GUEST COMMENTARY: Nothing new for hard-working Alaskans

Two weeks ago, for a moment, the energy industry was in the national spotlight. As usual, this opportunity wasn’t used to recognize its hardworking men and women or praise them for the growth they’ve brought to our country. Instead, it was used to recirculate the same tired, unproven talking points as always. At halftime of the Harvard-Yale football game, a renowned annual tradition, climate change activists rushed the field in protest of their schools investing in fossil fuels. This was done in the name of environmentalism and was praised by several Democratic presidential candidates including Sens. Elizabeth Warren and Bernie Sanders. As usual, the protest and ensuing coverage was riddled with disinformation and misinformation.   The benefits of the natural gas and oil industry to Alaska are undeniable. It accounts for one-third of Alaska jobs, as every job in the oil industry is connected to 20 additional jobs in the state’s economy. The hard work of these 110,000 men and women account for about half of the state’s overall economy. Last year alone, the industry generated $2.4 billion, which was about 80 percent of the state’s revenue. This year, it’s projected to be even more. These results don’t just happen; they’re the product of hard work. While some are planning chants, grabbing coffee and going to protest football games, others are grabbing winter jackets, saying goodbye to their families and going to the airport for their commute. It takes about an hour and a half for most oil workers to fly into the North Slope, where much of their work takes them. Some employees then need to take smaller flights to even more remote locations. Once there, they typically stay for one or two-week long tours. This means one or two weeks of 12-hour days (some workers complete even longer shifts), doing hard physical labor in temperatures that can vary by nearly 150 degrees throughout the year. This is what it takes to be the engine of Alaska’s economic growth, and, whether you see it or not, it’s happening every day. Sadly, none of this hard work is inspiring enough for a group of Ivy League students to protest a football game, and none of the results it produces are sexy enough to capture the attention of the national media. Instead, voices in New Haven, Conn., are amplified, as are their chants to ban fossil fuels: the driving force of Alaska’s economy and its peoples’ jobs. For Alaskans, particularly those in the energy industry, this is nothing new. The hard work goes unnoticed, and the results are unappreciated. Last month’s protest is only the most recent incident in a long history of undermining every-day workers. Fortunately for us, this doesn’t stop Alaska’s energy workers from doing their job. Now, it is our responsibility to make sure the response is as loud as the protests, and the truth is louder than the disinformation. Alaskans working in the energy industry deserve our support, appreciation and respect. Those three words were completely forgotten on that football field two weeks ago. For Ivy League students who are seemingly at the top of their game, that was a fumble of major proportions. Rick Whitbeck is the Alaska State Director for Power The Future, a nationwide non-profit focused on supporting energy workers, while pushing back on radical green groups and the ideologues who fund them. Contact him at [email protected]

The surprising facts about age and entrepreneurship

If I asked you to describe a stereotypical entrepreneur, chances are you would fall back on a familiar image: a tech-savvy twenty-something donning a hoodie, revolutionizing the world with a piece of software or new technology. This prototypical tech founder boldly disrupts established industries from the outside, outmaneuvering older and more conservative business executives at rival firms. This is the story of Bill Gates at Microsoft, Larry Page and Sergey Brin at Google and Mark Zuckerberg at Facebook among several others. But this story misleads. It turns out that very few business founders fit this description.  Business owners under age 35 are actually somewhat rare, accounting for only about 6 percent of Alaska’s businesses with employees, according to US Census data. Grey-haired entrepreneurs dwarf the younger sort — just over half of the state’s business owners are 55 or older. Even those over 65 vastly outnumber the under-35 set by three to one. Though these are Alaska numbers, they closely mirror national figures. So how does starting a business fit into the lifecycle of an individual? Kauffman Foundation research reports that the average age for starting a business is around 40. Another study focusing on the fastest growing venture-backed firms — exactly where you’d expect to find the young Silicon Valley entrepreneur — found the average founder age was even older, 45 years old.  There are good reasons for entrepreneurs to be a little older. By their early 40’s, a person is more likely to have acquired personal savings, which is by far the most common form of startup capital. They have also gained the valuable experience that comes from working for someone else and seeing how organizations function. Rates of business failure tend to fall as the age of the founder rises, so it seems that experience makes for better entrepreneurs. Another perspective comes from rates of new entrepreneurship by age, which is unfortunately not available at the state level. The national figures show that the share of individuals aged 20-34 starting a business each year is lower than for other age groups from 35-64 and has actually fallen in the last two decades. Given that half of Alaska’s business owners are at or approaching retirement age, the low rates of entrepreneurship among the young are worrying. Who will replace them as job creators? At the Center for Economic Development, we think part of the solution is introducing students to entrepreneurship as a potential career pathway. Our Upstart Internship gives UAA students the opportunity to experience the excitement of working for an innovative startup company here in Alaska. This gives entrepreneurs access to talent, and students a chance to test the waters of entrepreneurship. Our Upstart Alpha student accelerator is a signature effort to guide students through the process of launching a business and will strive to compress years of experience into months. Like accelerators nationwide, Upstart Alpha will accept a cohort of entrepreneurs into a structured boot camp to validate their business models with the help of mentors, instructors, and hard work. These initiatives join others that introduce young people to entrepreneurship. They include the King Career Center’s Entrepreneurship and Enterprise class that gives high schoolers the experience of starting a real business. The Alaska Small Business Development Center’s Lemonade Day is another example, focusing on that ubiquitous symbol of youthful enterprise, the lemonade stand. Entrepreneurship is never an easy pursuit, but Alaska’s economic future will depend on vibrant businesses that make the most of our human capital. Let’s do our best to make sure smart people with entrepreneurial talent discover their pathway, regardless of age. As Executive Director, Nolan provides overall leadership for the University of Alaska Center for Economic Development, as well as support for other programs of the UAA Business Enterprise Institute. He is a Certified Economic Developer (CEcD) through the International Economic Development Council, and serves as chair for the Municipality of Anchorage Budget Advisory Commission. Nolan was named to Alaska’s “Top 40 Under 40” in 2015. He holds a Master of Public Administration from the University of Kansas and a Bachelor of Arts, History and Political Science from Gustavus Adolphus College.

Possibilities, costs “enormous” for A2A rail

The backers of a new rail line to link Alaska to Canada and Lower 48 markets insist it would generate upwards of $5 billion of freight revenue through the state. Alaska-Alberta Railway Development Corp. founder Sean McCoshen told attendees of the Resource Development Council for Alaska’s annual conference that the 1,500-mile stretch of new railroad would provide trans-Pacific shippers an alternative to existing bottlenecked ports and rails lines along the West Coast. Oft-referred to as the A2A rail line, McCoshen said just-in-time shippers would benefit from the fact that Southcentral Alaska ports are about four days closer to East Asia by vessel than ports in the Lower 48 and British Columbia despite the longer distance by train. “Our own economic model looks at steady state revenue from export commodities in Canada of almost $5 billion per year. We must complete this project to show shippers we can bring a variety of commodities to and from Alaska’s Pacific ports competitively with the slower, more energy-intensive rail and pipeline routes that exist or are under construction in Canada,” McCoshen said. For comparison, the Alaska Railroad typically generates about $110 million in passenger and freight revenue per year. The project would start by constructing rail from the north end of the Alaska Railroad’s tracks near North Pole and continue south and east past Tok and Tetlin to the Canadian border for about 200 miles of new track in the state. That section would link to 1,300 miles of track built in Canada, starting roughly near Fort McMurray in northeast Alberta. It’s about a $13 billion endeavor, according to company estimates. Canadian rail lines currently get as close to Alaska as Whitehorse in the Yukon. “The possibilities are enormous but so is the project,” McCoshen said. Former Lt. Gov. Mead Treadwell is also working on the project as A2A’s chief operating officer. The idea of a freight rail line to connect Alaska to the rest of the continent has been analyzed several times but has never made it far past the conceptual stage. The project is being driven in large part by a need for new export routes for Alberta’s heavy oil production. Studies analyzing the feasibility of a conceptual rail line linking Alaska and Canada have looked at shipping 1 million barrels of oil per day or more through Alaska but McCoshen stressed in a brief interview that while oil shipments would be a part of the private rail line’s business it would be a general cargo line that “ships everything under the sun.” He noted in his presentation that the Canadian government last year passed a law prohibiting additional tanker traffic out of British Columbia ports and said the lack of new shipping routes and port facilities in the country has stymied growth in other Canadian commodity exports. Importantly, it would open up export routes for many stranded mineral deposits in Northern Canada and Interior Alaska, he said, calling the potential mining benefits “the economic icing on the cake” for the project. In June, the Alaska Railroad signed an agreement with A2A that allows McCoshen’s firm to undertake the environmental and engineering studies for the project while the state-owned railroad corporation would apply for the additional right-of-way from the state. A2A would then rent the track from the Alaska Railroad, he said. A2A is currently waiting on a border crossing permit from the White House and McCoshen thanked Gov. Michael J. Dunleavy for advocating to President Donald Trump for its approval. The Alaska Legislature also passed a resolution in May urging the president to approve the permit. McCoshen added that many, but not all, of the baseline impact studies have been done for the project. “We have a good solid two years of work ahead of us at least before we can get to a final investment decision,” he said. He emphasized the new infrastructure is necessary in a global economy as it would help balance the North American trade deficit with Asia. “This is a 21st century project, not a 19th century project,” McCoshen said. “It is one of several long rail links being pursued around the world and one that will more closely tie the economies of Alaska, Canada and Asia.” Elwood Brehmer can be reached at [email protected]

OPINION: Stowers’ ruling in Stevens recall sheds light on law

Considering the stakes and the players involved, inexplicably little attention has been given to a 2006 ruling by a judge who will ultimately hear the case to recall Gov. Michael J. Dunleavy when it reaches the Alaska Supreme Court. While nearly every press report regarding the recall notes the relative dearth of case law covering efforts to remove statewide officials, a Superior Court decision from 2006 cited by Attorney General Kevin Clarkson in his Nov. 4 opinion to reject the recall petition is noteworthy for multiple reasons: the target was the sitting Senate President, that legislator was Dunleavy’s current Chief of Staff Ben Stevens, and the judge was Craig Stowers. Stowers was appointed to the Supreme Court in 2009 and served as Chief Justice for three years from 2015-18. In 2006 as an Anchorage Superior Court judge, he rejected the recall petition against Stevens filed by citizen activist and former state Rep. Ray Metcalfe amid the burgeoning VECO scandal that ultimately resulted in multiple corruption convictions but no charges ever filed against Stevens. The transcript is worth a read for anyone who wants to know more about the legal thresholds for a recall application qualifying as “substantially in the required form” that was issued by a current Supreme Court justice. Clarkson’s opinion concluded that the Recall Dunleavy backers’ petition did not meet that legal threshold and kicked off the anticipated court fight that got underway Nov. 27 with a 55-page motion for summary judgment filed by a high-powered legal team led by Jahna Lindemuth and Scott Kendall, who were respectively Attorney General and Chief of Staff under former Gov. Bill Walker. The state’s response is due by Dec. 16 and oral arguments are currently scheduled for Jan. 10. Primary among the takeaways from reading Stowers’ opinion is that the petition — and only the petition — may be considered by the court. Under the recall statute, petitions are limited to no more than 200 words. An equal 200 words are given to the official subject to recall for a defense should it reach the ballot. What that means is attachments, affidavits, budget documents, veto statements, or 55-page motions that offer additional evidence to support the individual allegations, are irrelevant to the ultimate decision. “I have not reached my decision with reference to any of the extraneous information that’s been provided by any of the parties,” Stowers said in his ruling. Because of this statutory word limit, the law also requires that allegations be stated “in particular,” which according to Stowers is the basis for judicial review even under the intent for voter-driven initiatives to be construed liberally and the requirement of the court to accept allegations as factual. “If this statute has any meaning at all,” Stowers said, “the phrase ‘described in particular’ is something that the court is required to consider as it reviews the 200 words or less in any given petition.” For the purposes of judicial review, then, a judge or panel of judges must determine whether allegations — even when assumed to be true — actually meet one of the standards of lack of fitness, incompetence, neglect of duties or corruption. Stowers went further by addressing what he described as “mixed questions of facts and law.” In Stowers’ opinion, while the court cannot rule on whether an allegation is true or not, it must rule on questions of whether an allegation that claims a violation of the law is valid. “That’s appropriate for the court, and indeed it’s my duty,” he said, “to evaluate those and to determine whether or not those are true and accurate statements of law.” He went on, “To the extent that there are mixed questions of fact and law … then the validity of that statement in part turns on whether the statement of law is valid or not. And if it’s not, it gets stricken. And it also depends in part on whether the facts as alleged are specific enough or particular enough to create a statement that’s sufficient to go to the voters.” Three of the grounds for recall in the petition allege violations of the law or the constitution that would fall under Stowers’ “mixed questions” standard. Only one is highly specific. The first ground states that Dunleavy refused to appoint a judge to the Palmer Superior Court within the 45 days required under Alaska law. There is no dispute that Dunleavy did not appoint the judge within that period, although he eventually did and before the seat actually became vacant. Whether the courts will decide that rises to lack of fitness or neglect in unknown, although we already know the Supreme Court has determined that the constitution trumps statutes in the cases of the Permanent Fund dividend formula and the voter-approved 90-day legislative session, and there is no deadline in the constitution for appointing judges. The next two grounds are less specific. The second alleges that Dunleavy violated the law and the constitution by authorizing public funds for electronic ads and direct mailers for “partisan purposes” making “partisan statements about political opponents and supporters.” The third alleges that Dunleavy violated separation of powers by “improperly using the line-item veto to: (a) attack the judiciary and the rule of law; and (b) preclude the legislature from upholding its constitutional Health, Education and Welfare responsibilities.” In their motion for summary judgment, the recall backers assert the second and third grounds meet the legal threshold under the standard of deference to the truth of allegations. Clarkson wrote in his opinion that these allegations do not meet the “particularity” standard because they are too vague. Essentially, Clarkson is arguing that the claims fall short without specific allegations about what the “partisan statements” were or how exactly Dunleavy attacked the judiciary or precluded the Legislature from upholding its constitutional responsibilities. “A court is required to make at least a threshold determination as to whether what has been alleged is factually specific enough,” Stowers said in his 2006 decision in reference to petition language. In their 55-page motion, the recall backers lay out all their evidence to support their claims, but as noted above, the court cannot consider any of that. The general consensus of what little case law we have is that Alaska has chosen a “middle of the road” standard that is neither too far toward political recalls for any reason nor legal standards too strict to ever be met. Stowers referenced this “middle” way in his decision in the Stevens case. “Recall advocates must allege more than conclusory statements or arguments, otherwise our recall process drifts to the end of the spectrum where simple disagreement with an officeholder’s position on questions of policy becomes sufficient in and of themselves,” he said. Finally, the recall backers allege incompetence over Dunleavy’s Medicaid veto of the wrong amount of state funds. The state explains that as a simple mistake since remedied; the petitioners assert that the availability of a defense does not render the allegation insufficient for recall. In the end, the recall petitioners only need the courts to agree with them on one of the four allegations to move forward. If they are allowed, though, just don’t expect to see a campaign built around Palmer judges, mailers or Medicaid vetoes. This is a political effort to overturn an election, pure and simple, which is not what the constitutional framers intended. Vic Fischer, the campaign co-chair and the last living constitutional delegate, wanted recall for any reason back in 1956 but he lost that debate. We’ll see if he wins this time. Andrew Jensen can be reached at [email protected]

Uneven status of Pacific halibut revealed by annual data

Following the trend of the past several years, overall Pacific halibut biomass seems to be down again. The most recent stock assessment presented to the International Pacific Halibut Commission for its interim meeting on Nov. 25-26 shows a coastwide decline in spawning biomass, though that decline isn’t even across all areas. That’s a continuation of a trend seen in stock assessments since 2015. Particularly, surveys have indicated lower numbers of halibut in the central Gulf of Alaska. According to the 2019 stock assessment, biologists estimate the spawning biomass at 194 million pounds. It’s not down by much overall, but the impact to regulatory areas isn’t evenly spread; the central Gulf of Alaska, or Area 3A, has been declining fairly steadily since 2004, while Areas 2 and 4 — from British Columbia southward and the Bering Sea/Aleutian Islands, respectively — have seen increases in the same time period. “What you will see here shortly … is that we have mixed trends coastwide. However, (commercial catches per unit of effort are) relatively flat at the coastwide level, with some relatively brighter spots and some relatively not-so-good spots across the coast,” said Ian Stewart, the lead scientist on the IPHC’s stock assessment. “…We’re looking at a period of relatively low productivity for the Pacific halibut stock over the next three years.” All signs are pointing, as they have before, to lower fishing yields in order to maintain the target level of intensity on the stock. Overall Pacific halibut landings increased in 2019, coastwide, by a little more than 1 million pounds. That increase is in commercial, with reported mortality for subsistence and recreational fishing flat, according to figures Stewart presented to the IPHC. Each year, the IPHC surveys halibut in the management areas to gather data for a stock assessment that will inform the fishing limits set by the IPHC in February, prior to the next season’s opening. This year, the biologists also had new data to work with for the assessment to gather more information about the stock: sex. Female halibut are bigger, and have long been estimated to outweigh male fish in the commercial catch by weight, but with definitive data on sex distribution in commercial catches, biologists were able to establish exactly what proportion of the catch was male or female. The sex ratio information improves the IPHC’s understanding of the stock dynamics significantly, Stewart said. Coastwide, catches are coming in at 82 percent female on average by total number of fish. That’s much higher than they expected, he said. “We’ve always known that the commercial catch would be dominated by female by weight, because female Pacific halibut are much larger than males, but in terms of having 82 percent by number, that is quite a bit higher than we would have expected,” he said. In some areas, it’s higher. Area 4, which covers the Bering Sea and Aleutian Islands, the catch was 92 percent female. Areas C, D and E, the Central Bering Sea, were 97 percent female. “(The catch is) almost completely females in the Bering Sea fishery,” Stewart said. Pacific halibut are broadcast spawners, meaning the females carry the eggs and lay them into the water column, where they are fertilized by males. Biologists don’t think it takes that many males to sufficiently breed to keep up the stock. However, there isn’t a good tool for fishermen to exclusively target male halibut at present, Stewart said. In addition to having fewer halibut, their size at age has been declining as well. In the early 1990s, the average halibut weighed more than 30 pounds; since 2010-11, the average weight has been in the mid-20s. However, there may be some promise of better numbers down the road. The surveys track halibut age classes as well. To date, the cohort of 1987 — the fish born that year — have been one of the strongest contributors to catches across the coast. In more recent years, the 2005 cohort has dominated catches, and because halibut are multi-year fish, they can be represented for many years as the fish age. While some of the other cohorts have been weaker, scientists have been tracking the 2011 and 2012 age classes, which are now starting to show up in catches. Because they’ve been younger, they haven’t been contributing as much to the overall catches so far, but in the future, they may show up more. The cohorts aren’t as strong as the 2005 or 1999 age classes, but it is good news, Stewart said. One of the factors that biologists think affects recruitment among Pacific halibut is an environmental trend called Pacific Decadal Oscillation, or PDO. PDO describes an environmental phenomenon in the North Pacific similar to the El Nino Southern Oscillation which can last years and describes an oscillation of sea surface temperature and pressure. When temperatures near the coast are higher and cooler in the interior, accompanied by below-average pressure, fishery biologists have noted that Pacific halibut tend to have better recruitment. The opposite is true when the temperatures are lower near the coast and higher near the interior, accompanied by above-average sea level pressures, recruitment tends to be lower. From 2007-13, the PDO value was described as negative, correlated with lower recruitment. Since 2014, the PDO has had a positive value, which may be mean better recruitment, but scientists won’t know for several years yet, Stewart said. The anomalously warm temperatures in the Bering Sea for the last two years may also play a part in Pacific halibut numbers in the future. For the last two years, scientists have noted extremely low sea ice cover in the Bering Sea, accompanied by much warmer sea surface temperatures than normal. This summer, residents and the National Marine Fisheries Service noted unusual sea bird and marine mammal die-offs, potentially correlated with ecosystem changes. There have already been some changes to the Pacific cod distribution, and scientists noted a “modest increase” in the density of Pacific halibut in the northern Bering Sea this summer, Stewart said. It’s hard to definitively say how the warmer temperatures and lack of sea ice will affect Pacific halibut, but scientists have their eyes on the Bering Sea, he said. “We don’t know if (the conditions) are bad yet, but they’re certainly different,” he said. Elizabeth Earl can be reached at [email protected]

Gov: Communication key to second year success

Alaskans should expect to see much more of Gov. Michael J. Dunleavy in 2020. Following a turbulent first year in office during which he proposed unprecedented cuts to the state budget, regularly sparred with fellow Republicans in the Legislature and watched an effort to recall him from office materialize, Dunleavy said he will be making more appearances across the state to talk with residents about what they want their state to be. “I could’ve done a much better job at communicating. I’ll be the first to admit that,” Dunleavy said during a Dec. 2 interview with the Journal at his Atwood Building office in Anchorage. “Since I can’t go back in time I will be reaching out and we’ll be going to all the communities, communities that have been affected and meeting with any and every group there is and I fully expect some people not to be happy with what happened with the budget. But what I want to hear from these folks once they get done venting is what they want Alaska to look like. What are we willing to do to get to that point for Alaska to look like that?” The governor and key members of his administration did conduct what they dubbed a “budget roadshow” last spring that consisted of five public events across the state to make the pitch for his budget proposal, which looked to close a $1.6 billion deficit through major spending cuts and diverting what has traditionally been local tax revenue to the state while paying Permanent Fund dividends according to the formula that is still in law. However, those events were disrupted by protesters at times and dismissed by other skeptics because they were coordinated with and sponsored by the national conservative advocacy group Americans for Prosperity. The upcoming legislative session, which starts Jan. 21, will undoubtedly be another contentious one but Dunleavy hopes it can be more constructive — and shorter. Alaska’s regular 90-day session is scheduled to end in late April each year. Lawmakers have gradually extended their work time since 2015 as structural budget deficits that have at times put the state more than 50 percent in the red and correspondingly shrinking reserves have made reaching a yearly spending compromise increasingly difficult. In 2019 the situation hit a new level with special sessions spent debating Dunleavy’s budget plan and subsequent $410 million worth of vetoes that bled into early August, more than a month after the start of the 2020 state fiscal year. Looking back Dunleavy acknowledged the situation left many state programs and private enterprises such as social service providers in limbo. This year, he and members of his administration have been meeting with individual legislators regularly while crafting his latest budget proposal that must be released by Dec. 15 according to state law. He said his administration also has “an idea of what Alaskans are willing to tolerate and what they aren’t,” which should help get the 2020 session off to a more productive start. Last year also started with a nearly month-long leadership vacuum in the state House until a small bloc of Republicans joined with Democrats to form a bipartisan majority coalition primarily aimed at opposing fundamental elements of the governor’s budget plan. Everyone has also had the luxury of hindsight this year to examine the ramifications of some of his budget cuts — the biggest to Medicaid, the University of Alaska and the state ferry system — and lawmakers can start working from there, according to Dunleavy. He said last year’s budget process “was painful for a lot of people” and stressed that he took no enjoyment from the emotional toll it took on many Alaskans. At the same time, he also said it ended up proving the Alaska economy is more resilient than some of his naysayers insisted. “I think one of the successes — and many people may say, ‘come on’ — is making the reductions and having the discussion of what Alaska would look like if we truly reduced $1.6 billion, what would Alaska look like if we reduce $600 million,” Dunleavy said. The Legislature cut General Fund spending by about $200 million, which combined with Dunleavy’s final round of vetoes to reduce the overall state budget by roughly $600 million compared with a year prior. He highlighted that employment and personal income in Alaska are on the upswing this year, counter to the predictions of some economists who said implementing his full suite of budget cuts would send the state back into a prolonged recession. The elephant in the room The elephant in the room during every budget debate last session was the PFD — the state had a revenue surplus without it — and the insistence of Dunleavy and a minority group of legislators in the Senate and House on paying it according to the statutory formula. He wants it to be one of the first topics the Legislature addresses in 2020 because a proposed special session this fall to settle the matter was derailed by the sudden death of former Anchorage Sen. Chris Birch in August and the lengthy process of legislative appointments that followed including Senate Republicans rejecting Dunleavy’s first nominee, Rep. Laddie Shaw. Dunleavy’s first budget appeared to put the PFD above all other spending, as it was the one area of spending that was not cut and instead, by following the formula, was nearly doubled under his plan from the previous year. He emphasized that it was arbitrarily reduced over several years, first by former Gov. Bill Walker by veto in 2016 and then the Legislature in 2017 and 2018, and his aim was to see what programs Alaskans truly value. “I don’t say the PFD is the most important thing. I think it’s important. It’s been a program, if you want to look at it as a program — some of us choose to look at it as a transfer although the courts have changed that dynamic with their (2017) ruling on appropriations — but it’s been around for almost 40 years and it touches more Alaskans than almost any other program we have,” Dunleavy said. “You will have Alaskans that get a PFD that don’t necessarily take the ferry. You’ll have Alaskans that get a PFD that don’t necessarily go to the university. You’ll have Alaskans that get a PFD that may not partake in other state programs, so this is a program that touches about 660,000 Alaskans. The last time there was a major discussion on this in 1999 there was an advisory vote and from the vast majority of Alaskans the message was they prefer to leave the program as it was.” He continued to stress that he wants another advisory vote to precede any changes to the PFD formula, but also said that it needs to be resolved one way or another. “I don’t want to give anyone the impression that it’s the dividend or that’s it and nothing else matters, the state can fall apart,” he added. “My preference is to keep as much money in the hands of people as possible but I know that we have a legislative process. I know that we have to solve this issue or nothing else gets done in the State of Alaska. I’m hoping that we can come up with an agreement, whatever that is, that we can all live with. It may not be something that we’re all excited about but that we can all live with.” Capping spending Lowering the state’s current but ineffectively high constitutional state spending cap has been another priority of the Dunleavy administration and is likely to receive more attention this year, legislative leaders have said. Resolving all of the budget-related issues is likely to get just a little more difficult, as well. Dunleavy said there will likely be a slight downward revision in the state’s revenue forecast based on oil prices that at $63.69 per barrel are currently averaging 3.5 percent below the $66 per barrel price the Revenue Department forecasted for the 2020 fiscal year last spring. An education year One of Alaska’s major policy issues that was sidelined last year because of the prolonged budget drama, according to Dunleavy, was education reform. A teacher and school administrator by trade, he said the administration wants to make 2020 “an education year” and will be introducing several bills to make that happen. His focus is on getting young Alaskans reading at proficient standards by third grade and proficient in algebra by eighth grade. To do that, the administration will submit legislation to establish a pilot program to integrate a pre-kindergarten reading program into K-12 curricula, Dunleavy said. The Department of Education will pay for the new program, which will include reading coaches, advanced training for teachers and parental support, through a $20.7 million, five-year federal grant the department received in early October, according to a statement from the department. The state will start by inviting five or six underperforming schools to participate in the program and hopefully grow it from there, Dunleavy said. After the grant funding is depleted it will be up to the Legislature to decide if the program should continue with state funding. “I think Alaskans will be more apt to want to pay for that because they’ll see the results and the outcomes,” he said, adding similar programs have been successful in Florida and Mississippi. Alaska has long had poor education outcomes. Standardized test results from the 2018-19 school year indicate more than 63 percent of Alaska third-graders were not proficient in English and language arts skills and nearly three-quarters of eighth-graders were not proficient in math. Dunleavy has repeatedly called algebra a “gatekeeper course” that provides students with the math skills necessary for more advanced study in science, engineering and technology fields. He said the Education Department will be making regulatory changes and possibly introduce bills to require that students are proficient in algebra before they leave eighth grade. “If we can get our students reading at grade level by third grade, and kids are proficient in algebra by eighth grade, we just laid the fundamentals for them to be able to do almost anything,” he said. According to Dunleavy, based on initial conversations, the reading concept has support from stakeholders while there has been concern about how small rural schools can focus on algebra when there are often just a handful of students in a given grade. He said he wants to utilize more distance learning classes to remedy those situations and also partner with Alaska Tribes through a formal education compact with the state. He said Tribes can provide a valuable cultural component to education that historically was ignored when Alaska Natives and other indigenous youth were forcibly relocated to boarding schools. “We are probably seeing the results of that inter-generationally, in terms of some trauma that occurred to some folks,” Dunleavy said. “Having the Tribes now oversee in the cases that they wish to oversee education — they’re a part of it. They’re not doing it to their young people, they’re doing it with their young people and supporting their children so I think it’s a different approach for education to be viewed differently in many parts of Alaska.” Editor's note: This story has been amended to provide an updated timeframe for when Gov. Dunleavy's 2021 fiscal year budget proposal will be released. The governor originally indicated it would be Dec. 13; however, a spokesman for the governor's office later said it would the budget would not be released Dec. 13, but it would be before the Dec. 15 deadline. Elwood Brehmer can be reached at [email protected]

GUEST COMMENTARY: Time to let go and get it right

The sound of the crowd is at fever pitch. The intensity is explosive. Reduce the budget versus find new revenues is the fierce battle of tug-of-war underway in Alaska. Let’s take a good look at the players. On the “New Revenue” end, rope fibers fray as two team players struggle for the lead position while audience members break into factions, some fans of “Raise-Oil-Taxes”, others cheering “Raid-the-PFD”, and some ecstatic and googly-eyed because of the potential windfall for government if both players stay in the game and win. At the same time, a loud bass sound rumbles as a wave in a large packed section in the stands rises and chants boos in unison. The “Hands-off-Our PFDs” crowd boisterously bellows against the “Raid the PFD” challenger. Thundering shouts and another wave pick up in the bleachers from the “Bad-Unfair-Tax” crowd as they rail against the “Raise-Oil Taxes” contestant. Meanwhile, on the “Reduce the Budget” end of Alaska’s tug-of-war rope, a very tall player with scissors in his pocket is checking the tension on the rope as every few minutes team members, also with scissors in pockets, rotate on the line to lend a hand and give a good, strong tug. The noisy clamor on this end is not so confusing. It’s just two groups in an uproar. The “Wailing-and-Gnashing-of-Teeth” crowd sobs incessantly that life in Alaska as we know it will end if these guys win. The “Necessary-efficiencies-everyone-duh” crowd rolls their eyes at the wailers, followed by jumps and shouts of glee when they notice their favorite team’s scissors sparkle in the sunlight. What a scene. Without an emerging victor in sight, could there ever be a more fractured crowd or more opposing forces? This tug-of-war has been underway for five years. That’s right: five years. Ever since the price of oil dropped. Here’s the good news. The tug-of-war has to end soon. Why (and this is the bad news)? Savings have dwindled. Incoming revenues don’t match spending. This is catapulting us to a new point, to a crossroads, and we have no choice but to act. So does that mean one team just all of a sudden needs to pull harder, cause pain and rope-burns, and break the stalemate? That could happen but it’s unlikely – if the last five years mean anything. At this crossroads, I believe it’s time to ask: Is there a better way? And is it possible for this to end well? The answer to both questions is yes. I say, it’s time to let go of the rope, everybody. Set it down. What we need now is pivotal and factual budget information and answers to questions to know whether and where we can reduce and whether and where state services are lacking. And we don’t need political responses to those questions. We need objective, unbiased responses. What Alaska needs now as we broach this crossroads is an objective, unbiased State Auditor who is independent, neither beholden to the Legislature or to the governor, but who is accountable to the people of Alaska. State services are for the people and revenues are derived from the people. Who better than the people to hold this position accountable? We can fight and bicker over whether we need more or less money in the budget along majority/minority or party lines. We can fight based on our own perspectives and biases. We can fight over our most, or our least favorite programs. We can pit one special interest group against another. But wouldn’t it be better to get factual data, to get expert recommendations with the effectiveness, efficiencies, statute requirements, constitutional obligations of each program, of each division, of each department factored into the equation, from someone who has no skin in the game, from someone who abides by approved standards, principles, and practices, from someone who has the time day in and day out to get into the weeds, from someone who has the skills, the training, the focus and does not stand to benefit one way or the other? Yes, this would be better. I’ve observed how well this concept has worked on a small scale each year as the auditor we do have (with her small team) under the direction of the Legislative Budget and Audit Committee presents reports on limited items, such as on professional boards. The respect for and acceptance of the report and recommendations is typical across the political spectrum. It works quite beautifully, actually. This is what we need now, budget-wide. Independent, objective audits of each and every program, division, department. Along with recommendations for improved effectiveness and efficiencies, we can also root out fraud and abuse. How is this not a good thing? Surely this is a better way forward than the tug-of-war. It would be much more of a win-win to boot. Once we know we’re not spending wastefully, and that we’re spending enough to adequately provide state services, we will have the much-needed budget baseline which can be adjusted annually for inflation. This will give us assurance to address the spending cap that’s over-inflated and outdated in the state constitution; we’ll have confidence that the adjusted cap will be enough but not too much. We will sleep at night knowing we’re not going to sink the next generation. Very, very importantly: this will also allow us to know if we do need to turn on a new revenue tax spigot. With our very small population, it’s vital to get our budget to the right level. We simply do not have enough people to carry an over-sized budget on our backs. Tax spigots rarely are turned off or down. Starting at a budget baseline that’s too high for our low population and increases that exceed inflation would be harmful for the economy and hard on Alaskans (and undoubtedly spur out-migration from Alaska, resulting in fewer backs to bear the burden). I’ve spoken about the concept of an objective State Auditor with Alaskans since oil prices dropped. The reception has been warm and welcoming. I think the time is now. If you think so too, please let me know as well as your legislators and the governor. ^ Shelley Hughes is the state senator for District F representing Chugiak and Palmer.

State settles Alaska hire suit for $50,000

The State of Alaska has paid $50,000 to settle a lawsuit challenging the validity of its resident hire law following a legal opinion from Attorney General Kevin Clarkson agreeing with the company that brought the suit earlier this year. The lawsuit was filed by the Southeast Alaska general contractor firm SECON in July in state Superior Court alleging that the “Alaska hire” law requiring contractors working on state and locally funded projects to utilize at least 90 percent resident labor under certain economic conditions violates the Privileges and Immunities and Commerce clauses of the U.S. Constitution and the Equal Protection Clause of the Alaska Constitution. Juneau-based SECON is a subsidiary of Colaska Inc., which is part of the larger Colas USA group of construction companies. The company routinely works on Southeast Alaska road projects. Ricky Kirby, a seasonal SECON paving equipment operator from Yakima, Wash., was also named as a plaintiff in the suit. On Oct. 3 Clarkson issued a formal opinion at the behest of Gov. Michael J. Dunleavy indicating he also believes that laws intended to economically benefit Alaska residents at the expense of nonresidents violates the Privileges and Immunities Clause of the U.S. Constitution. Similarly, provisions in the current law could at times put Alaskans from one region of the state ahead of others when being considered for certain work, meaning it violates the Alaska Constitution’s Equal Rights, Opportunities, and Protection Clause, according to Clarkson. The $50,000 settlement, dated Nov. 8, ends the lawsuit in which SECON was seeking to have $158,670 of fines issued by the state Labor Department covering 18 Alaska hire violations since 2017 vacated or repaid. According to SECON’s complaint, the union contractor is managed by Alaskans and has an 85 percent resident workforce but is periodically forced to hire Outside laborers such as Kirby to work on its projects in the state. As it stands, state law requires that staffing for state or locally funded public works projects be conducted with a 90 percent Alaska resident hire requirement by trade when a given project is in a region of the state deemed to be a Zone of Underemployment by the Labor Department commissioner. A region of the state can be considered a Zone of Underemployment if the unemployment rate for the area averaged 10 percent more than the national unemployment rate over the prior 12-month period. The entirety of Alaska can also be deemed a Zone of Underemployment if the criteria are met statewide. Labor Commissioner Tamika Ledbetter found all of Alaska to be a Zone of Underemployment in the most recent employment preference determination issued by the department June 13. The determination was effective through June 2021 for 21 trades until Clarkson’s opinion, which recommended the state stop enforcing the law. Nonresident workers accounted for 17.9 percent of the state’s construction labor force in 2017, according the state Labor Department. A common lack of economic opportunities and the subsistence lifestyle prevalent in rural Alaska, and the state’s highly seasonal industries such as fishing and tourism have historically combined to give the state a significantly higher unemployment rate than the rest of the country. While settling the case means the true constitutionality of the Alaska hire law remains unsettled, some state lawmakers are unhappy with the Dunleavy administration’s decision to stop enforcing a law that otherwise remains remains on the books. Republican Senate President Cathy Giessel sent a letter to Clarkson Oct. 22 insisting it is his duty as the Alaska’s top lawyer to defend the state’s laws until they have been thrown out in court. Clarkson responded Oct. 29 writing that the administration wants Alaskans to work on projects in the state, but also stressing that he took an oath to defend the state and federal constitutions first. Senate Labor and Commerce Committee chair Lora Reinbold, R-Eagle River, said in a brief interview that she had not yet discussed with members of her committee whether they should look into the Alaska hire situation. Reinbold, who is a supporter of many of the administration’s conservative policies, withheld an opinion on Clarkson’s position, saying she needed to research it further leading up to the legislative session that starts Jan. 21. The House Labor and Commerce Committee is currently without a leader because of changes in committee assignments, but Labor and Commerce member Rep. Zack Fields, D-Anchorage, was blunt in his assessment of the situation, saying the issue is one he hopes the Legislature examines closely. “When you have a law that’s been passed that hadn’t even previously been challenged, it’s pretty outrageous for an administration to unilaterally not enforce it,” Fields said. “It fundamentally challenges the balance of powers between the executive, legislative and the judiciary.” The development director for Laborers International Union of North America Local 341, Fields said the decision to not enforce a statute that is still on the books leaves impacted businesses in an untenable situation because the next governor could, and likely would, revert the state’s policy back to enforcing Alaska hire requirements. “The downsides for the State of Alaska and workers are obvious, but I think it is a very fair point that there are a lot of downsides for businesses, too, who are just trying to make reasonable investment decisions, recognizing that they have a graying workforce and that’s particularly true for the construction and oil and gas industries,” he said. For his part, Dunleavy said in an interview that his administration is working on alternative ways to encourage companies to hire more Alaskans on projects in the state. “We’re having discussions about how we can incentivize Alaska hire, how we can make that work without running afoul of the Commerce Clause issue,” Dunleavy said. “We really believe in Alaska hire. We’re doing everything we can with our economic development team to bring jobs up here, industries up here that have jobs.” The governor said he needed to talk further with Clarkson about whether the administration should submit legislation to repeal the current Alaska hire statutes. Elwood Brehmer can be reached at [email protected]

BROWN'S CLOSE: Guys, don't loiter in lingerie

Why do men insist on dawdling in ladies’ lingerie departments? To me, the mark of a well-bred man is one who stays far away from these stores. This model of decorum was perfected by my parents during our family back-to-school shopping trips. Every year, my mother would choreograph an elaborate outing to purchase clothes for my younger brother and me. At the shopping mall of choice, she, like a kind of shopping champion, powered through the clusters of stores, hurling pants, shirts, and shoes at her two children. Mom would scurry between the clothing racks and dressing rooms, toting around options. She would then try to confirm if there were any outfits that year I found suitable, thereby allowing me to hold off on life as a nudist for another season. After repeating this process with my younger brother, she would bustle up to the counter, collect her bags, and shoo us out the door. And that’s when Dad’s role would take the limelight. My father hates shopping. Beyond hates. It paralyzes him with fear, actually. Not a grocery store trip goes by without Dad calling Mom on the phone, facing a wall of canned beans, or a display of packaged cheese. He then describes every label he sees to her in great detail, attempting to find the specific object of desire for which she sent him out searching. Even then, he gets it wrong as often as he gets it right. On the days my mother would designate for school shopping, he would cringe, and turn an ashen shade of grey. As Mom would shovel my brother and me through the stores, he would skulk behind and skiv newspapers out of bins. With his new treasures now collected, he would find a bench, sit down, and desperately try to distract himself. At this point in the spree, my mother would deposit the bags on the bench beside my father. My brother would manfully take his position on the bench, and Mom would lead me off to buy underwear. But we all learned a lesson the year my brother finally reached an age to be intrigued by the feminine form. He was curious about that inner sanctum known as Victoria’s Secret, and was reluctant to join my father on the bench. Mom informed him in no uncertain terms that never ever was my brother to be found in Victoria’s Secret.  Dad looked up from his newspaper long enough to watch Mother and Brother squabble loudly before Brother sullenly took up his designated battle station. And, satisfied the men were consigned to their proper place, Mom led me off once more. A man’s place in Victoria’s Secret is sitting on a bench far away from it. This idea was further reinforced when I went off to summer camp in Washington, D.C. I was 17 and the camp consisted of male and female counselors in their 20s driving several hundred teenagers around the monuments for hours while lecturing them about history and dates of great importance. We would then be sent out of the bus into the swampy heat of July, and made to run for miles around the monuments. One night, the counselors took pity on us. Our destination was a large outlet mall, in which we would be set loose for the evening. The head male counselor seized the microphone to give us the rules for the outing. We had to travel in pairs and be back on the bus by nine o’clock. “Boys!” he bellowed suddenly. “Do not let me catch you anywhere near Victoria’s Secret!” This counselor was a superman. Looking back on the sad saps I’ve dated since then, I should have asked for his hand in marriage. Walking through shopping malls today, I am sorely disappointed by the state of America. The lingerie departments are always so crowded, mainly with people who have no reason to be there. This is not helped by the fact that department stores have an inexplicable penchant for erecting their coffee carts directly across from the bras and panties. But aside from this fatal design error, without fail, every time I need to buy new underwear, there is a man hanging about. Be they following their wives or girlfriends, or just lurking in the background, these men do not realize they are committing cardinal breaches of shopping mall etiquette. Where were their mothers? Where were their back-to-school shopping trips? When I was a regular at Nordstrom and needed to complete underwear-related errands, I would make a beeline for the lingerie floor. With no desire to linger, I would attempt to accomplish my panty mission in the shortest time possible. But alas. A man and his teenage son were forever magically leaning against the exact bra rack I needed to peruse. I would walk up and down the nearby displays, hoping they would move along. They did not, and I was forced to rummage through bra sizes in their presence. There is nothing quite so uncomfortable as attempting to find highly personal items under the curious stare of a complete stranger. And then there are the drawer cabinets in Victoria’s Secret. These white islands are placed in the middle of the store. Drawers can be pulled out and appropriate panties selected. And this is where the men congregate, leaning upon them. These ne'er-do-wells watch inquisitively as I open and close the drawers, rifling through the cotton underpants. One day, one of them will offer an opinion on my choice and I will fall dead away through the floor. Where are the feminists on this issue? Women deserve the right to work through the rocket-science-level calculations of bra sizing on their own, unmolested by men who simply must skulk around. Why are they here? Why? And then, as I am about to despair of shopping comfortably for underpants ever again, I spot a man and his son sitting bored on a bench, a respectful hundred paces away from Victoria’s Secret. These men are heroes. Long may they reign. Sarah Brown is a reluctant shopper and general curmudgeon. She can be reached at [email protected], and on Twitter @mesarahjb. "Close” is a British term for alley or cul-de-sac.

Movers and Shakers for Dec. 8

Coffman Engineers Inc. hired Senior Project Manager Jason Moncrieff to its Anchorage Project Management group. Moncrieff holds a bachelor’s degree in civil engineering from the University of Washington and a master’s degree in project management from George Washington University. Moncrieff is experienced managing both large- and small-scale multi-discipline projects for multiple client markets. Projects have included large scale drill site remediation, pipeline replacement, generator controls upgrades, erosion control, plant design and road design. Jason had the opportunity to design and manage many oil and gas development projects on the North Slope over the past 15 years. He is a licensed civil engineer in Alaska and a Project Management Professional. Coffman Engineers also announced that Zack Wright obtained American Petroleum Institute 653 Aboveground Storage Tank Inspector certification in September. Wright also holds a master’s and bachelor’s degree in mechanical engineering from the University of Alaska Fairbanks and is a NACE certified CP Technician. The API 653 certification allows Wright to perform and oversee tank inspection activities, including repair recommendations, oversight of non-destructive testing per applicable codes, and prepare inspection reports for clients. Wright has already put his certification to use by supporting Alyeska Pipeline Service Co. on both an ongoing API 653 tank inspection and future planning for four API 653 tank inspections. His certification also helped obtain new work with the North Slope Borough developing API 653 tank inspection, API 570 piping inspection, and CP Monitoring programs for their eight fuel storage tank farms as part of a three-year program.

FISH FACTOR: Halibut survey data released; Symphony winners announced

Lower catches for Pacific halibut are in the forecast for the foreseeable future. That was the message from the International Pacific Halibut Commission at its meeting last week in Seattle. The IPHC oversees halibut stock research and sets catch limits for nine fishing regions ranging from Northern California and British Columbia to the Bering Sea. There are fewer of the prized flatfish (down 4 percent), they weigh less (down 5 percent) and no big pulses appear to be coming into the stock was the grim summary of the 2019 halibut fishery and the results of summer long surveys at nearly 1,370 fishing stations, including 89 added to the Central Gulf of Alaska, the biggest halibut fishing hole. The numbers of spawning halibut also appeared to continue their decline over the past year, said IPHC lead scientist Ian Stewart. “This has been predicted for several years. This is projected to continue for all 2020 TCEYs greater than approximately 18.4 million pounds,” Stewart said. “It’s essentially the breakeven point over the next three years. So, we’re looking at a period of relatively low productivity for the Pacific halibut stock over the next three years.” TCEY, or total constant exploitation yield, is the amount of removals of halibut longer than 26 inches for commercial, recreational, sports charter, subsistence and bycatch in other fisheries. For 2019, the coastwide TCEY was 38.61 million pounds. Stewart added that more female fish are showing up in the stock and lower halibut yields will be necessary to “reduce higher fishing intensity.” “The primary driver behind that has been the addition of new information about the sex ratio of the commercial fishery catch that has indicated that we’ve probably been fishing this stock harder than we thought, historically,” he said. Fishing the stock harder includes the halibut taken as bycatch in other fisheries. “The non-directed discards, meaning bycatch, was up from a little over 6 million pounds to a little over 6.4 million pounds,” Stewart said. In the Bering Sea, for example, there is a fixed cap totaling 7.73 million pounds of halibut allowed to be taken as bycatch for trawlers, longliners and pot boats targeting other fish, with most going to trawlers. The cap stays the same, regardless of changes in the halibut stock. This year, after four years of analyses and deliberation, the North Pacific Fishery Management Council began moving towards a new “abundance based” management plan that would tie bycatch levels to the health of the halibut stock as determined by annual surveys. (Prior to that, the issue had not been discussed for 20 years.) Meanwhile, bycatch allowances, combined with new rules in setting halibut catch limits, could mean Bering Sea communities get squeezed out of the upcoming fishery. “Last year the IPHC agreed to two allocation decisions that this year may hamstring efforts to provide enough halibut for Area 4CDE (the central Bering Sea) to even go fishing,” said Peggy Parker, director of the Halibut Association of North America and contributor to “The first decision was to provide a fixed minimum of 1.65 million pounds to Area 2A (Washington, Oregon, and California). The second was a formula for the Canadian allocation that was designed to mitigate their current and future losses from the trawl bycatch in the Bering Sea. That bycatch increased this year, which threw last year’s projections off and will likely result in lower catches to that area next year,” Parker added. “Having fixed minimum allocations to Area 2A and 2B (British Columbia) will increase the difficulty in providing enough halibut to merit a fishery, in the eyes of quota holders, next year. It is a zero-sum game in the midst of a declining stock where Alaska becomes the only place with wiggle room.” It’s déjà vu for Jeff Kauffman of St. Paul, where emergency measures were implemented in 2015 to enable a halibut fishery to open in the region and fishermen’s catch limits were slashed to a half-million pounds. “There has been a de facto reallocation from the directed fisheries to the bycatch fisheries,” he said at the time. “Conservation of the stock is riding solely on the backs of the halibut fishermen.” The North Pacific council will set halibut bycatch limits for 2020 during its Dec. 2-10 meeting in Anchorage. The IPHC will reveal the catch limits for the halibut fishery during its annual meeting Feb. 3-7, also in Anchorage. Fish watch The Pacific halibut fishery ended on Nov. 14 amidst little fanfare. Most dock prices ticked up during the eight-month fishery, hovering in the $5 to $6 per pound range, likely due to bad weather hampering landings of competing halibut from Canada. “Their hurricanes and everything may have disrupted some of the fisheries there and allowed some of the product from Alaska to make it into those higher end East Coast markets. So we got a little better price,” said Doug Bowen of Alaska Boats and Permits at Homer. Better dock prices have not boosted the market for halibut quota shares, which are down by a third or more from sky high levels two years ago and appear to have stabilized. Shares in Southeast, for example, that topped $70 per pound are now in the $55 range or less. In the Central Gulf, halibut Individual Fishing Quotas, or IFQs, are at about $45 per pound. “For the last 15 years or so the resource has been in general decline. There have been some minor increases over the years, but mostly the trend has been downward,” Bowen said. “I think folks are kind of tired of buying something that gets cut the next year and is worth less. They’re buying an asset that’s declining in value. Many times over the last few years folks have thought that this must be the bottom and it would be a great time to buy: get in and ride it back up, and that hasn’t happened.” The 2019 Bristol Bay red king crab fishery ended last week with a catch of just less than 3.8 million pounds. Crabbers averaged 15.6 crabs per pot pull, the least since 2005, and down from 20 crab in the last two seasons. The crabs were hefty, weighing 7.14 pounds on average, the highest since 1973. That’s cause for concern, said Ethan Nichols, assistant area manager for the Bering Sea region for the Alaska Department of Fish and Game. “We’ve seen average weight increasing for several years now. We think we are fishing on the same group of adult male crab who are a year older and heavier,” he told KUCB in Unalaska, adding that not many small crabs are recruiting into the fishery. “If we had a better mix of small crab, we would see a lower average weight. What is coming in is mostly large older males.” Symphony of Seafood winners A fish and chips meal kit featuring Alaska cod was the fan favorite in the first round of the Alaska Symphony of Seafoods competition held during Pacific Marine Expo. The snappy kit by Alaskan Leader Seafoods won the coveted Seattle People’s Choice Award. “It’s really a lot of fun. You’ve got the French fries, the batter, the panko and the fish, which of course is Alaska cod,” said Keith Singleton, head of the value added division. In all, 20 new Alaska seafood products debuted at the Expo contest. The event, hosted for 27 years by the Alaska Fisheries Development Foundation, showcases a diverse array of innovative items and levels the playing field between major companies and small ‘mom and pops.’ Other first place winners selected by a panel of judges: In the retail category, it was Bullwhip Kelp Salsa by Juneau-based Barnacle Seafoods. Southern Style Alaska Wild Wings made from Alaska pollock by High Liner Foods of Canada took top honors in Food Service. In the Beyond the Plate Category, Juneau-based WILD by Nature’s Alaskan Fin Fish Earrings won first place. That category was added four years ago to open doors for new things made from seafood byproducts. “It can be anything,” said Julie Decker, AFDF executive director. “Things that are edible such as fish oil capsules, or nonedible things such as salmon leather wallets.” Pet treats from Drool Central, an Anchorage “mum and pup barkery,” could be among more winners to be announced on Feb. 24 at the annual Symphony of Seafood and UFA Legislative bash in Juneau. That and other entries such as kelp pickles, smoked octopus, and blueberry cured gravlax are vying for second and third place awards. The overall grand prize winner also will be named at the Juneau event. ^ Laine Welch lives in Kodiak. Visit or contact [email protected] for information.

Fed’s Powell sees steady growth, signals pause in rate cuts

WASHINGTON (AP) — Federal Reserve Chairman Jerome Powell said Nov. 13 that the Fed is likely to keep its benchmark short-term interest rate unchanged in the coming months, unless the economy shows signs of worsening. But for now, in testimony before a congressional panel, Powell expressed optimism about the U.S. economy and said he expects it will grow at a solid pace, though it still faces risks from slower growth overseas and trade tensions. “Looking ahead, my colleagues and I see a sustained expansion of economic activity, a strong labor market, and inflation near our symmetric 2 percent objective as most likely,” Powell said before Congress’ Joint Economic Committee. Fed policymakers are unlikely to cut rates, Powell said, unless the economy slows enough to cause them to make a “material reassessment” of their outlook. The Fed cut short-term rates last month for the third time this year, to a range of 1.5 percent to 1.75 percent. “It now looks increasingly likely that the Fed will move to the sidelines for an extended period,” said Andrew Hunter, an economist at Capital Economics, a forecasting firm. Still, when asked if he expected rates to remain unchanged over the next year, Powell said, “I wouldn’t say that at all.” Powell’s testimony came a day after President Donald Trump took credit for an “economic boom” and attacked the Fed for not cutting interest rates further. Powell and other Fed officials, however, argue that their rate cuts, by lowering borrowing costs on mortgages and other loans, have spurred home sales and boosted the economy. Powell was asked about negative interest rates, which Trump also called for Nov. 12, and responded that they “would certainly not be appropriate in the current environment.” Negative rates occur “at times when growth is quite low, and inflation is quite low, and you really don’t see that here,” Powell said. Other Fed officials have also questioned whether cutting rates below zero has actually succeeded in boosting growth in places like Europe and Japan, where central banks have pushed rates into negative territory. Despite Trump’s attacks, both Republican and Democratic lawmakers took a largely respectful approach to Powell. Several complimented him for the “Fed Listens” events the central bank has held around the country, which have sought input from a range of groups, including unions and nonprofits, on ways the Fed could update its monetary policy framework. Powell repeatedly demurred when Sen. Ted Cruz, R-Texas, pressed him on how higher tax rates would affect the economy, including wealth taxes that have been proposed by Democratic presidential candidates Elizabeth Warren and Bernie Sanders. But Powell did concede, under questioning from Cruz, that a ban on fracking would “not be a good thing for the economy.” Some Democrats have called for a fracking ban over environmental concerns about the controversial method for drilling for oil and gas. Recent data suggests that growth remains solid if not spectacular. The economy expanded at a 1.9 percent annual rate in the July-September quarter, down from 3.1 percent in the first three months of the year. The unemployment rate is near a 50-year low of 3.6 percent and hiring is strong enough to potentially push the rate even lower. Inflation, according to the Fed’s preferred gauge, is just 1.3 percent, though it has been held down in recent months by lower energy costs and most Fed officials expect it to move higher in the coming months. Yet Powell reiterated that higher tariffs from the Trump administration’s trade war with China and uncertainty over potential future duties have caused many businesses to delay or cut back on their spending on large equipment and buildings. That has slowed economic growth. Powell also urged Congress to lower the federal budget deficit so that lawmakers would have more flexibility to cut taxes or boost spending to counter a future recession. Other Fed officials have voiced similar concerns. Patrick Harker, president of the Federal Reserve Bank of Philadelphia, said Nov. 12 that the large deficit, and the constraints it imposes on Congress in the event of a recession, “is one of the things I do lose sleep over.” Powell also noted that with the Fed’s benchmark rate at historically low levels, the central bank is considering whether it needs new tools to help boost growth whenever the next downturn arrives. “Central banks around the world are going to have less room to cut in this new normal of low rates and low inflation,” he said. The Fed is exploring an alternative policy framework, Powell said, that it hopes will provide more flexibility. In typical recessions, the Fed cuts short-term rates by roughly 5 percentage points. Powell reiterated that the Fed believes the unemployment rate could fall further without necessarily pushing inflation higher, a view that suggests the central bank is a long way off from hiking rates. “The data is not sending any signal that the labor market is so hot or that inflation is moving up,” he said in response to a question from New York Rep. Carolyn Maloney, a Democrat and vice chair of the Joint Economic Committee. “What we have learned … is that the U.S. economy can operate at a much lower level of unemployment than many thought.” Historically, super-low unemployment has been seen as likely to push up inflation, as workers push for higher pay and companies offer greater salaries to find and keep workers. Most analysts forecast that the Fed will hold rates steady when it meets next month. But some economists expect growth will slow in the coming months and the Fed will likely have to cut again next year. ^ AP Economics Writer Martin Crutsinger contributed to this report.

ConocoPhillips seeking investors in North Slope projects

ConocoPhillips has a lot of work to do on the North Slope and company executives are looking for someone else to help pay for it. They announced during a Nov. 19 analyst and investor meeting that the Houston-based oil producer plans to sell up to a 25 percent stake in the producing fields and other projects the company operates in Alaska. A deal to sell part of its Alaska holdings is expected to take place next year, but it could be pushed to early 2021, according to ConocoPhillips Chief Operating Officer Matt Fox. Michael Hatfield, president of the company’s Alaska, Canada and Europe operations, said ConocoPhillips plans to spend approximately $25 billion in the state over the next decade. A large chunk of that investment is expected to go into the company’s Willow prospect in the eastern National Petroleum Reserve-Alaska, which will cost between $4 billion and $6 billion to fully develop and could produce more than 100,000 barrels of oil per day at its peak. “These investments increase production from our fields and more than mitigate the current decline through (the Trans-Alaska Pipeline System). In fact, as a result of these investments, we believe production through TAPS will increase,” Fox said. “This will create a very economically advantaged future for the state of Alaska.” ConocoPhillips Alaska Vice President Scott Jepsen said during the Resource Development Council for Alaska conference in Anchorage Nov. 20 that Willow is likely to require $2 billion to $3 billion of spending before the first oil is produced in the mid-2020s. However, appraisal drilling of the very large prospect last winter indicates all of that investment could generate an additional 50 million barrels of oil beyond initial estimates; the company now says Willow holds between 450 million and 800 million barrels. ConocoPhillips also began producing from its Greater Mooses Tooth-1 drill site in the NPR-A last fall and is in the midst of developing the similar, mid-sized Greater Mooses Tooth-2 oil project, which is expected to come on line in late 2021 at a cost of more than $1 billion. The search for a silent partner in its Alaska work is a reversal of recent moves ConocoPhillips has made to take more control of its North Slope assets. The company announced in a February 2018 earnings call that it had spent $400 million to buy out Anadarko Petroleum’s minority position in the Alpine field and large swaths of western North Slope exploration acreage. Anadarko for years held a 22 percent stake in Alpine and had similar interests in approximately 1.2 million acres of North Slope leases ConocoPhillips has gradually explored. ConocoPhillips currently holds 100 percent of those assets. About 75 percent of ConocoPhillips significant holdings of prospect acreage are still untested, according to Jepsen. The company additionally swapped North Slope and North Sea assets with BP last year in a pair of cash neutral deals that gave each producer a greater stake in the field it operates. ConocoPhillips took BP’s 39 percent share of the Kuparuk River field in exchange for giving up a portion of its interest in the BP-operated Clair oil field in the North Sea. The result is ConocoPhillips now holds a 93 percent stake in Kuparuk on top of the other Slope developments it owns outright. The decision to sell a minority position in its Alaska operations is consistent with ConocoPhillips policy of not investing 100 percent equity in large-scale projects, which is a common practice in the industry, Fox said. “We’re pretty confident we’ll have a lot of interest in Alaska. I think we’ve made the case there as one of the best exploration plays in the world just now; so I think we’re going to have significant interest there,” he said. Company executives also briefly discussed the Fair Share Act, an initiative to raise oil production taxes on the Prudhoe Bay, Kuparuk and Alpine fields by approximately $1 billion per year, according to sponsor estimates. Fox noted the initiative is not yet guaranteed to make it on 2020 ballots — the sponsors are currently attempting to gather the more than 28,000 signatures needed to get it on ballots next year — but said if it does make it on ballots that the company will “have a conversation with the people of Alaska about, does that make sense?” The Fair Share Act sponsors insist the measure is aimed at Alaska’s legacy fields, which they claim are currently among the most profitable oil fields in the world, to not deter investment in new fields. Fox said he believes Alaskans will reject the initiative if given a chance to vote on it, but if they don’t, the company will have to reevaluate its plans. “They will see what Michael (Hatfield) said was $25 billion of capital in this plan being invested across the three assets we’re involved in, plus about the same again in operating cost,” Fox said. “They’ll see that that’s going to turn around the production in Alaska and actually make it increase again. “So our sense is that once the whole dust has settled, then everybody understands what’s at stake, Alaskans will understand that short-term revenue gain is a risky proposition if you’re going to give up all this long-term potential.” Elwood Brehmer can be reached at [email protected]

GUEST COMMENTARY: Hilcorp proven to be loyal nonprofit supporter

In the coming months, Alaskans are preparing to bid farewell to BP. In times of transition, uncertainty and questions about the future are the norm. Alaska’s non-profits are most certainly wondering what level of commitment Hilcorp demonstrates to local nonprofit groups and charities. I can speak to the experience we at the American Cancer Society in Alaska have enjoyed in getting to know this company over the past several years. In short, Hilcorp has become a tremendous supporter of the work we do and a steadfast partner in the fight for a world without cancer. Hilcorp has sponsored multiple teams in the American Cancer Society’s Polar Bear Jump in Seward. Over the last three years, their involvement and fundraising has increased four-fold, and Hilcorp employees from across the country have traveled to Seward to participate in the event. Without exception, Hilcorp employees exceed their fundraising goals and are consistently open to sharing their personal stories of why the cause means so much to them. I’ve observed the culture at Hilcorp to be one that goes beyond camaraderie, particularly when it comes to their efforts in support of Alaskan cancer patients. Hilcorp fosters an environment of encouragement and a heartfelt attitude of “we’re all in this together.” Hilcorp has multiple teams registered for the 2020 jump, and we expect them to shatter fundraising records again next year. In addition to fundraising and sponsorships, Hilcorp also makes its best and brightest talent available. Over the years, we’ve seen nothing short of leadership, true commitment and old-fashioned hard work from Hilcorp volunteers at various events throughout the state. As a whole, nonprofit groups in Alaska are plentiful and tremendously dependent on corporate sponsorships and donations. That is why it is so important that all types of companies continue to support Alaska’s charitable organizations, enabling them to continue to do good work in our communities. Hilcorp has a loyal history of supporting the American Cancer Society in Alaska by way of sponsorship, employee fundraising and corporate matching. All revenue donated by Hilcorp and raised by Hilcorp employees for the American Cancer Society in Alaska goes toward lifesaving cancer research, prevention and screening outreach, as well as free programs and services for Alaskans facing cancer. It has been our experience that Hilcorp is a generous community partner when it comes to lending their time, talent and treasure for the causes they support. For anyone who has been personally affected by cancer, we owe them a debt of gratitude for their past, current and future efforts to finish cancer, once and for all. Charissa Habeger is the Director of Community Development for the American Cancer Society in Alaska. She has been with the organization since 2015 and is based in Anchorage.

GUEST COMMENTARY: If we build it, will the projects come?

Remember the 1989 movie “Field of Dreams”? An Iowa farmer, played by Kevin Costner, hears a voice urging him to build a baseball diamond in his corn field. “If you build it, he will come,” the voice told Costner’s character. “He” was the ghost of famous player “Shoeless” Joe Jackson. Slightly changed, “if you build it, they will come,” has since entered our political vocabulary, usually referring to big projects — roads, railroads or ports — aimed at fostering economic development. The idea is that infrastructure should spur development. But not always. There’s the “white elephant” risk, where there could be big cash outlay to build something but then nothing happens. A fierce debate has developed around an effort by the state’s development finance corporation, the Alaska Industrial Development and Export Authority, over AIDEA’s facilitating a possible 211-mile industrial road from the existing Dalton Highway to the Ambler Mining District in the western Brooks Range, an area where mineral discoveries have been made. “Build it and they will come” in this case means new mines, and jobs. Building regional industrial infrastructure is exactly what the state development authority does. AIDEA has had several successes and some projects where the jury is still out. In this case, critics are questioning why the state should spend millions of dollars — $19 million — planning a road that may never be built, because construction of mines it will serve is not yet confirmed. It’s important to realize, however, that this road, which would cost about $450 million, will not be built unless there are contracts signed with mining companies to pay for it through guaranteed toll — or use — payments. That won’t happen until a decision is made to actually build a mine. The anchor project, the mining project furthest along, is Trilogy Metals’ “Arctic” high-grade copper discovery. AIDEA is modeling the project on its industrial road and port built in 1989 for the Red Dog Mine, which is on lands owned by NANA Regional Corp. of Kotzebue. The mining company, Cominco (now Teck), agreed to pay AIDEA for use of the road and port, and all would agree the project has been an outstanding success. Red Dog infrastructure has been profitable for the state authority, which invested $265 million in construction and has earned, through tolls, $475 million since 1989. Most important, the mine and the infrastructure created a solid private economy for the Northwest Arctic, an area formerly economically depressed. But it was also nip-and-tuck for Red Dog for a while. Zinc prices dropped in 1989 just as the mine was starting up, and they stayed down for years. Zinc has been stronger recently. Copper markets can be volatile, too. A worst case, critics argue, would be for AIDEA to build the road and have the mines not be economically successful, leaving the state stuck with an unused road. That risk is there, and it’s important to have companies with deep pockets signing firm contracts. Meanwhile, many Alaskans who love wild country don’t like this road. If it results in one or more mines being built, which is AIDEA’s goal, it would create a lot of jobs, but also change the wilderness character of this remote region. That’s the trade-off — jobs against preservation of wild places. Even at Red Dog, AIDEA’s investment wasn’t just about one mine. The area has lots of zinc and there will eventually be other mines. Alaska Native residents of nearby small villages have a different worry. Their concern is that the road would ultimately become a public highway, not industrial-only, that would open access to sport hunters from outside the region. This could put pressure on local subsistence resources. It’s a reasonable concern, given some past history. In 1977, the state of Alaska promised the North Slope Borough, after the pipeline was built, that the Dalton Highway would be an industrial-only road. It wasn’t long until political pressures from sporting groups caused the road to be made public, although the horrors of outside hunters decimating the local game never materialized. AIDEA says that because it would own this road, it can legally enforce an industrial-use-only policy, although local residents would use the road to haul in fuel and freight. It is true that the legal framework is different than that of the Dalton Highway, which was built with state general funds. The Ambler road would be funded by AIDEA bonds, which can have covenants written into them. But despite that assurance, no one can promise that the road would always be industrial. The state will decide that, and governors, Legislatures and laws change. Politics can change things. Red Dog and the Ambler discoveries are cases where mining companies asked the state, through AIDEA, for help in building regional infrastructure. Financially, the mine pays for the infrastructure through the tolls for use. If a company has very strong balance sheet and can finance both mine development and infrastructure, it might be better off doing the entire project itself, without the state. That’s because the mining company then owns and controls the infrastructure. Some companies prefer to build and own their own roads. When the state offered to help Japanese-owned Sumitomo Metals build a 50-mile road from the Richardson Highway near Delta to its Pogo gold mine, the company said, “No thanks.” It built the road itself mainly so that it could control it. Access is effectively limited on this road. There are cases, however, where a medium-sized mining company doesn’t have deep enough pockets to finance both the mine and the infrastructure, and that’s where AIDEA steps in, because the state authority is financially strong. This was the case for Cominco, the mining company that built Red Dog. An investment like this can be a win for the state because the infrastructure continues to make money long after bonds for construction are paid for. AIDEA earns an ongoing 6.5 percent return on its Red Dog investment. In sum, it’s a mixed bag. There’s a big upside — a lot of well-paying jobs and economic diversification for the state. But there are risks, too. Tim Bradner is copublisher of the Alaska Economic Report and Alaska Legislative Digest.

Opposite forecasts for SE pinks, Bristol Bay reds; Cook Inlet busts

Biologists are forecasting another weak pink salmon year for Southeast and another strong sockeye salmon run for Bristol Bay coming in the 2020 season. The forecasts for Southeast Alaska and for Bristol Bay, released in late November, continue the trends of the past few years in both areas. In Southeast, biologists are forecasting about 12 million fish to be harvested, with a range of 7 million to 19 million fish. That’s in the second-lowest forecast percentile, or just more than 20 percent of the fishery’s historic volume. A harvest of 12 million would be about a third of the region’s recent 10-year average harvest, according to the forecast. The forecast number, produced by the National Oceanic and Atmospheric Administration’s Auke Bay Lab in Juneau in collaboration with the Alaska Department of Fish and Game and the Southeast regional hatcheries, is calculated from surveys of juvenile pink salmon in June and July in northern Southeast Alaska waters. The survey data from 2019 turned up the third-lowest index in the last 23 years, according to the forecast. “The low juvenile abundance index in 2019 was not unexpected. Pink salmon escapements in the parent year (2018) were very poor throughout northern Southeast Alaska inside waters and the escapement goal was not met in that subregion, which may have resulted in below optimal egg deposition,” the forecast states. “Escapement and harvest of pink salmon in the Northern Southeast Inside subregion have been very poor since 2012 and the 2020 forecast indicates this pattern is likely to continue.” Though escapement goals were met in the Southern Southeast and the Northern Southeast Outside regions in 2018, harvests were poor there as well. The reason for the low abundance in the 2019 survey isn’t clear, but it could be due to poor freshwater survival conditions or poorer marine conditions, leading to higher mortality, the forecast states. Drought conditions also lasted from 2018 into spring 2019 in Southeast. The juveniles caught in the survey were all large and healthy-looking, the forecast states, but so were the juveniles from 2014-16, when the returns were also less than average. The summer’s unusually warm and dry conditions may also have an effect, as well as the anomalously high sea surface temperatures in the Gulf of Alaska. “The impact of warm sea surface temperatures on the survival of pink salmon that went to sea in 2019 is unknown and adds uncertainty,” the forecast states. Southeast Alaska has had a series of poor pink salmon harvests for the past few years. In 2019, fishermen landed an estimate 21.1 million pink salmon for a total ex-vessel value of $23.7 million, according to a preliminary season summary from Fish and Game. The fish weighed an average of 3.68 pounds. Pink salmon are Southeast’s major volume fishery, but the fish are worth significantly less than other salmon fisheries. Chum, which are significantly larger, came in at an average weight of 7.99 pounds in Southeast. A total of 8.4 million of them landed came to about $37.5 million in ex-vessel value, according to ADFG. The total salmon ex-vessel value of $101 million in 2019 in Southeast was about $32 million less than the total 2018 value, with the shortfall mostly in chums. Bristol Bay Bristol Bay, on the other hand, is predicted to see another better than-average run. The forecast of 48.95 million sockeye is about 6 percent better than the recent 10-year average. If the prediction comes true, it would be yet another big year for Bristol Bay, which has broken harvest and value records for sockeye two years running. The 2018 season brought an estimated 62.5 million sockeye home to the rivers of Bristol Bay; the 2019 season brought more than 50 million. A run of 48.95 million sockeye would allow for a harvest of 36.9 million fish, with 34.56 million in the bay and 2.35 million in the South Peninsula fisheries, according to the forecast. As always, biologists warn caution when reading forecasts, as they may not be accurate, particularly for individual rivers. “Forecasting future salmon returns is inherently difficult and uncertain,” the forecast states. “We have used similar methods since 2001 to produce the Bristol Bay sockeye salmon forecast which have performed well when applied to Bristol Bay as a whole.” Another bust year for Cook Inlet Upper Cook Inlet’s salmon fishermen had another disappointing season, with only 2.1 million salmon landed. That’s about 37 percent less than the recent 10-year average. That brought in a total of about $18 million in ex-vessel value, which is about 40 percent less than the recent 10-year average in the fishery, according to ADFG season summary released Nov. 25. It’s better than the 2018 season, when fishermen in the area only landed about 1.3 million salmon total, about 815,000 of which were sockeye. The sockeye showed up erratically late in 2018, throwing management procedures for a loop and frustrating fishermen. This year, the fish were an estimated two days late, but both the Kasilof River and Kenai River sockeye salmon escapement goals were exceeded in part because of restrictions on commercial fishermen due to weak Kenai River late-run king salmon numbers. The sockeye salmon harvest of about 1.7 million was the second-smallest in the last decade, according to the season summary. ^ Elizabeth Earl can be reached at [email protected]


Subscribe to Alaska Journal RSS