ADFG releases draft disaster funds plan for Chignik salmon, P-cod

In the middle of two ongoing disasters — the coronavirus pandemic and extremely poor salmon runs in many regions of the state — some fishermen may finally see some money to help with disasters from 2018. The Alaska Department of Fish and Game is looking for comments on its draft distribution plans for relief funds connected to the Pacific cod disaster in the Gulf of Alaska and the Chignik sockeye salmon disaster, both in 2018. The comment periods for them are open until Aug. 14. Two years ago, Pacific cod fishermen were facing a dismal season, with two age classes of fish just missing. The P-cod fishery is highly valuable and high-volume in Alaska’s groundfish fisheries, accounting for about a fifth of the total groundfish catch in Alaska every year. But the increasingly warm temperatures in the Gulf of Alaska seem to be connected to declining fish survival. The survey numbers led the National Marine Fisheries Service to close the Gulf of Alaska Pacific cod fishery entirely for the 2020 season. The Secretary of Commerce confirmed the disaster declaration in October, and in early 2020, the National Marine Fisheries Service, or NMFS, set aside $24.4 million for the disaster. Under the current draft plan, harvesters would be eligible for 40 percent of that, with 51 percent going to pot catcher vessels, 29 percent to trawlers, 4 percent to jig vessels, 8 percent to longliners, 7 percent to longline catcher-processors, and 1 percent to trawl catcher-processors. Those values were calculated based on wholesale value among the six sectors, according to the plan. With the exception of the jig sector, which would be permit-based, ADFG is proposing for distribution to be vessel-based. Payments to individual vessels would be determined in tiers, based on the average landings over three years, calculated by the best two of three years. Processors would be eligible to receive 26 percent and communities for 4 percent, with community payments pro rata based on demonstrated loss, with a threshold of at least $10,000 of landings in a community. The remaining 30 percent would be set aside for research. With the changing temperature regime in the area, there are other repercussions, like changing phytoplankton and zooplankton. “Species at the top of the marine food chain, including Pacific cod, experienced lower recruitment (reduced juvenile survival) and increased mortality was documented in fishes, birds, and mammals,” the draft plan states. Funding would be available by bid, with preference for projects that help managers understand the causes of the 2018 cod crash, such as projects focusing on understanding the effect of warming temperatures on Pacific cod ecology and dynamics, early life history studies, and more information about stock spatial structure, migration patterns, and connectivity based on new genetics or genomics. A small portion, less than 1 percent, would be set aside for ADFG to administer the grants as well. In 2018, Chignik saw its worst sockeye run to date. Less than 150 fish were harvested as the run struggled to make escapement. NMFS designated $10.3 million in relief funds for that fishery, with 55 percent set aside for harvesters. Chignik is a fairly exclusive salmon fishery, with many of the local fishermen reliant on that cash income to pay for items like heating oil and gasoline for the winter. The relief funds are calculated to cover about 75 percent of the average ex-vessel value from 2015-17. ADFG’s draft plan would split that 55 percent into two groups, with 65 percent going to vessel owners and 35 percent going to crew. The plan divides payments for vessel owners into four tiers, based on the average landings for the best two out of three years. Crew, on the other hand, would get equal payments as long as they can provide information showing they had a license in 2018 and participated as crew in 2018. Processors would be eligible for 11 percent, with an option for tender vessels, and communities would be eligible for 3 percent. The Chignik Intertribal Coalition, or CIC, would be eligible for 1 percent under a subsistence designation, which would be intended to help the group provide other sustained options for subsistence activities. “Residents of the region are heavily dependent on the sockeye salmon runs to sustain their subsistence lifestyle,” the plan states. “The CIC may need to identify specific projects or infrastructure that support subsistence activities in the region prior to receiving funds from (Pacific States Marine Fisheries Commission). The funds could also be considered for direct payments to regional households to mitigate food security concerns.” Like the cod fishery, 1 percent would be set aside for ADFG administration and 30 percent of the money for Chignik would be designated for research. It’s not entirely clear what happened in 2018, as both the early and late runs failed. Projects ADFG is interested in grantees pursuing would be to help understand environmental factors and freshwater and marine production for both runs, investigate juvenile movement, growth, and habitat use in freshwater and estuaries, better salmon enumeration methods, and better understandings of the socioeconomic impacts of fishery disasters on subsistence communities like Chignik. Even as ADFG is working on the plans to distribute that funding, fishermen all over the state are struggling with ongoing disasters. Chignik is facing another extremely poor run, with restrictions this season in both the subsistence and commercial sockeye fisheries. Only 255,579 early run sockeye were counted on the Chignik River, less than even in 2018; as of Aug. 3, only 117,131 sockeye had been counted as well, less than half of the run in 2019. Prices are also a major concern for fishermen, as restaurants all over the U.S. face fluctuating restrictions and openings amid the coronavirus pandemic. With that uncertainty and the burden of the additional costs for COVID-19 mitigation this season, including quarantining crew arriving in the state and additional personal protective equipment, Alaska fishermen have felt the pinch this year. The state recently made CFEC permit holders eligible to apply for Alaska CARES Act funds, which can be applied toward eligible expenses and impacts related to the pandemic. Elizabeth Earl can be reached at [email protected]

GUEST COMMENTARY: Ranked-choice voting should be voted down

Every lieutenant governor of Alaska I’ve known takes his or her role overseeing elections very seriously. Impartial, crystal-clear election rules are vital to our democracy. We should not be bamboozled by a proposal — set for the November ballot — that would deny political parties the ability to put forward a candidate, and totally confuse the process for the rest of us as voters. A national voting fad has made its way to Alaska this November, by way of ranked-choice voting in Ballot Measure 2. It would eliminate party primaries for a free-for-all. It would create confusion at the polls. It potentially would render a person’s vote not to be counted. As a former Lt. Governor of our state with experience overseeing elections, I join leaders of all political parties urging Alaskans to vote this proposition down. Imagine a situation where candidates of the Libertarian Party, the Green Party, the Alaska Independence Party, even perhaps the Republican and Democratic parties are, after a wide-open primary, not even allowed to appear on the general election ballot. Only four candidates would make it to a general election ballot, in a state that usually has five or more parties. Thus, Ballot Measure 2 restricts our civil right to associate and form a viable party. Sounds hardly constitutional or fair. I’ve worked with Libertarian, Green, and Alaska Independence Party elected officials during my career, and we already make it tough — perhaps too tough — for newer or “smaller” parties to put a candidate forward in a general election. I’ve run in three Republican primaries myself and seen times when several candidates in my party’s contest drew more votes than all the other parties combined. In a highly contested primary situation, with a single candidate in another party, it’s possible that party’s choice doesn’t even make it to the November ballot. Far more people vote in general elections. Primaries should narrow a party’s choice of people, not the peoples’ choice of parties. The “ranked-choice” part of this proposal comes later, during the general election. If no candidate receives a majority of the first-choice votes, then the candidate with the least number of votes is dropped from the ballot, and those who had that candidate as their first choice get their second choice counted instead in a re-tally. This continues until one candidate is declared the winner. Simple? Hardly. This proposed form of voting is so complex, in fact, that when Maine implemented it in 2016, officials needed a 19-page instruction manual for voters to explain it. Other states have found that ranked-choice voting leads to some voices not being fully heard in the political and electoral Studies on ranked-choice voting have shown that minority groups, voters with less education, older voters, and those whose first language is not English are less likely to fill out their ballots completely. With ranked-choice voting, when people leave blanks on their ballots or assign the same ranking to different candidates, those ballots can be discarded in the subsequent and final tabulations. This means that their vote may not be counted, creating what is otherwise known as “exhausted ballots.” This process gives those who fully complete their ballots more influence over the electoral process, and leaves those who don’t understand the process more likely to be disenfranchised. Another problem with ranked-choice voting is there is not always a majority winner. In one extreme case, the prevailing candidate in a 2010 San Francisco election won less than 25 percent of the total votes. While this is not always the case with ranked-choice voting, a non-majority winner is a possibility that occurs 61 percent of the time, according to research done by the Maine Policy Institute. As a final warning about the ranked-choice voting scheme, multiple jurisdictions in the U.S. have implemented and later repealed ranked-choice voting. These include the state of North Carolina; Burlington, Vt.; Aspen, Colo.; and Pierce County, Wash. While the voters in these jurisdictions may have had varying reasons to repeal ranked-choice voting, one thing is clear: voters preferred their traditional voting method of “one person, one vote” over the convoluted ranked-choice system. There is no denying the importance of voting, nor the importance of keeping elections simple and accessible for every eligible voter. Unfortunately, while proponents of Ballot Measure 2 make it sound easy, ranked-choice voting is confusing, runs counter to the democratic process, and disenfranchises voters. All eligible voters in Alaska deserve to have their ballots counted and their voices heard. Adopting ranked-choice voting will accomplish the opposite. Mead Treadwell served as lieutenant governor of Alaska from 2010-14.

FERC denies requests for rehearing of Alaska LNG approval

Without comment, the Federal Energy Regulatory Commission on July 22 declined to take up two requests that it reconsider its June 6 approval of the state-sponsored Alaska LNG project. Under federal law, such requests for rehearing are deemed denied if FERC declines to act on the motion within 30 days. The Matanuska-Susitna Borough filed its objections to the project approval on June 19, followed on June 22 by a motion for rehearing from the Center for Biological Diversity and Earthjustice. The clock ran out July 22 without FERC acting on the requests. “In the absence of commission action on the requests for rehearing within 30 days from the date the requests were filed, the requests for rehearing (and any timely requests for rehearing filed subsequently) may be deemed denied,” FERC said in its July 22 notice. The next step — should either the borough or the environmental groups choose — would be to challenge the FERC authorization in federal court. The borough believes its property at Port MacKenzie, across Knik Arm from Anchorage, would be a better location for the proposed gas liquefaction plant and marine terminal than the project’s preferred site 60 miles to the southwest in Nikiski, on the Kenai Peninsula. The environmental groups in their 142-page request for a rehearing argued that the federal environmental impact statement was deficient, particularly in how it addressed air emissions and damage or loss of wetlands. Though the federal agency had no comment in declining to act on either appeal, the Alaska Gasline Development Corp., which has been leading the venture the past four years, in a July 17 filing with FERC referred to the Center for Biological Diversity’s claims as “overbroad and unsupported … where intervenors mischaracterize the record and/or the law.” In the same filing, AGDC said the Matanuska-Susitna Borough “misconstrues facts” in its challenge to the federal decision. The final environmental impact statement, released in March, affirmed the project team’s preferred option to build the LNG terminal in Nikiski. FERC commissioners on May 21 authorized the Alaska LNG project, adopting all of the findings and decisions in the final EIS. Separate from legal maneuvering by challengers to the FERC decision, the AGDC board is working with a new price tag for the project, estimated at $38.7 billion following a 14-month review by a third-party engineering and construction firm. The latest cost estimate, presented to the board June 25, is down about $5 billion from the previous number but is still substantially higher per tonne of output capacity than most other LNG projects proposed worldwide. Multiple Alaska North Slope natural gas development projects have been in various proposal and permitting stages for 50 years, all failing to advance due to no viable market for the gas or uneconomic project numbers. The state took over the latest LNG project in 2016 when North Slope oil and gas producers ExxonMobil, BP and ConocoPhillips cited weak economics in withdrawing as participants. The project, as authorized by FERC, would include 62 miles of pipeline from the Point Thomson field to Prudhoe Bay, a gas treatment plant at Prudhoe to remove carbon dioxide from the gas stream for reinjection into the reservoir, and 807 miles of pipeline through the state and across Cook Inlet to the liquefaction plant and marine terminal in Nikiski. The AGDC board is looking to get the state out of the role as project leader for the economically challenged venture. The board does not support the state continuing as the sole project sponsor past Dec. 31, and plans to “put the Alaska LNG project assets up for sale” in a formal bidding process if no one steps up to take over as lead developer. Larry Persily is a former Alaska journalist, state and federal official who has long tracked oil and gas markets and projects worldwide. He can be reached at [email protected]

State keeps tweaking AK CARES as rollout remains slow

Additional small businesses will be eligible for more than $155 million in pandemic aid from the State of Alaska Aug. 6 following wholesale changes to the AK CARES grant program, but whether or not the revisions will result in distribution of funds remains to be seen. Department of Commerce, Community and Economic Development officials announced July 31 that less restrictive eligibility requirements for small businesses to receive the grants would go into effect approximately seven weeks after they were first released. On Aug. 6, AK CARES grants will also be available to Alaska-based businesses with up to 50 full-time employees that have received $5,000 or less from federal government aid programs such as the Economic Injury Disaster Loan, or EIDL, and Paycheck Protection programs run through the Small Business Administration. Approximately 11,600 Alaska small businesses had received nearly $1.3 billion in aid through the Paycheck Protection Program as of July 31, according to the SBA. Commercial fishermen who held a state Commercial Fisheries Entry Commission permit either this year or last and fished in 2019 are also now eligible for the grants of between $5,000 and $100,000, as are 501(c)6 nonprofits, such as local chambers of commerce. The move to broaden eligibility came after legislators and business leaders said they heard from many small business owners who had taken small federal loans or grants this spring that proved insufficient as the economic conditions brought on by the pandemic continue. Dunleavy administration officials said some of the prior restrictions, particularly disqualifying businesses that had taken federal assistance, were put in place to assure that more businesses in need of aid would get it at some level. The AK CARES program was seeded with $290 million of the more than $1.25 billion the state received in federal CARES Act funding this spring and went live June 1. As of Aug. 3 Credit Union 1 — the lender selected to administer the grants — had received 2,542 AK CARES grant applications with requests totaling approximately $114 million; of those, 511 applications totaling about $20 million have been approved, according to the Commerce Department. Another 136 applications have been approved but the applicants have not opened a free account with CU1 needed to receive the funds, according to Commerce spokeswoman Glenn Hoskinson. State and CU1 officials have also acknowledged it has taken too long to process the applications and distribute the funds in legislative hearings on the matter, but Commerce Commissioner Julie Anderson said in a statement that the department’s new online application portal, which will be used instead of CU1’s website going forward, should speed it up from the start. The state’s new AK CARES loan application portal is at www.akcaresonline.org. Anderson said evolving federal guidance the state must adhere to for the money has challenged the process, as have incomplete applications and a lack of responsiveness by applicants to address issues with their documents. “We continue to adapt the program to assist as many businesses as we can, as quickly as we can. I expect to see significant improvements in processing times and the number of businesses we can reach as a result of the program changes,” she said. Senate President Cathy Giessel, R-Anchorage, said the Legislature is not in a position to micro-manage the aid program and needs to support the Dunleavy administration’s efforts to improve the program; but the slow distribution of funds is largely a reflection of how government agencies typically operate. “This is simply a mechanical, bureaucratic process that is just slow,” Geissel said in an interview. “I wish it were more smooth.” Anchorage Economic Development Corp. CEO Bill Popp said the changes are not all he and others were hoping for but they are very important for some business owners that have now faced roughly five months of pandemic impacts — from slower sales to forced closure. “The timing will be good for many businesses with the uptick in cases. Every little bit helps,” Popp said. The Municipality of Anchorage has also appropriated $5 million for a second round of pandemic aid grants targeting tourism and hopsitality businesses, nonprofits and arts and culture organizations in addition to the $1 million dispersed earlier this year, according to the mayor's office spokeswoman Carolyn Hall. A CU1 spokeswoman did not respond to questions in time for this story; however, the Anchorage-based lender sent a long list of the “most commonly missed items” on AK CARES applications or expense schedules to Alaska regional development organization leaders and Commerce officials on July 29. The 20-issue list highlights missing business incorporation documents; requesting amounts outside the $5,000 to $100,000 limits; a lack of tax forms; and illegible handwriting among some of the problems credit union staff are facing when working with applicants. Some applicants and other professional observers have said the first application required significant documentation, similar to what would be needed for a large loan application, rather than prioritizing the speed of the process. Elwood Brehmer can be reached at [email protected]

North Slope production beating prior years after pandemic cuts

North Slope oil production in July was stronger than it has been in years and while it’s a long ways from the “glory days” of Alaska’s oil era, every little bit helps with state budget experts forecasting a nearly $1 billion deficit this year. The final North Slope production average of 477,896 barrels per day last month was the largest for July since producers pumped about 497,300 barrels per day in 2013. About 466,000 barrels per day were produced from North Slope fields in July 2019, according to Revenue Department records. In April, Revenue Department officials forecasted an average production rate of 486,570 barrels of oil per day from the North Slope in the 2021 state fiscal year at a time when the price for Alaska oil was running less than $20 per barrel. The summer months are traditionally when producers conduct maintenance on facilities that can require them to curtail or outright stop production from time to time. Warmer temperatures can also degrade the efficiency of processing facilities engineered to operate in cold Arctic conditions to some degree. The July production boost followed a roughly six-week production curtailment period by ConocoPhillips in response to very low oil prices. The company said it would slow production by about 100,000 barrels per day in late May and resumed normal production operations in July. ConocoPhillips’ Alaska production was ultimately cut by about 40,000 barrels per day in the second quarter, the company reported last month. It also comes at a time when the small Badami oil field east of Prudhoe Bay, which has generally produced 1,000 to 2,000 barrels per day, is offline. Savant Alaska LLC asked the Division of Oil and Gas in late May to approve a production suspension from the field in light of the poor market conditions. Detailed production data for July is not yet available but the company did not produce from the field in June, according to Alaska Oil and Gas Conservation Commission records. The improved production rate could also partially be the result of ConocoPhillips’ move to curtail some of its wells. While it’s difficult to exactly quantify the impact, spokeswoman Natalie Lowman wrote via email that the company’s data and models indicate field production rates will be higher for some time after wells are shut-in. “This is called flush production and it has been seen historically in North Slope wells after production shut-ins,” Lowman wrote. However, production at the iconic Prudhoe field, which was just taken over by Hilcorp on July 1, is also running far better than recent history. Hilcorp produced an average of 287,341 barrels per day last month, more than 30,000 barrels per day greater than July 2019, according to Revenue records. This July was also the best rate for the month at Prudhoe since at least 2012 when the state began combining oil from the large field and its satellites in its production reports. State Oil and Gas analysts generally surmised it could be the result of fewer large maintenance projects scheduled during the operational transition between BP and Hilcorp, but a Hilcorp spokesman did not respond to questions in time for this story. There has been a positive rebound on the price side for Alaska producers and the state budget as well. While it’s just more than one month into the 2021 fiscal year, the average oil price of $43.38 per barrel for Alaska North Slope Crude is 17 percent greater than the state’s official forecast of $37 per barrel for the year. Whether the stronger-than-expected price holds will continue to depend on the severity of the pandemic in the world’s major oil consuming nations, analysts predict. Elwood Brehmer can be reached at [email protected]

OPINION: Berkowitz inspires a revolution he can’t embrace

Anchorage Mayor Ethan Berkowitz isn’t a big fan of Van Hale right now. Safe to say Hale is no fan of Berkowitz, either. On Aug. 3, the day that the mayor once again shut down bars and restaurants, Hale’s trademark sign outside Van’s Dive Bar on Fifth Avenue had a message: “Berkowitz is a Dick Tator “Hell yeah, brother!” Berkowitz’s heavy-handed decision to deal a potential death blow to scores of small businesses across Anchorage sparked a resistance and the first real civil disobedience from otherwise law-abiding folks who have largely gone along with the mayor’s mandates. A crowd of people well in excess of his arbitrary limit on gatherings of no more than 50 people popped up to protest on Aug. 3 at the Loussac Library where the Assembly meets to regularly rubber stamp the mayor’s actions. Kriner’s Diner did not close and defied a stop work order delivered by municipal employees on Aug. 4. A bartender at Jens’ Restaurant started a petition opposing the shutdown that was rapidly nearing 4,000 signatures out of a goal of 5,000 as of midday on Aug. 4. Not only did Berkowitz decide to shut down bars and restaurants on July 31, he did so without even a proposal for a relief plan despite the municipality having received more than $150 million in CARES Act funds four months ago. While the state has had its own issues with its business relief grant program thanks to the rushed nature of its approval at a time when the Paycheck Protection Program had run out of money, the municipality is not encumbered in any way to provide help to the businesses ordered closed by the mayor. Here is the guidance for eligible uses to distribute the millions of dollars now in possession of the mayor and his merry bunch of marionettes on the Assembly: “Expenditures incurred to respond to second-order effects of the emergency, such as by providing economic support to those suffering from employment or business interruptions due to COVID-19-related business closures.” And: “Expenditures related to the provision of grants to small businesses to reimburse the costs of business interruption caused by required closures.” That is about as clearcut as it gets. In his typical buck-passing fashion that he regularly exhibits when it comes to the humanitarian crisis of homelessness that has exploded on his watch, Berkowitz is pointing his finger at the state and federal government rather than admit he has come up with no plan to aid the businesses he is closing down. While the governor may well need to call the Legislature to a special session to amend the state relief program, he is not the one who is shuttering businesses across the state. Berkowitz has stamped his feet repeatedly asserting his local superiority to go further than state mandates, yet when it comes to mitigating the consequences of his power grabs he tries to blame others. Nor has anyone on the Assembly proposed a plan to use the $150 million to aid small businesses as the lame duck mayor cripples them. While the mayor and his allies dither over virtual town halls to talk about plans, and after they wasted weeks with the only plan they have come up with to spend $22.5 million of the CARES Act funds on shelter and treatment facilities, paychecks are running out and rents are coming due. Berkowitz didn’t wake up on July 31 and decide to shut down a huge swath of the Anchorage economy. He had months to craft a relief plan and has done nothing except come up with a legally questionable use of CARES money to address a problem that entirely predates the pandemic. Here’s the federal guidance for using CARES funds on homeless services: “Expenses for care for homeless populations provided to mitigate COVID-19 effects and enable compliance with COVID-19 public health precautions.” That would mean the temporary shelters at the Sullivan and Ben Boeke areas are well within a proper use of the funds. Buying four properties to deal with issues the mayor and Assembly have neglected for years hardly seems to qualify, yet this administration is plowing ahead with it while leaving small business owners to suck it up. The mayor certainly had no such concerns about large gatherings or risks of transmission when he attended a June 6 protest of more than 1,000 people at the Park Strip and praised everyone in attendance. “I look out and I see a crowd full of revolutionaries, and it makes my heart glad because more than 200 years ago this country was founded on a revolutionary idea that all would be created equal and treated equally. “If you want change, you have to change the future.” Judging by the early response to the mayor’s decision to not treat everyone equally, a growing number in Anchorage are willing to take him up on his challenge. Andrew Jensen can be reached at [email protected]

ConocoPhillips manages profit amid pandemic

Despite facing negative oil prices and cutting production ConocoPhillips still managed to turn a profit in the first full reporting period of the global coronavirus pandemic. ConocoPhillips executives reported net earnings of $260 million in the second quarter during a Thursday morning investor call. The $260 million overall quarterly profit is a dramatic turnaround from the more than $1.7 billion ConocoPhillips lost in the first quarter when oil prices began to fall worldwide. However, ConocoPhillips lost $141 million on its North Slope operations in the second quarter. It also lost $451 million cumulatively from its Lower 48 and Canadian segments. The North American losses were more than offset by profits turned elsewhere around the globe, according to the earnings report. The company's net adjusted earnings, excluding income from asset sales and other special items, totaled a $994 million loss in the second quarter. The Houston-based global oil and gas producer generated just more than $4 billion in total second quarter revenue, which was down from $4.8 billion in the first three months of the year, but also cuts its expenses by more than 35 percent to less than $4 billion. It ended the quarter with $2.9 billion in cash reserves, down $1 billion from the first quarter and more than $2 billion over the first half of the year, according to the earnings report. CEO Ryan Lance said the result reflects the company’s strong underlying business operations and its commitment to continue work safely through the pandemic that at times has brought whole sectors of the economy to a complete halt, which has been reflected in energy markets worldwide. “We are monitoring the market closely to develop a view around the timing and path of price recovery and to guide our corresponding actions,” Lance said, the company began reversing actions to curtail production as oil prices rose late in the quarter. “Our financial strength, flexibility and portfolio diversity represent a distinct advantage that enables us to navigate and preserve value in this volatile environment.” Prices for oil on domestic markets, including Alaska, fell further in April and stayed there longer than the internationally-recognized benchmark of Brent crude. Prices on the Alaska North Slope and West Texas Intermediate oil markets went negative April 20 but stayed below $20 per barrel for weeks, while Brent prices dipped to $19 per barrel on separate occasions but rebounded afterwards. ConocoPhillips reported a second quarter average realized price of $26.81 per barrel for its Alaska oil compared to $32.32 per barrel for production from Europe and Africa. Alaska North Slope crude traded for $42.46 per barrel on Wednesday, according to the state Revenue Department. The company paid $85 million in state taxes and royalties during quarter, according to spokeswoman Natalie Lowman, who also noted that ConocoPhillips invested $223 million in North Slope capital projects, or about 25 percent of the company’s global capital spend during the period. Since mid-March, ConocoPhillips leaders announced $400 million of cuts to the company’s overall 2020 spending plan in Alaska. In early April the company told its drilling contractor Doyon Drilling that it would be laying down its North Slope drilling rig fleet indefinitely. In May, ConocoPhillips began implementing oil production cuts on the North Slope that were originally planned to peak at about 100,000 barrels per day as part of a broader strategy to curtail up to 460,000 barrels per day companywide. The North Slope cuts were reversed to start July as oil prices pushed back above $40 per barrel. Spread over the entire quarter, the North Slope production reduction averaged to 45,000 barrels per day less being produced in the second quarter — which averaged 153,000 barrels per day — compared to the first. The curtailment averaged a reduction of about 225,000 barrels of oil equivalent per day during the quarter, according to the company.   Elwood Brehmer can be reached at [email protected]

Alaska broadband deal alive as global telecom OneWeb resurrected

A partnership to bring multiple layers of broadband coverage to Alaska next year is back on following the reemergence of a London-based telecom. Representatives for OneWeb and Anchorage-based Pacific Dataport Inc. said the companies’ agreement to deploy and distribute broadband capacity across Alaska and Hawaii remains valid. OneWeb was pulled from bankruptcy earlier this month when the U.K. Department for Business, Energy and Industrial Strategy teamed with investment firm Bharti Global Ltd. to commit more than $1 billion to purchase OneWeb and restart its global satellite project. Pacific Dataport, or PDI, is a subsidiary of Anchorage-based telecom provider Microcom. In January, PDI and OneWeb announced a business partnership that would have the Alaska broadband company distribute capacity across Alaska and Hawaii on OneWeb’s worldwide network of low-earth orbit satellites, which was in-the-works when the economic effects of the coronavirus pandemic began to be felt worldwide. OneWeb filed for Chapter 11 bankruptcy March 27 after several of its large investors backed away, citing financial uncertainty created by the pandemic, which immediately halted work on its worldwide broadband project. OneWeb previously touted large international partners and investors such as fellow telecoms Hughes and Qualcomm as well as Coca Cola and Dutch aerospace giant Airbus. Hughes announced July 27 it has agreed in principle to invest $50 million in OneWeb alongside Bharti and the British government presuming creditors and regulators ultimately approve the purchase. PDI’s partnership targets large customers with the company selling wholesale broadband capacity on OneWeb’s network, which is based on a massive fleet of low-earth orbit, or LEO, satellites. Their plan originally was to begin offering capacity by the end of the year. PDI Government Affairs Director Shawn Williams said the work has been delayed by about four months, but stressed the company’s partnership with OneWeb “stands exactly where it was before the filing. If anything, it’s stronger.” He emphasized that PDI continued work on its own Alaska-focused Aurora System broadband project while OneWeb’s future was uncertain. PDI’s project is specifically targeting Alaska with geosynchronous equatorial orbit, or GEO, satellites that are launched into an orbit thousands of miles above Earth and mirror the planet’s rotation. The Aurora System will be run by Pacific Dataport. Microcom will offer small business and residential retail broadband from the system and Pacific Dataport will handle business-to-business and wholesale broadband contracts. Work on OneWeb’s LEO network was delayed by several months, according to an Alaska representative for the company, but PDI and OneWeb expect to start offering service in the state next year through both the LEO and Aurora projects. The Aurora project will offer 7.5 gigabits per second of broadband capacity through its first satellite early next year and the launch of a second satellite planned for 2022 should provide an additional 70 gigabits of bandwidth. “Everything is back on track,” Williams said. Elwood Brehmer can be reached at [email protected]

Movers and Shakers for Aug. 2

Tonbo Digital has merged with MSI Communications to provide enhanced digital and web services to its clients. Tonbo President Kristen Fowler Lindsey and SEO digital marketing strategist Scott Thomas have both joined the agency. Fowler Lindsey will lead MSI’s web, social and digital media departments, as well guide the agency’s initiative to be the first full-service, digitally driven creative, advertising and public relations firm in Alaska. Thomas will guide the agency’s social media and digital marketing strategies, including search engine optimization, or SEO, programmatic ad buying, pay-per-click, email marketing and Google display ads. In addition to comprehensive website development, MSI’s web division offers an online ticketing system for easy maintenance requests, database design, user experience design and sophisticated analytic reporting. Heather Harris will join the Municipality of Anchorage effective Aug. 24 as the Director of the Anchorage Health Department, succeeding Natasha Pineda. She is an alumna of the University of Alaska Anchorage and has an executive master’s degree in public administration from the University of Washington. Lane Powell announced that Associate Hans Huggler and Counsel to the Firm Miranda Strong have joined the firm’s Anchorage office. Huggler, who is relocating from the firm’s Portland office, is a commercial litigator with a focus on transportation and insurance-related matters. After earning his juris doctor, magna cum laude, from Lewis &Clark Law School, Huggler served as a law clerk for the Honorable Sharon Gleason of the U.S. District Court for the District of Alaska before joining Lane Powell. Over the next few months, Huggler will complete the requirements for an LL.M. degree in air and space law from McGill University’s Institute of Air and Space Law in Montreal, Quebec, including a research project focusing on U.S. court jurisdiction over international air crash claims. He also holds undergraduate degrees in economics and political science from Oregon State University and a master’s degree in criminal justice policy from the London School of Economics &Political Science. Strong focuses her practice on compliance, litigation, government affairs and employment. She joins the firm from the Bering Straits Native Corp., where she served as chief ethics and compliance officer and associate general counsel. In that role, she conducted investigations; handled administrative employment hearings; designed and directed corporate compliance, records and information management, and export compliance programs; and advised on Arctic, Alaska Native, corporate and energy public policy. Strong also spent time as an Assistant Attorney General for the State of Alaska, where she was a trial and appellate litigator, and a tribal liaison and special assistant advising the executive branch on emerging Alaska Native legal and policy matters. She is co-founder and co-chair of the Alaska Compliance Alliance and serves as a pro bono attorney for the Alaska Network on Domestic Violence and Sexual Assault. Strong received her juris doctor from the University of Washington School of Law, her master’s of public administration from the University of Alaska Southeast, and her bachelor’s degree in philosophy from the University of Alaska Anchorage. She is also a Society of Corporate Compliance and Ethics Certified Compliance and Ethics Professional.

OPINION: Anchorage officials want carrots, public gives them the stick

Don’t get a tattoo. Wear your mask. Don’t go out (especially after midnight). Anchorage Mayor Ethan Berkowitz has eagerly accepted the mantle of parent-in-chief and admitted as much to KTUU in a July 1 interview after he announced his municipal mask mandate on June 26. “Nobody likes eating vegetables either,” he said, “but sometimes you have to be told to do the right thing because it’s the right thing.” Notwithstanding how the vendors of the weekly Anchorage farmers’ markets may feel about the mayor knocking their products with his glib take, what we have learned since lockdown and hunker down orders started being issued in March is that law-abiding people are quite easy to boss around. Business owners will shut down at the risk of losing their livelihoods rather than risk losing their licenses. Shoppers will don a mask in order to make their Costco run. Students will forgo once-in-a-lifetime graduation experiences. Families will give up funerals, weddings and church services. In short, we’ll eat our damn vegetables. But when it comes to the people in Anchorage who most need help, who desperately need to be told to do the right thing, the mayor has been quite unwilling to even suggest a switch from a sugar-based diet to sprouts and salads. While the coronavirus is concerning, homelessness has become a full-blown humanitarian crisis under this mayor’s watch. Berkowitz can attempt to deflect blame as much as he likes to the federal government, the pesky ACLU or the 9th Circuit Court of Appeals, but the heartbreaking scenes of daily life in Anchorage are on him and his supermajority of allies on the Assembly. The mayor is closing out his six years in office with an attempt to convert $22.5 million worth of CARES cash into campuses he claims will curb the rampant problems of vagrancy, larceny, loitering, littering and public intoxication that are plaguing the municipality. Before moving on, lest this skepticism be interpreted as callous, or worse, racist, Anchorage does need infrastructure to care for those who cannot care for themselves. Although the locations can be debated, and the NIMBY impulse will always run strong, we need additional space for addiction and mental health treatment, as well as temporary and transitional housing for those who need a hand up and not a handout. However, this mayor and the majority of this Assembly have earned absolutely zero confidence they can be trusted to execute a successful strategy even were they able to bypass the Planning and Zoning Commission or avoid a federal audit for using economic aid funds to fix their failures that were the norm long before the new normal. Meet the new normal, same as the old normal. Nobody should believe anything will get better if the mayor gets his way. Not after more than five years of essentially unchecked authority in Anchorage until five days of overwhelming opposition that proved the public has well and truly had enough. If the rest of us can be forced to stay home, stay closed or stay covered for our own good, then surely the same logic applies to those who have long lost track of what is good for them whether from mental trauma or hopeless addiction. Until a plan includes enforcing the law, we will never identify and separate those who need help, those who want help and those who just want to help themselves to whatever isn’t nailed down. Mental health care is a huge challenge and we can look no further than the disaster at the Alaska Psychiatric Institute for evidence. Mandatory in-patient addiction treatment for chronic violators will likely require statutory changes at either the state or local level. Securing neighborhoods where treatment facilities are sited will require resources, but if bars ever get to resume normal business we have an alcohol tax for that. Those are major obstacles to overcome, and the mayor has squandered five-plus years to clear them, but doing so is critical to receive public support. Eating your vegetables can’t all be carrots. The mayor and the Assembly are going to keep getting the stick until they figure that out. Andrew Jensen can be reached at [email protected]

AIDEA gets green light for Ambler mining road

In approving a mining access road across the subarctic Interior, the Trump administration has signed off on another decades-long goal of Alaska development proponents. Bureau of Land Management Alaska officials signed a record of decision providing the State of Alaska right-of-way access across federal lands for the 211-mile Ambler mining district access road July 23. The road would open the roughly 75-mile-long mineral belt along the southwest portion of the Brooks Range for development of its copper, zinc, cobalt and precious metals. The area has been explored for decades but its remote location far from the road system has precluded additional work. Congress specifically contemplated the road in the 1980 Alaska National Interest Lands Conservation Act, or ANILCA, which directs the Interior Secretary to permit a right-of-way through Gates of the Arctic National Preserve to access the mining district, per other environmental regulations, when one is applied for. The state Department of Transportation began early reconnaissance work on the road under former Gov. Sean Parnell before the project was transferred to the Alaska Industrial Development and Export Authority, which applied for the right-of-way under Gov. Bill Walker’s administration. “This long-sought development of the road and mining district represents tremendous potential for economic growth, diversification, and job opportunities for Alaskans, along with revenue expected to the state and local governments for decades,” AIDEA board chair Dana Pruhs said in formal statement. Gov. Mike Dunleavy thanked President Donald Trump and Interior Secretary David Bernhardt for working to advance domestic mineral production in a prepared statement. “Nearly 40 years after Congress guaranteed access to the Ambler mining district, today’s decision allows AIDEA to move forward with the planning of a project that could create thousands of Alaskan jobs and a new source of revenue for the benefit of all Alaskans,” Dunleavy said. The members of Alaska’s congressional delegation largely echoed the governor’s sentiment in a joint statement. Trump also opened the Arctic National Wildlife Refuge to oil leasing and potential exploration — another ANILCA-designated opening for development — via a provision in the tax cut bill he signed in December 2017. Local opposition to the Ambler project from villages such as Evansville and Bettles, near where the road would connect to the Dalton Highway, has focused on the belief the road and eventual mine traffic would disrupt the migration of caribou needed for subsistence harvests. AIDEA officials are modeling their plan for an industrial toll road after the 52-mile haul road to the Red Dog zinc mine in Northwest Alaska that the authority financed in the late 1980s. And while AIDEA insists access to the road will be limited to mining activity, some also question whether the state will be able to effectively restrict access or if it will instead lead to increased sport hunting pressure. Numerous conservation groups and others have also questioned the economics of the road. Estimated in 2017 to cost between $280 million and $380 million for basic gravel construction, the final environmental impact statement, or EIS, for the road now pegs the total construction cost at approximately $520 million. They often note AIDEA has not publicly detailed its plan to coordinate road financing and construction with development of the mineral prospects needed to support the road beyond a conceptual plan. While there are more than a dozen early-stage prospects in the Ambler district, only two deposits held by Vancouver-based Trilogy Metals have been explored significantly and only Trilogy’s Arctic copper-zinc-precious metal prospect is close to be ready for permitting. Trilogy said “development of the road will unlock the world-class economic potential of the region by allowing greater access to the district and the potential development of the Arctic project,” in a company statement. Trilogy leaders previously said the company would likely start federal permitting for an open-pit mine at Arctic shortly after the road was approved. However, the junior mining company was forced to defer its 2020 summer field season because of the pandemic and it’s unclear at this point where the project stands. Elwood Brehmer can be reached at [email protected]

Local lenders make the difference in Payroll Protection Program

“Have you heard that (insert name of local business) is closing?”  This is an all too common refrain in 2020, repeated as we’ve watched restaurants, fitness studios, tour companies, retailers, and more, shut their doors for good. Researchers estimate that between early March and early May 110,000 small businesses closed across the country. In Alaska, the number of open small businesses decreased by 29 percent and consumer spending is down by nearly 12 percent in comparison to January 2020 numbers.  Considering that the median business has more than $10,000 in monthly expenses and less than one month of cash on hand, it’s no surprise that many have been unable to stay afloat during the pandemic. “We have months of economic pain still to come,” says Nolan Klouda, Executive Director for the University of Alaska Center for Economic Development. Paycheck Protection Program: $669 billion for small businesses nationwide The economy would probably be faring far worse if the federal government hadn’t acted quickly and authorized the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act on March 27.  The CARES Act is the largest economic stimulus plan in U.S. history, and includes the Paycheck Protection Program, which provided a total of $669 billion in forgivable loans for small businesses. The program was so popular the initial $349 billion ran out in two weeks, necessitating the authorization of a second phase. Slated to close on June 30 with $130 billion unspent, the PPP was recently extended to Aug. 8.  Although highly utilized, PPP presented a host of challenges for business owners, ranging from changing guidelines and concerns that loans would not be forgiven as promised, to establishing eligibility and finding a financial institution to apply through. In the future, business owners will need to calculate the forgivable amount of their loan and track allowable expenses to ensure program compliance, which may be difficult for some. Lenders also experienced challenges, including restrictions on the asset size of eligible lenders, unclear guidelines, and using a federal website not built to withstand the program’s heavy traffic. Going forward, lenders will need to manage servicing the unforgiven portion of loans, identify how to categorize the debt, and potentially deal with audits. Did PPP work? And did Alaska get a fair share? The Small Business Administration, which manages the PPP program, recently released detailed data regarding businesses nationwide that participated in the program. “The first question everyone wants answered is ‘Did it work?’ And the second question is ‘Did Alaska get its fair share?’” Klouda said. “Although it might take years to find out how effective PPP has been, it’s clear from reviewing the data that the program was used extensively in Alaska, by employers from just about every industry and region in the state.” When Klouda analyzed the data, he discovered the following: At 53 percent, Alaska entities received a smaller number of loans compared to the total number of small businesses and nonprofits, but a higher average loan amount of $112,000, versus $107,000 nationwide.  Employers in the state received $1,692 per capita, which is slightly better than the national figure of $1,594. Urban population centers like Anchorage, Fairbanks and Juneau received a greater proportion of PPP loans relative to the number of businesses than less populated rural areas. For the most part, Klouda’s findings about PPP in Alaska matched his expectations. One in particular though, surprised him: the top five PPP lenders were largely made up of local institutions. Wells Fargo was the only national bank ranked among the top five; the other four — Northrim Bank, First National Bank Alaska, Alaska USA Federal Credit Union, and First Bank — are all smaller in-state lenders.  Alaska’s leading PPP lender  Northrim alone was responsible for approximately one in four loans in the state, which translated to nearly 2,600 new business loans between April and June. For reference, there are only about 20,000 businesses and nonprofits with employees in the whole state. “We made a decision to assist as many businesses in Alaska as possible, regardless of whether they were an existing Northrim customer because as a community bank, we recognize the importance all our small businesses have within our community,” said Northrim Executive Vice President and Chief Lending Officer Mike Huston. To manage the high volume of applications, Northrim created a loan processing assembly line and brought staff from departments like IT, Accounting, Marketing, and others into the lending process.  “There were times when work was being done every minute of the day,” said Huston. “People stayed up late, got up early, and worked during the weekends. A significant portion of our staff were working remotely, and knowing that we were making a difference for our communities made us feel connected during this challenging time.” Although flexibility isn’t often a word associated with banks, Huston says it’s something Northrim prides itself on.  “One of our takeaways from this is that change is constant, and it’s coming at us quicker than ever. Tomorrow is not going to be what we expect and we have to be ready to adapt.” Disruption creates opportunity, and businesses that can pivot or identify new consumer needs can be successful despite a challenging economy, something Northrim knows well. The bank opened its doors in 1990 on the heels of a devastating recession, and has grown significantly since its origin in two trailers in a parking lot. Despite dire forecasts about Alaska's economy, Huston remains optimistic.  “We’re continuing to invest, Huston said. “We opened a loan production office in Kodiak in early March, and are planning to open a second community branch in Fairbanks this winter. We are committed to powering the businesses that power Alaska.” 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 Launch Alaska, Vice Chair for Anchorage Downtown Partnership, and a Gallup-certified CliftonStrengths coach.  

BROWN'S CLOSE: Groundhog Days

There is a Facebook prompt going around that brought me a welcome respite from the otherwise angry political, mask, and/or election messages. “Can you describe your favorite movie in as boring a way as possible?” Responses were admirable: “A group of short men spend a long time walking. They end up throwing away a piece of jewelry.” (The Lord of the Rings) “A teenage boy doesn’t want to go to school, so he picks up his girlfriend and hypochondriac friend, and they drive around Chicago.” (Ferris Bueller’s Day Off) “A number of people go to an amusement park where the attractions are not working as intended. The power goes out, and after a day or so the people leave.” (Jurassic Park) “A woman falls for her boss and his kids. They go for a hike.” (The Sound of Music) And my personal contribution – “A guy drives south and is arrested for murder. He’s saved by his cousin.” (My Cousin Vinny) This got me thinking. In a year where every day seems to be a repetition of the previous day (Groundhog Day), why don’t we reflect on our daily activities in as exciting a way as possible? For example, my days were always action packed, and COVID-19 has only heightened the mayhem. The day starts when I bound down the hallway, fire up my computer, and glance through my work emails. There is an offer for me to appear in CEO Today Magazine, for the scant price of 1,500 British pounds. This is the fifth such offer in two weeks. I am not a CEO, and I am not British. My gaze shifts to one of my many other browser windows currently open, where I read about the recent Twitter hackings of high-profile accounts. Such victims include former President Barack Obama, former Vice President Joe Biden, probable 2020 President-elect Kanye West, and likely alien Elon Musk. I am elated I have not yet fallen victim to Twitter Hacker, Cozy Bear, or his associate, Fancy Bear. Fancy Bear is now what I call my mother when I wish to annoy her. An Outlook Calendar Reminder pops up; it’s Five-Minutes-to-Zoom. I dial in, and am admitted to a meeting with other industry professionals around the nation. One company’s representative does not realize his mic is on. He is speaking to someone off camera. “Go in the corner and clean up that poop. That poop. That poop there in the corner. We can’t have this place looking like a garbage dump.” His pets, presumably, were at it again. At noon, I step onto my front porch for a breath of fresh air. My neighborhood is often a source of whimsy, and today is no different. One of my neighbors is painting bloody handprints across the front of her house. She completes this pastiche with a giant red “X” on her front door, and then drags a seven-foot-tall red-rimmed cross for display next to the street. A line of cars starts to congregate outside of her house. The neighbors all get out to gawk at her handywork, and whisper to each other. A middle-aged woman on a bicycle wearing a helmet and backpack begins taking frantic photos from the opposite side of the road. The posse of neighbors confronts the woman. While her initial reaction is to shout back at them in an even louder voice, she eventually recognizes she is outnumbered. She backs down and drags the cross back into her garage. She leans it gingerly against the wall, and then hurls the entire contents of her municipal garbage can out onto her front lawn and into her driveway. In a final crescendo, she places a giant handwritten sign in her front window. It reads, “We love.” The “o” in “love” is a smiley face. I watch the property value of my home evaporate. Chased away from the fresh air out front, I return to my home office, where I open my window. Perhaps I can enjoy the breeze from out back. I am immediately treated to the high-pitched shouting of the man who lives next door. “I am triggered whenever I watch The Shining!” (“A family moves to a hotel in the off season, but goes back to Denver in the middle of winter.”) “That’s when it happened! It was at the chalet in Switzerland when I was two! That’s why I stopped eating fruits and vegetables!” Whatever made Next Door Man forever forsake plant-based food products must assuredly be traumatic. Feeling ethically compelled to respect his privacy, I begrudgingly shut the window, and finish out the day working in a stuffy, hot room. At the close of the workday, I sit on my couch and look for something to watch on television. Crimson Peak is running (“A girl falls in love with a guy and moves to his house. The house is condemned, but she gets some help from its prior residents”). I stare at the screen hypnotically until the credits roll.  That night, I have a number of nightmares about living in a sinking house in the middle of nowhere. In one dream, I wander around the house, watching red matter seep out of the walls. I don’t really panic, however, until I put all of my clothes into one of the house closets. I am unable to locate the closet again, and thereby lose all of my clothes. I wake up sweating, and turn on the fan in my room. It was a thrilling day indeed. Sarah Brown is a folk hero. She can be reached at [email protected], and on Twitter @BrownsClose1. “Close” is a British term for alley or cul-de-sac. For more of Sarah’s musings, visit Browns-Close.com.

Alaska Air Group loses $214M in 2Q; major layoffs likely

Alaska Air Group Inc. absorbed a loss of $214 million in the first full quarter of the coronavirus pandemic and the airline company could be forced to shed up to 7,000 jobs in the coming months if the country’s overall condition does not improve soon, executives said Thursday. Brad Tilden, CEO of the Seattle-based parent to Alaska Airlines and regional carrier Horizon Air said during an earnings call with investors that the $214 million second quarter loss balloons to a $439 million loss when federal CARES Act payroll support funding is removed from the equation and called the numbers “sobering.” “It’s the largest quarterly loss in our history and it’s obviously not a sustainable result,” Tilden said, noting the company’s airlines operated at capacity levels about 75 percent less than last year during the quarter.  Alaska Air Group netted a $262 million profit in the second quarter of 2019. The company lost $232 million in the first quarter before it and other major airlines were able to substantively respond to broad travel restrictions and economic shutdowns imposed by states and local governments in March as the coronavirus gained a hold across the country. Since then, Air Group has managed to reduce its cash burn from approximately $400 million per month at the end of March to about $120 million in June, according to the quarterly report. The company has also more than $3 billion in cash reserves — including about $1 billion in CARES Act funding — since March by pulling on multiple financing levers, according to Chief Financial Officer Shane Tackett. Air Group currently has about $3.7 billion in cash on-hand with the ability to add to that total by leveraging its unencumbered aircraft and other assets to add liquidity, Tackett said. Most recently Alaska Airlines announced July 2 it had secured $1.2 billion in private loans by using 61 of its owned aircraft as collateral. Air Group is also in discussions with the Treasury Department about utilizing its popular mileage plan program as collateral for more than $1 billion in additional loans, Tackett said.  The company has signed a nonbinding letter of interest with Treasury and anticipates government officials will make a final decision on the financing in the next eight weeks, he said. Air Group stock mostly held steady in the hours immediately following the earnings call; it closed trading Thursday at $36.67 per share. The company’s stock traded in the $60 to $70 per share range for months prior to a pandemic-induced slide that started in late February. On the operating side, Alaska and Horizon’s combined revenues totaled just $421 million in the second quarter, an 82 percent drop from a year ago. The airlines collected just more than $2 billion in operating revenue in the first half of the year, compared to approximately $4.1 billion in the first six months of 2019. Alaska flew just 905,000 revenue passengers during the quarter, a drop of more than 90 percent year-over-year. Passenger traffic is down 55 percent so far in 2020. Overall operating expenses were down 63 percent year-over-year to $709 million and company executives continue to stress a strong desire to reach cash breakeven by year’s end but also believe it will take at least two years for the industry to return to 2019 activity levels.  Tilden said Alaska’s low-cost operating structure and strong market control should help the airline rebound as quickly as anyone in the industry but the long-term outlook means major domestic carrier will almost certainly have to shrink significantly before it can begin growing again. Tackett said Alaska might have to shed up to 7,000 of the airline’s roughly 23,000 workers by the fourth quarter but no specific timeline for the layoffs has been announced. Tackett emphasized that executives are searching for ways to limit the scale of involuntary furloughs. The airline has about 1,800 employees across the state of Alaska. More than 30 percent of employees have already taken a voluntary leave of absence that will continue to be offered through the end of the year, he said, and incentives are being offered for frontline workers and pilots to retire or otherwise leave the company. About 300 management positions will be cut on Oct. 1 as well, according to Tackett.  “It goes without saying that these (job cut) decisions have regrettable and meaningful impacts on employees that have invested their careers here,” he said. “While extraordinarily difficult, these actions are necessary given the realities of our business going forward.” Air Group leaders said they want to return the company to its pre-pandemic cost structure even if it means a smaller company for the foreseeable future. “There’s no doubt in our minds that we will have to be very aggressive in restructuring the company to ultimately get back into a growth trajectory and pay down this debt we’ve taken on,” Tackett said further. Air Group held a debt-to capitalization ratio of 51 percent at the end of the quarter, up from 41 percent to start the year.  The executive team has long preached that a conservative balance sheet has helped Alaska Airlines grow steadily over the past decade-plus in the highly volatile industry. Company executives took steep pay cuts in late March, ranging from a 100 percent cut for Tilden, a 50 percent pay reduction for Horizon President Gary Beck and 30 percent cuts for executive and senior vice president level management. Tilden added that the outlook for the airline industry has only again turned dismal in recent weeks as the number of coronavirus cases has again spiked across much of the country since states began reopening in May and June. “We were on a really nice clip through the July 4 weekend in terms of it seemed like every day was a thousand more customers than the previous day, but as the narrative changed and the headlines changed I do think every airline has seen a softness in bookings for future travel and that’s what’s making us nervous for August and September,” Tilden said. “The environment is a lot different than it was 30 days ago.” Elwood Brehmer can be reached at [email protected]

Final Pebble mine EIS maintains early Corps conclusions

U.S. Army Corps of Engineers officials describe the Pebble mine as one that would remove 99 miles of fish habitat at the mine site but poses little risk to the broader area in the project’s final environmental impact statement released July 23. The conclusion mirrors what was written in excerpts of the preliminary final EIS leaked to the public in February. Pebble Partnership CEO Tom Collier said both the preliminary and final documents support the company’s assertion that the mine could operate in harmony with the region’s famed salmon fisheries. “Alaskans have demanded that Pebble, and any Alaska resource development project, meet its high standards before the project could advance. Today, we have passed a critical milestone on that journey,” Collier said in a July 24 statement. He said the EIS process has been thorough and called criticism of the Corps’ work on the project “unfortunate,” insisting that the mine can be a source of year-round jobs in an area without many. The final EIS is the last step in the federal review of the project before Corps officials reach a conclusion on the key record of decision for the project: whether it is an acceptable development plan based on the issues studied in the EIS process. Pebble says it will work through state permitting over the next three years before commencing a four-year construction period for what is now planned as a 20-year mine. Project opponents contend the Corps limited its focus to environmental impacts at the mine site and ignored potential downstream effects, particularly to fisheries, in the draft EIS. They allege the process has been rushed to fit within the timeframe of President Donald Trump’s term in office following an attempt by the Obama administration to preemptively veto the project via Environmental Protection Agency authority. The EPA ultimately has the authority to reject the Corps’ decision on Pebble’s Clean Water Act Section 404 wetlands fill permit application, which triggered the EIS in 2018. Corps officials responded to concerns from the commercial fishing sector that the mine would damage the perceived quality of Bristol Bay salmon and ultimately lower its market value by noting that some of the state’s other fisheries are conducted alongside resource development. “Prices paid in Bristol Bay are nearly always lower than those paid in other Alaska salmon fisheries producing similar products, which reflects the higher transportation expense associated with Bristol Bay’s geographic location and the lack of a strong brand identity, which could boost prices,” the EIS states. “(T)he Cook Inlet salmon fisheries exist in an active oil and gas basin and have developed headwaters of Anchorage and the Matanuska-Susitna areas. The Copper River salmon fishery occurs in a watershed with the remains of the historic Kennecott copper mine and the Trans-Alaska Pipeline System in the headwaters of portions of the fishery. Both fisheries average higher prices per point than the Bristol Bay salmon fishery.” It concludes that there would be “no measurable change” in the numbers of salmon returning to the Nushagak and Kvichak rivers or in the long-term health of the commercial fisheries in the region. At the mine site, approximately 99 miles of fish habitat, part of roughly 2,200 acres of permanently impacted wetlands, would be destroyed in the combined North and South Fork Koktuli drainages, which feed the Nushagak River and support all five species of Pacific salmon. However, the expected losses of wetlands at the mine site represent just six percent of the mapped wetlands in the Koktuli, according to the document. Bristol Bay Native Corp. CEO Jason Metrokin noted the impacts of the current plan represent mining just a small portion of the copper-gold ore body and leaders of Pebble’s parent company, Vancouver-based Northern Dynasty Minerals Ltd., have long pitched additional development to investors. “Put simply, the EIS does nothing to alleviate our concerns about the myriad risks Pebble would pose to Bristol Bay’s watershed, salmon, way of life, and economy,” Metrokin said in a statement. Staff scientists for the Environmental Protection Agency, Interior Department and several state agencies were highly critical of apparent gaps related to wetlands, hydrology and fish habitat data in official comments on the draft EIS. Interior scientists went as far as to suggest the Corps should rewrite the voluminous document in light of the omissions. Corps officials said in response that the agencies’ comments would be considered alongside all others. The final EIS states that gaps in wetlands data identified by other agencies and stakeholders in the draft EIS published in February 2019 have been filled. Corps officials wrote in the EIS they do not believe it is necessary to analyze the likelihood that the mine’s proposed tailings dams could fail — a primary concern of mine opponents — because the Pebble Partnership is designing the dams differently than those that have failed at other mines in recent years and attracted global attention. “Modeling of a catastrophic, very low-probability tailings release was requested by commenters, but deemed inappropriate based on the applicant’s permeable flow-through design for the tailings storage facility (TSF) main embankment, compared with historical water-inundated TSFs that have been subject to large-scale failures,” the EIS states. Corps officials have also said in media briefings that a detailed review of the tailings dams would be done by the state under the Department of Natural Resources Dam Safety Program. DNR officials wrote in March comments on the preliminary final EIS that a full breach of a large and well-designed and operated tailings dam is very unlikely, but asserted that Pebble’s mine waste storage plan high-level and key aspects of it could be impractical. According to the comments, Dam Safety officials believe the Corps’ use of a subject risk analysis process in the preliminary final EIS to study tailings and water management pond dam failure scenarios was “based on a marginally developed, conceptual design, and the exclusion of other risks including the other relatively large, water management dams, does no represent a thorough assessment of risk from potential failure modes and potential impacts.” The pre-final EIS comments from DNR’s Dam Safety Unit also state that Pebble’s plan to move pyritic, or potentially acid-generating, mine tailings from a temporary storage facility into the pit at mine closure “does not appear to be reasonable, practicable or safe” because filling the pit would preclude accessing other parts of the deposit. Additionally, the tailings are likely to consolidate over years in a storage pond, making them more difficult and costly to extract, according to the Dam Safety Unit comments. The EIS highlights Pebble’s plan to drain and thicken the bulk tailings — which has caused critics and regulators to question whether the company can constantly treat the large volume of water — as a design element likely to limit the downstream flow of tailings in the event of a spill. However, Corps officials also acknowledge in the document that the ground waste rock may not settle as expected and it could only be confirmed if the tailings system was working as intended after about two years of operation. Additionally, the corridor identified as the least environmentally damaging route for a road to a port on west Cook Inlet needed to supply the mine remains viable despite the fact that some of the Alaska Native corporations that own land in the corridor are some of Pebble’s staunchest opponents, according to the EIS. In late May, Corps officials announced they had identified a road route along the north shore of Iliamna Lake to a port on the west side Cook Inlet as the least environmentally damaging practicable alternative, or LEDPA, for the expansive mining plan in its environmental impact statement review. Until that point, Pebble had long promoted its plan for a year-round, ice-breaking ferry across the lake to shuttle supplies and metal concentrates to and from the mine site to the north of the lake. Alaska Native village corporation Pedro Bay Corp. owns much of the land along Iliamna’s northeastern corner and along with regional Bristol Bay Native Corp. — which holds the subsurface rights to Pedro Bay Corp. property — has opposed to the project for years and insists Corps officials are discounting the fact that Pebble does not have access to the area. Army Corps Alaska District Regulatory Chief David Hobbie said in a July 20 call with reporters before the release that Pebble officials maintain they believe they can gain access to the area so the agency considers the route viable. The EIS states the Corps has determined that “even though some alternatives may not be available to the applicant at this time, the alternatives remain reasonable under (National Environmental Policy Act) guidelines and are retained in the EIS.” Economic review unlikely Opposition groups and some technical observers of Pebble’s complex plan question the economics of it, particularly given the scaled-back, 20-year mine, and have pointed to the lack of an independent economic assessment as justification for the skepticism, but Collier said in an interview that that one is unlikely to come at this point. That’s because Northern Dynasty Minerals is past the stage of seeking the retail or institutional investors that would find a public economic assessment of the project valuable, Collier said. At this point, the junior mining firm is focused on attracting a large partner to help fund development. “A major mining company isn’t going to give two wits about a PEA (preliminary economic assessment),” he said, adding any interested company would conduct its own evaluation and it would be costly for Pebble to hire the required independent analysts. Northern Dynasty ended the first quarter with $7.2 million Canadian in cash, according to its latest quarterly report. Canadian finance law prohibits the company from disclosing its internal projections, he said. Collier told the Journal in the spring of 2018 — shortly after Pebble filed its permit application — that Pebble would likely publish a PEA by the following winter. Opponents have urged the Corps to demand economic information from Pebble so it can be better known which of the development options are truly viable. Project managers for the Corps have said they would like to have the estimates but they are not required for the EIS. Editor's note: This story was updated for the Aug. 2 edition of the Journal that went to press July 29. Elwood Brehmer can be reached at [email protected]

Task force questions proposed subsidy level for ferry system

The group tasked with reforming the Alaska Marine Highway System said a $24 million subsidy proposed by Gov. Mike Dunleavy to run the system is insufficient. The Alaska Marine Highway Reshaping Work Group said the funding is not enough to fix the system regardless of whether ferry operation is public or private, CoastAlaska reported July 19. The nine-member task force appointed by the Republican governor in February faces a Sept. 30 deadline to complete its report. The group was asked to define essential service levels for coastal communities without road access and recommend ferry system operational and efficiency changes. Group members have studied data from a $250,000 study commissioned by the Dunleavy administration that concluded privatization of core services is not a realistic option. “None of the dozens of studies have come up with the idea that any private operator could run the system and make a profit,” Chairman Tom Barrett said at the group’s July 16 meeting. The study proposed scenarios for running the system on the $24 million subsidy Dunleavy proposed in February 2019. Work group member Wanetta Ayers said the low funding target was counterproductive and could critically injure the system, noting the food shortages and other struggles some coastal communities faced last winter when the sole mainline ferry broke down. “We’re probably just stepping over dollars to pick up dimes because it’s going to cost us so much more as a state to try and sustain these communities that we’re crippling,” Ayers said. Republican state Sen. Bert Stedman said the ferries are also part of the state’s emergency supply chain in case catastrophe hits communities away from the coast. “The marine highway becomes an essential corridor for keeping those Alaska citizens fed and watered,” Stedman said. Tony Johansen, a Fairbanks-based highways contractor appointed to represent road-connected communities, has been critical of the marine system’s expense. Johansen urged the group to consider the size of populations served in relation to the amount of money required for ferry service. Members agreed money alone would not fix the system because waste, mismanagement and poor planning cause difficulties.

GOP splits as virus aid package could swell past $1 trillion

WASHINGTON (AP) — The price tag for the next COVID-19 aid package could quickly swell above $1 trillion as White House officials negotiate with Congress over money to reopen schools, prop up small businesses, boost virus testing and keep cash flowing to Americans while the virus crisis deepens. Senate Majority Leader Mitch McConnell on July 21 promised a new round of direct payments to earners below a certain income level, similar to the $1,200 checks sent in the spring. President Donald Trump insists on a payroll tax holiday for workers. And Democrats want billions to outfit schools and shore up local governments. “Regretfully, this is not over,” McConnell said after a raucous private GOP lunch, urging Americans to learn to live with the virus by wearing masks and practicing social distancing until a vaccine is found. Treasury Secretary Steven Mnuchin and acting chief of staff Mark Meadows spent the day on Capitol Hill, meeting separately with McConnell, House Speaker Nancy Pelosi and others trying to broker a compromise between the GOP’s emerging $1 trillion proposal with the House’s more sweeping $3 trillion bill. The lunch session grew heated as key Republican senators complained about big spending, vowing to stall the relief bill’s passage. Supporters of the package “should be ashamed of themselves,” Sen. Rand Paul of Kentucky said as he emerged. Paul compared GOP backers of the spending to “Bernie bros” — referring to the young supporters of Sen. Bernie Sanders of Vermont. “This is insane,” he said. “There’s no difference now between the two parties.” As senators rose to speak about aspects of the bill, Texas Sen. Ted Cruz asked his colleagues, “What in the hell are we doing?” Cruz warned if the economy is still shut down come November, Joe Biden will win the White House, Democrats will control the Senate and “we’ll be meeting in a much smaller lunch room,” according to a person granted anonymity to discuss the closed-door session. Sen. Rick Scott of Florida left saying it’s wrong to “bail out” cash-strapped states. “Florida taxpayers are not going to pay for New York’s expenses,” he said. With the pandemic showing no signs of easing, officials acknowledge the daunting challenge of trying to contain the coronavirus and prevent further economic distress. The U.S. has rising infections and a death toll exceeding 142,000, more than anywhere else in the world. The health crisis is worsening as emergency aid is about to expire. Meadows told reporters Trump wants to ensure the funding package “meets the legitimate needs that are before the American people.” Democratic leaders said the Republicans are in disarray, and Pelosi later blamed the pandemic’s mounting toll on Trump’s inaction. “It is the Trump virus,” she said on CNN. The Republicans are poised to roll out a $1 trillion package, what McConnell called a “starting point” in talks. It’s a counter-offer to Pelosi’s $3 trillion House-passed plan as they race to strike a deal by the end of the month. That’s when a $600 weekly unemployment benefits boost and other aid, including a federal rental moratorium on millions of apartment units, expires. McConnell’s package would send a fresh round of cash payments to Americans below a certain income level, likely $75,000 for singles, extend small business loans under the Paycheck Protection Program and create a five-year liability shield against what he warns is a potential “epidemic” of coronavirus lawsuits. It’s also expected to include at least $105 billion for education, with $70 billion to help K-12 schools reopen, $30 billion for colleges and $5 billion for governors to allocate. The Trump administration wanted school money linked to re-openings, but in McConnell’s package the money for K-12 would be split 50-50 between those that have in-person learning and those that don’t. Republicans said they want to replace the $600 weekly federal jobless benefit with a lower amount, to prevent the unemployed from receiving more aid than they would through a normal paycheck. Over lunch, Mnuchin explained the unemployment boost could be phased down to a percentage of a worker’s previous income, according to a Republican granted anonymity to discuss the private meeting. Some Republicans prefer simply eliminating the $600 benefit. But Trump’s priorities are splitting his GOP allies and giving momentum to Democrats. Trump wants a full repeal of the 15.3 percent payroll tax, which is shared among employers and employees, and funds Social Security and Medicare. Experts say that alone would cost $600 billion. At a White House meeting Monday, GOP leaders told Trump they preferred including only a partial payroll tax cut. Easing the payroll tax is dividing Trump’s party because it does little to help out-of-work Americans and adds to the debt load. The tax is already being deferred for employers under the previous virus relief package. Supporters say cutting it now for employees would put money in people’s pockets and stimulate the economy. The administration also panned McConnell’s proposed $25 billion for more virus testing, saying earlier allotments remain unspent. Senate Democrats began investigating why the Trump administration has left almost half the testing money unspent. The political stakes are high for both parties before the November election, and even more so for the nation, as amid the virus crisis and economic fallout. Biden, the Democrats’ presumed presidential nominee, stated his own priorities, urging “a lifeline to those who need it most: working families and small businesses.” Trump’s renewed focus on therapeutics and a vaccine is falling flat among lawmakers who understand any COVID-19 cures remain months, if not a year, from widespread distribution in the U.S. The federal government is struggling to provide basic medical supplies and personal protective equipment to health care providers. Mnuchin vowed to stay on Capitol Hill for the next two weeks, determined to reach a deal this month. The proposed virus aid package would be the fifth, following the $2.2 trillion bill passed in March, the largest U.S. intervention of its kind. The jobless rate has remained in double digits, higher than in the last decade’s Great Recession, and a federal eviction moratorium on millions of rental units approved in the last bill is about to expire. Associated Press writers Andrew Taylor, Darlene Superville, Alexandra Jaffe and Padmananda Rama contributed.

US signs contract with Pfizer for COVID-19 vaccine doses

WASHINGTON (AP) — The Trump administration will pay Pfizer nearly $2 billion for a December delivery of 100 million doses of a COVID-19 vaccine the pharmaceutical company is developing, Health and Human Services Secretary Alex Azar announced July 22. The U.S. could buy another 500 million doses under the agreement, Azar said. “Now those would, of course, have to be safe and effective” and approved by the Food and Drug Administration, Azar said during an appearance on Fox News. Pfizer Inc. and BioNTech SE announced separately that the agreement is with HHS and the Defense Department for a vaccine candidate the companies are developing jointly. It is the latest in a series of similar agreements with other vaccine companies. The agreement is part of President Donald Trump’s Operation Warp Speed vaccine program, under which multiple COVID-19 vaccines are being developed simultaneously. The program aims to deliver 300 million doses of a safe and effective COVID-19 vaccine by January 2021. Under the initiative, the government will speed development and buy vaccines — before they are deemed safe and effective — so that the medication can be in hand and quickly distributed once the FDA approves or authorizes its emergency use after clinical trials. Pfizer and BioNTech said the U.S. will pay $1.95 billion upon receipt of the first 100 million doses it produces, following FDA authorization or approval. Americans will receive the vaccine for free, the companies said. Azar said the contract brings to five the number of potential coronavirus vaccines that are under development with U.S. funding. Nearly two dozen are in various stages of human testing around the world, with several entering final test to prove if they really work. Trump said at a July 21 briefing that “the vaccines are coming, and they’re coming a lot sooner than anyone thought possible, by years.” As early as next week, a vaccine created by the National Institutes of Health and Moderna Inc. is set to begin final-stage testing in a study of 30,000 people to see if it really is safe and effective. A few other vaccines have begun smaller late-stage studies in other countries, and in the U.S. a series of huge studies are planned to begin each month through fall in hopes of, eventually, having several vaccines to use. Pfizer is finishing an earlier stage of testing to determine which of four possible candidates to try in a larger, final study. Other countries are also scrambling to get a vaccine for COVID-19, which has killed more than 617,000 people, according to a tally kept by Johns Hopkins University. Nearly 4 million Americans have been infected by the new coronavirus and at least 142,000 have died from COVID-19, the disease it causes, according to Johns Hopkins. Britain announced July 20 it had secured access to another 90 million experimental COVID-19 vaccines made by Pfizer and others, a move some campaigners warned could worsen a global scramble by rich countries to hoard the world’s limited supply of COVID-19 vaccines. China, where the new coronavirus originated, also has several vaccine candidates entering final testing. Trump blames Beijing for not doing a better job of containing the virus and allowing it to spread around the world. Still, he said he’d be willing to work with China if it were first to the market with a reliable vaccine. “We’re willing to work with anybody that’s going to get us a good result,” Trump said July 21. “We’re very close to the vaccine. I think we’re going to have some very good results.” The FDA has told manufacturers it expects any vaccine to be at least 50 percent effective to qualify. But at a congressional hearing July 21, Rep. Frank Pallone, D-N.J., said he was worried Trump could push the agency into prematurely clearing a vaccine. “My fear is that FDA will be forced by the Trump administration to approve a vaccine that lacks effectiveness,” Pallone said. Executives from five leading vaccine companies testified that they will take no shortcuts in their testing of the shots, so that people can be confident in the results. In addition, it won’t be just the FDA rendering an opinion; each vaccine will likely be judged nearly simultaneously by regulatory authorities in Britain and Europe. “I don’t think any of the regulatory bodies that we have interacted with are lowering their standards,” said Menelas Pangalos, executive vice president of AstraZeneca, which is manufacturing a potential vaccine developed by Oxford University. “We would not be trying to launch a medicine that is not effective.” AP Medical Writer Lauran Neergaard contributed to this report.

Pages

Subscribe to Alaska Journal RSS