Elizabeth Earl

Dunleavy nominee to marijuana board hears major opposition

Cannabis industry members have their hackles raised at one of Gov. Michael J. Dunleavy’s appointees to the board that regulates their businesses with wide concerns about the administration’s long-term intentions. New governors regularly flip the membership of boards and commissions, particularly high-impact regulatory bodies. The Marijuana Control Board is no different. Dunleavy did not reappoint industry member Brandon Emmett of Fairbanks, instead nominating Vivian Stiver of Fairbanks. He also appointed Lt. Christopher Jaime, who works as a wildlife trooper at the Alaska Department of Public Safety’s Soldotna post, to the designated public safety seat. Jaime would take the seat from Sitka Police Chief Jeff Ankerfelt, whom the Dunleavy administration dismissed from the board in January. Both Ankerfelt and Emmett voted to authorize on-site consumption of cannabis in a 3-2 vote on Dec. 20, 2018. Stiver has owned several small businesses and worked in the legislative offices of Rep. Tammie Wilson, R-Fairbanks, and Sen. Cathy Giessel, R-Anchorage, previously served on the Fairbanks City Council and led an effort to ban commercial marijuana activity within Fairbanks city limits in 2017. Stakeholders immediately raised the alarm, in part because Emmett held a seat designated for the industry or general public, and had been one of two industry representatives since the board was formed in 2015. During a Senate Labor and Commerce Committee hearing on Feb. 12, members of the public testified on Stiver’s appointment for nearly two-and-a-half hours. A few people testified in support, but the vast majority opposed her confirmation. During her introduction, Stiver said she could put aside her personal views and be impartial. Her effort to ban commercial cannabis in Fairbanks had not been because of prohibitionist views, she said, but rather over concern with the city and borough’s readiness for businesses. “Our concern was are we ready? Are we ready for this industry?” she said. “There were many people in the group at that time that had different viewpoints from mine. I do believe there’s no problem with me working within the parameters of (the board) seat and working well for everyone involved.” She said she has been meeting with members of the industry and working to educate herself about the issues in the meantime as well. So far, the vast majority of operators have been responsible and no issues have come up, and those that have were dealt with, she said. A handful of people called in to testify in support of Stiver’s appointment, while other submitted letters saying they wanted someone on the board with an opposing viewpoint to balance the board. Some of the industry testifiers said they hoped Stiver’s statements were true and she would work fairly with the industry. Cole Hollister, the chairman of the Alaska Marijuana Political Action Committee and a co-owner of cannabis business Pakalolo Supply Co., agreed with another testifier that Stiver may be a “Trojan horse” for Dunleavy’s intentions in the future. “I believe that in removing one of our biggest voices, Brandon Emmett, and appointing Vivian Stiver, he’s spoken loud and clear of his intention toward the industry,” he said. “I don’t believe Vivian is telling the entire truth but I want to give her the benefit of the doubt.” Others offered no support based on Stiver’s previous work. Cary Carrigan, the executive director of the Alaska Marijuana Industry Association — a group where Emmett serves as the board president — testified against Stiver’s confirmation, saying the business people she had consulted did not include a broad swath of the industry and the AMIA had not been included. The AMIA sent out multiple emails to stakeholders before the meeting requesting that they testify against Stiver’s confirmation. “It’s impossible for a leopard to change its spots,” he said. “I think that it’s really interesting that we have somebody who’s as well versed in cannabis as Brandon Emmett being displaced by someone who has little to no knowledge whatsoever.” Public safety nominee Though the Labor and Commerce Committee hearing was supposed to include both nominees, the entire hearing focused on Stiver. Jaime’s hearing was rescheduled two days later, where the committee members heard less than half an hour of discussion before forwarding his name to a joint session for consideration. Jaime said he has worked in both rural and urban settings as a trooper and would listen to the industry within the lines of law enforcement. Since being nominated, he said he met with several Kenai Peninsula cannabis business owners and visited their operations to get a better understanding of the industry. “I am not looking forward to expressing my personal opinions about marijuana or going against the will of the people,” he said. The people who offered testimony on his appointment were cautiously optimistic or supportive. Ryan Tunseth, who owns the retail shop East Rip in Kenai, said Jaime has earned a reputation as a fair officer with the Department of Public Safety. His effort to visit with industry stakeholders offered an olive branch to industry members, he said. “(The stakeholders he visited) felt like it was very meaningful, that he would work to understand the inner workings,” Tunseth said. Both nominees were forwarded out of committee to a joint session for consideration. But even as the nominees move forward, the board they plan to serve on may not be long for this world. Dunleavy’s fiscal year 2020 budget, released on Feb. 13, includes a proposal for legislation to abolish both the Marijuana Control Board and the Alcoholic Beverage Control Board and delegate their responsibilities to the commissioner of the Alaska Department of Commerce, Community and Economic Development. Elizabeth Earl can be reached at [email protected]

ADFG cuts aim at logbook program, division directors

Sportfishing guides on Alaska’s rivers and lakes would no longer have to submit logbook records of what their clients catch if the cuts proposed in Gov. Michael J. Dunleavy’s fiscal year 2020 budget come to fruition. The elimination of the freshwater sportfish guide logbook program is just one of a handful of changes proposed for the Alaska Department of Fish and Game to save money. A letter from acting Commissioner Doug Vincent-Lang to staff sent out on Feb. 13 detailed some of those cuts to accommodate the approximately 4.3 percent proposed cut in the department’s budget. “As we all know, the state continues to face fiscal challenges in the wake of low oil prices,” Vincent-Lang stated in the letter. “I, along with our budget team and the staff at the Office of Management and Budget, have worked diligently over the last six weeks to align our programs with our core services and identify areas of opportunity for efficiencies.” Those cuts include moving the Commercial Fisheries Entry Commission into the Division of Commercial Fisheries, eliminating the director positions for the Habitat and Subsistence divisions, a 50 percent travel reduction for all divisions, eliminating General Fund support for Special Wildlife Viewing Areas as well as eliminating the logbook program. Currently, sportfishing guides have to meticulously record the fish their clients catch and submit them in a timely manner to the state so biologists can get a better idea of harvest rates and some survey information on stocks that may not be monitored. The department enumerates and tracks many runs of fish, especially salmon, using weirs and sonars, but the expense makes it impossible for all species on all rivers. Even some major stocks, such as coho salmon on the Kenai River, are not tracked by sonar or weir every year, though the department conducts periodic assessments in the river. This applies to guides both in freshwater and saltwater. Guides on the ocean would still have to record and submit logbooks, but the freshwater program would go away entirely, said Samantha Gatton, the acting director of administrative services for ADFG. Together, the salt and freshwater guide programs cost between $650,000 to $690,000 annually, she said. “(The freshwater logbook program) would just go away,” she said. “That doesn’t mean we don’t have fisheries biologists out in the field.” ADFG biologists regularly travel to remote locations all over the state in a variety of vehicles to monitor fisheries and wildlife, from periodic aerial salmon surveys to diving surveys for clams to moose collaring. Beyond just the staff, members of the regulatory boards of Fisheries and Game travel from their respective regions to where the regulatory meetings are being held. A 50 percent travel reduction would impact the entire department, including the boards. Gatton said the goal is to eliminate unnecessary travel. The department leaders also want to find ways to use technology instead of flying for some meetings, for example, which could save the time and expense for the boards. It might also improve logistics, she said — travel in Alaska can often be unpredictable. The changes to the CFEC aren’t coming from nowhere; former governor Bill Walker’s administration also tried to consolidate some of the agency’s functions into Fish and Game through an administrative order issued in early 2016. The CFEC, which administers the limited entry permit system for Alaska’s commercial fisheries, has been plagued by complaints of inefficiency in both expense and permit adjudication. A judge blocked the implementation of the administrative order in August 2016 and the Walker administration put the action on hold to consult more stakeholders. In the case of Dunleavy’s budget, the consolidation of the CFEC would have to be done through statute approved by the Legislature, Gatton said. Though contained within ADFG, the CFEC would retain independence in functions like permit adjudication, but sharing services and other expenses like office space could result in savings, Gatton said. “They would be creating efficiencies,” she said. “You’re kind of duplicating a lot of services right now.” Of all the state departments, ADFG is proposed to take one of the smallest cuts. That may be in part because the department has been working to shift away from its dependence on the General Fund to operate, Gatton said. When the Legislature authorized the department to raise its fees for sportfishing and hunting licenses, that helped access more federal funds and split the cost between user fees and federal dollars rather than relying on the state. The Division of Commercial Fisheries did not shift at the same time, so has experienced more general fund cuts as the Legislature has cut the budget over the past three years, she said. The specific cuts to the department were made in “a collaborative effort” between the Office of Management and Budget and ADFG, Gatton said. “The goal here at Fish and Game is to continue to do our core functions … while learning to operate within what we’re given,” she said. ^ Elizabeth Earl can be reached at [email protected]

Despite Republicans’ ire, Knopp says he won’t resign or change party

KENAI — Despite pressure from Republicans in his own district, Rep. Gary Knopp of Kenai defended his actions in the House and said he won’t resign or change his party affiliation. As the House elected a speaker— Rep. Bryce Edgmon, who recently switched from the Democrat party to undeclared — Knopp returned to Kenai from Thursday through Sunday to visit with constituents. Knopp has been at the center of controversy as he defied his party and refused to caucus with the House Republicans to form a fragile majority with the minimum 21 members. District 30 Republicans passed a resolution Feb. 11 offering Knopp an ultimatum: either join the majority or resign. After Knopp voted against electing Rep. Dave Talerico, R-Healy, as Speaker of the House on Feb. 12, Republicans in District 30 launched a “Recall Gary Knopp” Facebook page aimed at pressuring him to join the Republican caucus or face the consequences. During a breakfast hosted by the Kenai and Soldotna chambers of commerce on Friday, he told attendees that he chose to break from a 21-member majority because it was destined to fail. “We had no chance of functioning or succeeding the way it was,” he said. “In a 21-member coalition, you had virtually no experience.” Some attendees offered support for his decision, while others told Knopp they were disappointed. One asked that he switch his affiliation to Democrat if he wouldn’t vote with the Republican majority. “You can’t define ‘Republican,’” he said. “I’ve never voted down party lines. I’ve always been an issue-by-issue candidate, and I’ll remain that way. I think the Republican party has done more to divide us as Republicans in the last couple of years than any time in our state history. I think we’re on a path of correction now … I’ll remain Republican, I’ll always vote the issues, not on the party.” Knopp explained that during the initial organization days, he saw sharp philosophical divides even among the Republicans. Many members of the House have served fewer than two terms — including Knopp, who was elected to the seat in 2016 — and that level of inexperience has led to disorganization and would have caused the caucus to later implode, Knopp said. “I could see the divide in the opinions, and I could see the campaign promises,” he said. “I could see that big divide on the policy issues that we hadn’t begun to broach or have the discussion. I knew when we got to Juneau, if we had fixed them or resolved them … my fear was when we got to Juneau, we organized as 21, we got to those policy decisions, our divide would be so great we would never fix it.” On Friday, Feb. 8, he said he approached the Republicans and said he’d be their 21st vote to “move the needle” after a month of gridlock in the House. But on Saturday, he said he discussed concerns about the caucus instability with Rep. Louise Stutes, R-Kodiak, who proposed putting his name forward as Speaker of the House. During the floor session on Tuesday, Stutes moved his name forward, where a confirmation for him as speaker failed 20-20. Republicans said they felt misled after Knopp had promised them to support a Republican speaker. Knopp said he had engaged with conversations with Stutes’ coalition about possibly moving his name forward as speaker but that it was their idea. “They were more interested in the coalition concept,” he said. “…I didn’t know who they were going to put forward, even up to the day that they did it. They were very concerned. So we took a shot, we put my name forward, I voted for myself. If one of them would have supported me, we would have had a Republican speaker, and we could have coalesced around that concept. That didn’t happen.” Things are different in the state, he said. Members of the Legislature don’t have bargaining chips like capital projects funds to grease the wheels for votes between the caucuses anymore, “driving the need for this discussion,” he said. Among the crowd of about 100 people were former Reps. Kurt Olson, whom Knopp replaced in 2016, and Mike Chenault, who served as Speaker of the House for four terms and explored a run for governor in 2018 before pulling out just before the filing deadline. Both said they had never seen deadlock in the House organization like this year. Olson referenced Knopp’s comments about the inexperience of the members of the House. “We were always organized within a day or two after the election,” Olson said. Both said they weren’t surprised to see the magnitude of the cuts in Dunleavy’s budget this year, but they expected the Legislature to restore some of the cuts before the session is over. But Dunleavy does still wield the line-item veto if they restore too much, Chenault noted. The Legislature has been debating whether to raise revenue or drastically cut the budget for the last four years, with few to no long-term solutions. Chenault said the legislators will have to have similar debates with this budget on the floor. “I think a lot of Alaskans are figuring out what state the state is really in,” Chenault said. “Do you fill that hole or do you find that funding somewhere else?” Knopp also offered some critique to Gov. Michael J. Dunleavy’s budget, many of the effects of which would fall on the Kenai area. High on that list was the removal of some financial support for the Alaska Gasline Development Corp., which has been heading the development of the Alaska LNG Project.  The project is planned to build an approximately natural gas liquefaction plant on about 800 acres in Nikiski, a massive economic boon to an area that has lost a number of its oil and gas producers in the past decade. Though he’s been optimistic in the past, Knopp said Dunleavy’s budget seems to spell an end for the project. “I wanted to see it go through at least to the permitting stage and have those guys looking for markets for that gas,” he said. “For all practical purposes, it seems to be dead at this point. I hope to see it through to the final permitting stage, the EIS (environmental impact statement) … I believe the governor’s intent would be to engage industry back into that project.” Dunleavy’s budget slices more than $1.6 billion from the state’s budget. Cutting that much from the budget in one fell swoop seems harsh, Knopp said, and while he said he wants to see responsible spending, Dunleavy’s approach seems too broad. “I’ve never seen an administrator wield a big axe and take this approach to right-sizing government,” he said. “There’s a methodical, analytical approach to what we do, and that’s having the conversations.” Elizabeth Earl can be reached at [email protected]

Council takes first step toward rationalizing P-cod fishery

Pacific cod fishermen in the Bering Sea and Aleutian Islands, one of the last remaining unrationalized federal fisheries in Alaska, may finally have to cross that bridge. The North Pacific Fishery Management Council passed a motion at its meeting Feb. 9 to take action on the Pacific cod fishery, which is facing a number of issues in abundance, processing and participation. Depending on public review and the council’s action at the next several meetings, the Pacific cod fishery could see significant changes to seasons, limits and vessel participation. The motion hinges around an analysis developed on the trawl catcher vessel fishery and releases Alternatives 1, 2, 3 and 6 for public review separate from the rest. Rationalization, also known as catch shares, refers to a system in which set amounts of the harvest are issued as quotas to various gear and vessel types, typically based on participation history in the fishery. Halibut and sablefish were the first fisheries to be rationalized in Alaska in the early 1990s, followed by Bering Sea pollock later that decade and Bering Sea crab fisheries in the mid-2000s. Proponents tout the benefits of such programs for ending the dangerous, “derby style” races for fish and curbing bycatch; opponents point to the high cost of entry for newcomers to purchase quota shares, consolidation of effort and the accompanying loss of jobs. The council’s Advisory Panel, made up of fishing industry stakeholders, unanimously supported the move to release some alternatives sooner, in part because of the urgency of the problems in the fishery. The shortened season was a particularly painful point for many: the 2018 Bering Sea trawl cod season was the shortest in the fishery’s history at just 13 days. “The (Bering Sea/Aleutian Islands) trawl catcher vessel Pacific cod fishery is facing multiple issues simultaneously that are negatively impacting the sustained viability and rational prosecution of the fishery for all its participants,” the council motion states. “These factors include: decreasing Pacific cod TACs (total allowable catch), an increase in the number of participating LLP licenses, the potential for additional new participants, a race among existing participants (often in unsafe conditions), and an increasingly shortened season.” Pacific cod are managed by both the state and the federal government, with some fisheries allowed in state waters. In recent years, participation has been growing, both in the state and federal fisheries. The state Board of Fisheries recently created a new cod fishery for pot gear for small vessels near Dutch Harbor, gaining record-high participation in the fishery this January. Pacific cod is a valuable fishery in Alaska. Most of that value goes to out-of-state residents. In 2016, $76 million in ex-vessel value went to Alaska residents; $117.7 million went to out-of-state residents, according to a December 2017 report to the council. The harvest of Pacific cod was cut by 80 percent in the Gulf of Alaska last year, and by nearly half in the Bering Sea. That’s attracting more boats to the open access state waters fishery, where the harvest comes out of the overall TAC. In its report, the Advisory Panel also pointed to an increase in mother-shipping by catcher-processors in the Bering Sea and Aleutian Islands, pushing down shoreside processing and thus tax revenue for the Bering Sea communities. Those communities have long depended on the economic base provided by shore-based processors to sustain economies in incredibly remote, meteorologically hostile areas. During the council’s hearing, more than a dozen stakeholders offered testimony in person and by letter, and one by voicemail. Most testified in favor of the Advisory Panel’s motion and spoke about the danger of the fishery without changing the race for fish and the impact of the painfully short season this year. “Unfortunately, the season was so short this year that it allows me to be here to testify,” said Chris Cooper, who fishes on the F/V Perseverance. “…One thing that has not changed is our participation and commitment in this fishery. In the past, we’ve relied on the fishery for as much as half of our income … We’ve watched a two-and-a-half month to three-month season go down to under two weeks this year. To say that we’ve been directly affected by this change is an understatement.” The halibut bycatch is a perpetual problem for the trawl fisheries. The Pacific cod fishery, like other groundfish fisheries, have bycatch caps after which the fishery will close to protect non-target stocks. Brent Paine, the executive director of stakeholder group United Catcher Boats, said the halibut are victims of the race for fish; when fishermen are racing against the clock, they may not move to a new fishing area when they encounter large numbers of halibut in the bycatch. “In a 15-day fishery where these boats are racing for fish, you can’t exclude halibut bycatch. It doesn’t work,” he said. “We don’t like to compete. We can rationalize this fishery … if you just look at a catch share program.” The areas included in the fishery are often subject to poor weather, and with a breakneck race for fish before the managers close it, safety can go out the window. “The cod fishery has turned into a dangerous, irrational fishery recently here,” said Robert Smith, who said he owns and operates a trawler for cod and pollock. “We need to move forward with some kind of a rationalization program. The safety sometimes gets overlooked here. In these nice, warm rooms and stuff, I wish we could somehow convey how bad this weather can be up there at times.” Opposition came from the floating catcher-processors, who said implementing the rules suggested by the advisory panel would push them out of the area. Changing the rules on mothership deliveries would upset a large part of the fishery, said Matt Upton, representing U.S. Seafoods. “If you change it on us now, it’s basically jeopardizing our entire business operation,” he said. “We support the AP motion — it’s a wide range of alternatives for you to consider.” Shoreside processors said it’s important for the their sector to have a fair shot, as they support the communities that often depend on the economic support of the processors. Nicole Kimball, representing the Pacific Seafood Processors Association, said the council motion should not affect the Amendment 80 fleet, either, which is a group of Seattle-based groundfish catcher-processors. The council batted amendments back and forth but ultimately unanimously supported releasing the separated alternatives of the analysis. Council member Andy Mezirow said he hoped the federal process would not bog down the council’s ability to make progress on the changes before the next Pacific cod season, based on the concerns the members heard. “Hopefully, even though our schedule Is fairly jammed up here … hopefully in the three-meeting outlook we can get this moving,” he said. Council member Craig Cross encouraged members of the public to begin meeting and looking at the alternatives. Unlike other council actions, which start with an abstract discussion paper, this is further along in the process, he said. “I think this is further along and I think the public should understand that this is further along than a discussion paper, and it has intent,” he said. ^ Elizabeth Earl can be reached at [email protected]

IPHC to investigate ‘chalky’ halibut among research plans

After years of hearing concerns from fishermen about the prevalence of “chalky” Pacific halibut, the International Pacific Halibut Commission is planning to gather information for an investigation into it. Chalky halibut are fish that, when cut open, have a stiff, chalk-textured flesh as opposed to the normal pale and tender flesh. Chalky meat is not dangerous to humans but is not desirable and thus costs the fishermen at the dock. Dr. Josep Planas, who heads up biological research for the IPHC, noted plans to gather information about chalky halibut from stakeholders this year before moving forward with designing a study on it. “What we plan is to initiate this project by collecting information from stakeholders on the incidence of chalky flesh and trying to understand the conditions that lead to its development,” he said. “We would love to get any information from any stakeholders on this topic.” Chalky halibut is not a new phenomenon; fishermen and researchers have been seeing it for decades. IPHC research from the 1960s and 1990s connect the prevalence of chalky flesh with the buildup of lactic acid in the fish and lowered pH in the fish after death. Researchers have associated it with warmer ocean temperatures near the bottom, according to the IPHC. When the bottom temperatures reach 12 to 14 degrees Celsius, they tap at the upper thermal limits of Pacific halibut distribution, according to the IPHC. “The condition is reversible in live fish,” according to the IPHC’s website. “Flesh which might otherwise turn chalky does not develop the condition post-mortem if the fish are allowed a 1-2 day resting period after capture, and before killing.” The project is one of a host of research projects the IPHC is planning for the next two years. Those projects focus on topics including migration, growth patterns, reproduction, genetics and discard mortality, Planas said. He said the migration study, which incorporates a number of different methods for tracking fish through their migration patterns, will likely produce some results on larva distribution in 2019. The study on reproduction, which aims to craft a more detailed picture of the full Pacific halibut lifecycle, will likely produce results in early 2020. Researchers are also taking advantage of a new tool on many commercial fishing vessels: electronic monitoring. Some fishing vessels, to save the aggravation and expense of having a human observer on their boats, are opting to install cameras and other electronic systems to monitor their harvests and bycatch. After the first year, the National Marine Fisheries Service reported implementation and compliance went smoothly, with plans to enroll 165 vessels for 2019. The researchers are taking advantage of the presence of electronic monitoring devices onboard to test out different methods of tagging and tracking fish, Planas said. The IPHC is working on a study on discard-related mortality, and specifically how handling and release methods affect halibut injury and outcomes. On vessels with electronic monitoring, the researchers were able to closely track release methods and verified that the data was good. “What we can say so far is when you compare the electronic monitoring-determined release method to the actual, the correlation is incredibly high,” he said. “Sometimes 100 percent, but close to 97 to 95 percent. EM captures very well the release method.” The researchers are working on results to determine how release methods impact the fish’s condition upon release and thus survival. Planas said the study includes both the commercial and recreational sector and results may be incorporated into stock assessments as soon as late 2019 and 2020. The purpose of the research program is to fill in gaps about knowledge of Pacific halibut stocks and life history, he said. In the future, the IPHC is planning to work with other researchers for studies on whale detection techniques and possibly using LEDs on trawls to trigger flight responses in Pacific halibut, thus helping to reduce trawl bycatch, Planas said. ^ Elizabeth Earl can be reached at [email protected]

Credit union to offer financial services to cannabis industry in March

Starting next month, cannabis business owners in Alaska will have access to financial services for the first time. Credit Union 1, an Anchorage-based credit union, expects to launch its pilot program serving licensed cannabis businesses in March. CU1 has been working on the details of the program closely with business owners for more than a year and announced the pilot program in November, said Joseph Martin, who manages the marijuana-related business program for Credit Union 1. “The whole plan all along has been to launch it sometime in March,” he said. “We announced it so early because we wanted to give the industry hope, because they’ve been struggling for awhile now.” Because cannabis is still listed as a Schedule I narcotic under the federal Controlled Substances Act, financial institutions have been skittish about serving the businesses. Banks are federally insured and inspected, and taking on the risk of serving a business technically still considered illegal by the federal government could present risk. Thus, cannabis business owners and customers to date have largely had to work in cash, with huge deposits of cash going in and out of businesses by hand. That’s something that’s both inconvenient to businesses and dangerous to the public. Martin said that was one of its concerns as a community credit union — business owners are taking on a risk by having to transport large sums of cash down the street to pay bills and holding their payroll in cash. Credit Union 1 is a relatively small player in the larger world of financial institutions, with about $1 billion in holdings — for comparison, JPMorgan Chase has about $3 trillion — but its nonprofit status and community orientation allows it to take on more risk, Martin said. “Credit unions typically take on bigger risks than banks to serve the underserved,” he said. “I think marijuana kind of fits into that. It’s a big community safety issue to have all this cash running around on the streets.” Essentially, the pilot program will hinge on improved software to serve the cannabis industry. Because of the nature of the business, the credit union has to keep close tabs on what is coming in and out of the accounts and file reports on every deposit over $10,000 — which is basically all of them, Martin said — to report them to the federal government. That helps CU1 prove to the federal government that everything is above board and the accounts are not laundering money, he said. The financial industry occupies a strange tidepool in the world of back-and-forth cannabis legalization legislation. After Obama-administration U.S. Deputy Attorney General James M. Cole issued a memorandum in August 2013 essentially telling all federal prosecutors to defer to states’ legalization laws on cannabis, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network developed its own guidelines for banks wishing to serve the cannabis industry. Even after President Donald Trump’s former Attorney General Jeff Sessions retracted the Cole memorandum, the Financial Crimes Enforcement Network let its banking regulations stand, as long as banks complied. For those looking to open accounts, there will likely be a significant charge, at least at first. The cannabis banking programs are expensive. For one, the additional burdens of tracking the industry to comply with the FinCEN’s guidelines require significant manpower. Credit Union 1, which usually files about 2,000 reports of transactions more than $10,000 per year, expects its annual reports to increase to about 15,000, Martin said. “When you’re thinking of (the service) from inside the financial institution, it’s not information that we have readily available,” he said. “It’s very invasive … we have to know their product lines, their normal customer base, we have to know all their owners, anyone tied to the business.” But the software improvement should help Credit Union 1 bypass some of the staffing increases other banks have had to take on. For example, other banks have developed cannabis departments in which individual employees handle specific cannabis accounts and know the ins and outs of each business. The software Credit Union 1 has been working on will help avoid some of that, Martin said. Over time, he said he thinks the program will get cheaper as CU1 onboards more businesses and the employees get better at serving the cannabis industry. The federal burdens of reporting may decrease, too, as bills move through Congress to change the regulations on serving the cannabis industry. The U.S. House Committee on Financial Services held a hearing on just such a draft bill on Feb. 13. The bill, which would encode safe harbor banking practices, is championed by the National Cannabis Industry Association and supported by the Marijuana Policy Project. Though it’s only a draft, a final version could be introduced shortly thereafter, said Morgan Fox, the communications manager for the National Cannabis Industry Association. “There’s a number of comprehensive bills being introduced that all approach the issue from different directions,” he said. “Almost all of them would basically solve the banking issue.” Since the midterm election, many of the “obstructionist” legislators have left Congress and the NCIA feels the banking bills have a better chance of passing, Fox said. The particular bill being discussed on Feb. 13 would carve out a safe harbor for banks, but he said he had never heard of a bank being prosecuted for serving the cannabis industry. There aren’t very many of them, though. Though FinCEN’s official tracking documents roughly 486 banks maintaining service for cannabis businesses, Fox said the true number is significantly smaller than that — something like 40 financial institutions nationally have cannabis departments, he said. Having access to banking services is important for cannabis businesses from an economic angle and for states from transparency and regulatory perspectives, he said. “Without access to banking, they have to institute much more expensive measures … even paying taxes, security,” he said. “I think it’s really important from a regulatory standpoint.” Martin said Credit Union 1 has plans in place to unwind the program if the federal government is uncomfortable with it, but they’re fairly confident in the plan they’ve written out. One of the core things the bank hopes for is to normalize the legal cannabis industry as members of the business community in the state. “We don’t have a political or moral sense about this. You’re not going to see us sponsoring (bills) … but because it is legal in the state of Alaska, we’re going to service it like a business like any other,” he said. Elizabeth Earl can be reached at [email protected]

Legislators revive bills to abolish certificate of need program

Two legislators are again seeking to end the state’s healthcare certificate of need program. Identical bills filled prefiled for the 2019 legislative session by Rep. George Rauscher, R-Wasilla, and Sen. David Wilson, R-Wasilla, would abolish the program. It’s at least the third year in a row the Legislature will have considered a bill that would do so. The certificate of need, or CON, program sets up a protocol for hospitals, nursing homes and other healthcare facilities seeking to expand the services they offer. In order to build a new expansion costing more than $1.55 million, facility administrators must document and demonstrate a need for the added service capacity in the community to the state. Alaska is one of 35 states that have a certificate of need program; since the federal requirement for the programs was repealed in 1987, a number of states have scrapped them, according to the National Conference on State Legislatures. Those opposing the program say that it unnecessarily restricts health care facilities from developing new services and competition that could drive down prices. Small communities may not be able to open a full-service hospital or nursing home, for example, because the population is not large enough to pay for it and it does not meet the certificate of need requirements. In other cases, independent ambulatory surgery centers are not able to open and compete with hospitals because the hospital already provides that service. During committee discussions in the legislature in 2017, the federal government offered support for the repeal of the program in Alaska. The Federal Trade Commission and the U.S. Department of Justice submitted a joint letter in response to a request from Wilson detailing problems with the certificate of need program and stating that it may be limiting competition. “CON laws raise considerable competitive concerns and generally do not appear to have achieved their intended benefits for health care consumers,” the FTC and DOJ wrote in their letter. “For these reasons, the Agencies historically have suggested that states consider repeal or retrenchment of their CON laws. We respectfully suggest that Alaska repeal its CON laws.” Federal agencies have been working on ways to implement better competition in the health care industry after President Donald Trump issued an executive order in October 2017 to facilitate choice and competition in the health care industry. The U.S. Department of Health and Human Services identified the repeal of certificate of need laws as a priority in an update to the president. The hospital and nursing home industry largely opposes repealing the program. The Alaska State Hospital and Nursing Home Association testified against the bill in previous committee hearings and, in response, convened a workgroup last summer to outline suggested changes to the bill. Though the stakeholders see room for improvement in the program, a full repeal is overly simplistic, said Jeannie Monk, senior vice president of ASHNHA. “The people who want to repeal it think that we need to repeal it and just let the free market take over, and then prices will go down,” she said. “Based on what we’ve seen, we just don’t think that healthcare in Alaska is a typical free market system.” The competition argument doesn’t hold a lot of water for the industry, Monk said. Health care doesn’t behave like a typical capitalist market — when a new service is installed at a facility, it often just results in more people receiving that service rather than a price decrease, she said. Alaska also has the limiting factor of being an isolated state; unlike in the Lower 48, where people can cross state lines to visit competing hospitals in a neighboring state, Alaska is not a hotspot for medical tourism and has a relatively small population. “It’s not like you put in a new hospital and you can draw more people to use it,” she said. “(In Alaska) you’re either here or you’re not.” Hospitals have a disadvantage in competing against standalone facilities like independent ambulatory surgery centers; they are obligated to provide some services, like 24-hour emergency center care, regardless of the patient’s ability to pay. Hospitals rebalance that with a mix of insurance payers and across services. Private organizations, which do not have the same service obligations, would not have to take patients on Medicaid or Medicare, which have a lower reimbursement rate and are less profitable, Monk said. “(Hospitals) come with significant fixed costs,” she said. “Basically, without CON, healthcare providers can open up facilities that compete on the profitable services but not the unprofitable ones.” The workgroup convened by ASHNHA developed a series of recommendations for changes to the certificate of need program, all of which could bypass the Legislature and be done through regulation change. Many of those changes are technical, including how the net present value of a lease is calculated or how a “community” is defined. The suggested changes were sent to the state in June 2018; however, they didn’t get through the department before the transition in administrations in November, Monk said. Rauscher’s and Wilson’s offices could not be reached for comment. The two bills have not yet been scheduled for committee hearings. ^ Elizabeth Earl can be reached at [email protected]

State wrestles with sizeable backlog of Medicaid applications

Alaska is significantly behind on approving Medicaid applications and in some cases applicants are waiting for months. As of Jan. 29, Alaska had a backlog of 15,639 cases of new applicants or renewals on the books. About two-thirds of those, or 10,200 cases, were filed in 2018. The average wait time to be approved is currently 55 days, according to Clinton Bennett, the media relations manager for the Alaska Department of Health and Social Services. That’s the average, but not everyone is waiting that long, he wrote in an email. “Cases that are tagged as emergent, involve a pregnant woman or adding a newborn to any case are being processed on average within 2 days,” he wrote. Alaska has a fairly large Medicaid population with about 210,276 people enrolled in the Medicaid and CHIP programs as of October 2018, according to the Centers for Medicare and Medicaid Services. That’s about 24 percent of the state’s total population, and up from 123,335 people enrolled at the end of July 2015, just before the Medicaid expansion took effect in the state. Though it’s still a sizeable backlog, it’s significantly down from the total in May 2018, when the Alaska Ombudsman’s Office published a report highlighting the difficulties in the Division of Public Assistance. At the time, the ombudsman noted a backlog of more than 20,000 cases, itself down from 30,000 in July 2017. The eligibility staff couldn’t keep up, in part because of the increasing number of cases per worker — up 24 percent since the expansion in 2015 — and other types of applications for public assistance, such as food stamps, which began increasing during the height of the economic recession in July 2017. The state practices pre-enrollment eligibility verification, Bennett said, meaning that eligibility systems or workers must verify income before approving someone to enter the program. The state cooperates with the federally-facilitated marketplace, Healthcare.gov, to verify eligibility for low-income individuals. If Healthcare.gov is unable to determine eligibility, the state will take over from there. The Legislature also passed a bill reforming the state’s Medicaid program in 2016. One of those requirements was to implement a new technology system. Changing over systems amid the increased volume after the expansion may have led to the backlog boom, said Tricia Brooks, a senior fellow at Georgetown University’s Center for Children and Families. “I think that in Alaska, it was sort of a perfect storm,” she said. “… You have this new system coming in, (the state was) a late adopter of the Medicaid expansion, so you have this volume going on. The combination of those two going on is really tough, particularly when you’re in an environment where you’re changing the business rules.” Alaska is one of a handful of states that have an extensive delay for processing applications, Brooks said. The federal standard is 45 days for non-disability Medicaid applications, and 90 days for disability Medicaid applications. That delay can mean that some go without coverage, and it makes things complicated for the administrators when some are renewals as opposed to new applications. “Backlogs affect both new applications as well as renewals,” Brooks said. “If the state’s unable to keep up with renewals, they should not be automatically terminating someone because they’re not able to renew applications.” The Republican Senate Majority, which backed the original 2016 Medicaid redesign legislation, is concerned about the eligibility backlog as well. Senate President Cathy Giessel, R-Anchorage, said the current process is weighing the state down and allowing some people who do not qualify to obtain coverage. Other states dealing with a similar problem have hired third-party qualified contractors to screen applicants. Giessel said that’s a step Alaska should take, too. The backlog can be frustrating for providers as well as for recipients, she said. “I think it’s the frustration that any compassionate Alaskan has,” she said. “When they’re on waiting lists so long, it’s not compassionate. It’s not compassionate. We want to fix that. In addition, we know there are folks on the rolls that are not eligible, that shouldn’t be.” The reform was a big request of the department, but it is making some progress and reporting savings, Giessel said. There are still changes that could make things better such as moving regulations through that allow expanded coverage of services via telehealth and possibly breaking up the Department of Health and Social Services into smaller departments, allowing for more efficient management, she said. Two bills prefiled for the 2019 session propose adding work requirements for certain eligible adults. Giessel said that’s one other item the Senate is considering in the wake of Medicaid expansion, to encourage able-bodied adults on Medicaid to work. “Am I personally happy with the way Mediciad reform is going? It’s slow,” she said. “It’s very much like the glaciers in Alaska. They’re there, but moving very slowly.” To reduce the backlog in Alaska, Brooks pointed to a number of steps other states have taken, including the step Giessel mentioned to hire a third-party contractor to verify eligibility. Another way, which has been encouraged by CMS, is to use eligibility data from the SNAP program to determine eligibility for Medicaid. Most people who qualify for SNAP also qualify for Medicaid, Brooks said. Another logjam in the system can be as simple as people calling the Division of Public Health to check the status of their application. That takes staff time to answer the phones. One way to address that problem is to launch online account that allow people to check the status of their applications online, Brooks said. The majority of states have now done that, she said. “Online accounts really improve the efficiency of the eligibility operations,” she said. “I think there’s been less trouble with the online accounts than there have with the underlying eligibility rules engine. It is a way to offload some of the work volume.” ^ Elizabeth Earl can be reached at [email protected]

US, Canada agree on 2019 halibut harvest limits

American and Canadian halibut fishermen finally have an approved set of catch limits for the 2019 season. With the discord of its last annual meeting hanging in the air, the International Pacific Halibut Commission agreed on a set of total allowable catch limits for Pacific halibut in American and Canadian waters during its meeting from Jan. 28 to Feb. 1. The overall catch limit of 38.61 million pounds is slightly up from the 2018 quota — about 1.4 million pounds more. That’s up from 29.9 million pounds in 2016 and from 31.4 million pounds in 2017. Total removals in 2018, including bycatch in nontarget fisheries, added up to about 38.7 million pounds. By area, the total constant exploitation yield, or TCEY, limits are as follows in millions of pounds: Area 2A (West Coast): 1.65 Area 2B (Canada): 6.83 Area 2C (Southeast Alaska): 6.34 Area 3A (Central Gulf of Alaska): 13.5 Area 3B (Western Gulf of Alaska): 2.9 Area 4A (Aleutians/Bering Sea): 1.94 Area 4B (Aleutians/Bering Sea): 1.45 Area 4CDE (Bering Sea): 4 Last year, the commissioners from the U.S. and Canada could not come to an agreement about how to reduce halibut catches in Pacific waters and adjourned their meeting with no agreement. Each individual country handled its catch limits, as long as they were no higher than the 2017 limits the commissioners last agreed on. The commissioners noted multiple times that they needed to work together this year. “America and Canada have been partnering for 100 years,” said commissioner Paul Ryall of Canada at the beginning of the meeting. “Though we did come to an impasse we hope we can work together for a productive future.” The commissioners met about eight times between the last annual meeting and this year’s, Ryall said, with “good” discussions but no agreements in the interim. The combined value to fishermen of the halibut and sablefish fisheries for 2018 was $161 million, according to the National Marine Fisheries Service, a 22 percent decrease from $208 million in 2017. The average halibut price of $5.35 per pound in 2018 was down from $6.32 in 2017. The increase in the overall catch limit follows a trend of the commission increasing the quotas, despite warnings from the IPHC researchers that the halibut surveys indicate that the stock is decreasing and reductions in the fishery levels are necessary for sustainability. The researchers noted in their survey data that the stock is projected to decline from 2019-22 for all TCEYs set greater than 20 million pounds. The 2019 TCEY is nearly double that. The 2018 setline survey data showed yet another decrease in the stock across its range: 7 percent down in the Gulf of Alaska and 15 percent down in Southeast. However, the commissioners have previously noted doubt about the survey data’s accuracy. The researchers also noted at the 2017 meeting that their conclusions were based on incomplete data and that they were working on a new model to account for current stock dynamics. Former North Pacific Fishery Management Council Executive Director Chris Oliver, the administrator for the National Marine Fisheries Service and a U.S. commissioner to the IPHC, thanked the Canadian delegation for its cooperation and said he has gained a deeper understanding of the halibut fishery after working through the year on the IPHC issues. “Based on our inability to reach consensus last year and coming into this meeting based on some of the preliminary meetings we had, I was somewhat fearful, skeptical that we would be able to reach a conclusion in this meeting,” he said. “I was eager to do so, because I feel like if we came out of this meeting with an inability to reach consensus it would be extremely negative to the reputation of this international management body.” He added that in its process of setting catch limits, NMFS reshuffled some of the halibut quota and moved it to Southeast from the other U.S. areas to avoid a significant drop that would have resulted from going directly with the apportionment model. “We opted to move some of the fish from the other U.S. apportionment areas back into 2C to get it where it was last year,” he said. “(For consistency) we felt it was appropriate to move a little fish out of 3A, out of 4B, a small amount of 4C, in order to get area 2C to a level of 6.34 million pounds.” Halibut bycatch, a perennial issue, took center stage at the meeting as well. The commission unanimously approved a recommendation to redefine TCEY to include the bycatch of halibut less than 26 inches long, or U26 bycatch. Nontarget commercial fisheries, notably the commercial trawlers, catch a significant number of halibut as bycatch each year, which managers and fishermen have been trying to figure out how to address. Several people at the IPHC noted work currently under progress at the North Pacific Fishery Management Council to manage Bering Sea halibut bycatch by abundance. Heather McCarty of the Central Bering Sea Fishermen’s Association urged the IPHC to get involved with the council’s efforts there. “You now have an opportunity to participate in a very meaningful way in what some of us believe is the best way to manage halibut bycatch,” she said. The commissioners rebalanced the allocation as well, with 17.7 percent of the total catch going to Canada and 82.3 percent going to the U.S. Canada’s allocation would be slightly up from 2018, when it was suggested at about 15 percent. The allocation between countries was a big hangup at the last meeting. In a press release issued Feb. 4, Oliver said the 2019 quota still conserves stocks, though it is higher. “While the overall quota for 2019 is a slight increase over 2018, the catch limits agreed to at the meeting reflect a sensible, conservative approach that will secure the future of this iconic and economically important species,” he said. The commission agreed on a halibut season of March 15 to Nov. 14. Elizabeth Earl can be reached at [email protected]

Sablefish season to open with slight increase, along with uncertainty

Alaska’s sablefish fishermen will go into the 2019 season in March with no change to their overall catch limit but some debate about the state of the stock. Sablefish, also known as black cod, regularly opens to fishing in Alaska in March, at the same time as the halibut fishery. Commercial fishermen in the Bering Sea, the Gulf of Alaska and Southeast Alaska catch them using trawls, longlines or, in some areas, pots. Fishermen landed about 13,956 metric tons of them last year between the Gulf of Alaska and the Bering Sea/Aleutian Islands fisheries. (A metric ton is 2,204 pounds, making the catch last year about 30.7 million pounds.) The North Pacific Fishery Management Council, which manages the species, voted to slightly increase the sablefish total allowable catch in the Gulf of Alaska and the Bering Sea/Aleutian Islands — from 11,505 to 11,571 metric tons in the Gulf, from 1,464 to 1,489 metric tons in the Bering Sea and from 1,988 to 2,008 metric tons in the Aleutian Islands. The increases were recommended by the council’s advisory panels, based on an observed increase in the fishery surveys conducted in 2016 and 2017. Researchers noted a 14 percent increase in the longline survey index from 2016-17, which built on a 28 percent increase from 2015–2016. The spawning biomass is expected to “increase rapidly from 2018 to 2022, then stabilize,” according to the National Oceanic and Atmospheric Administration’s 2018 assessment of the sablefish stock. Alaska’s sablefish are a high-value species, but with a caveat — they’re far more valuable when they’re large. Fishermen can make $7 to 8 per pound when the fish is greater than a certain weight, but for small fish, they make less per pound. That’s driven by consumer preferences, said Garrett Evridge, an economist with the McDowell Group who tracks seafood markets. Consumers in Europe, China and, increasingly, Middle Eastern countries like Dubai and the United Arab Emirates, are beginning to demand sablefish. However, Japan is far and away the biggest market for sablefish, 70 percent of which comes from Alaska, Evridge said. Japanese fishermen pioneered the fishery in Alaskan waters after World War II, and new generations have grown up developing a taste for sablefish. “When we talk about sablefish, it’s all about Japan,” he said. “Japan continues to value that larger fish.” Demand definitely weakened in 2018, pushing prices down after a peak year in 2017, Evridge said. Remaining inventory and high retail prices repressed demand last year, pushing down prices for fishermen in 2018. With roughly the same catch limit and relatively stable demand, the price trend should remain relative stable for the fish, he said. International currency strengths also play a role — when the dollar is stronger against the yen, it makes things more expensive for Japanese consumers. The slight TAC increase in 2019 follows an increase of about 14 percent from 2017-18. The surveys have continued to show an increasing abundance, with focus on the 2014 age class entering the spawning biomass. However, it doesn’t mean the news is completely rosy. In the survey summary for 2017, the researchers recommended an acceptable biological catch, or ABC, less than the maximum permissible, albeit 14 percent higher than in 2016. That was because of uncertainty regarding the strong 2014 age class and the existing spawning biomass. “While there are clearly positive signs of strong incoming recruitment, there are concerns regarding the lack of older fish and spawning biomass, the uncertainty surrounding the estimate of the strength of the 2014 year class, and the uncertainty about the environmental conditions that may affect the success of the 2014 year class,” the survey states. “These concerns warrant additional caution when recommending the 2018 and 2019 ABCs.” Despite high numbers turning up in the surveys, some fishermen have reported seeing the opposite out on the fishing grounds. During the North Pacific council’s deliberations in December, two groups submitted public comments asking the council to keep the TAC at the current level because of concerns about the sustainability of the stock into the future. Sablefish can be long-lived — the maximum recorded age is 94 years old, according to the National Marine Fisheries Service — with 40-year-old fish caught frequently in the commercial sector. They mature at approximately 5 to 7 years old, spawning annually after that, according to the Alaska Department of Fish and Game. The Alaska Longline Fishermen’s Association, a group of stakeholders in the small-boat longline fleet, requested the council set the 2019 TAC equal to 2018. Because of the concern about the uncertainty of the incoming age class and the decline of mature spawning biomass, the group asked the council to limit increases to fishing for the coming year. The North Pacific Fisheries Association, a commercial stakeholder group based in Homer, raised similar concerns in a letter to the council. Erik Velsko, a board member, said the catch per unit of effort where he fishes out of Homer has recently increased significantly, even in areas that were historically excellent fishing grounds. Other fishermen have said they’re seeing large numbers of juvenile sablefish, he said. “I think it’s true, that age class is there, it’s just a question of whether those fish are going to grow up enough (to be part of the spawning biomass),” he said. One of the major issues the council and fishermen are still dealing with in the sablefish fishery, though, is whale depredation. Longliners have long been frustrated by orcas and sperm whales arriving as they begin hauling in lines and stripping the fish from their hooks, causing them to lose hours of effort and thousands of dollars. The federal surveys and recommendations account for whale depredation as part of the fishery now — based on existing data, researchers estimated the total whale depredation on the fishery in Alaska at 371 metric tons, according to the 2017 survey. To combat the problem, some fishermen have begun switching to using pots to catch sablefish instead, which the whales reportedly have not been able to break into yet. Elizabeth Earl can be reached at [email protected]

Online retailers charging taxes, but municipalities still trying to collect

Some online retailers have begun charging sales taxes to sales originating in Alaska, though the question of how those taxes will be collected by municipalities is still unanswered. The Supreme Court of the United States ruled in 2018 that the state of South Dakota had the right to collect sales taxes from online retailer Wayfair.com, stating that the rules South Dakota had in place did not place an undue burden on interstate commerce. Online sales have been eating away at brick-and-mortar sales in the U.S. for years, and with online retailers largely not applying local sales taxes, they have been eating into local governments’ revenues as well. Since January, online retail giant Amazon has been applying sales taxes to relevant municipalities in Alaska. A number of municipalities have noted that the company has applied for certificates to collect sales taxes, according to a newsletter from the Alaska Municipal League. It seems to not apply across the platform, though, as many of the items listed on Amazon are sold by third-party retailers. “What Sitka and Juneau have found is that Amazon is only collecting and remitting sales tax on sales fulfilled by amazon.com from its own warehouses,” AML Executive Director Nils Andreasson wrote. “Taxes are not being collected on sales by Amazon subsidiaries and by its 3rd party retailers. This is very confusing to citizens as most don’t understand the difference – they think Amazon is Amazon.” Amazon representatives did not respond to requests for comment on its Alaska sales tax collection policies and procedures. In Juneau’s case, Amazon already had a sales tax certificate prior to Jan. 1, but a change in the corporate structure led to the tax being applied across a broader range of products, according to a Jan. 23 press release from the City and Borough of Juneau. The Supreme Court’s online sales tax ruling has caveats, though — online retailers doing less than $100,000 in sales are not subject to the tax. The City and Borough of Juneau notes that online retailers only doing sales in Juneau aren’t included, either. “Currently, other retailers that only conduct sales in Juneau via the internet are not yet subject to CBJ sales tax,” the release notes. “A recent Supreme Court decision may change this though, but it will take a standardized Alaska local sales tax program.” Alaska is one of five states in the union that don’t have statewide sales taxes. Instead, individual municipalities have the authority to levy sales taxes, as do cities of some classes. That means that an online retailer like Amazon, conducting business all over the state, will have to apply to collect and remit sales taxes to about 100 different entities, Andreasson said. AML, which represents the various city and boroughs in the state, convened a workgroup in August 2018 to discuss the implications of the Wayfair v. South Dakota case and how to implement it. Among its conclusions was a recommendation to work together to develop a joint independent authority through AML to collect online sales taxes. A joint authority would reduce the burden both on retailers and on municipalities, and would not require the implementation of a statewide broad-base tax. The AML requested contributions from cities and boroughs to support the effort. How the final implementation looks could vary, Andreasson said; some contractors could provide services, for example. The AML doesn’t envision the state having a role in the collection, though, he said. Online retail plays a major role in Alaska’s economy, in part because the small populations don’t always work out for brick-and-mortar locations and in part because the population is so spread out. The AML’s workgroup noted that the Alaska Department of Revenue estimated approximately $1 billion was spent in online retail in the state. About 50 percent of that is in Anchorage and Fairbanks, though, which have no sales taxes. The Kenai Peninsula Borough, which is considering an ordinance to appropriate $10,000 to support the AML’s efforts on online sales taxes, estimated that it stands to gain an additional $1.5 million in revenue if online retailers remit sales taxes. ^ Elizabeth Earl can be reached at [email protected]

Alaska management untouched under revised Modern Fish Act

Though a landmark piece of fisheries legislation will affect how many Lower 48 federal sportfisheries are managed, there won’t be many changes for Alaska. President Donald Trump signed the Modernizing Recreational Fisheries Act — known as the Modern Fish Act — into law on Dec. 31, 2018. The law revises the management framework for recreational fisheries in federal waters, heralded by supporters as a way of differentiating sportfishing from commercial fishing and providing more fishing opportunity in the recreational sector. In Alaska, though, the act won’t have much direct impact. Mike Leonard, the vice president of government affairs for the American Sportfishing Association, said it’s fair to say the provisions in the bill don’t herald many changes in the Pacific Northwest saltwater sportfisheries. The final version of the bill itself removed some of the particular provisions directly changing management strategies, but the essential purpose of the bill remains, Leonard said. “The passage of a bill itself that is focused on saltwater recreational fishing … I don’t know that Congress has ever done that,” he said. “The motivations behind this were to get a recognition within the (Magnuson-Stevens Fishery Conservation and Management Act) that recreational fishing is important but that (commercial and sport) are fundamentally different activities.” The bill inserts language into the existing MSA stating that recreational and commercial fisheries are “different activities” and science-based management approaches should be developed for both. It also instructs the federal Comptroller General to conduct a study of the allocations within the South Atlantic and Gulf of Mexico fisheries and that the National Academy of Sciences shall study the limited access privilege programs in all council-governed fisheries except for two — the Pacific Fishery Management Council and the North Pacific Fishery Management Council. The North Pacific Fishery Management Council, which governs Alaskan federal fisheries, is specifically exempt from parts of the law, in part because the catch share plans that partition the allowable catch of halibut each year are already established. Those catch share plans are working well in large part, said Andy Mezirow, a member of the North Pacific Fishery Management Council. “I think the problem with catch share plans is when there isn’t enough of the resource, which is the case in many places, or they didn’t build a catch share plan based on other ones … and then you end up with these impossible structures,” he said. “Even though we have our own challenges, they’re very different than those that gave rise to the Modern Fish Act.” Mezirow signed onto a letter raising concerns about the initial draft of the act, in part because of the act’s intention of shifting away from catch shares. In affected fisheries, the intent is to allow recreational fishery managers to allow sportfishing even without new available survey data. Advocates said this was to allow the sport sector — which they argue is an inherently different activity than commercial fishing — to continue operating when survey data is deficient. The initial version of the bill required mandatory five-year reviews of the catch share program and prohibited the establishment of more limited access privilege programs, but both requirements were toned down in the final version of the bill. The initial design of the bill would have also allowed recreational fishery managers who lacked survey data to step away from catch limits, providing more recreational opportunity. “The part that we really objected to was a component that was removed from it,” Mezirow said. “The problem was that there was some provisions in the Modern Fish Act that if they were applied to the federal fisheries in Alaska, they would create a lot of chaos. And that was the desire to step away from a catch share plan … That didn’t really resonate with us … the idea that you would do less science and give more fish away.” In Alaska, halibut is managed by the North Pacific Fishery Management Council with input from Canada via the International Pacific Halibut Commission. The way the recreational halibut fishery is managed already contains some of the principles the authors of the Modern Fish Act aimed for, including more flexibility on catch limits, Mezirow said. For example, the Gulf of Alaska charter sector has gone over its allowed quota for the past several years, but the fishery is not closed as soon as the catch limit is reached — in part because it would be a harsh restriction on the fishery, and in part because there is no in-season management for the recreational sector. The commercial sector groups largely removed their objections to the Modern Fish Act when the mandatory allocation review requirements were removed and the language allowing “alternative management measures” was refined, said Linda Behnken, the executive director of the Alaska Longline Fishermen’s Association. “(The Modern Fish Act) as first floated or introduced had a plan or included language to allow ‘alternative management’ measures in the recreational sector,” she said. “It left wiggleroom for ‘alternative’ to mean overfishing by the recreational sector. That was our primary concern with (the bill). No one was opposed to designing management measures for the recreational sector that are more well suited to their fishing, but no one supports overfishing.” Several groups in the commercial sector worked together to educate legislators and the public about the impacts of the original bill as drafted, Behnken said. The commercial sector’s main concern was if the recreational sector was not held to the same scientific data-based management that commercial fishermen are, which could endanger fishing stocks for all users. “That was where the real hue and cry came from the commercial sector,” she said. “We are all very committed to conserving this resource in the long term. That’s been a bipartisan commitment over the years to manage our fisheries with that as the highest standard.” The Modern Fish Act amends the Magnuson-Stevens Act, but does not reauthorize it. Behnken said she hopes the Senate will continue the reauthorization process in the upcoming session. Leonard said the American Sportfishing Association found the process of working with various groups on the Modern Fish Act “interesting,” as it gave stakeholders of all groups a chance to scrutinize a bill that focused solely on recreational fishing as opposed to fishing in general. The group is looking forward to working with the Senate on the MSA reauthorization in the future, he said. “This is a good start,” he said. “There were several provisions in the original Modern Fish Act that got left behind, just through the nature of working through the legislative process… I think that would likely need to get done through the MSA.” Elizabeth Earl can be reached at [email protected]

Huge leap for Alaska cruise traffic expected in 2019

HOMER — More tourists are projected to arrive in Alaska by sea in 2019. A lot more. Cruise ship tourism is estimated to increase by about 16 percent in 2019 over 2018 numbers, according to projections from the Cruise Lines International Association. In raw numbers, that translates to about 1.3 million tourists arriving by cruise ship to destinations including Juneau, Sitka, Skagway, Seward and Valdez, among other ports. A 16 percent increase in passenger numbers translates to about 175,000 people more than last year. The industry is adding both more port calls and more passengers per port call. Not only are there are more ships coming to Alaska, the ships are getting larger. Three new ships — the Norwegian Joy, Royal Princess and Ovation of the Seas, all of which carry more than 3,000 passengers each — join the Norwegian Bliss, which carries more than 4,000 passengers, in Alaska waters, according to a news release from the CLIA. “With one exception, next year’s ships are either new to the trade or larger than the ships they replace,” the news release states. Though tourism in Alaska has generally been increasing for the past several years, the cruise ship industry has particularly been growing, said Sarah Leonard, the president and CEO of the Alaska Travel Industry Association. “A driver of Alaska’s visitor numbers are due in large part to our cruise visitors and partners and the marketing by the cruise industry in Alaska,” she told crowd gathered in Homer for the Kenai Peninsula Borough Economic Development District’s Industry Outlook Forum on Jan. 9. “We’re a popular cruise destination. Independent travel, we’re starting to see some flattening, and we’re not seeing the rate of growth for non-cruise sector increasing as fast as the cruise industry has projected growth.” Though scheduled cruises take passengers everywhere from Nome to Ketchikan, the vast majority of the cruise ships will dock in Southeast. Juneau is expecting nearly all 1.3 million of those passengers, with at least one cruise ship docked there nearly every day from the end of April through the beginning of October. Juneau has been building out its dock infrastructure for cruise ships over the past several years, with two owned by the City and Borough of Juneau and two privately owned. The port can take another ship through a lightering system, and on heavy days can rotate ships through the docks on a “hot berthing” system, said Carl Uchytil, the port administrator for the City and Borough of Juneau. The trend is definitely toward larger ships in the cruise industry, and the city is trying to accommodate that with its infrastructure, he said. “In Juneau, we’re trying to build infrastructure that meets the demand of the cruise ships,” he said. “It’s important to the diversity of our economy here in Southeast, and typically Juneau is known as a government town, but over the years we’ve seen job losses in that sector and now cruise tourism is the No. 1 private sector employer in Juneau.” Over the past decade, cruise ship tourism has increased by about 50 percent in Juneau. On a heavy ship day, the city can host about 15,000 visitors in a town of 32,000, Uchytil said. As the ships get larger and accommodate more passengers, that may increase to 20,000 on a heavy day, he said. When the passengers disembark, they’re frequently headed out for excursions, and the city has tried to plan around that flow of travel. “We try to build infrastructure that’s smart with the idea that we’re going to have … people who come to Juneau, they want to go out to (Mendenhall) glacier, they want to go whale watching,” he said. “We try to build a bus staging area to improve efficiency. We try to increase the flow out to the glacier area.” For its part, the cruise line industry has also tried to work with the community to mitigate impacts. Two decades ago, city and cruise line representatives began developing a program to implement “best practices” for tourism businesses operating in Juneau and Alaska at large. Kirby Day, the manager of port operations for Holland America in Juneau, said it’s largely been successful, even as tourism numbers continue to grow. “It basically is a program that tries to anticipate growth and anticipate impacts on a small community,” Day said. “At the time, it was for 500,000 visitors … it tries to make sure that the companies think twice about the ways they operate in a town.” Some of those ways include making restaurant deliveries earlier, scheduling flightseeing tours to avoid flying too much over homes, considering impacts of hiking traffic on trails, reducing off-ship announcements in-port and scheduling bus traffic, among other things. In the 1990s, when the cruise ship industry was growing rapidly in Alaska, the communities didn’t have programs to account for the impacts; with the program in place, Day said he thinks the communities are better positioned to absorb the impact of increased tourism numbers. Cruise ship passengers who arrive in port eat at restaurants, buy souvenirs and go on guided trips, which contribute to the regional economies. Tourism businesses to serve them have multiplied in Juneau in the past two decades, Day said. “It’s a great economic benefit, you can’t ignore that, but with that comes some other things you have to work on,” he said. “…Sometimes we find a new issue each year. It doesn’t solve everything, but it sure goes a long way.” Elizabeth Earl can be reached at [email protected]

In surprise reversal, Board of Fisheries moves Upper Cook Inlet meeting

The Kenai Peninsula fishermen who want to speak to the Board of Fisheries at the 2020 Upper Cook Inlet meeting will have to pack their bags after all. In a surprise deliberation and vote, the Board of Fisheries voted 4-3 to relocate the Upper Cook Inlet 2020 regulatory meeting from the Kenai-Soldotna area to Anchorage. The meeting was originally scheduled to take place in Anchorage, but the board reconsidered the decision in March 2018 and voted 4-2 to hold the meeting on the central Kenai Peninsula. The reversal vote, which took place on Jan. 18 during the board’s Arctic-Yukon-Kuskokwim finfish meeting, moved the Upper Cook Inlet meeting back to Anchorage. Board chair Reed Morisky said there was interest in revisiting the decision in part because the board had voted on it several times in the past two years; board member Israel Payton said there had been “political pressure” from former Gov. Bill Walker’s administration. Morisky reiterated points the board has discussed before about why to have the Upper Cook Inlet meeting in Anchorage, including that Anchorage is central, is home to many fishery participants and has many hotels and meeting spaces. Board members John Jensen and Payton agreed that Anchorage was a neutral location, and were joined by Morisky and Orville Huntington in approving the move; members Robert Ruffner, Al Cain and Fritz Johnson voted against it. “The reason I vote to have the meeting there is it is a centrally located area,” Jensen said. “It’s halfway between Soldotna and the Wasilla area up above. You have to remember there’s a lot of people who live in the Anchorage area, both sport and commercial.” Ruffner, who lives in Soldotna, contested the process through which the board was reconsidering the location. No formal notice was issued, nor was the discussion brought up during the board’s “miscellaneous business” agenda, typically addressed at the end of a meeting. No formal notice was given in the meeting documents, and because the meeting was dealing with Arctic-Yukon-Kuskokwim fishing issues, Upper Cook Inlet stakeholders would have been unlikely to attend. “To me, it’s patently unfair,” Ruffner said. “My community has been asking this meeting for over a decade. People have gone from diapers to college and not been able to weigh in in their community. I apologize to you in the audience who have to listen to this because it’s garbage.” Morisky said he did offer notice that the discussion would take place, and that the board does note in its tentative agenda that items are subject to change. On Tuesday, Jan. 15, as the board was beginning its discussions for the meeting, he stated briefly that the board would be discussing the Upper Cook Inlet meeting location later in the Arctic-Yukon-Kuskokwim meeting. “Regarding reasonable notice, this decision to take this up again was discussed early on in the meeting that this would be talking about this later,” he said. “This is later.” Seth Beausang, the legal counsel for the board, said the process most likely had not violated the Open Meeting Act, as the meeting location decision was a nonregulatory decision and could fall into the miscellaneous business agenda. Jensen said he had asked for the discussion to be held Friday because he had to be absent for the last day of the Arctic-Yukon-Kuskokwim meeting on Saturday and wanted to weigh in on the Upper Cook Inlet meeting location. Huntington said that while he sympathized with the Kenai Peninsula fishermen, he would support having the meeting in Anchorage in part because of his health. Johnson contested the argument that the meeting should be held in Anchorage because of the number of stakeholders that live in the region. “If we were to make these decisions based on sheer numbers (of permit holders), we might as well hold the Bristol Bay meeting in Seattle,” he said. “Just because of what the board would gain by being in those communities … I don’t think we get a proper sense of what’s going on in those communities without being there.” During the March 2018 discussion, Cain proposed a rotating schedule that would move the meeting between Anchorage, Kenai-Soldotna and Palmer-Wasilla on a nine-year rotation. At regional meetings, he said he’s seen more young people attend and hopefully absorb some of the board process. The location of the Upper Cook Inlet regulatory meeting is always contentious. During the regulatory meetings, stakeholders are invited to comment on proposals and to participate in committees offering advice. There are also last-minute amendments and changes to proposals that can drastically alter fisheries. However, the agenda is frequently subject to change and no firm deadlines are given, so fishermen who have to travel out of their community frequently have to do so for days at a time, incurring hotel, food and travel expenses. The Upper Cook Inlet board meetings commonly last at least 14 days. Central Kenai Peninsula stakeholders have been asking for a meeting in their community for two decades. In 2018, most of the local governments of the central peninsula as well as community organizations jointly submitted documents requesting a meeting in the community with an offer of free venue space, free IT services and free ground transportation in an effort to reduce cost as a consideration. Upon hearing that the board planned to reconsider its meeting location, officials from Kenai and Soldotna traveled to the meeting on Friday. When they arrived, they spoke to a number of board members who told them that the vote would not happen Friday, said Kenai Mayor Brian Gabriel. He and his wife then turned around at noon and drove three hours back to Kenai. The board took the issue up immediately after its recess for lunch, around 1:45 p.m. Friday. “This to me isn’t about a particular user group getting a leg up — it’s about bridging the geographic divide,” Gabriel said. “This was flat-out wrong, the way this went down (Friday). The way it was handled was disrespectful. It doesn’t do much for bridging the geographic divide in this state.” The city managers of Kenai and Soldotna submitted record copy comments saying they had been planning for months to host the board on the peninsula and were committed to providing venue and IT services to the board at no cost, in part to prove the communities could host the event well and encourage the board to return on a rotation. Morisky said in the meeting that he took responsibility for the misunderstanding — he had told the city representatives from Kenai and Soldotna that it wouldn’t be taken up Friday, but then the schedule had changed. The Kenai Peninsula Fisherman’s Association, an industry coalition representing Cook Inlet east side set gillnet fishermen, called the move disenfranchising. “KPFA’s position is that Morisky knows it’s easier to disenfranchise people when he doesn’t have to look them in the eye,” the group said in a statement. Elizabeth Earl can be reached at [email protected]

Disaster declarations, relief in limbo for multiple fisheries

The last few years of commercial fishing for Alaska have turned up poor for various regions of the state, resulting in disaster declarations and potential federal assistance. The 2018 season proved no different, with at least two disaster requests in the works at the state level. A third is in process at the federal level, and yet another is finally distributing money to affected fishermen from the 2016 season. The three in process still have to be approved before going to Congress, where funds can be appropriated to assist fishermen. The process is affected by the federal government shutdown, as most of the National Marine Fisheries Service employees are furloughed until a resolution is reached. The pink salmon disaster, which was requested in 2016 after catches across the Gulf of Alaska came in dismally below expectations, is awaiting a finalized plan for distributing $56 million in relief funds. The plan is currently being reviewed by the National Oceanic and Atmospheric Administration before the fund distribution is coordinated by the Pacific State Marine Fisheries Commission, according to the Alaska Department of Fish and Game. Chignik The fishermen in the communities of Chignik Lagoon, Chignik Bay and Chignik Lake sat on the docks for the majority of the summer watching dismally as the sockeye salmon run to the Chignika River failed to materialized. The fishermen that normally catch more than a million sockeye among them walked away with 128. Former Gov. Bill Walker declared an economic disaster for the fishery on Aug. 23, 2018, to start the process of distributing relief to the area’s residents. The three villages on the Alaska Peninsula are subsistence-dependent and obtain most of their cash income as well as winter food supplies from the fishery and wrote in deep concern for the residents this winter. Walker’s initial disaster declaration stated that relief would be distributed in the form of capital projects in the village and hiring preference for locals. That didn’t solve the villagers’ immediate concerns, according to a letter from the Chignik Coalition to Walker’s administration in October. “While we appreciate and look forward to building much needed infrastructure in our region, we are in dire need of immediate relief,” the letter states. The letter stated that the coalition requested a refund of permit renewal fees for 2018 from the Commercial Fisheries Entry Commission, a deferment on payments to the state’s commercial fisheries revolving loan program and a declaration of a federal disaster to make assistance available. The CFEC planned to send out letters to individual fishermen for potential refunds in November after reviewing the fishery circumstances, according to the Native Village of Chignik Lagoon’s website. A representative from Chignik could not be reached by press time for comment. Upper Cook Inlet The fishermen of Upper Cook Inlet’s drift gillnet fishery are also seeking assistance for their poor sockeye salmon harvest in 2018. Though the run met its escapement goals and the fishermen did have a number of openers, they walked away with only about a third of the average ex-vessel value. Fishermen in the drift gillnet fleet complained of not being able to make boat or loan payments, adding another poor year atop two below-average sockeye salmon years in 2016 and 2017. Though the fishermen haven’t received a disaster declaration from the governor’s office, they’ve found support with local governments on the Kenai Peninsula. The city councils of Homer and Kenai have both passed resolutions supporting a disaster declaration for the drift gillnet fishery, as has the Kenai Peninsula Borough Assembly. The request was sent to the governor’s office before the transition between administrations, but the fishermen haven’t heard anything about it since, said Erik Huebsch, the vice president of the United Cook Inlet Drift Association board. “It sounds like that was pushed forward in the last few days or weeks of the Walker administration,” he said. “We’re working on that, waiting to see if it fell through the cracks somewhere.” Gov. Michael J. Dunleavy’s office had not returned a request for comment by press time on the disaster declaration request for Upper Cook Inlet. Pacific Cod Walker’s administration filed a request for a federal disaster declaration in the Gulf of Alaska’s 2018 Pacific cod fishery in March 2018. A drastic cut in the quota due to a forecasted decline in abundance in the gulf led the North Pacific Fishery Management Council to cut the fishery’s quota by about 80 percent between 2017 and 2018. Others were closed outright, and the remaining fishery performed poorly. “Throughout the Gulf of Alaska, direct impacts will be felt by vessel owners and operators, crew and fish processors, as well as support industries that sell fuel, supplies, and groceries,” Walker wrote in his request letter to the Department of Commerce. “Local governments will feel the impact to their economic base and the state of Alaska will see a decline in fishery related tax revenue.” As of Jan. 15, no determination had been made on the Pacific cod fishery disaster request. Some disaster determinations take longer than others; while the 2016 Gulf of Alaska pink salmon disaster declaration only took three months until a determination was granted, the Washington state coho and pink salmon 2015 tribal disaster request was filed in 2016 and took more than two years to attain a determination of disaster. Elizabeth Earl can be reached at [email protected]

Hilcorp plans $340M investment in Alaska for 2019

HOMER – After completing its Cook Inlet pipeline project in 2018, Hilcorp is planning to keep its monetary investment about the same in Alaska going into 2019. More of the investment will be in drilling now that the $90-million Cook Inlet pipeline project is complete, said Hilcorp Senior Vice President Dave Wilkins in a presentation at the Kenai Peninsula Economic Development District’s Industry Outlook Forum on Jan. 9. “We run things year to year fairly steady,” he said. “We don’t like wild swings … in 2019, we’re going to drill more wells.” Hilcorp’s Alaska operations are split between Cook Inlet and the North Slope, where it’s spent a lot of time and money rehabilitating old assets purchased from Marathon, XTO and BP. On the North Slope, Hilcorp operates Milne Point, a field the company purchased from BP, and is working on permitting for the new Liberty offshore project in the Beaufort Sea. Of the $340 million the company plans to spend in 2019, about 55 percent of it will go to projects on the North Slope, with the remaining 45 percent going to Cook Inlet, said Hilcorp External Affairs Manager Lori Nelson in an email. The company’s normal mode of operation is to rework old wells, Wilkins said. Some of the planned investment is also set aside for maintaining the older equipment the company operates. “I like to say we recycle old oil fields,” he said. “When other companies are done with assets, we come in and we put new capital into it and reinvent it extend the life of those oil and gas assets.” Most of Hilcorp’s Alaska assets are in the Cook Inlet region, with a number of offshore platforms and onshore wells. Four new onshore wells in the area are planned for 2018: one in the Beaver Creek field, two in the Swanson River unit and one in the Happy Valley unit. The Beaver Creek well is targeting oil, the Happy Valley well is targeting gas and the Swanson River wells are targeting both. The company completed a cross-inlet pipeline project in fall 2018, facilitating the decommissioning of the Drift River oil terminal. The terminal is sited at the foot of Mount Redoubt, an active volcano on the west side of Cook Inlet, and has long been controversial because of the risk of oil spills during volcanic activity. Wilkins said the pipeline is currently transporting about 15,000 barrels of oil per day and will allow Hilcorp to fully decommission the Drift River terminal. The company is working on a plan now to complete the work there. “Our intent is to decommission Drift River as urgently as we did the cross-inlet pipeline,” he said. “We don’t want to just let it sit there — we want out of it … what’s happening now is we’re pushing the oil to Drift River, and cleaning up all the sludge and dirt at the tank bottoms and get them out.” Though the company’s planned investment is slightly down from about $360 million in 2018, it’s up from a low of $200 million in 2016, when oil prices hit a crippling bottom of less than $30 per barrel. Hilcorp has continued to purchase assets and drill new wells, including several new wells in the Ninlchik and Anchor Point areas. The newest, the Seaview pad just outside Anchor Point, was finished in December 2018. HIlcorp is still deciding what to do with that well, with possible stratigraphic testing this year, Wilkins said. In addition to its onshore wells, the company plans to drill a new well at the Monopod platform and to bring a jack-up rig to upper Cook Inlet to work at the Granite Point platform. The company is also planning seismic work in Lower Cook Inlet, where it won bids on federal oil and gas leases offshore in the Ninlichik and Cosmopolitan units and in the middle of the inlet outside Kachemak Bay. Hilcorp’s leases, purchased in 2017 for $3.03 million, were the first federal leases that attracted any industry attention since 2008. Wilkins said the company is planning seismic exploration in about 175 square miles for April 2019 and will work with the community to reduce impacts. No oil and gas resources have been developed in the federal waters of Lower Cook Inlet before. “In the Cook Inlet, as an industry, we have been responsibly developing oil and gas for over 60 years,” he said. “We can still do this, we can still do it responsibly the right way without upsetting the fishing, the water or the air.” Though companies are continuing to invest in infrastructure and exploration, Alaska continues to lag in oil production behind other states. Alaska Oil and Gas Association President and CEO Kara Moriarty said in her presentation at the Industry Outlook Forum that Texas far and away leads the U.S. in oil and production, with about 4.3 million barrels of oil produced per day. “If you looked at production today, it is up over 500,000 barrels per day, so we are definitely in fifth (place),” Moriarty said. “But we’ve been hanging onto fifth for over a year, probably, so we have lots of it, we are sitting fifth, and right now we’re producing about 5 percent of that record-breaking U.S. production.” Some of the slowing may have been connected to the legislative debates over oil and gas tax policy in the state, Moriarty said. However, the new administration of Gov. Michael J. Dunleavy has indicated that they have no intent of altering oil and gas tax policy, she said. “It’s very encouraging that we have an administration that is saying they want to be open for business and they’re sending that signal,” she said. ^ Elizabeth Earl can be reached at [email protected]

Vincent-Lang to focus on sustainability, trust and state control as commissioner

As the state administration turns over, most departments have a new face in the commissioner’s office. At the Alaska Department of Fish and Game, that’s only half true. Though Acting Commissioner Doug Vincent-Lang is new to the commissioner’s office, he’s hardly new to the agency. He led the Division of Wildlife Conservation from 2012-14 and worked in various capacities with the department dating back to 1981. As soon as Gov. Michael J. Dunleavy was inaugurated, he named Vincent-Lang as his acting commissioner pending the approval of the joint boards of Fisheries and Game, who were scheduled to interview him on Jan. 16. Unlike other cabinet-level positions, commissioners of the departments of Fish and Game and Education must be recommended as qualified by the respective boards. Dunleavy is retaining Dr. Michael Johnson as the commissioner of Education. Although Dunleavy said he had “no clear preference” for commissioner, Vincent-Lang was the only applicant for the position. Should the board approve his candidacy, his name will be forwarded to the governor for confirmation by the Legislature. Stepping into the commissioner’s office isn’t necessarily a career move for Vincent-Lang, he said. “This is a challenging job,” he said. “I’m looking forward to the challenge. I have two new grandkids and I enjoy spending quality time with my grandkids … I hope to find the best work-life balance.” As the commissioner, all decisions boil down to sustainable management of animals, Vincent-Lang said. One of the biggest challenges moving forward will be how to continue the department’s operations and management with declining funds from the state general fund, he said. ADFG has not taken as steep a general fund cut as other departments, but as oil prices remain low and the Legislature turns down other revenue options, departments are having to get creative on maintaining operations. At ADFG, that has meant reducing surveys and research projects and reducing some staff positions. On the sport fishing and hunting side, that decline has been buffered some by an increase in hunting and fishing licenses, allowing the department to draw down more federal dollars to support operations like weirs and boat launch maintenance. Vincent-Lang was involved in the push to increase in sport hunting and fishing license fees in 2015 and 2016. The effort was unique because it came from the stakeholders themselves, he said; it saw little opposition because the users saw the need to increase funding for management. “As we move forward, we’re going to have to figure that out on the commercial fishing side,” Vincent-Lang said. In the long term, the department also faces the challenge of how to draw more young people into hunting and fishing, both on the commercial and sport sides. Millennials purchase fewer sportfishing and hunting licenses than their elders; the American Sportfishing Association found that sportfishing licenses sales nationwide declined among people 18 to 34 between 1980 and 2011. That decline has affected Alaska, too, which is something the department needs to consider for the future, Vincent-Lang said. That also applies to the commercial fisheries, which are broadly experiencing a “graying of the fleet” as the average age of permit holders increases because the financial threshold of entry is too expensive for young fishermen. The commissioner also holds the responsibility of connecting the department staff to the boards of Fisheries and of Game. In his application letter to the joint boards, Vincent-Lang wrote that he supports the boards’ role in management and their citizen Advisory Committees, ensuring that they have “the best available information to inform their resource allocation decisions” and not impact sustainability. He also wrote that while science plays an important role in management decisions, it is not the only consideration. “These are public trust resources,” he said. “We’re scientific experts, but we can’t do that in a vacuum without gaining people’s trust. It’s a two-way street.” To that end, Vincent-Lang has already delegated a staff member specifically to help build relationships with the public on sportfishing and hunting issues: Rick Green, widely known as Rick Rydell, a longtime conservative radio host and former Anchorage Advisory Committee member. A major theme that Dunleavy heard while campaigning was a lack of public trust and frustration with ADFG’s decisions. Green was appointed a special assistant to the commissioner to work on that problem, Vincent-Lang said. “(Green) has a lot of different people that he knows across the state,” he said. “(He’ll work on) trying to rebuild that trust.” On the hunting side, one major issue the department will continue to press on is state control over regulations on game management. The state sued the federal Interior Department in January 2017 over new regulations restricting certain hunting methods on federal lands in national parks and preserves and specifically on the Kenai National Wildlife Refuge. The state felt the rules interfered with the Board of Game’s ability to regulate game populations and, after pressure from Rep. Don Young in Congress in May 2017, the federal government began the process of reconsidering the regulations. If he’s confirmed as commissioner, Vincent-Lang said he would continue to press for state control over game management. “We are going to continue that battle, because we think they’re intruding on the state’s right to manage,” he said. Elizabeth Earl can be reached at [email protected]

Cook Inlet sockeye forecast improves; kings closed in North

After two disappointing sockeye seasons in a row, the 2019 season may look up for Upper Cook Inlet commercial fishermen. The Alaska Department of Fish and Game’s sockeye salmon forecast, published Jan. 4, predicts a total run of 6 million sockeye to Upper Cook Inlet stream systems, with an expected commercial harvest of 3 million and 1 million for sportfishing and subsistence harvest. If the forecast proves true, the run will be nearly double the 2018 run of 3.1 million. The Kenai River, the largest sockeye-producing river in the region, is projected to receive a run of about 3.8 million sockeye, the majority of which are the 1.3 age class (one year in freshwater, three years in saltwater). The Kasilof River, the second-largest producer, is projected to see about 873,000 sockeye come back, with a slight majority in the 1.3 age class. The Kenai’s forecast is greater than its 20-year average of 3.5 million, while the Kasilof’s is behind its 20-year average of 979,000 fish. The Susitna River is forecast to see about 343,000 sockeye come back, while Fish Creek is forecast with a run of 124,000 sockeye, according to ADFG. The Susitna’s forecast is less than its recent 20-year average return of 377,000, while Fish Creek’s is significantly greater than its 20-year average of 83,000. In salmon, age correlates to the size and weight of the fish. In the Kenai, the predominance of the 1.3 age class-fish tracks with the 20-year average, while the Kasilof’s 20-year average has seen more fish in the 1.2 age class. For the Susitna and Fish Creek, the predominant age class is forecast to be 1.2-age class fish, which falls in line with the 20-year average trend for Fish Creek. The Susitna River’s 20-year average usually sees more 1.3-age class fish than 1.2, according to ADFG. The commercial harvest is projected to be about 200,000 more than the 20-year average, and more than triple last year’s harvest of 800,000 sockeye. If the forecast holds true, it’ll be good news for Upper Cook Inlet’s commercial fishermen, who largely depend on sockeye salmon as their commercial species and have had two disappointing seasons in a row. Despite a sockeye run that turned out greater than the forecast in 2017, the commercial harvest came in about 1.8 million, which was close to the forecast but about 37 percent below the historical average in the fishery. The next year, a below-average forecast proved to be even worse than expected in 2018, with more than half the run arriving after Aug. 1 and commercial fishing management openings misaligned with the timing of the runs. By the end of the season, commercial fishermen had landed about $11 million worth of salmon, about 67 percent less than the previous 10-year average, according to ADFG’s 2018 season summary. The one exception was silver salmon, which arrived in large numbers late in the summer. “All species-specific exvessel values other than coho salmon were significantly below average in 2018 in UCI,” according to the 2018 season summary. Most of the failing was in two specific age classes — the age class 1.3 and 2.3 fish, also called “three-ocean” fish because they’ve spent one or two years in freshwater and three years at sea. The 1.3 age class fish returned at 10 percent of the forecasted level, while 2.3 fish returned at 50 percent, according to the season summary. Northern Cook Inlet closures Though sockeye forecasts in Upper Cook Inlet are looking up, the king salmon season in Northern Cook Inlet isn’t. ADFG announced preseason restrictions on Jan. 7 on king salmon fishing for sport, commercial and subsistence fisheries across the region, largely based on poor projected returns to the Deshka River. “The department must make these closures and restrictions because of a recent pattern of extremely poor returns for king salmon stocks in the NCI area,” said ADFG Acting Commissioner Doug Vincent-Lang in the announcement. “The outlook for this season is particularly worrisome with the Deshka River king salmon forecast well below the escapement goal.” The Deshka River is an indicator stock for king salmon in the region. The forecast projects 8,466 king salmon between age classes 1.2 and 1.4 to return to the river, far less than the lower end of the sustainable escapement goal of 13,000 to 28,000 fish. Like other rivers across Alaska, the Northern Cook Inlet streams have seen declining king runs in the last decade; the forecast is about half of the recent 10-year average of 16,647 kings and less than a third of the long-term average of 31,416 kings, according to Fish and Game. The Susitna River, Yentna River and Little Susitna River drainages will be closed to sportfishing for kings, as will the directed commercial salmon fishery in Northern Cook Inlet. Subsistence fisheries, which receive a management priority, will be restricted to two days per week during the respective subsistence fishery seasons, according to the announcement. ADFG will monitor the runs and provide more fishing opportunity should the run warrant it, Vincent-Lang said in the announcement. Elizabeth Earl can be reached at [email protected]

Disagreements remain after on-site cannabis consumption approved

Though Alaska’s cannabis business owners have received the green light for on-site consumption endorsements, there’s still division on the Marijuana Control Board and in the public on the issue. The board members passed regulations for on-site consumption at the Dec. 20 meeting on a 3-2 vote. Industry representatives Brandon Emmett and Nick Miller and public safety representative Jeff Ankerfelt, the Sitka Chief of Police, voted in favor, while public health representative Loren Jones and rural public member Mark Springer voted against. It was a flip across the table for Jones, who helped draft the language of the regulations the board was considering. Last April, when the board first considered regulatory language, Jones told the Journal that he felt the regulation language covered public safety and health concerns well and included various voices in the process. During the meeting, he reversed and said he did not think the regulations went far enough and that to approve on-site consumption now would be a “terrible, terrible mistake for us to make moving forward on this.” “I worked on this with Mr. Emmett, and I was clear to him and clear to everybody else that if this were to pass, I wanted to have something that was enforceable and workable,” he said. “I think we went a long way … but I don’t think we’ve gone far enough.” Atop concerns about the definition of “public space,” Jones said he didn’t think the regulations as written would sufficiently protect people from the effects of secondhand smoke. Earlier in the meeting, he also raised concerns about the ability of citizens in unincorporated areas to protest on-site endorsements from being granted, as they do not have a local government to formally protest or opt out. Like commercial cannabis operations, local governments of cities or boroughs are allowed to opt out of allowing on-site consumption within their boundaries. Though much of the support came from the tourist industry, with business owners seeking a place for tourists to legally smoke cannabis, Jones said there were mixed feelings in Juneau about encouraging cannabis tourism. “We’re expecting 1.3 million tourists come off the cruise ships (in Juneau) next year,” he said. “About 90 percent of the tourists who come to Alaska come through Juneau. I don’t know that Juneau or the state of Alaska wants to be known as a cannabis tourist destination. Most of the people come up to us wanting the clean air, clean water. They want to do the wilderness … In my community, we have a very strong indoor air ordinance that we’re going to maintain.” Springer agreed with Jones, saying he gave weight to the comments of public health officials, joining Jones in voting against. While many hailed the vote as a victory for Alaska’s cannabis industry, which would be the first state to develop retail on-site consumption, there was broad opposition from public health professionals and from the public. Within the board, Miller and Emmett supported clarifying rules for retailers, who under the approved rules would not be able to sell more than a certain amount of marijuana to an individual per day. In a large retail setting, with multiple employees working, that will be difficult to track, he said. “We’re not allowed to keep customer data,” he said. “How do I know if someone came in this morning and came in at 3? I understand that that is not the intent … but is it still a violation? There’s just no way for the retailer to understand it at this time.” The board voted down Miller’s proposed amendment to remove the daily limit clause 3-2, with Emmett and Miller supporting it. Other members cited concerns that removing the language would allow people to buy too much in a single day. Under the current requirements, several of the areas that requested it — notably, downtown Juneau — most likely won’t see on-site consumption areas soon. The regulations the board passed require a retail store to be freestanding to apply for an endorsement, meaning there are no other establishments in the building, and have proper ventilation systems for the smoke. That likely won’t apply to anywhere in downtown Juneau, which is densely developed, Jones said. Springer agreed, saying there will likely be a small number of retailers who meet the requirements. “I think it will be a boon to a relatively small number of people who developed their original facilities with this in mind,” Springer said. “There are a lot of retailers that this is going to do nothing for. It’s not an across-the-board benefit.” The American Lung Association’s Alaska chapter, the Alaska Department of Health and Social Services’ Division of Public Health and the American Cancer Society Cancer Action Network wrote letters opposing the approval of on-site consumption, all citing concerns about the impact of secondhand smoke particularly and the recently passed smoke-free workplace law, which requires all smoking activity to occur outside of places of employment. “Secondhand smoke from combusted marijuana contains fine particulate matter that can be breathed deeply into the lungs, which can cause lung irritation, asthma attacks, and makes users more vulnerable to respiratory infections,” the American Lung Association’s letter states. “Exposure to fine particulate matter can exacerbate health problems, especially for people with respiratory conditions like asthma, bronchitis, or COPD. Secondhand smoke from marijuana has many of the same chemicals as smoke from tobacco, including those linked to lung cancer.” Advocates wrote that the public health studies cited are not reputable about the carcinogenic effects of marijuana smoke and that blocking on-site. Consumption areas just push smokers into their own homes, where they expose their families and roommates. Elizabeth Earl can be reached at [email protected]

Southeast purse seiners to hold another permit buyback vote

Southeast Alaska purse seine fishermen are preparing to vote on another permit buyback, with an eye toward making the fishery more viable in an era of more efficient vessels and smaller salmon runs. The National Marine Fisheries Service is scheduled to send out ballots to fishermen starting Jan. 15 asking whether the fleet should take on $10.1 million in federal loans to buy out 36 permits, removing them from the fishery forever. If successful, the move would reduce the number of permits in the fishery to 279, down about 100 permits since 2012. Like many things in the U.S. right now, the vote may be delayed as a consequence of the ongoing federal shutdown because most NMFS employees are on furlough. Pending the resolution of the budget battles in Congress, proponents of the buyback are hoping to get the ball rolling soon. This would be the second buyback since the loan program was authorized by Congress in 2006, and so far, it’s been successful from the perspective of the fleet, said Bob Kehoe, the executive director of the Purse Seine Vessel Owners Association. “I think it’s been successful; we’ve removed permits,” he said. “We’ve been able to generate more than enough revenue to service the loan. The service rate has been decreased.” The purse seine permit buyback program in Southeast is something of an outlier; it’s a federally authorized loan program to buy back state-issued fishery permits. The Southeast Revitalization Association, a group of stakeholders formed to pursue the buyback, worked with former Sen. Ted Stevens to pass the authority through Congress, establish a floor for the number of permits with the state Commercial Fisheries Entry Commission and communicate with permit holders. The first fleet capacity reduction buyback happened in 2008, outside the loan program, through a federal grant. In 2008, about 415 permits existed in the fishery, though only about 200 were fished, according to information in the Federal Register. The Southeast Revitalization Association used a reverse auction to purchase 35 permits in 2008, reducing the capacity to 380. After the buyback program was authorized, NMFS worked with SRA to request bids for permits on a $13.1 million loan, which the fleet approved to buy about 64 permits. Kehoe said the original interest in fleet capacity reduction was because of very poor prices for salmon. “There was a lot of (pink and chum) salmon available for harvest, but the prices were so low that it was hard for people to make a living,” he said. “There was very little competition among the processing sector, and so it worked fine for the processors having more capacity than was needed for harvest, but it wasn’t working for fishermen. Back in the early 2000s, there were some fishermen that couldn’t even find a market to sell their fish.” With about $10.1 million remaining on the loan authority after the first buyback, the SRA asked for other bids to further reduce the size of the fishery. In 2016, after receiving 22 bids and asking the fleet if they cared to move forward with the buyback, the fleet voted it down and sent the second round of the buyback back to the drawing board. Susan Doherty, the executive director of the Southeast Alaska Seiners Association, said the vote didn’t fail by much in 2016, but many ballots weren’t returned and communication efforts about the buyback were low. Neither the Purse Seine Vessel Owners Association nor the Southeast Alaska Seiners Association boards of directors chose to take a position on the 2016 buyback and thus didn’t reach out to permit holders about the vote. The vote also took place over the Christmas holiday when people may have been away from home and did not see the ballots. “Last time there were several issues with the process,” she said. “We didn’t do enough with encouraging folks to return their ballots. Anything that’s not returned is an automatic ‘no’ vote.” This would be the last buyback for the foreseeable future, given that it would use up the remaining loan authority, Doherty said. The 279 remaining permits would still be greater than the floor of 260 set by the CFEC, which is the level at which it would be too exclusive. For the fishermen, it’s primarily an economic decision, Doherty said — the average vessel earnings in 2016 was $65,000. For scale, the average permit value at the end of 2016 was $163,400, according to the CFEC. The fleet now has several seasons of extremely poor runs under its belt since 2016, so that may increase interest in voting for the buyback, said Dan Castle, a seine vessel owner and the president of the Southeast Alaska Seiners Association board. “I think this time, after a few more mediocre to poor years, we have a full slate of people willing to extinguish their permits, and it will also extinguish all the money,” he said. “I think we have a much better chance of making the case … it’s going to grab more than 10 percent of the fleet. That’ll be permits that are not going to be fished, whether they’re latent or not … it’s going to be better.” Castle said the buyback program was unique to start and required jumping through a “containerload of hoops to approve.” One of the effects of the program, though, has been to overall increase the quality of the fleet, he said. Older boats, ready to retire anyway, left the fishery, and other concerns that people brought up over the buyback have proved to be non-issues, he said. One motivation for permit holders currently fishing is the hope to keep opportunistic fishermen from returning and ballooning the size of the fleet again when the runs return to larger numbers, he said. Overall, he said he’s more optimistic about the vote this time. “We’ve dispelled a lot of myths over the years,” he said. “Everybody’s familiar with how the process works. We have a lot better understanding in the fleet. This is going to be it … People can see the benefits of squashing the fleet down a little bit. We’re so efficient now, compared to how it was when the first issued the permit program.” The buyback program works as a reverse auction, with each bidder asking a price to be bought out, but the average price per permit would be about $280,555 if the loan is approved. At the end of 2018, the average value for a permit was $195,000, down from an average value of $307,000 in 2014, according to the CFEC. Kehoe said the price is based on bids, but there may some speculation going on as permit holders try to maximize the return based on the loan amount available. “You’re asking people to give up a permit that has value forever and then the permits that will remain assuming the fishery bounces back will have a higher value,” he said. “People are free to put in their bid amount. These permit prices change constantly. It could be when we put this program together, the permit values were higher. If you look at the permit prices now, you’re just coming off two consecutive poor seasons. In order to make this work, you’re going to have to remove permits.” Doherty said the value of permits may also be pushed down currently because people aren’t eager to get into a fishery that’s been hurting for the past several years. Addressing concerns The Alaska Department of Fish and Game raised concerns to NMFS about the reduction in the size of the fishery just before the 2016 buyback vote, according to a letter from former commissioner Sam Cotten dated Dec. 6, 2016. The letter raised concerns about the lack of fishery impact analysis after the 2008 and 2012 buybacks and the buyback increasing the value of permits, making it harder for new fishermen to buy into the fishery, exacerbating the problem of high entry costs blocking younger fishermen entering the fleet, among other concerns. “We are troubled by the lack of analysis informing this process, the lack of objective and measurable goals with which to measure the relative success of these buybacks, the potential impacts of this action, and the commensurate constitutional implications,” Cotten wrote. Castle said that the SRA worked with the CFEC based on fleet size concerns and exclusivity, and if the fishery is judged to be too exclusive, the state can always issue more permits. To pay for the loan, fishermen pay a levy to processors at the dock, who then pay the federal government. So far, the ex-vessel value has also proved itself able to service the loans, with NMFS lowering the loan service rate because the applied rate was generating more revenue than needed. The vote is currently scheduled to run from Jan. 15 to Feb. 14. Elizabeth Earl can be reached at [email protected]

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