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

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

Moda Health suspension lifted; company must raise $179M

JUNEAU (AP) — Insurance regulators in Alaska and Oregon announced Feb. 8 that a company that had been suspended from offering health insurance policies in the states over concerns with its financial condition will be allowed to resume that business. The Alaska Division of Insurance and the Oregon Department of Consumer and Business Services said they have reached an agreement with Moda Health Plan Inc. aimed at stabilizing its financial position. The agencies said the agreement will allow Moda to resume selling and renewing policies to individual and group customers in Alaska and Oregon. Both states late last month suspended Moda from accepting new or renewal policies, citing concerns with the company’s financial situation. In a release, Patrick Allen, director of the Oregon department, said initially the agency thought it might be prudent for Moda to leave the individual market. The steps outlined in the consent order will instead allow consumers to continue their health coverage with no changes, he said. The agreement reached “is the best option for consumers because it will not disrupt their current policies,” he said. The department said it retains the ability to respond if Moda doesn’t comply with all the requirements in the order. “We worked very hard to keep them” in the market, said Alaska Division of Insurance Director Lori Wing-Heier. Moda is one of two companies that have been offering individual health insurance policies for Alaskans on the federally facilitated online marketplace. Wing-Heier said she has asked the federal government to put Moda back on the exchange and has also requested a two-week special enrollment period. Wing-Heier said people may have selected Moda but had not finalized their enrollment. The initial action against Moda took place near the end of the latest open enrollment period on the marketplace. Alaska officials in a release said both states came to an agreement with Moda over the weekend that outlines a plan for the company to stabilize its financial position and continue to offer coverage. The agreement calls for Moda to raise at least $179 million, which is expected to allow the company to continue providing services through 2016. Of that, $15 million would be put aside for the protection of Alaska policyholders, Wing-Heier said. Among other things, Moda also must obtain approval from Oregon regulators before awarding executive salary increases or bonuses. Wing-Heier said insurers not only in Alaska but across the country have had a tough time. Moda has made a commitment to try to stay in the market, she said. “They could’ve taken a much easier route and said, ‘We’re out of health insurance,’ or ‘We’re out of Alaska, period,’ and they did not take that,” she said. Since Jan. 27, Moda has worked through the process of assuring the Oregon Department of Consumer and Business Services of its ability to continue to serve its individual customers in Oregon and Alaska, said Robert Gootee, CEO of Moda Inc., the parent company of Moda Health Plan. “They have done an excellent job of quickly analyzing a difficult and rapidly changing set of circumstances,” he said in a statement. He said he’s pleased an agreement has been reached on a path forward. About 10,000 Alaskans are enrolled by Moda on the individual market and about 7,500 on the small group market, Wing-Heier has said. About 244,000 Oregon residents were enrolled in Moda plans in the individual, small group and large group markets as of Sept. 30, according to the Oregon Department of Consumer and Business Services.

McGuire’s bill to use Permanent Fund earnings gets hearing

JUNEAU — For 13 months, Sen. Lesil McGuire, R-Anchorage, has been working on a plan to use Permanent Fund earnings to partially balance Alaska’s state budget. In form and function, McGuire’s plan (formally, Senate Bill 114) introduced late in the 2015 session, resembles the one brought forward by Gov. Bill Walker late last year. “With my plan, you’ll bring in approximately $2 billion, and that will put you on a glidepath (to balancing the budget),” she told members of the Senate State Affairs Committee on Feb. 9. She added that “mine is not a whole plan,” and while it would eliminate a substantial chunk of the state’s deficit, additional taxes and further cuts will be needed to balance the annual budget. “This is only meant to stabilize one part,” she said. State Revenue Commissioner Randy Hoffbeck said the governor’s staff and McGuire’s staff used the same financial models and budget figures, and that any similarities aren’t coincidental. “Quite frankly, I think all the plans out there have the same essential target in mind,” Hoffbeck said. The principal difference between the two plans is their emphasis. The governor’s plan is designed to provide $3.3 billion per year to fund state government, but after its first year, Permanent Fund Dividends would be about $500 per person. Senate Bill 114 has a minimum $1,000 dividend, and it provides only about $2 billion per year for state operations. If oil averages $56 per barrel this fiscal year (July 1, 2015, through June 30, 2016), the state’s annual deficit will be about $3.5 billion. Through Feb. 8, oil has averaged $47.08, which puts the deficit at roughly $3.7 billion. McGuire said her bill “still leaves open the conversation for restructuring the size and cost of government.” The mechanics of McGuire’s plan are relatively simple. Right now, investment earnings from the $50 billion Permanent Fund end up in the Earnings Reserve account. That account pays dividends but otherwise accumulates interest and grows. Right now, it contains about $7 billion. While no one can spend from the Permanent Fund proper without a statewide vote, lawmakers can spend from the Earnings Reserve with a majority vote. McGuire’s plan would set up an annual transfer of 5 percent of the Permanent Fund’s value from the Earnings Reserve to the state budget. If the Permanent Fund’s $50 billion principal account earns more than 5 percent when invested on global markets, the system holds up. Dividends, instead of coming from the Earnings Reserve, would come from the state’s annual oil royalty check. Three-quarters of the state’s oil royalties (last year, about $961 million) would be devoted to dividends. The remaining quarter of the state’s oil royalties would go into the Permanent Fund principal. If implemented this year, McGuire’s bill would result in a dividend of a little more than $1,000. If not implemented, the traditional dividend formula (based on the Permanent Fund’s investment returns) is expected to result in a dividend of more than $2,000. One thousand dollars is “still a big dividend,” McGuire said, adding that in a state whose economy is dependent upon government spending, it’s important to keep the state budget balanced and stable. “The Permanent Fund Dividend is important,” she said, “but it’s not the only thing that’s important. Even Republicans can say that.” The Senate State Affairs Committee will meet again on Feb. 11 to hear legal analysis of the governor’s Permanent Fund earnings plan.

Oil price drop pushes Shell 2015 profit down 44 percent

LONDON (AP) — Royal Dutch Shell said fourth-quarter earnings tumbled 44 percent as the collapse in oil prices took its toll on another global energy giant. Profit adjusted for changes in the value of inventories and one-time items dropped to $1.83 billion from $3.26 billion in the same period a year earlier, the Anglo-Dutch company said Feb. 4. The results came days after Shell sealed a $52.4 billion takeover of BG Group Plc, which will increase the company’s proven reserves of oil and natural gas by 25 percent. While critics questioned the deal because of the plummeting price of oil, CEO Ben van Beurden promised it would rejuvenate Shell. The BG deal comes as Shell and other oil companies are slashing jobs and postponing investments to adjust the bottom line to the dramatically lower oil prices. Jobs will also be eliminated in the Shell-BG deal and other efforts to boost competitive performance. In a statement released last month just before shareholders voted on the BG merger, Shell said that streamlining and integration from the deal and other cost cutting would include the loss of 10,000 staff and contractor positions across both companies in 2015-2016. “In 2015, we significantly curtailed spending by reducing the number of new investment decisions and designing lower-cost development solutions,” van Beurden said. “Shell will take further impactful decisions to manage through the oil price downturn, should conditions warrant that.” Oil prices have been falling for over a year. Brent crude, the benchmark for international oil, hit a 12-year low of $27.10 a barrel in January, having been above $100 a barrel in September 2014. It traded at $30.32 on Feb. 9. Shell cut capital investment by $8.4 billion to $28.9 billion and slashed operating costs by $4.1 billion to $41.1 billion for 2015. The company expects another $3 billion in cuts this year. Net income improved 58 percent to $939 million. Van Beurden told reporters in a webcast that he expected prices would rebound later in the year or in the early part of next year. The fundamentals point to a higher price, he said. “Can oil prices go lower? I’m sure they can. Will they go lower? I don’t know,” he said. “If you look at ... the slightly longer run, you are not going to see structurally lower oil prices in the $30s.” The report comes amid sweeping changes for the company. Shell has exited from exploring in Alaska for the foreseeable future and cancelled the Carmon Creek heavy oil project. Oil supplies are high even though consumption growth has tailed off, particularly in China. OPEC members, meanwhile, haven’t wanted to cut production — even at a time Iran wants to turn on the taps after decades of sanctions. Campaign groups like Greenpeace suggest it’s time the oil companies focused on other forms of energy, citing more electric cars, solar panels, and better-insulated homes. “Shell and BP have bet heavily on the wrong energy sources, and now they’re losing big,” Greenpeace UK’s senior climate adviser Charlie Kronick said. “The problem is that with thousands of jobs, billions in investments and people’s pensions tied up with their companies’ fortunes, Big Oil’s bosses won’t be the only ones to pay for their shortsightedness.”

Companies lose billions buying back their own stock

NEW YORK (AP) — If you think your stocks are doing poorly, check out the performance of some of the most sophisticated investors, the ones with more knowledge about what’s going on inside businesses than anyone else: Companies that buy their own shares. The companies losing money on these bets are down a collective $126 billion over the past three years, a decline of 15 percent. Many corporations would have been better off investing that cash in an index fund instead of their own stock. The overall market rose 39 percent over the same period. The companies could also have distributed that cash as dividends to shareholders, allowing them to spend what is, in the end, their money. And it’s not just a few big corporate losers accounting for all the pain. The group includes 229 companies in the Standard and Poor’s 500 index, nearly half of the companies in the study prepared by FactSet for The Associated Press. When a company shells out money to buy its own shares, Wall Street usually cheers. The move makes the company’s profit per share look better, and many think buybacks have played a key role pushing stocks higher in the seven-year bull market. But buybacks can also sap companies of cash that they could be using to grow for the future, no matter if the price of those shares rises or falls. And the recent losses highlight another criticism: Companies may be good at finding oil or selling bathroom trinkets, but they aren’t always smart stock investors. Some corporations bought ever more of their own shares even as prices tripled from financial-crisis lows and several measures showed the market was overvalued. “Whenever you see a buyback, the company always says, ‘We think our stock is cheap,’” says Nicholas Colas, chief market strategist at brokerage ConvergEx Group. They are sometimes so confident that they take out enormous loans just to buy more and more shares. That those shares have now plunged in value is something Colas calls a “great irony” of the bull market. Among the companies with the biggest paper losses are struggling ones that bought after their stock fell, only to watch prices drop even more. Macy’s, the beleaguered retailer, is down $1.5 billion on its purchases, a 26 percent loss. American Express has lost $4.1 billion, or 34 percent. As the price of oil plunged, driller Chevron racked up $2.8 billion in paper losses, or 28 percent. The losses are also piling up in unexpected places, such as at companies that have generated solid earnings through most of the bull market, suggesting that there is danger when stocks of even top performers climb too high. Starwood Hotels & Resorts Worldwide and Ford Motor have each lost hundreds of millions on their buybacks, more than a fifth each of what they spent. Defenders of buybacks say they are a smart use of cash when there are few other uses for it in a shaky global economy that makes it risky to expand. Unlike dividends, they don’t leave shareholders with a tax bill. Critics say they divert funds from research and development, training and hiring, and doing the kinds of things that grow the businesses in the long term. “The company doing the most buybacks is often not investing enough in its business,” says Fortuna Advisor CEO Gregory Milano, a consultant who has written several studies criticizing the purchases. He says most buybacks are “financial engineering” and a waste of money. The study looked at 476 companies in the S&P 500 index, leaving out the index members that split off parts of their businesses during the period. Among the findings: $100 million club Nearly a third of the companies studied, 153 in all, lost $100 million or more on their purchases in three years. Not just about oil Four of the top 10 biggest dollar losers are energy companies. But big losses are hitting a variety of companies, including insurers and banks, retailers, technology companies, airlines and entertainment giants. Biggest winner, biggest loser MasterCard has the biggest paper gains from buybacks: $7.9 billion. IBM has the biggest paper losses: $9.8 billion. IBM says it isn’t neglecting long-term investments and notes that the money it spent on R&D, big projects and acquisitions last year was triple what it spent buying its stock. Gainers help, sort of When the companies that have profited from buybacks over the last three years are included with the losers, the paper losses narrow to $11 billion. Total spent on buybacks by all companies: $1.43 trillion, more than the annual economic output of all but 12 of 193 countries in the world, according to the World Bank. Stocks may bounce back, of course, turning losses into gains. But the history of buybacks isn’t encouraging. Companies often buy at the wrong time, experts say, because it’s only after several years into an economic recovery that they have enough cash to feel comfortable spending big on buybacks. That is also when companies have made all the obvious moves to improve their business — slashing costs, using technology to become more efficient, expanding abroad — and are not sure what to do next to keep their stocks rising. “For the average company, it gets harder to increase earnings per share,” says Fortuna’s Milano. “It leads them to do buybacks precisely when they should not be doing it.” And, sure enough, buybacks approached record levels recently even as earnings for the S&P 500 dropped and stocks got more expensive. Companies spent $559 billion on their own shares in the 12 months through September, according to the latest report from S&P Dow Jones Indices, just below the peak in 2007 — the year before stocks began their deepest plunge since the Great Depression. Bernard Condon can be reached at twitter.com/BernardFCondon.

The Bookworm Sez: The courage to say ‘yes’

For far too long, you’ve been holding back. Opportunities have presented themselves, and you’ve passed on them. Chances have leaped in front of you and you skipped them, but you’re not sure why. Some days, you feel like you’re in a 10-foot-deep rut; in the book “Year of Yes” by Shonda Rhimes, you’ll see how to get out. With two babies and a “tween” at home, several mega-hit productions, and hundreds of employees on her payroll, writer-creator-producer Shonda Rhimes had ample reason for turning down requests. She was busy — and she was also terrified. Rhimes is a private person, an introvert’s introvert. She hated publicity, interviews, and foofaraw, all of which scared her to the point of panic. “NO” was a much safer word until, on Thanksgiving Day a few years ago, her sister said six words that set Rhimes back on her heels: “’You never say yes to anything.’” A few days later, after those words sunk in, Rhimes realized how wrong it was that her sister was right. Rhimes was “miserable” and knew that she shouldn’t be, so before she was tempted to let the idea go forever, she texted a friend and vowed to say “YES” to everything scary for one years’ time. Almost immediately, the “Universe” sent her the first challenge: an invitation to speak at her alma mater’s graduation. Next came an invitation to interview with Jimmy Kimmel and, said Rhimes when it was done, “I didn’t die.” She said yes to letting go of outdated ideas about motherhood. She became “a big social butterfly” before learning to say yes to play. As an F.O.D. (a “First. Only. Different.”), she’d already said yes to “literally changing the face of television,” but she had to learn to watch the yeses she stuffed in her face… and she said yes to weight loss. She said yes to those who inspired her. She said yes to compliments. She said yes to learning how to appropriately say “no.” She said yes to singlehood because everybody’s “happy ending” is different. And she said yes because “Saying yes… is courage.” With all she has on her plate — one high-profile company, three kids, four hit TV shows — you should wonder where author Shonda Rhimes found time to write a book. And you should be glad she did. With wisdom, wit sharper than a Ginsu knife, and the warmth of a BFF, Rhimes takes readers on her year-plus-long journey, from “It’s NEVER going to get better” to a life of joy, on a road filled with potholes of self-doubt, hairpin curves, and the realization that inviting fears into her life wasn’t going to kill her. Yes, I loved it. Inspirational? YES, and because her TV creations are dramas, you’ll be surprised and delighted to find that Rhimes is a funny writer, too. She’s also thoughtful, and her experiences will make you think: maybe you do need play. Maybe you do need to learn when “no” is appropriate. Maybe you do need “Year of Yes,” no holding back. Terri Schlichenmeyer is the author of The Bookworm Sez, which is published in more than 200 newspapers and 50 magazines throughout the U.S. and Canada. Schlichenmeyer may be reached at [email protected]

Movers and Shakers 2/14/16

Darrell Friess and Margaret Nelson each captured the Top Producer Award for earned commissions in 2015, announced Broker Molly Friess of Alaska Real Estate Alliance Darrel Friess is owner and founder of Alaska Real Estate Alliance and Nelson is a sales associate. Dave Kemp was named the Central Region Director for the Alaska Department of Transportation and Public Facilities. Kemp has 11 years of public service with the department. Most recently he served as director for Statewide Facilities where he showed exemplary performance of managing the programming, design and construction phases of public facility capital improvement projects across Alaska. As an efficiency and cost-saving measure, Kemp will continue to oversee Statewide Facilities in his new role. Kemp will also continue to serve as the department’s Facilities Maintenance Shared Services project director. This project consists of a multi-departmental working group tasked with creating efficiencies to reduce costs and better manage State of Alaska public facilities. Kemp is a licensed professional engineer and project management professional. He holds bachelor’s degrees in business administration and civil engineering. Explore Fairbanks recently announced the election results and appointments of its 2016 Board of Directors. Executive Officers are: Matt Divens, Chair, Holland America Princess Alaska-Yukon; Dustin Adams, Past Chair, Regency Fairbanks Hotel; Kory Eberhardt, Chair Elect, A Taste of Alaska Lodge; Andy Anger, Treasurer, University of Alaska Fairbanks Community & Technical College; and Irene Meyer, Secretary, GoNorth Alaska Travel Center. Board members are: Communications Chair Jason Avery, Pioneer Park, Parks and Recreation, Fairbanks North Star Borough; Tourism Chair Mok Kumagai, Aurora Borealis Lodge; Meetings & Conventions Chair Patricia Silva, Westmark Hotel & Conference Center; Visitor Services & Partnership Development Chair Buzzy Chiu, Premier Alaska Tours; Audit Chair Kathy Hedges, Arctic Circle Trading Post; Public Policy Advisory Chair Andy Anger, University of Alaska Fairbanks Community & Technical College; Debbie Mathews, Expressions in Glass; Becky Kunkle, Wedgewood Resort, Fountainhead Hotels; Ashley Bradish, Gold Dredge 8 and Riverboat Discovery; Bruce LaLonde, Alaska Railroad; and Ralf Dobrovolny, 1st Alaska Outdoor School. Alaska Center for Ear, Nose & Throat welcomed Dr. Kaylyn Hum as the newest member of the practice. Hum is a certified audiologist, recognized by both the Academy of Audiology and the American Speech, Language and Hearing Association. Hum earned her clinical doctorate in audiology from the University of Utah in 2013. She is most passionate about pediatric audiology, including evaluations, amplification, Auditory Brainstem Response testing and bone conduction amplification. Prior to joining ACENT, she practiced at Alaska Native Medical Center. Julie Griffith and Katey Clem have been promoted to retail sales branch managers by Denali Federal Credit Union: Griffith at the Credit Union’s Wasilla branch, and Clem at the South Anchorage Walmart branch. Griffith has spent nearly seven years at Denali FCU, most recently as the assistant branch manager at the Wasilla branch. She had worked at National Bank of Alaska’s VISA department for six years, and owned her own car dealership prior to joining the credit union. Clem has more than five years’ experience at Denali prior to assuming her new position, most recently as the assistant branch manager at the South Anchorage Walmart branch. She is an active member of Business Networking International, currently serving on the membership Committee. She received a bachelor’s degree in psychology from University of Alaska Anchorage. Justin Shaw, PE, has joined the R&M Consultants Inc. Anchorage office. Shaw joined R&M’s Engineering Department as a project engineer in October 2015. As part of R&M’s Water Resources Group, he is responsible for hydrologic and hydraulic analysis and design of water resources, roadway, airport, site development, and hydropower projects. Shaw has more than five years of experience in water resources engineering. He has worked on numerous hydrologic, hydraulic, and erosion control projects for public and private sector clients, including the Louisiana Department of Transportation and Development, Department of Natural Resources, and Coastal Protection and Restoration Authority. He is experienced in creating H&H models, analyzing natural and man-made drainage systems, generating flood mitigation measures, and performing sedimentation and erosion studies. His work has focused on one- and two-dimensional modeling of riverine and coastal environments. Since joining R&M, Shaw has worked on a culvert replacement project near Galena to replace the existing, deteriorated drainage structure within limited right-of-way. He is also working on the Little Goldstream project near Nenana to replace an older bridge with a fish passable culvert. Shaw has master’s and bachelor’s degrees in civil and environmental engineering from Mississippi State University. He is a professional civil engineer licensed in Alaska.

Anchorage Assembly finalizes pot regs

Anchorage’s marijuana industry is set to begin, with a final package of municipal requirements coming weeks before the Marijuana Control Board starts accepting licenses on Feb. 24. Anchorage tightened certain regulations while holding off on others. New regulations increase buffer zones in Chugiak and Eagle River, add new buffer zone triggers to Anchorage marijuana businesses, bar small-scale commercial home grows, prohibit onsite consumption, and redraft the measurement standard between marijuana businesses and sensitive areas. Most restrictively, property buffer distances have changed. The Assembly narrowly approved a 500-foot separation distance from schools, which halved the earlier proposed 1,000-foot separation. However, that distance is no longer measured by the shortest pedestrian route, but “as the crow flies,” and from property line to property line instead of from entrance to entrance. This shortens distances some marijuana upstarts said they’d already counted on having nailed down, and nixes marijuana facilities adjacent to a sensitive area's property line. “Many of my clients’ spaces were fine this morning,” said Jana Weltzin, a marijuana business attorney. “And as of tonight, many are now back to square one after months of careful property location scouting and efforts.” Weltzin said the Assembly’s final regulations make the industry impracticable — echoing earlier claims that the Assembly opens itself to legal challenge. Assembly members emphasized that the ordinances will be an ongoing project and certainly be revised as time passes. Members maintained earlier sentiments about wanting to start slowly with the new industry, rather than open floodgates too quickly and have to scale them back. Caution, they said, should not be misinterpreted as antagonism. “Politics is the art of the possible,” said chairman Dick Traini. “It’s a compromise. We’ve got a better document now. We’re going to have to tweak it. We want to see you guys successful.”   500-foot buffers Restrictions tempered an early concession to cannabis industry concerns. Introduced by assemblyman Patrick Flynn, an amendment recalls the city’s earlier insistence that it avoid federal scrutiny with a 1,000-foot buffer zone from schools. Flynn argued that the best way to thwart the black market is to make the industry as easy as possible for the regulated market. With a land crunch in Anchorage making retail and industrial space scarce, Flynn said the industry needs more lax rules to avoid being priced out of existence.  “There’s just limited land available in the Anchorage Bowl,” said Flynn. “We’re already seeing a premium charged on facilities available under the 1,000-foot standard.” Members Amy Demboski and Paul Honeman both argued the federal government’s scrutiny should steer the Assembly to caution, but member Bill Evans said the fear is misplaced; if the feds want to bust marijuana businesses, they need little reason, as the substance is still federally illegal. Encouraging the regulated market, he said, will help the schools’ children more than a 1,000-foot distance. “The feds can (shut down a business) if they make it 10 miles away,” said Evans. “The regulated industry doesn’t sell to kids, whereas the black market does…the 500 limitation…is the safest way for the kids; 1,000 feet, I’m not sure there’s any magic, really, about that distance.”   Cannabis less welcome in Chugiak and Eagle River Several amendments introduced by Demboski effectively zoned Chugiak and Eagle River out of the industry, according to marijuana industry stakeholders. Demboski, who attended meetings with Eagle River community council last weekend, said she chose conservative rules specifically to meet the needs of the community she represents. Her district largely disapproved of legalization. “This is one of those moments, this night, there may be some things I would do differently if I was acting individually,” said Demboski at the meeting’s prelude. Eagle River residents looking to enter the legal marijuana market said they feel cheated as Anchorage taxpayers. “I feel like an overprotected Eagle River child that’s not able to participate in the recreational marijuana market,” said Jessica Jansen, co-founder of Canna Farm Co-op. Demboski submitted a battery of amendments with varying degrees of success. Some, like a 500-foot buffer for video arcades, died a quick death with a majority vote against it. Others received more consideration and more favorable votes. In the end, Demboski succeeded in securing a 1,000-foot buffer from an Eagle River community center, a removal of marijuana retail stores from all B-3 zones in Chugiak and Eagle River, and a 1,000-foot buffer from all dedicated parks in Chugiak and Eagle River. Other Demboski amendments applied to Anchorage at large and revived previous restrictions the Assembly’s Planning and Zoning Commission had stripped out of its recommendation to the Assembly. Demboski tried to reinstate a buffer trigger for dedicated parks — of which Anchorage has roughly 10,000 acres — but was voted down. The Assembly forwarded the special land use package to the Planning and Zoning Commission late last year, complete with the setbacks for parks, childcare centers, and homeless shelters. After a round of outraged industry comment, the commission loosened some of the proposals in their final recommendation to the Assembly. Another amendment introduced by Demboski added childcare facilities back into the buffer zone. The Planning and Zoning Commission had stripped this provision out of the assembly’s packet earlier after industry complaints that the measure would remove too much available land. These specifically apply to businesses license to provide care for nine or more children, according to Demboski. Demboski admitted during debate that she disagreed with the Planning and Zoning team’s recommendations, saying they “drastically altered” the Assembly’s “original intent.” The ballot initiative included an opt-out clause for localities, and several have already done so. Chugiak and Eagle River, however, are not their own municipalities or villages. Traini said closing off specific areas for specific businesses is allowed by Title 21.   Pot clubs and home grows Pot Luck Events — the Anchorage marijuana club that allows members to bring and share product — will continue operations for now. The Assembly opted not to go through with ban on clubs, which are neither prohibited nor approved by state regulations. However, the Assembly did opt to prohibit state-regulated onsite consumption licenses, saying they plan to review the state’s final provisions when licenses become available. Assembly regulations also put a halt on small marijuana cultivators. An amendment to allow limited commercial marijuana grows in residential areas failed. Pete Petersen, the amendment’s author, said he wanted to acknowledge a reality of the black market and try to collect tax dollars the city may be missing. “The more of the black market growers that become legitimate business people, the more taxes the municipality is going to collect,” said Petersen. “Right now, there are no warehouses growing marijuana. All the marijuana being grown in Anchorage is grown in residential areas. It’s been going on for decades.” The amendment failed overwhelmingly on a 9-2 vote, however. Assembly members acknowledged the same black market reality, but said the dynamics change when people openly profit from it. “People do not want this in residential areas,” said Hall. “I understand what Mr. Petersen is saying. I think it becomes a totally different situation when you legalize them and everybody knows they’re there.”   DJ Summers can be reached at [email protected]  

Construction forecast down 18% to 2013 levels

Alaska’s contractors will begin to feel the effects of the new oil reality in 2016 as statewide capital spending declines about 18 percent from last year, according to a construction industry forecast. The University of Alaska Anchorage Institute for Social and Economic Research projects just more than $7.3 billion will be spent on capital projects in 2016. About $8.9 billion was spent on construction projects in Alaska last year. “Our short-term outlook is challenging,” Associated General Contractors of Alaska Executive Director John MacKinnon said during a Jan. 28 presentation in Anchorage. ISER compiles the industry data for AGC of Alaska’s annual spending forecast. MacKinnon noted that the contraction in outlays is neither positive, nor a catastrophe; it takes the industry back to 2013 spending levels. Statewide construction employment in 2013 peaked at 20,700 jobs in late summer and averaged 16,600 workers throughout the year, according to the state Labor Department. Preliminary Labor numbers show the industry averaged 18,100 workers in 2015. Not surprisingly, the spending decline will be led by the oil and gas sector, which is expected to be down 25 percent at $3.1 billion from an all-time capital spending high of $4.2 billion last year, according to ISER Professor Emeritus Scott Goldsmith. The annual wellhead value of North Slope crude has fallen from about $20 billion several years ago to $10 billion in 2015 and is projected to be roughly $5 billion this year, Goldsmith said. Less revenue translates directly, he said, into less spending on exploration and maintenance of existing fields. However, spending on oil and gas development projects is often separate from immediate price fluctuations, as evidenced by the record 2015 industry capital spend in Alaska while oil prices fell throughout much of the year. Several major projects, including Shell’s offshore Arctic exploration, the Point Thomson gas project led by ExxonMobil, and ConocoPhillips’ CD-5 oil development, mostly wrapped up last year, leading to an organic spending vacuum. A bright spot for this year is ConocoPhillips’ $900 million Greater Moose’s Tooth No. 1 oil project in the National Petroleum Reserve-Alaska, which was sanctioned late last year. The age of the North Slope fields — Prudhoe Bay is closing in on 40 years of production — also helps spur workforce demand that is disparate from oil prices, Goldsmith said. “One of the things that is a positive is that jobs in oil and gas related industries — construction related oil and gas — continue to grow as production declines,” he said. “Aging fields require more maintenance and smaller fields require more workers for a given barrel of oil.” Projections were mixed for other industries outside of the dominant oil and gas sector, which supports about 40 percent of the total capital spend in the state. Transportation spending, pegged at just more than $1 billion, will be down slightly due to less work on the state’s ports and harbors. The Matanuska-Susitna Borough’s Port MacKenzie rail extension, which has relied on state capital appropriations, is also stalled this year for lack of money. Large state capital appropriations in the 2012 and 2013 fiscal years have supported many projects across Alaska; however, expenditures from public-supported capital projects will fade in the coming years if the state continues with sparse capital budgets. According to ISER, money from public projects “hits the street” over six years after the initial approval, with peak monies available two years following the appropriation. Gov. Bill Walker’s administration has proposed a $500 million general obligation bond package to fund capital projects in the 2017 budget being debated in Juneau now. Utility spending is expected to be down by a third to $459 million in 2016 mainly because, similar to oil and gas, several large projects wrapped up in 2015. Matanuska Electric Association and Golden Valley Electric Association both commissioned new power plants in 2015 and Anchorage’s Municipal Light and Power is nearly done with its replacement plant started in 2014. Most of the utility spending will be from nearly 50 small projects going on across the state, according to ISER. Long-term, Alaska’s Railbelt electric utilities are currently debating whether major upgrades, estimated at upwards of $900 million, are needed for the region’s transmission system. Defense spending is projected to reverse a several year trend and increase by more than 25 percent to $552 million this year. Work scheduled at Eielson Air Force Base in Fairbanks includes a new flight simulator in preparation for new squadrons of F-35 fighters and upgrades to the base’s heat and power plant. Upwards of $1 billion will be invested in missile defense systems over the coming years at Clear Air Force Station near Nenana and Delta Junction’s Fort Greely. “Anytime that kid in North Korea starts playing with fireworks it bodes well for Defense spending in Alaska,” MacKinnon quipped. Construction spending by Alaska’s large mines will remain flat at about $180 million in 2016, despite depressed metal prices, Goldsmith said. He noted lower oil prices can help the bottom lines of the state’s mines, many of which are remote and rely heavily on diesel fuel for not only equipment but for electrical generation as well. “I was surprised to find that all of the existing world-scale mines in Alaska are spending at higher rates than they have in years past and that’s to upgrade their facilities, to expand their facilities to be able to take advantage of new discoveries that will extend the lives of their mines,” Goldsmith said. Health care’s capital spend will be down about 20 percent at $195 million, ISER projects, again, as new construction in Anchorage, Kenai and Ketchikan is completed. Alaska’s health care industry has grown steadily both on the capital and employment sides for more than a decade. One major hospital project expected to start this year is the Yukon-Kuskokwim Health Corp.’s new $287 million clinic and hospital in Bethel. YKHC received a $165 million U.S. Department of Agriculture loan for the project, the largest single loan the USDA has ever approved, according to corporation leaders. Elwood Brehmer can be reached at [email protected]

Negotiations among producers challenging AK LNG timeline

Progress has slowed in fiscal negotiations among the state’s partners in the Alaska LNG Project, raising concerns that agreements might not be in place to meet critical deadlines. At the top of the list of eight agreements still needing to be resolved is the Gas Balancing Agreement, the foundation necessary for the other issues to fall into place, project leaders told the Senate Resources Committee Jan. 27. Representatives from BP and ExxonMobil stuck mostly to vague boilerplate statements, saying the negotiations are hitting “speed bumps,” that should in a way be an encouraging as a sign the tough issues are being addressed. Bill McMahon, a senior commercial advisor for ExxonMobil, said the project must have “agreeable, competitive and durable” fiscal terms for each party — the State of Alaska, BP, ConocoPhillips and ExxonMobil. “The key is making sure we have a clear understanding of positions and making sure we find ways to bridge those gaps,” McMahon said to the committee. ConocoPhillips Vice President of Commercial Assets Leo Ehrhard offered more telling testimony, saying the project faces “significant economic headwinds” as oil and natural gas prices have fallen. LNG prices in Asian markets have slid by up to 60 percent since early 2014, the beginning of major work on the project, he noted. As it stands, the $45 billion-plus Alaska LNG Project has made it farther than any of the other previous attempts to monetize the massive North Slope natural gas resource. “Should we find an impasse on these agreements, we will not stand in the way of the project and will make our gas available to the state on commercially reasonable terms,” Ehrhard said. In early December, the state received commitments from BP and ConocoPhillips to sell their shares of gas to the state for “commercially reasonable terms” in the event either pulls out of the Alaska LNG Project for any reason. Analysis of the potential purchase found the state would have to come up with $19.2 billion to purchase ConocoPhillips’ 22 percent share of the project’s gas at a price of $4 per thousand cubic feet. That would be on top of the $13 billion-plus the state is already committed to for its quarter-share of Alaska LNG Project construction costs. The three producers and the state are collectively paying more than $690 million for the current preliminary front-end engineering and design phase, or pre-FEED. A decision to move to the full front-end engineering and design, or FEED, will require a commitment of $2 billion or more among the four parties proportional to their ownership shares. “In these times we have to be careful stewards of our cash,” Ehrhard said. Negotiating the Gas Balancing Agreement, also known as the gas supply agreement, is mostly up to the producers, the companies acknowledge. It determines how the parties, each with varying shares of gas in two fields, Prudhoe Bay and Point Thomson, will manage offtake from the fields. After the Gas Balancing Agreement there are seven other issues that must be hashed out. According to Gov. Bill Walker’s administration, they are as follows: byproduct handling terms; field cost allowances; modifications to state leases for the Point Thomson field; marketing agreements; project governance agreements; system use agreements; and in-state gas sales. Department of Natural Resources Deputy Commissioner Marty Rutherford said the state is involved in the negotiations but is not a signatory to the balancing agreement. (Editor's note: Rutherford told the Journal in a follow-up interview that she misspoke in her committee testimony and that the State of Alaska is a signatory to the agreement.)  She noted the producers have been good at recognizing the state’s share in the process. Having two fields to draw from provides security that gas will always be available, but it adds challenges as well. The agreement becomes increasingly complex when accounting for field downtime, for maintenance or otherwise, on top of making sure each party can get its gas off the field when the market wants it. These issues are usually resolved earlier in the process through field unitization that helps simplify the agreements, Ehrhard said. In the case of Alaska LNG, blending varied ownership of multiple gas fields into one pipeline adds to the challenge. “We have probably the only project in the world that’s being sourced from two separate fields with separate interests across those fields,” he said. Once in place, the Gas Balancing Agreement provides the state with a path to its 25 percent share of the project’s gas derived through royalty and tax payments, according to Ehrhard. “We see that it’s unlikely, from just the amount of time that’s left in front of us, to try and conclude an agreement of this complexity,” he said. “On the commercial side, we’re just not as far along as we’d like to be. We’d like to be in a position to have this agreement behind us.” Walker has said for several months the fiscal terms of the project need to be hashed out by sometime this spring in order to hold a special legislative session so the state can give its approval, or not. The long-term commercial agreements will bind the parties together for at least the 25-year initial life of the LNG export project. They also need to be done soon so the administration can draft a constitutional amendment required to allow the state to enter long-term the financial contracts, which amount to tax commitments. The Legislature must vote on and approve the amendment in time to send it to the Division of Elections by June 23, the deadline for placing it on the general November ballot, at which point the voters will take up the issue. Because amendments to the state Constitution must be taken up on a general election ballot, falling short of the timeline likely means delaying the project at least two years. Rutherford told the Senate committee that much progress has been made on the technical side of the project, mainly aimed at reducing costs, but the administration is concerned about the pace of the negotiations, as the governor noted in a Jan. 18 letter to the Alaska leaders of the producers. “We will have to step up the pace in order to meet the spring special session,” Rutherford said. In his letter, Walker wrote that he is “increasingly concerned” about the progress of the negotiations, given a 2015 deadline set out in the original Heads of Agreement to have fiscal terms completed has already passed. “I have been extremely patient in allowing the negotiations to proceed in the hope that the parties will reach alignment on the agreements necessary to move the AK LNG Project forward and thereby commercialize Alaska’s gas,” the governor wrote. He continued to explain that he would seek to move a gas project forward in other ways if the parties fail to reach alignment in 2016. “If the parties do not reach alignment on these important contracts and issues, then I will have no other choice but to consider other options for commercializing Alaska’s gas,” Walker wrote. “In addition, absent any such alignment on all of these agreements and issues, my administration will be unable to support any fiscal contract that the producers may seek, or a constitutional amendment supporting such fiscal contract.” Pre-construction work is all but complete on the state-led Alaska Stand-Alone Pipeline project, but the economic viability of the smaller project is seriously questioned.

Bycatch spike, meeting spur trawl stand down

Gulf of Alaska trawlers are flocking to a meeting in Portland, leaving behind a halibut bycatch situation the North Pacific Fishery Management Council is attempting to fix. The trawlers have complaints with council process, but are also standing down from a halibut bycatch spike resulting from a pollock price dispute with area processors. Industry sources say the stand down was already underway prior to a letter from prominent Gulf of Alaska trawl organizations on Jan. 28 asking for the council-related stand down. Trawl industry representatives said the two stand downs are unrelated. Thirty-four Central Gulf of Alaska trawlers and 19 Western Gulf of Alaska trawlers have agreed not to fish from Feb. 3-6, showing solidarity with those trawlers traveling to Portland to testify at the council meeting. No pollock, lots of halibut Before the Jan. 28 letter, a pollock price dispute spun into high halibut bycatch. Processors set a low pollock price for the Gulf of Alaska this year; sources said processors are offering 8 cents per pound for pollock less than 800 grams (1.78 pounds) in weight compared to a more typical 12- to 15-cents range. These smaller fish, the majority of this year’s early catch, also have little roe for finished products, and those prices are relatively low as well. In response, trawlers who’d come to the Central Gulf for pollock fished for groundfish instead and their nets filled with halibut bycatch.  While fishing for non-pollock groundfish such as Pacific cod, the Central Gulf of Alaska groundfish fleet collectively caught 110 more metric tons of halibut this year than through the same period in 2015, or about 242,000 pounds. “Last week, they thought they were getting into some halibut and getting some high rates,” said Mary Furuness, a resource management specialist with the Alaska Region of National Marine Fisheries Service. “We were getting PSC (prohibited species catch) rates extrapolated to the rest of the fleet from the observers. So they decided to have a voluntary stand down and stop targeting non-pollock species.” Through Jan. 24, the fleet caught 118 metric tons of halibut compared to the same period in 2015 when they caught only 8 metric tons.  Gulf of Alaska processors say they are not taking deliveries for trawl-caught groundfish, though managers clarify it is a vessel decision not to fish, not a processor decision not to accept deliveries. Both the Kodiak Ocean Beauty and Kodiak Trident Seafoods, two of the region’s largest processors, have confirmed their fleets are standing down. Gearing down for Portland Julie Bonney, executive director of Alaska Groundfish Data Bank, said the stand down’s organizers set the current council-driven stand down date on Jan. 18, two days before the season began and the halibut bycatch rate spiked.  “This is really quite unique,” said Bonney. “Fishermen agreeing to stand down, essentially losing income, in order to make this trip to provide their input demonstrates just how important this change in management is to the fishing industry.” Each vessel will likely lose between $30,000 to $50,000 in total revenue, she estimated; vessels lose two trips worth of fishing over the four-day stand down. Similarly, the Gulf’s 1,500-odd processor workers could lie idle and payless in shoreside bunkhouses with no fish to scale and gut. Bob Krueger, executive director of Alaska Whitefish Trawlers Association, said the stand down’s organizers wanted to show unity. “We don’t want someone going out and fishing while other vessel crew are closing operations to go to Portland,” he said. “It’s a fairness issue for everybody.” Salmon and halibut bycatch in the Gulf of Alaska drives the council’s agenda for early 2016. The council has lowered the bycatch caps for halibut and set caps for chinook salmon for the Gulf fisheries in the last few years and will decide on an entirely new management scheme in 2016 or 2017. The 2016 halibut cap dropped 3 percent from 2015, and the council could potentially lower it further. On Jan. 29, the executive directors of some of Gulf’s largest trawler organizations circulated a second letter to media explaining the rationale behind the stand down, outlining criticisms of proposed bycatch management. The letter described a host of issues the fleet has with the council’s latest Gulf of Alaska options. The Gulf of Alaska groundfish fishery is one of the few fisheries in the North Pacific that has no quota system, which assigns individual vessels specific amounts of fish every season. Most other fisheries have such management, ending derby style fishing where the “race for fish” makes the occupation dangerous and unpredictable and results in greater bycatch rates. Trawlers also have high bycatch rates for halibut and chinook salmon. Both fish are in a low abundance state compared to previous decades. Managing bycatch is a top priority for the North Pacific council. New management has already proven problematic. In 2015, chinook salmon bycatch caps closed Western Gulf trawlers down prematurely; the council had to make an emergency shift of chinook salmon bycatch quota for the fleet to resume fishing. “The management structure we have right now just does not work,” said Krueger. “We’re set up to fail again unless we get another management structure. The last thing the state needs is to have the economy of the Gulf melt down.” Preferred alternatives Trawlers protest one alternative in the current management package, which they say didn’t have enough public input before an Alaska council member added it in October 2015. The trawlers’ preferred alternative, they said, came from former Alaska Department of Fish and Game Commissioner Cora Campbell after two hard years of public input throughout the council process. The Alaska ADFG commissioner holds one of 11 voting seats on the North Pacific council. In 2014, however, Gov. Bill Walker entered the governor’s mansion and brought new fisheries managers with him. He appointed Sam Cotten to fill Campbell’s commissioner position. During the council’s October meeting in Anchorage, Cotten forwarded a new option to the Gulf of Alaska bycatch management discussion, naturally without the same amount of input as Campbell’s. Gulf of Alaska trawlers say the option does nothing to help bycatch, and could damage the Gulf’s economy. Cotten’s option, Alternative 3, only creates an individual quota system for bycatch, rather than for the target species. Trawlers say this does nothing to end the race for fish, as vessels will simply fish up to their individual bycatch limit instead of the fleet wide limit. This would depart from other North Pacific area management, which gives quota for both bycatch and directed species. “Alternative 3 introduces a catch share program significantly different from those programs already implemented in other Alaska fisheries,” reads the trawlers’ letter to the council. “In fact, so far as we are aware, there are no programs in any fishery worldwide similar to that proposed under Alternative 3.” Further, Alternative 3 doesn’t have the same community protections against overconsolidation, such as port landing requirements for on shore processors and vessel use caps. “It is difficult to understand why the Council would pursue management measures that hamstring the industry’s ability to provide these economic benefits to Alaska’s fishery dependent communities while also meeting the Council’s bycatch reduction requirements,” reads the letter. DJ Summers can be reached at [email protected]

‘Permission slip’ offered to use Fund earnings

Politicians are often accused of being childish, and the leaders of some of Alaska’s largest companies and interest groups are asking Alaskans to sign a “permission slip” allowing legislators to use Permanent Fund earnings as the basis for a solution to the state’s nearly $4 billion budget deficit. Led by GCI co-founder and CEO Ron Duncan, the newly formed Alaska’s Future coalition has the singular mission of pushing the Legislature to finally use the $50 billion Permanent Fund for its original purpose: to pay for state operations when resource revenues are depleted. Speaking during a Jan. 29 forum in Anchorage hosted by the policy think tank Commonwealth North, Duncan stressed that state government needs to solve its budget problem not only to save itself, but more importantly to save the private economy. He noted GCI’s capital budget, at $225 million this year, as one of many potential casualties of inaction by the Legislature this session. GCI also employs more than 2,200 people in Alaska. “If in June or July or August or September or whenever the legislators go home this year there is no solution in sight there is no way (GCI) can continue to make that investment because we will be looking out the front window and seeing an economic cataclysm within 18 months,” Duncan warned. The list of Alaska’s Future co-chairs is short but powerful. It includes Duncan, NANA Development Corp. President Helvi Sandvik, Cook Inlet Region Inc. CEO Sophie Minich, former Democratic Gov. Tony Knowles, Alaska AFL-CIO President Vince Beltrami, former Administration Commissioner and founder of the Andrews Group management firm Eleanor Andrews and Fairbanks businessman Steve Frank. Duncan said he took an interest in the daunting issue of closing the multi-billion dollar gap in late summer when he examined what taxes and spending cuts would do to his business. He quickly became consumed by the grim budget situation. Alaska’s Future projects, much like many Alaska economists and general budget gurus have, that the state can maintain its current revenue system and live off its total savings of about $15 billion for three more years — give or take a year with market, oil price and spending fluctuations — before going broke. Spreading a politically ambiguous mantra is Alaska’s Future’s job, according to Duncan. The group, that just formally launched Jan. 26, will employ a broad media campaign to spread the word, he said in an interview. The home page of GCI’s website incorporated a scrolling Alaska’s Future ad Feb. 1. “When we did our focus groups we learned that people believe that there’s a problem; they’re willing to make some personal contributions to solve it, but they don’t believe what their public officials are telling them.” Duncan said. “They do believe their employers; they believe their labor unions; they believe their teachers; they believe people in their community councils and their churches and to get this message out we need to get people who are willing to carry this message to their affinity groups.” Alaska’s Future’s members list included the names of nearly 90 Alaska businesses, nonprofits and influential Alaskans on Feb. 1. If the Legislature does not move to capture the investment earnings of the fund for government operations this session, Duncan predicted businesses statewide will pull back spending and trigger an “economic catastrophe” ultimately resulting in the loss of upwards of 10,000 private sector jobs. Historically, the Permanent Fund’s realized earnings have primarily been reinvested in the fund and paid dividend checks to Alaska residents. The principle of the fund is off-limits to the Legislature per the state Constitution. “If you like the current dividend formula you can keep it for three years,” Duncan said. “You’ll give up your economy in the process, but you can keep the dividend.” Gov. Bill Walker has proposed shifting state resources to what is known as a “sovereign wealth fund,” which would pump revenue that had previously gone directly into the General Fund through the Permanent Fund, so the money can earn an investment return. The state would then draw from the earnings of the Permanent Fund each year to pay for operations. Duncan credited Walker’s overall plan that includes further spending cuts and increased taxes for putting “a target on every special interest in the state,” but emphasized that Alaska’s Future is not endorsing any specific political plan. Sen. Lesil McGuire, R-Anchorage, introduced her own proposal to revamp how the state uses the Permanent Fund last session in Senate Bill 114. “We will cheer for either plan that gets adopted,” Duncan said in an interview. He noted that maintaining a sustainable dividend is a related emphasis of the group. Walker’s New Sustainable Alaska Plan would pay dividends with half of the state’s annual resource royalties, likely cutting the projected size of future dividends. McGuire’s bill would use a similar, but slightly more dividend-friendly formula. While recent dividends have some of the largest the state has paid, it bears noting that future PFDs under the current system are tied to often-fickle financial markets, much the same way Alaska’s General Fund is coupled to a collapsed oil market. SB 114 would sustainably pull roughly $2.5 billion from the fund’s Earnings Reserve account each year and the governor’s plan would put more money directly into the fund each year and draw about $3.2 billion annually. Knowles said factions on either side of the political spectrum that demand more cuts to government spending or revenue generation — taxes in some form — before using the Permanent Fund are missing the point of the argument. “The reason why the cornerstone of the Permanent Fund earnings comes first is because that gives you the time before you lose the crucial mass of your (savings) assets to make other tough decisions,” Knowles said. “It’s not a question of what you like the best, it’s a question of what’s the most effective.” Taking the one big step of revamping how Alaska uses its wealth in the Permanent Fund would give the Legislature and Walker another two years to hash out the finer points of taxes and spending cuts. The state cut about $800 million from its overall 2015 fiscal year budget; however, about half of the reduction came from one-time cuts in the capital budget. Walker’s plan includes additional but smaller cuts to spending over the next two fiscal years. Sandvik said in an interview that she became comfortable with joining Alaska’s Future when she learned that keeping a dividend is part of the group’s mission. Originally from the Northwest Alaska village of Kiana, she said the checks every fall help rural families and struggling urban residents alike pay essential bills. Using the Permanent Fund properly also allows the state to stabilize its finances without wholesale cuts to critical programs. “You feel the pain a little bit sooner in rural Alaska when you start cutting state services,” Sandvik said. Elwood Brehmer can be reached at [email protected]

Walker gives Ruffner second shot at Board of Fisheries

Gov. Bill Walker announced three new nominees to the Board of Fisheries on Feb. 2, including one who lost a bruising confirmation fight to the same body in 2015. Walker once again put forward Kenai area habitat advocate Robert Ruffner for a seat on the board, but this time his nomination has been promised to go smoother after a campaign waged against him last year by sportfishing advocates that resulted in a 30-29 defeat in the Legislature. Walker had at least two openings to fill with the resignations of Bob Mumford and Tom Kluberton, but he also announced he is replacing Dillingham commercial fisherman and current board member Fritz Johnson, who was nominated to the board in 2013 by former Gov. Sean Parnell. Ruffner received the governor’s call on Feb. 1, and after a talk with his wife decided he was up for another round. In a telephone interview, he said he still has plenty to offer the board, though the nomination came as a surprise. “I don’t know how it’s going to turn out, I didn’t even think I was eligible for a year,” Ruffner said. “Nothing’s changed, I think I’d be good at doing the job. Hopefully there will be less drama this year.” Ruffner said believes this year won’t breed the same kind of ugly political fighting that led to his narrow Legislative defeat in 2015. “I have had the assurances that it won’t happen, and I hope it won’t,” he said. Ruffner’s “assurances” from the governor’s office are well-founded. Sportfishing industry representatives said they support all three of Walker’s appointments, including Ruffner. They don’t anticipate the same legislative fracas for Ruffner, as Walker is nominating him to replace a commercial fisherman on the board rather than a sportfishing seat. “We support all three of the governor’s appointments,” said Ricky Gease, executive director of the Kenai River Sportfishing Association, which led the fight against Ruffner in 2015. Gease said the sportfishing industry’s issue with Ruffner last year concerned board composition, which isn’t an issue in the current board lineup. In 2015, Ruffner would have replaced Karl Johnstone, the former chair and a sportfishing industry representative on the board. Gease’s organization wanted to ensure that the sportfishing interests of the Anchorage area, which they emphasized are the state’s largest, were satisfied. “Those are satisfied with the appointments this year,” Gease said. “I think those issues are not going to be raised.” Gease, like Ruffner, said he interprets the nominations as a signal that Walker is willing to shake up the board’s customary user group and geographical designations. Fritz Johnson, a Bristol Bay commercial fisherman, was not reappointed, leaving the board without a Bristol Bay representative. Ruffner seemed pleased with Walker’s full nominee list. He said it indicates a willingness on the governor’s part to alter the current custom of stacking the board with equal numbers of competing interests. “It seems like with the list of names…he still has that idea, that the dedicated seat idea is not the right way to do this business,” said Ruffner. “Picking a candidate based on how much they’re opposed to another particular gear type isn’t the right idea. I think picking individuals with a balanced view is a better way to look at it.” “Most of the drama,” he said, comes from Upper Cook Inlet. He said he hopes he can “roll up his sleeves and go to work” on statewide issues. Besides Ruffner, Walker nominated Alan Cain and Israel Payton for seats on the board. Cain, of Anchorage, is a natural resources enforcement advisor and trainer, with 40 years of experience as an Alaska Wildlife Trooper, criminal justice planner, and private contractor. According to a release from the governor’s office, “During that time, he spent 15 years as an enforcement advisor to the Alaska Board of Fisheries” and “worked closely with the Alaska Department of Law, board members, and the public to develop clear and enforceable regulations for the Alaska Board of Fisheries.” Payton, of Wasilla, is currently a salesman for Airframes Alaska and has worked as a hunting and fishing guide in Southcentral and Western Alaska for 20 years. According to the release, Payton is from Skwentna and grew up living a subsistence lifestyle. He’s also a member of the Mat-Su Fish and Game Advisory Committee. With the 2017 Upper Cook Inlet meeting approaching, the nominations are sure to draw scrutiny from user groups and legislators in the area. The fight over Ruffner began last year after Walker ousted the previous board chair Karl Johnstone, a representative of the sportfishing users, and replaced him with commercial fisherman Roland Maw, previously of the United Cook Inlet Drift Association. Maw withdrew from consideration on Feb. 20, 2015, as he faced charges for illegally obtaining resident hunting and fishing licenses in Montana, leading Walker to nominate Ruffner, who was painted as too sympathetic to commercial interests and not representative of the state’s population center in Anchorage and the Mat-Su Valley. Maw was charged Jan. 13 by the State of Alaska with 12 felonies and five misdemeanors for illegally obtaining Permanent Fund Dividends and resident hunting and fishing permits in Alaska. After Ruffner lost his bid for confirmation, Walker eventually named Mumford to serve in the interim, but Mumford recently tendered a letter of resignation effective at the end of the current board meeting cycle in March. Walker also nominated Guy Trimmingham of Hope, a veteran hunting guide, and reappointed Nathan Turner, a wilderness trapper from Nenana, to the Alaska Board of Game.   Former fish board nominee pleads not guilty to fraud, theft By Rashah McChesney, Associated Press JUNEAU — A former Alaska Board of Fisheries nominee has pleaded not guilty to 17 felony and misdemeanor charges that he fraudulently obtained commercial fishing permits and Alaska Permanent Fund dividend payments. Roland Maw entered his plea Feb. 2 in court in Juneau to the 17 counts covering theft and unsworn falsification. Maw was charged on Jan. 13 with illegally collecting more than $7200 in dividends between 2009-2014. His lawyer, Nicholas Polasky, said his client declined to comment after the hearing. Gov. Bill Walker appointed Maw, a Cook Inlet commercial fishermen, in January 2015. He withdrew his name from consideration suddenly last February and faced criminal charges that he illegally obtained resident hunting and fishing licenses in Montana. He pleaded no-contest to the charges, paid more than $7,200 in fines and lost his privileges to hunt and fish in Montana and all of the Wildlife Violator Compact States, including Alaska.

Lawmakers propose bill to privatize air traffic control

WASHINGTON (AP) — Responsibility for the nation’s air traffic control operations would shift from the government to a private, nonprofit corporation under legislation introduced Feb. 3 as part of an overhaul of how Washington oversees the aviation system. The measure extends for six years the authority of the Federal Aviation Administration and continues its role as the regulator of aviation safety, including the safety of air traffic operations. It also prohibits cellphone calls by airline passengers in-flight, and requires airlines refund bag fees when checked bags arrive more than 24 hours overdue. But the FAA would lose responsibility for day-to-day air traffic operations and the transition from a radar-based traffic control system to one based on satellite technology. A board representing aviation system users would govern the new, federally chartered air traffic control corporation. The bill would complete the transfer of air traffic operations, hundreds of facilities and about 38,000 workers to the new corporation within three years. Rep. Bill Shuster, the bill’s chief sponsor, said it was a “transformational” solution and greatly needed because modernization of the air traffic system is taking too long and costing too much. Without an overhaul, the system won’t be able to keep up with growing air traffic demands and congestion will increase, said Shuster, chairman of the House Transportation and Infrastructure Committee. Shuster, R-Pa., told reporters that he also wants to revamp how air traffic operations are financed, eliminating most airline ticket taxes in favor of a fee-based system. The proposal envisions charging commercial operators — airlines, air cargo companies, charter plane, air taxi services and others — for the services they use. Private pilots and noncommercial aircraft operators would continue the same fuel and other taxes as before rather than service fees. But the bill doesn’t specify how the tax and fee structure would be changed because decisions on taxes are up to the House Ways and Means Committee; Shuster is working with that committee, a spokesman said. It’s unclear if this would ultimately result in lower airfares since airlines would presumably pass along the cost of the new fees to their customers, but the hope is that privatizing air traffic control will produce greater efficiency and reduce the overall cost of the system, according to Republican committee aides. The aides briefed reporters on the condition that they not be named because they weren’t authorized to speak publicly. Rep. Peter DeFazio, D-Ore., the senior Democrat on the committee, said Democrats strongly oppose the privatization plan, although they’re happy with most of the rest of the bill. “This privatization proposal gives a private corporation the power to tax the American public to pay for safe operations, and it hands over a public asset worth billions of dollars to a private corporation for free,” DeFazio said. The corporation would effectively become a monopoly that picks winners and losers and decides routes, schedules, and slots based on profit margins, he said. Airlines, the lobbying muscle behind the bill, have long said the fairest way to pay for the air traffic system is to have all aircraft operators pay fees for the services they use, such as controller-directed takeoffs and landings and government weather reports. Most other aircraft operators oppose a fee system, which they say would shift a greater share of paying for the air traffic system away from airlines and onto them. The model for Shuster’s proposal is Canada, which shifted its air traffic operations to a nonprofit corporation about a decade ago. In the U.S., private contractors who provide air traffic control services at small airports general have lower costs than at FAA facilities because they hire fewer personnel and pay lower salaries. The FAA has worked on its “NextGen” modernization program for more than a decade and says much progress has been made. Lawmakers and airlines say they have yet to see significant benefits from the billions of dollars spent on modernization and are deeply frustrated. Shuster and Rep. Frank LoBiondo, R-N.J., the aviation subcommittee chairman and the bill’s co-sponsor, gained an influential ally Wednesday when the National Air Traffic Controllers Association, which represents about 14,000 air traffic controllers, announced its support for the bill. The bill also: • Seeks to force the FAA to issue regulations governing the use of small drones more quickly by threatening to impose its own rules on small drone operations. • Gives the FAA administrator the ability to waive safety rules for classes of commercial drone operations like limitation on how far and how high drones are allowed to fly and a prohibition on nighttime flights. • Would continue to bar the FAA from issuing safety regulations banning cargo shipments of lithium batteries on passenger planes unless the International Civil Aviation Organization adopts a ban first.

Alaska, Oregon suspend Moda Health as finances worsen

Alaska insurance regulators on Jan. 28 suspended Moda Health Plan from accepting new or renewal policies in the state, citing concerns with the Oregon-based company’s financial situation. The Alaska Division of Insurance acted after officials in Oregon placed the company under supervision because of its financial condition. Moda is one of two companies offering individual insurance policies for Alaskans on the federally facilitated health insurance marketplace. The other is Premera Blue Cross Blue Shield. The division of insurance last year approved average rate increases of nearly 40 percent for both companies. The Oregon Department of Consumer and Business Services said its supervision order calls for the company to obtain sufficient capital and to present a business plan that demonstrates Moda can operate in sound financial manner into the future. The department said its actions were prompted by Moda’s “excessive operating losses and inadequate capital and surplus.” Under the order, Moda cannot issue new policies or renew current policies in the individual market or add new groups in Oregon, the department said in a release. The department said it will begin working with Moda to transfer its individual market plans to another carrier. “Our primary goal is to ensure consumers are protected,” Patrick Allen, the department’s director, said in a release. “We will continue to work closely with the company to find a sustainable path going forward while minimizing risk to consumers.” Lisa Morawski, a spokeswoman for the department, said a lot of what happens next will depend on the plan that Moda presents and whether the department finds it acceptable. About 10,000 Alaskans are enrolled by Moda on the individual market and about 7,500 on the small group market, Alaska Division of Insurance Director Lori Wing-Heier said in an email response to questions. There are other options in the group market, she said. “The division will do everything within its authority to see that Moda’s policyholders will continue to access medical services until they can be transitioned to another insurer,” Wing-Heier said in a release. About 244,000 Oregon residents were enrolled in Moda plans in the individual, small group and large group markets as of Sept. 30, according to the Oregon Department of Consumer and Business Services. U.S. Rep. Don Young, R-Alaska, said Thursday’s announcement “is meant to protect Alaskans from the failings of an individual insurance provider, but it also begs the question of the overall instability of our current health care system.” The system went through a shake-up last year, with other companies announcing their departure from the individual market. “The Alaska Division of Insurance has made assurances that Moda policy holders will continue to be able to access health care services, their claims will be paid and consumers will be protected,” Young said in a release. “Alaskans should know that the state and the congressional delegation will be working with them as this process moves forward.”

Aetna lays out concerns about ACA exchange business

Aetna has joined other major health insurers in sounding a warning about the Affordable Care Act’s public insurance exchanges. The nation’s third-largest insurer said Monday that it has been struggling with customers who sign up for coverage outside the ACA’s annual enrollment window and then use a lot of care. This dumps claims on the insurer without providing enough premium revenue to counter those costs. The ACA provides an annual enrollment window that gives people several weeks starting every fall in which they can buy coverage for the next year. The law established that window to prevent people from waiting until they become sick to buy insurance. But insurers say it has become too easy for customers to sign up outside of this window. Customers are allowed to buy coverage outside that time frame if they lose a job, get divorced or have a child, among other reasons. Insurers want the federal government, which processes coverage applications in 38 states, to take a closer look at whether people actually qualify for these special enrollment periods when they apply for coverage. Both Aetna and UnitedHealth Group Inc. said the exchange customers they get outside the annual enrollment window use more health care than those who sign up within it. This includes some cases where it appears that a customer bought coverage, used it and then dropped it. “Insurance systems tend to get stressed when people can buy coverage when they know they need it and then drop it when they know they don’t,” Chief Financial Officer Shawn Guertin told The Associated Press. The Centers for Medicare and Medicaid Services recently outlined several changes it said it was making to help shore up exchange enrollment windows. Aetna is a big player in the ACA’s state-based exchanges. It has enrolled about 750,000 people and is selling coverage in 15 states this year. It lost more than $100 million last year on its exchange business, which makes up a small part of its overall enrollment. “We continue to have serious concerns about the sustainability of the public exchanges,” Aetna Chairman and CEO Mark Bertolini said Monday. Blue Cross-Blue Shield insurer Anthem Inc. also is paying close attention to how the government deals with special enrollment periods as it judges how sustainable the exchange business will be in the future, CEO Joseph Swedish said recently. UnitedHealth Group has said it will decide this year whether to participate in the public exchanges in 2017. Aetna leaders, who have publicly supported the exchanges in the past, say they are still committed and not ready yet to make that kind of call. “It would be premature frankly to declare victory or defeat at this stage in the process,” Guertin said. Federal officials announced last month that they would end several narrow special enrollment windows that focused on consumers like non-citizens with incomes below the federal poverty level who experienced processing delays. Customers will still be able to use special enrollment periods to shop for coverage if they lose their insurance for more common reasons like a move, a marriage or divorce or the loss of a job. But the government plans to clarify guidelines on those remaining windows so customers understand them better. That includes clarifying that an enrollment period cannot be used for a temporary move, and people who do not provide accurate information on their insurance application could be penalized. HealthCare.gov CEO Kevin Counihan said in a Jan. 19 blog post that special enrollment periods will not be available for “the vast majority of consumers.” HealthCare.Gov operates public insurance exchanges in 38 states. “For example, special enrollment periods are not allowed for people who choose to remain uninsured and then decide they need health insurance when they get sick,” he wrote. Insurers are also making adjustments. Aetna has left exchanges in markets like Kansas where it incurred high costs. It also has raised rates and done other things to shore up a business that only contributes about 5 percent of its total enrollment. Guertin said the company hopes its exchange business will move closer to breaking even next year.

Federal officials consider Donlin mine’s subsistence impact

BETHEL — Two federal agencies have weighed in on the potential impacts the proposed Donlin Creek mine could have on subsistence along the Kuskokwim River. Donlin Gold LLC estimates it could excavate about 34 million ounces of gold over three decades from the proposed open pit mine near the village of Crooked Creek, KYUK-AM reported. The Army Corps of Engineers predicts that the mine would have a minor to moderate impact on subsistence practices and resources. “Minor are impacts that tend to be low intensity, temporary duration, and local in extent typically to common resources that may experience more intense longer-term impacts,” said Keith Gordon, Army Corps Project Manager for the Donlin project. Alan Bittner, field manager for the Bureau of Land Management, agrees that subsistence could be affected by the mine proposal. “When we looked at all three major components of the project, it seemed like there was significant potential for subsistence resources to be affected,” Bittner said. Plans for the mine project also include barging on the Kuskokwim River and a natural gas pipeline spanning 300 miles to Cook Inlet. “Simply put,” Bittner said, “this is a pretty big project. There’s big components to it, and our finding is that the possibility exists in any of those major components to affect subsistence resources.” The BLM is planning to gather feedback from the public as it looks further into how subsistence resources and access to those resources will be affected by the project. “So our preliminary finding is that it may (be affected), and we need to hear from people about whether that’s true for them or not — the individuals who are actually in the communities and subsistence is a part of their life,” Bittner said. The Army Corps, which is the lead federal agency creating the project’s environmental impact statement, is also looking to engage with the community by responding to their critiques and considering any alternative solutions they may have for the project. “And if they can give us some of those reasons, give us some information about why we need to do more, that gives us something we can look back at and determine if the analysis needs to go to a deeper level or needs to be expanded,” Gordon said.

AJOC EDITORIAL: Moda’s big Obamacare bet goes bust

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

FISH FACTOR: Rare optimism for halibut as IPHC boosts harvest quotas

Alaska’s halibut stocks are showing signs of an uptick and fishermen in all but one region will avoid slashed catches for the first time in nearly 15 years. The International Pacific Halibut Commission on Friday (Jan. 29) set the coast wide Pacific halibut harvest for 2016 at 29.89 million pounds, a 2.3 percent increase from last year. “This was probably the most positive, upbeat meeting in the past decade,” said Doug Bowen of Alaska Boats and Permits in Homer. “The feeling is the stocks are up and the resource is stabilizing and recovering, and it’s the first meeting in a long time that there weren’t any areas that are looking at double digit cuts.” “The bottom line for this year is that we can see some positive trends both in the data and in the stock assessment models,” said Ian Stewart, a scientist with the International Pacific Halibut Commission, or IPHC, which held its annual meeting last week in Juneau. The IPHC manages the catches and fishery research for west coast states, British Columbia and Alaska. “The stock appears to be stabilizing at a coast-wide level and the more years that we’ve see this play out, the more certain we become of that.” Alaska share of the total halibut catch was set at 21.45 million pounds, an increase of 200,000 pounds from last year. Southeast Alaska saw the largest halibut harvest gain for recreational and commercial users at 4.95 million pounds, a 6.1 percent increase over 2015. Scientists said based on survey data, the Panhandle again showed the most improvement in both fish catches and weights. Catches in the biggest halibut fishing hole in the Central Gulf (3A) were decreased by five percent to 9.6 million pounds, the only region to get a cut. Although the annual survey showed increased catches for the first time in nearly 12 years, scientists said they remain concerned that the fish are still showing slow growth rates. They also had questions about potential inaccurate accountings of halibut taken as bycatch in other fisheries. For the Western Gulf (3B) the IPHC scientists said they “are optimistic that 3B has hit bottom and is showing stabilization.” The other three halibut fishing areas in the Aleutians and Bering Sea also showed “strong signs” of holding steady. In other halibut news: The IPHC approved retention of halibut taken incidentally in sablefish pots in the Gulf of Alaska to reduce whale predation. A proposal to reduce the legal halibut size limit from 32 inches to 30 inches to reduce wastage of small fish failed. Likewise, a proposal to limit the maximum size to 60 inches to protect the large breeders also got a thumbs down. The 2016 halibut fishery will begin on March 19 and end on Nov. 7. The IPHC also selected David Wilson to replace Bruce Leaman as executive director as he departs after nearly 20 years. Wilson currently serves as secretary of the Indian Ocean Tuna Commission, and was formerly head of the International Fisheries Section of the Australian Bureau of Agricultural and Resources Economics and Sciences. He will join the IPHC in August. Dr. Wilson is expected to join the IPHC staff in August 2016. Here are the 2016 Alaska halibut catch limits in millions of pounds, with comparisons to 2015 in parentheses: 2C (Southeast AK) 4.95m (4.65m) 3A (Central Gulf) 9.6m (10.1m) 3B (Western Gulf) 2.71m (2.65m) 4A (W. Aleutians) 1.39m (1.39m) 4B (Bering Sea) 1.14m (1.14m) 4CDE (Bering Sea) 1.66m (1.285m) Total: 21.45 million pounds (21.25m) Seafood showcase Canned smoked herring, salmon caviar, sockeye salmon candy – those are just a sample of the 18 new products to be showcased this month at Alaska Symphony of Seafood events in Seattle, Juneau and Anchorage. The Symphony promotes new, value-added products in four categories: retail, food service, Beyond the Plate and new this year, Beyond the Egg. “It’s a great event for the industry, but it also shows how much work and effort is going into developing new products,” said Julie Decker, executive director of the Alaska Fisheries Development Foundation, host of the Symphony for 23 years. “It is good for everyone because it creates more value for the resource, and in the case of Beyond the Plate, which focuses on fish byproducts, it is actually using more of the resources.” That category attracted several entries, including wallets, key fobs and other items made from salmon and halibut skin. Another is an anti-aging serum that uses omega-3 oils from ArXotica, a Bethel company Another attention getter is a product from Bambino’s Baby food of Anchorage called “Hali Halibut.” “It is a frozen, portioned product made with halibut and Alaska grown vegetables. It’s really cool!” Decker said. The new Beyond the Egg category attracted one salmon caviar entry, with several more set to debut at next year’s Symphony, she added. All items will be judged by an expert panel prior to a Seattle bash on February 10, with their choices remaining under wraps. That will be followed by a seafood soiree for Alaska legislators in Juneau on Feb. 16; then it’s on to Anchorage on Feb. 19 where all winners will be announced Top winners in each category get a free trip in March to Seafood Expo North America in Boston. See the full line up at www.afdf.org.  New life raft rules New safety rules for vessel life rafts go into effect on Feb. 26, meaning the use of commonly used flotation devices will no longer be acceptable. Smaller vessels will no longer be able to use life rings, rectangular red floats and other buoyant devices as their only form of survival gear, and instead must be equipped with a raft that ensures every passenger is safely out of the water in the case of a sinking.  “The big thing to remember is that it’s one thing to be wet and cold, it’s another thing to be immersed in cold water,” said Scott Wilwert, U.S. Coast Guard Fishing Safety Coordinator in Juneau. “On Feb. 26, survival craft requirements for commercial fishing vessels, as well as other classes of passenger vessels, will change in a way that if a vessel is operating beyond three miles from shore, they are required to have a survival craft that does not allow for an immersed segment of a person’s body,” he explained. “So the big change for any fishing vessel, regardless of length or the number of people on board, is that they have to step up to a survival craft that is called an inflatable buoyant apparatus or a full life raft.” Even those who got their mandatory dockside safety exams last fall will need to recheck their survival gear to comply with the new regulations, Wilwert said.  “If you know that the new rule affects you, I would definitely start working with a local marine supplier and get one coming your way.” Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

Anchorage LIO owners submit proposal to Legislative Council

A proposal to resolve the political hot potato that has become the Anchorage Legislative Information Office lease has been submitted to Legislative Council chair Sen. Gary Stevens. The building’s owner group, 716 West Fourth Ave LLC, released a statement Feb. 2 saying it would not release the details of the proposal out of respect for the Legislative Council process, but noted that the group had met the timeline laid out by the council in mid-December and also likely resolved a lawsuit over the terms of the lease. “Our discussions with Sen. Stevens over the past 45 days have pushed us to dig deep for short-term interim savings,” 716 spokeswoman Amy Slinker wrote in an email. “That then set the stage for a long-term solution to save millions of dollars and help avoid any negative financial implications for the state. In addition, the conversations with Sen. Stevens appear likely to result in dismissal of the lawsuit by Alaska Building Inc.” The leaseholder company name is the Downtown Anchorage address of the LIO. The current 10-year lease has the Legislature making rent payments totaling $3.3 million per year for the built-to-suit, six-story office building with underground parking and 45,000 square feet of usable space. It is paid through May 31, 2016. Anchorage Democrats, the public and legislators from elsewhere in the state have disparaged the LIO lease terms as far too expensive at a time when the state is facing annual budget deficits approaching $4 billion. Anchorage attorney Jim Gottstein, owner of the adjacent Alaska Building, filed suit against 716 West Fourth Avenue and the Legislative Affairs Agency, which manages business for the council, last March alleging the LIO lease is illegal because it is neither an extension of an existing lease, nor 10 percent below market value, as statute requires for a long-term lease extension. On Dec. 19, the Legislative Council — at a meeting in the Anchorage LIO —unanimously recommended the full Legislature vote not to fund the lease unless a solution that is cost-competitive with moving to the Atwood Building could be resolved within 45 days, or by Feb. 5. Multiple news outlets were denied a copy of the proposal when requests were made to Stevens’ office. A move to the nearby state-owned Atwood Building, home primarily to executive branch agencies, would first require a $3.5 million remodel and then $664,000 per year to operate the 30,000 square-foot space, according to a cost analysis presented at the Dec. 19 council meeting. Purchasing the LIO in some fashion — 716 West Fourth Avenue managing member and project developer Mark Pfeffer has said the group would sell for $37 million plus closing costs — would require the initial payment and covering of operations costs estimated at $525,000 per year for its 45,000 square feet of space. However, the state would immediately begin building equity in the property, Pfeffer has noted. The building houses off-season offices for 25 Anchorage legislators and is the de-facto home to much of the general Legislature’s out-of-session activity. The Legislative Council, then led by Rep. Mike Hawker, R-Anchorage, who has announced he will not seek reelection this year, decided to rebuild on the old LIO building site in 2013 after numerous attempts to find existing suitable space that meets the unique needs of a public government body in Anchorage failed. The Legislature contributed $7.5 million towards the construction cost, so Pfeffer and his company ultimately funded $37 million, about $28 million of which is long-term debt and $9 million is Pfeffer’s cash equity position in the property, he has said. Appraisals of the six-story building plus its underground parking facility have been as high as $48.5 million by the Alaska Housing Finance Corp., while numerous estimates by lenders involved in the construction and long-term loans appraised its value at $44 million. The customized office space cost $44.5 million to build in 2014, according to Pfeffer. His group first drafted and submitted terms for the state to purchase the building for $37 million plus fees this past Oct. 9; a proposal requested by the Legislative Affairs Agency. The original terms agreed to by Legislative Affairs attorneys in an Oct. 22 letter to Pfeffer set a Jan. 31 deadline to act on the sale terms, according to correspondence between attorneys for both sides. The Legislature could terminate the lease seemingly without legal ramification because of a clause in nearly all government contracts stating fulfillment of the agreement is “subject to appropriation,” in this case, by the Legislature. If the Legislature doesn’t fund it, for any reason, the lease or contract falls apart. Pfeffer has indicated an intention to sue if the Legislature walks away from its obligation. Elwood Brehmer can be reached at [email protected]


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