 million to capital projects. Based on the passage of the Senate bill alone, the bond rating for the Alaska Railroad Corp. was downgraded by Moody’s to negative in April. There’s no immediate impact on the debt service costs, but all other financial activities by ARRC such as obtaining short-term credit or using revolvers will now be more expensive if not impossible to obtain. This is just outrageous. The FTA approved the capital improvement bond sale in 2007 and the use of annual grant funding to service the debt. The bondholders bought the debt on those guarantees, and now Congress may force the Alaska Railroad to default on the bonds through no fault of its own by refusing to provide the funding it was promised. So to sum up: the Alaska Railroad already receives less money than it should be eligible for, it sold bonds based on assurances from the federal government that it would receive annual funding, and on top of that has an unfunded, $100 million federal mandate to install Positive Train Control or lose its passenger service by 2015. Makes a lot of sense, doesn’t it? Especially from a government that spent $10 billion-with-a-B in the 2009 stimulus bill on high-speed rail that’s going nowhere. Imagine what Alaska would look like without the rail system as it operates today. Just picture the 11,000 buses it would take to transport cruise ship passengers who now travel to Denali and Fairbanks every summer by rail. There is still time for Congress to do the right thing, and now is a good time to make your voice heard. Perhaps the fact that ratings agencies are now examining other rail bonds backed by federal guarantees will be the kick in the pants the conference committee needs to fulfill the obligations the government has made to the Alaska Railroad. The current extension of the surface transportation bill expires June 30. Congress comes back to session this week after the Memorial Day recess. Knowing how Congress works, if an agreement can’t be reached, another short-term extension that preserves the Alaska Railroad funding may get it through the end of the 2012 fiscal year Sept. 30. But even with a temporary reprieve, this fight isn’t going away. Alaskans need to keep vigilant to ensure the commitments made to the railroad and its creditors are honored.

EDITORIAL: Remember the fallen — today, and always

Everybody has an enemy, but I didn’t know anyone who didn’t like Brian. — John Cosato, Lucerne Valley, Calif.   Sgt. Brian L. Walker did have enemies, but they weren’t at Juan Cosato’s barbershop in his hometown of Lucerne Valley. Walker’s enemies were the ones who planted the improvised explosive device along a road in Bowri Tana, Afghanistan, that exploded on Mother’s Day while the 425th Brigade Special Troops Battalion was on patrol under his command. The battalion is attached to the 4th Brigade Combat Team (Airborne), 25th Infantry Division out of Joint Base Elmendorf-Richardson in Anchorage. The IED killed Walker and the vehicle’s driver, Pfc. Richard L. McNulty III, of Rolla, Mo., and wounded three other JBER soldiers. Walker was 25. McNulty was 22. It was the second deployment of Afghanistan for Walker, who joined the Army in 2007. It was the first for McNulty, who shipped out of JBER in December and was scheduled to return home in three weeks. McNulty’s wife since February 2010, Hannah, is due to give birth to their first child in June. He leaves behind his parents, a brother, four sisters and a heartbroken town of fewer than 20,000 that lost another native son, Sgt. Tyler Smith, on April 3 in Afghanistan. According to a friend quoted in Walker’s hometown California paper, the Army sergeant had also recently gotten married. Excruciating as it must be on any day to learn of the death of a loved one fighting 10,000 miles away, the pain of such news on a day we honor our moms is unimaginable. Mother’s Day will never be the same for the parents of Walker and McNulty. Nor will it be for McNulty’s wife Hannah, or his daughter Ella who will grow up without ever celebrating a Father’s Day with her dad. The tragic deaths drive home a powerful reminder: The enemies of Walker and McNulty — and of us back home who enjoy the freedom they are fighting for — don’t care what day of the week it is. And unfortunately, sometimes back home we don’t care about what day of the week it is either. We just know we have a three-day weekend. The stories of Walker and McNulty break our hearts because of the day their deaths occurred, and for that we are guilty of going about our daily lives without very often thinking about the men and women who serve, the risks they face and the sacrifices they and their families endure. Alaskans have plenty to celebrate over this long weekend with the return of long days and time with family and friends. We also should celebrate the safe return home of some 4,000 troops to Fort Wainwright in Fairbanks. But we also need to remember Brian Walker and Richard McNulty, and all of their band of brothers who don’t get the day off — or don’t make it back at all. Join the Wounded Warriors project to help the mates of Walker and McNulty who survived the attack. Support a veterans’ scholarship program for children like Ella McNulty who never get to meet their fathers. But whatever you do to celebrate, make sure to put the “Memorial” in Memorial Day — and give thanks for all those who serve year round.

Time to make voices heard on halibut bycatch

Something big is coming up, and I don’t mean a halibut. After years of study and foot-dragging, the North Pacific Fishery Management Council is finally considering reducing the outrageous amount of halibut bycatch in the Gulf of Alaska. What’s halibut bycatch? It’s what happens when a commercial trawler or long-liner tries to catch cod, pollock or some other species and, in the destructive, unsustainable process, the vessel catches halibut and other fish. Under current regulations, the trawl and long-line fleet can catch more than 5 million pounds of halibut bycatch, all of which must be thrown back, a rule meant to prevent them from profiting from bycatch. Many of these halibut are dead. Reduced to an acronym — “PSC,” for prohibited species catch — they sink to the bottom, utterly wasted. The NPFMC should’ve reduced halibut bycatch years ago. This bycatch is now affecting fishing opportunity and, more importantly, halibut productivity. A recent study found that 1 pound of halibut lost to bycatch equates to a loss of about 1.5 pounds of halibut in the halibut spawning biomass. Let’s put it another way: Trawlers, mainly targeting Pacific cod, are incidentally killing halibut, cutting into the number that you and I could be catching, whether we fish for halibut for sport, subsistence or commercially. What’s worse, the trawlers are killing a great many halibut before the fish are mature enough to reproduce. Most of us don’t see many trawlers, but they’re out there. Sometimes called draggers, they pull large nets through the water, either on the bottom or at mid-water depths. Some are small boats, operated by families out of Alaskan ports. Others are huge factory ships owned by foreign corporations and based in Seattle. The current regulation that allows a bycatch of 5 million pounds of Gulf of Alaska halibut hasn’t significantly changed since 1986 for trawl fisheries, where most of the halibut bycatch occurs. While that regulation remains unchanged, the portion of the halibut biomass available for harvest has declined by more than 50 percent in just the past 10 years. This decline has resulted in stricter regulations for fishermen and higher costs for everyone who eats halibut. In Southeast waters, it led to charter-boat anglers being able to harvest only one halibut less than 37 inches in length per day. Charter operators in Homer, Seward, Whittier and Valdez fear the same thing will happen here. At its June 6-12 meeting in Kodiak, the NPFMC will be considering cutting the halibut bycatch by a range of 5 to 15 percent. Let’s hope council members do the right thing and choose the 15 percent reduction. It’s time they stopped talking and studying and took action. What can you do to help? Visit the Alaska Marine Conservation Council’s Web page (www.akmarine.org), and sign onto their letter to the Council. Add a note, telling the Council to reduce the bycatch by 15 percent. Tell your friends to do the same. If you can, attend the NPFMC meeting in Kodiak. If you want to continue catching and eating halibut, here’s your chance to prove it.

EDITORIAL: With time right for LNG exports, Alaska is playing catch-up

Amid the rubble of the week that began with the collapse of the legislative special session was a piece of expected yet welcome news. The state approved a project plan amendment May 2 for TransCanada to formally shift its focus to an in-state, liquefied natural gas export project instead of a gasline connecting the North Slope to Alberta. The amendment — anticipated after the March 30 announcement by North Slope producers to pursue an LNG export line to Alaska tidewater — defers the requirement under the Alaska Gasline Inducement Act for TransCanada to file an application with the Federal Energy Regulatory Commission, or FERC, by this October. In terms of incremental progress toward the decades-old goal of commercializing North Slope gas, this announcement would surely be measured in inches. However, anything that moves this effort forward is a good thing because while Alaska geographically has a head start on its North American competitors to serve Asian markets, it is still playing catch-up in the race to export LNG. With the expanded Panama Canal set to handle massive LNG tankers beginning in 2014 and a glut of natural gas pushing domestic prices to a 10-year low, Lower 48 producers and their counterparts on the Canadian coast are angling to serve the Asian markets. On April 16, FERC issued an approval for Cheniere Energy to convert its import terminal in Cameron Parish, La., for exports. The next day, Sempra Energy Inc. announced a $6 billion LNG export project, also in Cameron Parish, and the third LNG export project planned for Louisiana. Two of the companies who have signed on to develop and market the Sempra facility are Mitsubishi Corp. and Mitsui & Co. Ltd. of Japan, a country Alaska has exported LNG to since 1969. Japan is a vast potential market as it moves toward conversion to natural gas in the aftermath of the Fukushima nuclear accident that followed the devastating March 2011 earthquake and tsunami. All but one of the nation’s 50 nuclear reactors are now idled, and imports of LNG surged 18 percent in 2011. That’s according to an April 27 Reuters report on Tokyo Gas Co. Ltd. and Sumitomo Corp. negotiating a 20-year deal with Dominion Resources Inc. to buy from its planned LNG export facility in Cove Point, Md. All in all, there are nine pending LNG export permits in the U.S. and another handful of potential projects in British Columbia that could compete with Alaska for Asian markets. A Brookings Institute study released May 2 recommended approving them all and letting the market sort itself out. One of those Canadian LNG projects is being contemplated by Imperial Oil Ltd. On the same day Alaska approved the TransCanada amendment, Imperial Oil CEO Bruce March said his company is considering LNG exports. The twist is that Imperial is 70 percent owned by ExxonMobil, which is partners with TransCanada under AGIA, and one of the Slope producers who have agreed an LNG export project is the most viable way to commercialize Alaska natural gas. The latest news coming May 8 is that the U.S. Export-Import Bank has approved a $3 billion loan to facilitate an LNG export project in Queensland, Australia, that would serve markets in China and Japan. The Ex-Im Bank action will allow American companies Bechtel International and North Slope producer ConocoPhillips to export equipment and services for the project Down Under. In short, Alaska does not have time to waste. That’s what was most frustrating about the state Senate refusing to even hold hearings on House Bill 9, which would have empowered the Alaska Gasline Development Corp. to pursue an in-state “bullet” line with a target of a 2013 open season and given AGDC a seat at the table for discussions on the LNG export project where it could leverage its work and the 417 miles of right-of-way it possesses. If Alaska’s state senators have an alternative way to get gas to state residents and relieve crippling energy costs, they have yet to present it. They appear content to place the destiny of the state in the hands of others, namely the North Slope producers some legislators so enjoy vilifying. The only thing this Senate appears to celebrate more than doing nothing is doing something shortsighted instead. Some criticism of HB9 was the cost of environmental impact studies required to prepare for an open season in 2013, yet the Senate voted 15-4 to spend as much as $430 million on one-time energy vouchers dispersed to Alaska residents regardless of need. It appears to escape the majority in the Senate that the high price of oil they depend on to justify keeping the status quo when it comes to production taxes is the very thing that is devastating the pocketbooks of so many in our state, or that indiscriminately shoveling $400+ million out the door without a long-term plan is the height of irresponsibility. So rather than do the hard work required to find solutions for the state’s energy needs, the Senate took the easy way out and tried to put a bandaid on a bullet wound that is bleeding Alaskans dry. Now that the North Slope producers and TransCanada have aligned on a vision to pursue LNG exports, the companies have additional benchmarks to reach by the end of September — identifying a project and a timetable. TransCanada is also required under the project plan amendment approved May 2 to submit a more detailed work schedule by early 2013. If the companies meet those benchmarks, natural gas taxes must be on the table for the 2013 legislative session. A stable, predictable fiscal regime is vital to making a large-diameter gasoline possible. Further, the current tax structure couples oil and gas production taxes and the state could stand to lose billions in revenue if gas is commercialized. Energy consultant Pedro van Meurs, who’s been retained by the legislature to advise on tax policy, said in February that the current regime is “the most nonsensical system in the world.” It won’t be a simple task to restructure Alaska’s production tax regime to facilitate a large-scale LNG project, and based on the last two years, the current composition of the Senate leaves little reason for optimism One encouraging event is on the horizon, though. There is an election in November.

Ire over profits another sign of an unserious debate

In the days before Gov. Sean Parnell abruptly pulled oil tax reform legislation from the special session he’d called barely a week earlier, the Big News of the week was the April 23 earnings report from ConocoPhillips. ConocoPhillips — the only one of the North Slope producers that reveals the results of its Alaska operations — reported $616 million in profits for the first quarter of 2012. Opponents of Parnell’s plan to slow the rate of decline in Alaska’s aging Slope fields through lower production taxes leapt on the report as proof that oil companies are doing just fine without it. It “blows a hole” in Parnell’s argument to lower production taxes, said Sen. Bill Wielechowski, D-Anchorage. So ConocoPhillips made $7 million per day in Alaska in the first three months of the year. So what? During the second quarter of 2010, ConocoPhillips made $381 million from its Alaska operations, or about $4 million per day. Is that OK? Still too much, or just right? What would it prove if ConocoPhillips was making $5 million per day, or $8 million? If the company can make it on $7 million per day, surely it can make it on $6 million. Perhaps legislation is in order to raise taxes further. That self-appointed arbiters of What’s Fair in the legislature and the media are still obsessing over Big Oil profits in the name of cheap soundbites and easy headlines in the second year of this debate shows a fundamental unseriousness about what the discussion should be about. (It’s also more than a little inconsistent that the legislature has no qualms about subsidizing a multi-national like Repsol with exploration credits while politicos like Wielechowski make hay out of the ConocoPhillips profits that pay for them.) The issue isn’t about how the state can best maximize its take at high oil prices or how much profit is enough in a volatile global market, and it shouldn’t be about atoning for real and perceived past sins of politicians and producers. A tax structure that is confiscatory, punitive, or both, is quite simply a terrible basis for public policy. The state should want ConocoPhillips to be highly profitable. The legislature should want the state to be the most profitable, best place in the world to do business. That can be done without handing over state sovereignty, and without creating a system where producers can benefit more from increasing their upstream costs by $1 than they do from a $1 increase in the price of oil. Instead, we’ve heard time and again that Alaska’s oil taxes aren’t nearly as bad as Parnell and the companies have argued, and that the state actually ranks somewhere in the middle among oil-producing jurisdictions in terms of government take. In a state where 90 percent of the budget is funded by oil, the goal of our leaders should not be to just have a middling to decent tax climate for producers. The goal should be to have the very best, and nobody, not even Parnell’s most vociferous critics, have asserted that Alaska is at the top of any rankings when it comes to oil tax policy. It is beyond bizarre to witness the spectacle of ConocoPhillips executives being called to the dock and shamed by state legislators for the sin of earning $13 million per day for the state and feds in tax revenue. Yes, the state and feds take $2 for every $1 ConocoPhillips makes. You don’t have to be an overpaid Big Oil honcho, or even a modest business owner to recognize the inherent lack of incentive when growing your operation brings far more tax liability than it does return on investment. Setting aside the oil issue, it has been demonstrated time and again that individuals and businesses respond to tax policy. It’s a part of human nature that the legislature itself recognizes by serving up tax credit after tax credit and touting their effects on attracting film producers and independent explorers to the state. On the other hand, the most consistent effect that flows from high taxes is tax avoidance. If the U.S. didn’t have the highest corporate tax rate in the world, it wouldn’t have so many companies parking their profits offshore. (And it’s hard to blame them when the U.S. government blows billions of tax dollars collected from productive companies like ConocoPhillips on “green jobs” fiascos like Solyndra.) Critics of tax reform can point to a large number from an earnings report to advance their position if they wish, but it is precisely that upside from periods of high prices that fund the investments necessary to stem the production decline on the North Slope. Taking away that upside is one of the reasons a 2011 Department of Interior report ranked Alaska’s onshore regime dead last in North America from an investor perspective and next-to-last between Venezuela and Russia globally. The blessing of Alaska’s wealth of natural riches is a whim of nature. The technology, expertise and capital necessary to extract it are not. Many in Alaska are excited about Shell finally getting the go-ahead to explore in the Arctic this summer. The company has spent more than $4 billion between leases and two false starts that halted plans in 2007 and 2010 without, to date, sinking a single well into the areas it purchased more than half a decade ago. In the magic bean theory of economics, Shell must have found that $4 billion stuffed between some couch cushions by of one of its executives looking for a fresh $100 to light a stogie wrapped in a page from a Gutenberg bible. Or, more likely, Shell had to risk billions to earn that money as profit somewhere else so the company could spend it in Alaska. House Bill 110 may have gone too far in lowering tax rates without encouraging new investments. The governor’s special session legislation may have been “half-baked” as one of his own allies described it. None are blameless. But the Senate, with a mega-majority of 16 out of 20, couldn’t even come up with a plan after more than a year of harping over what was wrong with everybody else’s. It’s pretty easy to criticize someone else’s plan when you don’t have to defend your own. In the end, the state still lacks a comprehensive plan for increasing production and is still on the magic bean program hoping prices stay high or that companies will invest billions to benefit ballooning state budgets, unfunded pensions and the legislators who dole out the windfall. The Senate wants to look everywhere else for blame. Its members should try looking in a mirror.  


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