Opinion

Editorial: Deception becomes precedent in health care ruling

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

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

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

Editorial: TAPS milestone marked by drop in Slope oil prices

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

Commentary: TAPS birthday wish — change policies to fill pipeline

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

Commentary: Move on Bering Sea canyons a victory for subsistence

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

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

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

EDITORIAL: Council, trawlers must be accountable for bycatch

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

EDITORIAL: Council, trawlers must be accountable for bycatch

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

Commentary: Like Sierra Club, biz community holds leaders accountable

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

Editorial: Cuts to rail are a betrayal of federal commitments

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

EDITORIAL: Remember the fallen — today, and always

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

Time to make voices heard on halibut bycatch

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

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

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

Ire over profits another sign of an unserious debate

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

Editorial: Regulators hold first joint meeting on halibut bycatch; herring updates

Brainstorming over halibut bycatch was the theme of a two-day workshop this week in Seattle. Topping the discussions: the methods used to collect bycatch numbers and the accuracy of the data. The meeting between the International Pacific Halibut Commission and the North Pacific Fishery Management Council is an unprecedented effort to work together to reduce the estimated 10 million pounds of halibut taken as bycatch and discarded in Alaska’s fisheries. “As far as I know, this meeting represents a first ever joint effort by the two bodies to meet together to discuss current science and/or research,” said Duncan Fields of Kodiak, a member of the North Pacific Fishery Management Council. The NPFMC sets halibut bycatch limits in federal-water fisheries, which produce 80 percent of Alaska’s seafood landings. The IPHC tracks and studies the stocks and sets annual catch limits for commercial halibut fisheries in the U.S. and Canada. It has been more than two decades since bycatch levels were soundly re-evaluated by the NPFMC; two years ago, the IPHC reconvened a task force to study how bycatch removals affect halibut stock assessments and, ultimately, fishery management. Fields said he has “high hopes” that the joint meeting, “will be informative and further more co-operative public presentations.” The North Pacific Council plans to reduce halibut bycatch limits in Gulf of Alaska fisheries at its June meeting in Kodiak. Alaska seafood is tops The seafood industry not only provides the most jobs in Alaska — more than oil/gas, mining, timber and tourism combined — seafood also is Alaska’s top export. State numbers show that Alaska’s total exports increased by more than 26 percent last year valued at $5.2 billion, the highest ever. Half of the value, $2.5 billion, came from seafood exports, a 35 percent increase over 2010. Last year also marked the first year that China ranked first for Alaska exports with seafood also topping that list ($836 million). China was followed by Japan, South Korea, Germany, the Netherlands, Canada, France, Thailand, Spain and Portugal. Europe accounted for more than 22 percent of Alaska seafood exports last year. Other Alaska exports included mineral ores, which increased 31.7 percent to $1.8 billion; precious metals (primarily gold), were up 24.7 percent to $266.4 million. Forest products exports increased 1.9 percent to $119.3 million. Energy exports decreased 7.3 percent to $387.7 million. Herring watch Big roe herring shortfalls at Southeast have boosted fishing and buying interest at Kodiak. The fishery began on April 15 and 25 to 35 boats are signed on compared to 17 last season, said James Jackson, a fishery manager at Alaska Department of Fish and Game in Kodiak. As many as seven major companies are buying the fish valued for its roe. “I think a lot of that has to do with the large harvest that did not get taken down in Sitka,” Jackson said. The Sitka herring fishery in late March produced less than half of its nearly 29,000-ton quota, and a small fishery at West Behm Canal was canceled all together. That puts Kodiak’s 5,355-ton herring harvest in a good spot for interested buyers, and hopes are high that the fish will fetch more than the disappointing $200 per ton last year. Unlike other Alaska regions where herring fisheries can be over in a few short openers, Kodiak’s fishery can occur in up to 81 different sections around the island, and the fishery lasts through June. “Kodiak is a big complicated fishery and it is very different,” Jackson said. “At Sitka and Togiak, those places have large spawning aggregates and they tend to come in usually all at once and you can catch the harvest limit really fast. At Kodiak there are so many different separate spawning aggregates, and they spawn at different times, sometimes in mid-April and sometimes in late June.” Kodiak also is a “stop over” for boats heading to the state’s largest herring fishery at Togiak in Bristol Bay. Alaska’s herring fisheries will continue along the westward coast all the way to Norton Sound. The statewide fisheries bring in more than $20 million to coastal communities. Fish bills United Fishermen of Alaska, the nation’s largest commercial fishing trade group, is claiming “success” with the passing of several measures during the regular session of the state legislature. They include bills that would increase commercial fishing loan limits, support entry of young fishermen into commercial fishing careers. Funding increases UFA also supported include: $9 million in general fund for Alaska Seafood Marketing Institute as a match to industry contributions; a $60,000 increase from the governor’s recommendation for Alaska Marine Safety Education Association trainings; and $489,000 for ADFG Sport Fishing Division Invasive Species response. UFA-supported measures that did not pass include: Sea Otter Management Resolution (held in Senate Rules); labeling of farmed fish and genetically modified fish (Did not move from first committee referral, House Fisheries); prohibiting growing or cultivating genetically modified fish (was not heard in House Resources); R&D tax credits (held in Senate Finance Committee); crew data and statistics (held in House Finance); coastal management (heard but not passed in first committee, House Resources). Also not passing was a bill on Bristol Bay large scale mines: “An Act requiring legislative approval before the issuance of an authorization, license, permit, or approval of a plan of operation for a large-scale metallic sulfide mining operation that could affect water in or flowing into or over the Bristol Bay Fisheries Reserve” (was not heard in first committee of referral, Senate Labor and Commerce). Find a complete update on all fish bills at www.ufa-fish.org.   Laine Welch lives in Kodiak. Visit alaskafishfactor.com for more information or contact [email protected]

Editorial: Alaska needs wise oil tax policy built on compromise

For the second time in two years, oil taxes have prompted a special session of the Alaska Legislature. Or, to put it another way, state Senate leaders outsmarted themselves and were unable to get to the negotiating table with their counterparts in the House during regular session. Here is what happened. In March of last year, the House passed an oil tax reform bill to roll back some of the most damaging aspects of the ACES (Alaska’s Clear and Equitable Share Act) tax increase of 2007. That bill, HB110, has since been languishing in the Senate, bottled up in committee. In two sessions it has not been given a floor vote or even amended in committee more to the Senate’s liking. Usually, amendments are how compromises get started. Not this time. Senate leaders spent two legislative years, untold hours of hearings and big bucks on consultants coming up with a different bill that, in the end, could not draw enough votes in their own 16 of 20 super majority to pass. One reason for the failure was that their bill, SB192, was too clever by half. It had been given a ridiculously long, two-page title that prevented much compromise under the rules of the Legislature. My way or the highway, in other words. When that failed, Senate leaders who had been lecturing anyone who would listen on the virtues of going slow and being cautious, pulled an obscure bill out of legislative oblivion, grafted certain sections of SB192 onto it in a single committee meeting, rammed it through the Senate a few hours later, then sent it back over to the House for action with only a day left. To their credit, House leaders were not stampeded. Hence, the special session. All the trickery aside, what matters most is what happens next. There is still an opportunity to get this right. The bill that the Senate rushed over to the House has constructive relief for new oilfields, a step in the right direction. However, it is far too narrow. It leaves Alaska with a Chilkoot Charlie’s tax policy – “we gouge the other oil field and pass the savings on to you.” The private sector is generally not fooled by such trickery. Today’s new oil will become tomorrow’s old oil, in annual peril of being “reclassified” by politicians hungry for more pork to hand out. A good compromise bill will have two simple elements to it. First, it will alleviate the extreme progressivity that causes Alaska government “take” to become confiscatory as oil prices climb. This is important. Oilfield economists know that prices go up and down over time. They assume that high profitability during periods of high prices offset losses when prices are low. Any taxing region that takes away the upside for industry will find itself underperforming, as Alaska has. Second, a good bill should not try to skim off the vast majority of profits from existing fields. At today’s oil prices or higher, the incremental government “take” on existing oilfields is between 70 percent and 90 percent. That is too greedy. It reduces the incentive to invest in existing fields, which is where most easily recoverable oil lies. The old Chilkoot Charlie’s joke is just that, a joke. It is not wise tax policy. In order to address this issue successfully, our state Senators must do what successful policy makers have always done: don’t be greedy, set aside the trickery and negotiate in good faith. The next generation of Alaskans is counting on it.   Scott Hawkins is president of Advanced Supply Chain International, an oilfield services firm headquartered in Anchorage that employs more than 200 Alaskans. He serves on the board of the Alaska Council on Economic Education and is chairman ProsperityAlaska.org.

Editorial: State spending on energy should look to long term

The twists and turns of legislative attempts to address high energy costs probably left many Interior residents shaking their heads in wonder. On the one hand, the state Senate approved a bill to spend hundreds of millions of dollars on energy cost vouchers across the state, including in many areas where those costs are not particularly high. Yet the same body, at the time of this writing, had abandoned a proposal to spend $30 million on a natural gas storage system for Interior Alaska because of disagreement about how to deliver the money, whether through a direct appropriation or a tax measure that would amount to the same thing. And a much larger request of $100 million or more, which could have delivered dramatic and lasting energy savings across the region where it’s actually needed, also went nowhere. These choices are hard to fathom. Jump-starting a natural gas system would be a real step toward reducing the cost of heating and electricity in the Interior in the long term. The benefits would begin within a few years, and they would compound indefinitely as more people and businesses switched to gas. It would prepare the community for natural gas if a pipeline is ever built. The alternative — spending $330 million to $465 million on energy cost vouchers — is far less forward-thinking. The money would be gone in a year, with nothing done to address the long-term problem of high energy costs. Vouchers perversely reduce the incentive people have to conserve through steps such as switching to cheaper fuels, insulating their homes, using less electricity or taking other steps to address the problem individually. Vouchers also do nothing to reduce business costs, a serious problem illustrated by the recently announced shutdown of a crude refining unit at the Flint Hills refinery in North Pole. The voucher route is certainly easier. A statewide distribution has appeal for legislators everywhere, even in areas where heating costs are not stressing family and business budgets. Few of their constituents are going to complain too loudly about free money. Yet putting the state’s money into infrastructure is clearly the better choice, even for Alaska residents who wouldn’t seem to benefit directly — residents of Southcentral Alaska, for example. There is much talk of building either a small-scale or large-scale natural gas pipeline from the North Slope to Southcentral.

OPINION: Young entrepreneurs dream big

All across the country, there are young men and women dreaming of opening their own businesses. Some are looking to start the next social media phenomenon, while others are focused on a business idea that fills an important niche on their campuses and in their communities. At the U.S. Small Business Administration (SBA), we know that young entrepreneurs are a valuable source of American innovation, which is why we launched our Young Entrepreneur Series (YES). Nationwide, 20 events were held, including one in Anchorage and one in Boise, Idaho. The SBA has the tools and resources to help these entrepreneurs succeed.  SBA appreciates that young entrepreneurs have different sorts of needs – they’re not just online and mobile; they’re starting all kinds of businesses while working out of cafes or even dorm rooms. We’ve launched a new set of online tools, with links to resources and online courses, geared specifically toward young entrepreneurs at www.sba.gov/content/young-entrepreneurs. And the SBA online community puts articles and advice from tens of thousands of small business owners and entrepreneurs online and available for perusing on our website. Join the community at www.sba.gov/community. SBA has many other tools available for young entrepreneurs and small businesses alike. We like to call these our “three C’s” and include capital, contracting and counseling. We provide a government guarantee on SBA loans that are given by lenders to increase access to capital. One great example is SBA’s microloan program. It provides low-cost, low-dollar loans to entrepreneurs and small business owners who require a small infusion of capital to start or expand their business. Opportunities available for small businesses in federal contracting include special efforts for women, veterans and disadvantaged businesses.  And we offer counseling and training to over a million aspiring entrepreneurs each year through our resource partner network including: SCORE, Small Business Development Centers (SBDC), Women Business Centers and Veterans Business Centers. As young entrepreneurs build their small businesses, SBA resource partners are there for them to provide mentoring, coaching and advice for every stage of their business, from starting up and writing a business plan, to accessing capital and expanding. SBA is dedicated to educating young entrepreneurs, connecting them to each other and other successful business owners and providing better access to tools, resources and information for starting, growing and managing a business. But no matter where you are, how old you are, or what your business is, SBA has resources to help you grow your business. You can get in touch with your local SBA district office in Anchorage or resource partner at www.sba.gov/direct.

EDITORIAL: Unfinished business: no justice in Sen. Ted Stevens case

Justice isn’t done in the federal case involving Alaska’s late Sen. Ted Stevens. The Justice Department has blamed the system’s corrupt practices for the injustice committed upon Sen. Ted Stevens. It held no one accountable. No one suffered sufficiently for the consequences of the department’s unethical behavior in the Stevens case. It appears that Justice and the people in its employ are above the law. Of all people, it should be those employed by Justice to uphold the law and to hold others publicly accountable who should be adamant about not only protecting the department’s credibility, but also the appearance of being credible. A jury convicted Sen. Stevens in October 2008 of accepting tens of thousands of dollars in home renovations and gifts. Stevens had sought — much to the surprise of Justice Department prosecutors — a quick trial in order to clear his name before that November’s election. (The timing of the charges so close to an upcoming election will prompt speculation about prosecutorial intent well into the future.) Months after the verdict, when evidence of prosecutorial misconduct emerged, U.S. District Court Judge Emmet G. Sullivan threw out the conviction. Sen. Stevens, who routinely won re-election with 70 percent of Alaska’s vote, narrowly lost his 2008 bid for re-election despite heartfelt proclamations of his innocence. Alaskans find it difficult to respect a Justice Department that betrayed them, destroyed the late senator’s career and changed the makeup of the U.S. Senate. So do other Americans. Lives changed forever, and not for the better, because of Justice’s handling of the Stevens case. Alaskans want to see evidence that the Justice Department not only recognizes that, but makes amends. It needs to take action in order to begin to rebuild the trust and confidence of the public. To date Justice has admitted it made grievous errors in the prosecution of Sen. Stevens. It has announced its intention to institute a new training curriculum for federal prosecutors to ensure ethical behavior. In other words, Justice says it will do better in the future. Federal penitentiaries are filled with those who say that — if the government just would release them from their punishment. That doesn’t begin to rebuild a sense of trust. Judge Sullivan, who seems to understand the severity of Justice’s disgraceful behavior, ordered a special investigation of the Stevens prosecutorial team. Two and a half years later, the investigator, Washington, D.C., lawyer Henry F. Schuelke III, produced a scathing 514-page critique of that team. The report says that the prosecutors withheld pertinent evidence from the Stevens’ defense team and the jury that by law they were required to provide. The evidence would have proven Sen. Stevens’ testimony to be truthful. The prosecution team was “permeated by the systematic concealment of significant exculpatory evidence which would have independently corroborated Sen. Stevens defense and his testimony,” the report concludes. The report also says that information withheld would have undermined the testimony of the prosecution’s star witness, Bill Allen. It noted that Allen, a convict on charges of bribery and conspiracy, provided information during the investigation. Allen’s initial story conflicted with his court testimony. But the prosecutors and FBI agent involved “forgot” about the earlier information. Schuelke pointed out that a “complete, simultaneous and long-term memory failure by the entire prosecution team” was “extraordinary” and “strains credulity.” The prosecution denied misconduct, or, in one case, denied intentional misconduct. All of them pointed at superiors for Justice’s failures. Schuelke wrote he couldn’t prove beyond a reasonable doubt the prosecutors’ intent in the Stevens case. As a result, he didn’t recommend criminal charges. But, undoubtedly, Judge Sullivan is reviewing the findings, and he might well come to a different conclusion. The judge who oversees a case has a view unique to all others involved or following proceedings. The Justice Department still could act beyond new training procedures, holding the guilty parties accountable. Dismissal from Justice might be an outcome. Disbarment is a possibility. Sen. Lisa Murkowski has introduced legislation, the Fairness in Disclosure of Evidence Act, to create a nationwide standard for disclosure of evidence that demonstrates the innocence of a defendant to defense attorneys in federal cases. Currently, there are almost 100 varying standards throughout the nation. The act is a response to the Justice Department’s failures in the Stevens case. “What happened in the trial of Senator Stevens is unfortunately not an isolated incident, but most Americans do not have the wherewithal that he did to push back against prosecutorial misconduct,” says Murkowski. “While I do believe most federal prosecutors are adhering to the law, it’s clear the rules in place are not preventing ‘hide-the-ball’ prosecutions in cases across the country. There are a few prosecutors out there willing to put a finger on the scales of justice to get more convictions — and this bill seeks to stop that. Justice should be blind, not blindly ignored.” Alaskans are pleased to see the Stevens case might result in improvements in the law and in the training that prepares federal prosecutors. But still the case isn’t over until guilty parties in the Justice Department — whether the lawyers in the trenches or their superiors — suffer the full consequences of their action or inaction. Then, and only then, justice will be served and the Justice Department can rebuild its credibility with the public and within the Justice Department itself.

Bedrock of economy at risk without ACES fix

Alaska continues to face a critical challenge because of our state’s oil production tax structure. Alaska’s Clear and Equitable Share is impeding our competitiveness and putting our future in jeopardy. Our economic bedrock is at stake because our oil and gas industry is being severely crippled. Our current tax structure greatly concerns me as the head of the largest Alaska-owned employer in the state. ASRC Energy Services is a subsidiary of Arctic Slope Regional Corp., and we employ thousands of Alaskans, many of whom are in their early and mid-20s and many of whom are Alaska Native. These young people are the future leaders of our companies and our state. They want to know that their company, one that is a service provider to the oil and gas industry, is going to remain in business. Lately, other states that welcome the oil industry are thriving while Alaska is failing to keep up. The professional jobs such as petroleum and drilling engineers, geologists, geophysicists, air permitters, field biologists, architects, cultural resource specialists, project managers, as well as high paying construction jobs for managers, builders, logistics managers, supply chain personnel, etc., and many businesses supporting the industry are headed south to more welcome climes. Our current tax system, that only took a few weeks to implement and seems next to impossible to change, is complex and uninviting to investment. With oil prices more than $120 a barrel, and rising, Alaska has an opportunity, and an obligation, to position ourselves now and also for a prosperous future—a future that ensures both young and old are set with a viable pipeline and revenue from an industry that is sustainable. In order to accomplish this, our state government and our legislators need to put their heads together and meaningfully change and improve the tax structure this session to welcome growth. As an Alaska-born Inupiaq, I resolve to give our youth a strong future. Together we must make our voices heard and get the message to our legislators who are making decisions on our behalf. Standing by and watching the pipeline, which employs thousands of Alaskans and supports countless businesses, continue to lag is unacceptable. Together, let’s send a clear message to Juneau—change ACES today. Taikuu Sunna Jeff Kinneeveauk is the President/CEO of ASRC Energy Services. AES is the largest Alaska-based oil and gas service company in the state, and is a wholly-owned subsidiary of the Arctic Slope Regional Corp.

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