Small businesses that took PPP aid may face a tax problem

A recent IRS ruling tying up a loose end in the 2020 economic-relief law could force many small businesses to pay taxes on government aid meant to help through the pandemic. The agency on Nov. 18 said the businesses cannot deduct expenses such as payroll and rent, paid for with money from the Paycheck Protection Program of the CARES Act. Such deductions are common when those expenses are paid for with revenue from running a business. The ruling hardened a divide between the Trump administration and the main tax writers in Congress, who have sought since the coronavirus outbreak produced an economic slowdown to ensure that aid to businesses not be taxed. The IRS decision got lost in the swirl of news out of Washington last week, including that the Treasury Department moved to restrict the Federal Reserve’s emergency lending. Treasury Secretary Steven Mnuchin opposed PPP-related deductions for businesses in negotiations with Congress earlier this year. As word sank in this week, accountants and bankers called small-business owners to warn them to prepare for an increased tax bill. A trade association of accountants urged business owners to reach out to members of Congress for legislative relief. Leaders of the tax-writing Senate Finance Committee, Chuck Grassley, an Iowa Republican, and Ron Wyden, an Oregon Democrat, asked the IRS and Treasury to reconsider their position and said Congress may act when it reconvenes in December. “Since the CARES Act, we’ve stressed that our intent was for small businesses receiving Paycheck Protection Program loans to receive the benefit of their deductions for ordinary and necessary business expenses,” the senators said in a statement. To speed the distribution of $525 billion in aid to small businesses this spring and summer, the CARES Act directed the Small Business Administration to move funds through the nation’s banks in the form of loans that would be forgiven if a business showed it used the money to keep people employed. The last loans were distributed in August. The tax confusion for PPP recipients arose because the tax code normally disallows deductions associated with tax-free income. The IRS and Treasury Department underscored that principle last week by saying, “Since businesses are not taxed on the proceeds of a forgiven PPP loan, the expenses are not deductible.” The issue is complicated by the timing of when the loan is forgiven, turning it into a tax-free grant. Many businesses have not yet asked the government for loan forgiveness. The IRS views the PPP aid as a wash for businesses, since tax-free income would go in and nondeductible expenses go out of a tax calculation. But from a business owner’s perspective, the PPP money replaced lost revenue but without the benefit of being able to subtract payroll and other costs to calculate taxable income, creating greater tax exposure as a result. “The word from Congress at the time was this is going to be a forgivable loan and it says right in the CARES Act that it’s not income,” said Mike Crabtree, partner at Boulay, an accounting firm with offices in Eden Prairie and Minneapolis. “People were thinking it’s like a government grant, essentially a shot in the arm to help them through this rough time,” he said. “But as they decided to create the disallowance of the expenses, then it might not be helping keep these businesses afloat. It was called the Paycheck Protection Program, with the idea that the money would go to employees and keep them off the unemployment line. That’s generally what happened. As far as the health of the business itself, this isn’t really doing as much.” In a worst-case situation, business owners who sought the aid, kept people employed for awhile but ultimately couldn’t keep their business alive would face a tax bill for taking government assistance. In their statement, Grassley and Wyden said the ruling by the IRS and Treasury “increases the tax burden on small businesses by accelerating their tax liability, all at a time when many businesses continue to struggle and some are again beginning to close. Small businesses need help maintaining their cash flow, not more strains on it.” To the U.S. Treasury and IRS, tens of billions of dollars are on the line. If the ruling stands, the government could recover money from business taxpayers. If Congress changes the law and President Donald Trump agrees before leaving office, the government could end up, in many cases, making tax refunds to small businesses that received the PPP aid.

Why US airlines are eager to fly Boeing’s upgraded 737 Max

SEATTLE — Though Boeing’s 737 Max will return to service at a bleak moment in the airline industry when the pandemic has dried up demand, some carriers want the plane flying again as soon as possible. The first to fly will be American Airlines, which has scheduled a Max round-trip flight from Miami to New York’s La Guardia airport for Dec. 29. According to an internal memo sent Nov. 15 to Alaska Airlines pilots, the Seattle-based carrier plans to take its first 737-9 Max delivery early next year and start flying it in service by the end of March. United Airlines expects to schedule flights on the Max in late January or February. Southwest Air, which has decided to take the time to put all of its 9,000 pilots through Max training before any of them fly passengers, said it likely won’t put the Max on its schedule before April. Following the Federal Aviation Administration’s lead, the European Union Aviation Safety Agency, or EASA, along with Transport Canada and Brazilian air safety regulator ANAC are also expected to clear the Max to fly by year end. That will pave the way for Ireland’s Ryanair to start taking Max deliveries and for Air Canada and Calgary-based WestJet to begin flying the three dozen grounded Maxes already delivered into Canada. Offering passengers reassurance and flexibility Before American flies passengers on the Max in late December, it has plans to try to reassure the public that the plane is safe. The airline will take employees and the press on demonstration flights out of Dallas. And it will invite corporate customers to tour the Max on the ground in Dallas, Miami and New York, where they can ask questions of pilots who will fly the plane. Southwest doesn’t plan demo flights but said it will conduct “readiness flights” on each aircraft before returning the Max fleet to scheduled service. And CEO Gary Kelly indicated he will likely fly on a Max before passengers do so. Though Boeing and some airlines have begun avoiding use of the now-tainted Max brand name, instead referring only to the 737-8 or 737-9 models, all the U.S. carriers say they will make it transparent to travelers what plane they are flying on. All three U.S. airlines that were operating the Max before the grounding — American, United and Southwest — said they will rebook free of charge any passengers who balk at flying on a Max. American spokesperson Sarah Jantz said if a Max is switched onto a flight previously scheduled to be flown by some other plane, the airline will let passengers know via email, text and push notifications. “If a customer doesn’t want to fly on a 737 Max aircraft, they won’t have to,” she said. “We’ll provide flexibility to ensure our customers can be easily re-accommodated if they prefer not to fly on one.” If a reluctant passenger doesn’t want to re-book, the airlines will offer either refunds or vouchers for future travel depending on the type of ticket. Why airlines want the Max back now Despite the downturn in demand, American, Southwest, United and Alaska are all keen to fly the Max so they can swap out older aircraft to eke out whatever savings they can from the jet’s fuel efficiency advantage — the 737 Max burns 14 percent less fuel than the previous model 737 NG. When air traffic eventually recovers, airlines will also use the Max’s longer range to open up new long-distance routes. For example, when United first started flying the Max, it flew the plane between Houston, Texas, and Anchorage, Alaska, a route too long for the 737 NG. “The longer range and better fuel efficiency of the Max creates new options for flying a greater number of seats between more city pairs,” said a person familiar with United’s plans. It’s likely United will focus Max flights out of its hubs in Houston and Denver. Some international customers are also eager to get the Max. Low-cost carrier Ryanair is aggressively seeking to increase market share in Europe while rival airlines contract, and is negotiating a possible additional Max order in exchange for a large discount. Eddie Wilson, CEO of the main Dublin-based unit of Ryanair, speaking this month at a virtual webinar hosted by Australia-based CAPA-Centre for Aviation, said the low-cost carrier wants to have up to 30 Maxes by next summer and has simulators and pilots ready for training. “We’ve got to get this aircraft,” Wilson said. “It’s a fantastic aircraft. It’s probably going to be the aircraft that has got the most scrutiny from safety regulators. And we are really looking forward to having it in our fleet.” Max maintenance and pilot training The FAA’s green light for the Max to return to service is the signal for a frantic period of aircraft modification and maintenance, as well as simultaneous intensive pilot training, before the plane can actually fly passengers. All of the U.S. airlines that will operate the Max will soon commence the new pilot training mandated by the FAA. That consists of approximately five hours’ training in total: two hours of computer based training followed by a one-hour briefing to prepare for a two-hour session in a full-flight simulator handling the flight controls in various scenarios. Southwest has installed and certified nine 737 Max simulators to conduct the flight training with its 9,000 pilots. American and United will introduce Max flights on a rolling basis as teams of pilots come out of training. Boeing faces its own stiff challenge to get roughly 450 as-yet-undelivered Maxes out of mothballs and ready for customers. With many orders canceled, it must also find a new customer for more than 60 of those jets. In addition, it will have to be deeply involved with the airlines that have the 385 Maxes that were in service before the jet was grounded. As foreign regulators follow the FAA in clearing the Max to fly, Boeing will set up airplane modification lines in various parts of the world to train the teams of mechanics that will do the work for each airline.

Polar Star icebreaker to head north on rare wintertime Arctic mission

SEATTLE — The global pandemic has resulted in a dramatic reshuffling of the annual cruise of the Coast Guard icebreaker Polar Star. Instead of heading south into the unending light of the Antarctic summer, the Seattle-based vessel will journey north into the winter darkness of the Arctic. As late as August, the 134 full-time crew were still preparing for their traditional role assisting in the resupply of the McMurdo Station on Ross Island, close to the Antarctic continent. That mission was scuttled by the National Science Foundation as the coronavirus pandemic prompted research to be cut back and restrictions put in place to reduce the risk of the virus reaching there. So, in September, the Coast Guard decided to send the Polar Star on the first U.S. icebreaker winter cruise into Arctic waters since 1982. “This is going to be an amazing adventure,” said Capt. William Woityra, the 44-year-old commanding officer of the 399-foot Polar Star. “When I first found about this I told the crew, we were trading our penguins for polar bears and … for the northern lights. The crew is really excited about the chance to go do something different.” For this year’s northbound cruise, the Polar Star will start with a few days of cruising in Puget Sound to make sure that crew quarantines have been effective and there are no “sleeper cases” of COVID-19 aboard the vessel, according to Woityra. Then, the Polar Star will head for the Gulf of Alaska, cross into the Bering Sea and journey through the Bering Strait into the Chukchi Sea. Depending on ice conditions, the vessel then could push farther north before making its way back south to Seattle sometime in early March. The Polar Star will travel within the 200-mile economic zone claimed by the United States off Alaska. This is an area that abuts a maritime zone of Russia, which has had a muscular presence in northern waters. In August, a Russian military exercise extended into a U.S. zone of the Bering Sea, where American fishing captains were startled and angered to hear Russians warning them to leave the area. And Woityra, during an online November Wilson Center forum, said one purpose of the cruise was to “wave the flag,” and “ensure that we’re projecting sovereign presence and power.” Two Seattle vessels make up U.S. Arctic fleet Coast Guard icebreakers have stayed out of the winter Arctic for nearly four decades because it only has two Seattle-based vessels. The Healy, commissioned in 1999, is a “medium” icebreaker that breaks ice up to 10 feet thick and typically ventures into the Arctic in the summer and fall. The Polar Star, commissioned in 1976, is classed as heavy — able to break through ice up to 21 feet. That has made it a valued asset helping to carve open channels so that vessels can deliver supplies to McMurdo Station. The two U.S. icebreakers both have had mishaps and maintenance problems. The Healy suffered a fire Aug. 18 that damaged a critical propulsion motor and forced the cancellation of an Arctic mission. The crew of the aging Polar Star has faced many challenges, including a 2019 trip to McMurdo Station when they had to put out a fire that damaged an incinerator and repair a leaking shaft, with the aid of a scuba diver. That repair forced a temporary halt to breaking ice. Russia has long had a much bigger ice-breaking fleet than the United States because so much of that nation borders Arctic waters; it is now on track to exceed 50 vessels. Alaska and Washington’s congressional delegations have pushed for years for the United States to reinvest, and in 2024 the first of a new class of three heavy icebreakers is scheduled to be delivered to the Coast Guard. If congressional funding is sustained, that will be followed by the construction of three new medium icebreakers. Woityra said he has a young crew, mostly under the age of 30, and he expects them to provide some of the expertise and leadership for the new generation of U.S. vessels that will be able to make more frequent trips to the winter Arctic. And, he views this upcoming cruise as a great opportunity for training. “They are showing incredible resilience and agility to shift focus,” Woityra said. “We are able to turn on a dime and say, OK, this is a change but it’s an opportunity.” Woityra says the Polar Star crew is accustomed to Antarctic ice, which may be up to 10 feet thick. Because it is frozen to the shoreline, the ice is typically very flat. The Arctic ice is very different. It’s often broken up and tossed by winds, and it smashes together to create ridges as it piles on top of itself. Then, if it survives the summer, the salt may leach out and the ice becomes harder and denser. Woityra says can be “really challenging” to get through. It is uncertain just what conditions the Polar Star will encounter. The changing Arctic is deeply affected by climate change, which has dramatically reduced the amount of multiyear ice. This year, a Siberian heat wave got a portion of the Arctic sea ice melt off to an early start, and the ice reached its minimum extent Sept. 15 — the second lowest since record-keeping began in the 1970s, according to NASA. While north of the Arctic Circle, the Polar Star will take a series of measurements of ice thickness and concentration. Polar Star researchers will conduct communication and other technology tests, including deploying unmanned aerial vehicles in the darkness of the winter Arctic. They also will test a remote operating vehicle in the frigid ocean conditions. U.S. captains rattled by earlier encounters with Russians The Polar Star’s route will take the vessel through the Bering Sea during the winter fishery when pollock, cod and other seafood is caught by a largely Washington-based fleet of vessels. Woityra said the Polar Star is designed for breaking ice and pitches a lot in rough water, for which the Bering Sea is notorious during the winter. So the plan is to head directly to the Arctic and not linger in the Bering Sea, where U.S. Coast Guard cutters typically conduct winter patrols. Still, the presence of the icebreaker in these northern waters also will be welcome by the U.S. captains who were rattled by the August encounter with the Russian vessels and aircraft engaged in the military exercise. “It definitely makes a difference to have a Coast Guard presence up there whether it be an icebreaker or cutter,” said Capt. David Anderson, skipper of the Seattle-based Blue North freezer longliner. “Just to have them out there for safety is number one in my book but also there is this whole Russia incident, which is something that has never happened before.” In August, Anderson was told by the crew of a Russian plane to leave the area he was fishing, and — after consulting with the Coast Guard — he dropped his gear and moved about 10 miles away, before coming back to resume his fishing. Other captains also reported being harassed by the Russians during the August military exercise. Then on Sept. 14, in a separate Bering Sea incident, a Russian warplane made two direct passes over a U.S. catcher processor vessel at heights estimated to be about 500 feet, then flew over another fishing vessel. “We are concerned that the confrontations by the Russian military with our vessels this summer are part of a broader trend,” said Stephanie Madsen, executive director of the At-Sea Processors Association. Madsen said that a robust U.S. presence in the region is “simply nonnegotiable.” Polar Star will be in service until at least 2029 The upcoming Arctic deployment comes as the Polar Star nears the end of its 44th year of service, which is way past its initial 30-year expectation of service. Woityra said that there has been considerable investment in maintenance and that he feels confident the ship is ready for the upcoming trip. And it won’t be retiring anytime soon. During the next five years, $75 million has been allocated to keep the Polar Star running at least until 2029. “We want to make sure that the Polar Star is available to meet mission demands whenever we’re needed,” Woityra said.

OPINION: Missing the real story

Too bad for Anchorage Acting Mayor Austin Quinn-Davidson that New York Gov. Andrew Cuomo is already receiving an Emmy for Best Impersonation of Effective Leadership in a Pandemic. The selected-not-elected mayor of Alaska’s largest city gave a masterful performance on Nov. 25 as she choked back crocodile tears while announcing she was ordering bars and restaurants to close for the third time this year and the second time the municipality has done so without a plan for how to provide economic relief to hundreds of businesses and thousands of employees despite its allocation of more than $156 million in federal CARES Act funds. A former member of the Assembly since elevated to her position after former Mayor Ethan Berkowitz was forced to quit in October, Quinn-Davidson is directly responsible for the egregious misuse of economic relief funds that have been diverted into city payroll to the tune of $49 million, Parks and Rec union beak wetting with $4.5 million for bike trails, and $2 million for Visit Anchorage while people who actually live in Anchorage, let alone those who don’t, are being prohibited from visiting Anchorage. Throw in the $5 million for the Girdwood health clinic that is a perfect candidate for a bond issue instead of an opportunistic cash grab from the federal honey hole and the Assembly has squandered more than $60 million, or nearly 40 percent, of its CARES Act money while Quinn-Davidson auditions for a Spanish-language soap opera and demands Congress drop more cash on politicians who have proven to be completely incompetent stewards of putting it to the intended use. As she lived up to the “acting” half of her title, Quinn-Davidson didn’t get any questions about why Anchorage has wasted so much economic relief money even as she claimed the municipality has “only” $15 million left. Nor was she asked why she hadn’t already urged her former colleagues to appropriate the money into exhausted business and individual programs before she unilaterally decided to put thousands of people out of work. A question about the $49 million in payroll spending to the mayor’s spokesperson wasn’t answered and the same inquiry to Assembly Chair Felix Rivera and Vice Chair John Weddleton was similarly ignored. Rather than chasing down the real story of the gross mismanagement bordering on embezzlement of federal money by Anchorage leadership, social and legacy media were tossed into a tizzy by Gov. Mike Dunleavy’s community outreach liaison Dave Stieren encouraging people to support their favorite local bars on the last day they could operate until 2021. In full disclosure, Stieren is a good friend of mine. We’ve attended concerts and smoked the occasional cigar together, I’ve had dinner at his home co-hosted by his lovely wife and I had a Friday segment for a few years on his radio show during which we would have a whisky and shoot the bull over current events. That said, however, this is not about defending Stieren, who aborted his plans to support his neighborhood bar on Hunker Down Eve and at least temporarily deactivated his Facebook page as the social media mob descended and some members of the traditional press attempted to drive a wedge between him and his boss. The issue isn’t what Stieren wrote or even if it is newsworthy. The issues at hand are the misplaced priorities of both the Anchorage leadership that has put its budget ahead of household budgets and the media that has almost uniformly made accountability a standard that only applies to the wrong-thinkers like Stieren or others who have protested the onerous, arbitrary and destructive mandates of the current and former mayor and their enablers on the Assembly. Every day that goes by without elected officials in Anchorage being forced to answer for their malfeasance is an outrage as businesses close, temporarily or permanently, and their employees have to worry not just about whether they can even buy Christmas presents for their families but whether they’ll be able to pay the bills and rent come January. Meanwhile our comfortable leaders in Anchorage worry not over their paychecks, their homes or their next meal. They are not even made to answer uncomfortable questions. Uncomfortable questions are only for the governor’s office over a social media post touting the legal and morally defensible activity that is supporting local businesses. Accountability applies to everyone, especially when tens of millions of dollars are being blatantly frittered away and people’s very livelihoods are in jeopardy as a result. Anything less and the Alaska Press Club might as well start handing out its own acting awards. Andrew Jensen can be reached at [email protected]

Bristol Bay could boom again; SE pinks, chinook still down

For better or worse, recent trends in some of Alaska’s primary salmon fisheries are likely to continue in 2021, according to early predictions from state biologists. On the positive side of the ledger, Bristol Bay is expected to see yet another strong return of sockeye salmon next year; the Alaska Department of Fish and Game is forecasting a total run of just more than 51 million sockeye attempting to reach the bay’s nine large river systems. Such a return should translate into a commercial harvest of nearly 37.8 million sockeye and an area-wide escapement of about 13.7 million fish, according to the 2021 Bristol Bay Sockeye Salmon Forecast. A total run of 51 million fish would be approximately 45 percent greater than the long-term average run of 35.1 million sockeye to the bay based on harvest and escapement estimates going back to 1963 but “just” about 6 percent greater than the 10-year average return of 48.1 million sockeye as the fishery has continued to build on itself of late. Similarly, a harvest of 37 million sockeye would be 40 percent greater than the long-term average harvest of nearly 22 million fish and 13 percent greater than the average harvest of 32.2 million sockeye since 2011, according to the forecast. The Bristol Bay fishery is typically the largest commercial sockeye fishery in the world and the most lucrative salmon fishery in the state in terms of the total value of the fish harvested. ADFG Bristol Bay Area Research Biologist Greg Buck said the latest strong sockeye forecast is largely based on the expected continuation of “massive” returns of 1.2-age sockeye — those that spend one year rearing in freshwater and two in the ocean — to the bay’s western rivers in recent years, primarily the Nushagak and Wood near Dillingham. Biologists thought those Westside returns could be an indicator for large 1.3-age fish in 2020 and they were mostly right, Buck said, particularly for the Naknek River on the bay’s Eastside. “The Naknek just blew the doors off the numbers last year,” he said in an interview. “Now the question is: How long is this going to play out?” More than 14 million sockeye were harvested in the Naknek-Kvichak district last summer, which was 66 percent greater than the 20-year average harvest for the area. Even still, approximately 4.1 million sockeye escaped into the Naknek River, according to ADFG, more than double the river's upper-end escapement goal of 2 million sockeye. Buck also noted that the forecasts for Bristol Bay sockeye have borne out to be lower than actual returns in recent years. The forecast for this past summer pegged the 2020 run at 46.6 million sockeye before more than 58 million fish showed up for the sixth consecutive year of a 50 million-plus fish run. The 2018 run of 62.3 million fish was the largest on record going back to 1893, according to ADFG, and was 21 percent greater than the preseason forecast. “If we have had any trend over the past 10 years or so we’ve been kind of conservative with the forecast so I kind of took the governor off this year and said ‘go for it,’” Buck said. By district, the 2021 Bristol Bay sockeye run forecast breaks down as follows: 17.3 million fish to the Naknek-Kvichak district; 15 million to the Nushagak district; 11.2 million to the Egegik district; 6.6 million to the Ugashik district; and just more than 800,000 to the Togiak district. Buck added that the official state prediction is right in line with a forecast for a 2021 Bristol Bay sockeye run of 50.9 million fish from University of Washington experts, who conduct extensive research on the Alaska fishery. As for why the Bristol Bay sockeye fishery has performed exceptionally well in recent years when many other salmon stocks across Alaska and down the West Coast are struggling, he said the possibility that a warmer Bering Sea is more productive continues to be a popular theory but acknowledged that is little more than an educated guess at this point as well. “There’s obviously something deep-ocean about this,” he said. “Unfortunately, that’s part of the life cycle we don’t know much about.” There also is no apparent correlation between the strong 1.2 and 1.3-age classes and poorer returns of older sockeye. And while a larger harvestable surplus of salmon is generally a good thing, most of the sockeye that have returned to Bristol Bay of late have been small. Those salmon harvested this year averaged 5.1 pounds, which is nearly a pound smaller than the long-term average size, according to ADFG. “It’s pretty straightforward; they’re growing like gangbusters out there at sea for some reason so they’re maturing early. Whatever’s going on out there is putting their hormones in overdrive,” Buck said of the smaller sockeye. Smaller than average returning salmon have become a trend statewide. Bristol Bay Regional Seafood Development Association Executive Director Andy Wink wrote via email that the forecast for next year “looks really good” even if there is a trend towards smaller and younger sockeye. Wink wrote that although most Bristol Bay sockeye are frozen after being headed and gutted and smaller “H&G” sockeye often fetch lower per pound wholesale prices, poor runs elsewhere helped limit the global sockeye supply this year. As a result, prices for four- to six-pound sizes are currently quite high, according to Wink, so he wouldn’t be surprised to see what price gap there is start to close. A lot of it has to do with the fact that sockeye come from wild fisheries “so we get what we get, and so does the market,” he wrote. “We have seen those in the supply chain successfully adjusting to smaller fish sizes, and that will likely continue so long as we see runs that skew younger and smaller,” Wink continued. “Even though smaller sockeye produce a slightly lower fillet yield and can sell for a dollar/pound less in wholesale markets, there doesn’t appear to be a drastic difference when it comes to retail prices or consumer demand.” And though it’s impossible to predict exactly what will happen with millions of salmon facing seemingly just as many variables impacting their survival, but Buck added that “right now it looks like (the strong runs) will play out for a few more years.” Southeast pinks, chinook The immediate outlooks for two of Southeast’s biggest salmon fisheries aren’t nearly as bright. The joint NOAA Fisheries-Alaska Department of Fish and Game 2021 Southeast Pink Salmon Harvest Forecast state’s the regional harvest of the smallest and most prolific Pacific salmon is expected to be “average” at approximately 28 million pinks, but ADFG Southeast Pink and Chum Salmon Project Leader Andy Piston said in an interview that there is a caveat to that. Southeast pinks runs — particularly those to inside waters in the northern part of the region — have become increasingly odd-year dominant, he said, meaning more fish tend to return in odd-numbered years. That’s because pinks have a two-year life cycle that is much more strict than other species of salmon that often have several age classes of fish return in a given year. Pinks do not. “You have all your eggs in one basket, so it takes time for odd and even years to bounce back,” Piston said. To that end, a harvest of 28 million pinks is classified as average for all years but is actually “quite a bit below the average” for odd years in Southeast, he said. The 10-year average Southeast pink harvest is 34 million fish and the 28 million-fish forecast is just more than half of the odd-year harvest since 2001, according to ADFG figures. Additionally, next year’s Southeast pinks were spawned from the 2019 return that yielded a “really poor” harvest of about 21 million fish, Piston said. He attributed the smaller returns to poor early marine survival, which many biologists have linked to warmer-than-normal Gulf of Alaska water temperatures in recent years. “The overall trend has been downward since the early 2000s and the pattern is similar for sockeye salmon, coho salmon and chinook,” Piston said. “It’s pretty clear that there’s large-scale environmental conditions that are driving all of this.” However, he said there is hope in the fact that water temperatures in the northern Southeast waters of Icy and Chatham straits were again close to normal this summer and surface temperatures in the Gulf have also moderated. “Now (temperatures) are pretty close to near average in the northern Gulf of Alaska. Hopefully we’ll see some better survival for these fish,” he said, adding that short-lived pinks will likely offer the first clue as to whether or not gulf-raised salmon in general could start an upswing. However, managers do not think Stikine or Taku River chinook salmon will start their rebounds in 2021. According to the forecast for the large Southeast rivers published Nov. 30, just 9,900 large chinook are expected to return to the Stikine River near Wrangell next summer, which is well below the escapement goal of 14,000-28,000 fish. The Stikine had a chinook escapement of just 10,670 fish from a terminal run of 11,750 large fish this year, according to ADFG figures. Similarly, the terminal run forecast for the Taku near Juneau is for 10,300 large chinook next year, which would also be well below the escapement goal range of 19,000 to 36,000 fish. The Taku saw a chinook escapement of 15,590 fish this year. Chinook stocks have severely struggled across Southeast for several years and the small run forecasts are likely to again translate to broad chinook fishing closures across Southeast inside waters in spring and early summer, according to ADFG. ^ Elwood Brehmer can be reached at [email protected]

Army Corps of Engineers denies Pebble permit

In the end, Pebble Limited Partnership will not be getting a key permit for its mine from the Trump administration. The Army Corps of Engineers Alaska District issued a record of decision Nov. 25 denying Pebble’s Clean Water Act wetlands fill permit application, which, barring an unlikely reversal on appeal, kills the current iteration of the Pebble mine plan.  The company’s late 2017 application for the key development permit spurred the multi-year environmental impact statement, or EIS, review that has since been the focal point of the fight over the massive and contentious mine plan. The Army Corps’ record of decision, or ROD, summarily states that the mine plan impacting more than 3,300 acres of wetlands and 185 miles of streams does not comply with Clean Water Act guidelines and “is contrary to the public interest.” Corps of Engineers Alaska District Commander Col. Damon Delarosa wrote at the end of the 29-page decision document that the Pebble mine plan is being denied because the project would result in “significant degradation of the aquatic ecosystem.” “I have concluded that the benefits of the proposed elimination and alteration of wetlands, streams and other waters within the (Army Corps) jurisdiction do not outweigh the detriments that would be caused by such eliminations and alterations, based upon the information contained in the FEIS, the extensive public comments received, and the analysis of the public interest review factors,” Delarosa wrote. “As those eliminations and alterations would be necessary to realize any benefits from the proposed project, I have found that the project is contrary to the public interest.” Delarosa took over as commander of the Alaska District this past August. Opponents of the mine naturally celebrated the Corps’ decision, generally stressing that the permit denial ultimately follows years of scientific conclusions about likely environmental impacts of the project and what a majority of Alaskans want in regards to Pebble. Bristol Bay Native Corp. CEO Jason Metrokin called the decision “a triumph for the people of Bristol Bay” in a formal statement. “While we are still reviewing the details of the decision, it is clear that Pebble is not in the best interests of Bristol Bay and those whose livelihoods depend on its incredible fishery,” Metrokin said. “We thank the Corps for acknowledging this reality in its decision. BBNC looks forward to working with stakeholders, both in-region and across Alaska, our congressional delegation and the federal government to ensure that wild salmon continue to thrive in Bristol Bay waters, bringing with them the immense cultural, subsistence and economic benefits that we all have enjoyed for so long.” Pebble’s opponents have routinely cited that the region’s large commercial sockeye fishery — currently one of the state’s few thriving commercial salmon fisheries —supports more than 14,000 jobs and generates more than $1.5 billion in economic activity. Sens. Dan Sullivan and Lisa Murkowski, both of whom formally opposed the project in late August when the Corps issued strict mitigation requirements for Pebble, said Corps officials came to the right conclusion on Pebble, despite their general support for Alaska’s mining industry. “This is the right decision, reached in the right way,” Murkowski said. “It should validate our trust and faith in the well-established permitting process used to advance resource development projects throughout Alaska. It will help ensure the continued protection of an irreplaceable resource — Bristol Bay’s world-class salmon fishery — and I hope it also marks the start of a more collaborative effort within the state to develop a sustainable vision for the region.” Murkowski previously said her preference was that the Corps deny the permit rather than the Environmental Protection Agency issuing a subsequent permit “veto” because of concerns she has about an EPA development prohibition stymieing other resource projects in the state. Murkowski has instead floated the concept of changing the status of the land Pebble wants to mine, which is state land designated for its mineral potential, but a spokeswoman for Murkowksi could not provide additional details on the senator’s ideas in time for this story. Sullivan said he will continue to advocate for other resource development projects in the state because of the jobs and economic opportunities they can provide. “However, given the nature of the Bristol Bay watershed and the fisheries and subsistence resources downstream, Pebble had to meet a high bar so that we do not trade one resource for another. As I have been saying since August, Pebble did not meet that bar and, accordingly, the Corps rightly denied the permit,” Sullivan said. Rep. Don Young did not applaud or criticize the decision in a statement from his office, but said he is disappointed in the fact that the permitting process allows the federal government to effectively kill a project proposed on state land. “Now there must be a consideration of how the federal government will compensate the state for the loss of economic potential (from the mine),” Young said. Pebble CEO John Shively said company representatives are obviously dismayed with the decision, particularly since the final EIS published in July indicated the project could co-exist with the fishery. “One of the real tragedies of this decision is the loss of economic opportunities for people living in the area. The EIS clearly describes those benefits, and now a politically driven decision has taken away the hope that many had for a better life.” Shively said in a statement.  The company is now focused on the next steps for the project, including an appeal of the decision, according to Shively. The company has 60 days to appeal the decision. Pebble’s Vancouver-based parent company Northern Dynasty Minerals Ltd. issued a statement Wednesday that is sharper yet in its criticism of the Corps’ conclusions. “Based on the positive findings of the final EIS, conclusions by the (Army Corps) that development of the Pebble project is ‘not in the public interest’ are wholly unsupported,” Northern Dynasty’s statement reads. “For the United States to turn its back on an opportunity to develop these minerals here at home in a manner that U.S. regulators have agreed is environmentally safe and responsible, and to do so for purely political reasons, is not just short-sighted; it’s self-destructive,” Northern Dynasty CEO Ron Thiessen said. Northern Dynasty stock traded at 80 cents per share on Nov. 24 prior to the permit denial and has since fallen to 34 cents per share during early trading Dec. 2. The final Pebble EIS published in late July largely concluded that the large open-pit mine plan and its extensive support infrastructure would not materially impact salmon returns or the region’s water-plentiful ecosystem.  The final EIS backed the conclusions of the draft document published in 2019. Both of the documents were widely dismissed by Pebble opponents for lacking in-depth science and being rushed to fit permitting within the timeframe of the Trump administration. Army Corps Alaska District spokesman John Budnik wrote via email that the decision “is based on all the facts at-hand, which includes information provided by the permit applicant and the public, and is in compliance with existing laws and regulations.” An appeal would be adjudicated by the commander of the Army Corps Pacific Ocean Division headquartered in Honolulu, according to Budnik. That position is currently held by Col. Kirk E. Gibbs. Multiple conservation groups active in the fight against Pebble contend the proposed mine is the first large oil and gas or mining project in Alaska to be outright denied by the Corps. Budnik wrote that no major infrastructure projects have been denied a Clean Water Act permit by the agency since current Regulatory Chief Dave Hobbie took the position in 2015 but it’s unclear what happened before then. Brian Litmans, legal director for the Anchorage-based nonprofit environmental law firm that has fought Pebble said in an interview that the group thought both versions of the Pebble EIS could’ve been more thorough but noted Corps officials could also consider other information such as public comments and the EPA’s 2014 Bristol Bay Watershed Assessment — which concluded most any large mine would have substantial negative impacts on the region’s ecosystem. The watershed assessment was the basis for the EPA’s decision in 2014 to propose a “preemptive veto” of a large mine in the project area under authority granted it by Section 404(c) of the Clean Water Act. It was also the focal point of a subsequent lawsuit in federal court by Pebble against the agency, in which the company argued EPA staffers improperly coordinated with mine opponents and kept Pebble from contributing to the 1,000-plus page document.  That lawsuit ended in a May 2017 settlement that prohibited the agency from revisiting a veto for four years or until the Army Corps finished an EIS for Pebble; however, it did not invalidate the watershed assessment, meaning the Corps could still use it in its evaluation of the potential impacts of the project. “If anyone looked at this project, it’s impossible not to see significant degradation,” Litmans said. He also noted that the ROD states Pebble’s plan to mitigate the wetlands damage the project would cause was found to be insufficient. “Ultimately the science is clear on this one,” Litmans said. Mitigation plan The ROD states that Pebble “proposed to preserve a 112,445-acre area in the Koktuli River watershed, including 31,026 acres of aquatic resources” as the primary part of it's mitigatoin plan — actions to offset the damage the mine and associated infrastructure would have on wetlands, lakes and streams in the area. Under requirements published by the Corps in an August letter to Pebble but made apparent to the company earlier based on state documents obtained through a public records request by SalmonState, an Alaska-based opponent of the project, Pebble needed to find ways to mitigate its environmental damage within the Koktuli drainage where the mine site would be located. The stringent mitigation requirements laid out by the Corps are in sharp contrast to Pebble’s original mitigation plan as well as Alaska-specific guidelines issued by the Trump administration in 2018. Those joint Corps-EPA  guidelines encouraged regulators in the state to be flexible in approving mitigation measures for development projects because more than half of the state is considered wetlands — a fact development proponents often note. According to the documents shared by SalmonState, Corps officials told Alaska Department of Natural Resources officials in an August meeting that “If the impacts will be mitigated through preservation the ratio would need to be 10:1 to 20:1,” which puts Pebble’s proposal at the low-end of what the agency wanted, and Corps officials believed the threshold could be met within the Koktuli drainage.  Officials in Gov. Mike Dunleavy’s administration have regularly been accused of coordinating with Pebble to advance the mine despite the governor’s insistence his administration is neutral on the project. DNR spokesman Dan Saddler wrote in response to early November questions from the Journal that state agency officials had “no expectation” as to how many acres of state land Pebble would propose preserving. DNR officials simply answered questions from Pebble about state laws and regulations applicable to the project. The Koktuli watershed is almost exclusively state land and, with virtually no development beyond Pebble’s exploration work, holds little opportunity for wetlands restoration. Saddler wrote in response to questions after the release of the ROD that Pebble’s plan to deal with federal mitigation requirements “is fully up to them, and does not define DNR’s expectations. We don’t deal with expectations, but with actual applications submitted to us for consideration under state law and regulation.” Elwood Brehmer can be reached at [email protected] Editor's note: This story has been updated with additional statements and information since the original story was posted on Nov. 25. A prior version of this story incorrectly stated the Army Corps had not published Pebble's mitigation plan. The agency inititally withheld it from the public when Pebble announced it had been submitted prior to the record of decision, but it was released shortly after the decision document was published Nov. 25.

Federal agency moves to revise OCS drilling rules

In the final days of the Trump administration, federal environmental regulators are proposing to roll back some of the Arctic offshore drilling requirements mandated in 2016. The Bureau of Ocean Energy Management and Safety and Environmental Enforcement on Nov. 19 released the framework of proposed regulations for drilling in the Beaufort and Chukchi seas that agency leaders say will ease the burden of environmental protection on industry without increasing the risk of an oil spill in a sensitive environment through the use of new technologies. The prospective regulatory changes — which as of Nov. 24 hadn’t been posted to the Federal Register — follow the directives laid out in 2017 orders from President Donald Trump and then-Interior Secretary Ryan Zinke to review the 2016 rules and recommend changes that would encourage additional exploratory drilling off of Alaska’s Arctic coast. Documents outlining the proposed changes state the new regulations would make it easier for operators holding federal leases in the Beaufort or Chukchi to gradually explore their holdings and obtain a Suspension of Operations approval to prevent 10-year lease terms from expiring before work is completed due to the short seasonal operating window in Arctic waters. The revisions would also cut the authority of regional BSEE supervisors to require the capture of water-based drilling muds and cuttings in instances where subsistence resources could be impacted by discharges of the fluids. This change would alleviate uncertainty for industry caused by an apparent overlap of authority with Environmental Protection Agency requirements, according to a joint agency fact sheet on the proposal. The requirement of operators to file an integrated operation plan, or IOP, would be eliminated as well because much of the information in an IOP is also required in exploration plans filed with BOEM, according to the agencies. Changes to requirements for Arctic offshore drillers to have a drilling rig on standby to drill a relief well and well control equipment are also being advanced. “As countries like Russia increase their presence in the Arctic — including the use of U.S. technologies to develop their seabed resources, it is increasingly important to ensure that the United States has a strong presence in the Arctic OCS,” Deputy Interior Secretary Kate MacGregor said in a formal statement. “The Beaufort and Chukchi seas have a long legacy of oil and gas development — we believe these proposed revisions will better harness new technological innovation and best science to allow for responsible domestic energy development off the coast of Alaska.” A 60-day public comment period will start once the proposed regulations are published in the Federal Register, according to the agencies, meaning the changes would have to be finalized by the Biden administration. Alaska Wilderness League spokesman Corey Himrod wrote via email that while he can’t speculate on what the Biden administration will do, but noted it’s unlikely the incoming administration would finalize a move to quickly finalize regulations repealing what was put in place by the Obama administration. “Our view is certainly that the next administration should be strengthening safety regulations when it comes to oil spills, not limiting them,” Himrod wrote. Alaska Oil and Gas Association Regulatory and Legal Affairs Manager Patrick Bergt said he would be able to discuss the changes once they are officially posted. ^ Elwood Brehmer can be reached at [email protected]

Oil Search refines Pikka development schedule

Development of one of the largest North Slope oil prospects in decades will be more deliberate but eventually result in much more oil being produced at lower costs than originally planned, according to the company leading the work. Executives from Oil Search, the Papua New Guinea-based company developing the Pikka project on the central North Slope, said they now expect to reach initial commercial oil in 2025 with production quickly ramping up to 80,000 barrels per day in the first phase of development from pre-drilled wells. Oil Search officials submitted plans to state regulators just more than a year ago indicating the company wanted to push up its original first-oil timeline by about a year to late 2022 by utilizing modular production facilities to produce about 30,000 barrels per day before eventually ramping up to peak production of roughly 120,000 barrels per day. Now, company leaders expect production from the Pikka field and adjacent Mitquq prospect to top out at approximately 160,000 barrels per day late in the decade from a resource base that has nearly doubled since Oil Search moved to the state and took over the Pikka project in 2018, according to Oil Search Alaska President Bruce Dingeman. He and other Oil Search executives spoke Nov. 19 during a videoconference briefing for investors detailing the company’s revised operating and development strategies. Exploratory and appraisal drilling the last two winters has grown the 2C — likely technically recoverable, but not necessarily commercially viable barrels — oil resource over the area the company operates from about 500 million barrels to 968 million barrels currently, according to Dingeman. Managing Director Keiran Wulff, who preceded Dingeman in leading the company’s Alaska work, said during the investor update that 2020 has been a “humbling” year for Oil Search because the collapse of oil prices forced leaders to rethink all of their normal operations and capital plans. In April the company cut about $80 million from what was initially a nearly $400 million capital budget for its 2020 North Slope work shortly after oil markets worldwide bottomed out at less than $10 per barrel. “Aside from the oil prices we’ve had a very strong year,” Wulff said, noting the civil work requiring more than 800 workers was completed under budget on the North Slope last winter — 11 miles of new gravel road and three drill site and facility pads — allowed the company to redesign the Pikka project ostensibly on the fly. Oil Search also drilled the aforementioned Mitquq well and sidetrack just to the east of the Pikka area as well as the Stirrup exploration well about 20 miles to the southwest. Combined, the two represent about 200 million additional barrels of 2C oil resources, according to company leaders. Dingeman said oil from the Mitquq prospect would likely be processed through Pikka facilities in a third development phase, while the Stirrup prospect is likely large enough to be its own “development hub in the future.” Utilizing modular processing facilities to start production from one of three eventual Pikka drill sites should provide Oil Search about two-thirds of the initially planned production capacity for about half of the cost, Dingeman said. The first phase of development to reach 80,000 barrels per day is expected to cost approximately $2.9 billion with roughly $1.1 billion in drilling expenses and $1.8 billion in facilities. A final investment decision is expected in 2021. “The phased approach really opens the door with an initial high-return, low-cost development which will be followed by subsequent phases that will benefit from the learnings of the first phase as well as the cash flow it represents,” Dingeman said of the more gradual approach to Pikka. “It really represents a commercialization pathway that goes way beyond the volume we initially envisioned.” Oil Search previously planned to spend roughly $5 billion to develop the 120,000 barrels per day version of Pikka all at once with a cost of supply of about $45 per barrel. The changes have helped the company cut the cost of supply for Pikka to between $35 to $40 per barrel, which includes a 10 percent investor return, according to Dingeman, who noted long-term Brent oil futures are currently trading between $45 to $50. Oil Search reached a deal with Armstrong Energy in October 2017 to buy into Pikka and take over as the project operator for $400 million. This year the company exercised an additional $450 million option to completely buy out Armstrong and GMT Exploration Co., a silent working interest owner in Pikka, to take a 51 percent stake in the Unit. Spanish major Repsol holds a 49 percent interest in the Pikka Unit and project. Most of the oil would come from the shallow, conventional Nanushuk formation. It has been the source for smaller nearby discoveries by ConocoPhillips as well as Conoco’s Willow project in the National Petroleum Reserve-Alaska, which is similar in scale to Pikka and until recently had been on a slower development schedule. Elwood Brehmer can be reached at [email protected]

Murkowski touts relationships to keep Alaska ‘at the table’ for energy policy

Alaska’s resource extraction industries will be best served by working with, not against, the incoming Biden administration through an emphasis on how the industries can support Democrats’ broader goals for sweeping energy reform nationwide, according to Sen. Lisa Murkowski. Alaska’s senior senator told viewers of the online Resource Development Council for Alaska annual fall conference Nov. 19 that she has had good working relationships with both President-elect Joe Biden and Vice President-elect Kamala Harris in the Senate and that keeping Alaska “at the table rather than on the menu” when it comes to natural resource and climate policies will require proactive engagement from the state’s resource industry leaders. “We have a good story to tell and it should be told,” Murkowski said while stressing that Alaska’s traditional mineral and renewable energy resources will be crucial for the national energy transition Biden and Harris campaigned on. “If the new administration is going to achieve its goals it’s going to need to partner with Alaska rather than treating us as some kind of snow globe sitting up on a shelf or one big, giant national park or one big wildlife refuge,” she continued. “Let’s show them that our minerals need to be a part of the solution; that our oil and gas industry can lead in carbon management and we can harness the power of our renewables and that a stronger Alaska economy means a stronger national economy.” Alaska mining proponents have long pointed to the plethora of prospects across the state for numerous metals and minerals needed in new energy technologies. Murkowski specifically pointed to the Graphite Creek prospect near Nome, which would be the country’s only domestic source of graphite — a primary component of lithium-ion batteries used in electric vehicles and elsewhere — if it were developed. Development of Alaska’s deposits of rare Earth elements, or REEs, most notably the Bokan Mountain prospect on Prince of Wales Island, is also seen by many as essential in-part for national security reasons as REEs are often used in defense technologies in addition to cell phones and other devices. China currently supplies most of the world’s graphite and REEs. Mining advocates have similarly emphasized that development of the state’s widespread copper resources will also be necessary to grow renewable energy production nationwide as copper wire is a main component of electric generators. Some of the leading backers of a national carbon tax-and-dividend — the climate change policy favored by many conservatives — contend Alaska’s largely conventional oil and gas production is less carbon intensive than most oil and gas operations elsewhere in the country. To that end, Murkowski noted that flaring of unwanted natural gas produced with oil is prohibited in the state. Additionally, wells tapping the state’s conventional oil and gas reservoirs produce at greater volumes for longer than the shale-focused fracked wells being drilled across the Lower 48, generally meaning fewer wells requiring less fuel to power drilling operations are needed in Alaska to produce more of the target resource. However, Murkowski also said she expects the next administration to pursue much more aggressive policies aimed at cutting carbon emissions and limiting new oil and gas development if Democrats take control of the Senate with wins in the Jan. 5 runoff elections for Georgia’s Senate seats currently held by Republicans. Such a scenario would give Democrats slight majorities in both chambers of Congress in addition to holding the White House. Democrat wins in both Georgia Senate races would split the chamber 50-50 between the parties with Harris serving as the tiebreaking vote if need be. Such a thin margin in the Senate could give Democrats the ability to reverse the rider to the 2017 tax bill that authorized oil and gas leasing in the Arctic National Wildlife Refuge coastal plain as budget-related bills requires a simple majority to pass the Senate; but it’s unclear how other standalone climate or environmental legislation could be passed without some level of Republican support or changes to Senate rules that currently require 60 votes to pass general legislation. “I don’t think we should be afraid of (the climate change) conversation, but we should be ready for it. I think we need to thoughtfully engage on ways to reduce our emissions while fighting the policies that just take it too far,” Murkowski said. Still, she said there will be a major speed bump for any legislation attacking mining — particularly coal mining — regardless of which party controls the Senate. That’s because the chair of the Energy and Natural Resources Committee either Wyoming Republican Sen. John Barrasso or West Virginia Democrat Joe Manchin, who come from the top two coal producing states in the country. Murkowski currently chairs the committee but her turn as the top Energy and Natural Resources Republican will end with the new Congress in January per caucus rules. She will remain on the committee as the second-ranking Republican. More immediately Murkowski said she still has hopes of passing the American Energy Innovation Act championed by her and Manchin in the three weeks Congress will be back working between Thanksgiving and Christmas. The Energy Innovation Act prioritizes new technologies to limit or capture and store carbon emissions from traditional energy sources; advancements in energy efficiency; small-scale nuclear development; and domestic mineral security among other provisions. If passed, it would be the first major energy reform legislation from Congress in more than a decade, according to Murkowski’s office. A prior version of the omnibus energy bill passed both the House and Senate in 2016 with strong bipartisan support but died in a conference committee shortly before Christmas that year. “If you want to look to a good template to begin to reduce your emissions look at our energy bill,” she said to conference viewers. On Pebble Murkowski acknowledged some in the audience of resource development backers likely aren’t keen on the stance she’s taken since August against the Pebble mine plan, but also countered that it’s the only Alaska resource project she has opposed. “I have reached the same conclusion that Ted Stevens did many years ago — that this is the wrong mine in the wrong place,” Murkowski said, adding that she would prefer the Army Corps of Engineers deny Pebble Limited Partnership’s application for a Clean Water Act wetlands fill permit instead of the Environmental Protection Agency issuing a post-permit Clean Water Act Section 404(c) “veto,” which she says would set a bad precedent for other potential resource projects in the state. A simple permit denial would allow PLP or another developer to reapply for project permits under a new plan. Murkowski said the way Pebble executives portrayed the permitting process in the secretly recorded “Pebble Tapes” released in September — in which then-Pebble CEO Tom Collier and Northern Dynasty Minerals CEO Ron Thiessen touted expansion plans and their personal relationships with regulators and Gov. Mike Dunleavy to individuals posing as prospective investors — damages the credibility of Alaska’s broader resource industries. “What we all saw play out in those awful Pebble Tapes was something that none of us should feel good or comfortable about,” she said. “If you have those who are attempting to sell a project through I believe not only fabrications and truly a dishonest appraisal of their own project, I think we should all be concerned. I don’t think that gives anybody’s development project in the state any help at all.” Elwood Brehmer can be reached at [email protected]

Movers and Shakers for Nov. 29

Annette Gwalthney-Jones was recently appointed to the board of trustees for the Alaska Mental Health Trust Authority Gwalthney-Jones brings more than 20 years of managerial experience in human resources and social services to the board of trustees. Her career background includes program work and leadership within many Trust beneficiary-serving organizations in the Anchorage area, including the Arc of Anchorage and the Salvation Army’s Booth Memorial Home. She also has an extensive background in human resources and internal development and training. Furie Operating Alaska announced the appointment of Michael Cipriano as controller. Cipriano has a bachelor’s degree in accounting from Gonzaga University. His background includes progressively responsible positions at Parker Drilling, Arctic IT, BP and ConocoPhillips. R&M Consultants Inc. hired Craig Knight, PLS, as a senior land surveyor in the firm’s Geomatics Department at its Fairbanks office. Knight will work as project manager and lead surveyor responsible for collecting, processing and mapping survey data and for producing surveying and mapping projects in accordance with current standards of practice. He will also lead development and expansion of R&M’s survey services in the Fairbanks area and provide advanced professional, technical, day-to-day support, guidance and input to staff and other team members. Knight has 26 years of surveying experience in a wide range of services. He offers a unique variety of skills and experience, having conducted control, topographic, boundary, aerial, hydrographic, right-of-way, pipeline, power line, as-built, and dam and reservoir surveys. Knight has served as project manager and crew chief for large transportation and utility design and construction projects for a variety of agencies. He has degrees in land surveying, engineering technology, and drafting from Sheridan College in Wyoming and holds a U.S. Patent for a Damage Resistant Surveying Stake that he and his wife developed.

OPINION: Some news to be thankful for

After what has felt more like a terrifying plunge with no ups and all downs, this year has been more like a bungee jump than a roller coaster. But two recent developments have snapped us back from impact in the nick of time and given reason for thanks as we approach the holiday season. For one, as President Donald Trump repeatedly promised in the face of nearly unanimous ridicule and skepticism before the election, a COVID-19 vaccine was indeed just weeks away and is set to be deployed before the end of the year including here in Alaska. Encouraging clinical test results and a ready deployment plan are tremendous accomplishments by the public-private partnership under Operation Warp Speed that have buoyed investors and, critically for Alaska, oil prices. The price per barrel has increased by about $4 since Pfizer announced a preliminary 90 percent effective rate for its phase three clinical trial, and year-to-date North Slope crude is about $5 better than the budget forecast. This is not nearly enough to erase the projected budget deficit but is better than a kick in the shins and a long way from the prices that bizarrely and briefly went negative back in April. The Dow Jones average also crossed the 30,000-point mark on Nov. 24, which is good news for the Permanent Fund that is now the largest source of income for Alaska and as of Nov. 20 stood at nearly $70 billion in value. The record total for the Dow and the Permanent Fund came after ConocoPhillips Alaska President Joe Marushack announced at the Nov. 18 Resource Development Council for Alaska conference that the company is resuming drilling on the North Slope after suspending most non-production activity and briefly curtailing output by some 100,000 barrels per day this past spring. This is outstanding news for jobs — the sector has lost some 3,000 since the COVID-19 induced price crash — and future throughput in the Trans-Alaska Pipeline System. With approval for its massive Willow project in the National Petroleum Reserve-Alaska in hand (followed like clockwork by eco-extremists filing a lawsuit against it), ConocoPhillips is getting back to work and will finally get to deploy the biggest horizontal drilling rig in North America dubbed “The Beast.” Prices weren’t the only factor in the decision to restart its North Slope programs, of course. Crucial was the overwhelming defeat of the deceptively-titled “Fair Share Act” on Nov. 3 by Alaska voters who refused to follow millionaire lawyer and initiative funder Robin Brena off the economic cliff. The dark winter still lies ahead, but progress toward a vaccine and more production on the North Slope has relegated that fact to a mere function of the calendar and no longer a metaphor for where Alaska is going. For that we have reason for thanks. Andrew Jensen can be reached at [email protected]

GUEST COMMENTARY: Pebble mine is a giant black eye for Alaska

When I was young and my mom thought I was running with the wrong crowd, she had a simple admonition: if you lay down in the gutter, you get up dirty. That was long ago. But today, when I look at our industry “partners” in Alaska, it feels like we’re wallowing in the gutter. While there are many examples, perhaps the most glaring is the Pebble Partnership and its parent company, Vancouver-based Hunter Dickinson. Many things have changed over the past 15 years Inletkeeper has worked on the Pebble mine. But one thing has remained constant: the Pebble people consistently lie to Alaskans and they work in secret to undermine the rule of law and threaten our Alaskan way of life. This week Pebble provided yet another telling example: it submitted its long-awaited plan to “mitigate” the harm its massive open pit mine would cause in the headwaters of the world’s richest salmon fishery. But it kept the plan secret, and refused to share it with Alaskans. You would think Pebble would be proud to show Alaskans how it plans to protect our spectacular public resources, and to send a strong signal to investors and regulators that it knows what it’s doing. But no, Pebble once again chose secrecy and darkness over honesty and transparency. Pebble has been lying to Alaskans for years. It won’t harm salmon, Pebble tells us. It’s building a smaller mine to address local concerns. It won’t use toxic cyanide. The permitting process is fair. The project is economically viable. In the era of fake news, Pebble finds comfort in a bed of mistruths, half truths and flat-out lies. In the meantime, Pebble has spent lavishly on swampy lobbyists to game the permitting process, and paid fancy advertising firms to bamboozle Alaskans with the false promise of jobs and riches. And of course we can never forget the now-famous “Pebble Tapes,” where Pebble executives openly bragged about controlling our politicians and stacking the deck for their dead-end project. The question then becomes, what does it say about Alaska if our state and federal governments openly entertain a proposal like the Pebble mine from a bunch of dishonest people who put corporate profits above the public interest time and again? The short answer is that Pebble is a giant black eye for Alaska. It’s an ugly smear on responsible development and the people who support it. And it destroys the credibility of groups like the Resource Development Council, the Alaska Chamber and the Alaska Miners Association which refuse to call-out reckless and irresponsible development. In the end, however, we all lose with projects like Pebble. Because if Pebble’s lies, secrecy and manipulation get rewarded with the necessary permits, we’ll set the bar even lower for Outside companies to swoop-in and exploit Alaska’s incredible heritage in the years to come. And Alaska cannot afford to wallow in that gutter. ^ Bob Shavelson is Advocacy Director for Cook Inletkeeper, a local group formed by Alaskans in 1995 to protect the Cook Inlet watershed and the life it sustains.

GUEST COMMENTARY: Biden manufacturing plan requires major increase in U.S. mining

As a contentious presidential campaign fades, the incoming Biden administration will face serious economic challenges. Among them is the large number of Americans left unemployed by the COVID-19 pandemic. In response, the president-elect should initiate his “Build Back Better” program immediately after taking office in order to strengthen America’s industrial base. During the early months of the coronavirus recession, U.S. manufacturing lost 1.4 million jobs, and has only regained roughly half through October. This decline has walloped America’s workforce because each manufacturing job supports roughly seven other jobs throughout the economy. The pandemic has also awakened the nation to the risks of over-dependence on global import supply chains. President-elect Biden appears ready to address the concerns of America’s manufacturers and their workers. He’s already pledged to award government contracts only to domestic manufacturers, explaining, “From autos to our stockpiles, we’re going to buy American.” This would be a good start. However, his ‘Build Back Better’ plan also proposes to create 1 million new auto jobs through large-scale investment in America’s electric vehicle, or EV, industry. To reach that goal, his administration will have to tackle a major challenge. In recent years, the United States has become heavily dependent on countries such as China to supply the metals and minerals needed for EVs and other advanced technologies. In fact, China is now the dominant supplier for 23 metals and minerals critical to U.S. national security. EVs and their batteries require a wide array of these key metals and minerals. Beijing is using control of them to jump ahead in the EV manufacturing race. China will soon be home to 107 lithium-ion battery mega-factories. In contrast, the U.S. has only nine in the pipeline. The story is bigger than just EVs or batteries, though. Wind turbines need rare earths like neodymium and dysprosium, plus aluminum, zinc, copper, and molybdenum. And solar panels use plenty of cadmium, tellurium, gallium, selenium, and silver. Ramping up production of electric vehicles and renewable energy systems will require massive new supplies of metals and minerals. Fortunately, the U.S. possesses an estimated $6.2 trillion in mineral reserves. However, Washington has long pursued policies that have pushed mining investment overseas. As a result, America’s reliance on imported minerals has nearly doubled in the last two decades. It’s time for the U.S. to begin ramping up production of its vast mineral reserves. Instead of increased reliance on mineral production in China, a major polluter, Washington should encourage domestic mining under world-leading environmental and labor standards. Turning a blind eye to China’s pollution, labor abuses, and human rights violations should no longer be tolerated. To succeed in the clean energy revolution, Washington must commit to rebuilding domestic mineral production and processing. U.S. firms can both mine critical minerals and be good environmental stewards. With bipartisan support already coalescing around reshoring, it’s time to bring home the supply chains that affect every aspect of our economic and national security. Kevin L. Kearns is president of the U.S. Business and Industry Council.


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