FISH FACTOR: Efforts at seafood industry relief continue in Congress

Giving COVID relief funds to the seafood industry and stepping on the gas for offshore fish farming are two big takeaways from the executive orders and congressional packages coming out of the nation’s capital. Recent news that Alaska would receive $50 million from the $300 million fisheries relief funds in the Coronavirus Aid, Relief, and Economic Security Act was well received by industry stakeholders and it’s likely to be followed by more. A May 15 hearing titled “COVID 19 impacts to American Fisheries and the Seafood Supply Chain” was scheduled by the U.S. House Natural Resources Committee to focus on the lack of assistance for harvesters and processors. A bipartisan group of 49 House members also has pushed for at least $2 billion for the U.S. Department of Agriculture to purchase domestically caught and processed seafood and to distribute it through food assistance programs, as the agency does for agricultural products. Likewise, a group of 25 Senators is trying to get an additional $3 billion for the seafood industry from the next relief package. A new bill called the Health and Economic Recovery Omnibus Emergency Solutions Act would add another $3 trillion to overall relief assistance. While it builds on the CARES Act, critics claim it does little for the seafood industry except to give NOAA another $100 million to aid fishery participants. Undercurrent News reported that President Trump called the HEROES bill “dead on arrival” saying it contains too many unrelated priorities, such as expanding access to mail-in ballots. Somewhat lost in the particulars about relief payouts is the federal government’s renewed push and strict guidelines for expanding U.S. aquaculture. The May 7 executive order by Trump that cut loose the first batch of fishing funds also calls for an update to the 2017 National Aquaculture Development Plan in order to “strengthen domestic aquaculture production and improve the efficiency and predictability of permitting.” It states that “more than 85 percent of the seafood eaten in the U.S. is imported” and outlines rigorous ways and timelines to turn that around. It also designates the National Oceanic and Atmospheric Administration as the lead agency for aquaculture projects from three to 200 miles offshore. Among other things, the order calls for a “guidance document” within eight months that describes regulatory requirements for aquaculture operations and identifies grant programs. It also removes barriers to permitting and calls for a proposed U.S. Army Corps of Engineers “nationwide permit authorizing finfish aquaculture activities” within 90 days. Within one year, federal agencies, fishery management councils and states are required to identify at least two “Aquaculture Opportunity Areas” suitable for commercial operations. And within two years of identifying those areas, agencies must complete an environmental impact statement, and come up with two additional opportunities to be developed in the following four years. Finally, Trump’s order calls for the establishment of a new Seafood Trade Task Force that will, within 30 days, create a new agency to promote American seafood internationally, resolve technical barriers to U.S. seafood exports, and support fair market access for US products. (Suggestion: start with the seafood trade imbalance with Russia. Russia has not purchased a single pound of U.S. seafood since 2014, yet the value of Russian imports to the U.S. has grown 70 percent since 2014. The amount has tripled to nearly $670 million since 2016.) Tim Bristol, director of SalmonState, agreed with the need to maximize the value of our country’s seafood industry, but called Trump’s order “the wrong approach.” “It ignores the fact that America already has healthy wild fisheries generating billions of dollars in revenue and providing hundreds of thousands of jobs. We should be investing our resources in what we already have and better maximizing the value of our fisheries to American communities rather than displacing hard-working fishing families with open-water feedlots and fooling ourselves into believing that farmed fish will solve all of our problems,” he said in a statement. Fish farming is banned in Alaska although growing shellfish and seaweeds is permitted. At a U.S. Department of Commerce hearing in 2018, Sam Rabung, director of the Alaska Department of Fish and Game’s commercial fisheries division, said: “I think it’s safe to say that we’re going to fight pretty hard to maintain the state’s opt-out option and maintain the ability to prohibit finfish farming off of Alaska.” Copper River salmon slump It was slow going for the May 15 fishery at Copper River, which marks the official start of Alaska’s salmon season. Just more than 3,000 fish crossed the docks (1,491 sockeyes; 1,646 Chinook) by 337 deliveries in a 12 hour opener. Prices tanked for the famous “first fish” that usually fetch the highest prices of the year. Fishermen reported a base of $3 per pound for sockeye salmon and $6 per pound or slightly more for kings, for starters. That compares to record prices in 2019 of $10 for sockeyes and $14 for kings, respectively. Instead of the usual diners at high-end restaurants getting the first tastes, front line workers at Seattle’s Swedish Hospital were the first to be treated to the prized fish the day after the fishery. A partnership of Seattle chef Tom Douglas, Alaska Airlines, Trident Seafoods, Ocean Beauty Seafoods and the Copper River Marketing Association provided 200 salmon meals to the nurses, doctors, and other medical professionals, reported SeafoodNews.com. On May 17, the same group organized a Grilling for Goodwill event in Ballard, featuring a special $45 Copper River salmon meal for pick up with 100 percent of the proceeds donated to Food Lifeline. Letter to the fleets As thousands of boats head to the salmon grounds, everyone knows it’s not business as usual. United Fishermen of Alaska has penned a letter to the fleets with a concise list of the new rules in place during the COVID plague. Above all, you must know what is required of you and have a plan to implement the protocols, wrote UFA president Matt Alward of Homer, adding: “As a vessel operator, you are responsible for your crew’s compliance with the mandate.” “We also need to understand if there’s any local rules in the communities that we’re fishing in, and on top of that, if some of the boat yards or harbors or even the supply stores and whatnot have their own rules that we should follow,” Alward said in a phone interview. “If your crew’s coming from out of state, it’s important to have already figured out how and where you’re going to quarantine and how you’re going to get food and supplies without breaking quarantine. The quarantine part for those coming from out of state I think is by far the most important thing to really protect our communities and ourselves from bringing the virus in.” What about those who refuse to wear masks? Alward said contracts with his crew require that they follow all mandates and not doing so is grounds for termination. “They don’t have troopers running around making sure everyone’s following this. It’s really upon ourselves to self-regulate,” he said. “If someone sees crew members from another boat running around town without masks and violating the rules, it’s going to get the whole industry in trouble with the community. Fishing is a privilege, not a right, and we have to respect the community we fish in. The hope is everyone will comply.” Find the UFA letter and get COVID fishing updates at www.ufafish.org. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

Copper River closes for a week after poor sockeye showing

It’s been a very rough start to what was already a harried season for Copper River salmon fishermen. Alaska Department of Fish and Game managers announced the Copper River District will be closed for commercial fishing during the regular 12-hour period scheduled for May 21 due to very low initial sockeye catches indicating a lack of fish. Early indications for the May 18 opener show fishermen harvested 1,698 chinook, which Area Management Biologist Jeremy Botz described as “low,” but just 4,550 sockeye, which Botz called “dramatically low.” Subsistence gillnetting will remain open during the commercial closure, but waters inside the expanded Chinook closure area will be closed to all harvest. Botz said that while it has been a late and cold spring and weather deterred some fishing May 18, department officials expected a harvest of more than 28,000 sockeye based for that day based on the overall forecasted run. The total harvest from the first two 12-hour openers was 3,250 chinook, 6,023 sockeye and a handful of chum. Botz said May 19 that the sonar at Miles Lake used to enumerate Copper River sockeye had just been installed and was up and running. Managers expect fishing to resume May 25 with the time and area being announced May 22, according to the closure announcement. ADFG biologists initially forecasted a smaller Copper River sockeye run of 1.5 million fish this year compared to a 10-year average of 2.1 million wild fish. The Gulkana Hatchery supports a small portion of the annual Copper River sockeye run. The department’s official forecast estimated a commercial sockeye harvest of 771,000 fish versus a harvest of 1.2 million sockeye last year. The Copper River chinook return and harvest was initially expected to be strong with a total run of 60,000 fish and an all-fishery harvest of up to 36,000 fish possible. The early harvest figures this year are reminiscent of 2018 when the sockeye harvest averaged just 8,660 fish over the first three periods. Subsequent fishing closures limited the commercial catch to 44,400 fish in 2018; however they allowed the run to surpass minimum escapement goals with 701,577 sockeye counted at Miles Lake that year. Adding to the challenge for fishermen are lower prices for the salmon they do catch, a direct result of the restaurant closures largely in the Seattle area imposed to limit the spread of COVID-19. Botz said ground prices for the first period May 14 was $3.25 per pound for sockeye and $6.25 per pound for chinook. In recent years the price for famed Copper River chinook has been significantly higher; Botz noted it was around $10 per pound last year and the ex-vessel price averaged nearly $13 per pound in 2018. Botz said there is speculation that an improving retail market could boost prices for subsequent periods. Pike Place Fish Market in Seattle was advertising Copper River king salmon for $74.99 per pound at the time of this writing. Copper River sockeye was selling for $49.99 per pound at the renowned market. On May 20, 10th and M Seafoods in Anchorage had no kings for sale but was selling sockeye for $30.95 per pound. Botz and Cordova District Fishermen United Executive Director Chelsea Haisman both said participation in the fishery was down slightly from previous years but not much. Botz estimated it was 85 percent of normal and Haisman surmised about 70 fewer boats than last year participated in the first openers based on delivery totals. There were 372 deliveries made May 14 and 412 made May 18. Haisman said logistics complications delayed some fishermen from fishing and others have been slow to participate because of the cool spring. She said there is still some ice flowing downriver from Miles Lake. “Our hope is that it’s just early and time will tell,” she said. ^ Elwood Brehmer can be reached at [email protected]

GUEST COMMENTARY: A stable economic future follows the Ambler Road

As COVID-19 continues to create global economic hardship, it is reassuring to see steady progress on a project offering immediate and long-term benefits to Alaska’s economy. The Ambler Mining District Industrial Access Project, or Ambler road, would help bring jobs and new revenues for the Northwest Arctic Borough and the State by lowering the cost to explore, build and operate future mines in the area. We have known of the Ambler district’s vast copper and base metal deposits since the 1950s. Congress recognized the value of developing them, including specific guarantees in the 1980 Alaska National Interest Lands Conservation Act, or ANILCA, for a road to link them with the Dalton Highway. In 2009, state transportation planners identified an initial route, and in 2013 the Alaska Industrial Development and Export Authority took over as project lead, hoping to replicate its success with the DeLong Mountain Transportation System, which provides access to Northwest Alaska’s Red Dog mine. One of the world’s largest zinc mines, Red Dog has contributed significant revenues to the Northwest Arctic Borough and NANA Regional Corp., and provided family-wage jobs and other opportunities to rural Alaskans since 1989. The Ambler Road proposal is for a 211-mile gravel industrial road branching west from the Dalton Highway near Prospect Creek, crossing state, federal, and Native corporation land, ending in the Ambler Mining District. Access would be restricted to industrial and commercial uses. While it would be closed to the general public, the road would allow deliveries of commercial goods to local communities and access for emergency responders. Since first submitting applications in 2015, AIDEA has progressed this project through the extensive federal environmental review and permitting process. Over the past five years, federal agencies developed economic and environmental analyses, evaluated alternatives, and solicited and incorporated extensive public input. The draft environmental impact statement, or DEIS, was published Aug. 23, 2019, the final EIS on March 27, and the final record of decision is due in mid-May. These studies clearly describe the project’s benefit to Alaska’s economy: 365 jobs and from $280 million to $380 million in road construction spending, plus 80 year-round road maintenance jobs. Development of the Ambler district’s four major deposits would bring 2,777 direct jobs carrying a $286 million annual payroll, plus 2,034 indirect jobs carrying $108 million in payroll. AIDEA would finance road construction and maintenance by issuing bonds, earning back between $988 million and $1.1 billion – a positive return on investment for Alaskans. The Ambler Road would greatly improve the possibility of developing known deposits of copper and other minerals in the Arctic and Bornite prospects and would support exploration for and discovery of new deposits. Deposits in the Ambler District hold key strategic minerals that are increasingly important to Alaska and the nation. Without the Ambler road, those minerals would remain stranded in the ground. Like most Alaska development projects, the road inspires different opinions. Opponents claim a road would decimate caribou; that mines would poison water; that access would destroy Native culture; or that progress would drive out wilderness. Supporters note building roads brings jobs and a lower cost of living that benefits all area residents; mines could offer steady jobs and paychecks that compliment subsistence activities and allow local residents to stay in their communities; caribou thrive near existing construction and industrial projects; and millions of acres of nearby wilderness will remain untouched. AIDEA has carefully followed the process and requirements laid out in ANILCA, the National Environmental Policy Act, the Clean Water Act, and other applicable federal laws. On the state side, the Alaska Department of Natural Resources’ Office of Project Management and Permitting has closely coordinated with federal and state agencies and other authorities to ensure the process meets legal, procedural and practical standards and milestones. Following completion of the federal process, DNR will work with other state agencies to evaluate the proposed Ambler road under Alaska’s robust regulatory programs. Through this process, we will again hear from Alaskans as the agencies work to balance the possible impacts and benefits of the project. Advancing the Ambler road project would fulfil both the state’s constitutional responsibility to develop Alaska’s economy, and AIDEA’s mission to promote, develop and advance economic growth and diversification in the state by providing financing and investment options. I encourage all Alaskans interested in economic growth and diversification for our state to join me in supporting the continued progress on this important development project. Corri A. Feige is Commissioner of the Alaska Department of Natural Resources

New deal for idled North Slope oil project in the works

A cash-starved North Slope oil project could again have new owners with hopes of resuming production later this year. Majid Jourabchi, CEO of Houston-based Thyssen Petroleum, said May 20 that he is part of a team attempting to buy majority ownership in the long-delayed Mustang oil project from investors in Caracol Petroleum, the primary owner. Alpha Energy, through its subsidiary Caracol, has failed to make good on payment commitments to the Alaska Industrial Development and Export Authority for months. Singapore-based Alpha most recently missed an April 15 deadline to put a $60 million investment into Mustang, according to AIDEA spokesman Karsten Rodvik. The cash infusion into the project was part of a loan agreement the AIDEA board approved changes to in January after Caracol missed its first two quarterly loan payments starting last year. The loan was a modification of AIDEA’s $70 million total investment made in two tranches in 2012 and 2014 in the holding companies set up for the Mustang project’s infrastructure development. Rodvik wrote via email that the current volatility of oil markets has caused additional challenges for the project and the authority is reviewing its alternatives as a creditor to Mustang. The AIDEA board of directors discussed the project in an executive session during its May 20 meeting. Anchorage-based Brooks Range Petroleum — jointly owned by Thyssen and Caracol — operates the project. The current ownership group is the latest in a series of convoluted structures since oil prices first fell in 2014 and funding for the project became scarce. Brooks Range briefly started production from the small field in early November through temporary modular facilities after years of delays brought on by collapsed oil prices and other financing challenges. Alaska Oil and Gas Conservation Commission records show Brooks Range produced an average of 478 barrels of oil over 23 days from the well in November. However, production has been shut in since. The Mustang project is adjacent to the southern portion of ConocoPhillips’ large Kuparuk River field and also near the Nanushuk oil project being developed by Oil Search. The field is estimated to hold about 22 million barrels of oil and could peak at production rates of about 12,000 barrels per day when fully developed. Jourabchi, who said he is a shareholder in Alpha and is on the investment firm’s board of directors, said his group has plans to resume work at Mustang in the coming months and restart production late in the year if they are able to buy the project from Caracol and oil prices continue to recover. He declined to provide more information on the situation, saying it could compromise the negotiations. “We’re trying to bring ownership back to the North Slope,” he said. Alaska North Slope crude is selling for about $30 per barrel and prices are generally starting to recover following the market shocks of the COVID-19 pandemic and the Saudi-Russia price war. Representatives for Alpha and Caracol could not be reached. Elwood Brehmer can be reached at [email protected]

OPINION: Dunleavy rewarded for faith in Alaskans

Across the country from Huntington Beach to the Jersey Shore, protests against lockdowns, civil disobedience and court cases striking down governors’ orders are spreading. Here in Alaska all has been relatively calm other than a single drive-through rally in Anchorage on April 22 targeting Mayor Ethan Berkowitz. Now, as the state stands ready for nearly a full reopening on the eve of Memorial Day weekend, Gov. Mike Dunleavy deserves tremendous praise for his leadership style throughout this 100-year pandemic event that has and will continue to wreak long-lasting damage on the state economy. While there has been much fawning (often deservedly) over Chief Medical Officer Dr. Anne Zink’s performance, there has been relatively little credit paid to Dunleavy’s steady and optimistic tone since the very beginning. Dunleavy incessantly repeated his trust in Alaskans to do what was being asked of them from social distancing to accepting the need to shutter most businesses temporarily as health care capacity and testing were ramped up. He emphatically and consistently resisted every question or call to use tools such as state inspectors or State Troopers to patrol businesses or the highways to enforce his mandates. Unlike many governors and health officials around the country, he also refused to move the goalposts of what the closures were intended to achieve: lowering the rate of cases and having health care capacity in place to handle any increase. Dunleavy’s faith in Alaskans turned out to be well-founded. The state leads the nation in any metric you can choose from deaths (even inflated as they are by out-of-state numbers and questionable accounting) to cases to hospitalizations to testing per capita. On May 18, more than three weeks after Dunleavy first gave the go-ahead for limited openings on April 24, there were more than 630 tests reported with zero positive results and only a few dozen active cases. In the state’s largest city of nearly 300,000 people, where Berkowitz has acted reluctantly in following Dunleavy’s lead, there were just 22 active cases as of May 19 and barely more than couple hundred cases in total. Those of us who live in Anchorage, whether average citizens or small business owners, owe a great deal of thanks to Dunleavy for getting the state moving far ahead of Berkowitz’s “hunker down” order that he gave every indication of keeping in place until at least May 5. Although Berkowitz repeatedly claimed his orders would be driven by data and not dates, his reopening plan released April 20 had crippling and arbitrary timelines of 14 and 42 days for the first two phases that crushed the hopes of owners who’d been following the shrinking case numbers closely and waiting for any indication from the mayor there was a light at the end of this tunnel that wasn’t an oncoming train. Instead, it has been Dunleavy and his administration that are using data and not dates to open as much as possible as quickly as possible always guided by the principle that we are a free state in a free country ruled above all by personal responsibility. Dunleavy understands that governments derive their power from the consent of the people, and by treating Alaskans with respect and confidence he received the buy-in that other leaders in places like Michigan, New York, California and New Jersey have squandered through excessive restrictions, outright contempt for citizens and the use of police power to enforce their orders. Describing Dunleavy’s less than two years in office as tumultuous is an all-time understatement. Apart from self-inflicted wounds, he has also had to face earthquakes, devastating wildfires and now a pandemic that has driven down oil prices and production, crushed fishing markets and all but eliminated the 2020 tourism season. Tens of thousands are still on unemployment and monumental budget challenges loom that will continue to test his leadership. Leaders accept blame and share credit, so don’t expect Dunleavy to start patting himself on the back. But as we enjoy a three-day weekend that honors those who have given all for this nation among our family and friends whether in the backyard, in the beautiful Alaska outdoors or at our favorite local watering hole, don’t forget how we got to a point that is the envy of most states. We have a governor who didn’t just say we were in this together. He believed it. Andrew Jensen can be reached at [email protected]

State seeks new sponsor for AK LNG, or it will sell off the assets

The state corporation that has been leading the proposed multibillion-dollar Alaska North Slope natural gas project since late 2016 wants someone else to take over the development effort. The corporation’s plan assumes that an economic analysis currently underway determines the project is economically viable. If no one steps up to take over from the state, which has been paying just about all the bills the past four years, the Alaska Gasline Development Corp. board of directors appears ready to sell off the project’s assets — which could include permits, studies and engineering work — in a formal bidding procedure. The first step in the unfolding process is an update to the 3-year-old $43 billion cost estimate for the Alaska LNG project that would transport North Slope gas through more than 800 miles of pipeline to a liquefaction plant and marine terminal in Nikiski. Fluor, a 108-year-old global engineering and construction company, is under contract to AGDC to prepare the update. The state corporation expects to receive Fluor’s numbers later this month and, after review by its own team, will present them at its June board meeting. Fluor, based in Texas, is experienced in LNG plant construction. It’s part of a joint venture that was awarded the engineering, fabrication and construction contract for the $30 billion Shell-led LNG Canada project under construction in Kitimat, British Columbia, about 100 miles southeast of Alaska’s southern border with Canada. The AGDC board on April 9 approved a resolution adopting a strategic plan to direct state involvement in the Alaska LNG project through June 2021. The document itself is confidential, but the board reviewed in public session the underlying assumptions of the plan. • The updated cost estimate is complete by June. AGDC has been working — with help the past year from BP and ExxonMobil — to reduce construction costs in hopes of making the project economically viable, and has talked up Fluor’s upcoming estimate as potentially validating its work. Project construction and operation costs, and the price of gas going into the liquefaction plant, are the biggest drivers of the final sales price for the LNG. • The next assumption is that the cost update and economic analysis show the project “has a potential to deliver LNG to markets at a competitive price.” The state has been looking to Asia as the best market for Alaska gas. Though current spot-market and long-term contract prices in an oversupplied Asian market are far below break-even costs for an Alaska LNG venture, they could increase later this decade if demand returns to a strong growth rate. But competition from other suppliers will be intense. • The plan assumes that whichever partner(s) step forward to take over as lead sponsor will “recommend moving forward with further development of the Alaska LNG project.” • The Federal Energy Regulatory Commission stays on schedule and approves the Alaska project. The commission issued its final environment impact statement in March and is due to vote in early June on AGDC’s application to construct the gas treatment plant at Prudhoe Bay, the pipeline, LNG plant and marine terminal. FERC does not consider a project’s economic viability — only its environmental impact and safety issues. The assumptions that went into the strategic plan also included a timeline for the state to get out as lead sponsor of the project. That included: • AGDC will continue looking for partners, and a transition to a new project sponsor will be underway by Jan. 1, 2021, as the AGDC board of directors “does not support” the state continuing as the sole project sponsor past Dec. 31, 2020. • The board, working with the Legislature and the administration of Gov. Mike Dunleavy, “will define an acceptable role, if any,” for the state in the project. • If “there is not sufficient interest from strategic parties” to lead the development effort, AGDC will publicly solicit interest from others to take over the project. • And if that doesn’t attract a new leader for the project, “AGDC will put the Alaska LNG project assets up for sale” in a formal bidding process, according to the staff presentation at the April 9 board meeting. The corporation has the authority under state law to sell the project assets. The approximately 600 acres for the LNG terminal in Nikiski, however, is not owned by AGDC. ExxonMobil, BP and ConocoPhillips bought the privately owned parcels several years ago — when the companies were leading the effort — and the state never reached a deal to take control of the property. After the three major North Slope oil and gas producers declined in late 2016 to spend more money on the Alaska LNG project, AGDC took over as lead, funding the application process and environmental review at FERC. The producers cited economic reasons in their decision to opt out of the development effort. In the past decade, the Alaska Legislature has appropriated almost $480 million toward the LNG project and the smaller, so-called “backup” plan of a $10 billion North Slope gas project to serve Alaska, without an LNG export component. Most of the state money was spent on engineering and permitting for that Alaska Stand Alone Pipeline, or ASAP. Between the two projects, the corporation has spent about $460 million of the state appropriations. ExxonMobil and BP have been contributing to the Alaska LNG effort the past year, limiting their spending to no more than $10 million each toward finishing the FERC process and other work. As the work on the FERC-led environmental statement is nearing its finish, AGDC’s spending has slowed down. The corporation spent about $9.5 million in the first nine months of the fiscal year that ends June 30. The corporation has legislative authorization to use its available funds through the end of the next fiscal year in June 2021. Dunleavy, now about 18 months into his four-year term, has steadfastly advocated that the state step away from leading the effort and look for private companies to take over the LNG project. Just as the larger, export-driven project has been unable to pass the economics test in a highly competitive global marketplace, so too has the ASAP line proven to be unaffordable for the small in-state market. Among the assumptions that went into AGDC’s strategic plan is the statement that the ASAP project “has been determined to not be economically viable.” The Legislature created the state corporation in 2010 in hopes of developing a North Slope gas project (the ASAP line) to reduce Southcentral Alaska’s dependence on Cook Inlet natural gas supplies, which had become uncertain as producers stopped exploring for new supplies. Legislators’ hopes also included getting North Slope gas to Fairbanks. Since then, Cook Inlet legacy producers pulled out of the basin and sold their assets to Houston-based independent Hilcorp, which invested heavily in production to meet local needs and now produces more than 80 percent of Southcentral Alaska’s gas supply.

Tourism operators across Alaska ponder how to salvage season

The ice is going out on the teal surface of Kenai Lake, the centerpiece of Cooper Landing and the source of the Kenai River. In a normal year, gaggles of early-season fishermen are there with their drift boats ready to take advantage of it. After all, the local get first chance at the famous Kenai River rainbow trout, and they may not want to compete with the cosmopolitan crowds of tourists that pack the lodges, bed and breakfasts, and campgrounds of the small Kenai Peninsula town from Memorial Day through the late fall. But 2020 isn’t like most years. The coronavirus pandemic has changed virtually every aspect of the Alaskan economy over the last two months, but perhaps none more so than the tourism industry. The summer tourism season is short but profitable across the state and particularly concentrated in Southeast and Southcentral, where many travelers head to communities like Cooper Landing to get a wilderness experience like fishing, bear viewing, or backcountry hiking. For many of these communities, tourism is the only major industry, with year-round jobs scarce and little permanent industry in the area. “We’re getting a couple bookings every day, but we are getting a couple cancellations every day, too,” said Bob Rima, owner of Drifter’s Lodge in Cooper Landing. “(Our clients) are from the Lower 48, and they’re unsettled. They are scared. They don’t want to fly.” Normally booked out months ahead, Drifter’s Lodge has watched its May and June bookings dwindle. Some clients are holding out, hoping the restrictions will be relaxed and the mandatory quarantine for out-of-state travelers will be lifted, but others are cancelling or rescheduling. For some clients, it’s the second rescheduling. Last year, heavy smoke from the Swan Lake Fire on the Kenai National Wildlife Refuge limited business in Cooper Landing as well. Like some other businesses, Drifter’s Lodge has chosen to stay open with the hope of some level of visitation this season. With assistance from the federal Paycheck Protection Program, part of the CARES Act providing financial relief to businesses affected by the pandemic, the lodge hired on staff and plans to continue providing services. But the program is designed to stop employers from laying off employees and so covers their pay, but only that. Figuring out how to get employees from the Lower 48 to Alaska has been a challenge, too, as they have to quarantine when they get to the state. It’s not entirely clear who is responsible for paying for the quarantine, Rima said. Getting a loan is tough right now, too, with little to no income available with very few clients able to come, Rima said. “This is going to be a tough year for a lot of people on the (Kenai) Peninsula for sure,” he said. “Most places, you’re lucky to have one or two months of reserves.” There are still some bookings coming in, but there remain a lot of questions for businesses in the area. At the Inn at Tern Lake, near Moose Pass, most of the June bookings have been cancelled or moved, but some others have come in for later in the season, said Jeff Hetrick, who owns the Inn at Tern Lake near Moose Pass with his wife Rose. “We don’t know,” he said. “We’re optimistic by nature, but we’re on standby, just like everybody else. Hopefully by 2021, we’ll be back to normal.” Cooper Landing, with its predominantly outdoor recreation-based tourism economy, is far from alone in its economic struggle this year. Talkeetna is facing the dual hits of an anemic visitor season and the cancellation of the 2020 Denali climbing season, for which Talkeetna serves as the primary base camp. Guides and tour companies in Girdwood, the hub for visitors at the edge of the Chugach National Forest, are facing a very slow season, and the Hotel Alyeska is temporarily closed until May 31, 2020. Operators in other communities, like Seward and Valdez, are planning for abridged seasons or are working on deals to attract Alaskans until out-of-state visitors may be able to come. While the loss of the majority of cruise traffic has been a major hit for the communities of Southeast Alaska, the region does have its independent travelers and still hopes to see some later in the season, said Dan Kirkwood, general manager of Pack Creek Bear Tours in Juneau. “Despite (the COVID-19) concerns, we still have this incredibly awesome state that we live in that people want to come see,” he said. “We are tracking the state mandates on mitigating the spread, and we are hopeful that we will find a way to do right by our community.” Pack Creek Bear Tours transports clients from Juneau to Pack Creek on Admiralty Island by float plane. The company is still figuring out the logistics of how to transport and serve clients while following social distancing guidelines. Even if the state lifted the mandatory quarantine policy and visitors were able to come again this summer, it wouldn’t be the same season it was going to be before the outbreak of the pandemic in March. For one, the loss of the bulk of cruise ship passengers significantly scales back the number of tourists coming to the state overall; second, even if Alaska relaxes its restrictions, other states may not, and people may still not feel comfortable traveling. Adding that to the economic harm done by the pandemic shutdowns, which will likely leave people with less disposable income to take vacations for some time, the Alaska tourism industry may have to tighten its belt for more than just this season. Some of the members of the outdoor industry are looking for a little more support to make it through, though not just in grants. In a letter to Alaska’s congressional delegation sent in late April, a group of businesses through the Alaska Outdoor Alliance requested a $2 billion aid package spread over five years specifically targeted toward the Alaska outdoor industry. “We know there’s a lot of furloughed employees, and we know things aren’t going to bounce back; the cruise ships aren’t coming, so they’re not going to bounce back to even last year’s levels,” said Lee Hart, the AOA’s executive director. “We just want to get people back to work, with real wages (so) that they can pay rent, buy groceries.” Modeled on the Civilian Conservation Corps, an outdoor work program developed during the Great Depression, the stimulus would pay living wages to workers who worked on recreation and restoration projects in the state. Guides and outdoor industry companies, who know their areas well and are currently short on work, would be able to use their equipment and expertise to improve trail projects in their areas while being paid for work, Hart said. The request is for the conservation corps portion to last three years and provide $750 million. The other part of the request, spread over five years, would focus on deferred maintenance projects. The organization is looking to existing grant infrastructure for its requests to speed up the process, Hart said. In planning for the program, the federal agencies said they had desire to scale up the work if they had the funding, she said. Kirkwood said the program’s use of local guides and operators would make sense, as they have knowledge of the areas in which they operate and a stake in the outcome. In the case of Pack Creek Bear Tours, the guides are comfortable working in close proximity to brown bears in a remote area. “I think that’s where the local knowledge (comes in),” he said. “To a lesser extent, if your company runs a tour on the trails, then your company has a real investment in that infrastructure.” Elizabeth Earl can be reached at [email protected]

New Hilcorp-Enstar gas deal adds up to rate savings

Southcentral natural gas customers could collectively save $53.6 million under the latest contract between Enstar Natural Gas Co. and Hilcorp Alaska. According to a letter containing the amended contract terms filed with the Regulatory Commission of Alaska, Enstar customers should save approximately 7 percent in gas costs from June 1 through March 2023, when the utility’s prior contract with the Cook Inlet producer was set to expire. The new terms also extend the agreement through March 2033. According to Enstar’s filing, Hilcorp “reliably delivered” 82 percent of the utility’s gas in 2019 and is expected to cover 80 percent this year. Enstar could purchase anywhere from 64 percent to 97 percent of its annual gas requirement under the new terms. The utility expects its demand to remain at roughly 33.6 billion cubic feet, or bcf, per year through 2025. The contract has a base firm quantity of 25 bcf per year. Enstar officials noted that multiple Cook Inlet producers have filed for bankruptcy in recent years. Furie Operating Alaska had its gas production halted in early 2019 when a production line froze, causing Enstar and other utilities to purchase gas elsewhere and draw on stored reserves for several months. Furie filed for Chapter 11 bankruptcy last August. “This gas supply certainty is vital at a time of growing scarcity,” the letter states. Enstar supplies gas to approximately 148,000 customers. Gas will be sold at $7.55 per thousand cubic feet, or mcf, in the first year of the contract but will vary afterwards. According to Enstar’s filing, the price for gas in subsequent years will be set through a calculation based on three price indices published by the Bureau of Labor Statistics. However, the price cannot increase more than 1.5 percent or decrease more than 1 percent in any given year, meaning the deal has an effective price ceiling of $8.89 per mcf in 2033. Prior contracts between the two had fixed price inflation rates of 2 percent to 4 percent, but “Enstar does not believe that an inflexible, always-positive inflation factor appropriately reflects how production costs increase and decrease over time,” the letter states. The agreement amends and extends a contract signed in 2016. At the time most gas contracts in Cook Inlet were five years or less. In 2018, the first year of that deal, Hilcorp sold to Enstar for an average price of $7.56 per mcf. State Sens. Josh Revak, Shelley Hughes and Senate President Cathy Giessel all urged RCA to approve the contract in comments to the commission. Hughes and Revak noted the combination of price reductions and long-term supply as needed benefits during a highly uncertain economic period and Giessel highlighted that it will ensure Alaska is developing and utilizing its own resources. “When Alaska gas is on relative price parity with imports, this use of our own resource will support the direct and indirect jobs in the resource development industry that in turn support our communities,” Giessel wrote in her comments. A public comment period for the contract is open through May 20 on the RCA website. Elwood Brehmer can be reached at [email protected]

Alaska Air starting Bristol Bay, Unalaska service with regional help

Alaska Airlines is doing what it can to fill the void in air service to Western Alaska created when Ravn Alaska suddenly grounded its fleet earlier this spring. The major domestic airline is partnering with regional carrier Grant Aviation to provide twice-weekly scheduled service to Unalaska through Cold Bay starting May 16, Alaska Airlines Regional Vice President Marilyn Romano said. Regular passenger service between Anchorage and Dillingham and King Salmon — where Alaska has historically offered seasonal jet service — will also start earlier this year. The first flights to the Bristol Bay hub communities are scheduled for May 18, according to Romano. Dillingham, King Salmon and Unalaska-Dutch Harbor are just three of the 115 communities across the state that used to be served by Ravn Alaska and its subsidiary carriers. Ravn filed for Chapter 11 bankruptcy protection April 5, grounding its fleet of 72 aircraft, following a 90 percent drop in its passenger revenue as travel halted due to the COVID-19 pandemic, according to a company statement. Alaska Airlines had partnerships with Ravn at hubs across the state and Romano said it is very difficult to watch the company suffer largely as a result of the health crisis. “It’s hard to think about the 1,300 employees for Ravn that are currently out of work and I know they’re working hard still today, as far as I’ve been told, to see how they could possibly get their operation up and running,” she said in a May 12 interview. Alaska’s moves to backfill Ravn’s service are just part of a larger effort from multiple carriers statewide, Romano noted. “Very quickly, not just Alaska Airlines, the aviation community as a whole really stepped up from both the passenger and cargo side to quickly see how these markets could be served in some way and I think what we’ve got today is most of the markets, whether they’re a (larger) Part 121 market or a Part 135 (air taxi) market, are being covered in some form or fashion,” she said, adding that many of the smaller airports Ravn served are inaccessible to Alaska’s fleet of Boeing 737 jets. That is the case for Unalaska, so Alaska Airlines is flying to the Alaska Peninsula community of Cold Bay, which has a 10,000-foot runway from its days as a military airfield during WWII. From there, Grant Aviation will take passengers the remaining roughly 150 miles to Unalaska. The Cold Bay airport has periodically been used as an emergency landing site for international flights with mechanical or other issues. The Cold Bay stop will be part of Alaska’s service to Adak farther out the Aleutian Chain, according to Romano. She said preparing for the coordinated service to Unalaska — the largest seafood port in the country — has been “a real collaboration” between the communities, airlines and state and federal Transportation officials. While the travel restrictions imposed to limit the spread of COVID-19 have decimated the airline industry worldwide, Romano said the period of very low passenger demand has provided a window for Alaska and other carriers to work out solutions to serve rural communities. “It’s been relatively calm but you never want to, if you can help it, have a community with no access to travel. There are critical needs to travel,” she said. As for Bristol Bay, Alaska first had to arrange to sublease Ravn’s ground facilities at the King Salmon and Dillingham airports before it could start service, as the airlines shared space when they both flew to the communities in years past. “We’re ready to go,” Romano said. “We’ve got our plan for moving employees around filed with the state and the communities.” Alaska will start fly to Dillingham three times per week and King Salmon twice per week briefly before ramping up to daily flights in June along with activity in the region’s commercial salmon fishery. Many Bristol Bay-area residents have long pled for Alaska Airlines to provide year-round passenger service to the region and Romany said the airline currently plans to do so this year. “They seem really happy about that in those communities,” she said. Romano added that Alaska will be flying additional charter flights in and out of Bristol Bay to move commercial fishermen and salmon processor workers as safely as possible. Many leaders and residents in rural fishing towns have expressed serious concerns about the ability to safely move seasonal workers in and out of their communities amid the pandemic. “Some of those seafood workers will actually move from a quarantine situation right onto a charter flight as opposed to scheduled service. Any level of safety that any of us can do together is going to help,” she said. Elwood Brehmer can be reached at [email protected]

Alaska delegation signs on to effort against banks shunning Arctic

Alaska’s congressional delegation is at the center of a growing cadre of Republican lawmakers pushing back on big banks that have decided not to invest in Arctic oil and gas projects. Three dozen senators and representatives signed a May 7 letter to President Donald Trump that first thanked his administration’s pursuit of American “energy dominance,” which has largely focused development of coal, natural gas and oil resources nationwide. The U.S. was the top oil producer in the world immediately prior to the onset of the global COVID-19 pandemic, with companies producing just more than 13 million barrels per day in early March, according to the Energy Information Administration. But the letter mostly urged the Trump administration to look into how the federal government can counter the group of large banks that have recently publicized policies against financing oil projects in the Arctic and select other parts of the country. Many of the same institutions are also shying away from investments in coal as well. In recent months Goldman Sachs, JPMorgan Chase, Citigroup, Morgan Stanley and Wells Fargo have all confirmed that to varying degrees they would not be supporting future Arctic oil projects. Most of the statements have been made through the banks’ social and environmental policies. The decisions have been praised by numerous congressional Democrats, conservation groups and renewable energy advocates across the country but have made the banks a target for lawmakers from oil, gas and coal producing states. “Scoring cheap political points at the expense of American energy workers is an affront to our economic success and it must be confronted,” the May 7 letter states. The signatories included Sens. Dan Sullivan and Lisa Murkowski and Rep. Don Young. The lawmakers also questioned why lending institutions that received federal support during the 2008-09 financial crisis and will potentially benefit from participating in CARES Act programs should be allowed “to pick energy winners and losers in order to placate the environmental fringe.” “As every sector of our economy struggles to survive the COVID-19 pandemic and seeks financial stability from the federal government, environmental extremists are using the pandemic to accelerate their goal of putting American energy jobs in the grave,” the letter states. “We urge you and your administration to use every administrative and regulatory tool at your disposal to prevent America’s financial institutions from discriminating against America’s energy sector while they simultaneously enjoy the benefit of federal programs.” Sullivan helped get the ball rolling for Republicans while participating an April 24 signing ceremony for legislation to add funding to the Small Business Administration’s Paycheck Protection Program in the Oval Office. Sullivan first said the COVID-19 response aid would help many Alaskans, including those working in the oil and gas, fishing and tourism industries, through this exceptionally difficult period. He said further that he doesn’t believe the banks should be allowed to receive federal support and at the same time “discriminate against a critical sector of the U.S. economy.” “I like the idea of looking into that; you’re right. You know, that got (to) where they were pushed by the radical left, and so they’re afraid of the radical left,” Trump responded. Sullivan said in an interview with the Journal prior to the letter that it is the “irony and hypocrisy” that some of the same banks kept afloat by federal aid roughly a decade ago “still find it OK to discriminate against the energy sector, particularly our state” that goes beyond free market principles and at a minimum warrants congressional attention. He acknowledged that it’s currently unclear exactly what Congress or the administration could do regarding the banks but said his staff is working with administration officials and other congressional offices as well to find possible remedies to the situation. “If you implemented what the national Democrats want, America, as the energy superpower of the world, which we have achieved and is now being threatened, wouldn’t have a chance and the dominant powers would be Saudi Arabia, Russia; and somehow they think that would be good for our country. It’s remarkable and fundamentally frightening to me,” he told the Journal. In January, 16 Democrat senators wrote to Wells Fargo CEO Charles Scharf asking that the bank commit to not financing oil and gas exploration in the Arctic National Wildlife Refuge. Similar letters from congressional Democrats have been sent to other major bank executives as well. Alaska Oil and Gas Association CEO Kara Moriarty said Sullivan made “a really valid point” to Trump while noting that the banks have generally stated a prohibition on direct Arctic oil project financing, which does not preclude general lending to oil and gas companies that work in the region. How exactly the individual banks will decide which oil projects are acceptable and which aren’t is just one question they need to answer, she said, adding that how each institution defines “Arctic” is another. The bans on Arctic oil investments likely apply to the North Slope, as it is within the technical definition of the Arctic, Moriarty said, while also pointing out that the Arctic Council classifies the Aleutians as Arctic — and some federal agencies — have even broader definitions. “I do think it is frustrating to see these huge financial institutions in my mind arbitrarily decide that projects and financing in the Arctic is too risky because some of them have listed care for the environment and things of that nature (in policy statements) and yet they’re still investing in companies and projects in countries that have a way worse environmental record than America does and certainly Alaska,” she said. “If a bank’s risk profile doesn’t view that projects in the Arctic are going to meet their risk criteria, that’s fine, but making blanket statements that ‘we won’t be investing’ even without giving a project the benefit of the doubt is sort of like agencies saying ‘we’re never going to permit a project in the Arctic.’ How can you say that?” Wells Fargo interprets the Alaska Arctic to be the North Slope, according to spokesman David Kennedy. He wrote in an email that the bank did not have a comment on letter to Trump but clarified the bank’s policy regarding working with the oil and gas industry in the state, noting that the decision to forgo funding Arctic oil projects was part of a larger move away from all project-specific transactions in the region. The bank, which has branches in Alaska, will continue to offer general corporate credit facilities for oil and gas companies in Alaska, according to a statement from Wells Fargo. “Wells Fargo is a leading provider of credit to Alaska Native Corporations and responsible oil and gas exploration and production companies doing business in Alaska, and we want to continue those relationships long into the future,” the statement said. Moriarty said she hasn’t heard of any companies in Alaska struggling to find financing as a direct result of the banks’ decisions but that’s mostly because funding isn’t something oil companies often disclose. “We operate under some pretty strict anti-trust rules. Price and investors and who they’re getting money from and how they’re getting money for projects — that just isn’t stuff we talk about, but it doesn’t mean it’s not happening,” she said. First National Bank Alaska CEO Betsy Lawer said the large oil companies operating on the North Slope typically have lines of credit with other financial institutions to fund portions of their work. FNBA, as a community bank, instead focuses its oil industry lending on Alaska-based companies in the support service sector, Lawer said. A JPMorgan Chase spokesman declined to comment on the May 7 letter and other banks did not respond to questions in time for this story. ANWR lease sale Bureau of Land Management officials continue to inch ahead with plans for an oil and gas lease sale in the ANWR coastal plain despite historically bad dynamics in world oil markets but it remains unclear when the controversial silent auction-style sale will finally be held. BLM Alaska officials released the final version of the environmental impact statement in mid-September and BLM State Director Chad Padgett said at the time he hoped to hold a lease sale for the entire 1.6 million-acre coastal plain before the end of the year, reiterating a common theme heard from other Interior Department leaders. While a record of decision — a prerequisite to a lease sale — could have been signed by agency officials as soon as 30 days after the official Sept. 20 final EIS notice was published in the Federal Register, but 2019 ended with little word from BLM or Interior leaders about it. BLM Alaska spokeswoman Lesli Ellis-Wouters noted in an emailed response to questions that it is not uncommon for a record of decision to be issued up to several months after a final EIS is made public. “This decision will take into consideration the many important issues and potential impacts we heard during our multi-year scoping and public comment process which resulted in almost 2 million comments received,” Ellis-Wouters wrote. The commenters largely expressed concerns about impacts to subsistence lifestyles, the migratory patterns of the Porcupine caribou herd that uses the coastal plain for calving and opportunities for increased jobs and economic opportunities in the state, she added. Ellis-Wouters also noted that to comply with the 2017 tax bill, which opened the Coastal Plain to oil and gas exploration, BLM does not have to hold the first lease sale until December 2021. However, many supporters of drilling in ANWR have pushed for a sale before the end of President Donald Trump’s first term to make sure Republicans maintain control of the process. Bloomberg reported May 11 that Interior Secretary David Bernhardt said he does not think the immediate collapse of oil markets will dampen industry interest in an ANWR lease sale, which he believes will likely be held this year. Moriarty said it’s too tough to tell what industry’s response to a lease sale would be as uncertainty from the COVID-19 pandemic has made even very near-term predicting in the historically volatile industry impossible. “You’ve got to let the process work. You’ve got to make sure the EIS is defensible in court because those that oppose development of the coastal plain are going to say, ‘well, the reason they didn’t show is because of low prices’ or ‘the reason they didn’t show is because of high prices’ or ‘the reason they didn’t show is’ — it just doesn’t matter,” Moriarty said. “There’s always a reason fabricated as to why we’ll never have a successful lease sale in this price environment so the process has to continue.” It’s widely believed that a record of decision authorizing a lease sale will be challenged in court. If a record of decision advancing a sale is approved, BLM will issue a Call for Nominations to industry, which usually takes 30 days and then a Notice of Sale announcing the date will be issued following a review of industry’s submissions, according to Ellis-Wouters. ^ Elwood Brehmer can be reached at [email protected]

BROWN'S CLOSE: The Young and the Redemption

While I was hoping the next report would be from the other side, alas, I’ve enjoyed eight full weeks of quarantine here in West Anchorage. This is largely due to my own sense of caution; the Municipality of Anchorage is well into Phase 2 of reopening. On the first day that restaurants were open, I stepped out onto my front porch and into the brilliant sunshine. I took a tentative step forward, breathing in the fresh air. As detailed in Episode 1, my main source of entertainment over the last eight weeks has been my daily hour-long walk through my neighborhood; my cardio stints come from the quick weaves and dodges to avoid my neighbors. But the day restaurants opened, well that porch stepping had the added significance of being the possible first move into the world beyond my neighborhood. I could actually go to some destination, should I so choose. The man in the next driveway was climbing into his car, and I cheerily waved at him. While not one to normally greet anyone, least of all my neighbors, I was overflowing with the spirit of goodwill for my fellow man. He waved back, and promptly coughed. I dropped my hand, scandalized, and scuttled back into the dim recesses behind me. Every day now, I peer eagerly out of my windows, awaiting news of either devastation or recovery. Nevertheless, this is the third installment of series sponsored by COVID-19, preceded by "The Young and the Restless" and "2 Young 2 Restless: Covid Drift." Updates to key dramatic subplots are included below for your convenience: Workouts – I've joined three fitness challenges through work. I’ve got seven blisters and two biceps to show for it. Karate – Someone circulated a rumor that my karate sensei trained the Karate Kid. This story soon evolved into he trained the guy who trained the Karate Kid. Latest version is that he may have seen the Karate Kid once. Bottom line, the sensei’s life continues to remain shrouded in mystery. Speaking of karate – I am due to test for my “yellow-orange” belt at the end of the month. Logistics remain uncertain and I am not sure whether a virtual test will be easier or harder than an in-person test. Most students advance to black belt (i.e. master ten belts) in three years. At my rate, I can expect to become a black belt in twice that time. I advance through life at half the speed of a nine-year old. Television – I determined it was time to tackle a movie with slightly more gravitas than Alice and Wonderland (the last feature film I watched in quarantine). Netflix had The Shawshank Redemption on rotation. I’d never seen it, had no idea what the plot was, and sat down to watch it with no advance research. Upon viewing, I became unduly morose, and spent 48 hours worried about whether there was any reasonable likelihood I would one day have to stage a prison break through a hole in the sewage piping. After a few comforting episodes of Parks and Recreation, I started Hollywood on Netflix, thinking it would be a cheerful cartoonish reimagining of post-war California. It is not; I’d say the early tone of the show is cynical at best. I watched the central character’s employment struggles for about fifteen minutes, became unduly morose, and went back to Parks and Recreation. I thought a third venture was warranted, and went back to that tried and true genre of British period soap operas. Julian Fellows of Downtown Abbey fame debuted a new show over the Easter weekend and I tuned in. Sure enough, the first episode had a surprisingly affecting death scene, after which I became unduly morose and swore off new content for the foreseeable future. Reports from the front lines both locally and nationally are promising, but with an added dose of whimsy. Women can return to beauty parlors, but cannot have their hair blown dry. Nail salons may take customers, but manicurists must wear the equivalent of a moon suit to protect themselves and their customers. Gyms can hold classes, but only outside. In a nutshell: businesses may take customers, but customers should stay home. Drawing courage from the relatively tame scene locally, I stepped onto my front porch for the second time a few weeks following my neighbor’s assault. Again, I blinked my eyes against all that new bright May light, and glanced down at my phone. Per the news, giant murder hornets have arrived in the United States. I retreated again. The Egyptians understood plagues, and darned if I wasn’t going to follow their hunker down example. Sarah Brown delights in the outdoors. When she is not frolicking in nature, she can be reached at [email protected], and on Twitter @mesarahjb. “Close” is a British term for alley or cul-de-sac. For more of Sarah’s musings, visit Browns-Close.com.

LBA Committee OKs release of CARES Act funds

A committee of the Alaska Legislature approved Gov. Mike Dunleavy’s plan to spend federal coronavirus aid on May 11, but a handful of lawmakers warned that their vote might not be legal. The governor’s plan calls for $568.5 million to cities and boroughs, as much as $100 million for fishermen and fishing businesses, and $289.3 million for small businesses that have not received aid from existing federal programs. Other sections of the approved plan include $10 million to fight homelessness and $52 million for the Alaska Department of Transportation and Public Facilities. Legislative attorneys previously warned that a vote of the full Legislature is needed to legally approve the three biggest pieces of the governor’s plan. The governor has said he disagrees with that interpretation. Members of the Legislative Budget and Audit Committee agreed with the governor, citing the need to get money to Alaskans quickly, and overturned chairman Chris Tuck, D-Anchorage, to approve the plan. The plan has three main pieces: • Community aid. Cities, towns, villages and boroughs will split $568.5 million that can be spent according to rules set by the U.S. Treasury Department. Municipal officials told a legislative committee earlier this month that they believe those rules are so restrictive that much of the money cannot be spent legally. The Municipality of Anchorage said it feels differently and that Congress intended to allow cities and boroughs to use the aid to cover lost tax revenue. Rep. Mark Neuman, R-Big Lake, said he expects Congress will “continue to hear that local control is the best way” and that the issue will be resolved. • Small-business aid. The Alaska Industrial Development and Export Authority, contracting with Credit Union 1, will offer up to $289.3 million in grants to small businesses. Grants will be granted to businesses with 50 or fewer full-time employees that did not qualify for federal aid programs under the CARES Act. The loans are up to $100,000, and recipients will be subject to audits and other restrictions. The commissioner of the Alaska Department of Commerce, Community and Economic Development said nonprofits would also be eligible for grants. • Fisheries aid. The state can accept up to $100 million for aid to fishermen and fishing businesses, but right now, it is scheduled to receive only $50 million. The Alaska Department of Fish and Game will administer the aid program. Rick Green, a special assistant in the department, said the agency is “still working out the avenue the funds will take on their way down to be distributed.” Smaller pieces have involved $10 million for rental and mortgage assistance to be administered by the Alaska Housing Finance Corporation, funding for rural airports, money for the Whittier Tunnel, and cash for local transit systems. Lawmakers in the Budget and Audit Committee talked for almost three hours about the legality of approving the governor’s plan in committee rather than by the whole Legislature. “So far no one has been able to show me how this is legal. You’re all saying ignore it. Some of us are having a hard time ignoring it,” said Rep. Chris Tuck, D-Anchorage and the committee’s chairman. The budget and audit committee can make limited budget decisions on behalf of the full Legislature when lawmakers are not in session, and it normally can only increase line items already funded with federal cash. The governor’s proposal calls for creating new line items funded by the federal CARES Act. The committee cannot alter the governor’s plan, even if there is a mistake. That contributed to delays, as the administration had to rewrite elements of the plan. Legislative reluctance added further delay. A Department of Law spokeswoman said the department has no public documents explaining the administration’s position. The spokeswoman, Maria Bahr, previously said that those documents are covered by attorney-client privilege. Despite the legal questions, a majority of the committee said the state is in an emergency and action is needed quickly. “The COVID virus itself is stretching the limits of this state and the communities, and this money does need to be dissipated as soon as possible,” said Senate President Cathy Giessel, R-Anchorage. Sen. Bert Stedman, R-Sitka, said the full Legislature will eventually be asked to ratify the committee’s action. In the meantime, the money will go out to communities and programs picked by the governor. The final vote was unanimous in favor after Tuck’s opposition was defeated in a procedural vote, 3-7.

FISH FACTOR: Alaska halibut getting battered by foreign imports

Sales of Alaska’s most popular seafoods are being hit hard by markets upended by the coronavirus, but perhaps none is getting battered worse than halibut. Along with the big losses in the lucrative restaurant trade, Pacific halibut also is facing headwinds from increasing foreign imports. Starting three years ago, sales of fresh Pacific halibut to established markets on the East Coast were toppled by a flood of less expensive fish flowing in primarily from eastern Canada. Trade data show that for 2019 through February 2020, total Canadian halibut imports to the U.S. topped 15.3 million pounds for which the U.S. paid nearly $107 million. “It is taking over the eastern seaboard and also is being trucked from Boston to major middle American markets such as Chicago and Denver. It’s very hard to sell Alaska halibut to these traditional markets now. The Canadian product is cheaper and is available nearly year round,” said a marketer with more than 30 years of experience in selling halibut from Southeast Alaska, speaking on condition of anonymity. “All of a sudden, an important market that paid a good price for fresh halibut has disappeared,” he said. “Rule of thumb is generally, sell fresh make a profit, freeze halibut, lose money.” Earlier this year, fresh farmed Atlantic halibut was spotted for sale at $9.99 per pound at a Costco near Seattle. Total global production of farmed halibut is only 4.4 million pounds, of which 3.5 million comes from three farms in Norway. (The remainder is from Scotland, Canada and Iceland.) From 2019 through February 2020, the U.S. bought nearly 2 million pounds of wild caught and farmed halibut from Norway for $10.5 million. Alaska’s losses in fresh sales are combined with huge hits in the West Coast frozen market. That’s due to another newcomer: increasing imports of halibut caught by Russians and processed in China. “Halibut is not consumed by Asians nor Russians so they target the U.S. The Russian halibut is mostly fished longline, dressed collar and tail off and frozen in blocks at sea. They off load in Busan and auction it to processors for making into fillets,” he said. The fish then goes to the U.S. and Canada for resale at prices that undercut all others. “I have been calling end users and distributors trying to find placement for our Alaska product in the frozen fillet form. But the Russian product has taken over,” he wrote in an email. “I visited a customer in Vancouver and he showed me some Russian/Chinese skinless halibut fillets he had bought in the low $6s. Alaskan fillets, for reference, needed to be in the $13s to recoup costs. He mentioned that most of his customers have switched to the less expensive imported. I spent weeks calling fish and chip shops that have always used Alaskan and they prefer not to cut in house but use the imported twice frozen fillets,” he said, adding that Canada is where most of Alaska’s larger frozen halibut (60+ pounds) has gone over the last few decades.” Other market watchers agree that the appearance of Russian halibut is a new twist to conventional market trends. “We started seeing increased Russian production about a year and a half ago when it started to pop up in the data,” said Garret Evridge, a fisheries economist with the McDowell Group. “We were wondering where that volume was going, but given the difficult nature of trade data, we didn’t have a firm grasp. Now we see that some of that harvest is making its way into the U.S. It is a relatively new development,” The Russian/Chinese fish also makes an end run around trade tariffs of up to 25 percent imposed two years ago by the Trump Administration. “A lot of the product used to come in through Seattle, but since the USA imposed the duties for Chinese processed halibut coming into this country, a lot comes into Vancouver, thereby avoiding the duty,” said the marketer. The volume coming in from Russia has been tricky to track once it enters the “black box of China,” said Evridge who added, “Then our data really falls apart. But we understand that Russian Pacific halibut entering China can make its way to the U.S. through a variety of ways.” And the Russian imports are increasing. “In 2019, we saw about 2 million pounds of frozen Russian caught halibut imported into the U.S. The year prior it was 140,000 pounds. Through the first two months of 2020, we’ve imported about 420,000 pounds, so it’s trending higher. For a relatively low volume fishery and for U.S. markets 2 million pounds is pretty substantial,” Evridge said. Trade data show that the U.S. paid nearly $6.7 million for 2 million pounds of Russian caught halibut from 2019 through January 2020. The foreign fish also get the benefit of more favorable exchange rates. “The Russian ruble has weakened against the U.S. dollar by about 14 percent. If I’m a U.S. buyer, there’s a 14 percent discount. The ruble is also weak against the Chinese yuan, so if I’m a Chinese buyer, bringing that product in is relatively affordable. That’s another thing that that we struggle with,” he explained. Tariffs of up to 25 percent are in place for most seafood both coming and going to China, and Russia has not purchased a pound of U.S. seafood since 2014. Meanwhile, Alaskans have 17 million pounds of halibut to catch this year and landings so far are down 60 percent. With deflated markets and dock prices in the $3 to $4 range, there’s not much motivation to go fishing. Salmon starts! Alaska’s salmon season officially kicks off on May 14 at Copper River near Cordova with the arrival of kings and sockeyes. Other salmon fisheries will quickly follow. Alaska’s total 2020 salmon catch is projected at just less than 133 million fish, a 36 percent drop from the 208 million fish taken in 2019. The state’s largest herring fishery at Togiak in Bristol Bay opened on May 3. Icicle is the only buyer for a haul of nearly 39,000 tons of herring caught for their roe. Kodiak’s roe herring fishery is still underway with catches topping 1,500 tons. The price was reported at $300 per ton. A small, one-day-a-week herring fishery is underway at Upper Cook Inlet through May 31. The UCI’s 200 ton smelt fishery runs from May 1 through June. Dungeness crab opened around Kodiak on May 1. Southeast Alaska’s longest ongoing fishery — beam trawling for pink and sidestripe shrimp — opened on May 1 with a catch quota of nearly 1.8 million pounds. A pot shrimp fishery opens on May 15 with a 32,000-pound quota. A lingcod fishery is underway and Southeast divers are still going down for giant geoduck clams. Trollers will be out on the water this month targeting hatchery kings in several regions. At Prince William Sound a second opener for big spot shrimp was set to wrap up on May 9. The total catch by 60 boats will come in at just more than 68,000 pounds. Just more than 2 million pounds of halibut has been landed since the mid-March opener. Sablefish catches at just more than 5 million pounds also are down. The Bering Sea snow crab fishery is wrapping up with a 30.6 million-pound catch. Final prices won’t be settled until July. And as always, catches for cod, pollock, flounders and much more are ongoing in the Gulf of Alaska and Bering Sea. Get mugged Mug Updates tell Alaska fishermen how to navigate the strict COVID-19 mandates in place for salmon season. The updates are provided by the Alaska Fishermen’s Network, an arm of the Alaska Marine Conservation Council. “The purpose is to help you dip your toe in and give you a roadmap for some information to prepare for this upcoming salmon season and for fisheries that are currently ongoing,” said Jamie O’Connor, Network director and a longtime Bristol Bay fisherman. COVID puts the kibosh on parties in the boatyard, the Mug Updates advise, and include simple suggestions like using paper dishware and changing up your galley game with gloves and masks for making meals. “Basics of sanitation and hygiene are huge,” O’Connor stressed. “I think when people are putting together their grubstake, whether they’re putting in a barge order for their summer in the community or they’re going fishing, it’s important that they flag some of these little things to put in their shopping cart. It can make a world of difference.” From what she’s hearing, O’Connor said fishermen “are committed to doing things as safely as possible.” “I’m also hearing a real concern for our supply chain, and people are very aware of the important role we play as food producers,” she added. “Keeping informed is vital right now,” she said, “and we’re doing our best to make that as understandable and digestible as possible. We’re also helping people work through the decision process about whether they are able to fish this season or sit this one out.” The Mug Updates tell it straight about salmon fishing during the COVID pandemic: Play by the rules or everyone gets sent home. Find the Updates at www.akyoungfishermen.org and on Facebook. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

Long-sought Railbelt utility reform becomes law

After more than five years of highly technical analysis, delicate negotiations and numerous fits and starts along the way, the path to restructuring Alaska’s once-disjointed Railbelt electric system is officially complete. Gov. Mike Dunleavy signed legislation April 29 fortifying the authorities of the Regulatory Commission of Alaska and directing the six Railbelt electric utilities to establish a new organization to plan for and manage deeply integrated utility operations. RCA Chair Bob Pickett thanked Dunleavy for signing Senate Bill 123 — spawned from recommendations the commission made in 2015 — and said it will eventually help provide Railbelt region residents with more reliable and effective power service in a formal statement. “A cooperative effort of legislative leadership, the RCA, utilities, independent power producers and other public interest representatives contributed to this successful outcome, which started in 2014 at the direction of the Legislature,” Pickett said. SB 123 passed the Senate unanimously and received broad support in the House. It codifies the work that the Railbelt electric utilities have done at the behest of the Regulatory Commission of Alaska to better integrate the long-term planning of the six utilities and provide a consistent path for renewable power producers to access the regional transmission system. “SB 123 will foster cooperation among the interconnected utilities and ensure consumer needs are efficiently and reliably met,” said Sen. John Coghill, R-North Pole, the chair of the Railbelt Electric System Committee that drafted the legislation. Renewable Energy Alaska Project Executive Director Chris Rose called the signing of SB 123 “historic,” a term used by many individuals involved in the Railbelt electric work. “Efforts to reform the Railbelt electric grid to improve coordination and efficiency among the six utilities something that people have been trying to do for decades. This is a major win for everyone,” Rose said. “It will create a better environment for renewable energy development, create efficiencies that will lower electric costs for consumers and allow Alaskans to have a say on what projects are built in the future.” In 2014, lawmakers directed the RCA to conduct a detailed examination of the issues facing the Railbelt electric grid, which stretches across the service territory of six utilities from Fairbanks to Homer that collectively have a customer base typically served by a single utility in the Lower 48. The RCA’s analysis resulted in a frank June 2015 letter to the Legislature that characterized the Railbelt electric system at the time as “fragmented” and “balkanized” and recommended the utilities be afforded time to voluntarily improve their coordination before the commission would seek to clarify its authority to direct coordinated utility operations. At its core, SB 123 mandates the Railbelt electric utilities work with other stakeholder-driven organizations to form an electric reliability organization, or ERO, that would oversee implementation of system-wide reliability standards and coordinate long-term planning amongst the utilities. It also gives the RCA explicit authority to rule on the necessity of large infrastructure projects, such as generation plants, that utilities may pursue. The primary end goal for many stakeholders is to achieve “economic dispatch” across the entire Railbelt — from Homer to Fairbanks — or consistently maximizing use of the most efficient power generation through near-constant power sales between the utilities. Currently, the limited capacity of transmission lines in the region can inhibit economic dispatch of electricity, particularly from the state-owned Bradley Lake hydropower facility near Homer that provides some of the lowest-cost power in the region. While the process of getting from the June 2015 letter to the passage of SB 123 was lengthy and included multiple setbacks, such as the scrapping of an application to jointly form a transmission company to support transmission infrastructure investments last year, utility leaders generally supported the concept. Last December the general managers and CEOs of the regional utilities signed a memorandum of understanding outlining how they would form an ERO dubbed the Railbelt Reliability Council, governed by a board comprised of utility representatives and stakeholders championing independent power producers and others. Utility leaders acknowledged the bipartisan support already behind SB 123 last fall was an impetus to developing the MOU, which calls for the reliability council’s implementation committee to have a business plan for the council ready by this December. MEA spokeswoman Julie Estey wrote via email that the committee’s work has been slowed by a couple weeks while the utilities were immersed in responding to the COVID-19 emergency, but it has not stopped. According to Estey, 11 applications for two unaffiliated implementation committee seats are currently being reviewed and the results are expected in the middle of this month ahead of a vote to finalize the committee roster. Elwood Brehmer can be reached at [email protected]

Wall Street sees the economic pain, opts to look past it

NEW YORK (AP) — Is Wall Street blind? The global economy is in shambles, the coronavirus pandemic has killed more than 249,000 worldwide and 30 million Americans have lost their jobs as collateral damage in the fight against COVID-19, with the tallies all rising by the day. Yet, the U.S stock market just rocketed to its best month in a generation. While it’s most definitely wild, Wall Street is also a collection of investors who are continually looking ahead, setting prices for stocks at the moment based on where they expect corporate profits and the economy will be a quarter or two into the future. From February into late March, investors sent the S&P 500 down by nearly 34 percent, anticipating that the number of jobless workers would explode and the economy would tumble into recession. Then in April, as gruesome economic figures confirmed those fears, investors instead focused on a few strands of optimism for the future. The S&P 500 has surged 27 percent since hitting a low on March 23, which was the same week that the government reported a record number of U.S. workers filed for unemployment benefits, nearly 6.9 million. When clients have called in recently at Villere &Co., an investment adviser in New Orleans, they usually start with one question, said Sandy Villere, a portfolio manager at the firm. “They ask: Aren’t we going into a recession?” he said. “I say, ‘Yes, but the stock market has already gone through the recession, and now it’s coming out of the recession.’” Among the reasons the market chose to look ahead: • The Federal Reserve came to the rescue, again. A famous saying on Wall Street says: Don’t fight the Fed. The central bank is doing everything it can to support the economy, from cutting interest rates to near zero to the unprecedented promise to buy even riskier corporate debt. It’s all aimed at ensuring lending markets have enough cash to run smoothly and prevent prices from going haywire. Investors say that’s eliminated the worst-case scenario for markets: a collapse reminiscent of the 2008 financial crisis. And even a deeply divided Capitol Hill has come together to send trillions of dollars into the economy, hoping to fill the cavern created by the shutdown of businesses. • Infections have leveled off in some areas, and reopenings are on the horizon. In the hard-hit state of New York, the number of hospitalizations for the virus has dropped back to where it was a month ago after peaking in mid-April. Some states around the country have laid out plans to gradually relax restrictions meant to slow the spread of the virus. Georgia has been at the forefront, already allowing barber shops, gyms and nail salons to reopen. “This is first and foremost a health crisis, so any trend lines of improvement are good, even if they’re hidden within really terrible human loss numbers,” said Nela Richardson, investment strategist at Edward Jones. • Even the terrible economic numbers contain some hopeful signs. Joe Seydl, capital markets economist at J.P. Morgan Private Bank, has noticed how most of the jobs lost in March were temporary furloughs, rather than permanent losses. “That was a relative silver lining,” he said. “We know unemployment is going to spike. When you look beneath the surface at unemployment you can look at how much is temporary.” History shows that stocks usually begin heading back up even as the economy is still heading down. The S&P 500 typically begins rising four and a half months before the economy hits bottom in a recession, according to Lindsey Bell, chief investment strategist at Ally Invest. Consider the Great Recession: Stocks began what would become the longest bull run on record in March 2009, when corporate profits were still tumbling and layoffs were still rising. The unemployment rate wouldn’t hit its peak until seven months later. However, many professional investors have been skeptical of this rally, given how much uncertainty still exists about how long the recession will last. If a second wave of infections hits, businesses could shut down again as fast as they open. Stocks are no longer cheap following their strong recent run. And worries still loom about companies defaulting on their debt after a borrowing binge left them with a mountain of $9.6 trillion in outstanding bonds. . The stock market also has a patchy history in predicting the end of recessions, just like it has predicted nine of the last five recessions, as famed economist Paul Samuelson once quipped. . After hitting a low in November 2008 shortly after Lehman Brothers collapsed during the financial crisis, the S&P 500 rallied more than 24 percent in about seven weeks. But that rally proved to be illusory, and the market gave out again, plummeting nearly 28 percent before finally hitting bottom in March. AP Business Writer Alex Veiga contributed.

As US piles up debt to aid economy, even usual critics cheer

WASHINGTON (AP) — The U.S. government has opened the spigots and let loose nearly $3 trillion to try to rescue the economy from the coronavirus outbreak — a river of debt that would have been unthinkable even a few months ago. And yet the response, even from people who built careers as skeptics of federal debt, speaks to the gravity of the crisis: Almost no one has blinked. With the U.S. economy in a frightening free-fall, they say, the government has no choice but to pour trillions into an emergency operation. Doing less would risk a catastrophe — a recession that could devolve into a full-fledged depression. And if that were to happen, the government’s fiscal health would end up far worse. What’s more, the lessons of World War II and the 2008 financial crisis suggest to many that a combination of ultra-low interest rates and eventual economic growth can keep government debts manageable and prevent a budget crisis. In a sign that investors worry more about a deep recession than about whether the government might eventually struggle to repay its escalating debt, the yield on the benchmark 10-year Treasury note remains well less than 1 percent. Many analysts say that while soaring federal debt may end up slowing an eventual recovery, there won’t be any recovery if the government doesn’t borrow and spend aggressively now. “Like most folks, I’m not especially concerned about deficit and debt now,” said Donald Marron, director of the Tax Policy Center, a Washington think tank. “Interest rates remain low. Immediate health and economic concerns must take precedence.’’ Nonetheless, the numbers are shocking. After Congress passed four programs to sustain the economy through the COVID-19 crisis, the budget deficit — the gap between what the government spends and what it collects in taxes — will hit a record $3.7 trillion this year, according to the Congressional Budget Office. On May 4, the Treasury Department announced that it will borrow $2.99 trillion in the April-June quarter, blowing away the previous quarterly record of $569 billion, set in the recession year of 2008, and eclipsing the $1.28 trillion it borrowed in the bond market in all of 2019. By the time the budget year ends in September, the government’s debt — its accumulated annual deficits — will equal 101 percent of the U.S. gross domestic product, according to the CBO. Policymakers are trying to fend off catastrophe. The lockdowns and travel curbs meant to contain the virus are battering the economy. GDP is expected to fall at a 40 percent annual rate from April through June. That would be the worst quarter on record dating to 1947. Thirty million Americans have sought unemployment benefits since the virus struck. Even before the health crisis, the government’s debt to the public, swollen by President Donald Trump’s 2017 tax cuts, amounted to more than 80 percent of GDP, highest level since 1950. The nation has been here before. In 1946, the year after World War II ended, federal debt peaked at nearly 109 percent of GDP. By 1962, the debt burden had dropped below the 1940 level of 44 percent of GDP. The surging postwar economy poured tax revenue into government coffers. In some ways, things are different now. The economy doesn’t grow as fast. From 1947 through 1962, the economy averaged a robust, debt-erasing 3.5 percent annual growth. It’s unlikely to achieve anything that impressive anytime soon. Since 2010, GDP growth has averaged just 2.3 percent annually. Economists have long worried about the consequences of big government debts. When the government takes on debt, the argument goes, it competes with private borrowers for loans. It “crowds out’’ private investment, heightens borrowing rates and threatens growth. But after the financial crisis, economists began to rethink their approach to debt. The recovery from the Great Recession, in the United States and especially in Europe, was sluggish in part because policymakers declined to juice growth with more debt. The 19 European countries that share the euro currency slid back into recession in 2011. As their economies slumped, their debt problems worsened. In the United States, rates didn’t rise much even as the economy gradually strengthened. It turns out investors have a near-insatiable appetite for U.S. Treasurys, given their status as the world’s safest investment. Their rush to buy Treasurys helped lower the government’s borrowing costs. So did persistently low inflation. In such a low-rate, low-inflation environment, the risk of piling on debt seems more manageable, at least for countries like the United States and Japan that borrow in their own currencies. “We can worry much less about the amount of debt than most economists guessed,” said Douglas Elmendorf, a former CBO director and now dean of the Harvard Kennedy School who for years has been a critic of runaway federal debt. Today’s U.S. policymakers enjoy the support of the Federal Reserve, which has been flooding the market with cash and keeping borrowing costs ultra-low. Fed Chairman Jerome Powell took the unusual step at a news conference last week of imploring Congress not to worry right now about the risk that its aggressive rescue programs will produce excessive debt. “I have long time been an advocate for the need for the United States to return to a sustainable path from a fiscal perspective,” Powell said. “This is not the time to act on those concerns. This is the time to use the great fiscal power of the United States to do what we can to support the economy and try to get through.” Likewise, Olivier Blanchard, a former chief economist of the International Monetary Fund, challenged the old consensus on government debt in a speech last year: “Put bluntly, public debt may have no fiscal cost… The probability that the U.S. government can do a debt rollover, that it can issue debt and achieve a decreasing debt to GDP ratio without ever having to raise taxes later, is high.’’ Then again, the future might not be like the recent past. Mark Zandi, chief economist at Moody’s Analytics, said he thinks rates will eventually start rising as the economy regains health, perhaps in 2022 or 2023. “There’s going to be a day of reckoning,” Zandi said. “We are going to as a nation have to address these deficits and debts. We’re going to have to raise taxes. We’re going to have to restrain spending.’’ But for now, he said, “You have to respond with everything you’ve got to make sure the economy doesn’t completely fall apart.’’ “The question is not: How much does this cost? But rather: How much will debt go up if we do this, versus if don’t do this?’’ said Richard Kogan, senior fellow at the Center on Budget and Policy Priorities and a budget adviser in the Obama administration.

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