Upskilling Anchorage’s workforce to fill employment gaps

Last July as COVID-19 cases surged, Dynaa Montgomery was surprised to learn that she was considered an “essential employee” by her company. She is a data collector for an out-of-state corporation, and much of her work involves visiting retailers in Anchorage and surrounding areas to do comparison pricing. Montgomery says she was concerned about working during the pandemic, and the experience made her feel like her company chose to disregard the wellbeing of its employees. She began thinking about finding a different job but didn’t feel like she could leave her current position. “I still had to eat! That doesn’t stop,” says Montgomery. “And it wasn’t the first time I had to work somewhere I didn’t like. Quitting wasn’t an option.” When she heard about Upskilling Anchorage, she thought it might be just what she needed to find a new job with higher pay and potential for growth. Launched in March 2021 with Federal COVID-19 relief funding from the Municipality of Anchorage’s 49th State Angel Fund, gener8tor Upskilling Anchorage is a free self-paced virtual skills training program for under- and unemployed individuals looking to gain new career skills. A new, responsive kind of workforce development, upskilling is the process of using training to build on or advance existing skills and quickly addresses workforce needs with freshly educated workers. By delivering no-cost training in a condensed period of time (Upskilling Anchorage programs are five to 10 weeks long depending on the career track) participants are able to sharpen their skills without the sizable investment of time and money necessitated by a traditional degree or certificate program, and upon completion are more attractive to prospective employers. Montgomery, who is finishing up a bachelor’s degree in human services from the University of Alaska Anchorage next year, says that her Customer Service certificate is complementary to her degree. “Having a background in customer service is helpful no matter where you work; you have to be able to communicate with people and understand how they perceive you,” she said. “And, this certificate helps me right now; I’m still a student and have student bills! Anything that can help me increase my earning potential before graduation is awesome.” Currently, Anchorage is home to an estimated 10,000 unemployed individuals, who are generally younger on average than the workforce at large, and largely from lower-paying jobs in retail and the service sector. Prolonged periods of unemployment, like that caused by COVID-19, can cause skills to atrophy, and potentially result in long-term earning losses, reduced physical and psychological health, and other effects lasting years. Workforce training offerings can combat some of these effects by enhancing the employability of individuals. “We are training people who are actively looking for jobs or who want to show their current employers that they’re invested in adding to their expertise,” said Upskilling Anchorage Program Manager Gianna Varrati. “I know so many people hiring right now — I have a list of 300 employers and growing — and they will definitely take a look at our graduates!” Areas of focus are targeted towards those seeking full-time employment in a variety of in-demand fields such as web development, marketing, or information technology. The opportunity to embrace modern, virtually-delivered skill development to take advantage of both local and remote job opportunities represents a significant benefit for workers and employers alike. “We work with our partners to help us identify where employers really need skilled employees, and that guides our focus for each cohort,” Varrati said. “Customer service came up a lot, and that’s the cohort that just wrapped up. Next we are focusing on IT Help Desk skills.” Local community collaborating partners include the State of Alaska Department of Labor and Workforce Development, Anchorage Economic Development Corp., University of Alaska Center for Economic Development, and Anchorage Community Land Trust. Workforce readiness — the basic academic, critical thinking, and interpersonal skills for successful employment — is a perennial problem in Alaska. Employers often report that they’re helping new hires develop basic skills that should be a prerequisite to employment instead of something learned on the job. As part of the Upskilling program, participants receive one-on-one resume building, LinkedIn profile and cover letter writing, and interview preparation assistance, along with regular support from the gener8tor team and the opportunity to connect with national experts in their area of focus. They engage in weekly webinars that address soft skills through webinars like “Developing Your Emotional Intelligence,” “Teamwork Foundations,” and “Effective Listening,” and offer job search content like “A Career Strategist’s Guide to Getting a Job” and “Video Interview Tips.” Montgomery says that the job search support was invaluable. “I hadn’t updated my resume for three or four years because it had been awhile since I looked for a job,” she said. “The courses got me familiar with how to organize my resume, prepare for interviews, and not be so nervous.” At the end of the program, participants are invited to participate in an “Interview Swarm,” or virtual job fair, where they will be connected to employers hiring in the industries in which they have obtained certifications through Upskilling. “Our intent is to help the community employ the community first, but if one of our graduates can’t find the opportunity they’re looking for, we are connected to people hiring remote workers outside of Alaska too,” says Varrati. “But we are focusing first on connecting people to employment within the state of Alaska.” Montgomery has already had two interviews with more to come. “I definitely feel hopeful,” she said. “Before I’d go through an interview and guess what they wanted to hear, but in the course we heard directly from employers about what they were expecting and looking for, and that was really useful.” The next Upskilling Anchorage cohort will focus on IT Help Desk skills, and will run from Aug. 30 to Oct. 22. Applications are open to those ages 18 and above, and although the program is available to all who apply, Varatti says they’re looking for people who are dedicated to the process. “Our ideal applicant is someone who is going to put the time and effort into finishing the modules, will check in with their career coach each week, and will be active in our lunch and learns,” said Varatti. Montgomery says that anyone considering taking a course from Upskilling Anchorage should go for it. “I feel like it opened my prospects up, and now I see things differently,” she said. “It gave me a leg up because I’m more marketable and they help you get job interviews!” Gretchen Fauske is a marketing-minded economic developer fueled by a passion for innovation and entrepreneurship. She is the associate director for the University of Alaska Center for Economic Development, Board President for Anchorage Downtown Partnership, and a Gallup-certified CliftonStrengths coach. She was named to the Alaska Journal of Commerce Top Forty Under 40 in 2013.

USDA plans to reinstate ‘Roadless Rule,’ $25M for Southeast aid

And back the pendulum swings. The U.S. Department of Agriculture officially announced its plans to end old-growth logging in the Tongass National Forest and restore the contentious Roadless Rule development restrictions that agency officials just spent years repealing. Dubbed the “Southeast Alaska Sustainability Strategy,” the Biden administration’s plan also calls for distributing $25 million in discretionary funding and technical resources to advance economic development and identify future priority investments, according to a July 15 statement from the USDA. Agency leaders say they will organize a local group to consult with Southeast Tribes and Alaska Native corporations among other stakeholders to develop a strategy for the funding and other assistance. “This approach will help us chart the path to long-term economic opportunities that are sustainable and reflect Southeast Alaska’s rich cultural heritage and magnificent natural resources,” USDA Secretary Tom Vilsack said in a formal statement. It was about nine months ago that USDA officials under the Trump administration finalized their full repeal of the Clinton-era Roadless Rule that, with exceptions, largely prohibited development across approximately 9.3 million currently undeveloped acres of the 17 million-acre Tongass. Leaders of Sealaska announced in January that the Native regional corporation, which owns more than 360,000 acres across Southeast, would be making a transition out of the logging industry this year after a multi-year shift in its business model to focus on ocean-based food and tourism opportunities. Sealaska acquired just more than 70,000 acres formerly of the Tongass in 2015 to fulfill the company’s land entitlement under the Alaska Native Claims Settlement Act. Company leaders then said that nearly all of the acreage was selected for timber harvest and management. While timber is naturally the most recognizable resource industry in the forest, Alaska mining industry leaders and hydropower advocates have also pressed the USDA and Forest service to lift the rule — or at least exempt the Tongass from it — for years, contending that though the rule doesn’t outright ban their projects, the access limitations of the Roadless Rule often add greatly to the cost of the developments. Both of the large operating mines in the region recently applied with the Forest Service to expand their tailings facilities and extend the life of their operations. The advanced Bokan Mountain prospect on Prince of Wales Island would also be just the second rare earth element mine in the country. Rare earths are a suite of metals with unique properties that are widely used in small amounts in advanced technological equipment, phones, and national defense technologies. Several Southeast Tribes and conservation groups backing the reinstatement insist the economy of the region has changed from timber-centric to being more reliant on fishing and tourism in the two decades since the rule was first enacted nationwide. They also note that Forest Service regulations allow for project proponents to apply for specific exemptions to the Roadless Rule, which the agency routinely grants. USDA officials initially indicated their intent to reinstate the Roadless Rule in the Tongass in mid-June when the agency published a required notice for proposed rulemaking to reverse the Trump administration’s repeal. At the time, Sen. Dan Sullivan called the move an “unacceptable whipsaw” in federal policy after the Trump administration spent two years analyzing the rule, though USDA leaders made their intent to fully repeal it, rather than develop a Tongass-specific rule, early in the process. Sullivan called the $25 million economic investment in the region “simply a pay-off” for killing the long-term economic opportunities lifting the rule provided. “Greater restrictions on the Tongass have been opposed for decades by all of Alaska’s governors and the state’s federal elected officials, both Republican and Democratic,” Sullivan said in a statement from his office. “Let me be clear: $25 million doesn’t even come close to covering the economic damage that this administration’s policies will inflict on Southeast Alaska. Alaskans have the right to make a living, support our families, and connect our communities and have a much greater interest in seeing the Tongass healthy and sustainably managed than outside extreme environmental groups pulling the strings in the Biden administration.” Backers in the timber industry of the Trump administration’s repeal finalized last October emphasized that in practicality just about 188,000 acres of additional old-growth would be made available for harvest — not 9.3 million acres — because the Tongass Land Management Plan finalized under the Obama administration in 2016 still applies. The comprehensive Tongass land-use plan calls for a transition away from old-growth harvests to second-growth stands over about 15 years. It’s unclear at this point how the latest directive to end large old-growth sales will mesh with the 2016 plan. Elwood Brehmer can be reached at [email protected]

Hilcorp files plans to restart Prudhoe drilling

Rigs will be likely drilling new wells again soon in one of the country’s largest oil fields if state regulators approve Hilcorp Energy’s amended annual work plans. Representatives for Hilcorp North Slope LLC filed a proposed amendment to the company’s plan of development for the western satellite fields to Prudhoe Bay July 15 with the state Division of Oil and Gas indicating leaders of Hilcorp and the other Prudhoe owners have agreed to drill up to six wells in the Orion participating area by next spring. The Orion participating area is in the far northwestern corner of the broad Prudhoe unit area. More specifically, Hilcorp plans to drill up to three producer wells and one injector from the field’s L-Pad and one producer and injector each from the Z-pad. Hilcorp North Slope also indicated drilling of up to four new wells in the Lisburne and Point McIntyre areas in its 2021 plan of development, or POD, for the Greater Point McIntyre regulatory sub-area that is in the eastern portion of the Prudhoe Bay Unit. Hilcorp North Slope is the subsidiary formed after its purchase of BP Exploration Inc. and is the operator position at Prudhoe Bay. The 2021 Greater Point McIntyre POD would take effect Oct. 1 and run through September 2022. Hilcorp representatives wrote in their multiple original 2021 PODs for the complex field — the first of which were submitted in January — that Hilcorp and the other Prudhoe Bay owners did not approve drilling this year because of pandemic-induced market conditions. At the time, it was presumed drilling would likely resume sometime next year. The company drilled 10 wells in Prudhoe early last year before nearly all discretionary work was stopped Slope-wide in April in response to the pandemic, according to the development plans. ConocoPhillips resumed its North Slope development drilling program late last year. Hilcorp Senior Alaska Vice President Luke Saugier wrote in an emailed statement that the company is pleased to have support from the other Prudhoe owners to drill several wells in the coming months. “The last year has been challenging but I’m proud of what our team has accomplished, including increasing production at Prudhoe Bay. We look forward to working with our Prudhoe Bay Partners, ConocoPhillips, ExxonMobil and Chevron, to continue to safely and responsibly develop Alaska’s natural resources,” Saugier wrote. Hilcorp increased production at Prudhoe by 4 percent to approximately 198,600 barrels per day in the first 11 months after closing its $5.6 billion deal to buy BP out of Alaska over the most recent comparable period, according to the latest production figures available from Alaska Oil and Gas Conservation Commission. While oil prices increased steadily through the first half of the year — prompting a quicker resumption of drilling at Prudhoe and of general activity industry-wide — the trend ended abruptly in recent days. The price of Alaska North Slope crude fell $4.90 on July 19 to $68.67 per barrel after hitting a nearly three-year high of $76.49 just four trading days earlier. Analysts are attributing the drop to an agreement among OPEC countries to boost production slightly and rising COVID-19 case counts in the U.S. and elsewhere. Elwood Brehmer can be reached at [email protected]

Movers and Shakers for July 25

Mt McKinley Bank announced Paula Kennedy was hired as assistant vice president, Human Resources manager. Kennedy comes to Mt. McKinley Bank with many years of Human Resources experience and a master’s degree in management from Bellevue University. Kennedy holds both the Professional in Human Resources certification and the Society for Human Resources Management Certified Professional certification. Mt McKinley Bank also announced the promotion of Matt Ellis to assistant vice president, Finance. Ellis joined the bank a year ago as the first participant in its Management Associate program. He holds a master’s degree in finance from Northeastern University and served as a Naval Flight Officer in the US Navy prior to moving to Alaska. Tracy Wickham assumed duties as chief of the Contracting Division for the U.S. Army Corps of Engineers-Alaska District in May. In a typical year, this workload involves about $400 million in new contract awards, $1 billion in ongoing construction, engineering and service contracts; and another $1 billion in planning contracts to support the organization’s military, civil works and environmental programs. Prior to his arrival in Alaska, Wickham held multiple USACE assignments in the U.S. and overseas. He served as chief of the contracting division for the Portland District from 2015-21. From 2012-15, he was chief of the construction branch for the Middle East District in Winchester, Va. On two separate stints, Wickham worked as chief of the construction and architectural/engineering branch for the Walla Walla District from 2010-12 and 2005-07. Between these jobs, he served as branch chief for the direct contracting section at the Europe District in Wiesbaden, Germany, and also served a six-month tour of duty as the Gulf Region Central District’s chief of contracting in Baghdad, Iraq, from December 2008 until May 2009. Before his assignments with USACE, Wickham served for 20 years in the Army and retired at the rank of lieutenant colonel in 2005. His final 11 years on active duty were with the acquisition corps where he served in a variety of contracting positions in both Army and joint commands. Wickham earned a bachelor’s degree from the University of Northern Iowa and holds an MBA from Babson College in Massachusetts. The University of Alaska Southeast announced that Carin Silkaitis has been named as the new dean of Arts &Sciences, effective July 12. She replaces Dr. Paula Martin, who served as the interim dean of the school since April 2021. As dean, Silkatis will provide leadership for the school and its four departments: Business and Public Administration, Humanities, Natural Sciences, and Social Sciences. Silkaitis will alternate between Juneau and Chicago over the next academic year. Silkaitis most recently worked for Columbia College Chicago where she served as the Allen and Lynn Turner Chair of the Theatre Department, serving 91 faculty members and almost 800 students. Prior to that she worked for North Central College as the department chair for both art and theatre, and was also a Title IX Investigator and lead trainer of the Green Dot Bystander Technique. She earned a bachelor’s degree in psychology from Indiana University. She holds a master’s degree in theatre performance from Roosevelt University in Illinois.

Greens Creek helps generate $41M cash flow for Hecla

Production at the country’s largest silver mine was down to start the year despite strong metal prices due to processing lower-grade ore, according the mine’s owner. Idaho-based Hecla Mining Co., which owns the underground Greens Creek mine near Juneau, reported silver production of approximately 2.55 million ounces in the second quarter July 13. That was a decrease of 7 percent from a year ago. Silver production at Greens Creek is similarly down 7 percent for the first half of the year at 5.14 million ounces, compared to 5.53 million ounces in 2020. In its report, the company attributed the decline to “lower grades resulting from mine sequencing.” Hecla leaders earlier this year estimated total silver production of 9.5 million to 10.2 million ounces from Greens Creek in 2021. Even with the recent decline, silver output in the first half of the year from the Admiralty Island mine was still far better than comparable 2019 levels when the company produced approximately 4.6 million ounces of silver, which was an 18 percent increase over 2018, according to company records. Secondary gold production at Greens Creek was down 2 percent in the second quarter at 12,859 ounces, but is up 3 percent for the year overall at 26,125 ounces, Hecla reported. CEO Phil Baker said the “solid” and relatively steady silver production from what is by far the largest of the company’s five operating mines, helped Hecla generate $41 million in cash overall for the quarter, marking its fifth consecutive quarter of increasing cash reserves and said the company’s collective response to COVID-19 should help sustain the momentum. “With the company’s U.S. vaccination rate higher than the U.S. average, including Greens Creek at a nearly 90 percent vaccination rate, and Casa Berardi (Quebec) increasing, we expect to build on these results,” Baker said in a formal statement. After bottoming out at around $12 per ounce during the global onset of the pandemic, silver prices have rebounded to as high as $28 per ounce of late and are currently in the $26 per ounce range. Gold has recently sold in the $1,800 per ounce range after peaking at more than $2,000 per ounce roughly a year ago. The U.S. Forest Service is also in the midst of a supplemental environmental impact statement review of Hecla’s plan to expand the tailings disposal facility at Greens Creek by about 14 acres, or 20 percent. Hecla expects the current 66-acre facility will likely be filled by about 2031, at which point the mine would have to be closed. The company submitted the plan last October. Exploration update On the exploration side of the industry, remote camps are active this summer across the state after the disrupted 2020 work season. There are four drill rigs working at the Donlin gold site near the Kuskokwim River in Western Alaska and they are expected to drill 64 holes totaling approximately 20,100 meters this summer, according to Donlin’s co-owner Vancouver-based NovaGold. The drilling at the well-advanced prospect is aimed at further testing the continuity of the ore body and the structure of the mineralization, according to the company. HighGold Mining Inc. is also adding to the drilling work this summer at its early-stage Johnson Tract gold prospect on the west side of Cook Inlet. According to a statement from HighGold, the company was able to raise enough money in its most recent stock sale for leaders to consider adding 4,000 meters of drilling to the initially planned 16,000-meter, $10 million program. Back in Southeast Alaska, Constantine Resources is working towards drilling 6,000 meters of exploratory boreholes at its multi-metal Palmer project near Haines. The nearly $9 million work program is being funded by Tokyo-based Dowa Metals and Mining, which purchased up to 56 percent of the project through the funding arrangement, according to Constantine. A small summer program is also ongoing at the Pebble camp in Southwest Alaska, where a crew of nine is continuing baseline environmental studies and data collection for engineering as well as demobilization of unneeded facilities, according to Pebble Partnership spokesman Mike Heatwole. Pebble is currently appealing the Army Corps of Engineers Alaska District denial of its Clean Water Act wetlands fill permit last November. Elwood Brehmer can be reached at [email protected]

FISH FACTOR: Salmon prices up across state, but fish are smaller

Early prices to Alaska salmon fishermen are trickling in and as anticipated, they are up across the board. That will give a nice boost to the economic base of both fishing communities and the state from fish taxes, fees and other assessments. About one-third (62 million) of Alaska’s projected catch of 190 million salmon had crossed the docks by July 16 at the halfway point of the fishing season. Prices paid to fishermen vary based on buyers, gear types and regions, and bonuses and post season pay adjustments won’t be finalized until early next year. Here’s an early snapshot of average base prices from major processors at this point in the season: At Bristol Bay, the price to fishermen was boosted to $1.25 by OBI Seafoods, topping the $1.10 Peter Pan posted in June before the start of the fishery, and up from 70 cents last year. Kodiak fishermen were getting $1.45 to $1.50 for sockeyes and $1.75 at Southeast. That compares to a statewide average of just 76 cents per pound for sockeye salmon last year. A 2021 catch of 46.6 million sockeyes is expected for Alaska; the total so far has topped 44 million. Pink salmon were averaging $0.35 cents a pound for fishermen. An Alaska harvest of 124.2 million pinks is expected this summer, nearly 49 percent higher than last year. The statewide pink salmon price in 2020 averaged 30 cents per pound. Chums were averaging 50 cents per pound for Kodiak fishermen, twice last year’s price, and 85 cents at Southeast Alaska, compared to 45 cents last year. The average chum price in 2020 was 43 cents per pound. According to the Alaska Department of Fish and Game, troll-caught kings at Southeast were averaging $6.73 per pound, compared to a statewide average of $5.07 last year. With average weights at 11 pounds, each chinook was again worth more than one barrel of Alaska crude oil. ($74.03 vs. $73.48 as of July 16). Coho salmon catches will begin adding up in August but troll caught silvers at Southeast were paying fishermen a whopping $2.50 per pound for all sizes. That compares to $1.74 at the Panhandle last year and a statewide average for silvers at $1.17. Smaller sockeyes The run of sockeye salmon returning home to Bristol Bay could set a record at 66 million fish. The Bay-wide catch has topped 36 million, but the reds are smaller than in past years. The average size this summer is 4.5 pounds compared to 5.1 pounds last year, said Dan Lesh with McKinley Research Group. Still, the sockeyes are heading into an eager market. “Supply is low and there is strong demand for premium seafoods across the board,” he said. “People have more money and spending at foodservice is at pre-pandemic levels.” It’s “so far, so good” as far as putting a smaller fish on the plate, Lesh said, adding that it could mean adjustments for various salmon products. Bristol Bay reds aren’t the only ones shrinking. Chinook size has declined the most at 8 percent; 3.3 percent in cohos, 2.4 percent in chum salmon; and a 2.1 percent shrinkage in sockeyes overall. That’s based on 60 years of measurements from 12.5 million Alaska salmon, excluding pinks, by Nature Communications that compared average body lengths before 1990 and after 2010. Sleeping at sea, or not Finding time to sleep is one of the biggest challenges during a fishing trip, especially during limited openers. The pressure to bait and pull pots or lines and handle nets can be unrelenting. “The less you sleep, the more money you make in some sense. That’s a really hard thing to overcome. Because everybody wants to make more money,” said Jerry Dzugan, director of the Alaska Marine Safety Education Association at Sitka. Sleep deprivation leads to more accidents and worsens physical performance, he told KDLL in Kenai “The military alone has done volumes on this because of performance of personnel in the military. But not much has been done in the commercial fishing industry. And I think that’s the big thing,” he said. “I don’t think I’ve had one person tell me it’s not a problem.” AMSEA has partnered with national organizations for a two year project with 200 randomly selected fishermen in Alaska, Oregon and the Northeast. The group will track and hear fishermen’s concerns about their sleep patterns and possible effects on their safety and health. Funding comes from the U.S. Coast Guard and the National Institute for Occupational Safety and Health. NIOSH spokesperson Julie Sorensen told National Fisherman that fishermen have said they wonder how sleep deprivation will impact their cognitive ability as they get older. Many are curious about energy drinks, naps, diet, and other sleep disrupters. Find links to the project called “Assessments of Sleep Deprivation and Associated Health and Cognitive Impacts in Commercial Fishermen” at Expo is back! Pacific Marine Expo is back in person after Covid forced it to cancel last year. Now in its 55th year, the trade show is set for Nov. 18-20 at the Lumen Field Event Center in Seattle. Expo is on track to host about 500 vendors and the timing will attract even more visitors, said Bob Callahan, vice president of Diversified Communications Group and Expo director. “What’s in our favor this year is whenever the show dates are just prior to Thanksgiving, it’s usually one of our most productive shows and our exhibitors are very happy about it,” he said. “The dates are a jumping off point for our Alaskan attendees that are traveling for Thanksgiving,” he added. “They spend a few days at the show, and then they either stay in Seattle, or they travel throughout the country to visit family for the holiday weekend.” “Having a face to face event, I think, is coming out stronger after COVID, than people perceived before,” he added. This year’s Expo has another good lure. “This year is a bonus because the Seahawks play on Sunday, the day after the show closes,” Callahan said. “They play the Cardinals. So we’ll be giving out Seahawks tickets over the three days.” See more at Fish bit Halibut prices paid out at $7.25/$7.65/$7.85 to fishermen at Homer in mid-July and $7.05/$7.30/$7.55 at Seward, posted the Fish Ticket. At the grocery store U.S. fresh, frozen, and shelf-stable seafood sales reached $585 million in June 2021. That was a 5.3 percent drop from 2020, but sales surged nearly 44 percent this June compared to 2019, reported SeafoodSource. For the first six months of 2021, fresh and frozen seafood posted a mid-year increase versus 2020, “with increases in household penetration, trips and spend per trip,” 210 Analytics Principal Anne-Marie Roerink said. Ambient (shelf-stable) seafood sales, meanwhile, have declined over the past six months. Laine Welch lives in Kodiak. Visit or contact [email protected] for information.

Adak stakeholders protest denial of proposed cod allocation

Stakeholders of an isolated Aleutians fish plant contend state appointees on the federal fisheries management board have ignored calls for help to keep more of the area’s large Pacific cod catch in Alaska despite a court order that shot down the first attempt to do so. Representatives from Aleut Corp., which owns the fish processing plant in Adak through a subsidiary, and Peter Pan Seafood Co., have said they need to be able to rely on a foundational allocation of cod from federal fisheries to reopen the currently shuttered plant. It’s believed a reliable allocation of roughly 5,000 metric tons of Pacific cod to the plants in Adak and Atka, where a plant is also currently closed, would provide a base volume of fish that would allow an operator to keep it open year-round with purchases in the state waters cod and other fisheries throughout the year. Doing so could provide the ultra-remote community of approximately 300 residents with nearly 200 jobs during peak activity and several dozen steady positions if the plant were operated year-round, they estimate. The North Pacific Fishery Management Council that oversees the largely Seattle-based trawl cod fishery is in the process of reforming those allocations amidst other regulatory changes. Of the 11 voting council members, six are appointed by Alaska’s governor, in theory giving the state bloc control over council decisions and the business interests as well; those with more personal ties to the former Naval base community are wondering why, as they put it, the administration is not supporting the interests of a rural Alaska community over the trawl industry. Peter Pan Executive Vice President Jon Hickman wrote in public comments submitted prior to the council’s mid-June meeting that the company supports a harvest split with up to 30 percent of the qualifying shares going to eligible processors, contending that it would create a competitive, but not exclusive, market for the cod. For Peter Pan, it would likely provide the market stability the company needs to make investments in value-added cod products at Adak, according to Hickman. Peter Pan’s message on the issue was backed by the Pacific Seafood Processors Association, which feels a dedicated shore-side allocation recognizes the investments made in the fishery and the changes that have occurred due to rationalization and other factors, according to testimony from PSPA President Chris Barrows. Excess floating processing capacity left over after the rationalization starting in the mid-2000s of crab and other Bering Sea fisheries was moved south to participate in the federal Aleutians cod fishery among others, which challenged the community of Adak after the first time the plant closed in 2009, according to Adak Community Development Corp. board member Dave Fraser. “All that excess capacity flowed out into the Aleutians and shortened the seasons,” Fraser said. That 5,000 metric-ton mark is what was set aside by the council in 2016 under what is known as Amendment 113 for shore-based plants from the area’s federal Pacific cod fishery for several years as a means to direct resources to the communities that would otherwise be sent to floating processors. It was the council’s response to mitigate the impacts of its prior actions in other Bering Sea fisheries on Adak and other Aleutian communities. Offloading at shore side facilities means the large catcher vessels must pay the 3 percent state fish landing tax and adds other expenses to their operation. So in turn, several Seattle-based trawl industry groups and vessel owner companies sued the council in late 2016 in an attempt to have Amendment 113 overturned. They argued in part that the Magnuson-Stevens Act does not give the council the authority to allocate harvest to shore-based processers and that the council did not provide a rational explanation for the regulatory change, thus violating the Administrative Procedures Act that is at the core of many federal regulatory disputes. D.C. Federal District Court Judge Timothy J. Kelly sided with the trawl coalition in a March 2019 order in which he concluded the harvest set-aside for a pair of plants — but practically just Adak — violated national standards under the MSA that prohibit the council from discriminating between residents of different states in allocation issues. Sen. Dan Sullivan subsequently attached a rider to the 2019 Coast Guard reauthorization bill that largely would have made Amendment 113 law and bypassed the council; however, Washington Democrat Sen. Maria Cantwell gathered opposition sufficient to prevent Sullivan’s amendment from getting the requisite 60 votes on the Senate floor. According to data submitted by Peter Pan to the council prior to its recent June meeting, cod deliveries from the federal trawl catch to Adak in 2018 and 2019 when Amendment 113 was in effect accounted for 12 to 13 percent of the total Bering Sea and Aleutians trawl cod allocation. Brent Paine, executive director of United Catcher Boats, one of the plaintiffs in the Amendment 113 suit, wrote to the council that the group believes the concept of allocating harvest shares to processors is meant to provide stability in the catcher-processor relationship and a new catch-share program should strengthen that relationship, not weaken it. United Catcher Boats supported a processor allocation range of 10 to 20 percent in June when the council was deliberating its preliminary preferred alternative on the matter, versus Peter Pan’s 30 percent request. “By narrowing the range the council will help the public focus its attention on a fair and reasonable allocation percentage at this time,” Paine wrote in reference to the national fisheries standard requirements. Peter Pan Business Development Manager Steve Minor said in testimony after the council selected a preliminary alternative that would allocate about 2,000 metric tons of cod per year to Adak that the company is suspending its work to restart the Adak plant as a result of the decision. “There are many problems associated with this (preliminary preferred alternative), but let me close by saying that by selecting this PPA, the council ignored the unanimous agreement between all of the major Adak stakeholders about the most reasonable option to restore Adak’s economy,” he said. According to a written statement from Peter Pan after the council’s preliminary Adak decision, which was approved 10-1 as part of a broader regulatory package, there is a significant amount of work that needs to be done to the plant before it can be operated consistently. “Adak’s economic future, its school and small businesses are all tied to the success of the seafood plant, and we hope that the council ultimately supports the Adak community and the harvesters that helped pioneer this remote fishery,” Peter Pan’s statement reads. Council members who responded to questions from the Journal said the council rejected the allocation proposal because it would have allowed the fish to be transferred to other communities, such as King Cove or Unalaska, where Peter Pan and others have active facilities, and required a cash payment to Adak instead of generating real economic activity in the community, which state officials wanted to preserve. Officials in the Governor’s Office and the Department of Fish and Game did not respond to questions and interview requests for this story. They also said the 5,000-ton “set aside” for one group is far too much considering the annual total allowable catch, or TAC, for Pacific cod is in steep decline. It would create a situation where one user is provided a fixed quantity of a resource, with the rest are subjected to the swings in abundance. Adak Community Development Corp.’s Fraser said he hopes the council can come up with a way to support Adak’s economy that will get broader buy-in from stakeholders before finalizing the allocations; the council’s next meeting is scheduled for Oct. 11-16. If the plant remains closed, regardless of the reason, it’s likely the school will close, which would be another major blow to the community, he said. Adak’s economy shrunk rapidly after the first time the plant closed for two years starting in 2009, according to Fraser. “Each time that happens, that somebody opens and then closes the plant again you lose more and more people out of the community and the ability to maintain a small business in Adak is reduced,” he said. “It is literally a matter of life and death for the community to have access on a sustainable basis to the resources that are right on its doorstep.” Elwood Brehmer can be reached at [email protected]

Ford could start shipping unchipped vehicles to dealers later this year

Ford Motor Co. could start shipping unchipped vehicles to dealers around the country sometime this year that cannot be sold to consumers immediately, but something to fill dealer lots that are growing barer by the day, the automaker told the Free Press on July 19. When back-ordered semiconductor chips become available, Ford dealers would then insert them into components in cars that customers have selected and send them home immediately and eliminate an additional wait related to post-parts shipping. “We’re discussing this idea with our dealers so we can gauge interest. We’re assessing and it’s still very fluid,” Ford spokesman Said Deep said. “This is a scenario we are exploring and we want to be prepared should we decide to implement, which is why we are talking to our dealers now.” Shipping would not happen right away. If the company moves forward on the plan, shipping could happen before year’s end, Deep said. Dealer technicians are skilled at installing parts and components, a job they do with recall orders and repairs all the time. So this latest development allows Ford to get vehicles to dealers sooner, and allows the final touches to be done on-site, Deep said. Ford would hold the title until the vehicle is complete, so this strategy does not allow Ford to record vehicles as sold any sooner than normal, as the industry continues to navigate financial challenges amid the supply chain nightmare. However, customers would take custody of vehicles sooner. “Customers can see a vehicle on their dealer’s lot and when the component (that requires a semiconductor chip) is available and installed, the customer can take delivery. This works out in a way that’s positive for everybody,” Deep said. “The customer doesn’t wait for the truck to get shipped. This allows for another quality inspection after a vehicle has left the factory.” He confirmed that the Ranger, which is built in Wayne, Mich., is the first vehicle that would be shipped unfinished. While Ford is still working through the details, it also is exploring adding other vehicle lines, including the F-150. Thousands of unfinished F-Series, which are currently sitting on lots around the country including Detroit, Louisville, Kentucky, and Kansas City. ‘Touch, smell and feel’ Ford is holding thousands of F-Series awaiting parts, while General Motors and others have chosen to build and sell vehicles without features impacted by the supply chain. The chips, which are made mostly in Asia, are in tight supply since COVID-19 disrupted the supply chain and the ability for people to work in factories, after demand for them rose during the COVID-19 pandemic as people bought laptops and other personal electronics that also use them. The chips go into a variety of car parts. “We are exploring a number of different options as we work to get our customers and dealers their new vehicles as quickly as possible,” Deep said. “Dealers are excited about having vehicles in their hands.” Dealers say they want to get vehicles into showrooms to create excitement and give people something to experience, and this latest idea creates a new solution to ongoing problems, dealers told the Free Press. “It’s brilliant, actually. We’ve been doing recall work on vehicles forever,” said Rhett Ricart, owner of Ricart Ford in Columbus, Ohio. “I think we have 3,100 Ford dealers and thousands of technicians, all certified. To do the actual installation of the chip is as easy as it gets when it comes to these types of repairs,” he said. Meanwhile, as dealerships await the missing part, technicians can begin quality reviews that include removing plastic packaging and testing electronics and programs that are required prior to releasing a vehicle to a new customer, all work that can take hours after a vehicle is purchased, Ricart said. “We can install a chip in under an hour,” he said. “This is the right thing to do. Get the vehicles to dealers. Let the customer touch, smell and feel the vehicles. And as these chips come in, we’ll install them,” said Ricart, who also sells Nissan, Hyundai, Kia, Mitsubishi and Harley-Davidson motorcycles. “Dealers have customers trying to buy vehicles and don’t have anything on the lot to see, ” said Ricart, past chairman of the National Automobile Dealers Association. Jeoff Burris, founder of Plymouth, Mich.-based Advanced Purchasing Dynamics, said when he bought his 2018 F-150 from Bill Brown Ford in Livonia, inventory was great. “I called Tony (Juncai) and he had my two top choices ready for me when I arrived. I looked them over, made my decision and was done,” Burris said. “Now, the trucks with missing chips are held by Ford while dealer lots are empty. Putting the trucks on dealer lots makes them accessible to potential truck buyers and salespeople. The buyer picks their truck, the chip is installed and everyone is happy.” While dealers are eager to get vehicles into the hands of customers, this whole situation is unchartered terrain that creates uncertainty. “They’re going to run out of places to put these vehicles after awhile,” said Chad Wilson, general manager of Wilson Ford in Saginaw, Mich., and Midland (Mich.) Ford. “You’ve got a car here to show a customer that’s real, and there’s a lot to be said for that.” But what happens if a hurricane hits a dealership and vehicles inside that are still owned by Ford are damaged, what’s the liability? These are details Ford is ironing out, to make sure all bases are covered, Deep said. Meanwhile, dealers are watching and waiting. “At the end of the day, having cars on the ground is better than bare asphalt,” Wilson said.

Producer prices in US surged in June

Prices paid to U.S. producers rose in June by more than expected, indicating pressure is mounting on companies to pass along higher costs to consumers. The producer price index for final demand increased 1 percent from the prior month and 7.3 percent from June of last year, Labor Department data showed July 14. Excluding volatile food and energy components, the so-called core PPI also rose 1 percent, the most on record, and was up 5.6 percent from a year ago. The median forecasts in a Bloomberg survey of economists called for a 0.6 percent month-over-month advance in the overall PPI and a 0.5 percent increase in the core figure. The annual increases were the largest in data back to 2010. The PPI, which tracks changes in the cost of production, has accelerated at a faster pace than expected in recent months due to higher commodity prices and complications with global supply chains. Challenges in hiring skilled workers have also put upward pressure on wages. The increases in production and labor costs help explain why the pace of consumer inflation has exceeded economists’ estimates in each of the last four months. A report July 13 showed the consumer price index surged in June by the most since 2008. The increase was primarily in categories associated with reopening, including hotel stays, car rentals and airfares. Federal Reserve officials have said upward pressure on prices is likely to be transitory, but some investors worry the recent gains will lead to more persistent inflation. “Strong demand in sectors where production bottlenecks or other supply constraints have limited production has led to especially rapid price increases for some goods and services, which should partially reverse as the effects of the bottlenecks unwind,” Fed Chair Jerome Powell said July 14 in prepared remarks to lawmakers. The S&P 500 rose, the 10-year U.S. Treasury yield retreated below 1.4 percent and the dollar declined after Powell’s remarks. The PPI report showed prices for goods increased 1.2 percent after a 1.5 percent advance in the prior month, while the cost of services rose 0.8 percent, the most since the start of the year. Almost 60 percent of the overall PPI advance was due to services, according to the Labor Department. The increase in the costs of services reflected growth in margins received by wholesalers and retailers. Liquefied petroleum gas, plywood, aluminum base scrap were among goods that climbed by double digits from a month earlier. Producer prices excluding food, energy, and trade services — a measure often preferred by economists because it strips out the most volatile components — rose 0.5 percent from the prior month and increased 5.5 percent from a year earlier. The annual gain was the largest on data back to 2014. In an earnings call July 13, packaged food company Conagra Brands Inc. reported a 8.6 percent increase in the cost of goods sold for its most recent quarter, with expectations for a rate of about 9 percent for fiscal year 2022. “The bulk of this inflation can be attributed to continued increases in the cost of edible fats and oils, proteins, packaging, and transportation,” Chief Financial Officer David Marberger said on the call.

What history tells us about stock market returns

The Chorus of Worriers convenes daily, as it has for years. A market decline is coming, they say. Maybe a big one. Likely soon. Perhaps, like the long-awaited California earthquake, it will be The Big One. The worriers aren’t fools. They have good reason to be concerned. Use almost any common metric, and stocks are overpriced. All stocks. Everywhere. Two popular measures tell us a lot. The Shiller index, for instance, tells us that stocks are currently priced at historic, hyperbolic levels. Right up there with 1929 or the Great Internet Bubble at the turn of the century. Another metric, regularly used by the late indexing visionary Jack Bogle, tells us that future stock prices will be the sum of three things: dividend yield, earnings growth and the change in price-to-earnings multiple. Even if you assume that corporate earnings will continue to grow at their historical average pace, future returns will definitely be reduced by today’s low dividend yield. And it’s far more likely that the P/E multiple will be lower in the future, not higher. Basically, stocks are swimming against the tide. The only possible conclusion, many believe, is that it is time to sell. I beg to differ, even though I agree with the basic analysis: Stocks are overvalued. Being overvalued doesn’t keep stocks from rising further. Investment manager Jeremy Grantham was famously correct about the excesses of the internet bubble. But he was correct years before the bubble burst. He missed a lot of opportunity. So what’s a worrywart to do? One option is to take some comfort in the long-term return of stocks relative to other investments by examining the odds of having a positive return over different periods. To do this, I asked the researchers at Morningstar to develop figures for the return on large company stocks. It would be using what most consider to be the definitive database, the original Roger Ibbotson data beginning in 1926 with its software, Morningstar Direct. I asked for figures for periods of one to 10 years in increments of one year, then in increments of five years out to 35 years. Today, even if you are looking at 35-year investing periods, there are 66 samples, albeit with substantial overlap. In addition to determining what the odds were of having a positive return for any period, I also asked the odds of beating inflation and the odds of beating intermediate-term government bonds. The results encourage buy-and-hold, long-term investing. Here are some of the findings. • In any single year, large company stocks are a reasonable bet. They have a 73.7 percent chance of having a positive return, a 68.4 percent chance of beating inflation and a 65.3 percent chance of beating intermediate-term government bonds. •The odds steadily improve as the investment period increases out to six years. By the time you’ve held large company stocks for six years, there is a positive return 90 percent of the time and you’ve done better than inflation 82.2 percent of the time. You’ve also done better than intermediate government bonds 72.2 percent of the time. • In seven to 10 years, the odds fluctuate modestly, improving slightly. For a 10-year investment period, there is a 95.3 percent probability of a positive return, an 88.4 percent chance the return will beat inflation and an 82.6 percent chance the return will be higher than intermediate government bonds. • In 10 to 15 years, the odds continue to improve. In all 81 of those investing periods, 100 percent of large company stock investments had a positive return, the return bettered inflation 95.1 percent of the time and exceeded the return on intermediate government bonds 84 percent of the time. • In 15 to 20 years, large company stocks prevail. Their returns are positive and beat inflation 100 percent of the time in all 20-year periods. And they beat intermediate bonds 98.7 percent of the time. • In 25 years or longer, large company stocks have positive returns, beat inflation and return more than intermediate government bonds 100 percent of the time. What these figures tell us is that unless you know exactly when stocks will decline, the best bet is to hold on and do your best to avoid any need to sell stocks when prices are lower. How do you do that? You can’t do it perfectly. But you can put the odds in your favor by holding enough money in cash, short-term investments and intermediate-term bonds to cover your needed spending for five or more years. If you are spending at a traditional safe withdrawal rate of about 4 percent, that means 20 percent to 40 percent of your portfolio.

Study: Green energy requires massive jump in metal mining

Clean energy may mean less mining for coal, but it also means opening or expanding mines to unearth minerals such as cobalt for use in alloys and batteries, tellurium for solar cells and semiconductors, and germanium for transistors in electronic devices. That’s according to Dr. Michael Moats, professor and interim chair of materials science and engineering at Missouri University of Science and Technology, who says reducing carbon emissions from energy systems in the United States will increase the need for metal production by two to six times per kilowatt of energy production. “We could eventually reach some of our materials needs by recycling, but there is very little to recycle at this point,” says Moats. “So, we’re going to have to bring on new mines to meet the demand.” Moats, who is director of the Thomas J. O’Keefe Institute for the Sustainable Supply of Strategic Minerals at Missouri S&T, says current mining of cobalt, for instance, provides about 100,000 tons per year. To meet future green energy needs, he says production would need to double by 2030 and triple by 2050. Much of current production comes from the Democratic Republic of Congo and is refined by China. “It becomes an issue of how much control you want over your supply chain and how difficult it can be to bring supplies from overseas during wartime or political upheaval,” Moats says. “It’s a very complex discussion because it involves energy, defense, economics, diplomacy and other areas.” Moats says the United States has cobalt assets in Missouri, Minnesota and Idaho, but production trails other sources because the U.S. permit process takes years. Resources in the U.S. are small compared with countries such as Canada, he adds, and the U.S. lacks the smelters to refine the materials from ore and existing mine tailings. Developing a trained domestic workforce consisting of the trades, engineers and scientists is another issue. Moats testified to members of the U.S. House Committee on Natural Resources earlier this year that many U.S. universities no longer offer degrees in mining or metallurgical engineering. Missouri S&T offers one of 11 mining engineering programs accredited by the Accreditation Board for Engineering and Technology. It is one of only seven schools in the U.S. that offer ABET-accredited metallurgical engineering programs. In his testimony before the committee members, Moats recommended that the federal government create a mining and metallurgy innovation center to foster research and build interest in critical metals production. “We want to promote science-based policy at the O’Keefe Institute,” Moats says. “We want to be engaged in the conversation to find solutions in the best interests of all stakeholders.”

COMMENTARY: Poor and low-income Americans hurt the most by inflation

How can we help working families the most? Raising the minimum wage to $15 an hour is a popular solution, but it’s a short-sighted one given the reality that inflation — the silent assassin of Americans’ livelihoods, particularly for the poor — is now running the hottest it has in decades. The Consumer Price Index has increased 5.4 percent since last year, as announced on July 13 by the U.S. Bureau of Labor Statistics. The monthly rate was 0.6 percent in May but 0.9 percent in June. If this rate persists, our nation will experience double-digit inflation. A 0.9 percent monthly rate translates to an 11.4 percent annual rate, a level not seen since the 1970s. Considering all the recent deficit spending by Congress and expansionary policies by the Federal Reserve, expect more of the same, or worse. In fact, according to a survey of economists in a recent issue of The Wall Street Journal, “Americans should brace themselves” because economists are waking up to the prospect of higher inflation, expecting “brisk price increases for a while.” Economic history indicates deflation should be the norm. In fact, innovation spawns increased productivity that allows prices to fall, which should show up as deflation. We have the opposite: productivity gains with inflation. This outcome places the blame squarely on monetary and fiscal policy. Who gets hurt the most? Those who can least afford dramatic price increases for staples like food and rent, and those whose income growth typically lags others — the poor and low-income Americans. Consider this: The most recent mid-year consumer expenditure report from the BLS found that consumers in the lowest income quintile spend 82.2 percent of their income on housing, transportation, food and health care, compared to 64.4 percent for the highest quintile. A 5 percent inflation rate would cost those in the lowest quintile an additional $1,156 for these items on their already tight budgets, averaging $28,141. A 10 percent inflation rate would double those costs to $2,312. Worse, those in the lowest quintile are unable to save for their future, and inflation erodes the value of the little savings they do have. On average, those in the lowest quintile purchased only $563 in personal insurance or toward their pensions, compared to $19,736 in the highest quintile. This disparity guarantees the poor will be inadequately prepared for retirement or unforeseen loss or tragedy. The impact of inflation was illustrated in a recent focus group session on working class families conducted by my organization, the Georgia Center for Opportunity. Our focus group consisted of working-class African-Americans who did not have a college degree and who were not employed in a managerial position or on track to achieve a management level position. One of the women relayed her experience with financial stress up close. She was tempted to quit her job because the cost of daycare was so high. She said that either the minimum wage should be increased or the cost of living should be lowered. That was an incredible observation. What Jazmine referred to is all about promoting the purchasing power of all Americans. We know that raising the minimum wage has numerous negative impacts — from reducing employment among those groups that minimum-wage laws are designed to help to running mom-and-pop small businesses out of commission in favor of big corporations (think Amazon). The better option is for Congress to renew our nation’s purchasing power policy and get its fiscal house in order. Instead of devising new ways to spend more money we don’t have, Congress and the Biden administration should guide the federal government to live within its means and ease restrictions on economic growth. We don’t need more fiscal stimulus to fuel more inflation. Congress can start by reinstating the actively-looking-for-work rule for those receiving unemployment benefits. Our leaders can then put a halt on other benefits that create disincentives to work and benefit cliffs — such as pandemic-related food stamps — for a public health crisis that, for all practical purposes, is gone. At the same time, we need more production and entrepreneurial risk-taking on the supply side. The sooner we respond in ways that focus on cost-of-living changes for people like Jazmine and promote the purchasing power of all Americans, the better. Erik Randolph is director of research for the Georgia Center for Opportunity.

COMMENTARY: Facebook and Amazon launch attacks on a tough regulator

To any rational observer, Lina Khan is exactly the kind of person one wants to be chair of the Federal Trade Commission. The FTC is responsible for seeing that businesses don’t stifle competition and that they act in the public interest. Those goals have been central to Khan’s work as an academic and a staff member of congressional committees, on which she focused on the monopolizing tendencies of big tech companies. That’s why President Biden nominated her to be FTC chair and why she was confirmed to the post in an overwhelmingly bipartisan Senate vote last month. Facebook and Amazon don’t see things that way. No surprise, since they’re today’s leading examples of concentrated corporate power. Both companies have filed petitions with the FTC demanding that Khan recuse herself from any proceedings against them. Facebook’s petition was filed July 14; Amazon’s on June 30. They make essentially the same arguments, cite the same legal precedents, and suffer from the same logical shortcomings. In effect, they say that Khan should remove herself from their cases because she knows all too much about them. The Amazon and Facebook arguments are shot through with absurdities, though that doesn’t mean that federal judges might not find in the companies’ favor if the issue reaches their courtrooms. One is the notion that government regulators should come to their jobs as innocent as babes, with no prior experience in examining corporate behavior or understanding of how the law applies. Another is the more specific idea that Khan’s knowledge of the companies’ practices, developed through painstaking study and through official investigations on Capitol Hill, and relentlessly voiced publicly, should be automatically disqualifying. Then there’s the demoralizing truth that government regulators almost always end up in bed with the companies they oversee, a phenomenon so common that it has a name: “regulatory capture.” There’s the aspect in these petitions of special pleading — Khan appears to be un-capturable — which is why her targets have the knives out. Obviously, businesses never complain when a regulator’s bias tilts in their favor. The best recent example of this is Ajit Pai, whom Donald Trump installed as chair of the Federal Communications Commission. Pai spoke ceaselessly of his intention to repeal network neutrality protections the FCC had imposed during the Obama administration. Eventually he did so, a boon for incumbent internet service providers, not least of which was Verizon, for which he had worked as an in-house lawyer. As FCC chair, Pai even joked about his history of connections at Verizon, despite it’s posing a glaring conflict of interest. Khan, it should be noted, doesn’t have this sort of conflict of interest; she’s being attacked by Facebook and Amazon because of her knowledge. Finally, there are the strong indications that, even were Khan to step away from cases against Amazon and Facebook, the rest of the FTC, which is divided 2-2 between Republicans and Democrats, might pursue them anyway. As is evident from the confirmation vote, discontent with big tech crosses partisan lines. Khan has declined to commit herself to recusals in this case or any other. “I have none of the financial conflicts or personal ties that are the basis for recusal under federal ethics laws,” she said at an April 21 Senate confirmation hearing. She said that in any case before the commission, she would “follow the evidence wherever it leads me.” If she refuses to step away from the Amazon and Facebook cases, the other four commissioners could vote on whether to force her to do so. Let’s take a look at the bills of particulars advanced by Facebook and Amazon against Khan. We’ll start with Facebook because it’s more urgent. On June 28, federal Judge James Boasberg threw out an antitrust lawsuit brought last year by the FTC and 46 states against the giant social media company but gave them 30 days to file an amended complaint. The deadline expires on July 28; Facebook wants Khan off the case before the commission votes on whether to refile, since she otherwise would “inevitably play a pivotal role” in that decision. Facebook contends that it has no chance of receiving an unbiased consideration from Khan because she has already committed publicly to factual and legal conclusions about the company’s guilt. “Khan has consistently made public statements not only accusing Facebook of conduct that merits disapproval,” the company says in its legal filing, “but specifically expressing her belief that the conduct meets the elements of an antitrust offense.” Facebook disputes her conclusions. Facebook points to Khan’s work as legal director at the Open Markets Institute, a nonprofit that consistently called for breaking up Facebook by reversing government approvals for its acquisitions of WhatsApp and Instagram, which might have emerged as Facebook competitors had they remained independent. This idea is hardly unique to Khan or the institute; it was the core of a breakup proposal issued by Sen. Elizabeth Warren, D-Mass., during her campaign for the Democratic presidential nomination last year. Also sticking in Facebook’s craw is Khan’s role in a House antitrust subcommittee investigation of the domination of digital markets by Facebook, Google, Amazon and Apple, completed last year with the issuance of a damning 450-page report. Khan was a counsel to Democrats on the subcommittee that conducted the inquiry, which memorably warned that companies, which “once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons.” Khan also has written academic papers and tweets expressing her view of Facebook’s antitrust culpability. But it’s proper to note that much of her most recent comments, including positions taken by the Open Markets Institute, supported an action already taken by the FTC. That is, the filing of the antitrust lawsuit against Facebook. In other words, the FTC plainly came to the legal and factual conclusions expressed by Khan even before she joined the commission. Amazon, in its screed, touches upon the Open Markets Institute and House subcommittee issues. But the bulk of its petition is focused on an article she published in the Yale Law Journal in 2017, while she was a law student, and the themes she developed in the paper and continued to voice in subsequent years. The article, titled “Amazon’s Antitrust Paradox,” made Khan’s reputation. Its main point was that Amazon was the beneficiary of a wrongheaded approach to the law by antitrust regulators in recent years. Their concern had narrowed merely to whether corporate behavior produced lower prices for consumers in the immediate term, Khan wrote. But they ignored how allowing companies to undersell rivals in the interest of gaining market share would have bad consequences for consumers in the long term. “Antitrust doctrine views low consumer prices, alone, to be evidence of sound competition,” Khan wrote. “By this measure, Amazon has excelled; it has evaded government scrutiny in part through fervently devoting its business strategy and rhetoric to reducing prices for consumers.” Referring to Amazon’s founder and guiding spirit, Jeff Bezos, she added: “It is as if Bezos charted the company’s growth by first drawing a map of antitrust laws, and then devising routes to smoothly bypass them. With its missionary zeal for consumers, Amazon has marched toward monopoly by singing the tune of contemporary antitrust.” Amazon, like Facebook, contends that these insights make it impossible for Khan to give the company “a fair consideration … that is neutral and impartial.” It says Khan’s “anti-Amazon convictions” are so “integral to her professional credibility” that she couldn’t reverse herself without blowing her reputation. What does the law say about this argument? It’s equivocal. Both companies point to a 1970 ruling in which a federal appeals court overturned an FTC action against a vocational school because then-FTC Chair Paul Rand Dixon had made public statements indicating it was guilty of false advertising. The court ordered the FTC to reconsider the case, without Dixon’s participation. But they ignore another case, from 1979, involving an FTC action over TV advertising targeting children. In that case, the same court refused to order the recusal of then-FTC Chair Michael Pertschuk even though he had spoken out against the advertising practice. (Pertschuk later voluntarily recused himself because his participation had become a distraction.) The issue, therefore, could be a close call if it comes before federal judges. But the implications of the Facebook and Amazon petitions are dire. The core of active government regulation is the knowledge of regulators. The ills we’ve suffered from indulgent government oversight, whether the issue is pollution, fraud or unrestrained monopolization, often stem from having regulators in place who are so ignorant of the issues at hand that they’re easily swayed by corporate lawyers or academic pundits. If there’s anything indisputable about Lina Khan, it’s that she won’t be defenseless against self-serving arguments by slick corporate mouthpieces. No wonder Facebook and Amazon are in a panic.

Questions over Pikka after CEO resignation

The managing director of an oil company pursuing a major project on Alaska’s North Slope has resigned, raising questions about the future of the project. Keiran Wulff ran Oil Search’s Pikka project on Alaska’s North Slope for the last three years. He is resigning due to medical issues, but also amid a whistleblower’s complaint about his behavior, according to Rick Lee, Oil Search chairman, in a call with financial analysts on July 19. A whistleblower’s complaint into his behavior in June prompted the company to begin an internal investigation, Lee said. “The board entered into discussions with Dr. Wulff following the receipt of recent concerns and complaints about his behavior,” Lee said. “In (the) view of the board, this unacceptable behavior was inconsistent with the standards required under the company’s code of conduct.” Wulff has been managing a medical condition that recently deteriorated and prompted his resignation, Lee said. The company did not give details on the nature of Wulff’s medical condition. Oil Search, based in Papua New Guinea with much of its management in Australia, has been working with Spanish oil company Repsol on the Pikka project. The companies have estimated the Pikka project could produce 80,000 barrels of oil daily in the first phase of development in 2025. That amount would significantly boost the oil flowing through the trans-Alaska pipeline. The project is located on state land, east of the National Petroleum Reserve-Alaska and ConocoPhillips’ major Willow oil prospect. Oil Search has been expected to make a final investment decision before the end of this year, determining whether to commit funding to the multibillion-dollar project. “If the market has felt that that was the case in the past, it’s certainly not the case today,” Lee said. Lee told financial analysts on July 19 that there is now no specific date for when Oil Search makes the final decision to fund the project. Among other steps, Oil Search and Repsol must come to agreements with other investors to ensure there is an appropriate level of funding and risk for the project, Lee said. However, Amy Burnett, a spokeswoman for Oil Search in Alaska, said in a statement that a final investment decision is still targeted for 2021. “We are continuing to advance Pikka toward a final investment decision, targeted for later this year,” Burnett said. “We have consistently outlined that we are assessing a range of funding options to give Oil Search flexibility to make a (final investment decision) later this year. We’ve also noted that this is a high quality asset and that if there is not a clear value proposition for shareholders or market conditions don’t support a (final investment decision), we will adjust accordingly.” Oil Search as a company has the same level of passion for the Alaska project that Wulff had, Lee said. “For us, it’s very much a matter of how and when we fund this project going forward,” he said. Wulff thanked Oil Search staff for their efforts during a challenging time that saw oil prices plunge during the COVID-19 pandemic, according to a statement from the company. Oil prices have in recent months rebounded to pre-pandemic levels. “It has been a great privilege to work at Oil Search and I believe the company is very well-positioned for the future,” Wulff said. “It has however, become apparent to me that due to my health challenges, it is becoming increasingly difficult for me to perform at the level required of the position. After considerable reflection and consultation with my family and others including my medical advisers, it is an appropriate time to leave to focus on my health.”

Dunleavy administration sued over Power Cost Equalization policy

The state’s largest Alaska Native organization and several other groups are suing the Dunleavy administration over the Power Cost Equalization fund that lowers high rural energy prices for some 80,000 Alaskans in nearly 200 communities. The Alaska Federation of Natives, electric cooperatives, rural communities and others argue that Gov. Mike Dunleavy’s administration violated the Alaska Constitution when in 2019 it determined the Power Cost Equalization Endowment Fund must automatically be swept into the Constitutional Budget Reserve, a key state savings account. The effect of that move this year is that the program has not been funded for the fiscal year that began on July 1. Moving the rural power fund out of the savings account requires a three-quarters vote of each chamber in the Alaska Legislature, a high hurdle that the Legislature has so far not met. The lawsuit was filed in Anchorage Superior Court on July 19. The Legislature created the $1.1 billion fund in 2000 to help equalize power prices in rural areas that don’t benefit from state-funded power projects such as dams that help reduce power costs in the state’s larger cities. The power cost equalization program was created in the mid-1980s. The lawsuit asserts that without appropriate explanation, the Dunleavy administration in 2019 took a “very expansive view” of the Power Cost Equalization fund and other funds, deciding they should be swept into the Constitutional Budget Reserve. The lack of funding in July is impacting dozens of utilities across the state that must cover the costs for a program that usually supports much of their budget, utility representatives say. If the situation remains unresolved, rural residents will ultimately face much higher bills, they say. “We are essentially giving away free power, unless we turn back around and add those additional costs to our consumer bases,” said Bill Stamm, chief executive at Alaska Village Electric Cooperative, a plaintiff in the lawsuit. “So next month, that would be the full cost of energy and whatever we didn’t charge for the previous month.” The Alaska Village Electric Cooperative, which provides power to 59 rural communities, must cover funds amounting to about $800,000 this month that had traditionally covered by the state, Stamm said. The Legislature and the governor have approved $32 million in subsidies for the program this year. The money will be available if the Legislature reverses the sweep, or if the plaintiffs are successful. A similar situation played out in 2019. Then, the rural power fund was not funded for a month, but the Legislature later found enough votes to undo the sweep. They also retroactively covered costs, utility representatives say. The lawsuit argues that the power fund is not part of the general fund that’s subject to be moved into the savings account, Stamm said. Instead, Stamm argued the fund is a unique account placed into the Alaska Energy Authority, a quasi-independent state agency, to spin off revenue for power cost equalization. Dunleavy said in a statement on July 19 that he has asked his administration to pursue a quick decision in the case. “This issue is too important to delay any further,” the governor said. “A decision by the court will help clarify what is in the general fund and what is not to determine what gets swept into the Constitutional Budget Reserve to repay it. In order for us to fulfill our constitutional duties, both the executive and legislative branches need to know if the PCE is subject to the sweep.” The Alaska Federation of Natives said in a statement on July 19 that the rural power fund should not be swept in the savings account. “Affordable energy is essential to the survival of Alaska’s rural, Native communities, particularly as our families and individuals recover from the pandemic,” said AFN President Julie Kitka. Dunleavy has proposed a plan that he says will protect the Power Cost Equalization fund, by placing it in the $81 billion Alaska Permanent Fund, the statement from the governor’s office said. Helping bring the lawsuit are top former staffers under former Alaska Gov. Bill Walker. Jahna Lindemuth, Walker’s attorney general, and Scott Kendall, Walker’s former chief of staff, are two of the lawyers with Holmes, Weddle and Barcott that filed the case. Lindemuth and Kendall last year provided legal counsel to the campaign to recall the governor.


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