James Brooks

Proposed mining tax increase gets poor reception at Feb. 19 hearing

JUNEAU — Miners opposed to a proposal by Gov. Bill Walker to raise taxes on the state’s top-producing mines got help from an unexpected source Feb. 19. Alongside the miners testifying against the tax increase was Graham Neale, director of the center for mine training at the University of Alaska Southeast. “Now is the time to evaluate how the state can attract investment,” Neale said, explaining that a tax increase might do the opposite. If mine developers are frightened away from Alaska by higher taxes, that would leave students of his program without jobs. “We could be putting Alaskans on pathways to careers that don’t exist,” he said. Higher taxes, if they reduce business, could end up reducing state revenue, not increasing it, Neale and others said. Several members of the Alaska House Resources committee, which was hearing public testimony on House Bill 253, appeared surprised by Neale’s testimony. “Your testimony is interesting,” said Rep. Andy Josephson, D-Anchorage, and a member of the committee. “You could take just that testimony and describe the entire session that way.” He went on to ask how to balance the fact that an employee of the University of Alaska Southeast, a state-funded institution, was arguing for a decrease in a tax that (as drafted) would earn about $6 million more per year for the state budget. Neale replied that the mine-training program is primarily funded by donations and gifts from industry, plus federal grants. It receives little state funding, he said. Neale declined to offer an alternative to the mining tax when prodded by Josephson and Rep. Geran Tarr, D-Anchorage, and he said he wasn’t comfortable talking about whether the higher tax is competitive or not. After the hearing, Neale said, “basically, my job is to put other people to work. If mining activity or new mines are discouraged, it’s pretty hard to find work.” For the past several years, Neale has worked as project manager of Niblack, a gold-silver-zinc-copper mine prospect on Prince of Wales Island. With declining mineral prices worldwide, that project has been put on the back burner. Neale also serves as chairman of the Ketchikan/Prince of Wales chapter of the Alaska Miners Association. He said he doesn’t think his testimony will hurt the mine-training center’s relationship with other UAS departments, which are supported by state funding. In addition to Neale, 13 others testified for and against the governor’s proposal during the two-hour hearing. HB 253 would raise the tax rate for the largest mines (those with a net income of $100,000 or greater) from 7 percent to 9 percent. Only 14 mines were in that tax bracket in 2014, according to state records. The 3½-year tax exemption for new mines would be eliminated, and there would be a fee for tax licenses, something that would affect mines of all sizes. According to state documents, the existing mining tax collected $38.6 million in 2015. The increase would collect another $6 million per year. Miners and industry advocates said that sum isn’t worth the harm that would be done to the state by the tax increase. “This could not have been proposed at a worse time in the past 45 years,” said professional geologist Donald Stevens of Anchorage. The slowing Chinese economy has meant less demand for minerals, which has deflated global prices and led producers to scale back mining efforts. A tax increase, testifiers said, would exacerbate problems and lead companies to invest in places other than Alaska. “Alaska competes worldwide for capital, and I saw this firsthand in Anglo-American’s boardroom in London,” said Jason Brune, who was laid off from his job as a spokesman for Pebble Mine after Anglo-American withdrew from the project. He now works for Southcentral Alaska Native Regional corporation Cook Inlet Region Inc. “I was a casualty of higher costs,” Brune said. Josephson pointed out during the hearing that the mining tax hasn’t changed since 1955, before the Alaska Constitution was written, let alone before Alaska became a state. “We haven’t changed the tax since right after the Korean War,” he said. Randy Powelson, a mining engineer now working at a family-owned placer mine, said that doesn’t tell the whole story. The federal and state regulatory burden has risen, even if taxes haven’t. “Maybe it hasn’t changed since 1955, but I’ll guarantee you that everything else in the world has, and it’s making you uneconomical,” he said. In response to questioning from Rep. Paul Seaton, R-Homer, Nome placer miner Doug Tweit said a $200,000 lower limit for the top tax bracket might make more sense. Though most of the comments Feb. 19 were against the proposed tax hike, two commenters supported the governor’s proposal. George Pearce of Kasilof urged committee members to “get the best deal for the Alaskans, not the destroyers of the renewable resources like fish, water, habitat,” while Julia Mickley of the Northern Alaska Environmental Center said “development doesn’t come without a cost, and the public should be compensated for minerals removed from the land.” The bill was held in committee after the hearing, and committee co-chairman Rep. David Talerico, R-Healy, said people who didn’t testify Feb. 19 will get another chance. “We certainly don’t expect this to be the only public testimony on this bill,” he said.

In address to Legislature, Murkowski stresses 'certainty'

Alaska’s senior U.S. Senator didn’t offer her advice on solving the state’s fiscal problems. Speaking to a joint session of the Alaska Legislature, Sen. Lisa Murkowski said the Legislature has enough people offering advice. Instead, she offered a report on the work of the Alaska Congressional delegation over the past year, highlighting its efforts to reduce federal restrictions on state and business activities while providing certainty that new regulations and restrictions will not come in the future. “I hope this is your takeaway from my comments — that what I’m trying to do is help with that level of certainty at that federal level,” she said. Murkowski faces re-election this fall but no serious opposition yet. Republican Thomas Lamb of Anchorage is her only primary election opponent, while Libertarian Cean Stevens of Anchorage and Independent candidate Margaret Stock would face Murkowski in the general election. Speaking to legislators, Murkowski said the Senate has “returned to what we call regular order” since the election of a Republican majority in 2014. In addition to a replacement for the No Child Left Behind Act, the Senate has approved a bill funding transportation projects for several years. Federal military spending legislation also calls for more than a half-billion dollars in construction within Alaska. “An effort like this doesn’t happen by accident,” she said, calling attention to the work of her junior counterpart, Sen. Dan Sullivan, R-Alaska, and Rep. Don Young, R-Alaska and the 49th state’s only delegate in the U.S. House of Representatives. In regard to veteran care, “we’re making some headway, but the fight’s not over,” Murkowski said. When it came time to discuss federal land ownership and the federal government’s relationship with the state, Murkowski pointed out John Sturgeon, who was observing the speech from the House gallery. Sturgeon has sued the Department of the Interior in a case now in front of the U.S. Supreme Court over whether the state or the federal government has jurisdiction over rivers within federal parcels. “If the court should not come to the right decision,” Murkowski said, referring to a Sturgeon victory. “I’m prepared to crack open ANILCA (the Alaska National Interest Lands Conservation Act).” In fisheries, Murkowski discussed efforts to require the labeling of genetically engineered salmon, the proper labeling of Russian pollock, and laws against “pirate” fishing in federal waters. “These help to bring about certainty within an industry that needs it,” she said, returning to the theme of her speech. With the death of U.S. Supreme Court Justice Antonin Scalia, the Senate will be asked to confirm his replacement — an as-yet unidentified person selected by President Obama. That person, Murkowski said, “should get a hearing.” She then added, “that doesn’t necessarily mean that ends up in a vote.” The person could be found unqualified and rejected by the Senate without a vote, she said. Overall, she said, she hopes the president finds someone who keeps the court in balance, an allusion to Scalia’s habit of ending up on the conservative side of many rulings. “It’s clearly in Alaska’s best interest to maintain balance on the highest court in the land,” she said. Murkowski declined to state her preference in the contest for the Republican presidential nomination (Alaska’s preference poll is March 1), and she added, “I will defer from saying that I don’t like somebody, because I don’t think that is a fair approach.” She did say that she thinks the eight years of the Obama administration has “not been good for our state, and I’m not seeing it reflected in the overall strength of our economy” or in the “strength of our nation from a geopolitical perspective.” Based on a comment from the president’s chief of staff, she said she is particularly concerned about new executive actions that could be taken by the president in his final months in office. “This last year could be a bit scary for us,” she said. Contact reporter James Brooks at 523.2258 or at [email protected]  

McGuire’s bill to use Permanent Fund earnings gets hearing

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

Administrators favor scrapping new standardized tests

JUNEAU — After almost four years of preparation and planning, plus millions of dollars in implementation, Alaska’s new standardized testing scheme appears bound for the garbage can less than two months before students take it the second time. On Jan. 25, Lisa Skiles Parady, director of the Alaska Superintendents Association, told the Alaska Board of Education and Early Development that a majority of the state’s school district leaders favor abandoning the Alaska Measures of Progress testing scheme. The AMP test was administered to Alaska students for the first time last year under a $5 million per year contract with the Assessment & Achievement Institute of Kansas. Parady presented the results of a superintendent survey that found only five of 42 responding superintendents favored continuing AMP testing. Twenty-three of the 42 said they do not support continuing AMP. The 42 superintendents represent about 80 percent of Alaska’s school districts. Deena Paramo, superintendent of the Mat-Su Borough School District, participated in the meeting by telephone and called AMP testing a “failure” that “does harm” to Alaska’s school system because it does not provide useful feedback to teachers or administrators. In an October memo, the Mat-Su school district declared: “the AMP summative assessment is useful for state compliance purposes only. There is no value to districts from the assessment, and in fact learning opportunities are lost as a result of having to administer the assessment.” Speaking during the meeting, Alaska Education Commissioner Mike Hanley said “there’s nobody more frustrated with AMP than I am.” Hanley, who has been commissioner of education since 2011, oversaw three years of preparation before students took the test for the first time last year. Teachers, administrators and parents helped draft the test, which was prepared for “Alaska’s unique needs” and offered a tougher, more accurate, measurement of students’ knowledge, according to promotional material last year. While testing went well, problems came afterward. “We had glitches in the data, we had glitches in the timing,” Hanley said. Results came back from AAI much later than had been promised, and they didn’t offer the diagnostic information that schools were hoping for. Marianne Perie, AAI’s Alaska project manager, told the Fairbanks Daily News-Miner in November that the company had made mistakes. Perie did not respond to interview requests by this story’s deadline. “One of the most accurate comments was just there was such a loss of confidence in this tool that I don’t know how to get it back,” Hanley said. While Hanley and district superintendents might be frustrated, they have few options at the moment. While Congress has approved and President Obama has signed legislation that replaces the No Child Left Behind Act, the state is still required by state and federal law to conduct standardized assessments. “I just see no other option to meet the letter of the state and federal laws” than to have students take AMP tests this year, said state school board member Barbara Thompson of Douglas. Hanley said that even though it appears the state is locked into AMP testing this spring, he doesn’t plan to wait on replacing it. “I’m not interested in continuing down a path that’s not working,” he said. Rather than immediately seeking alternative proposals from competing testing companies, Hanley said he likely will begin by consulting with school districts to determine what approach works best for them. “Let’s not wait to pursue a new path forward,” he said. The state’s arrangement with AAI is structured as five one-year contracts, Hanley said, and he will gather information to determine the final choice the state takes this summer. In related business, the school board voted unanimously (member Sue Hull absent) to take the first step to cancel a program that would have tied teacher evaluations to students’ test scores.

Marine Highway fleet needs to downsize by two vessels

JUNEAU — An Alaska Marine Highway System leader gave the clearest statement yet that the ferry system will soon sell two of its 11 ships. Speaking to the House Transportation Committee, Deputy Transportation Commissioner Captain Michael Neussl said it makes little sense for the ferry system to own 11 ships when it only has the funding for nine. “The fleet size, in my estimation and opinion, needs to shrink back,” he told the committee Jan. 21. “We will need to divest of some vessels, and we need to start looking at that sooner, rather than later.” Neussl oversees the Marine Highway System for the state Department of Transportation and Public Facilities. His contention is based on what the ferry system calls “operating weeks.” One ferry running for one week is one operating week. If all 11 ferries are running in a given week, the system is providing 11 operating weeks. In the current fiscal year, which began July 1 and runs through June 30, the ferry system has scheduled 357.5 operating weeks. According to AMHS figures, that’s the fewest number of operating weeks since 2005, when the ferry system provided 349 operating weeks with 11 ships. The governor’s current budget proposal includes a $5 million cut to ferry system operations in the next fiscal year. With that cut, the Marine Highway expects to reduce its service to 320 operating weeks, a level not seen since 2004. If the Alaska Legislature elects to cut the Marine Highway budget beyond what the governor has suggested – something that appears possible, if not likely, considering lawmakers’ comments – that service would be reduced further. Between 2000 and 2003, the Marine Highway offered between 291.7 and 326.6 weeks of service with just nine ships. Lawmakers didn’t dismiss Neussl’s proposal out of hand, and some appeared positive about the idea, speculating on which ships should be sold. Rep. Matt Claman, D-Anchorage, suggested the Fairweather and Chenega might be at the top of the list. “Maybe we should be selling the fast ferries first,” he said. Judging by their maintenance and operation cost, “it certainly seems like those should be at the top of the list.” Neussl replied that getting rid of the fast ferries is “certainly an option,” but the first pick would likely be the ferry Taku, which has been laid up for lack of funds since last year, and is 53 years old. The fast ferries are less than 20 years old. In response to a question from Rep. Louise Stutes, R-Kodiak, Neussl said the Marine Highway will not get rid of the ferry Tustumena – one of the few vessels able to serve Kodiak, the Alaska Peninsula and the Aleutians – until a replacement is built. “We like to say the Tustumena is approaching its twilight years,” Neussl said. “It is not there yet.” Before a new Tustumena is built, however, the ferry system will take into service two new Alaska-class ferries for Lynn Canal service between Juneau, Haines and Skagway. Those boats, expected to enter service in 2018, would bring the Alaska fleet to 13 ships if none were sold off beforehand – a fleet definitely beyond the means of the state’s current budget. Speaking in committee, Rep. Shelley Hughes, R-Palmer and co-chairwoman of the Transportation Committee, speculated that a nine-ship fleet might resemble the ferry system of a decade ago. “Ten years ago, it wasn’t quite so bad; we had a pretty good state 10 years ago,” she said. “We can do this; it’s going to be OK. You’ll still be able to get from Point A to Point B.”  

Administrators favor scrapping new standardized student tests

JUNEAU — After almost four years of preparation and planning, plus millions of dollars in implementation, Alaska’s new standardized testing scheme appears bound for the garbage can less than two months before students take it the second time. On Tuesday, Lisa Skiles Parady, director of the Alaska Superintendents Association, told the Alaska Board of Education and Early Development that a majority of the state’s school district leaders favor abandoning the Alaska Measures of Progress testing scheme. The AMP test was administered to Alaska students for the first time last year under a $5 million per year contract with the Assessment & Achievement Institute of Kansas. Parady presented the results of a superintendent survey that found only five of 42 responding superintendents favored continuing AMP testing. Twenty-three of the 42 said they do not support continuing AMP. The 42 superintendents represent about 80 percent of Alaska’s school districts. Deena Paramo, superintendent of the Mat-Su Borough School District, participated in the meeting by telephone and called AMP testing a “failure” that “does harm” to Alaska’s school system because it does not provide useful feedback to teachers or administrators. In an October memo, the Mat-Su school district declared: “the AMP summative assessment is useful for state compliance purposes only. There is no value to districts from the assessment, and in fact learning opportunities are lost as a result of having to administer the assessment.” Speaking during the meeting, state schools commissioner Mike Hanley said “there’s nobody more frustrated with AMP than I am.” Hanley, who has been commissioner of education since 2011, oversaw three years of preparation before students took the test for the first time last year. Teachers, administrators and parents helped draft the test, which was prepared for “Alaska’s unique needs” and offered a tougher, more accurate, measurement of students’ knowledge, according to promotional material last year. While testing went well, problems came afterward. “We had glitches in the data, we had glitches in the timing,” Hanley said. Results came back from AAI much later than had been promised, and they didn’t offer the diagnostic information that schools were hoping for. Marianne Perie, AAI’s Alaska project manager, told the Fairbanks Daily News-Miner in November that the company had made mistakes. Perie did not respond to interview requests by this story’s deadline. “One of the most accurate comments was just there was such a loss of confidence in this tool that I don’t know how to get it back,” Hanley said. While Hanley and district superintendents might be frustrated, they have few options at the moment. While Congress has approved and President Obama has signed legislation that replaces the No Child Left Behind Act, the state is still required by state and federal law to conduct standardized assessments. “I just see no other option to meet the letter of the state and federal laws” than to have students take AMP tests this year, said state school board member Barbara Thompson of Douglas. Hanley said that even though it appears the state is locked into AMP testing this spring, he doesn’t plan to wait on replacing it. “I’m not interested in continuing down a path that’s not working,” he said. Rather than immediately seeking alternative proposals from competing testing companies, Hanley said he likely will begin by consulting with school districts to determine what approach works best for them. “Let’s not wait to pursue a new path forward,” he said. The state’s arrangement with AAI is structured as five one-year contracts, Hanley said, and he will gather information to determine the final choice the state takes this summer. In related business Tuesday, the school board voted unanimously (member Sue Hull absent) to take the first step to cancel a program that would have tied teacher evaluations to students’ test scores. Tuesday’s vote opens a public comment period on a proposal to cancel a one-year prototype phase of the evaluation program. Revisions to the No Child Left Behind Act had required states to begin tying teacher evaluations to student scores starting in the 2015-2016 school year, but Congress replaced No Child Left Behind in December with a law that eliminates the requirement.

At State of the State, Walker sells teamwork as necessary to beat deficit

JUNEAU — It was Salesman Walker who spoke from the podium Thursday night in the Alaska Capitol. Delivering his second State of the State address, Gov. Bill Walker used humor, metaphor and anecdote to outline his plan for solving the state's $3.5 billion deficit, then requested the Legislature's help implementing that plan. "We will not be able to accomplish what we need to do without working together," Walker said. The core of Walker's proposal is the New Sustainable Alaska Plan, an idea unveiled in the fall that turns the Alaska Permanent Fund into a money factory whose earnings partially fund state government. Permanent Fund Dividends would continue but be linked directly to state oil and gas revenue, rising and falling with global prices. On its own, that proposal isn’t enough to erase the deficit, barring a sudden and drastic rise in oil prices. Walker proposes a range of tax increases affecting gasoline, cigarettes, alcohol, mining, fisheries and tourism. Walker also proposes a state income tax based on a percentage of each Alaskan's federal income tax payment. In his speech, Walker said his plan is "written in pencil" and may be changed by lawmakers, but something must be done now. "As governor, I am flexible on the details of a fiscal plan, as long as the outcome meets basic tests of fairness and sustainability. I am not flexible, however, on our need to get there this year," he said. He said he understands that suggesting taxes and changes to the Permanent Fund may not be popular. "To those who question my political wisdom, I admit I may not be politically savvy. But I am a loyal son of this great land, and as your governor, I will always put Alaska’s interests above my own." That remark garnered  the largest sustained applause of the night, and after the speech ─ which ended with a plea to "pull together" and a request for divine intercession ─ Rep. Cathy Munoz, R-Juneau, had it highlighted in her notebook. "It was the best gubernatorial (state of the state) speech I've heard, and this is my eighth," she said. "It inspired, it spoke to the strength of Alaskans working together. He used terrific analogy and terrific history of his own family experience and left me feeling really energized about the work ahead." Rep. Mark Neuman, R-Big Lake, was a bit more equivocal. "We're going to have to pull together, sure, but there's a lot of different opinions out there," he said. "I don't know where we're going to end up at the end of the day." Similarly, Sen. Pete Kelly, R-Fairbanks, said he thinks Walker's plan is "too complicated." Rep. Adam Wool, D-Fairbanks, was optimistic, even if the governor's plan isn't what the Legislature ultimately decides. "I think something's going to happen," he said. "I personally don't think we're going to kick the can." The Alaska Republican Party offered the harshest words after the speech, with spokeswoman Suzanne Downing writing, "What he said tonight sounded less like vision for the future, and more like a vision of bigger, bloated government, a reflection of the liberal Democrats to whom he is now beholden." Walker was interrupted by eight rounds of applause during his 49-minute address, with most applause coming as the governor touched on non-budget items. During his speech, Walker wore a pin on his lapel that showed an outline of Alaska with two pipelines. He made his most significant divergence from his prepared remarks to talk about the pin and his continued support for a natural gas pipeline, something that earned applause. The pipeline is expected to be an issue in a special session of the Legislature later this year. His policy pledges also included support for a prison reform bill introduced by Sen. John Coghill, R-North Pole, and a pledge to create a public integrity unit in the Alaska Department of Law. That department will "investigate officer-involved shootings, deaths in state custody and allegations of government corruption," Walker said. Most of his time at the podium, however, was focused on encouraging the Legislature to solve the state's budget crisis. "Now is the time to put aside politics as usual. Now is the time for bold steps and new beginnings," Walker said. "The state of our state is strongest when we pull together. This is the Alaska that I love. This is the Alaska I have always known."  

Marine Highway head proposes selling two ships from fleet

JUNEAU — An Alaska Marine Highway System leader gave the clearest statement yet that the ferry system will soon sell two of its 11 ships. Speaking to the House Transportation Committee, Deputy Transportation Commissioner Captain Michael Neussl said it makes little sense for the ferry system to own 11 ships when it only has the funding for nine. “The fleet size, in my estimation and opinion, needs to shrink back,” he told the committee Thursday. “We will need to divest of some vessels, and we need to start looking at that sooner, rather than later.” Neussl oversees the Marine Highway System for the state Department of Transportation and Public Facilities. His contention is based on what the ferry system calls “operating weeks.” One ferry running for one week is one operating week. If all 11 ferries are running in a given week, the system is providing 11 operating weeks. In the current fiscal year, which began July 1 and runs through June 30, the ferry system has scheduled 357.5 operating weeks. According to AMHS figures, that’s the fewest number of operating weeks since 2005, when the ferry system provided 349 operating weeks with 11 ships. The governor’s current budget proposal includes a $5 million cut to ferry system operations in the next fiscal year. With that cut, the Marine Highway expects to reduce its service to 320 operating weeks, a level not seen since 2004. If the Alaska Legislature elects to cut the Marine Highway budget beyond what the governor has suggested ─ something that appears possible, if not likely, considering lawmakers’ comments ─ that service would be reduced further. Between 2000 and 2003, the Marine Highway offered between 291.7 and 326.6 weeks of service with just nine ships. Lawmakers didn’t dismiss Neussl’s proposal out of hand, and some appeared positive about the idea, speculating on which ships should be sold. Rep. Matt Claman, D-Anchorage, suggested the Fairweather and Chenega might be at the top of the list. “Maybe we should be selling the fast ferries first,” he said. Judging by their maintenance and operation cost, “it certainly seems like those should be at the top of the list.” Neussl replied that getting rid of the fast ferries is “certainly an option,” but the first pick would likely be the ferry Taku, which has been laid up for lack of funds since last year, and is 53 years old. The fast ferries are less than 20 years old. In response to a question from Rep. Louise Stutes, R-Kodiak, Neussl said the Marine Highway will not get rid of the ferry Tustumena ─ one of the few vessels able to serve Kodiak, the Alaska Peninsula and the Aleutians ─ until a replacement is built. “We like to say the Tustumena is approaching its twilight years,” Neussl said. “It is not there yet.” Before a new Tustumena is built, however, the ferry system will take into service two new Alaska-class ferries for Lynn Canal service between Juneau, Haines and Skagway. Those boats, expected to enter service in 2018, would bring the Alaska fleet to 13 ships if none were sold off beforehand ─ a fleet definitely beyond the means of the state’s current budget. Speaking in committee, Rep. Shelley Hughes, R-Palmer and co-chairwoman of the Transportation Committee, speculated that a nine-ship fleet might resemble the ferry system of a decade ago. “Ten years ago, it wasn’t quite so bad; we had a pretty good state 10 years ago,” she said. “We can do this; it’s going to be OK. You’ll still be able to get from Point A to Point B.”

Legislature opens regular session as oil keeps plunging

JUNEAU — On Tuesday afternoon, Rep. Matt Claman, D-Anchorage, and Rep. Lance Pruitt, R-Anchorage, climbed the steps of the Capitol together with smiles on their faces. They traded jokes and walked into the waiting office of Gov. Bill Walker, who extended his hand for a shake. “What’s the good word?” Walker asked the men as they delivered the traditional announcement that the Alaska House of Representatives is in session. For the next 90 days ─ and likely longer ─ lawmakers will struggle to eliminate or at least contain the state’s $3.5 billion annual deficit. The true figure is likely larger, but the price of oil has been falling faster than the state’s ability to redraft the numbers. As of Friday, the price of a barrel of Alaska North Slope crude oil was below $30 ─ cheaper than the barrel itself. “We believe this may be the most challenging … legislative session in which any of us will serve,” said Sen. Berta Gardner, D-Anchorage, shortly after the Senate opened the second session of the 29th Alaska Legislature. “It will be a challenging year, but together we’ll get through this fine and Alaska will be a better state because of it,” Sen. Kevin Meyer, R-Anchorage and the Senate President, said after Gardner’s remarks. Walker, speaking to the Empire in his office, said the first week of the legislative session will set the tone for the details of the debates that follow. In October, the Walker administration unveiled a comprehensive plan to balance the state’s budget by turning the Alaska Permanent Fund into a money factory. Earnings from the fund would cover a portion of state operating expenses, while oil and mineral prices would fund a smaller and more volatile Permanent Fund Dividend, an inversion of the existing setup. The Walker plan wouldn’t cover all of the state’s needs: In December, the governor proposed a range of tax increases and budget cuts to do the rest of the work. On Tuesday, the Senate received 10 bills from the governor to implement his fiscal plan. That total does not include the three budget bills considered every year by the Legislature. Walker said he wouldn’t be disappointed if the Legislature throws out his suggestions and picks its own way to balance the state budget, but “it’s got to be a whole plan,” he said. “I don’t care who gets the credit on any of this.” He declined to speculate on what he will do if the Legislature chooses to pass a plan that does not balance the budget in the long term. “I always reserve my position on any bills,” he said about whether he would veto an incomplete plan. He added that it would depend upon “where we are” in regard to oil prices, spending cuts and additional taxes. On non-budget items, Walker said he thinks natural gas pipeline issues will require a special session to address. Health care reform and prison reform are other significant topics, but “every one of those things is affected if the money isn’t there,” he said. Hanging above everything the Legislature does this session are this fall’s elections. Ten members of the Senate and all 40 members of the House are up for re-election this year, but those contacted by the Empire were careful to say that the impending vote should not affect their work. “The election should have zero bearing on what we do this session,” said Sen. Bill Wielechowski, D-Anchorage. With elections every other year, lawmakers can’t shrug off choices simply because there’s an election. “You simply can’t have a legislature that refuses to make tough decisions every other year.” The Senate Finance Committee will open its work on those tough decisions at 10 a.m. Wednesday morning as Pat Pitney, the state budget director, presents an introduction to next fiscal year’s plan. The Legislature’s next big event will take place at 7 p.m. Thursday night as Walker delivers his State of the State address to a joint session of the Legislature. The speech will be broadcast by radio on KTOO-FM and on TV by Gavel Alaska. Legislators are also expected Wednesday at Juneau’s 31st annual Legislative welcome reception. That takes place 5-6:30 p.m. in Centennial Hall.

Southeast residents air complaints about ferry reductions

JUNEAU — On Dec. 15, Capt. Mike Neussl of the Alaska Marine Highway System tried to spread oil on troubled waters. The 66 people listening to him did their best to light that oil on fire. “One of the things we don’t hear from those legislators up north is when they’ll close the Parks Highway one or two days a week,” said one man, raising his voice to interrupt Neussl’s presentation. In the fifth of six presentations across Southeast and Southcentral Alaska, Neussl — deputy Transportation Department commissioner and the head of the ferry system — outlined the problems facing the ferry system and for more than three hours heard an earful from Southeast residents upset about those problems. “Hang on a second — you guys are firing (questions) faster than I can answer them,” Neussl said at one point to soft laughter. More often than not, the conversation was serious and, at times, emotional. Karla Hart was among those who spoke about the ferry system’s impact on the tourism industry. “If I were trying to run a system into the ground, I would be doing just what you’ve been doing,” she said, describing how tour companies now deter RV drivers and independent travelers from using the ferry system because of its unpredictability. “The state Constitution tells us ... that everything belongs to us equally,” said Albert Howard by phone from Angoon, “yet other communities on a regular highway get a break. We pay the regular tire tax, we pay the gas tax ... and then we pay for our ride to Juneau.” In the past three fiscal years, the Marine Highway has seen a $27 million cut to its operations budget and a $3 million drop in its capital budget, which pays for required annual maintenance. The ferry system has gotten rid of bars and gift shops aboard ship, it’s gotten rid of discounts, increased cancelation fees and cut nearly 30 shoreside positions. In 2016, the ferry Taku will stay docked all year, and in the summer, it may be joined by as many as three other ferries. “We’re running out of low-hanging fruit. There’s no more bars to close, there’s no more gift shops to close. ... There’s not a lot left,” Neussl said. Later, speaking in response to a question about Angoon losing all service for a month this winter, he added, “I think we’re headed back to the days where there was one vessel for a particular area, and when that vessel goes out for maintenance, there’s no service.” One of the things that is left is a fare change, which the state expects to partially implement in the next year. Unfortunately, Neussl said, the state can’t charge tourists more than it does Alaskans. “The federal government frowns on us discriminating against other Americans,” he said. Another change, suggested by ferry crews, involves simply slowing down. “One of the consistent messages we’ve been getting ... another way to save money is to slow down,” Neussl said. “We’re going to look at those things and try to reduce the 10 million gallons of fuel we burn each year.” Through various means, Neussl said, the Marine Highway expects to be able to bring one of the fast ferries back online to serve Sitka and Cordova this summer. In the longer term, the state may need to consider selling one or more of its ferries, likely the laid-up Taku first. “What do you all think of laying up a vessel in the Marine Highway System permanently?” Neussl said. He added that during his tour of community meetings across the state, he’s heard that people don’t care how many ships are in the state’s fleet or which ships serve which communities, they just want to make sure they get served. Lt. Gov. Byron Mallott is expected to convene a meeting in Juneau in February of delegates from across the state to further discuss the future of the Marine Highway, but Sen. Dennis Egan, D-Juneau, sitting in the audience, cautioned that it will be difficult to get relief from the political process. Southeast Alaska and coastal Alaska in general doesn’t have the numbers in the Legislature to keep funding secure. “We’re rural versus roaded now,” he said.

Gov. Walker rolls out Permanent Fund budget proposal

JUNEAU — Gov. Bill Walker’s administration is preparing to roll out the most radical change to the state’s annual budgeting process since the creation of the Alaska Permanent Fund in 1976. At noon Wednesday in Juneau's Centennial Hall, lawmakers were briefed on a budget plan that redirects almost all of the state’s oil revenue to the Permanent Fund, in effect turning it into a money factory that would generate about $3.3 billion per year. The plan also promises to radically change the way the annual Permanent Fund Dividend is paid. “It is now clear that, barring a change in the economic environment, that our financial wealth assets will generate substantially more income than petroleum revenues in the future,” said Attorney General Craig Richards on Wednesday morning. The details of the proposal are complicated, but in broad outline, it isn’t dissimilar to the system of reservoirs that feed Juneau’s drinking water and hydroelectric power needs. Under the proposal, most of Alaska’s oil and gas revenue would flow directly into the Permanent Fund. A portion of the fund’s annual growth — which now comes more from investments than oil — would go to the fund’s earnings reserve, a separate reservoir. That reservoir already exists, and it can be accessed by a simple majority vote of the Alaska Legislature — but it’s rarely touched because most Alaskans consider the reserve part of the Permanent Fund proper. Under the proposal, there would be an annual transfer of about $3.3 billion from the reserve to the state’s general fund, which pays for state services. If the stock market drops — as it did during the Great Recession — and the Permanent Fund loses money as it did in 2008, when it lost 18 percent of its value, the earnings reserve acts as a buffer and allows the state to keep collecting $3.3 billion a year. If the Permanent Fund averages 6.7 percent growth — according to the fund’s latest annual report, it has averaged less, 6.4 percent, over the past 10 years — the arrangement could be kept up forever, Richards said. The key idea, Richards said, is to iron out the up-and-down swings of oil prices and give the state a steady source of income. That would reduce the explosion of government growth during fat oil years and reduce the need for cuts when times are tough. “What are you doing if you’re jerking your economy around like a see-saw?” he asked. “I believe, and I think others will once they begin to think about it, is that this is a powerful idea for the Alaska economy itself.”   Dividend changes As for the Permanent Fund Dividend, the plan would tie Alaskans’ annual checks directly to oil and gas revenue, instead of to investment income. Currently, dividends are based on a five-year average of the fund’s performance, not of oil prices. That’s why this year’s dividend was among the highest on record once adjusted for inflation, even though oil prices have plummeted. According to a flow chart provided by the governor’s office, dividends would be paid by half the oil and gas royalties collected by the state each year. “We’re changing the nature of how the dividend is calculated — we’re proposing a change — to how the dividend is calculated, and we’re going from one that is based on stock market returns to one that is based on oil royalty returns,” Richards said. He said Alaskans could expect dividends to be about $1,000 per year under that scenario and current production figures. “But if we get a gasline, if SB21 works and we get a rise in oil production, or if commodity prices turn around and you get an increase, well, the royalty dividend payout will be higher,” Richards said. “If production is lower and prices are low, and you don’t get a gas pipeline, then royalty payments will be lower,” Richards said. If the trans-Alaska oil pipeline shuts down and there’s still no gas pipeline — Richards said he doesn’t think that scenario is likely — the dividend would all but disappear.   Balancing the budget The proposal won’t completely fill the state’s gap between revenue and expenses. According to an analysis provided by the state, the Permanent Fund would have to have “well over $100 billion to generate sufficient revenues to fully fund the state budget and allow for dividends at the current rate.” Grace Jang, a spokeswoman for Walker, said it’s important to remember that using the Permanent Fund “is the major underpinning of the plan” to balance the state budget. “We’re not saying this is the plan,” she said. Either more cuts or additional revenue — such as a sales tax or income tax — would still be needed to balance the budget without using savings.

TransCanada exec: Company ready for buyout

JUNEAU — The state’s partner in the Alaska LNG Project says it’s ready to be bought out. Vincent Lee, director of major projects development for Canadian firm TransCanada, told lawmakers Wednesday that if they don’t approve a buyout of its position then TransCanada will consider leaving on its own. “We would definitely seriously consider that as an option,” Lee said during a House Finance Committee meeting, though the final decision would be left to the pipeline corporation’s board of directors. The revelation came as lawmakers debate whether to allocate $157.6 million to pay for the state’s share of the first phase of AKLNG, a $45 billion to $65 billion project that would bring natural gas from the North Slope to Cook Inlet for export. To avoid paying up front for its one-quarter share in the project, the state entered into a contract with TransCanada. Under the terms of the agreement, TransCanada pays all of the state’s direct costs until construction begins, then half of the state’s share of construction costs. In return, the state gives TransCanada a cut of its revenue once gas starts flowing. If the pipeline deal falls apart for any reason, or if TransCanada wants to walk away from it, the state must repay TransCanada every dollar plus 7.1 percent interest. That’s a high interest rate compared to the open market, which is why the state is considering a buyout and has earmarked $68 million of the legislative request to take an “offramp” built into the TransCanada contract. If the state doesn’t act by Dec. 31, its next offramp is years (and hundreds of millions of dollars) later. In a morning hearing, the Senate Finance Committee sharply criticized the administration of Gov. Bill Walker when it failed to make the Alaska Gasline Development Corp. president available for comment. “We feel like we’re being stonewalled,” Sen. Peter Micciche, R-Soldotna, said. After the committee recessed for a short time, Fauske was made available by phone to answer questions that continued in an afternoon hearing. “We’re not here to torture folks from AGDC. We’re not. Really,” Micciche said after another round of at-times intense questioning. In the House, things were calmer as Lee told lawmakers that yes, TransCanada has confidence in the AK LNG project, that it has confidence the state can proceed without it, and that AGDC is capable of taking over. “We’re a strong believer of this project,” Lee said. “We think this is a good project. We think this project has a lot of potential.” Even if the state-owned AGDC didn’t have the necessary expertise, Lee said the state’s other three partners in the project — BP, ConocoPhillips and ExxonMobil — do have those skills. “Personally, I believe the three producers, with the depth of experience and knowledge of megaprojects would be able to carry out this project ... without any difficulties,” he said. Lee acknowledged that TransCanada’s interest in leaving the project began after the Walker administration made it clear starting in May or June that it was interested in buying out the company. “The current administration has a different philosophy of how they see the role of the state of Alaska in the project,” Lee said, which led TransCanada to start looking for the exit. “I think we both decided this is probably the right thing to do.”

No emergency listing for Prince of Wales wolves

There will be no emergency listing of Prince of Wales Island wolves on the Endangered Species List. In a letter to the six conservation groups requesting the emergency listing, U.S. Department of the Interior assistant regional director Mary Colligan wrote that an emergency listing is not something that can be requested. It’s up to the discretion of the Secretary of the Interior. “If at any time we determine emergency listing is necessary, an emergency rule may be promptly deployed,” she wrote. The federal response was first reported by Nick Bowman of the Ketchikan Daily News. An emergency listing is therefore considered the same as a general listing, and a general listing petition is already being analyzed by the Department of the Interior. Last year, it found that the petition to list the wolves had merit, and it began a yearlong detailed analysis of whether protecting the wolves is worthwhile. The result of that analysis is legally required by the end of the year. If a listing is warranted, a years-long process to formally list the wolves would follow. The population of wolves in the Alexander Archipelago has drastically declined in recent years, according to studies by the Alaska Department of Fish and Game. In 1994, a Forest Service-conducted population estimate indicated about 900 animals in Game Management Unit 2, which includes Prince of Wales Island and smaller islands to its west. In 2013, the Alaska Department of Fish and Game estimated a population of about 221 wolves. A year later, it revised that figure downward to 89 animals. It is not clear what is causing the decline — whether it is linked to human activity, a shortage of food or other causes. It is also not clear whether the Alexander wolves are a unique subspecies or whether they are gray wolves, which are found throughout North America. Regardless of the cause, conservation groups have taken steps to try to protect the wolves, which may or may not be a subspecies of the gray wolf. Greenpeace, the Alaska Wildlife Alliance and others petitioned the state and federal governments in July to stop allowing trapping and hunting of the wolf. A hunting/trapping quota of nine animals was approved by the federal subsistence board in August.

Alaska goes full year without fishing fatality for first time

The deadliest catch is getting a lot less deadly. Last week, the U.S. Coast Guard reported to the North Pacific Fishery Management Council that for the first time in known history, no one died on the job while commercial fishing in Alaska during the last federal fiscal year, which ended Sept. 30. “This is the first year, going back as far as we have records, that we didn’t have what I’ll characterize as an operational-related death,” said Coast Guard Capt. Phillip Thorne, chief of enforcement for the Coast Guard in Alaska. That claim comes with a few caveats, said Dr. Jennifer Lincoln, who monitors fishing deaths in Alaska for the National Institute for Occupational Safety and Health. “It’s a case definition issue,” she said. “Unfortunately, there were still fatalities in the fishing industry as NIOSH would define them.” The Coast Guard’s “operational death” category includes deaths that happen in the act of fishing, but it doesn’t include the deaths of fishermen that happen while a boat isn’t actively working. In most years, that distinction wouldn’t matter. Commercial fishing was for years the deadliest industry in Alaska and the United States, and changing the measuring stick couldn’t change that. It’s one of the reasons the TV series “Deadliest Catch,” which just completed its 11th season following crab fishermen in the Bering Sea, earned its name. Today, salmon fishing — not Bering Sea crabbing — is Alaska’s deadliest catch, and commercial fishing nationwide — and especially commercial fishing in Alaska — is getting safer. In 2005, the year “Deadliest Catch” premiered, 15 people died in Alaska’s fisheries, most when their boats sank. Last year, according to NIOSH figures, just nine people died in Alaska fishing accidents, and the 29 deaths nationwide were the lowest since NIOSH started keeping records in 2000. During the period of the Coast Guard’s claim, NIOSH recorded only a handful of deaths in Alaska. Those include a man who washed up in Kodiak’s harbor, a possible fall overboard in Seldovia, a suicide aboard a fishing boat, and what was either another suicide or a drug overdose. All those cases are still being investigated. “They’re not the kind of events we typically associate with fishing accidents,” Lincoln said. The first definitively fishing-related death took place Sunday when a Kodiak diver was killed while harvesting sea cucumbers in a commercial fishery. Those incidents aside, Alaska’s fisheries are getting safer, Lincoln and Thorne said. “In the United States, the number of fatalities are decreasing; there is a decreasing trend,” Lincoln said. The number of fishermen is declining, which is likely a factor. Many fisheries have been rationalized and consolidated, with quotas in place for individual fishermen instead of an entire fleet. Instead of having boats race out to catch the most fish before the fleet hits its quota, fishing is slower. “It’s allowed fishing vessels to be empowered to make very good decisions about the weather and their operations … and that’s resulted in a safer fleet,” Thorne said. New equipment — winch shutoffs, more comfortable life jackets and better training through groups like the Alaska Marine Safety Education Association — also helps. The Coast Guard has also increasingly emphasized safety exams and on Thursday began mandating them nationwide for every fishing vessel that works more than 3 miles offshore. With more federal fisheries observers required aboard Alaska fishing boats, “we have had a lot of outside drivers that have made our phone ring, and it’s just been fantastic,” said Scott Wilwert, the Coast Guard’s commercial fishing vessel safety program manager in Alaska. Wilwert said about 1,500 boats in Alaska will need an exam, and about 400 still need to get one. There’s also simple chance. While six commercial fishing boats sank between June and September this year, no one was killed. In the past, vessel sinkings have been either the biggest or one of the biggest drivers of fishing fatalities.

Attorneys don’t buy state’s argument on land trust lawsuit

JUNEAU — In Washington, D.C., attorneys for the State of Alaska are arguing the most important Indian Law case to hit the justice system from Alaska this century. Back in Alaska, few believe the state will win. After the state appealed a federal district court decision upholding the right of Alaska Natives to put land into federal trust, the Juneau Empire contacted leading Indian Law attorneys unaffiliated with the lawsuit to gather their thoughts. Of the five who spoke to the Empire, none believe the state will win. “Personally, I don’t think the state will win in the D.C. Circuit,” said Kristi Williams, a Gwich’in Athabascan attorney who is bar-licensed in D.C. and owns her own consulting firm. “If I was a betting person, I’d say they will lose this appeal in the D.C. Circuit.” Why it matters The land-into-trust issue is the biggest legal case you may never heard of. Since 2006, four tribes and one individual represented by the Native American Rights Fund have been suing for the right to put land into federal trust, creating “Indian Country” in Alaska. Putting land into federal trust protects it from state and local taxes, grants it protection in lawsuits and makes the tribe eligible for federal grants that benefit Indian Country. “It is greatly protected,” explained David Case, the now-retired lead author of “Alaska Natives and American Laws,” the definitive textbook on Indian Law in Alaska. Indian Country in Alaska (so far only found in Metlakatla and a few isolated individual parcels) also falls under the jurisdiction of tribal courts. “What it would mean is that it would be clearer tribal jurisdiction … when it comes to people misbehaving,” Case said. In some cases, that authority would stretch to people who aren’t members of a tribe. Why trust has a problem In 1934, the U.S. Congress passed the Indian Reorganization Act, which permitted the Department of the Interior to take Indian land into trust for individuals and tribes. That power was extended to Alaska two years later and it lasted for 35 years, until the Alaska Native Claims Settlement Act was passed. The act almost entirely erased “Indian Country” in Alaska, but it didn’t explicitly revoke the authority of the Secretary of the Interior to put land into trust in Alaska. In 1978, a Bureau of Indian Affairs attorney wrote a memorandum stating that the intent of ANCSA, though the trust issue wasn’t explicitly addressed, revoked the right of the federal government to put Alaska Native land into trust. Two years later, the Department of the Interior formalized the “Alaska Exemption.” Until 2001, that exemption stayed untouched despite efforts by tribes to change it. In that year, a Bureau of Indian Affairs attorney reversed the 1978 memorandum and said ANCSA wasn’t clear enough. The federal government started writing a standard for taking land into trust in Alaska, but it abruptly stopped, leaving the exemption in place. In 2006, tribes and individuals sued in seeking trust powers. Seven years later, U.S. District Court judge Rudolph Contreras ruled the plaintiffs had won. The state has appealed, and the district court ruling is on hold. Why the state opposes trust When it filed its appeal Aug. 24, the state’s key argument was simple: ANCSA eliminated the ability of the federal government to put land into trust. “Legislative history and subsequent amendments to ANCSA demonstrate that Congress considered and rejected trust land,” the state’s opening brief says in part. If trust land becomes widespread, the state explains, “trust land in Alaska would diminish the state’s authority by creating islands of land within its borders potentially controlled by 229 competing sovereigns.” There are 229 federally recognized tribes in Alaska, and the state believes that it “could also lose authority to impose ... land use restrictions, natural resource management requirements, and certain environmental regulations” on land taken into trust. If that happens, Alaska would include territory governed by a “patchwork quilt of legal and regulatory authorities.” Breaking down the state’s argument Geoffrey Strommer is an attorney in Portland with extensive experience in Alaska Native and American Indian law. This spring, he wrote an article in the American Indian Law Journal breaking down the Alaska trust issue. By telephone, he explained that the onus is on the state to prove that Judge Contreras’ district court decision was wrong. “I think judge Contreras struck the right balance,” he said. “It’s rational, it interprets both statutes (ANCSA and the Indian Reorganization Act) in a fair and appropriate way.” “I think it’s defensible,” Case said, agreeing with Strommer’s comments and Contreras’ decision. “It says, correctly, despite the long history, that it’s pretty simple ... Congress has never repealed the land into trust statute.” Case explained that Congress amended ANCSA every Congress for 40 years, and that the state is acting as if the original act was perfect and wholly understandable. David Voluck, Case’s coauthor and a magistrate with the Central Council Tlingit and Haida Indian Tribes of Alaska, said the state is treating ANCSA like the U.S. Constitution — irrevocable and untouchable — but there are no “Founding Fathers of 1971.” Williams said the notion that wide swaths of Alaska will be put into trust is unlikely. “Right now, to think that the whole landscape is going to change … I think that’s a completely unfounded fear,” she said. While some tribes do have large amounts of land — Venetie with 1.8 million acres is the best example — most have no land at all, and they don’t have the resources to purchase it. “Tribes right now don’t have the currency to purchase large swaths of land,” she said. Even if they did have the money or the land, the land-into-trust process involves an extensive public process including public comment and testimony from non-tribal members. “The (Bureau of Indian Affairs) isn’t going to just rubber-stamp large parcels into trust,” she said. “There’s a whole list of things that have to be done.” What’s more likely are cases like one she’s working on now. She is working with a tribe — she wouldn’t identify which one — that has over 100,000 acres of land. It’s seeking to put only the land beneath its tribal offices into trust. That would give it eligibility for federal Indian Country grants. “I think a lot of tribes are looking at it in the same way,” she said. Strommer said he thinks the state’s arguments about tribal court jurisdiction are exaggerated. There are “very limited circumstances where a tribe can exercise jurisdiction,” he said. It’s “certainly not a broad and expansive authority.” In Alaska, Case said, the regulation of fish and game is a criminal matter, which means that regulating on trust land will be less difficult than the state believes. The bottom line, Strommer said, is that “these are rights that frankly, everywhere else in the country tribes have.” No simple matter In addition to the separation between the state and tribes that are suing, Native organizations across Alaska have different views on land into trust. Native regional and village corporations could see some of their authority eroded in favor of tribal authority. This has led many of those corporations to express mixed feelings about the concept of land into trust. “Despite our support in concept,” Sealaska Corp. general counsel Jaeleen Araujo wrote in 2014 on behalf of the corporation, “we believe that in most situations, the land status in Alaska could result in complications not contemplated in the current land into trust regulations.” Nicole Borromeo, general counsel of the Alaska Federation of Natives, said it’s hard to say if the state will win its appeal and that land into trust is a controversial issue. “It’s controversial because the Alaska Native community has many different layers of interest,” she said. “There’s many different avenues and questions here that need answers.” Last year’s Alaska Federation of Natives conference featured extensive discussion of land-into-trust issues, and this year’s conference will as well. A workshop on the subject will take place on the day before the conference’s opening day. Borromeo said AFN is “following the issue closely” but hasn’t jumped into the legal arguments. What comes next With the state’s appellate document less than two weeks old, the ball is now in the hands of the Native American Rights Fund, which has until the end of September to rebut the state’s arguments. Once that document is filed, the two sides will again trade written arguments with a deadline just before Halloween. Oral arguments are expected to follow, and the appeals court could rule sometime next year. The Empire offered the state an opportunity to rebut the comments made by the five attorneys, but it declined to do so. By email, Department of Law spokeswoman Cori Mills wrote, “We stand by the legal reasoning and position stated in our opening appellate brief, and believe that our position is legally sound. ... We would be happy to answer factual questions but otherwise, we rely on our legal briefing to present the State’s legal arguments and await the Court’s decision.” Unless the case is dropped, an appeal to the U.S. Supreme Court is expected to follow. The state’s argument includes a reference to the constitutionality of the district court decision, something that could give the Supreme Court grounds to take up the case. If the case makes it to the Supreme Court, two familiar faces will take center stage. Heather Kendall-Miller, the lead attorney for the Native American Rights Fund on this case, also argued the Venetie case, the last major Alaska Native decision to reach the Supreme Court. Operating against her on behalf of the state was a famed attorney named John Roberts. He’s now the chief justice of the Supreme Court. Who the Empire consulted • Kristi Williams, Gwich’in attorney, member of the D.C. Bar and owner of G2G Strategies • David Case, Indian Law attorney (retired) and lead author of “Alaska Natives and American Laws” (3rd edition) • David Voluck, Central Council Tlingit and Haida Indian Tribes of Alaska Tribal Court Magistrate and coauthor of “Alaska Natives and American Laws” (3rd edition) • Nicole Borromeo, Alaska Federation of Natives general counsel • Geoffrey Strommer, partner at Hobbs, Straus, Dean & Walker LLP, lead author on “Placing Land Into Trust in Alaska” in the spring 2015 issue of the American Indian Law Journal

Walker touts tax to push AK LNG, but producers pan concept

“I’m not trying to buy love. I’m trying to sell gas.” So declared Gov. Bill Walker in a press conference Friday as he explained to the state’s political reporters why his call for a special session next month includes a controversial tax plan. The third special session of the Alaska Legislature in 2015 will address the long-awaited Alaska LNG Project, also known as AK LNG. To encourage the state’s three big producers — ExxonMobil, ConocoPhillips and BP — to stay with the project until its completion, Walker has proposed the state tax gas not pledged to the pipeline. “When gas is not produced, we receive nothing from that,” Walker said. “We’ve got to be in a situation where we cannot be blocked by somebody else.” Details of the proposal have not been released. “What I have in mind may need some legal review,” the governor said, explaining that the proposed tax must be vetted by various state agencies before it is made public. Asked when the proposal will be released, Walker replied: “When it’s done.” Walker repeatedly said he is seeking assurance and security for the state. He doesn’t want AK LNG to be added to the state’s history of failed gas pipeline efforts, but a tax would be a secure way to collect revenue if the pipeline does fail. “We have a gun to our own head with our fiscal situation,” he said, referring to the state’s multibillion-dollar gap between revenue and expenses. The tax idea will face a tough slog when the Alaska Legislature convenes in Juneau on Oct. 24. In 2006, Alaska voters turned down a ballot measure that would have enacted a similar tax by a 2-1 margin. Lawmakers said they have plenty of questions, and the oil companies themselves are generally opposed. “Introducing a gas reserves tax undermines the efforts of all parties to progress the Alaska LNG Project and puts investment in Alaska’s future at risk,” wrote ExxonMobil spokeswoman Kimberly Jordan in an email. An emailed BP statement said: “BP wants to be part of a successful Alaska LNG project that includes the State of Alaska as an equal participant and co-investor. A gas reserves tax complicates this process and results in unintended negative consequences, such as: distraction and delays to negotiations, impacts to investment, and Alaska jobs. “A targeted tax at any one of the Alaska’s oil and gas producers impacts all companies and will reduce work activities on the North Slope during an already challenged time for the State. The gas reserves tax makes an Alaska LNG project more difficult.” A ConocoPhillips spokeswoman said she had no comment until the company sees the specific legislation. Walker, meanwhile, had an answer to questions about the companies’ concerns. “If a producer found this objectionable, I’d have to question their motives,” he said. “It’s not a penalty at all unless they fully intend to not do a project.”

Southeast fishermen angry over slashed king quota

JUNEAU — Southeast Alaska’s summer king salmon trolling season opened July 1, but when boats leave port this week, they’ll have a lot of angry fishermen on board. The Pacific Salmon Commission, which sets fishery quotas in waters governed by the U.S.-Canada Pacific Salmon Treaty, has allocated 175,000 king salmon to trollers. That’s out of a total harvest of 237,000 fish. If you’re a sport fisherman used to a single fish per day, that might sound like a lot. In fact, it’s less than half last year’s quota. In 2014, Alaska fishermen were allocated 440,000 king salmon. “We have a bunch of angry people right now,” said Alaska Trollers Association Executive Director Dale Kelley on June 28. In a statement released Saturday, the association said it was “outraged” by the quota. “Last year’s quota for Alaska was nearly 440,000 king salmon. We are fishing the same group of fish and Washington is forecasting the third largest run to the Columbia since the dams went in and many other stocks are similarly robust. You tell me how this year’s quota could have dropped by 200,000 fish. It makes absolutely no sense,” Kelley said in the statement. Even the Alaska Department of Fish and Game disagrees with the quota. Its announcement ahead of the July 1 opener stated that “Alaska does not agree that the draft calibration from which that number was derived is accurate.” The problem this year is a deadlock on the salmon commission — representatives can’t agree how many king salmon are in the Pacific. With no agreement, they’ve set quotas artificially low. Furthermore, the troll fleet fishes year-round, so its quota is divided among different openings. As much as half of the quota has already been taken, Kelley said on June 28, adding that even now, she doesn’t know how many fish the fleet will be allowed to take in the July 1 opening. In an interview with KCAW-FM radio in Sitka, Charlie Swanton, Alaska’s representative on the commission and deputy commissioner of Fish and Game, said a lower quota doesn’t make sense. Last year was a bumper year for king salmon, and conditions haven’t changed all that much. “Everything we’ve seen, from the returns to Columbia River last year, and Columbia River returns so far this year, are all pointing toward another year of very strong abundance,” he told KCAW’s Rachel Waldholz. Last year’s big harvest was the largest since the existing management system started in 1999 and is thought to be the largest since the first dam was installed on the Columbia River in 1938. Columbia River kings, many of which are grown in federally funded hatcheries, spend their young lives in the waters off Southeast Alaska and British Columbia before returning to the Columbia to spawn. Missing a big run would have more consequences than just a few gripes. Eighty-five percent of troll permit holders are Alaska residents, and roughly one in 40 people in Southeast Alaska works on a troll boat in the summer, according to state statistics. Kelley said the July 1 opening isn’t expected to last long, which will present a problem unless everything goes perfectly for every boat. “Heaven forbid you blow an engine or something,” she said. James Brooks can be reached at [email protected]

Pages

Subscribe to RSS - James Brooks