Final Ambler road review out; AIDEA adds $35M for project

Bureau of Land Management officials maintained their support for the most direct proposed road route to Interior mining prospects in their final environmental review of the plan published March 27, the same day leaders of the state-owned development bank moved $35 million for future work on the project amid sharp public criticism. The 211-mile industrial road concept preferred by BLM Alaska officials to reach the Ambler mining district is what the Alaska Industrial Development and Export Authority proposed in early 2017 when officials there submitted federal permit applications for the project. AIDEA is advancing the long-sought link to the remote Ambler mining district — estimated to cost between $280 million and $380 million for basic gravel construction — in an attempt to spur development of a suite of metal prospects in the area. BLM Alaska Director Chad Padgett said in a March 26 statement preceding the release of the final Ambler road environmental impact statement, or EIS, that the roughly 430-page document incorporates information gathered over three years of community and Tribal consultation meetings. “My staff traveled to more than 20 communities in the project area to solicit input and gather traditional knowledge,” Padgett said. “Those efforts contributed to this comprehensive analysis that will help pave the way for Alaska to responsibly develop its natural resources and create jobs.” BLM led the EIS because the agency is responsible for issuing road right-of-way permits to AIDEA if the project is ultimately approved. Agency officials cannot reach a record of decision on the project until at least 30 days after the final EIS is published and it’s unclear exactly when that will happen. The 211-mile industrial-use road would run west along the southern flank of the Brooks Range from the Dalton highway at milepost 161. It would pass near the villages of Bettles and Evansville near its eastern end and terminate among several mining prospects just north of the Kobuk River villages of Ambler, Shungnak and Kobuk. Agency officials dismissed an alternate route starting at mile 60 of the Dalton that would snake 332 miles northwest to the district because although it would avoid Gates of the Arctic National Park and Preserve; its added length would inherently mean more environmental impacts and costs compared to AIDEA’s proposal, the EIS states. Critics have pointed to the cost of the project, and the fact that there is no guaranteed repayment method, as reasons to scrap the plan. The Wilderness Society contends the current estimate for the road does not consider some of the costs inherent to building in remote northern Alaska, such as constructing a road over permafrost. The group suggests the road could end up costing $1 billion or more as a result. The proposed mines have also drawn scrutiny for potential impacts to salmon and whitefish runs in the Kobuk River drainage and many residents of the area villages are concerned about impacts to caribou in the region that are an important subsistence food source. Numerous village and Tribal governments in the area of the proposed road have issued formal statements of opposition to the project. AIDEA officials insist access to the road will be restricted to mining activity because it would ultimately be paid for through tolls under the plan; there would be no public access to currently isolated hunting areas, which has been another concern of area residents worried about increased activity. Currently, Vancouver-based Trilogy Metals Inc. is the only company with advanced prospects in the Ambler area. The company holds two main prospects, Arctic and Bornite, which contain high-grade copper along with cobalt, zinc, lead and precious metals. Trilogy leaders have said the Arctic prospect contains copper at grades up to 10 times greater than many other modern mines and the only thing holding back development is cost-effective access. Interim Trilogy CEO Jim Gowans said in a company statement that the final EIS marks a critical milestone for the road project that will “unlock the incredible mineral potential” of the region. “Trilogy, through its joint venture company, Ambler Metals LLC, is already discussing the next steps for the financing and development of the road with the Alaska Industrial Development and Export Authority,” Gowans said. AIDEA moves $35M for road Also on March 27 the AIDEA board of directors approved a transfer of $35 million from the authority’s Revolving Fund to its Arctic Infrastructure Development Fund to eventually support development of the Ambler road. The resolution directing the funding shift notes that further board action is required to spend the money, but a slew of public commenters made it known they were not happy that AIDEA officials took up the resolution at a short-notice emergency meeting that otherwise dealt with loan and regulatory issues related to the COVID-19 pandemic. Many commenters simply stated their strong overall objection to the road project and the mines it is intended to support, while others questioned whether the authority had violated open meetings laws with its second emergency meeting in as many days. Anchorage Democrat Rep. Andy Josephson testified that he shared in the concerns of others regarding the timing of the meetings and the funding transfer resolution. “I’m concerned that the optics of what you’re doing is so poor given what people are dealing with,” Josephson said to the AIDEA board members, adding that the Legislature’s decision to not capitalize the Arctic Infrastructure Development Fund exemplifies divisions among lawmakers over the Ambler road project. AIDEA’s Revolving Fund held approximately $1.3 billion at the end of the 2019 fiscal year last June 30, according to the authority’s annual financial report, but the vast majority of that money was committed to loans or other investments. The Revolving Fund held approximately $33.2 million in unrestricted cash at the time as well. Attorneys for the Anchorage-based environmental nonprofit law firm Trustees for Alaska also questioned the legality of the $35 million transfer in a memo sent to state lawmakers March 25. The memo asserts than an initial version of the resolution describes that the money would fund “expert engineering, attorney, advisor, and other professional fees to work on permitting, road and bridge design, acquisition of rights-of-way, public outreach, cultural resources evaluations, and other tasks necessary or convenient to reaching a decision point on whether to proceed with construction of the project.” Trustees attorney Bridget Psarianos said in an interview just prior to the March 27 meeting that much of the work outlined in the original resolution should have already been done so it could be included in the EIS for the road. That language was removed from a revised version of the resolution, which states that the authority has the ability to transfer the money so it can continue to advance Arctic infrastructure developments and “pursuing (the Ambler road) through the Arctic Infrastructure Development Fund is in furtherance of the authority’s mission to promote economic development and to create employment opportunities in Alaska.” Trustees argues the transfer is “directly contrary” to both the Alaska Constitution and the Executive Budget Act, which outline the appropriations process through the state Legislature and the governor. “The Ambler road project is a capital appropriation item, and AIDEA cannot increase funding for this project without approval, regardless of the source of that funding. Funds for the project are subject to appropriation by the Legislature, not AIDEA,” the Trustees memo states. “Because AIDEA has been unable to secure additional funding for the Ambler road through the Legislature and the capital budget process, it is now attempting to make an end-run around the authority of the Legislature by unilaterally appropriating money from its Revolving Fund to this project.” AIDEA spokesman Karsten Rodvik wrote via email that “When used for capital expense, money in AIDEA’s Revolving Fund is not subject to the Executive Budget Act. Also, the board has the authority to move money between funds.” The Legislature created the Arctic Infrastructure Fund in 2014 but it had not been capitalized until the $35 million was moved into it. Psarianos wrote in an email after the meeting that the firm has serious questions about the legality of the authority’s actions and “we are considering a variety of options to attempt to right this wrong.” Gov. Mike Dunleavy’s 2020 fiscal year budget plan originally proposed to transfer $84 million from the Revolving Fund to an oil and gas tax credit fund outside of the authority, but the move was not included in the Legislature’s final budget. Elwood Brehmer can be reached at [email protected]

Fishing community takes precautions as it readies for salmon season

As Alaska’s top doctor put it, “We know the fish are coming regardless of COVID-19 or not and we can’t ask them to stay home.” As a result, government officials and fishing stakeholders statewide are working to ensure Alaska can still have a strong summer salmon season even amidst a potentially prolonged COVID-19 winter. Alaska Chief Medical Officer Dr. Anne Zink made the comment during a March 30 press briefing, adding that the state has a specific fisheries work group trying to figure out ways small communities can handle an influx of fishermen and processing workers while also adhering to important health guidelines that run counter to the realities of a traditional fishing season. While Alaska’s diverse fisheries continue year-round, the famed Copper River sockeye and king fishery that unofficially kicks off the salmon harvest in mid-May each year will be one of the first testing grounds for trying to find that balance. United Fishermen of Alaska Executive Director Frances Leach said fishing groups across the state have been working for weeks to find ways to adjust normal fishing operations in light of the host of challenges the virus — and steps taken to fight it — raises. It started with crowdsourcing to simply identify who was doing what to make sure everyone is rowing in the same direction, Leach said. “Communicating is huge. Commercial fishermen are kind of infamous for not giving away their secret fishing spots so trying to shift gears and make sure we’re all communicating and sharing information during this time is really important,” she said. The goal is to standardize new health guidelines and corresponding procedures for each fishery as much as possible to make sure fishermen and support workers know what is expected of them. Leach said industry leaders are in the process of developing and submitting vessel action plans to the state that detail what steps they will take to prevent the spread of the virus while they are fishing and how they will respond if someone on their vessel develops symptoms during the season, among other considerations. The plans are not special to the fishing industry; each company working in an industry deemed critical by state officials must submit a similar COVID-19 Worker Mitigation Plan to the state Department of Commerce, Community and Economic Development if workers arriving prior to May 1 will not be quarantined for 14 days to monitor for symptoms of the virus. The plan requirement could also be extended beyond May 1 if the virus remains a significant threat to public health in the weeks and months to come as many health experts expect it will. “Just because we’re considered a critical workforce doesn’t mean that we can just run off and start fishing,” Leach said. She’s hopeful the state will adopt operating parameters for each segment of the industry in order to simplify the process because absent that, the state officials would literally have to review thousands of action plans for each individual fishing vessel, Leach said. “We have so many types of fishing vessels and fisheries in the state of Alaska that one plan cannot be applied to every single vessel in Alaska. We’re going through and catering plans to each type of vessel,” she said. At the epicenter of the rapidly approaching Copper River fishery in Cordova, Mayor Clay Koplin said city officials have been doing their best to prepare for the ranging impacts of the virus since late January even though the isolated Prince William Sound community has yet to report a confirmed case of COVID-19. The city’s protective provisions have mirrored the state’s fairly closely, Koplin said, noting the city put its own 14-day self-quarantine mandate on intrastate travelers ahead of health mandates issued by Gov. Mike Dunleavy. “We are acting as if the virus is already here on one hand, so we’re being proactive internally but we’re also acting as if the virus isn’t here and we have to keep it out,” Koplin said. Cordova is also requiring fishermen and processing companies to submit action plans similar to the state, Koplin added, though the state plans will be accepted at the city level. He acknowledged there is a “high state of fear” among Cordova residents about what the salmon fishery might bring. However, fishing also accounts for roughly 90 percent of the city’s economy, so still having a viable season is extremely important, he said. Cordova’s year-round population of approximately 2,300 is boosted by upwards of 860 fish processing workers at the peak of each summer season, according to state Labor Department figures. In addition, roughly two-thirds of the nearly 540 commercial fishing permits for the area are held by individuals from outside the community, Koplin said, and with each vessel comes several crew members. He said many stakeholders have quickly done what they can to ease residents’ concerns as much as possible and assist the city in the COVID-19 fight. Leaders of fish processing companies have been submitting their virus prevention and operating plans and some started doing so even before they were asked to do so, according to Koplin. “They filed very aggressive plans up to and including bringing in their own medical staff for the season and they have lots of bunkhouse space so they can essentially kind of quarantine their entire operation except for the fleet and that’s where a lot of our concerns are,” he said. The city also has Vessel Operator Mutual Agreement forms on its website for both large and small operators to sign that outline the local government’s expectations and requirements for working in the fishing industry amid the ongoing pandemic. Koplin said the situation largely requires more pre-planning by fishermen who typically buy fishing gear, boat parts, groceries and other supplies in Cordova prior to the Copper River fishery. “We would prefer that they do exactly what residents are doing. Don’t engage in any kind of interaction that you don’t absolutely have to,” Koplin said of arriving fishermen. He added that a lot of what fishermen will need to do when, and before, they get to Cordova will depend on where they came from. “If they come up on a seiner and they stop in Ketchikan (where 13 COVID-19 cases had been reported as of this writing) for three weeks and then come to Cordova we’re going to be extremely concerned,” Koplin described. “But if they leave Seattle and they’re in route for two weeks and they don’t really have any human contact then they’ve effectively quarantined before they got here.” With fishermen coming from all over, it can be difficult to communicate with the entire salmon fleet, so city officials are utilizing the state Commercial Fisheries Entry Commission as a conduit to communicate their expectations to fishermen, he said. If a fishermen or processing worker gets sick, Koplin stressed that they should call health facilities instead of going to them to limit their exposure to others if they indeed have contracted the virus. Department of Fish and Game Cordova Area Management Biologist Jeremy Botz said he doesn’t think the measures being taken to limit the spread of the virus will significantly impact management of the Copper River sockeye and king fishery. “Every season is pretty dynamic as far as the fishery goes. Until the fish start returning we really don’t have a clear sense as for what to expect,” Botz said. At this point, he expects managers will have their normal means to assess run strength but if they are put in a position where they don’t have those tools they can turn to their best available historical data to manage the run. Botz said he is planning for a fairly normal season in terms of fishing effort. “It’s hard to imagine a scenario where we wouldn’t be able to go out and have a commercial fishery,” he said. Market uncertainty While everyone in Cordova is working to make the fish catching go off as smooth as possible, the market end of the equation could pose another challenge. The Copper River sockeye and kings are prized as the first fresh salmon of Alaska’s season and some years consumers at high-end restaurants and markets in Seattle pay upwards of $60 per pound for the most sought-after king fillets. This year, however, that market is missing. Alaska Seafood Marketing Institute Executive Director Jeremy Woodrow said ex-vessel prices for early season fresh halibut — traditionally purchased by restaurants — have been depressed and a somewhat similar scenario is expected for Copper River salmon. However, Woodrow said processors should still be able to sell their product if they adapt to the new market conditions. Frozen salmon portions are selling well and canned salmon “is flying off the shelf” these days, he added. “I think Americans are more in-tune about supporting the American economy right now,” Woodrow said, and that sentiment could hopefully translate into buying more Alaska salmon for their own dinner tables this year. “If this challenge continues there’s likely going to be some lessons that can be learned from the Copper River fishery,” he said. Koplin noted that Cordova resembles a ghost town during fishing openers and said ideally the town will look that way as long as the COVID-19 threat lasts, whether folks are out fishing or not. “I guess my preference would be that every day of the week looks like that ghost town — that people are on their boats or they’re going out and doing some sport fishing in between commercial openers; anchoring up in their favorite cove and just not spending the time in town for their own health and that of the community,” Koplin said. ^ Elwood Brehmer can be reached at [email protected]

Movers and Shakers for April 5

Birch Horton Bittner &Cherot announced the hire of Michelle Nesbett, who focuses her practice on federal white collar criminal defense. She also handles civil cases, including professional negligence and complex litigation. She received her law degree from the University of San Francisco School of Law in 2006. After working as a prosecutor, she transitioned into private practice. In 2019, she was awarded the designation of “Super Lawyer,” which recognizes those lawyers who have attained a high degree of peer recognition and professional achievement. The firm also announced it has hired Ella Morozova as a paralegal in its Anchorage office. She received a bachelor’s degree from the University of Nevada Las Vegas; she received an associate’s degree from the College of Southern Nevada; and she studied law at California Western School of Law in San Diego. She has worked as a paralegal in Las Vegas since 2010, but recently relocated to Alaska. AJ Behm recently joined R&M Consultants Inc. as a staff engineer in the firm’s Surface Transportation Group. Behm brings a background in construction to his work at R&M. During college breaks, he interned for Knik Construction and the Alaska Department of Natural Resources. Since joining R&M, Behm has provided engineering support for the Nanwalek/Port Graham Airport Relocation, Skagway State Street Rehabilitation and Airport Way West Improvements in Fairbanks. His work has included creating alignment alternatives, quantities estimates and plan sheets. Behm has a bachelor’s degree in civil engineering from the University of Alaska Fairbanks. Alaska Pacific University announced the appointment of Valerie Nurr’araaluk Davidson as its next president. When Davidson succeeds current APU President Bob Onders on April 25, she will become the 12th president of APU and the first woman to lead the university. Davidson served as commissioner of the Alaska Department of Health and Social Services and then lieutenant governor under Gov. Bill Walker. Prior to that, she worked for more than 15 years as a national policymaker, focusing on matters affecting Indigenous health. The announcement concludes a nationwide search that included 21 applicants from across the country. Davidson previously served as Senior Director of Legal and Intergovernmental Affairs for the Alaska Native Tribal Health Consortium and as executive vice president of the Yukon-Kuskokwim Health Corp. Her current board service includes the First Alaskans Institute, the Foraker Group, the United States of Care Founder’s Council and the Lancet Commission on Arctic Health. Davidson earned a juris doctor with a certificate in Indian law from the University of New Mexico School of Law and a bachelor’s degree in education with a minor in bilingual education from the University of Alaska Southeast. Davidson is an enrolled Tribal member of the Orutsararmiut Native Council. The SMPS Alaska Chapter announced its 2019-20 Board of Directors. The Board of Directors includes the following architectural/engineering/construction, or A/E/C, marketing professionals: Katy Kless, communications and marketing specialist, Coffman Engineers, president; Sarah Hall, proposal specialist at Coffman Engineers, past president; Michelle Pasion, marketing director, AMC Engineers, president-elect; Karma Torres, marketing coordinator, Architects Alaska, secretary; Melissa McCarty, proposal manager corporate marketing, Coffman Engineers, treasurer; Joann Mitchell, PE, civil engineer, public involvement specialist, marketing manager, and an owner, Kinney Engineering; communications director; Pearl-Grace Pantaleone, CPSM, business development and marketing manager, Cornerstone General Contractors, programs director; Melissa Branch, PE, owner and principal engineer, Big City Engineers LLC, education director; Karin McGillivray, public engagement manager, Michael Baker International, sponsorship director; Cynthia Oistad, CPSM, Alaska business development and communications, Arcadis, membership director; Kate Hostetler, director of marketing, KPB Architects, outreach director; Andrea Story, CPSM, vice president of marketing and business development, R&M Consultants Inc., chapter advisor. Bob Warthen has been selected to fill the position of vice president, commercial services administration, business and commercial services for Alaska USA Federal Credit Union. Warthen has more than 25 years of industry experience. He has been employed with Alaska USA since 2005, most recently as credit administration manager. PDC Engineers announced the addition of Jennifer Kemp and Evan Venechuk to its Juneau office. Kemp joins PDC as a CADD engineering technician. Kemp is a 2002 graduate of Centralia College where she earned her associate’s degree in technical arts. Kemp has more than 16 years of experience with Civil 3D modeling, AutoCAD, GPS and GIS technology. Most recently, Kemp worked as a Crew Chief on a survey crew as well as developing the first-ever initiative to locate utility and light poles using GPS and GIS technology. Venechuk joins PDC Engineers as a land surveyor in training. In this position Venechuk will calculate boundary corner search/staking coordinates and provide technical and CADD support for the Land Survey team. Venechuk has more than five years of surveying experience, as well as extensive experience in the mining industry in Alaska. PND Engineers, Inc. announced the following new hires. Forrest Savel earned his bachelor’s degree in civil engineering from the University of Alaska Fairbanks. He has a background in construction, having worked previously as a summer laborer with the Alaska Department of Transportation and Public Facilities, and as an intern with R&M Consultants. Most recently he worked full-time as a distribution designer for Chugach Electric Association. At PND, Savel assists on general civil engineering projects. Jake Randazzo brings 15 years of experience in hands-on primary and secondary soil testing, data reduction, and soil lab operations. He is also experienced in geotechnical investigations, pile driving analysis, wave equation analysis, pile driving inspection, concrete testing, and other inspection work. Randazzo has an associate’s degree in process technology from Kenai Peninsula College; holds ACI, NICET, and Nuclear Gauge certifications; and has done field work all over Alaska, including the North Slope.

FISH FACTOR: Seafood industry gets $300M in relief under disaster bill

The U.S. seafood industry received a $300 million assist from the $2 trillion COVID-19 relief package passed by Congress on March 27, and a wide coalition of industry stakeholders is hoping for more. Fishery recipients in the relief bill include Tribes, persons, communities, processors, aquaculture and other related businesses. SeafoodNews.com reports that those eligible for relief must have “revenue losses greater than 35 percent as compared to the prior 5-year average revenue, or any negative impacts to subsistence, cultural, or ceremonial fisheries.” The funds will be provided on a rolling basis within a fishing season through Sept. 30, 2021. Two percent can be used for administration and oversight activities. The package follows a bipartisan letter sent on March 23 to Congress by Democratic Sens. Elizabeth Warren and Edward Markey of Massachusetts and Alaska’s Republican Sens. Lisa Murkowski and Dan Sullivan. They asked, among other things, that fishermen be able to collect unemployment insurance, get help with vessel loan payments and ensure that the global pandemic does not compromise management of U.S. fisheries. Also last week a coalition of nearly 200 seafood stakeholders sent a 12-page letter to the White House and Congress asking the government to purchase at least $2 billion worth of seafood and provide another $1.5 billion in relief for businesses and fishing communities. The letter states that nearly 70 percent of the more than $102 billion that consumers paid for U.S. fishery products in 2017 was spent in dining out as opposed to eating it at home. As a result, they said that for many fisheries the sudden shutdown of restaurants and other storefronts has caused demand to evaporate overnight, “threatening the economic viability of the entire supply chain.” Undercurrent News reported that the letter also asks the government to appropriate a minimum of $500 million to purchase surplus seafood that can be shipped overseas or supplied to U.S. hospitals and state and local government programs. And while the Department of Homeland Security has declared that fishermen and processing workers are “essential critical infrastructure,” the letter asks that support staff also receive the same designation in order to continue operations amid any self-quarantine orders. The stakeholders also urge the government to launch a “Buy American” campaign to promote consumption of seafood, along with expedited visa plans that will help to quickly staff and reopen businesses and fishing operations when travel restrictions are reduced. Meanwhile, in Alaska the Governor’s Economic Stabilization Task Force is organizing a fisheries subcommittee to address safety provisions. Staff at the office of Rep. Louise Stutes, R-Kodiak, is in contact with Gov. Mike Dunleavy’s administration about forming groups to report on the needs of each region. Fish for the needy Eighteen truckloads of more than a half-million pounds of donated breaded pollock portions went to 16 food banks in 12 states this month, and more seafood is on its way. “We did a press release and it’s actually grown to the point that another company, Gorton’s Seafood, has come up with 120,000 pounds at cold storages around the country. Our donors are so generous and everybody’s calling and asking how they can help. It’s rewarding to be in this business right now,” said Jim Harmon, executive director of SeaShare, a nonprofit that works with fishermen, processors, logistics and distribution partners to provide top quality seafood to Feeding America, a network of 200 large food banks in every state that services up to 500 smaller agencies. SeaShare dates back to the early 1990s when Bering Sea industry members banded together to turn mandatory discards of groundfish (bycatch) into frozen portions for food banks. “We’ve been doing it for 25 years and grown to the point where bycatch represents only about 10 percent of our total donations,” Harmon said. Products have broadened to include a wide variety of species, such as salmon, shrimp, rockfish, halibut, catfish, and tilapia. Most are frozen although canned and other shelf stable items are included. SeaShare also distributes seafood throughout Alaska where industry donations have put freezers in hub centers such as Bethel, Dillingham and Juneau. The fish is then sent to over 30 remote communities. During the coronavirus crisis the less fortunate are especially at risk, Harmon said, and SeaShare is getting requests for fish from all over the world. Anyone with products available in any quantity as a donation or at a low cost is encouraged to contact SeaShare as it has some resources to help access seafood that might not be available for free. “We’re asking everyone we know to pull on the oar with us,” Harmon said. “We’re hoping that getting the message out about the 18 truckloads of pollock and the 120,000 pounds from Gorton’s will resonate with others and get people thinking about how they can get on board.” “I’m so thankful and proud of our seafood partners who really come together when emergencies happen. It also takes financial support along with the efforts by seafood processors and fishermen,” Harmon added. A donation of just one dollar provides eight servings of seafood. See more at www.seashare.org. PWS aims to expand fisheries Prince William Sound’s Tanner crab fishery has been underway since March 2 for the third year running. Sixteen boats have pulled up more than 54,000 pounds so far fetching $3.50 per pound. That’s about half of last year’s 124,000-pound catch. “Things are going well and we’ll just let it click along and we’ll be monitoring it every day,” said Jan Rumble, PWS and Cook Inlet manager for shellfish and groundfish for the Alaska Department of Fish and Game at Homer. A test fishery also is underway in unfished areas in hopes of eventually expanding the Tanner fishery. “We’re collecting information and we’re hoping to combine that with our trawl survey data and historical harvest information to provide a more expansive harvest strategy than what we have in regulation currently,” Rumble said. Tanner crab fishermen also are recording the numbers and where they pull up golden king crab to provide more data for a potential fishery. Goldens appear to be on an upswing in some areas, but no stock assessments have been done since 2006. Two proposals to open a commercial fishery were denied this month by the Board of Fisheries but Rumble said ADFG and local harvesters are committed to gathering more information. ADFG already manages 25 shellfish and groundfish fisheries in the region and there’s no money in the budget for surveys, but Rumble said a test fishery, hopefully this year, might help get the data they need. “People bid on the test fishery and that could provide us with revenue where we could send observers aboard a vessel to collect biological and abundance information. So that’s kind of the route we’re pursuing right now,” she said. Another potential fishery for Prince William Sound is sea cucumbers. Rumble, a former diver for the state’s largest cuke fishery in Southeast Alaska, is working with local fishermen on a pilot survey for this summer. “With dive fisheries, you’re allowed to tax the product, it’s in the state statutes. So that creates a situation where you are providing funds for stock assessment through the taxation of the fishery,” she explained. “If things go well with the survey, we’re hoping to expand it throughout the Sound, and to continue stock assessments and development by using proceeds from anything that’s sold.” In 2018, sea cucumbers in Alaska averaged $5.29 per pound and a harvest of roughly 1.4 million pounds was valued at $7.4 million to divers. Up next in Prince William Sound is the popular pot shrimp season starting in mid-April with a harvest of 68,100 pounds. Registration is open through April 1 and shrimpers must first get a Commercial Fisheries Entry Commission card before they sign up with ADFG. The big spot shrimp can pay fishermen $10 to $16 per pound in what Rumble calls a very local fishery. “We provide shrimp to people on the street and people sell it through Facebook and to local restaurants,” she said. “It’s local sales that drive this fishery and I think that we would all say that we’re pretty proud of it.” ^ Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

OPINION: Legislature misses chance for immediate help to Alaskans

Faced with the biggest threat to Alaska’s economy in state history, the Legislature failed to meet the moment with a move that would have offered the most immediate relief. The operating budget approved after midnight on March 29 stripped out a supplemental $1,000 dividend payment originally added in the Senate and did not move up the traditional date for distributing the PFD from October while setting the amount at $1,000 per Alaskan. Rather than paying Alaskans a distribution from the Permanent Fund Earnings Reserve to help them pay their bills, the Legislature’s solution was to make it illegal to collect bills for three months. Such a scofflaw strategy isn’t surprising after five years of the Legislature avoiding tough decisions by simply not paying bills whether it has been the statutory PFD formula, oil tax credits or its own lease on the office building it commissioned. Instead of taking advantage of Alaska’s unique financial position to help itself, the Legislature is doing another thing it does well: relying on the federal government to foot the bill. Congress passed the CARES Act with a $1,200 per person and $500 per dependent appropriation for certain income levels, and added $600 per week to those now forced into unemployment. That is apparently good enough for the legislative leadership that negotiated the conference committee budget. Paying a supplemental relief check or an early PFD would have required exceeding the 5.25 percent of market value draw from the Permanent Fund, which is the only law the leadership treats as binding. Adhering to the formula is backed by the Permanent Fund Board of Trustees, but much like the laws it passes, the Legislature also picks and chooses what advice to follow from the board. On March 5, the board passed a resolution calling on the Legislature to take one of two actions: either combine the principal and the Earnings Reserve account into one with a fixed 5 percent annual draw, or failing that to maintain a balance in the ERA of at least four times the annual draw that would be roughly $12 billion. Given the rapidly unfolding circumstances of the coronavirus spread, there was no chance of attempting a lift that would be difficult in the best of times such as combining the Permanent Fund accounts. However, the Legislature gave no thought to reversing the $4 billion transfer from the ERA to the principal approved last year, and even went a step further by appropriating another $1 billion to the corpus under the nebulous purpose of “inflation proofing.” If Gov. Mike Dunleavy doesn’t veto that $1 billion transfer — and he should — the total budgetary and supplemental transfers out of the ERA would likely lower its balance to less than $7 billion, or just about half of what the Board of Trustees recommended. After attempting to move $9 billion from the ERA to the corpus last year (Dunleavy vetoed $5 billion of that), the need to move another $1 billion for “inflation proofing” doesn’t hold a colander’s worth of water. What it looks like is the legislative leadership is tired of hearing from constituents and the governor that “the money is there” in the ERA to pay Alaskans a statutory dividend or even a supplemental “true-up” to the 2019 check. By refusing to follow the Permanent Fund board’s advice to keep a 4-times buffer in the ERA, and in fact taking affirmative action to reject it with the latest $1 billion transfer, what it looks like is the leadership is attempting to starve the PFD out of the budget. Moving $5 billion to the untouchable corpus of the Fund at a time when Alaska is staring down economic ruin is actually far more irresponsible than paying a supplemental dividend. Our two sources of revenue — oil and investments — are being hammered in tandem. New projects that promise thousands of jobs, hundreds of thousands of barrels per day and billions in revenue are on hold. Our biggest private sector employer — fishing — is likewise in limbo with nearly three-quarters of its harvest typically bound for restaurants that are now shuttered across the globe. Our one bright spot in the recession — tourism — is on the brink of having no cruise season based on federal distancing guidelines, Canadian restrictions and one headline after another about outbreaks on ships that will surely discourage travelers even if sailings begin. Those four industries alone account for more than $10 billion in state revenue and economic activity, to say nothing of the destruction of the state’s hospitality sector that is also ongoing through mandated government closures. In their effort to save the Permanent Fund from themselves by slashing the ERA balance, this Legislature is taking financial options off the table that other states would love to have, and ones we may yet need. Andrew Jensen can be reached at [email protected]

GUEST COMMENTARY: Help Alaska by supporting your local businesses

Alaska was just pulling out of a recession; the future was looking bright and then the invisible enemy attacked: COVID-19. Watching many businesses close and leave the state in the past few years was difficult, let’s do what we can to keep those that stayed viable for the future. Our businesses have a hard time in a normal winter, and this current situation goes beyond anything we have experienced in recent history. Alaska has amazing communities — some of the finest in the country — and we have wonderful local businesses. Now is the time for us to come together and support those local businesses, and the vitality and diversity they bring to our lives. I believe in the people of this state, I believe in Alaska’s future. My grandmother came to this state as a missionary nurse in 1920, lived in Nenana during the Diphtheria epidemic in 1925, and went on to raise her family there. It’s hard to imagine the challenges everyone endured. We had strong communities then and we have strong communities today. We are fortunate that we now have more tools and information at our disposal that enable us to provide economic support within the guidelines of the health mandates. It is critical that we abide by those mandates to ensure the safety of our residents and our frontline workers. Implementing necessary closures of businesses throughout the state during this COVID-19 emergency, although necessary, has been difficult on everyone. None more than on the people who have put their hearts and souls into their ventures or the employees that make the magic. These are our friends, neighbors, co-workers, and people we see at our stores and churches. They are our community. The actions we take now can have a significant positive impact in helping sustain these enterprises over the next few weeks. Let’s instill hope and confidence in our community. Utilize the take-out or delivery options at your local restaurants, breweries, and distilleries, or put a deposit down with your favorite hair dresser to get in the front of the line when they re-open for business. For those local businesses with an online presence, purchase birthday and Christmas presents, whale watching tours, or memberships to the Botanical Gardens or the museum. Support your local food bank and provide meals for those in need. If you can afford it, please don’t cancel memberships to gyms and other businesses right now; and consider donating to a local business that could use the money to stay open and keep their workers employed. Remember those small businesses that supported local fundraisers? Now it’s our turn to do the same for them. There are innumerable ways we can help keep our economy, our friends, and our neighborhoods sustainable. We are a creative bunch here in Alaska, let’s use that creativity to support our economy! To our local businesses, we appreciate you! Our team at the State Department of Commerce, Community, and Economic Development is here to support you. Please take a moment to look over the newly launched Alaska COVID-19 Economic Recovery Resource Portal for Business page on our website. I encourage all business owners to check this page periodically, as it will be updated as new tools become available at the State and Federal Levels. During these uncertain times, it’s crucial that we all support each other however we can. Be a good neighbor, share your resources, and assist your local businesses where you can. Julie Anderson is the Commissioner for the State of Alaska Department of Commerce, Community, and Economic Development.

GUEST COMMENTARY: University of Alaska wants your input on academic reviews

As we face the rise of the COVID-19 health crisis in our state and our nation, the leadership team at the University of Alaska is addressing the pandemic with strength and care for our staff, faculty and students. In response to the crisis, when students returned to classes this week, our university looked much different than it did just three weeks ago. Our university communities, like those throughout our state, now must study, work, and live differently. These new conditions bring new responsibilities for all of us, and a new way to serve our friends, neighbors and colleagues. Our new reality also includes the mandate to reduce our operating costs by $45 million as of July 1, 2021. When the Board of Regents signed a compact with Gov. Mike Dunleavy last August, we averted a catastrophic $135 million budget cut this fiscal year. The compact has given us three years to reduce our operational expenses by $70 million: $25 million this year, $25 million by July 1, 2020 and another $20 million by July 1, 2021. We achieved $25 million in reductions this year, but still have the remaining $45 million in cuts to achieve. Months ago, the Board of Regents established a process to make the remaining reductions, and tasked the university chancellors to review and further reduce academic programs and administrative costs. Due to our notice and “teach out” requirements, those decisions need to be made by the Board of Regents in early June 2020. The added costs and reduced revenues caused by the rapidly spreading COVID-19 make these decisions even more critical and urgent. The recommendations from each university provided this week have been very difficult to make, but they were made in the spirit of transparency and with input from staff, students, faculty and community members at each campus either by attending a forum, writing an email or letter, or expressing your views personally. As we evaluate the choices over the next several months our commitment to you is to continue to be transparent, inclusive, and to work together to best position the university to serve the needs of our students and the state. Now the second phase of the review process begins. The chancellors’ recommendations will be reviewed by the president before being sent to the university’s Academic Council. From there, a committee of the Board of Regents will review the recommendations and draw up a list of final reductions to present to the full Board of Regents in June. At every decision point, we know there are students, faculty, donors, community members and employees who have an interest in the outcome. As we go through this review process considering cost, demand, and other data, as well as qualitative factors, we will do so with compassion. We also recognize that as we make decisions about what programs to reduce or discontinue, we must preserve what is core to our mission so we can adapt to this fast changing demographic, technological, economic, and epidemilogical world. Between now and the board’s decision in June, there will be many opportunities to provide input and testimony. Virtual town halls will be held and all the relevant program and budget information will be posted at https://alaska.edu/research/review/index.php. Additionally, each university has a website with university-specific information. We urge you to check the websites often and add to your calendar the dates for virtual town halls, committee meetings, and public testimony opportunities. We are all living in difficult and stressful times, with multiple forces pressing on us all. Rest assured, the University of Alaska — UAA, UAF, and UAS — is strong. We will weather these unprecedented times, using all tools available to do what’s right for our university, for the students we educate and the communities and state we serve. ^ Jim Johnsen is the President of the University of Alaska; Rick Caulfield Is the Chancellor of University of Alaska Southeast; Cathy Sandeen is the Chancellor of UA Anchorage; Dan White is the Chancellor of UA Fairbanks.

Oil price collapse foreshadows huge deficits before PFD payments

What little financial wiggle room Alaska had to start the year has been squeezed out of the state’s fiscal picture and then some, according to the Legislature’s top budget analyst. Legislative Finance Division Director Pat Pitney told members of the public policy group Commonwealth North during a March 27 videoconference that the State of Alaska is now facing significant annual deficits even before Permanent Fund dividends are paid for the foreseeable future. Pitney summed up the impact of ongoing volatility in energy and financial markets as “declining lines” in the state’s revenue outlook. Lawmakers will likely have to reconcile an additional $300 million added to the fiscal year 2020 deficit and could similarly be faced with yearly pre-PFD deficits of $300 million and growing down the road based on the current scenario, she said. While many state officials and leaders of Alaska’s core industries are focused on the immediate health and economic impacts of the COVID-19 pandemic, the latest budget crunch is due to another reset of global oil markets that is only marginally linked to the worldwide health crisis. Saudis and Russian officials were unable to strike a deal in early March to curb oil production in response to the sudden curtailment in demand stemming from suspended economic activity worldwide due to the response to the COVID-19 outbreak. The situation quickly devolved into a price war as Saudis leaders ordered more production on the premise their country can outlast Russia and other large producers dependent on oil revenue for a major share of their budgets. The end result has been an approximate halving of oil prices over the past month. The Department of Revenue’s official fall 2019 forecast pegged Alaska oil at $59 per barrel for the 2021 fiscal year, which starts July 1, with prices gradually rising with inflation in the out years. Pitney told lawmakers earlier this month that Legislative Finance was basing its state revenue projections on a roughly $40 per barrel oil average for the next year-plus based on similarly priced Brent benchmark futures trades. The additional $300 million shortfall this year is similarly based on $40 per barrel oil for the rest of the year, she noted. Based on those fundamentals, the final 2020 deficit is expected to be about $730 million, according to Legislative Finance officials. The Energy Information Administration forecasted in mid-March that Brent benchmark crude — which Alaska oil follows closely — will average $43 per barrel in 2020 and return to $55 per barrel in 2021, but those projections could change along with the global response to COVID-19. However, as of March 25 Alaska North Slope crude was selling for $26.73 per barrel, according to Department of Revenue figures. CME Group, a Chicago-based firm comprised of four commodity exchanges, published Brent oil futures on March 30 of $22 per barrel for May, gradually rising to $37 by December. The Department of Revenue typically publishes an update to their annual fall forecast in late March or early April to give lawmakers deliberating budgets more timely information on the state’s finances, but department officials have said they are holding off on publishing new numbers for now given the market volatility. Many legislators who favor smaller dividend payments to help stabilize the state’s finances in-lieu of drastic budget cuts or new taxes have noted that the current budget had a surplus of more than $400 million based on oil in the low $60s per barrel and before paying PFDs. That quickly evaporated with a cumulative $1.1 billion PFD appropriation and a $360 million supplemental budget to mainly pay for shortfalls in Medicaid and wildfire funding. The oil price collapse just takes more away from the revenue side of the ledger. Under a longer-term projections by Legislative Finance, a slower oil market recovery to about $35 per barrel would cut annual state revenue by $700 million to $800 million per year. The combination of very low oil prices and lower return projections for the Permanent Fund stemming from COVID-19 induced stock market declines the whole situation could end up costing the state up to $11 billion of lost revenue potential over the next decade, according to Pitney. “Under a scenario with annual revenue going from $5.5 billion to $4.5 billion, irrespective of dividends we’d have high annual deficits,” she said. Lawmakers recessed from the current legislative session shortly after the House approved a combined operating and capital budget bill shortly after midnight March 29. The Senate had previously approved the budget that had been negotiated in a conference committee. The fiscal 2021 budget calls for spending approximately $4.7 billion in unrestricted general funds and is largely in line with the current budget on most agency items. However, it adds $30 million for K-12 education, $12.5 million for the University of Alaska, and $88 million in health system and disaster assistance funding for the state’s response to the COVID-19 pandemic. The Legislature also approved nearly $17 million more for Alaska Marine Highway System operations than Gov. Mike Dunleavy requested in his budget and $19 million from the Vessel Replacement Fund to repair the currently laid up ferry Aurora that typically serves Prince William Sound communities. The budget includes $680 million to pay dividends of $1,000 per person this fall, but a Senate proposal to pay a $1,000 PFD that would’ve provided a cash infusion to the state’s beleaguered economy was pulled out of the final budget that’s headed for Dunleavy’s desk. The budget relies on a roughly $1.1 billion draw from the Constitutional Budget Reserve, the state’s last remaining savings account. Dunleavy thanked legislators for quickly passing the budget in a statement from his office but said the missed an opportunity to help Alaskans by not approving a significantly larger PFD appropriation. The governor had previously called on lawmakers to approve a supplemental spring PFD of $1,306 per Alaskan to make up for the difference between the $1,606 residents received last fall and the more than $2,900 dividends called for under the statutory dividend formula. “The vast majority of economists worldwide, as well as the president of the United States, and almost every member of Congress understand how a quick injection of cash into the hands of workers will do more to stabilize the economy than any other approach at this time,” Dunleavy said in reference to the checks of up to $1,200 many Americans are set to receive from the federal stimulus package. “My administration will continue to work closely with Alaska’s congressional delegation and the White House on how to maximize the benefit of the federal emergency relief package here in Alaska.” House Speaker Rep. Bryce Edgmon, I-Dillingham, wrote in a lengthy Facebook post March 30 that the sudden drop in oil prices and a roughly 10 percent decline in the value of the Permanent Fund in recent weeks forced the Legislature to make choices that will hopefully mitigate the long-term damage do the state’s finances — namely, approving a single, $1,000 PFD payment this fall. “If the Legislature is able to return to session this year, I predict that the first order of business would be to take a second look at helping Alaskans who could be suffering even more than they are today,” Edgmon wrote, adding that while the choices were difficult this year, “next session will be worse” if oil prices don’t make a drastic recovery. “When the Legislature convened this January, a budget surplus existed. But today it’s a faint memory, and in its place is a nearly $600 million hole. Next year could easily feature all at the same time: major budget cuts, attempts to impose new revenue measures and a zero PFD,” he wrote. Pitney said Legislative Finance analysts expect the CBR to finish fiscal 2020 on June 30 with about $1.5 billion after starting the year with more than $2.1 billion. (The final deficit projections do not match the CBR draw due to mandated CBR deposits from court and tax settlements and modest investment returns during the year.) Pitney, a former budget director for Gov. Bill Walker, said state officials need a minimum of approximately $600 million in the CBR to continue using it as a day-to-day cash management account. A CBR balance of less than $600 million would require Revenue officials to turn to the Permanent Fund’s Earnings Reserve Account to manage the state’s cash flow. A rough calculation of current projections indicates the CBR could be down to approximately $500 million by the end of fiscal 2021. As early as 2022 lawmakers would be faced with making a $350 million ad-hoc draw from the Permanent Fund to pay for state operations even before accounting for a PFD appropriation, according to Legislative Finance models. Elwood Brehmer can be reached at [email protected]

A bright spot in recession, tourism outlook dims with uncertainty

For the past five years, tourism has been one of the bright spots in Alaska’s struggling economy. This summer, it may dim down. The rapid spread of the novel coronavirus and its associated illness, COVID-19, across the United States this spring has interrupted almost every aspect of American life. Air travel has plummeted, and cruise ships across the U.S. have voluntarily suspended all service for at least a month. Another record number of tourists, some 1.4 million, were expected to arrive by cruise ship this year according to the Cruise Line Industry Association-Alaska. Alaska Airlines has dropped a number of regular flights and has indicated plans to further reduce service in the face of reduced travel. Canada has limited all non-essential land border crossings, and Alaska now requires all people entering the state between March 24 and April 21 to self-quarantine for two weeks. The Port of Seattle also announced March 24 it is suspending cruise travel indefinitely. All of those things bear ill omens for Alaska’s 2020 tourism season. About 70 percent of Alaska’s tourists arrive by cruise ship, visiting communities from Ketchikan to Fairbanks. In addition to the voluntary shutdown by the U.S. cruise industry, Canada announced that it would close its ports to cruise traffic through July 1. Because all cruise vessels on their way to Alaska are required to stop over in Canada, the closure would cut off about half the season. To try to reopen that part of the season, the Alaska Travel Industry Association, or ATIA, has requested an exception to the Passenger Vessel Services Act, which would allow vessels carrying more than 500 passengers to bypass Canada on their way to Alaska. “The loss of these weeks of the season will devastate Southeast Alaska ports, and reduce the number of visitors to all other regions of the State,” the ATIA wrote in a letter to Alaska Sens. Lisa Murkowski and Dan Sullivan and Rep. Don Young. “The economic impacts to our communities—and to the hundreds of small businesses and their thousands of employees who rely on cruise ship visitors for their economic livelihoods—will be decimating.” An exemption to the foreign port rule would help preserve tourism jobs in the state, mitigating job and revenue losses, the letter states. The ATIA is also advocating for federal assistance to businesses affected by the outbreak. The U.S. Travel Association projects a total loss of approximately $809 billion in the 2020 travel industry, with a loss of 4.6 million jobs, 3.5 million of them directly in tourism, said ATIA President and CEO Sarah Leonard in an email. Alaska is highly reliant on out-of-state and international visitors, making the state vulnerable to disruptions in national and international affairs, she said. “I can only project that the level of economic loss, including tourism jobs and revenue in Alaska will be significant as the impact is happening now and will likely last into the summer season,” she said. “Tourism businesses have already taken a hit and are struggling with solvency and cash flow decisions, due to cancellations and refunds.” The Cruise Line Industry Association did not sign onto ATIA’s letter but supports the efforts to communicate the importance of the industry, said CLIA Alaska Public Affairs senior director Lalanya Downs. “For CLIA, we are focusing our efforts on evaluating ways we can improve our protocols to better protect our passengers, crews, and the communities we visit,” she wrote in an email. “Since the voluntary suspension of cruise operations, we have also been very focused on finding ports for our vessels and helping our guests return to their homes and families during these challenging times.” Though CLIA does not track individual company bookings, there have been some sailing cancellations so far; however, the situation is fluid and hard to predict, Downs said. Since the World Health Organization declared a public health emergency Jan. 30, cruise lines have begun denying boarding to people who have traveled from, visited, or traveled through airports in South Korea, Iran, China, and municipalities in Italy under lockdown. Other ships were held off shore in search of ports, including in the U.S., when passengers fell ill on a cruise to Mexico from California. CLIA met with Vice President Mike Pence about further health safety measures, including more rigorous boarding procedures, adding more medical resources on board and temperature screenings at departure. “Our focus right now continues to be on evaluating ways we can safely return to service at the appropriate time,” Downs said. Fairbanks, where winter tourism has been growing significantly in recent years, has already seen a drop in revenue. Though businesses reported good January and February returns, “the bottom fell out” in March, said Deb Hickok, the president and CEO of Explore Fairbanks, the region’s tourism marketing organization. “March is our most popular winter month,” she said. “In-season winter cancellations were felt immediately … and then we’re hearing more and more cancellations for summer visitation.” Winter tourism has been a growing season in Fairbanks, with visitors coming in to enjoy the skiing, winter activities, and northern lights via the airport and on the Alaska Railroad. About 20 percent of the visitors during the aurora season — which runs roughly from Aug. 21 through April 21 — come from China, where the COVID-19 outbreak began. This year, the visitation definitely dropped, Hickok said. The Alaska Railroad cancelled its remaining Aurora Train and Easter Train services between March 19 and April 30 as well. Though Fairbanks is about 400 miles from the Gulf of Alaska, the tourism industry there is also dependent on cruises. The Alaska Railroad takes many cruise ship passengers north from Southcentral, where they disembark at Seward or Whittier, north through Denali National Park to Fairbanks. Approximately 160,000 cruise ship passengers go north to Fairbanks, about 41 percent of the area’s visitation, and the businesses reliant on them are grappling with the uncertainty of when the season will start and how big it will be this year, Hickok said. Other businesses are wondering how big of a season to predict, in part because of travel restrictions and in part because of the shock to consumer confidence, which may stop people from traveling even if the planes, roads and ships are open. “There are some businesses built on cruise-land tourism,” she said. “(Another factor) is that confidence shock. (Businesses are) really grappling now. How many staff should they hire? When should they start operations?” Some of the tourism industry spending in Alaska comes from Alaskans traveling to various regions of the state, staying in hotels and participating in activities in other regions. However, the state’s population isn’t very large, and likely wouldn’t make up for a large loss in out-of-state tourism, Hickok said. ATIA estimates that the tourism industry was worth about $4.5 billion in total revenue within the state in 2018, supporting about 1 in 10 private-sector jobs. Businesses and tourism industry advocates are working on their plans now, but the future is still uncertain, she said. “Last week we were in shell shock,” she said. “Now we’re just trying to figure it out, what it means. We might not have the answers for a while.” Elizabeth Earl can be reaced at [email protected]

Fishing industry grapples with fallout from coronavirus response

Like almost all industries and institutions across Alaska, the novel coronavirus pandemic is shaking up the fishing industry. With restrictions changing almost daily and cases spreading across the United States, fishermen are still fishing, but the normal seasonal progression of the industry is likely to hit some rough waters. Travel in and out of Alaska has dropped after federal and state advisories against it, and questions are hovering about how seafood processors and fishing vessels will find the employees they need for upcoming seasons. Demand for seafood has fallen in restaurants after sweeping closures, and large numbers of layoffs may affect demand as workers scale back their expenses after losing incomes. Status-quo industry events have been disrupted, too. Hiring events have been postponed or canceled; the North Pacific Fishery Management Council cancelled its April meeting, and Kodiak’s annual ComFish exposition has been rescheduled for Sept. 17-19 due to concerns about gatherings where the COVID-19—the name for the disease caused by the novel coronavirus—could be spread. As of March 24, Alaska had reported 42 cases of the illness in Anchorage, Fairbanks, Soldotna, Ketchikan, Sterling, Seward, Juneau and Palmer. The primary recommendation to limit the speed of spread is to maintain physical distance of at least six feet. But it can be hard to limit close contact in the seafood industry, where fishermen work in close quarters on vessels and processing plant workers sleep in dormitories and work together. Adding to that, the workers in the seafood industry are often seasonal and come from outside the communities where they work, from elsewhere in Alaska, the Lower 48 or international. That’s something the processing industry is working hard to figure out. For the past few weeks, as cases of COVID-19 have spread across the U.S., seafood processors in the North Pacific have been meeting in a work group to coordinate how to respond to the pandemic, said Chris Barrows, the president of the Pacific Seafood Processors Association. “From the earliest days of the COVID-19 threat, companies have worked with urgency, together — within this AFISH Committee, to minimize the impacts of this public health threat on Alaskan fishing communities, fishing crews, and processing workers,” Barrows said. “As part of those efforts we have strengthened cross-company information sharing through this AFISH Committee, including through formation of a layered, robust prevention and response network and continue to work together to update guidelines focused exclusively on challenges relating to COVID-19.” The group is currently working on partnerships with public health and government authorities on how to protect employees and the communities they work in, he said. Many of the plants in Alaska are in remote communities with small year-round populations, such as Akutan, Cordova, False Pass and Dutch Harbor. Community leaders from the involved regions, including Unalaska and Bristol Bay, are involved in the discussions, and Barrows said leaders from other remote communities are welcome to work with the committee on response and prevention coordination. Government public health and safety officials from Washington, Alaska, the Centers for Disease Control and Prevention, and the Coast Guard are all involved in the committee as well, Barrows said. “The network continues to share within the membership guidance on best practices for companies, vessels, and plants throughout Alaska and work to disseminate the most up-to-date information from state and federal authorities to key stakeholders,” he said. The seafood industry relies on seasonal labor from Outside, much of it from foreign countries. Nelson San Juan, the deputy commissioner of the Alaska Department of Labor and Workforce Development, estimated that the seafood industry brings in more than 20,000 workers to the state each year. The guidelines for how to handle employees coming in from out of state and out of country are still new, he said. On March 23, Gov. Mike Dunleavy issued Health Mandate 10, requiring anyone traveling into the state — resident, visitor or worker — to self-quarantine for 14 days, from March 24 until at least April 21. Visitors and incoming workers will have to go directly to their hotels or rented housing to quarantine, where they can only leave for medical emergencies. Businesses who had to bring in workers from Outside to maintain critical infrastructure were required to submit a plan on how they would prevent the spread of the illness and not endanger the lives of other employees or those in the communities to the Department of Commerce, Community and Economic Development by 3 p.m. March 24, according to the mandate. Barrows said the governor’s office had informed the industry of the mandate, and the AFISH committee is working on how to handle the quarantine requirement and worker plan. Seafood companies are also updating their screening and monitoring plans with maritime health doctors to prevent anyone with a risk profile from traveling to the remote communities and prevent sick crew members from being placed on vessels or in plants, he said. “We are all operating in a period of high uncertainty,” he said. “Access to a sufficient and healthy workforce is key challenge among those uncertainties. The industry is working together, and with local, state, (and) federal officials to successfully address such challenges.” Health Mandate 10 included a list of industries identified as essential to national infrastructure, within which employees would still be allowed to report to work. The fishing industry, including seafood processing, was included on the list, along with other agricultural and food supply industries. In Bristol Bay, where the workers largely come from out of the region, the mandate raised some concern because of the timeline. The Bristol Bay Regional Seafood Development Association wrote on its website that anyone who needed to bring in workers prior to May 1 had to submit any plan they had before 3 p.m. March 24, while others who need to bring in workers after that date could submit plans now or at a later date to the Department of Commerce, Community and Economic Development. BBRSDA originally looked into submitting a “blanket plan” for all Bristol Bay fishermen, but because of the tight timeline, it likely wouldn’t be feasible, and the organization wrote that it would continue to work on it if deadlines are extended. “In terms of broad advice, it is critical that everyone prioritize partitioning and avoiding increasing the number of places where the virus can live and spread,” BBRSDA wrote on its website. “For partitioning, this means isolating yourself and crew as much as possible until you can get on the water or to your setnet site.” Under regulations from the U.S. Food and Drug Administration and the Alaska Department of Environmental Conservation, seafood processing plants are already required to practice safe sanitizing processes for food products. So far, the federal government has not found that the coronavirus can be spread through food, according to the Alaska Seafood Marketing Institute. The coronavirus has been found to live on surfaces, but it is unlikely that it will be spread by food products or packaging that has been shipped for a period of time at ambient, refrigerated, or frozen temperatures, according to ASMI. “As part of each plant’s required preparedness plans, there are contingency mechanisms in place to deal with human disease outbreaks and other externalities so as to protect the health and safety of both employees and the public and guard against threats that could cause a disruption to plant and processing activities,” ASMI wrote on its website. “Human health and food safety are always the priority.” Elizabeth Earl can be reached at [email protected]

GUEST COMMENTARY: Back PFD payments are the stimulus Alaskans need now

As Alaskans face the current COVID-19 outbreak, we face a lot of uncertainty about how severe the disease’s spread will be. We hope that the disease’s spread can be slowed, and Alaska’s public health community is doing yeoman’s work to slow it. But we already know that with this health crisis comes a severe economic crisis. We already face business closures, layoffs, and wage losses. And we aren’t out of the woods yet; far from it. Alaskans will get through this as we always do: with tenacity, hard work, and caring for one another. But part of that means that we in state government need to do everything we can to help Alaskans ride out this economic crunch as best we can. Economists disagree about many things, but nearly all of them agree: in times of economic crisis, the monetary authorities need to inject liquidity – cash – into the economy. The federal government knows this well, and regularly takes steps to increase the money supply in times of economic crisis, usually by slashing interest rates. But there’s a limit to how low interest rates can go, and we’re almost there already. Fortunately, there’s another solution: direct cash payments to Americans. Sounds like something Alaskans know well, doesn’t it? In Alaska, we know that our Permanent Fund dividends always provide a boost to our economy. We see it every year. The federal government knows it too, which is why President Trump and Senate Majority Leader Mitch McConnell each have proposals to pay cash directly to Americans. Paying cash to every American is a big job, and it will take some time for the federal government to get set up to do that. But here in Alaska, we are already prepared – we do it every year. We already have the applicants, their eligibility has already been verified – because we paid them just a few months ago. The Permanent Fund dividend is part of being Alaskan, but it is so much more than that. It has been found to significantly reduce obesity in Alaskan children. But most importantly, it has been found to lift between 15,000 and 25,000 Alaskans – especially children, rural residents, and Alaska Natives – out of poverty every year. There really is no way to seriously address our looming economic crisis without giving this serious consideration. Many Alaskans are already finding themselves without income. The dividend is income. It’s the most direct solution, providing direct relief to the specific problem Alaskans are facing. There are numerous examples of how Alaskans might use their dividend as relief from the hardships of this outbreak. A family in Chevak might use it to pay for fuel costs in rural Alaska; elderly Alaskan who can pay $500 per month for incontinence products not covered by Medicare could use it to pay for three months of adult diapers; a laid-off single mother could use it to put food on the table. If this payment means that a family can pay their rent one month more, that by itself can keep them from losing their housing, having to go on expensive state services, and having their lives permanently and negatively disrupted. The Legislature should immediately vote to pay the remaining dividend of $1,300 from our reserve account. This account currently has about $16 billion dollars. A withdrawal of $750 million from this account would cover the back dividend from 2019 and would fulfill a promise made to Alaskans in law. Another dividend should be paid to Alaskans in October. This can’t wait. Restaurants, bars, schools, and many, many other gathering places and businesses have already been closed all over the state. They will remain closed for the duration of this COVID-19 outbreak, and we don’t know how long that will be. The Great Alaska COVID-19 Recession is already here, and we need to act now to help Alaskans get through it as best we can. Alaskan wage earners are already finding themselves without hours to work and staring down bills they don’t know how to pay. It’s not a distant future, or even an imminent one; it’s here now. We can help Alaskans now, and we should. Sen. Mia Costello is a lifelong Alaskan who represents West Anchorage in the Alaska Senate.

Financial institutions aim to aid battered customers

Alaska’s financial institutions are doing what they can to help businesses and individuals through the economic consequences of the response to COVID-19 and they’re largely doing it from a position of strength. “We’ve got plenty of funds to lend,” Northrim Bank Chief Lending Officer Michael Huston said March 24. The state’s largest banks were all growing and nearly all of them had significant net income increases and strong loan portfolio performance based on third quarter results. Northrim, for example, had a 45 percent year-over-year increase at $7.8 million in net income. Anchorage Economic Development Corp. CEO Bill Popp said the state’s banks and credit unions are “in the best possible situation we could’ve hoped for” given the dire economic situation facing thousands of Alaskans and people worldwide brought on by government-mandated business closures and event cancellations aimed at limiting the spread of the virus. “There’s great leadership in our financial institutions and they have the resources to stay solvent,” he said. Popp is also a co-chair of the Economic Resiliency Task Force formed by Anchorage Mayor Ethan Berkowitz to help city leaders navigate the unprecedented situation and minimize its impact on Anchorage’s economy. It’s unclear exactly how many workers will ultimately be impacted by attempting to pause the state and national economies, but what is certain is the numbers will be painfully large. State Labor Department officials reported roughly a six-fold increase in unemployment claims in the days after the state and local governments began restricting public gatherings and closing bars and restaurants in mid-March. Popp said he’s heard numerous lenders are aggressively working to modify business loans, refinance mortgages and defer payments and interest for businesses that have had to close and individuals who have had their income cut off so quickly. He stressed a need for an immediate cash infusion into the economy. Popp said the explosion of the pandemic and the quick nature of the subsequent government responses left many business owners without time to react. “Businesses have been caught without sufficient cash resources to ride this out,” he said. Based on information the task force is receiving, Popp said the group expects the virus and resulting movement restrictions to be in place for months, not weeks. A survey published by the National Federation of Independent Business indicated that as of March 24, more than three-quarters of Alaska small businesses were being negatively impacted by the response to the virus. Approximately 5 percent of mall businesses have been positively impacted. At the time, 68 percent of small business owners said they were very concerned about the potential impact to their business, according to the survey. Gov. Mike Dunleavy said on March 20 his administration had reached an “understanding” with members of the state’s banking community to partner on a program to offer state-backed bridge loans to small businesses. Bank executives said they are generally supportive of the concept but they are waiting to hear more details about it. A spokesman for Dunleavy did not respond to questions about the loan program in time for this story. In a March 23 statement, officials with the Alaska Industrial Development and Export Authority encouraged its borrowers in need of assistance to contact the private lender that participated in the loan with AIDEA. “The authority can then work with the lender to help achieve a positive solution for the client,” the AIDEA statement reads. The state-owned development bank regularly participates in private commercial loans at up to 90 percent of the loan, many of which are in the tourism and hospitality sectors. Some of the lending Northrim is doing is in the form of short-term loans to businesses that are trying to pay their employees through the work stoppage, Huston said. Northrim is providing 90-day payment deferrals and 120 days of interest-only payments on business loans, according to Huston. The statewide bank has different options for individuals with loans or mortgages, he said. “We have significant resources to assist any borrower that is having difficulty as a result of this pandemic,” Huston said. James Wileman, president of Anchorage-based Credit Union 1, said his institution is offering loan extensions, reduced monthly payments, 60-day deferrals and giving borrowers 1 percent back on new loans. Credit Union 1 workers search the cooperative’s records when local companies announce layoffs, Wileman said, in an attempt to determine if any members have been impacted and reach out to them for assistance if need be. “We’re just looking for ways to help,” he said, noting the juxtaposition of needing to help fuel the economy in any way we can while also severely restricting nearly all activity. Popp additionally noted that waiving late fees and other payment-related penalties during extraordinary times can prevent compounding an already difficult situation. Aside from more traditional means of assistance, on March 24 CU1 began encouraging members to support certain local restaurants with takeout and delivery orders, and each time someone posts a photo of their food on social media with the #cu1foodie hashtag, the credit union will donate $50 to that restaurant. Steve Lundgren, president of Denali State Bank, said his institution is handling each borrower independently. The Fairbanks-based bank first began hearing from Aurora-centric and winter tourism operations impacted by initial international travel restrictions before many other businesses were hit by state and local government mandates. “We’ve made a lot of concessions in terms of payment modifications with those borrowers,” Lundgren said. He implored state officials in a March 24 interview to issue a strict “stay at home” mandate across Alaska in an attempt to blunt the impact of the pandemic as quickly as possible. Lundgren said he believes sharp immediate measures will prevent the COVID-19 pandemic from lingering any longer than it needs to. “The quicker we can get this issue resolved the quicker we can help our economy recover,” Lundgren said. Elwood Brehmer can be reached at [email protected]

NEPA revisions continue with senators’ support

They’re undeniably complex, dry, arcane and seemingly always published in painfully hard-to-read print, but the Council on Environmental Quality’s proposed changes to the implementing regulations for the National Environmental Policy Act are likely to have an outsized impact on Alaska. That’s because, from the smallest commercial fishing boat to the most remote eco-tourism trek to the largest oil project, Alaska’s economy is inextricably linked to its natural resources and federal jurisdiction on nearly every level. On Jan. 10 the Council on Environmental Quality, or CEQ, published 47 pages of changes to National Environmental Policy Act regulations in the Federal Register, an action that officially opened the proposed regulations for public comment. It officially marks the only major change to NEPA regulations since the council first approved them in 1978. A public comment period closed March 10. The CEQ is an arm of the White House tasked with implementing NEPA requirements. The sweeping regulatory changes precipitate from Executive Order 13807, which President Donald Trump signed in August 2017, directing agencies to complete reviews for major infrastructure projects within two years, among other things. NEPA, the landmark federal environmental policy signed into law by President Richard Nixon in 1970, was so transformative it is often referred to as the “Magna Carta” of environmental law. In conjunction with the Clean Water and Air acts, it forms the national basis for environmental protection, pollution control and land conservation. At the highest level, the regulatory reforms are aimed at shortening the length of environmental reviews in terms of both time and page count of the final documents. Proponents of the changes, which include Alaska’s congressional delegation, insist the current process for conducting environmental impact statements, or EIS — the most thorough reviews under NEPA — results in unnecessary permitting delays that routinely hamper economic and infrastructure development nationwide. Skeptics worry the proposed regulatory overhaul is a backdoor attempt by a very pro-development presidential administration to weaken fundamental environmental protections nationwide. Brian Litmans, a senior attorney for the Anchorage-based environmental nonprofit firm Trustees for Alaska, said he believes NEPA is important for all Americans simply because it requires federal regulators to examine all aspects of a proposed project or action holistically so they can make informed decisions when issuing major development permits or making long-term land-use decisions. “NEPA doesn’t require a particular outcome and that’s one of the great things about it,” Litmans said. “It simply tries to get all of the relevant information on the table so the agency can understand what’s at stake and make a decision and I think because of that NEPA has been a success and projects can be better because of it.” The basic EIS structure involves an agency issuing a notice of intent to start evaluating a project or plan deemed to a “major federal action,” followed by a public scoping period to solicit input as to what aspects of that action stakeholders feel should be studied in the EIS. A draft EIS is published following the scoping period, after which a final EIS is published and then a record of decision, or ROD, is issued. Public comment periods of varying lengths must also follow the publication of each version of the EIS. Few direct stakeholders dispute the value of its core goals, but a largely Republican group of lawmakers at the state and federal levels largely in Western states where federal land ownership is extensive has grown increasingly frustrated at the persistent growth of NEPA reviews, particularly environmental impact statements. Part of that is because the NEPA framework is so commonplace in federal agencies. The simple process is used to adjudicate mines and oil developments, public land-use plans and road construction projects. Legal hurdles Sen. Dan Sullivan, for one, said the rulings in NEPA-related lawsuits that have piled up over the decades have led to an unrealistic burden on EIS drafters, or NEPA practitioners, as they are often known. They must account for so much case law, often from seemingly unrelated issues or projects, that writing an EIS has become a practice in writing a “legally defensible” document as much as it is conducting a thorough environmental review, according to Sullivan and others. “This is something my Democrat colleagues agree is a problem; my Republican colleagues certainly agree it’s a problem: this big issue that under our federal permitting system and to some degree state and local, but a lot of it’s federal — that you have this super-long lead time that’s required for any major infrastructure project,” Sullivan said in an interview. “Of course, it costs money and it costs time. Money and time are usually enhanced by litigation and it makes it very difficult for us to build stuff.” Eric Fjelstad, an Anchorage-based partner with the national business law firm Perkins Coie, has spent roughly 20 years working on NEPA issues. He believes the current system benefits no one — except maybe attorneys. That’s because there is nearly always a contingent that opposes a large project or major federal planning decision for a myriad of reasons. Those groups then regularly sue the decision-making agencies to overturn a record of decision or delay the process based on perceived legal flaws in a given EIS. “It’s devolved into somewhat of, I’ll call it a ‘gotcha’ review process where the process is a series of hurdles with people playing different roles and ultimately the courts at the end exacting a gotcha sanction,” Fjelstad. “Is there any realistic world where it should take four, five, six years to study something at this level? And this isn’t the only study that occurs on big projects,” he added, referring to an EIS. According to CEQ figures, approximately half of the 1,161 EIS reviews conducted from 2010-17 took longer than three years and seven months to complete. Roughly one-quarter took more than six years and the average time from a notice of intent to a record of decision was 4.5 years. About one-quarter of those analyzed took less than two years and two months to complete. Ted Boling, an associate NEPA director for the CEQ, said during a February presentation at the Alaska Forum on the Environment conference that the council primarily wants to modernize the regulations to help produce more timely and effective NEPA reviews. The council also seeks to codify years of court rulings in the proposed regulations to clarify exactly what is required under the law, according to Boling. “Much of that guidance and case law is reflected in modern agency NEPA practice but it’s not reflected in the regulations,” he said. In addition, the proposed regulations meet the president’s orders by directing agencies to complete an EIS within two years and a less rigorous environmental assessment within one year. New guidelines The CEQ is also seeking to harden current guidelines for the length of an EIS. Current NEPA regulations recommend the text of a final EIS be less than 150 pages. An EIS of “unusual scope or complexity” should be limited to 300 pages, according to the regulations. It’s 75 pages for an environmental assessment. The new regulations would make those recommendations mandatory in most cases. However, the 2010-17 EIS review found that the average length of a final EIS from the time period was 669 pages, with about one-quarter each less than 300 pages or more than 730. Boling emphasized that the harder timeline and length directives are “not just a get out of jail free card” for agency officials looking to do less work. The proposed regulations allow for senior agency officials to exempt certain complex or highly scrutinized reviews from the limitations. “Ideally, the senior agency official says, ‘Yes, this is an important project so I will read more pages than usual,” Boling said. The new language also defines reasonable alternatives, which are a required part of an EIS, as alternatives that are “technically and economically reasonable” to be in line with longstanding Supreme Court decisions, according to Boling. He further added that the council is proposing to clarify that a project’s effects should not be considered significant — and therefore not be studied — “if they are remote in time, geographically remote or they result in a lengthy causal chain.” That also codifies a Supreme Court ruling, Boling said. He acknowledged that it’s a “great point of debate” as to whether or not the new regulations will ultimately change what projects necessitate an environmental assessment or EIS. “It really gets into the question of how will the case law work?” he said. Many of the high level reforms to the parameters of an EIS were in part pulled from Sullivan’s Red Tape and Rebuild America Now bills, according to the senator. He said one of the first conversations he had with President Trump was about the need for NEPA reform. While he would prefer to make the changes in statute, Sullivan said regulatory reform via an executive order “is really good.” “We have been kind of ground zero for this” in Alaska, Sullivan said, noting it took nearly 20 years to reach a record of decision on the Kensington gold mine near Juneau and other projects. That project only began after a Supreme Court decision. He dismissed concerns that the changes will weaken environmental protections. “We don’t want to cut corners in Alaska,” he said. “It’s about timely permitting — certainty in the permitting process — so people can make investment decisions to move forward on infrastructure projects.” ‘Morphed into its own entity’ Sen. Lisa Murkowski similarly said the EIS process has become overly burdensome over the years. “It has morphed into its own entity, the NEPA process, far beyond what the act initially required,” Murkowski said in an interview. The legislation itself is a relatively brief seven-page bill that outlines Congress’ desire for a national environmental policy, establishes the CEQ and describes very generally how that policy should be implemented. “The Congress recognizes that each person should enjoy a healthy environment and that each person has a responsibility to contribute to the preservation and enhancement of the environment,” NEPA states. Sullivan and Murkowski said the status quo of EIS timelines and particularly lengthy documents discourages public involvement, contrary to NEPA’s intent. “The whole point of NEPA was to bring the public into the permitting process. You do that by having an EIS that’s 100, 200 pages; something that the average citizen can sit down and read. That was the point. Public involvement, public engagement, public input,” Sullivan said. Boling went a step further and said the council wants to make an EIS more readable for the senior agency officials tasked with making major permitting decisions based on them. The page limits are designed to help get to the core detailed statement of an EIS, Boling said, adding that appendices to the main document are “free space” that do not count towards the limit. “We’d be concerned if people were trying to take really complicated projects and just reduce it all to 150 pages but we’re also equally concerned that decision-makers need to actually be able to use those documents,” he said. “Ultimately, it’s not a paperwork exercise; it’s designed to be something that decision-makers can actually read, digest and respond to.” Litmans, of Trustees for Alaska, said the EIS timeline and length statistics can be skewed by a few exceptional cases. He noted that a very small number of projects reviewed by federal agencies are actually subject to an EIS. The vast majority are given a finding of no significant impact, or FONSI. Litmans referred to a 2014 Government Accountability Office report that found less than 1 percent of projects subject to a NEPA analysis resulted in an EIS and less than 5 percent required an environmental assessment. The rest receive a categorical exclusion, meaning a formal environmental review isn’t needed. He said Boling is “far off the mark” in saying the CEQ is simply codifying case law in the regulations. “This rule completely guts or removes from the regulations the concepts of cumulative effects and indirect impacts. These are aspects of a project that have to be considered under NEPA,” Litmans said. A section of the regulations attempting to define “effects” and “impacts” states that a “but for” causal relationship does not constitute a particular effect under NEPA. “Analysis of cumulative effects is not required,” the regulations state further. Fjelstad said he believes an EIS should be narrowly focused on roughly five to 10 areas of study that are particularly germane to a project. “It’s the old maxim, pick a few things and bring real rigor to the table and do it right rather than trying to solve everyone’s issues,” he said. Litmans said there is a large body of case law defining the requirements of a cumulative effects analysis and simply cutting it out lends to a whole new round of lawsuits. “This rule just removes key aspects of what’s required in an agency review and adds new terms that will have to be defined by the courts,” he said. Litmans also said that permit applicants are regularly the cause of delays in the process because they were not armed with the requisite information an agency needs for an EIS when they start it. Such is the case with the Pebble mine EIS, he said. “You have a project that’s sorting things out as it goes along and as a result the reviews are going to take longer,” Litmans said of Pebble. “The shouldn’t, in the middle of the process, while the draft EIS is being written and completed say, ‘Well, we’re going to go get some more field data this summer,’ which is what they did.” Murkowski joined a series of state and federal resource agencies in roundly criticizing the U.S. Army Corps of Engineers’ draft EIS for Pebble published in February 2019, contending it lacks detailed information and minimizes the project’s potential impacts to the region’s salmon and other resources despite being approximately 1,400 pages. In response to a question about how she reconciles support for the regulatory reforms with the Pebble EIS Murkowski said, “When you say a project needs a review that’s fair and thorough, that fairness and thoroughness is not necessarily measured by pounds of paper or the length of time within a process.” Pebble spokesman Mike Heatwole wrote via email that the company has not had an unusual number of information requests from the Army Corps of Engineers for a project of its size. More people than normal are interested in Pebble and therefore the intricacies of the process have been made more transparent than normal by the Corps, according to Heatwole. He added that midstream changes to the project did not fundamentally change the layout of the project or the company’s approach to mining the resource. “The modifications were improvements upon the environmental impacts of the project and in many cases reduced the footprint of the project,” Heatwole wrote. Boling said agencies can better meet the new, firmer review timelines by making sure applicants have all of the information needed at the ready and Fjesltad acknowledged that “a lot of people start when they’re not ready.” The CEQ received 598,989 comments on the proposed regulations, according to the Federal Register. CEQ spokesman Dan Schneider wrote March 17 that modernizing the environmental review process for infrastructure projects is a priority for the administration and the council is currently reviewing the comments. ^ Elwood Brehmer can be reached at [email protected]

GUEST COMMENTARY: Success of oil and gas industry vital to success of Alaska economy

Oil prices have plunged in the past few weeks, a result of global market forces and COVID-19. With jobs and government revenue sure to be impacted, it is useful to consider how a drop in oil prices played out in Alaska before. McDowell Group recently completed a comprehensive analysis of the oil and gas industry’s role in Alaska’s economy. For many years we have tracked jobs and wages associated with industry spending and payments to government. This analysis was different, coming on the heels of a recession in Alaska driven mainly by a sharp drop in oil prices and revenues. Oil prices started sliding in late 2014, falling from $110 per barrel to $30 per barrel by 2016. Oil and gas industry spending and employment sank, as did tax and royalty revenue to the State of Alaska. All told, Alaska lost 12,000 jobs before emerging from recession in 2019. Like Alaska’s economy, the oil and gas industry is again on the rise, adding 500 jobs in 2019. Though the oil and gas industry downsized during the recession (nationally and in Alaska), it remains a critical component of the Alaska economy. Oil industry spending supported 41,800 jobs and $3.1 billion in wages in 2018, including all multiplier effects. This tally of employment does not include nonresidents employed by the oil and gas industry in Alaska. The 17 companies that produce, transport, and refine oil and gas are the heart of Alaska’s oil industry, spending $4.4 billion in Alaska in 2018. 84 percent of these companies’ employees are Alaska residents earning 83 percent of wages paid in Alaska. The industry also paid $3.1 billion in taxes and royalties to state and local governments in 2018. As government uses oil- related taxes and royalties to fund operations, programs, and capital projects, thousands of public and private sector jobs are created. Government spending of oil-related taxes and royalties accounted for an additional 29,300 jobs and $1.5 billion in wages in Alaska. The Permanent Fund, and the dividends it generates for Alaskans, is a legacy economic impact of the oil and gas industry. PFD spending in Alaska supports 6,500 jobs and $260 million in annual wages. All told, including jobs related to private sector spending and payments to government, the oil and gas industry accounted for 77,600 jobs and $4.8 billion in wages, or 24 percent of all wage and salary jobs and 27 percent of all wages in Alaska in 2018. For each job with Alaska’s 17 oil and gas producers, pipeline companies and refineries, there are 15 additional jobs in the Alaska economy connected to the oil and gas industry. No other industry in Alaska can match the employment footprint of the oil and gas industry. Alaska oil production has been declining steadily since 1988 when we produced 25 percent of all U.S. oil. Now Alaska accounts for 4 percent of domestic U.S. production (and just a small fraction — 0.6 percent — of global production). While U.S. oil production outside Alaska grew 143 percent between 2008 and 2018 — largely due to rapid growth in North Dakota, Colorado, Texas, New Mexico, and Oklahoma — Alaska production declined 30 percent. Recent history has proven that a healthy oil and gas industry is essential to Alaska’s economic wellbeing. That fact, coupled with our much-diminished role as an oil producer and another severe drop in oil price, underscores the importance of keeping Alaska an attractive and competitive place for oil industry investment. Jim Calvin is the McDowell Group’s senior vice president and senior economist.

GUEST COMMENTARY: Short- and long-term fixes for ferry system in the works

While I know the novel coronavirus has rightly captured our attention, I think it’s important that we don’t forget the Marine Highway. In recent months, I’ve read disappointing reports of communities throughout the Inside Passage being unable to obtain food and vital supplies. Having represented Hoonah, Angoon, and Kake in the legislature for many years, I found it surprising that these self-reliant communities were supposedly struggling so severely. But after calling a few local friends, I learned the situation was far different than what some were representing. The people were not starving. Chartered barges have continued to deliver goods and supplies to Hoonah and Angoon; landing craft were quick to restore depleted grocery shelves. One friend told me they are gatherers and have been ready since November. After the weather cleared, I visited these communities myself and was relieved to find they were doing fine given the circumstances. That said, the outpouring of support from Petersburg and elsewhere was greatly appreciated. The willingness to help each other shows how much things have changed during my 72 years in the Southeast. Of course, most places in Alaska and the country are now facing supply issues because of the coronavirus, but these temporary stocking issues are unrelated to the ferry system. None of this is to understate the importance of fixing the Alaska Marine Highway System. Earlier this year I spent nine weeks cooped up in Juneau as ferry cancellations and weather-related flight delays prevented me from going home to Haines. And while I know our communities are home to many generations of skilled gatherers of both land and sea, I realize that ferry service is integral to modern life. Thankfully, service is already being restored. The brand-new Tazlina is providing service to Angoon, Hoonah, and upper Panhandle communities like Haines and Skagway with other ferries soon to follow. Emergency funding has been requested by the governor, and a work group is developing a detailed, long-term plan. But it’s important to keep in mind that the Marine Highway’s problems built up over decades. Way back in 1963, I sailed with my future wife, Joyce Marie, aboard the very first ferry into Alaska (we were flown down for the inaugural voyage alongside Governor Egan and the Chilkat Dancers from Haines). That vessel, the Malaspina, remained in service until just a few months ago. The mechanical deterioration that placed it out of commission happened over many years. Likewise, the LeConte and Aurora, built in 1974 and 1977, respectively, suffer from years of rust damage. Long-term planning has been equally problematic. Beginning in the 1970s, we stopped building boats for 21 years. When we did construct several aluminum ferries in the early 2000s, they were a bad fit for Alaskan waters. Clearly, we need to take a step back and develop a sustainable, thoughtful course for our ferry system. Other troubles, like the breakdown of the Matanuska’s brand-new reduction gear and the bulkhead failure and electrical issues aboard the Tazlina, can only be chalked up to misfortune. As a commercial fisherman of some 50 years, I’ve seen firsthand how unexpected setbacks often occur at the worst of times. Fortunately, most folks I spoke with during my recent trip were boat people and understood these unpredictabilities. Even this virus is working against us as worried shoppers clean out store shelves. But much like hoarding toilet paper is unlikely to slow the pandemic, spreading exaggerated information about impacted communities isn’t going to cure the marine highway. Everyone is hard at work on short-term fixes, and long-term solutions are on the way. We need to work together instead of blaming each other for a problem that’s nearly as old as our state. My good friend Clay Koplin of Cordova said it best: I want to be part of the solution, not the problem. Bill Thomas of Haines represented Southeast Alaska in the Alaska House from 2004 to 2012.

FISH FACTOR: Flattened prices greet fishermen to start halibut season

The Pacific halibut fishery opened on March 14 amid little fanfare and flattened markets. The first fish of the eight-month season typically attracts the highest prices and is rushed fresh to high-end buyers, especially during the Lenten season. But that’s not the case in this time of coronavirus chaos, when air traffic is stalled and seafood of all kinds is getting backlogged in global freezers. Alaska’s share of the 2020 halibut catch is about 17 million pounds for nearly 2,000 fishermen who own shares of the popular flatfish. A week into the fishery, fewer than 50 landings were made totaling just more than 262,000 pounds and, as anticipated, prices to fishermen were in the pits. Earliest price reports at Homer were posted at $4.20 to $4.40 per pound, Kodiak prices were at $3.25 for 10- to 20-pounders, $3.50 for halibut weighing 20 to 40 pounds and $4 for “forty-ups.” Prices ranged from $3.75 to $4 at Yakutat and $3.50 “across the board” at Wrangell, according to Alaska Boats and Permits in Homer. The highest prices of $5, $4.75 and $4.50 were reported at Southeast ports that have regular air freight service, although they are expected to drop by $1 to $2 per pound, a major buyer said. The average statewide price for Alaska halibut in 2019 was $5.30 per pound and $5.35 in 2018. For this season’s start, some Alaska processors were buying small lots of halibut on consignment or filling existing orders; others were not buying at all. “We are tentatively going to be buying longline fish on the first of May after the Columbia ferry gets back on line,” said a major buyer in Southeast who blamed not having traditional ferries that haul thousands of pounds of fish each week, and a lack of air freight options at smaller communities. “We’re down here where transportation is dictating where fish has to go,” he added. Most of Alaska’s halibut goes into the U.S. market where in recent years it has faced stiff competition from up to 8 million pounds of fresh Atlantic halibut, primarily from eastern Canada. And although Russia has banned purchases of U.S. seafood since 2014, increasing amounts of halibut caught by Russian fishing fleets are coming into our nation. Trade data show that 2 million pounds of Pacific and Atlantic halibut were imported to the U.S. over the past year through January 2020, valued at nearly $6.7 million. A major Alaska buyer said: “One of our salespeople shot us a deal showing that right now you can buy frozen at sea, tail off, 3-5 and 5-8 pound Pacific halibut from Russia for $3.25 a pound.” Also newly appearing on U.S. shelves: farmed halibut fillets from Norway retailing at $9.99 a pound. Hatchery hauls Alaska salmon that got their start in hatcheries made up 25 percent of last year’s total statewide catch. In 2019, roughly 50 million hatchery salmon were caught by Alaska fishermen, mostly pinks and chums, valued at $118 million, or 18 percent of the state’s total salmon harvest value. That’s according to the annual salmon enhancement report by the Alaska Department of Fish and Game. Currently there are 30 hatcheries producing salmon in Alaska, of which 26 are operated by private, nonprofits. ADFG operates two sport fish hatcheries in Anchorage and Fairbanks, the federal government runs a research hatchery near Sitka, and the Metlakatla Indian tribe also operates a hatchery. The hatcheries are funded by a fishermen’s tax and sales of a portion of the returning fish and receive no state dollars. They also produce salmon for sport, subsistence and personal use fisheries at no cost to the state of Alaska. “For the coastal communities the hatchery program is a lifesaver for many of the people who fish for a living. It gives about 25 percent of the salmon harvest and that supplementation is a critical component for their business model,” said Steve Reifenstuhl, who on March 15 retired after 40 years as general manager at the Northern Southeast Regional Aquaculture Association. At Prince William Sound, where most of Alaska’s hatchery fish call home, 31 million salmon were caught last summer valued at $64 million, or 56 percent of the region’s total dockside value. Nearly 83 percent were chums, 61 percent were pinks and 34 percent were sockeye salmon. For Southeast Alaska, the second-largest hatchery region, fishermen harvested about 6.5 million hatchery fish valued at $32 million, or 37 percent of the region’s landings value. Chum salmon contributed $24 million of that total. Kodiak has the state’s third-highest hatchery production and about 3.4 million hatchery salmon were caught last year, nearly all pinks. The value to fishermen was close to $5 million, or 11 percent of the total dockside value for Kodiak fishermen. Three hatcheries in Cook Inlet produce primarily sockeye and pink salmon. About 42,000 hatchery-produced salmon were harvested there last year for a total of nearly $2 million, or nine percent of the value for the region. About 1.7 billion tiny salmon were released by Alaska hatcheries in 2019 which operators predict will product a total return of about 52 million salmon in 2020 including 35 million pinks, 13 million chums, 2.2 million sockeyes, 1.2 million cohos, and 100,000 Chinook salmon. Alaska’s on acid Alaska waters are showing effects of increasing acidity faster and more severely than lower latitudes because cold water is richer in carbon dioxide and melting sea ice and glaciers worsen the problem. The off kilter ocean chemistry reduces the amount of minerals sea creatures need to build and maintain their shells. That’s the verdict in the 2019 report by the Alaska Ocean Acidification Network, which updates the science going on around the state. The Network has modeled 40 years of ocean changes in the Gulf and is doing the same for the greater Arctic. At Sitka, researchers are testing the effects of acidification and ocean warming on the earliest life stages of herring; early signs point to warming as the bigger threat. At the Alutiiq Pride Shellfish Hatchery at Seward, studies on razor clams indicate they are hurt by increasing acidity. Tiny swimming sea snails called pteropods that make up 40 percent of the diet of juvenile pink salmon already are showing extensive shell corrosion in both the Gulf of Alaska and Bering Sea. The 2019 report also updates the monitoring being done since 2017 by the ferry Columbia as part of an unprecedented Alaska/Canada project to learn how increasing ocean acidity affects fisheries. The 418-foot ferry sucks up water samples every two minutes and has produced more than 700,000 measurements. The monitoring will resume when the Columbia is back on the water in May. “The fantastic thing about this vessel is it’s going from Bellingham to Skagway and back every week. That’s a 1,600-kilometer run. Nowhere in the world is there a ferry system that’s outfitted with CO2 sensors that’s running that scale of a transit. This is really exciting,” said Wiley Evans, program technical lead with the Hakai Institute. Early data point to an extremely variable seascape in which the surface water is more corrosive in fall and winter, representing the most vulnerable time for species that are sensitive to acidity. When spring arrives, the phytoplankton bloom removes carbon dioxide from the water through photosynthesis, and the water gets warmer making conditions more favorable for shell production. So far, only a limited number of Alaska’s commercially important species have been studied for their response to increasing acidity. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

Global oil storage capacity shrinks amid supply glut

As Saudi Arabia and Russia — and even U.S. shale producers — pump more oil than the world needs, the price for crude is dropping while the price for storing all that excess oil is rising. There are worries that demand for storage will overwhelm capacity. “I don’t see how you don’t exhaust global storage capacity, if this goes on until summer at the production numbers talked about,” Jeffrey Currie, head of commodities research at Goldman Sachs Group told Bloomberg. “We believe … the market will soon come to realize that it may be facing one of the largest supply surpluses in modern oil-market history in April,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy, an Oslo-based research and business intelligence company. Until supply and demand come back into balance, the oil will keep stacking up worldwide. Traders and buyers are storing cheap crude for consumption when they need it later, or in hopes of an eventual profitable resale. The price for a barrel of Brent, the global benchmark crude (which North Slope oil tracks), has crashed from about $68 at the start of the year to about $28 at the start of trading March 23 as Russia and Saudi Arabia out-produce to see which one wins. Global supply was already expected to exceed demand this quarter by 3.5 million barrels per day, according to the International Energy Agency. And that number will get a lot bigger after March 31, when OPEC member nations further boost their output as production limits expire. “We could have global market oversupply of over 10 million barrels per day. Which is insane and unprecedented,” Abhi Rajendran, director of research at Energy Intelligence, told CNBC on March 16. IHS Markit, a global energy research and analysis firm, forecasts the same oversupply of up to 10 million barrels per day, adding as much as 1.3 billion barrels to storage by the end of June. Bloomberg has an even bigger number. If the market fight between Russia and OPEC continues, and the COVID-19 world economic collapse extends into later in the year, Bloomberg calculated that global crude inventories could grow by 1.7 billion barrels. Don’t look for Saudi-led OPEC to blink first. “Any large political power sometimes needs to remind its adversaries and competitors of its might. We believe Saudi Arabia seeks to teach the market a lesson,” Rystad’s Tonhaugen said in a posting on the company’s website March 18. Global oil storage could fill up within four months, Antoine Halff, the chief analyst of Paris-based consultancy Kayrros, told The Wall Street Journal. Kayrros tracks global storage by using satellite imaging. About 65 percent of the world’s total 5.7 billion barrels of oil storage is currently in use, according to Kayrros. At current fill rates, oil could reach the top of the tanks and caverns in just over a year, the company estimates. “The fill rate that we are experiencing now is totally unprecedented,” Halff said. The oil hub in Cushing, Oklahoma, is home to about 15 percent of the U.S. commercial storage capacity, or almost 80 million barrels. The tanks were about half full a week ago — and filling up. Storage rates at Cushing doubled over the past month and were running as high as about 50 cents per barrel per month, Reuters quoted two traders. “Everyone and their mother is scrambling to fill up tankage,” a trader said. The federal government’s Strategic Petroleum Reserve in salt caverns in Texas and Louisiana can hold about 750 million barrels and was storing about 635 million barrels as of early last week. Though 115 million barrels may sound like a lot of spare capacity for U.S. shale oil production, it’s not. About two-thirds of the Strategic Petroleum Reserve capacity is designated for sour crude — with a sulfur content greater than 0.5 percent. But the crude pumped from the shale rock of West Texas and other shale basins has very low concentrations of sulfur, if any, and the sweet crude is not suitable for blending with sour crude. Different caverns are designated for the different crudes. The caverns for low-sulfur, or sweet crude, had room a week ago for about 25 million barrels, while the sour-crude caverns had room for an additional 95 million barrels. Other countries, notably South Korea, also have large onshore oil storage tank farms. But those are filling up, too, pushing traders and buyers to look to sea to park their crude. Reuters reported March 10 that tanker rates are surging as traders need a place to store their cheap oil. The cost of renting a very large crude carrier, or VLCC, which can hold 2 million barrels of crude, was quoted March 10 at more than twice what it was a month ago, ship brokers told Reuters. Other news sources were reporting even steeper rate hikes last week. “We are seeing several deals being negotiated for short-term (6 to 12 months) charters. … The fall in oil prices has made floating storage more attractive, although the margins are still relatively thin,” shipbroker and consultancy Poten &Partners said in a research note. The margin being whether buyers can pay the costly storage fees and still turn a profit. As the charter rate climbs for the biggest ships — whether for storage or to deliver cheap Middle East crude to refineries — a growing number of Asian oil buyers are looking to smaller vessels to save money. Bloomberg reported that the rate hikes for smaller tankers were much less than the boost in VLCC rates. Too much oil and not enough capacity to move it to market has been a growing problem in landlocked Alberta, with its growing oil sands production is outpacing the ability to get new pipelines built. The provincial government has been limiting oil production the past year in an effort to hold down oversupply and boost prices, and now says it might mandate further cuts if rising supplies and falling prices threaten the survival of companies. Larry Persily is a former Alaska journalist, state and federal official who has long tracked oil and gas markets and projects worldwide. He is the Atwood Chair of Journalism at the University of Alaska Anchorage School of Journalism and Public Communication.

GUEST COMMENTARY: Alaskans will rise to meet latest challenge

Where were you when the pandemic came to Alaska? Future generations will demand an answer from each of us. Did we change our habits to protect the vulnerable? Did we make sure our elderly neighbors had everything they needed? Long after the virus disappears from the public consciousness, these are the questions we’ll be left to grapple with. For so many, we look to government to provide services during a crisis. We forget, as Franklin Roosevelt once said, that “government is ourselves.” It’s understandable. Few have experienced an event of this magnitude. But we are not alone. Generations of Americans stood where we stand today, facing problems of enormous weight – wondering who they were as a people. Invariably, they rose to meet the great challenges of their day. They gave of themselves, sacrificing much to sustain this great American experiment. Alaskans will choose a similar path; I have little doubt. Time and again, be it the Anchorage earthquake, last year’s fire season, or our highest-in-the-nation percentage of veterans, Alaskans consistently reaffirm their commitment to service. You may say, “But I have nothing to contribute.” I would urge you to reconsider. All over the world, people are finding ways to aid their communities by donating their time, skill, and even blood. Perhaps, you hung up your stethoscope years ago to enjoy retirement or pursue a new career. You wonder if your services could be useful. The answer is yes. Maybe you own a manufacturing company that can produce medical equipment, or a rental car company that could offer vehicles to transport volunteers. Others may have the means to contribute to a local food bank or buy supplies for an emergency shelter. All across our state, Alaskans are saying, “I can do that,” and stepping up. At Joint Base Elmendorf-Richardson, soldiers and airmen are packing meals for needy families; in Anchorage, volunteers are sending out 30-day food supplies to seniors while healthcare workers perform drive-up tests in the cold and snow. Behind the frontlines, our state workers are busy processing business bridge loans, reviewing unemployment insurance cases, and ensuring that your government provides the best possible response to this crisis. Even grocery clerks and delivery drivers are providing a critical service, keeping Alaskans fed and healthy. But the question remains: How will you answer the call? When our children ask, “Where were you?” will we be able to tell them that we served in an army of Alaskans who did everything in their power to look out for one another? If the past is any indicator, I’m confident the answer will be yes. For those that choose to heed the call of service, I offer you the thanks of a grateful state as we face this historic challenge together.

BROWN'S CLOSE: The Young and the Restless

Like many of my fellow residents of the Municipality of Anchorage, I am currently living under a state of quarantine, social distancing, and general loneliness. It’s been difficult, mostly resulting in me chewing on my leg out of sheer boredom. All, however, is not lost. Thus far, I have accomplished the following tasks: I’ve made it to Season 5 of The Office. Any show with even a mite more plot is proving too overwhelming in this chaotic time. I’ve compared quarantine snack choices with anyone who will entertain the question. We’ve concluded peanut M&M’s and popcorn are the most popular snacks. Curiously, one survey participant said oatmeal was his favorite snack; he was mildly crushed to hear that Quaker Oats is selling for $30 per unit online. I’ve disinfected my television remote three times. I obtained a quarantine haircut. Prior to complete isolation, I had my hairdresser cut my hair into a nineties style bob. I’m good on haircuts for the next four months. My brother’s hair, on the other hand, is now long enough to be tied back with a rubber band. I’ve purchased canned vegetables and baked beans for the first time in my adult life. When this is over, canned food drives will be more bountiful than in any prior decade. Aside from my little triumphs, my community and its residents are fighting back, overflowing with self-improvement. For example, everyone I know has turned into a public health expert. I am pleased how much my Facebook friends have improved their scientific knowledge, seemingly overnight. No one, however, beats out newly minted epidemiologists, and my beloved parents, Fred and Ann Brown, for coronavirus pandemic preparedness. Fred and Ann Brown are currently quarantining their mail. It is encouraging to see how seriously businesses are taking this crisis. Businesses of all sizes have a coronavirus task force, regardless of the applicability of said task force to any particular business’ industry. Thus far, I have received coronavirus protocols from the credit union where I opened my first bank account at age eight, Groupon, Ollin Tea & Café, Nordstrom, and the Whistler Film Festival (which is not currently scheduled to take place before December). While I find it comforting that Spirit of Alaska Federal Credit Union has a coronavirus task force, I’m really much more curious what United Healthcare intends to do about all of this. Small business owners are finding ingenious ways to keep their customer base intact. For example, prior to the Mayor’s order closing all bars, restaurants, and sites of recreation, my gym sent out sweet, optimistic, daily emails describing how the floor was antimicrobial, how management was capping class sizes, how staff were increasing cleaning regimens, and how instructors would no longer touch the students. Pure Barre on 36th and Old Seward was determined to remain a sanctuary for the women who faithfully frequented it. Post mayoral mandate, this happy little community disbanded for all of three days. Not to be gainsaid, they surged back, offering online streaming classes. Come what may, they will lift, tone, and burn. My daily online workouts require some adjustments as I do not have a complete supply of gym equipment at my house. For example, my hand weights for these online classes consist of two giant jars of baby dill pickles from Costco. Magically, the weights are getting lighter as time goes on. I must be getting very strong indeed. I attempted to get Fred and Ann Brown to take these online classes with me. I did one class with each parent. Afterwards, they opted for the workout regimen prescribed by The Wall Street Journal for “The Aging Athletes.” Exercises consist of pushups against countertops and rising up and down on your tippy toes. The highlight of my day is usually an hour-long walk around my neighborhood. Since schools closed and most businesses sent employees home, the streets of my neighborhood are more crowded these days than they used to be on a typical weekday afternoon. My neighbors, to their credit, are very respectful of my space; they regularly run to the other side of the street whenever they see me approaching. Apart from my neighbors, however, everyone else I know has gotten abundantly chatty. Before the pandemic, the only person who would call me on FaceTime was my brother. Now, FaceTime requests have increased 5,000 percent and I am very rarely camera ready. Anchorage’s Mayor is pleading with citizens to cease hoarding behavior. Until this time when the mania ends, may there be a paper towel in every kitchen, and a roll of toilet paper in every bathroom. Sarah Brown is a shut-in. She can be reached any time, day or night, at [email protected], and on Twitter @mesarahjb. “Close” is a British term for alley or cul-de-sac.

Pages

Subscribe to Alaska Journal RSS