State compiles plan to combat entry of foreign aquatic species

The state wants to head off bio-invaders in Alaska waters before they take hold, and input is wanted on the first "Draft Aquatic Nuisance Species Management Plan." Rob Bosworth, Alaska Department of Fish and Game deputy director, called the plan "a first step in initiating the establishment of a coordinated state aquatic and terrestrial invasive species program." Development of the plan also makes Alaska eligible for federal funds to help control invasive species.The draft plan focuses on non-native aquatic nuisance species that have been or could be introduced into Alaska marine, coastal, estuarine, lake and river environments. The emphasis is on identifying and responding to the highest priority threats. Atlantic salmon are identified as the biggest biological threat to Alaska’s wild stocks, and escapees from fish farms in British Columbia, Canada and Washington have been found in streams near Cordova, Ketchikan, Yakutat and as far north as the Bering Sea. Also Northern Pike, which have a voracious appetite for wild salmon, have been identified in Southcentral drainages. In all, the plan identifies 21 aquatic nuisance species, including yellow perch on the Kenai Peninsula and Japanese knotweed, found in Sitka and spreading throughout Southeast Alaska. Other exotic species that might appear in Alaska include green crab, New Zealand mud snails and the notorious zebra mussel.Bio-invaders cost billions of dollars in damage to marine ecosystems, and if they take hold, in some cases they’ve completely eliminated native marine and plant species. The unwanted aliens are, for the most part, tiny hitchhikers that are dumped along with the ballast waters of ships that traverse the world’s oceans. They are credited with being involved in 70 percent of native species extinctions in the last 100 years.Cornell University scientists reported three years ago that more than 30,000 non-native species cost the United States roughly $123 billion a year in economic losses. This figure includes $35.5 billion for alien weeds, $20 billion for insects, $19 billion for rats and $3 billion for zebra mussels alone.A recent report by the Pew Oceans Commission said: "At least 7,000 different species of marine life are likely transported each day around the world. E Ballast water carrying this wide array of non-native life arrives in the U.S. at the rate of 2 million gallons per hour."A copy of the Alaska’s Aquatic Nuisance Management Plan is located on the Internet at www.state.ak.us/adfg/adfghome.htm or contact Ginny Fay at 907-465-4148.Fish bucksState funds used for "running" Alaska’s commercial fisheries weren’t cut as badly by legislators as in past years. For fiscal year 2003, which began July 1, Fish & Game’s budget for commercial fisheries lost $1.2 million out of the $30.9 million portion of its budget funded from the state treasury.The final result was an overall department cut of roughly $525,000 "which, for the first time in many years, did not fall almost entirely on the Commercial Fisheries Management Division," said Bob Tkacz in his weekly publication Laws for the Sea. The Sport Fishing Division will lose $20,000, and the Wildlife Conservation Division’s "watchable wildlife" programs will take a $225,000 hit. In all, the commercial fisheries budget will drop by $280,600.Department administrator Kevin Brooks told Laws: "Basically, there’s no real impact. We’re spreading (the cut) around and going to lean on the federal money a little more. Bering Sea crab and genetics are intact. No one’s going to see a pink slip. We’re going to tighten the belt."Brooks said elimination or reduction of interagency contracts will account for almost $115,000 of the commercial fisheries division loss. The Fish & Game budget has been reduced by roughly 27 percent in the past 10 years from a one-time high of nearly $50 million in state funding.Limited sockeye availableSupplies of sockeye salmon to Japan will be way down this year, as only about 28,000 tons of frozen product are expected to be available from all of the North American fisheries. Roughly 9,540 tons will come from Bristol Bay, from the projected catch of less than 10 million fish.Market watcher Bill Atkinson reports that early sales of frozen Alaska sockeye from Bristol Bay started at a Japanese price of $2 per pound for 4 to 6 pound sizes, with more recent prices reported at 5 cents to 10 cents per pound higher. Atkinson said the increase was mainly due to the strengthening of the yen in recent weeks "than from a rush by the Japanese to purchase the limited amount of frozen sockeye available from the bay this year."Despite the potential demand for frozen reds, most of the fish will again go into lower value cans. Atkinson said: "The low catches will affect the overall supply of frozen salmon, as will the packers’ focus on the production of canned sockeye again this year. According to some reports, as much as 60 percent of the fish will be put in cans this year. With an estimated 30 percent decline in the overall catch this year, the focus on canned salmon production will only further reduce the supply of frozen sockeye for the Japanese market."Atkinson said reduced production of farmed coho and salmon-trout in Chile next year, "in addition to the unknown sales strategy of the U.S. packers, makes it difficult to determine the future of the sockeye salmon market in Japan."Bill Atkinson’s reports include a summary of articles from the Nikkan Suisan Keizai Shinbun, the Hokkai Keizai Shinbun and the Suisan Tsushin newspapers, covering the Japanese market and other developments regarding select fish species.Farm fundsThe U.S. Department of Agriculture has earmarked $25 million to the University of Maine in Orono to research ways to raise halibut, Atlantic salmon and cod in land-based fish farms. The Bangor Daily News said construction of the 27-acre facility, which includes a commercial-grade hatchery, is scheduled to begin next year and be in operation by 2005. The research findings will be passed on to the aquaculture industry.Kodiak-based free-lance writer Laine Welch can be reached via e-mail at [email protected]

Driller unearths Fort Knox data

FORT KNOX GOLD MINE -- Derek Linnell found drilling through granite at this hard-rock gold mine northeast of Fairbanks to be a challenging task, especially because the reverse-circulation drill rig he was operating was tilted, drilling through the dense rock at a 69 degree angle, rather than straight down."It’s a lot more tricky, E even just swinging the drill pipe into place, because it’s not vertical. Gravity is working against you," Linnell said, wiping his brow during the heat of a late July afternoon in Interior Alaska. "The drill goes pretty slow here, the rock is so hard."As the driller in charge of the rig owned by GF Back Inc., a Fairbanks-based drilling company, Linnell and his crew of two helpers were working in the ore pit at the Fort Knox gold mine. Their assignment was to punch development drill holes five and one-quarter inches in diameter, taking samples for the mine’s geologic staff to study.The drill work is designed to firm up knowledge about existing gold found within the multimillion ounce deposit at Fort Knox, and to also increase the number of ounces estimated to be contained in the underground ore, said John Odden, project geologist at the mine.As a six-year veteran of GF Back drill crews, Linnell is quite familiar with work at Fort Knox. He worked on a crew that drilled 10-inch diameter water monitoring wells below the mine’s tailings dam a few years ago."The ground was really weathered and broken," Linnell said. "We had a hard time keeping the hole open. E The bigger the hole, the more problems you have."Overcoming such operational challenges is just one part of the job as a driller in Interior Alaska, according to Jerry Back, owner of the Fairbanks drilling company."We’ve been flexible all along. We do whatever it takes to get the job done," Back said."Anybody can go out and buy iron, but it’s getting the job done and getting it done right. We’ve always been sticklers for quality. E That’s probably why we get the work we do, because that means a whole lot to mining people," Back said.In fact, hiring enough skilled workers to run his company’s drill rigs has been one of Back’s management challenges."Historically, this has been a young man’s job, more short-term work," Back said. "Now, the new modern equipment is easier on you. Our goal as a company is to make it a career, E to build the company with a group of people who will work here and retire when the time comes."For example, Linnell started with the drilling company in 1996 as a helper. As he gained experience, he was offered opportunities to actually run the rigs, stepping up to the driller’s position about a year later."It varies with the individual, how quickly they catch on," Linnell said.In addition to encouraging his employees to progress and gain new skills, Back tries to schedule some work through the slow months of winter so he doesn’t have to lay off as many workers.Another recent change within the Alaska drilling industry is that some mining exploration work can be completed when the soft tundra ground surface is frozen, he said. Access to such remote areas is easier and less damaging to the environment.Back also keeps a few employees on the payroll to pull maintenance on the drill rigs in the deep winter months, when outdoor work shuts down.In summer, when the workload peaks, GF Back employs about 10 to 12 people, with three to four drill rigs running at a time, Back said."The challenge is, we turn down about as much work as we do," he said. "We’re not keeping up with what people want us to do."In addition to mining and oilfield exploration work, GF Back crews drill water wells, provide soil sample testing for construction and most recently have started drilling holes for foundation pilings."Diversity is the key," Back said. "We’re such a specialized industry, but we’ve worked on projects from oil field development to hippie cabins."This summer, Back has a three-person crew working in the Delta Junction area, drilling a water well for a new concrete batch plant being built to supply the National Missile Defense project at Fort Greely."It’s a 500-gallon per minute well, so we’ll go close to 600 feet deep," Back said. "It’s a pretty big project for us."The company’s longest-running job has been drilling at Fort Knox. Back drilled the discovery hole at the gold deposit back in the 1980s, shortly after he started up the drilling company in 1982.At that time, he started with a small auger rig, which he used to complete soils testing for foundation work."It took off from there. We worked at other things and got busier and busier," Back said.Patricia Jones is a free-lance writer living in Fairbanks. She can be reached at [email protected]

Groups seek more time for public comment on pipeline

FAIRBANKS -- More than 20 environmental, Native and community groups are asking Interior Secretary Gale Norton to give the public more time to comment on the trans-Alaska oil pipeline right-of-way renewal process.The 45-day comment period began July 5 with publication of a draft environmental impact statement produced by Argonne National Laboratory for the Bureau of Land Management.An Anchorage spokesman for the Joint Pipeline Office, a state-federal organization created to oversee the pipeline, said the requests to extend the comment period would be considered at higher levels in the Interior Department.Tanana Chiefs Conference President Buddy Brown, in a July 15 letter to Interior Secretary Gale Norton, said the impact statement discusses the ways in which the pipeline right-of-way renewal would affect subsistence activities. Summer is a busy time for people engaged in that lifestyle, so the comment period should be extended, he said.Nineteen environmental, watchdog and Native organizations also wrote a letter to Norton, emphasizing the large size of the document and expressing their desire to use it as a vehicle for more rules on pipeline operations."This renewal process is our main instrument for protecting the many priceless natural resources at risk from oil spills along the pipeline or tanker route for the next 30 years," said John Devens, executive director of the Prince William Sound Citizens Advisory Council.The council is a watchdog group authorized by Congress and funded by Alyeska Pipeline Service Co., the pipeline’s operator.The Northern Alaska Environmental Center, based in Fairbanks, was also among the groups seeking an extension of the public comment period."We’re talking about a potential 30-year renewal, an 800-mile-long pipeline and a 1,000-page document," said Deb Moore, Arctic coordinator for the Northern Center."Forty-five days is simply too short of a time period for the public to read, digest and comment intelligently on the information provided."The Alaska Federation of Natives and the Association of ANCSA Regional Corporation Presidents and CEOs Inc., also sent letters seeking an extension.The ANCSA group represents the leaders of the 13 for-profit Native corporations created by Congress in 1971 with the Alaska Native Claims Settlement Act.The corporation presidents said Argonne’s analysis of the subsistence impacts of the pipeline may need more work."To our knowledge, the firm had no previous experience with subsistence prior to taking on this project," wrote the group’s executive director, Vicki Otte.Most of the groups asked Norton to double the comment period to 90 days. Otte sought to have it extended to 120 days.Rob McWhorter with the Joint Pipeline Office in Anchorage said BLM and Interior officials would consider the requests. The pipeline’s first 30-year right-of-way grant and lease came from the federal and state governments, respectively, in 1974 as construction began.Pipeline owners last year requested another 30 years from the state and federal government.The federal government’s draft impact statement issued July 5 says the "preferred alternative" is to renew the grant for another 30 years. The commissioner of the state Department of Natural Resources issued a proposed decision favoring a 30-year lease on the same day.Neither the state nor federal documents propose any major new regulatory obligations for the pipeline. JPO officials have said that’s because the right-of-way renewal is a fairly narrow action and some of the issues raised during hearings to date should be handled in a different forum.

Tax rule affects gains

Under current law, when a property owner dies, the person then entitled to the property generally may sell the property free of any income tax. This general rule has long been subject to numerous exceptions. The ex-ception may become the rule under the tax act passed last year by the U.S. government and known as the Economic Growth and Tax Relief Reconciliation Act of 2001.Recall that the concept of "basis" is used in determining gain or loss from the sale or other disposition of property. If a client purchases stock for $1 million, for example, her basis in the stock is $1 million. If she then sells the stock for $3 million, her taxable gain is $2 million, which is the consideration received in excess of basis.As a general rule under current law, when a property owner dies the person entitled to the property obtains a basis in the property that is "stepped up" to the fair market value of the property. Using our above example, if our client dies when the fair market value of her stock is $3 million, her estate or beneficiary will obtain under current law a fully stepped-up basis of $3 million in the stock. Her estate or beneficiary could then sell the stock for as much as $3 million at absolutely no income-tax cost.The 2001 tax act provides that the current step-up-in-basis rule will not apply after Dec. 31, 2009. The act provides that beginning in 2010, the carry-over basis rule that applies for gifts made during lifetime will apply to transfers at death. Recall that when a lifetime gift is made, the recipient takes, in general, a carry-over basis in the gifted property.Suppose our client dies when the carry-over basis rule is in effect. Suppose the fair market value of our client’s stock is $3 million at the time of her death. Here her estate or beneficiary would appear to obtain a carry- over basis of $1 million in the stock and not a stepped-up basis of $3 million as under current law.The 2001 tax act provides, however, some tax-basis increases for certain transfers at death after Dec. 31, 2009. These tax-basis increases are to be allocated among property by election by the decedent’s personal representative.For individuals dying after 2009, $1.3 million of basis increase may generally be allocated among the decedent’s property. Additional basis increase may be available in an amount equal to certain tax losses that were, or could have been, realized by the decedent. For married individuals dying after 2009, an additional $3 million of basis increase may generally be allocated among the decedent’s property that passes to the surviving spouse.Continuing our above example, suppose again that our client dies when the carry over basis rule is in effect. Suppose at the time of her death she was unmarried and her only asset was her stock with a basis of $1 million but a fair market value of $3 million. Suppose she had no tax losses. Under the 2001 tax act, the personal representative of the decedent’s estate may elect to increase basis from $1 million to $2.3 million (for example, $1 million carry-over basis plus $1.3 million basis-increase election). If the stock is then sold for $3 million, the taxable gain would be $700,000, which is the consideration received in excess of basis.No one knows whether the carry-over basis system that appears in the 2001 tax act will be the system that goes into effect in 2010. This writer and others believe that the federal government will either continue stepped-up basis at death or adopt another variety of carry-over basis.Nevertheless, the 2001 tax act is a reminder that clients need to retain all records that support their tax basis. These records include not only documentation on original costs, but also documentation on the costs of subsequent improvements to real estate, as an example. Records will also be needed to establish basis for any property that clients acquire by gift or inheritance. If adequate records are not maintained, then clients could be giving up the opportunity to maximize any basis increase that may be available in the future.The 2001 tax act is also a reminder that clients need to review their asset ownership. All things being equal, clients will want to structure asset ownership so that sufficient property is owned by persons who can maximize any basis-increase opportunities.Steven T. O’Hara is a shareholder in the Anchorage law firm of Bankston, Gronning, O’Hara, Sedor, Mills, Givens & Heaphey PC. This article is Copyright 2002 by Steven T. O’Hara and is used by permission.

Railroad tallies passenger increase

Ridership along the Alaska Railroad is up slightly from last summer, prompting corporation officials to consider adding more passenger cars to its fleet. Patrick Flynn, Alaska Railroad Corp. spokesman, said through June about 170,000 people had ridden the rails, about 2,500 more riders compared with the same time period a year ago.Most of the increased traffic comes from the Grandview train that transports cruise ship passengers from Seward to Anchorage and back. The Grandview service began in 2000 following the $3.6 million purchase of nine passenger cars from Florida.Nearly every seat on the Seward-to-Anchorage leg was full last summer. This season, the southbound train has been filled up on several of the trips, which has caused passengers to be turned away, Flynn said. "We want to capture some of that capacity," Flynn said.The railroad is doing some wheel-kicking and has identified three used single-level dome cars from British Columbia Railway Co., Flynn said.The passenger cars, which hold 76 people each, are similar to some Alaska Railroad owns already, and would cost about $800,000 each, about half the price of new models, Flynn said. If the railroad’s board approves the purchase this year, the cars could be in service by next summer, Flynn said."All they would need is a coat of paint and the tender, loving care of our car men," Flynn said.Meanwhile, Holland America Line Westours is selling two of its double-decker dome cars that have been in service on the Alaska Railroad since 1996. Flynn said tour company’s two cars will be replaced with four, larger double-decker cars next summer.Holland America’s double-decker cars are being offered at $375,000.Flynn said Alaska Railroad is not interested in the cars because they aren’t "consistent" with passenger cars the railroad owns.Passenger revenues for the railroad last year were $14.2 million. Railroad officials are projecting an increase to $14.9 million for 2002.Passenger numbers are projected to be about 500,000 this year, up slightly over the past two years, Flynn said. Passenger numbers in 1999 were 679,000.The reduction in ridership, according to railroad officials, is blamed on the 2.5-mile Anton Anderson Memorial Tunnel, which opened Whittier to road traffic in June 2000.The state-owned railroad has taken steps since then to move more passengers along its 611 miles of rail, including streamlining its marketing operations and adding more locomotives.

Business Profile

Name of the company: Firenze DesignEstablished: 1997Location: 500 W. Sixth Ave., Anchorage, AK 99501Telephone: 907-563-7953Major focus of services: Firenze Design provides residential and commercial interior design services and operates a retail store selling home furnishings including lamps, candles, soaps and linens.History of the company: Alaskan Denise Trefry started Firenze Design after working more than eight years as an interior designer from her home studio. A family trip to Europe inspired her. She christened her company after the Italian word for gathering place.Firenze Design opened at an office complex in Midtown Anchorage and later relocated within the same building.This spring Trefry added a partner, Beth Brewington. The pair began planning renovations and logistics for relocating the business to downtown Anchorage and doubling the size of its office. Construction at the new, 2,400-square-foot office began in mid-June, finishing in time to open July 13. The move increased visibility, attracting new customers, Brewington said.Firenze Design employs six. Brewington and Trefry conduct four to five buying trips annually. Their Alaska business, although selling pieces from statewide artisans, is similar to stylish firms in metropolitan areas like Chicago or San Francisco, Trefry said.Top accomplishment of the company: Firenze Design’s owners praised the swift, hard work by the painters, builders and others who renovated the new location. The four-week project with complicated lighting and special mill work typically would take six months, Trefry said. The two business owners enjoy helping Alaskans transform a house into a refuge. "We want that sanctuary to be as nurturing, comforting and as vital as can be," Trefry said. The downtown store is a source for ideas, Brewington said. "We want people to come and be inspired," she said.Major players: Denise Trefry and Beth Brewington, owners, Firenze Design.Trefry, who was born in Alaska, credited her training to her mother, an interior designer, and several other women. Brewington moved to Alaska in 1964 with her family. She has handled interior design for condominium developments, earned an associate broker’s license in real estate and worked in graphic design.-- Nancy Pounds

Group: Proposed town center could restrict Merrill Field

An envisioned town center near the Northway Mall in Anchorage would be beneath a final approach to Merrill Field, the largest general aviation airport in Alaska, and one of the busiest in the country."Does anyone expect that there will be some noise complaints if the town center is built there?" asked Felix Maguire, president of the Alaska Airmen’s Association.He believes the answer is obvious.Maguire said the proposed town center near Merrill Field, with new residential and commercial development, will be a classic example of people "building next to an airport and then complaining about the noise."Maguire and others fear increased development of the area could restrict operations at the airport or unnecessarily sap tax dollars in government-sponsored soundproofing projects.The commercial charter pilot is asking his membership to give city planners an earful about the proposed town center, just east of the airport."Make noise now with the planning authorities or you may receive noise complaints down the road," Maguire wrote in the association’s recent newsletter.Northway Mall is one of seven town centers studied under Anchorage’s new 20-year comprehensive plan. The pedestrian-friendly, plaza-like districts are intended to be within walking distance of new and redeveloped neighborhoods.Tom Nelson, city planner, said in no way does the municipality want to have conflicts with the airport and the proposed town center, which is probably two decades from reality."Clearly, general aviation is in the best interest of the municipality," Nelson said. "(The town center) is intended to be a compliment, not a conflict for the airport."Portland, Ore.-based Lennertz Coyle and Associates is being paid about $175,000 to study the concept of city town centers, Nelson said.The proposed Northway town center is located between Mountain View Drive to the north, DeBarr Road to the south, Merrill Field to the west, and several blocks east of Bragaw Street to the east.According to city officials, the area already is beginning to show signs of an emerging town center, with several small businesses and large national retailers in the area, as well as a large mobile home park.There are several large vacant tracts of land in the area, some of which are likely unsuitable for housing development, Nelson said."We are not suggesting any homes be built under the flight path," Nelson said.Maguire points to noise problems at the Ted Stevens Anchorage International Airport and a nationwide noise-abatement program that is costing taxpayers billions.A $15 million, decade-long Federal Aviation Administration-funded project to soundproof 650 homes and apartments that border the airport began this summer in Anchorage.Homes are being outfitted with special sound-deadening doors and windows, and denser attic and wall insulation. Improvements to ventilation systems will also help circulate air when windows and doors are closed to muffle airplane noise.Each home could cost up to $50,000 to soundproof, according to the FAA, and between 80 and 100 homes will be soundproofed annually beginning in 2003.The FAA has paid more than $2 billion in similar projects in the Lower 48 since the program began a dozen years ago, the agency said.Merrill Field, established in 1930, averages around 190,000 take-offs and landings annually from small, general-aviation aircraft.Maguire said those considering building a home or business in the proposed town center need to beware that Cessna and Super Cub engines aren’t music to everyone’s ears."If you live or work near an airport, you will get some noise," Maguire said.

Bill may fund study on new Tanana River bridge

FAIRBANKS -- A Defense Department spending bill includes $1.5 million for a study on building a bridge over the Tanana River, according to Sen. Ted Stevens’ office.For years the Army has built an ice bridge over the Tanana south of Fairbanks so it can move heavy equipment to the military training area in the flatlands.The money for the bridge study is in a bill approved by the Senate Appropriations Committee in mid-July.Stevens’ office released some details of Alaska items in the bill. Alaska items added by the committee total $274 million, Stevens, R-Alaska, said.The bill still must be approved by the full Senate and merged with the House version in conference committee negotiations.The bridge isn’t the only Alaska Army project included in the bill. It also would provide $4.5 million for repairs to a building at Fort Wainwright; $2 million for improvements to the Yukon Training Area roads and infrastructure; and $7.5 million for range improvements at Fort Wainwright, the Donnelly training area and Fort Richardson near Anchorage.Several Air Force projects in Alaska that add up to $39 million also are included in the bill.The Air Force projects are mostly training range upgrades that would likely benefit training missions out of both Eielson Air Force Base near Fairbanks and Elmendorf Air Force Base near Anchorage, Stevens’ staff said.

Red Dog Mine cancels port expansion

ANCHORAGE -- The company that operates the Red Dog Mine near Kotzebue says it is no longer pursuing a multimillion-dollar port expansion on the Chukchi Sea coast.The proposed expansion had drawn fire from environmentalists and some nearby villagers.A sharp drop in zinc prices along with efficiencies in barging the ore concentrate to freighters anchored offshore have made an expansion of the state-owned port unnecessary, Teck Cominco said July 24."We can operate just fine without it," said Charlotte MacCay, senior environmental manager for Teck Cominco in Alaska.Despite the decision, state and federal officials said Wednesday they’ll push ahead with $8.8 million of feasibility and impact studies.Teck Cominco’s decision to abandon the port expansion coincides with a threatened lawsuit by three environmental organizations against the U.S. Army Corps of Engineers over the agency’s analysis of the project. The groups filed a 60-day notice of intent this week to sue to block the project.For years, Teck Cominco said it needed a deep-water port to expand production at Red Dog, the world’s largest zinc and lead mine. NANA, the regional Native corporation for Northwest Alaska, owns the mine.Mine operator Teck Cominco trucks a metal concentrate from Red Dog down a 52-mile road to the shallow port. During four months when the sea isn’t iced over, barges take the concentrate to ships moored in deeper water.Depressed zinc prices over the past couple of years have halted expansion plans at Red Dog for the foreseeable future, MacCay said. Low prices, combined with improvements in barge lightering, have canceled the need for a deeper port where freighters could pull up to the dock."It’s not that we’re not interested," MacCay emphasized. "It’s not that it would not be beneficial to us."A bigger port would reduce the risk of spills and would extend the shipping season until December.

August-Issue-1 2002

Sinking of the Titanic example of leadership that failed

"We have struck iceberg ... sinking fast ... come to our assistance."Burning the airwaves came those words late in the cold evening of 1912. Before they tapped the last bit of Morse code, those words became the epitaph for the lives of the 1,200 people lost on the Titanic. The ship was doomed and it was slowly sliding into its watery grave.Why did the largest, most advanced ship of the century sink?Those of us who studied the Titanic, or at least saw the movie, may know why. It wasn’t the iceberg causing the disaster. It was something else. Clear in my mind was the real cause: Leadership had failed.The Titanic still rests on the bottom of the ocean, but we can resurrect the truth. The lessons we learn can help our businesses stay on course and improve our ability to lead others.Leadership is always responsibleLeadership is more than a wooden figurehead. Leadership is not a position, a job title or in this case, merely the captain of the ship. Leadership is not just power, ego and self-centered pride. Leadership is both science and art. Leadership is ever present, touching, motivating, talking, and checking, removing barriers, training, preparing, breathing and heading toward in particular direction.Management is a 8-to-5 obligation; leadership is a 24-hour-a-day responsibility.This was Captain E.J. Smith’s retirement trip. He was headed for the easy life. All he had to do was get to New York. No one knows why he ignored the facts, or why he ignored seven iceberg warnings from his crew and other ships. Responsibility can’t be delegated. Leadership is responsible for everything the organization does or fails to do. In a disaster, the captain goes down with the ship.The biggest is not the bestThe larger an organization becomes, the greater its inflexibility, and the more difficult and cumbersome it is to steer, to direct and to change. It soon becomes a bureaucracy where rules, regulations, policies, procedures and "I need permission to make a decision" becomes the norm. Today’s businesses must adjust course quickly. It took more than 30 seconds before the Titanic turned away from the iceberg, but then it was too late.Rank has its privilegesRanking is good for command and control, not good for change and innovation. Ranking people limits potential. Today, businesses rank and classify people, sometimes unintentionally. However, the results are the same.Examples are blue collar, white collar, temporary, part-time, those with cubicles, those with desks, and those with reserved parking spaces. Ask yourself, when the ship sinks, who gets in the lifeboats first? Who gets severance pay, bonus, stock options or nice hotels? Clear the lines between the classes and make everyone feel they are rowing in the same direction for the same purpose. Make people feel like equals.The truth changesThe Titanic was unsinkable, or so they thought. So confident were they, that they only had enough lifeboats for half the passengers. The thinking that made us successful yesterday is the very same thinking that will cause us to fail tomorrow. Our unlearning curve must be greater than our learning curve.Technology is never a substitute for leadershipSomeone once said, "The danger is not that computers will replace us. The real danger is when we start acting like computers." When technology fails, leadership must prevail. Capt. E.J. Smith said years before the Titanic’s voyage, "I cannot imagine any condition which would cause a ship to founder. Modern shipbuilding has gone beyond that."Many businesses today have replaced their leaders with technicians, their brains with a hard drive. So when disaster strikes, who is going to lead and will your technology pull you under?Leadership is always trainingAs the stern of the Titanic lifted out of the water, the crew and passengers struggled with the lifeboats. There were no drills, no rehearsals and the crews stood unfamiliar with their responsibilities. The boats were improperly loaded and only one boat went back to try to recover survivors. Everyone is business today must be a trainer and mentor, not just the training department.Leadership looks below the surfaceThe greatest danger as well as the greatest opportunities lie below. The ocean in 1912 was like glass, deceptively dangerous. The biggest part of an iceberg lies below, unseen. Like steel fangs, it tore at the rivets along 300 feet of the Titanic’s hull. Those below, the "crew and steerage," felt and saw the damage first. Like a gasping breath, the steam billowed above as chaos reigned below.Just like then and now, those who know what’s wrong with your "ship" are those below. Furthermore, those below usually have the best ideas and solutions to your problems. Start looking toward those on the front-line for the ideas, problems and solutions. Do it before you hit the icebergs.Leadership looks beyond the horizonSuccess gets organizations in trouble. A good "captain" is on the lookout for changing trends, changing needs, storms and icebergs. Sam Walton identified the need and Sears didn’t. Apple Computer saw the need before IBM. The vision of the Sony Walkman existed in Akio Morita’s mind before RCA. Mary Kay Ashe saw it and others didn’t. Get the picture? Be out there looking for the next change.The moral of the storyFew of us were alive when the Titanic sank, but all of us lost something that night. Hopefully, we recognize the lessons learned and chart our course toward the right direction. Let’s not make the same mistakes so we can avoid our own Titanics.Gregory P. Smith leads the management consulting firm called Chart Your Course in Conyers, Ga. He can be reached via e-mail at [email protected]

Juneau Gottschalks reopens at new, expanded location

JUNEAU -- Gottschalks opened its doors for the first time July 15 in the 36,400-square-foot space formerly occupied by J.C. Penney Co. Inc. in the Mendenhall Mall in Juneau. The move increases Gott-schalks’ store size by about 16,000 square feet and provides an anchor store for the mall, brokers who arranged for the store to sublease the space from J.C. Penney said last month."Unless you weighed 90 pounds, the (Nugget Mall) store was really tight," said Mike Schmidt, Gottschalks’ director of stores. "Now we’re more spread out and have more brand names."The Nugget Mall location is closed, Gottschalks’ management said.J.C. Penney closed about four years ago but was obligated to pay its lease through 2007, and the store’s brokers said they had been searching for a business to lease the space since October 2001.According to store manager Debbie Oleman, the new location gives Gottschalks flexibility and room to grow."The square feet we devote to each department depends on what the customer wants," Oleman said. The company plans to adjust as the needs of the community are gauged.Schmidt said Gottschalks has 73 stores across the country, some of which are more than 200,000 square feet. Even though the store has nearly doubled in size, Schmidt said it can’t have the same product assortment other Gottschalks carry down south, but employees can get anything the stores there carry if requested."There is one dirty word that nobody in the store can say," Schmidt said. "That is the word ’no.’ If we don’t have it in the store, we can get it."Gottschalks opened within 30 days of getting the lease, with crews working into the night to install new carpet and paint, Schmidt said. Oleman added that visually, the store has changed tremendously.Gottschalks has increased its staff, but is looking for more employees."Opening the new store has made people more interested in working for us," Schmidt said. "Our best employees come from our customer base. We try to be a hometown store."Resident Ivanka Simatic, who waited outside the store to be the first inside, said she was looking forward to seeing the Liz Claiborne collection, and hoped there would be more size selection."This store is much much better," Simatic said. "The other store was way too small."

Kenai Wild fish branding program sets sail in Cook Inlet

KENAI -- The drive to invigorate the Cook Inlet salmon industry is on.After all the marketing and money invested, the opening of the commercial fishing season in the Inlet last month meant time for action. Four seafood processors, 30 to 35 commercial fishermen, and a salmon buyer agreed to participate in the $400,000 Cook Inlet Salmon Brand Inc. program. They are following a plan that hopes to bring to the fresh and frozen Inlet salmon fishing industry the ability to compete with farmed salmon.Success could mean revitalization and stabilization of the commercial salmon fishing industry.Fish can earn the "Premium" grade, the higher of the two grades available, or grade "A," the second level.Although much of the process fish follow from gillnet to market does not change for this program, significant steps have been added along the way to assure consistent quality before the Kenai Wild certified seal is placed on an Inlet sockeye.Bleeding and chilling at sea"These program fish are pretty hard to do on boats these sizes unless it’s a (slow) day," said Ninilchik driftnet fisher John McCombs July 11 from the helm of his 33-foot commercial fishing boat, Katydid.He said the previous Monday’s opening produced fewer fish set aside for the program due to a steady stream of fish and inexperienced help.On July 11, McCombs only caught 72 fish. He pulled in his gillnet after a second set off the Katydid’s stern only to find three fish. Undaunted, he began following the procedure to make his catch meet the standards of the branding program.Carefully, he untangled the sockeyes from the net and reached into each one’s gills."See," McCombs said, tearing at one fish’s breathing organs, producing an immediate flow of blood. "You rip out their gills like this. Now, this is a program fish."He then passed each fish off to his deckhand, 15-year-old daughter Maureen, who stowed them below deck in a storage hold filled with almost 600 pounds of ice. Even with the three reds chilling below, he expected later catches to stand a better chance of passing muster for the seal."If you do program fish, you should take them out of the last set of the day," McCombs said. "That way, they’re fresher."During the day, he pointed out spots on a few of his fish, like sores and net marks, that could warrant demerits from inspectors onshore."These bruises are net marks," McCombs said, pointing at a set of heavy, black lines just behind one sockeye’s gills. "They don’t want those."His fish were accepted as program fish, for this first layer of grading. They would be grouped together with more fish for subsequent scrutiny, but the program has no means in place to track them from this point.McCombs said he became involved with the program because he was interested in promoting consistent quality."Everybody can take better care of their fish," he said. "There’s got to be some way to show more value. Hopefully, branded fish will do that."Scrutinizing salmon once they reach landChristine Keenan, a seafood inspector for Surefish Quality Specialists, stood outside Deep Creek Custom Packing in Ninilchik the evening of July 11 peering into totes filled with ice and freshly harvested sockeyes."I’m making sure the quality meets the standard," Keenan said.That standard calls for fish to be bled and chilled on fishing vessels and handled with care, she said.Processors must get fish to the plant as soon as possible, keeping the fish on ice and taking care not to rough up the fish’s skin. Once fish leave the ocean and are killed, their bodies begin to deteriorate, making them susceptible to easy bruising.Keenan said she looks at specific features of the fish to determine the level of care each salmon has received before reaching her. She looks for the amount of scales and for marks, she said."If the skin is soft and wrinkly, or if it is bruised, I know it has not been iced," she said. "Then I look at the eyes for clarity and I look at the gills to see if (the fish) has been bled. I also look for a yellowish or pasty white slime on the fish. Colored slime is bad, but a clear slime is normal."Keenan also takes each fish’s temperature using a rectal thermometer. She said driftnetters’ salmon should register 32 degrees Fahrenheit, while setnetters, whose fish often are exposed to elements and on ice for shorter periods, are expected to return fish at about 38 degrees.But there is no exact science to grading the sockeye, she said.Inspectors have to use their own judgment, and clearer rules will come as the program transitions from its pilot stage. Since fishermen turn fish over to the program on a voluntary basis, there’s little pressure to have everyone meet standards, she said."You can tell when you’ve been looking at fish long enough, how long they’ve been iced," she said. "If they run into any trouble, they’re not required to bring the fish in."Packaging and a second lookMark Powell, Cook Inlet Salmon Branding president and owner of Alaska Salmon Purchasers Inc., reiterated the importance of enforcing quality standards in a meeting July 12 at Snug Harbor Seafood in Kenai. A Surefish inspector and two Kenai Peninsula Borough employees training as inspectors also attended the meeting."The integrity of the label is everything," he said. "Take no prisoners on that."Friday the trio, Karin Ho-brook of Surefish and borough hires Brandi Ohlsen of Sterling and John DeVolld of Soldotna, oversaw the filleting process at Snug Harbor’s custom packing arm, taking a second look at sockeye meat caught the previous day."We have to follow the fish everywhere it goes to make sure at each step people are following the program handling procedures," Holbrook said. "Hopefully, by the third year, we can self-certify some people so we can just audit quality every so often."Ohlsen said this first year of the program has the inspectors working frequently to pave the way for standards that will not require such stringent oversight."We’re more hands-on right now," she said. "We’re getting people used to our standards."At the plant, the three inspect for texture, color, pin bone removal and gaping, the separation of the muscle fibers. The inspectors also take random samples of fish after being headed and gutted, filleting selected salmon themselves. And Ohlsen said they look for butchers’ defects.Holbrook said the high mark premium grade does not allow for many defects."Premium is basically perfect fish," she said.Holbrook said the "A" grade is still preferable to no fish at all, and said many salmon miss getting in the program due to a misunderstanding that premium is all the program will accept." ’A’ grade just has to be chilled but can be dead in the net," she said. "Setnetters believe because their fish aren’t bled alive, they can’t be ’A,’ so they’re not submitting them."As of July 12, 7,122 pounds of fish of the 10,000-pound goal set for the program had been certified.Marketing: getting the word outPowell said the program is on target with reaching its initial test market. Samples of salmon fillets embossed with the Kenai Wild logo will be sent directly to 12 high-end seafood buyers in the Lower 48, including regional restaurant and grocery chains from the Pacific Northwest to the Northeastern Atlantic.Chris Mitchell of Seattle’s marketing group Seafood Market Developers works with the branding project finding and building relationships with potential direct buyers. Mitchell said these first impressions with potential long-term wild salmon buyers could make or break the program."We’re talking to the people who are willing to pay more for a better fish," he said. "That’s why it’s critical that for sure on these samples there’s perfection."Mitchell said the end-goal will be split between fillets and headed and gutted fish. But he said the market wants more fillets and restaurateurs want to be able to go straight to the oven with the wild salmon they receive.He said headed and gutted fish could bring in $2 per pound, where fillets could get double that price."In order for this fishery to survive, they need that $4," he said.

As it grows larger, borough's population also gets grayer

KENAI -- As the population of the Kenai Peninsula grows larger, it also is growing older, according to new U.S. Census figures included in the latest quarterly report of key economic indicators published by the Community & Economic Development Division of the Kenai Peninsula Borough.The report shows the population of the borough as a whole grew by 8,889 people in the decade of the 1990s, reaching 49,691.The central peninsula region grew the fastest, with the largest gains in the unincorporated areas.Meanwhile, as the population of those between 45 and 54 years of age more than doubled, fewer children were being born and the number of young adults between 25 and 34 fell by almost a fourth.Helping to push the median age upward from 31.1 to 36.3 years of age during the preceding decade was the relatively rapid growth of the senior population.Those 65 to 74 years of age grew from 1,489 in 1990 to 2,361 in 2000, a 58.6 percent increase. Those 75 to 84 years bounced 157 percent from 419 to 1,077, and those 85 years and older went from 79 to 211, a 167.1-percent jump.The bulk of the peninsula’s population, some 23,461 men and women, or about 47 percent, are between 25 and 54 years of age.The borough’s population remains relatively young, but it is older than the state as a whole, where the median age is 32.4 years.Seldovia has the oldest average age at 45.3 years. Homer and Seward both slightly exceed the borough median, while Kenai and Soldotna are slightly lower.The 2000 census split the borough into four regions: central, southern, eastern and western. The growth in the central peninsula outstripped every other region, said Jeanne Camp, an economic analyst with the division.The central region now is home to better than six of every 10 borough residents. Most of the growth occurred outside borough cities.For instance, Moose Pass grew 154.3 percent, Bear Creek jumped 201 percent, while Anchor Point’s population rose by 113 percent, according to the figures.Other statistics tell more about the peninsula. Males make up 52 percent of the borough population, females 48 percent.Better than 86 percent of the peninsula’s population is Caucasian. The next largest group, 7.47 percent, is made up of American Indians and Alaska Natives.Asians make up 0.97 percent, African Americans 0.46 percent, and Hawaiians or other Pacific islanders comprise 0.17 percent of the borough’s residents. All other races account for 0.84 percent. Nearly 4 percent of the population is of mixed race origin.The population of the borough is relatively well educated.Some 88.3 percent of persons over the age of 25 in Kenai, which has the largest population among the cities at 6,942, are high school graduates and 16 percent have college degrees.Of Soldotna’s 3,759 residents, 87.6 percent of those over 25 have finished high school and 15.5 percent are college graduates.In Homer, with a total population of 3,946, those figures are 92.4 percent and 29.2 percent respectively, while in Seward, with a population of 2,830, the figures are 86.7 percent and 15.9 percent respectively.

White House wants different incentives for building Alaska gas line

FAIRBANKS -- The Bush administration wants to replace a proposed tax credit for Alaska natural gas sales with some other type of incentive that doesn’t set a gas price floor, Sen. Frank Murkowski, R-Alaska, said July 18 after a meeting at the White House.Sen. Ted Stevens and Rep. Don Young, both Alaska Republicans, also attended the meeting.The Senate version of a national energy bill proposes a tax credit that would kick in when gas prices fall below $3.25 per million British thermal units at a hub in Alberta, Canada. The amount taken off the gas owners’ tax bill would be the difference between $3.25 and the actual sale price.Murkowski said the Alaska delegation pointed out that the tax credit would have to be paid back when prices rose, but that didn’t allay the administration’s worry. He said other gas producers fear they won’t have the same safeguard that Alaska gas would have.The gas provisions will be the subject of negotiation in a conference committee formed to work out differences between the House and Senate versions of the energy bill.Administration officials suggested that a combination of other incentives would be less harmful to other gas sellers, Murkowski said. Those incentives could include: Tax credits for development of oil and gas that is technologically difficult to extract. Loan guarantees. Changes that allow the value of the pipeline to depreciate faster than normal for tax purposes."What we agreed is to continue to work in an expeditious manner to address the various ways the federal government could participate in this process," Murkowski said."The feeling was that, yes, it’s in the national interest," Murkowski said. "The question was, ’What is the meaningful role of the government?’ Is it limited to tax incentives, accelerated depreciation, tax credits and so forth?"Stevens had to cut his White House visit short because of work on spending bills, so he declined comment on the meeting.Murkowski said White House officials attending the meeting included Larry Lindsey, the president’s top economic adviser; Glenn Hubbard, chairman of the Council of Economic Advisors; Karen Knutson, an aide to Vice President Dick Cheney who used to work for Murkowski and hails from Ketchikan; and Marcus Peacock, associate director for natural resources in the Office of Management and Budget.

Borough acquires Ketchikan mill

KETCHIKAN -- Ketchikan Gateway Borough officials sealed a last-minute deal July 16 to buy a defunct veneer mill.The borough closed a deal with the mill’s major creditor, Foothill Capital Corp., which had loaned the former Gateway Forest Products $14 million to operate the business.Ketchikan officials had been working frantically along with state officials to avert an auction of veneer mill equipment in hopes of continuing to operate the plant and preserving local jobs.The borough agreed to pay $2 million for the mill and equipment and pay related expenses for the auction. It also will absorb $320,000 in back taxes on the property."It’s what we think the auction would pay," said William Shiao, Foothill senior vice president.The final cost to the borough for the mill and associated expenses could top $2.6 million, said Steve Corporon, acting borough manager.Other equipment, including Gateway Forest Products assets that the company received from the old Ketchikan Pulp Co., and which were not related to the veneer plant, were auctioned as scheduled.Borough officials swooped in to buy the mill after the Alaska Industrial Development and Export Authority was unable to negotiate a price with the creditor to avert the auction.The state development agency hopes to form a three-way partnership with Sealaska Corp. and Timber Products Co. of Oregon, to supply and operate the mill.Under AIDEA’s plan, the state development agency would lease the mill to Timber Products. Sealaska, the Southeast regional Native corporation, would supply wood for production of veneer products.The borough still intends to sell the facility to AIDEA in hopes that it can continue to operate the mill in an attempt to retain local jobs in a community hard hit by economic losses.Bob Poe, AIDEA director, said there is no immediate agreement with the borough to purchase the mill but he is hopeful a deal can be reached.The Ketchikan Gateway Borough paid for the mill by dipping into a $25 million economic disaster relief fund it received after the former pulp mill closed. It had $4 million left in the fund before the sale, Corporon said.Gateway Forest Products opened the mill on the site of a failed pulp mill in 1999 but ran into financial difficulties a year later.The company filed for bankruptcy protection in February 2001, claiming in court papers $45 million in debt including $15 million owed to the borough. Its request for Chapter 11 bankruptcy protection was dismissed and the property was to be liquidated.Borough officials continued to meet with Foothill on July 16 even as outside buyers were bidding on equipment being auctioned off.

Torgerson: Companies want gas pipeline risks kept to minimum

KENAI -- Sen. John Torgerson, R-Kasilof, announced to the Soldotna Chamber of Commerce July 16 that Duke Energy had told him it is pulling out of a consortium of gas-producing and distributing companies.Duke Energy is a gas distribution company that has been working toward bringing the plans for the Alaska-Canada gas pipeline to fruition.The company apparently made its decision after being informed by the major gas-producing companies that Duke would not play a large role in the distribution of any gas transported by the new line."Producers don’t want to play ball with those guys. They want to do it on their own," Torgerson said.Although Duke’s withdrawal essentially dissolves the group because it owns half of Canada’s representation as well as American holdings, losing the consortium is not the crux of the issue keeping a gas line from being built, Torgerson said.Gas-producing companies have made it clear that they will not begin construction of a pipeline until the federal government has instituted a way to mitigate some of the project’s financial risk, thus making it more appealing to financiers. Talks between the White House and Congress are under way to define an acceptable package of incentives for the line."It’s clear if they don’t get federal support, they won’t do a pipeline," Torgerson said of the producers. "The fact is a lot of risk is involved in this project. They didn’t become the largest in the world by being fools."

Scientist finds 10 kinds of crabs inhabiting underwater mountains

KODIAK -- Kodiak-based crab biologist Brad Stevens recently returned from an underwater adventure exploring sea mountains located thousands of feet below the surface in the Gulf of Alaska. He made a similar trip three years ago with the intent of finding out what species of crab live in very deep water."We went out looking for four commercially exploitable species and we came up with a total of 10 species of crabs, six of which we hadn’t known about," Stevens said.In June, Stevens made several dives to Patton Seamount, using the submarine Alvin that was transported aboard the research vessel Atlantis based in Woods Hole, Mass. This time the focus was on juvenile crabs, particularly species like Golden King crabs, which are of high-market value. He found the young crabs living at deeper depths than the adults and concentrated on a narrow band along the seamount, an underwater mountain.Another crab species Stevens saw from his cramped quarters aboard the submarine was Spider King crabs, which he says have a body about the size of a Tanner crab but with pencil-thin legs about 2 feet long. "It looks like a daddy longlegs on steroids." Stevens said.Although the crabs aren’t very marketable, Stevens says studying them can help him learn more about crab habitats and behavior.One exciting moment of his underwater journey was what Stevens called the "attack of the flying squid." This happened when a school of squid converged on the submarine Alvin. "It’s just amazing to see these things go whizzing by. You could see them hovering right in front of the portholes."It will take months for Stevens to view the videotapes and analyze the data, but he hopes this summer’s dives will add to his growing body of knowledge about crab species that live on these underwater mountains.Cash for tagsSome lucky halibut fishermen could be in for a bonus when he or she pulls up one of the big flatfish. This summer the International Pacific Halibut Commission and the U.S. Geological Survey are conducting a tagging project in waters off Alaska and British Columbia. Two dozen halibut are fitted with small microphone-shaped electronic satellite tags designed to transmit data on where halibut migrate between their feeding and spawning seasons.Each tag costs $4,000, which is why so few fish are wearing them. If a fisherman lands a halibut with the whole tag intact and returns it to the IPHC, they will receive a $500 reward. Tags can be sent directly to the halibut commission’s office in Seattle or given to a commission port sampler.View on valueThe value of the Bristol Bay sockeye salmon catch is estimated about $25 million this season. That’s down from last year’s $37.7 million, which was the lowest value since 1977. Early projections peg the overall value of this year’s salmon catches at $130 million, down from $216 million last year. In 1988, Alaska’s salmon catch was worth $768 million at the docks.Kodiak-based free-lance writer Laine Welch can be reached via e-mail at [email protected]

Alaska Airlines eyeing Adak contract

At least three airlines are eyeing service to Adak under a federal contract that has been the most costly in the nation.Company officials from Alaska Airlines, Peninsula Airways Inc. and Evergreen International Inc. have indicated they will bid on the service to the Aleutian Island community of about 100 that is struggling economically after its 1997 U.S. Navy base closure.The U.S. Department of Transportation began accepting bids for the subsidy July 8, after canceling Evergreen’s two-year $1.5 million contract when the airline failed to provide promised jet service. Bill Mosely, spokesman for the Department of Transportation in Washington, D.C., said as of July 19, no bids have been received under the agency’s Essential Air Service program. Airlines have until Aug. 7 to file with the agency for the federally subsidized route.Joe Sprague, Alaska Airlines’ director of sales in Anchorage, said the airline is running numbers on the 2,600-mile round trip-route and is hopeful that increased economic activity in the area, combined with a federal subsidy, may make the flight profitable."Count on us to bid on it. ... We are analyzing the possibility and see at least some potential," Sprague said.Passenger and freight revenue alone would not allow jet service to the Aleutian Islands’ community, he said."It would not be economically viable for a jet without the subsidy," Sprague said.Jerry Rock, president of Evergreen’s Alaska operations, did not return telephone calls from the Journal.A company official, who asked not to be identified, said the airline would resubmit a bid for the service.The McMinnville, Ore.-based airline was awarded the two-year contract in July 2001 based on its proposed purchase of a Boeing 727-100 combined passenger and cargo jet. The "combi" is better able to handle cargo and the region’s notoriously bad weather than propeller aircraft, according to written decision last summer by the federal Transportation Department.But over the last year, Evergreen has only provided once-a-week mail and freight service with its DC-9 cargo jet to Adak. Peninsula Airways has been providing passenger service with prop aircraft, under an interim federal award of about $4,000 weekly.PenAir has charged about $1,100 for a round-trip ticket from Anchorage to Adak.Evergreen has been paid roughly $7,000 for each of its weekly cargo flights, according to DOT’s Mosely.Evergreen blamed the events of Sept. 11 and new bypass mail rules for not purchasing the combi jet it promised when it won the subsidy last year.PenAir has been flying to Adak since December 2001 when Reeve Aleutian Airways went out of business. Reeve had operated two Boeing 727-100 combis that serviced Adak and other Aleutian destinations, as well as the Russian Far East.Reeve operated its flights with no government subsidy.PenAir officials have said they will resubmit a bid for the subsidy, although they are concerned that it requires use of an airplane with a minimum of 60 seats. The company is asking that the requirement be lifted, and its officials are seeking legal and congressional avenues to get it done.In its year-long interim service, the airline usually fills only six seats per flight to the Aleutian island community, said Dick Harding, vice president of Anchorage-based PenAir.PenAir’s Saab 340Bs, the airline’s largest plane, only have 30 seats.Mosely said community officials in Adak can ask to have the seat requirement amended.That’s unlikely, however, as the community has fought hard for jet service and backed Evergreen’s proposal last year, the only bid that said jets would be used.When Evergreen didn’t provide a jet after a year, the community and members of the Aleut Corp., which owns the abandoned Navy base now, lobbied successfully to have Evergreen’s proposal canceled.The federal contract last year drew five bids from carriers, with proposals ranging from $1.3 million to $2.1 million annually for flying cargo and passengers to Adak.The subsidy at the time had drawn criticism from some state officials who questioned if the federally subsidized route to the tiny community would be money well spent, since more than 150 communities in Alaska qualify for subsidized funding for air service, but receive none.Adak officials say the subsidy is needed to help the struggling community grow its economy. The Aleut Corp. has been planning to use the existing airfield and deep-water port for such things as a refueling and reprovisioning facility, and as a fish processing center for the Aleutian area.Some 33 communities in Alaska and 86 nationwide receive a subsidy from the federal government under the Essential Air Service Program, established in 1978 to ensure small communities retain a link to the national air transportation system, according to DOT’s Mosely.The program’s annual budget is $50 million, Mosely said.

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