Movers and Shakers for June 20

Aminata Taylor has joined United Way of Anchorage as chief financial officer, effective May 24. Taylor, a certified public accountant, most recently served as CFO for Camp Fire Alaska. She has worked in finance, information technology and human resources in both nonprofit and for-profit enterprises, including CliftonLarsonAllen, one of the largest accounting firms in the United States, where she specialized in tax compliance for non-profits. She also has worked in permanent supportive housing at Shelter House in Iowa City, Iowa, and for American Equity, an insurance company, in Des Moines. Taylor is one of 17 children and speaks five languages. She came to the United States from the West African nation of Guinea in 2008. A 2012 graduate of Coe College in Iowa, Taylor earned a master’s degree in accounting at the Kaplan University School of Business in Chicago in 2016. Emery Schramm, CESCL, recently joined R&M Consultants Inc. as an engineering associate in the firm’s Construction Services Department. Emery will provide construction oversight, field inspections and materials testing on a variety of building, bridge, transportation, site development, utility and waterfront projects. Emery is a former R&M employee, originally joining the firm in 2007 as an engineering intern, working during the summer construction season for several years. She joined full-time as an engineering associate in 2013. Since being back at R&M, Emery has been working in R&M’s materials laboratory, calibrating testing equipment, conducting various tests in support of geotechnical field work and preparing for reaccreditation of the lab. Emery is an Alaska Certified Erosion and Sediment Control Lead; American Concrete Institute qualified in concrete, field and aggregate; and Western Alliance for Quality Transportation Construction qualified in aggregate, asphalt, embankment and base, and density. KPB Architects hired Korynn Applegate as project designer and Brad Nygaard, RA, as architect. Applegate brings 16 years of experience as a designer, the majority in Anchorage. Her technical skills include an expertise in various architectural and graphic mediums for K-12 schools, preschools, early childhood development facilities, as well as multifamily and mixed-use housing projects. She holds bachelor’s and master’s degrees from Savannah College of Art and Design. Nygaard has more than 28 years of experience in the field of design. Nygaard recently spent most of 2019 and 2020 managing a design and contractor team on large-scale earthquake repairs which included damage assessment, seismic-restraint strategies and implementation of those strategies.

Joint venture advancing geothermal for Unalaska

Unalaska city leaders, a local Native corporation and a team of renewable energy experts from Fairbanks are working hard to unlock the energy potential inside a volcano near the Aleutian fishing community. The geothermal resource in the base of Makushin Volcano — a prominent feature about 15 miles west of the city — is well-documented, according to Dave Matthews, a program manager with the Ounalashka Corp. and Chena Power LLC joint venture. However, the cost and logistical challenges common to rural Alaska projects, along with prior land ownership issues, have precluded development to date. “Tens of millions of dollars have been spent in the last 40 years on the Makushin resource. There’s actually been 13 plans for development there,” Matthews said during a June 4 video conference presentation hosted by the policy think tank Commonwealth North. “People have written papers and gotten their Ph.D.s based on this resource. It’s well known in the geothermal world.” Geothermal energy is one of the most consistent forms of renewable energy, whether used for heat, power generation, or both. Wells are drilled into a geothermal reservoir that emits steam that can then be captured and used in multiple ways. Chena Power currently operates the only geothermal power system in Alaska. A traditional geothermal power project will utilize the steam to turn a turbine generator, after which the steam is sent through cooling towers before being injected back to the reservoir. At the Makushin project, the steam will be produced at about 390 degrees Fahrenheit and it will be injected as liquid water of 80 to 100 degrees, according to Matthews. “The whole concept is to try to extract as much geothermal energy as you can from the geothermal reservoir before you put it back into the ground where it gets reheated again,” he said. Based on a 1983 test well, the Makushin resource has been “ball parked” to be capable of supplying steam to generate 500 megawatts for 500 years, he added. Unalaska, with a population that peaks at nearly 10,000 during the height of fishing activity, needs only a fraction of that, according to City Manager Erin Reinders; and that’s part of the problem. The city currently relies on diesel power generation and has a peak demand of about 11 megawatts. The seafood processors that help make Dutch Harbor the largest volume fishing port in the country and, along with a handful of other isolated power consumers, generate nearly 20 megawatts at peak demand themselves. Getting the processing companies or others to connect to the city grid is imperative, according to Reinders. “In order to make this pencil out we’ll need to have more (power) sales,” Reinders said in an interview. She also noted that the project has the potential to displace more than 2.5 million gallons per year of diesel consumed by the city’s current power generation. Residential power rates in Unalaska were approximately 28 cents per kilowatt-hour in 2020 after the state Power Cost Equalization subsidy was applied, based on Alaska Energy Authority data. Commercial customers are not eligible for PCE subsidies. Simply put, the seafood processors — already in a highly volatile industry — don’t want to relinquish control over their all-important power supply, even if doing so would mean forgoing millions of gallons of diesel purchases each year. Matthews said the fixed development costs, such as that for the 10-mile road to the site, along with the inherent nature of the ostensibly free heat resource, mean developing a larger plant up-front will lead to lower electric rates over the long-term if other customers can be added to Unalaska’s grid. For that reason, Ounalashka and Chena Power plan to install a net 30-megawatt plant with three individual generation systems. Having three smaller systems is more expensive than one large system but it will allow the plant to better match demand fluctuations, which will be a necessity given the Makushin plant will be Unalaska’s primary power if it is seen through, according to Matthews. “The thing with geothermal is it’s a high capital cost but once you get it installed your price is pretty much fixed for 30 years,” Matthews said, noting the larger plant provides ample opportunity for grid growth. The City of Unalaska signed a 30-year power purchase agreement, or PPA, with Ounalashka and Chena Power last August, which calls for fixed payments starting at $16.3 million with a 1 percent annual escalator that puts the 30th year total at $22 million to power the city. Reinders said the Unalaska City Council approved the deal in part because the processors publicly supported the project even if they aren’t ready to commit to it yet. “In the past the other showstopper was that the processors weren’t on board,” she said. Matthews emphasized the benefit to the companies is the consistent cost of the power, adding that the reliability can be proven to them over time. “The power that we’re providing to the city is pretty close to the diesel cost in the next few years and will become cheaper over time, of course,” he said. The project is currently on schedule to produce its first power in late 2023 shortly after a 4-mile, redundant subsea power line is laid to connect Unalaska to the Makushin project, according to Matthews. Finalizing the PPA qualified the development group to seek financing for the full project, Reinders said, noting it is also a step that has never been reached before in other development attempts. Matthews said the joint-venture, which is aided by Ounalashka owning the land, is self-funding the road and pad construction that started in May. He declined to disclose the overall price estimate for the project, but said bids are due from two international geothermal plant developers later this month. “We’ve gone a long ways on getting the details of the cost and logistics plan put together,” Matthews said. Elwood Brehmer can be reached at [email protected]

Copper River reopens after delayed pulse in sockeye run

Copper River salmon fishermen got their nets back in the water for the first time in weeks on June 9 aiming for some of the sockeye headed upriver. The sockeye had been sparse at the Alaska Department of Fish and Game’s sonar at Miles Lake, but the count increased enough through June 8 to allow a 12-hour commercial drift gillnet opener. As of June 14, the sonar counted 321,656 sockeye, slighly ahead of the department’s management objective for the run so far and significantly ahead of last year’s count and on track to reach the in-river escapement goal. The Chitina personal-use dipnet fishery also opened June 10 for a 96-hour period. “Increasing daily passage at the Miles Lake sonar station indicates that the inriver goal is likely to be met and supports opening the Copper River District commercial fishery,” ADFG noted in its June 12 announcement. Harvest numbers in Copper River are overall still low; through the June 14 opener, in which 32,005 sockeye and 368 kings were harvested, the total harvest was 122,585 sockeye and 6,137 kings. The commercial Copper River king fishery traditionally fades well before the sockeye fishery is over. The ADFG sonar went into the lake on the south shore of Miles Lake, which based on historical counts means half the sockeye passing through have been counted. The flows in the Copper have been extremely low and cold so far, in line with the late and cold spring, which may be affecting the fish moving upstream as well. Downriver, the Prince William Sound Science Center runs a sonar site near Clear Martin River confluence with the Copper. The fishery depends on the counts of sockeye entering the river, but because of hydrology of the system, ADFG’s sonar is at the outlet of Miles Lake — nearly two miles upriver from the mouth. To help ADFG gather management data for the commercial fishery, the Copper River/Prince William Sound Marketing Association fund the PWSSC’s sonar. However, this year, their sonar didn’t gather much useful data. Rob Campbell, who manages the project for the PWSSC, said the flow of the river has changed to more of the water flowing down the western side. The sonar site is on the eastern. “We’re not seeing very many fish,” he said. “I don’t think that’s the fish’s fault. It is just really, really changeable down there.” It’s not entirely clear whether it’s just siting or whether sockeye behavior is a little different this year, particularly with cold water. In 2019, the soaring temperatures in the Sound placed heat stress on salmon, causing die-offs, but the Copper River was deep and cold enough that it wasn’t as affected as the shallower clear-water streams elsewhere in the area. The project may have to relocate in the future to provide more useful data, he said, but that’s something the PWSSC and the funding group will have to talk about. Early in the season, which is when the lower-river data is the most useful, Copper River sockeye salmon command high prices. That’s when an opening — or closing — means the most to the fishermen economically. “If that stimulated one extra opener, that could be like a million bucks into the fishery,” Campbell said. “Up until last year we lined up fairly well with the state sonar.” Copper River sockeye prices have been reportedly sky-high this season. Copper River Seafoods has two-pound packages of king salmon for about $144 and five-pound packages of sockeye for sale for about $250; Peter Pan Seafoods announced following the second drift gillnet opener of the year that the company would be paying $19.60 per pound for kings and $12.60 per pound for sockeye; those prices that are several fold greater than historical averages. Dan Lesh, a seafood industry analyst with McKinley Research — formerly the McDowell Group — said demand is expected to be strong and inventories are low, so prices are expected to be higher this season, despite the dearth in actual fish on the docks so far. “The general story is that most participants in the salmon industry are feeling optimistic about this year,” he said. “The harvest volumes in general are below long-term averages, but they’re still expecting prices to be strong.” Despite the economic damage from the pandemic in many parts of the U.S. economy, demand for frozen seafood in grocery stores and other retail locations reportedly increased. Copper River salmon, and Alaska wild salmon in general, is typically considered a premium product and thus commands a premium price, available to those with more income. People were not spending as much on travel or food service, and there was plenty of income still accumulating, Lesh said. “One of the things we need to understand with the pandemic is that we actually had unprecedented high personal incomes last year,” Lesh said. “People are making money and they’re not spending it as much.” However, Copper River prices don’t always translate elsewhere in the Alaska salmon market. Lesh said it can’t be assumed that the price will stay similarly higher than usual in other fisheries as more wild sockeye hits the market. Bristol Bay will come online in the next few weeks, with forecasted harvest of about 37 million sockeye, which is about 13 percent greater than the average harvest in the last decade. Upper Cook Inlet is gearing up to begin its sockeye harvest as well, though sonar counts do not begin on the Kasilof River until June 15. Elizabeth Earl can be reached at [email protected]

GUEST COMMENTARY: Will Manchin, Murkowski, Biden cave to extremists?

Last weekend, U.S. Sen. Joe Manchin, D-W.V., became a lightning rod for the extreme progressive wing of his party when he stood firm in support of the filibuster. While the term “filibuster” gets thrown around — usually in conjunction with colorful language — a lot by folks in Washington, D.C., it is a sensible procedural step for the majority of America. It keeps a party with a slight majority from ram-rodding bad policies through Congress. It represents a check-and-balance to executive overreach, and in this case, a roadblock to many of the Biden Administration’s most radical campaign priorities; ones that would harm Alaska and our jobs, revenues and in areas related to states’ rights. As it stands today, relative moderate Joe Manchin might be the most powerful member of the U.S. Senate, with Alaska’s Sen. Lisa Murkowski right behind him. They, and their centrist colleagues in both parties, can move legislation forward, or kill it in their body. Right now, infrastructure spending, federal voting legislation, Supreme Court packing and the so-called “existential threat of climate change” are being championed by zealots who don’t want compromise, but rather, radical transformations with the way America views and acts on their issues. Without the filibuster, 51 Senators (or 50 and uber-progressive Vice President Kamala Harris casting a the tie-breaking vote) could pass legislation, things could look very different for Americans moving forward. Filibusters aren’t the only topic with fires burning around it in our nation’s capital. Also on the hot seat is an area crucial to Alaska: energy policy. Every Alaskan is touched in numerous ways by federal energy priorities. From fuel prices to upholding legal lease sales, and nearly a third of our private-sector jobs being driven by resource development (not to mention our annual Permanent Fund Dividends), what happens in Washington, D.C. has a direct impact on our day-to-day lives. With the Administration kowtowing to extreme viewpoints on a “just transition” from fossil fuels to renewable energy sources, which includes losing American energy independence and ceding energy market dominance to other foreign governments, Alaskans should be furious with most of the decisions coming from 1600 Pennsylvania Avenue. Even the one “win” for our resource-centric economy — Biden announcing his administration would not fight the massive Willow project in the NPR-A — was followed by his Interior Department shuttering development of completed, binding leases in ANWR’s 10-02 area. For you and me, and everyone who works in or relies on our energy sector for a paycheck or to heat their homes or power their vehicles here in Alaska, blocking the insanity of the Biden agenda is a good thing. After all, we don’t want these bills ever seeing the light of day, let alone passing. But for the wildlife-over-human-life activists on the Left, it’s a different story. As The Hill reported last week, “On Friday, a few dozen activists from the Sunrise Movement flocked to the White House — and plan to do so again — to urge Biden to abandon infrastructure talks with Republicans and pass lofty climate change legislation with just Democratic votes. They asked for Biden to directly meet with progressive leaders, including their executive director Varshini Prakash, and ensure the creation of a Civilian Climate Corps that they say would put 1.5 million people back to work. ‘To watch him prioritize Republicans in creating his plan [rather] than the young people who elected him, we cannot let Biden off the hook,’ Audrey Lin, an organizer with Sunrise, said at the Friday protest.” Which leads us back to Manchin, Biden and Murkowski. For the two Democrats, each will be under immense pressure from their far-Left base. During the first few months of the administration, Manchin did his pal Biden a favor by shouldering much of the political pressure. Then the President threw his long-time ally under the bus last week by saying he votes with Republicans more than Democrats (which is not true, by the way). With Manchin taking the high road, but still unwilling to acquiesce to the fringe and move far to the left, the barbarians are at the gate for both men. No wonder the President decided to leave the US for his first foreign trip. Unfortunately for him, many of his problems will be there when he returns. If they can’t pull Manchin or Biden left, the next attacks will be against Murkowski (and, to a lesser extent, Sens. Susan Collins and Mitt Romney). Astute Alaskans have seen the ads on social media and elsewhere imploring the Senator to support the jobs-killing PRO Act, to back drastic climate change legislation and to even support court-packing. Let’s hope the Senator remembers that Alaskans elected her to stand up to radical, job- and economy-killing legislation. Alaska’s bright energy future quite literally hangs in the balance. Rick Whitbeck is the Alaska State Director of Power The Future, a national nonprofit organization that advocates for American energy jobs. Contact him at [email protected] and follow him on Twitter @PTFAlaska.

Hex tops Inlet lease bids, but dispute emerges over North Fork purchase

Small independents did the bidding in Wednesday’s Cook Inlet oil and gas lease sale that netted the Department of Natural Resources $451,594 from eight bids, according to the department's tally. Furie Operating Alaska collected four leases adjacent to its large offshore Kitchen Lights Unit in the middle of the Inlet gas fields as well as one onshore tract containing at least part of the North Fork Unit just east of Anchor Point on the southern Kenai Peninsula. Overall, Furie spent $325,605 for the rights to its acreage. Hex LLC, the primary owner of Furie, also won two onshore tracts north of Nikiski along the edge of the Kenai National Wildlife Refuge for $101,489. John Hendrix, a former Apache Alaska general manager and oil and gas advisor to former Gov. Bill Walker owns Hex LLC and purchased Furie — and the Kitchen Lights natural gas facilities — out of bankruptcy last summer. Production problems and unpaid state tax credits among other issues pushed the previous owners to seek debt relief. Furie currently produces a small amount of natural gas from Kitchen Lights for local utility customers. As for the 5,760-acre North Fork Unit tract, which Furie bid $325,843, or $56.75 per acre, to acquire, the opportunity to purchase the lease already with a handful of wells and pipeline infrastructure was too good to pass up, according to Hendrix, who also noted an apparent discrepancy regarding the total acreage leased in figures provided by the state Division of Oil and Gas. “Until they can prove otherwise the leases that they put up for sale were up for lease. That’s why we bid on it,” Hendrix said. “I can’t afford not to bid on it.” A spreadsheet detailing the winning bids indicates Furie won 19,200 acres across five tracts, while a summary of the sale shows the company won an estimated 14,053 acres in five tracts. Somewhere between 21,267 acres and 26,414 acres were sold Wednesday, according to the division’s numbers. Division of Oil and Gas spokesman Sean Clifton wrote via email that Oil and Gas Director Tom Stokes delayed a mandatory contraction of the North Fork Unit in a March decision after Cook Inlet Energy resigned its rights to North Fork and transferred them to Gardes Holdings Inc., a Louisiana-based firm. The actual acreage available for lease was about 720 acres, according to Clifton, who wrote that the time and labor required to adjudicate tracts for lease means the work is usually done after a sale is held. Furie will be refunded for the amount the company bid on acreage that wasn’t available to lease, according to Clifton. Hendrix insisted state officials had not notified him of any issues with the lease and need to be open in their explanation of the situation. “We should get what we bid for. We bid on it because it was available,” he said, adding the company could have used the money it committed to the North Fork lease elsewhere. “They hurt us with our strategy,” Hendrix said. Hendrix said the goal with the acreage near Kitchen Lights is to “shore up” the company’s position around the unit and eventually work to diversify its resource base. “We bid on some acreage that I wanted to drill back in the Apache days,” he said in an interview. Hilcorp Energy, the large, dominant producer in the Cook Inlet basin, was the only bidder in last year’s sale. This year’s winning bids averaged $21.23 per acre, according to the Division of Oil and Gas. Houston-based Strong Energy Resources LLC also picked up a small offshore lease on the edge of state waters near Anchor Point. BlueCrest Energy produces oil from the nearby offshore Cosmopolitan Unit. Elwood Brehmer can be reached at [email protected]

Audit: state books off by at least $1.6B

Conflicting legal opinions have led to discrepancies in the state’s finances totaling more than $1.6 billion, according to a legislative audit that detected 91 issues with the state’s money management and reporting last year. The largest problems identified in the 2020 fiscal year Statewide Single Audit released June 3 by the Legislative Budget and Audit Committee resulted in a qualified opinion of the state’s financial statements from Legislative Auditor Kris Curtis. “State of Alaska’s General Fund rents and royalties are not reported in accordance with generally accepted accounting principles and management declined to correct the misstatements. Misstatements include an unreported General Fund prior period adjustment of $199.0 million for overstated General Fund royalty revenues of $99.8 million in (fiscal year 2018) and $99.2 million in (fiscal year 2019), and an understatement of $199.0 million due to other funds,” Curtis wrote in her Independent Auditor’s Report to committee members dated Feb. 22. The root cause was the decision by Department of Natural Resources officials to transfer mineral royalty revenues owed to the Permanent Fund to the General Fund instead, according to the audit report. Additionally, the Constitutional Budget Reserve, the state’s primary — and dwindling — savings account “is materially misstated by $1.6 billion” and Revenue Department officials have also declined to correct the error, she wrote. The alleged misstatements in the state’s financial records stem from decisions made by former Gov. Bill Walker’s administration to put more money in the General Fund at a time when state was, and still is, running significant annual deficits. Tariff settlement Former Attorney General Jahna Lindemuth wrote to Curtis in October 2018 insisting that Department of Revenue officials appropriately put oil tax revenue in the General Fund that previously would have gone to the CBR based on her recommendation. According to the 630-page audit and report, the Federal Energy Regulatory Commission in 2016 and 2018 reduced the tariff rates the Trans-Alaska Pipeline System owner companies — the North Slope oil producers — could charge for using the pipeline, thereby increasing the net production tax they owed on the oil throughput since 2010. The Revenue Department ultimately collected $201.5 million in retroactive taxes and interest when the tariffs were applied and put it in the General Fund. Prior to that, money collected from FERC decisions, which are the result of litigation, was put in the CBR as the constitutional amendment establishing the savings fund directs all settlement revenue into it. In Lindemuth’s opinion, which the Dunleavy administration has adhered to, the tariff changes resulted in a change to the net tax the producers owed and all tax revenue goes to the General Fund. Conversely, Legislative Legal Director Megan Wallace wrote in a September 2018 memo to Curtis that the revenue stemming from FERC decisions must go to the CBR because it “seems to fit within the category of ‘windfall revenue’ the framers of the CBR amendment intended to be deposited into the CBR.” Further, the tariff-related tax revenue was the outcome of federal litigation the state was a party to, and even if the state had not participated in the suit it would have eventually sought to collect it from the producers based on the terms of the settlement “and any additional revenue received by settlement or otherwise would undeniably be deposited into the CBR,” according to Wallace. Curtis has adhered to Wallace’s advice and wrote in her audit report that based on the attorney general opinion, money deposited into the CBR under the prior guidance “should be reclassified as General Fund monies, thereby reducing the amount that the General Fund must repay the Constitutional Budget Reserve Fund in the future. Legal analysis does not support the attorney general’s opinion.” The CBR currently holds just more than $1 billion and the General Fund along with a handful of other state investments total nearly $2.6 billion, according to the Revenue Department. Royalty revenue As for DNR, the audit states that administration officials under Walker asked the Legislature to reduce the amount of royalty revenue allocated to the Permanent Fund to again increase available revenue for fiscal years 2018 and 2019. While at least 25 percent of all mineral royalties collected are constitutionally mandated to the fund, in 1980 the Legislature directed 50 percent of all royalty revenue from future state leases to the Permanent Fund. “The Legislature made the reduction by omitting from the FY 18 and FY 19 annual operating budget bills a reference to (the 1980 statute). Although there was no appropriation for the post-1980 lease revenues, the governor’s Office of Management and Budget instructed DNR staff to transfer 25 percent of the post-1980 lease revenues to the (Alaska Permanent Fund). The transfer occurred without an appropriation,” the audit states. Lindemuth at the time argued that the 1980 law could not explicitly dedicate the additional revenue to the Permanent Fund and therefore the transfer did not need an appropriation to be legal. Legislative Budget and Audit chair Sen. Natasha von Imhof, R-Anchorage, said that what is often described as a “friendly lawsuit” is likely needed to resolve the diverging views with a court ruling since the Supreme Court has not dealt specifically with these matters before. “There needs to be a discussion with the Legislature, along with Megan Wallace and (Legislative) Legal to decide how we want to go forward with this,” von Imhof said in an interview. “I think we’re going to have to have the courts decide whether this money needs to go to pot A or pot B.” She noted that while the biggest practical implication of the dispute is what vote threshold needs to be cleared to spend the money is significant — the CBR requires a three-quarters supermajority vote in the Legislature and for the General Fund it is a simple majority — the state still has the money regardless. Lawmakers were considering ways to fix the issue early in 2020 before the pandemic halted court proceedings, according to von Imhof. Legislative Budget and Audit member Rep. Andy Josephson, D-Anchorage, said that the FERC-derived collections probably should go to the CBR but also questioned the importance of the distinction. “On the other hand, I don’t know as an academic point what the difference would be because we likely would’ve spent it out of the CBR because that’s what we’ve been doing,” Josephson said. His primary concern is that the differences have led to a qualified opinion of the state’s finances. “I don’t know to what extent that is a red flag to the federal government,” Josephson added. Anchorage Democrat Sen. Bill Wielechowski, who filed the suit against former Gov. Bill Walker for his partial veto of the Permanent Fund dividend appropriation in 2016, said Curtis is one of the most universally respected officials in state government, particularly for her objectivity. Wielechowski said a suit by the Legislature or someone in the public against the administration would be a way to resolve the issues, or the administration could “just do what Kris Curtis is recommending and go ahead and transfer those funds to the appropriate places.” The Supreme Court’s ruling in Wielechowski’s lawsuit that reinforced the Legislature’s ultimate appropriation authority largely set the precedent for subsequent money moves that have conflicted with statute, both by the Legislature and the state administrations. Wielechowski emphasized that having the money in the General Fund as opposed to the CBR creates a whole different political dynamic given the vote requirements. He said he was struck by the top line numbers of 94 findings of noncompliance and 41 unresolved issues that include some of the constitutional questions. The reporting issues are spread throughout agencies, including equipment rentals made outside of required bidding processes, mishandled Medicaid funds and other accounting misstatements, Wielechowski said, which require better controls in state agencies. “Those are things I’ve always paid extra attention to because that’s preventing waste; it’s preventing cronyism. You have procurement rules for a reason,” he said. Von Imhof said there is likely a “multi-pronged answer” to the seemingly high number of discrepancies and other issues in the audit. She has asked Curtis to dissect the alleged misstatements in a spreadsheet to parse out any themes or trends among them. “The large one is we seem to have a brain drain of I think seasoned, several-year employees that have left the state and we just have newer, less-experienced accountants and I just think there is some institutional knowledge that may have been lost,” von Imhof said. When asked about the audit June 7, Dunleavy said he had not yet reviewed it and couldn’t comment. Curtis wrote in an April 28 letter to Dunleavy attached to the audit that the 2020 fiscal year report included 94 findings and the 41 that were unresolved from prior years. “With your active support and encouragement, we hope to see improvement in the implementation of corrective action for these findings by the state agencies,” Curtis wrote to the governor. Josephson said he also believes a high turnover rate among state staff is a contributing factor and suggested a long-term solution would be to bring back defined benefit pension plans for state workers in an attempt to make long-term state employment more appealing. Elwood Brehmer can be reached at [email protected]

Royal Caribbean reverses on passenger vaccine requirement

Royal Caribbean International will no longer require any of its cruise passengers to be vaccinated for COVID-19 as it had previously planned to. In a press release June 4 announcing cruises for sale on eight of its ships from U.S. ports this summer, starting with Freedom of the Seas from Port Miami on July 2, the company said it will recommend passengers get the COVID-19 vaccine, but not require it. The announcement is a reversal from previous statements and vaccine protocols the company submitted to the U.S. Centers for Disease Control and Prevention last month that said it would require all passengers at least 18 years old and older to be vaccinated. “Guests are strongly recommended to set sail fully vaccinated, if they are eligible,” the company said in a statement. “Those who are unvaccinated or unable to verify vaccination will be required to undergo testing and follow other protocols, which will be announced at a later date.” The about-face is an apparent submission to Gov. Ron DeSantis, who has insisted that there will be no exception made for cruise companies to a newly passed Florida law that fines companies $5,000 each time they ask a patron to provide proof of vaccination. Royal Caribbean International’s sister brand Celebrity Cruises (both owned by Royal Caribbean Group) is still requiring all passengers 16 years old or older be vaccinated on its seven-night Caribbean cruises that are restarting from Port Everglades on June 26. Lyan Sierra-Caro, a spokesperson for Royal Caribbean International, said the plans to require passengers be vaccinated that the company submitted to the CDC only applied to its test cruises. According to CDC rules, cruise ships that don’t meet certain vaccination thresholds for passengers and crew must first do a successful test cruise before they can restart revenue cruises. “Our intention is to comply with all federal, state and local laws,” she said via email. On May 26, the cruise line updated its website to say that passengers 16 years old and older on its cruises from Seattle and The Bahamas are required to be vaccinated. Previously, the website said passengers 16 years old and older on all of the company’s U.S. cruises had to meet the requirement. In a statement, CEO Michael Bayley thanked DeSantis and other elected officials for their support of the industry, which has been paralyzed since it was forced to shut down in March 2020 after COVID-19 outbreaks and deaths on several ships. “As of today, 90 percent of all vacationers booking with Royal Caribbean are either vaccinated or planning to get vaccinated in time for their cruise,” Bayley said in a statement. The company said all crewmembers will be vaccinated. The recently passed Florida law crafted by the Republican-controlled state Legislature and promoted by Gov. Ron DeSantis bars businesses, schools and government entities across Florida from asking anyone to provide proof of a COVID-19 vaccination. Under the law, which takes effect on July 1, businesses can be fined up to $5,000 per violation. It is unclear if cruise companies will be allowed to ask passengers if they have been vaccinated as part of the boarding process, even if they don’t require vaccination to board. The summer cruises announced by Royal Caribbean International are still pending approval from the CDC after each ship successfully completes a test cruise with volunteer passengers. The CDC has so far approved nine cruise ships, including Freedom of the Seas, Carnival Horizon and MSC Meraviglia from PortMiami, for test cruises, meaning the ships won’t meet a CDC threshold of 95 percent of passengers and 98 percent of crew be vaccinated, and two ships — Celebrity Edge and Celebrity Equinox from Port Everglades — for revenue cruises.

GUEST COMMENTARY: Big Tech censoring ‘misinformation’ does more harm than good

Labeling misinformation online is doing more harm than good. The possibility that COVID-19 came from a lab accident is just the latest example. Social media companies tried to suppress any discussion of it for months. But why? There’s no strong evidence against it, and evidence for other theories is still inconclusive. Pathogens have escaped from labs many times, and people have died as a result. Social media fact-checkers don’t have any special knowledge or ability to sort fact from misinformation. What they have is extraordinary power to shape what people believe. And stifling ideas can backfire if it leads people to believe there’s a “real story” that is being suppressed. Misinformation is dangerous. It can keep people from getting lifesaving medical treatments, including vaccines. But flagging it doesn’t necessarily solve the problem. It’s much better to provide additional information than to censor information. Part of the problem is that people think they know misinformation when they see it. And those most confident of their ability to spot it may be least aware of their own biases. That includes the fact-checking industry within the mainstream media, who were caught removing earlier posts on the lab leak theory, as well as social media “fact checkers” who aren’t accountable to the public. Earlier this year, I interviewed physician and medical podcaster Roger Seheult who said that he was censored by YouTube for discussing the clinical trials of hydroxychloroquine and Ivermectin as potential COVID-19 treatments. No wonder so many people still believe these are the cures “they” don’t want you to know about. Much better would be an open discussion of the clinical trial process, which could help people understand why scientists think those drugs are unlikely to help. Even without the power of censorship, social media culture encourages the facile labeling of ideas and people as a way of dismissing them — it’s easy to call people deniers or as anti-science because they question prevailing wisdom. Of course, there are ideas that are very unlikely to be true. These generally involve elaborate conspiracies or a complete overhaul in our understanding of the universe. Or, like cold fusion and the vaccine-autism theory, they’ve been tested and debunked multiple times by independent investigators. I discussed the new interest in the lab leak with another science journalist who was interested in why so many reporters are still treating the natural spillover hypothesis as the only possibility. We agreed this isn’t like the connection between carbon emissions and climate change, where there’s a scientific consensus based on years of research and multiple, independently-derived lines of evidence. Here, even if a few scientists favored the natural spillover early on, the question is still open. Last year, some scientists rightly objected that accusing any lab of causing a worldwide pandemic is a serious charge and one shouldn’t be made on the basis of proximity alone. That doesn’t mean we should ignore the possibility, or assume that some other equally unproven idea is right. In the face of an unknown, why would the fact-checking people deem one guess to be a form of misinformation, and another guess to be true? And the lab leak idea got conflated in some people’s minds with conspiracy theories that the virus was deliberately created and released for population control or some other nefarious agenda. But a lab leak could have involved a perfectly natural virus that a scientist collected, or virus that was altered in some well-intentioned attempt to understand it. Writing in his blog, journalist and Bloomberg contributor Matthew Yglesias calls it a media fiasco. “(T)he mainstream press … got way over their skis in terms of discourse-policing.” He admits he Tweeted his disapproval of a thoughtful, well-written New York Magazine piece that helped revive the lab leak debate last January. The author — novelist Nicholson Baker — didn’t claim any smoking gun, but made a convincing case that the issue was still open. A Medium piece by former Times writer Nicholas Wade added little to what Baker said, but came at a time when the pubic was ready to reconsider. A recent Vanity Fair account details how the issue was suppressed inside the U.S. government. Looking back, there really wasn’t that much new news to report. Very little new evidence has been uncovered over the last year. The pandemic’s origin is still unknown. The fiasco was the media’s propagation of the lie that the issue was settled and that anyone questioning it might be deemed an idiot or conspiracy theorist. And maybe the intentions of the Facebook fact checkers were good. If there was magical way to identify misinformation, then social media platforms could do more to refrain from spreading it. Suppressing ideas they don’t like isn’t the way. Yesterday I had a long talk with someone who volunteers at a girls’ school in India, and she said she’d been in contact with some students who expressed fear of COVID-19 vaccines, even though their neighborhood has been ravaged by the pandemic. When she gave them additional information, about relatively greater danger of the disease, they chose to get vaccinated. What helped was not taking away information but giving people additional information. Censoring information — or what one deems “misinformation” — isn’t as helpful as it seems. The best we can do is keep questioning, and give people the most complete story we can. Faye Flam is a Bloomberg Opinion columnist and host of the podcast “Follow the Science.” She has written for the Economist, the New York Times, the Washington Post, Psychology Today, Science and other publications.

Costly F-35 program faces pushback in Congress

The Pentagon’s F-35 fighter jet, a revenue mainstay for manufacturer Lockheed Martin Corp. and engine maker Pratt &Whitney, is facing pushback over its $1.7 trillion lifetime cost, the greatest in U.S. military history for a weapons system. The Joint Strike Fighter program and its supply chain that’s developed into an industrial system across the United States face few serious threats in Washington. But Congress could halt the practice of adding money to the president’s funding request and, long-term alternative programs could be in the offing. Rep. Adam Smith, D-Wash., chairman of the House Armed Services Committee, in March called the F-35 a “rathole” and suggested the U.S. consider cutting its losses by investing in competing fighter jets. A single F-35 costs as much as $80 million. Rep. John Larson, D-Conn., whose district includes the East Hartford headquarters of Pratt &Whitney and one of its manufacturing plants, said he has “great respect” for Smith, but he said he and the Washington state Democrat haven’t always agreed, particularly in 2011 when Congress halted production by General Electric Co. of an alternate engine for the F-35, clearing the field for Pratt &Whitney as the engine’s sole source. Still, Larson said his colleague has a valid point about the cost of the jet’s engine. “Adam Smith does not speak out of turn lightly,” he said. “To deny the problem is wrong-headed.” With Smith’s criticism, Lockheed Martin and Pratt &Whitney “had a shot across the bow, and they’ve taken it seriously,” Larson said. “His message is we spend a lot of money on these things and we expect performance,” he said. The U.S. Government Accountability Office said sustainment costs — those associated with maintaining and sustaining the aircraft over its 66-year life — have increased since 2012, to $1.3 trillion, from $1.1 trillion, despite efforts to reduce costs. It’s the Defense Department’s “most ambitious and costly weapon system in history,” the agency said in an April 22 report. That’s in addition to the approximately $400 billion the Pentagon plans to spend for nearly 2,500 F-35s, the GAO said. The armed services “face a substantial and growing gap between estimated sustainment costs and affordability constraints” the agency said. Rep. Joe Courtney, D-Conn., a member of the House Armed Services Committee, said government and industry are “getting their arms around the obvious sustainment costs.” “The trend is not good,” he said. “The real issue is this is becoming a major challenge or threat to the program, the relentless increase in terms of sustainment costs.” President Joe Biden’s first budget is not yet out, but he’s expected to seek 85 F-35s at a cost of $11 billion. Chris Calio, president of Pratt &Whitney, vigorously defended the weapons system at parent company Raytheon Technologies Corp.’s investor day May 18. “It’s incredibly capable. It’s the most capable fighter engine in production today,” he said. “It’s reliable. It’s exceeding its reliability expectations.” Calio said Pratt &Whitney expects $1.5 billion in revenue between 2022 and 2025 related to sustainment, which is the support and maintenance of the system. The manufacturer said it has cut unit costs by 50 percent since the first lot of six production engines was delivered starting in 2010. Costs were reduced by using low-cost suppliers and other strategies, he said. Total lifecycle cost savings of $8 billion were realized by component redesign, supplier changes and improving manufacturing, said a spokeswoman for Pratt &Whitney. With a steep decline in commercial aviation due to COVID-19, Raytheon Technologies is relying on a greater share of revenue from its defense businesses. Its mix of sales last year was 65 percent for defense, which includes Raytheon Missiles and Defense and Raytheon Intelligence and Space, and 35 percent for commercial aerospace. In 2019, defense businesses accounted for 55 percent of Raytheon Technologies’ sales and commercial aerospace was 45 percent. James D. Taiclet, Lockheed Martin’s chief executive officer, told industry analysts last month the F-35 is the “most capable fighter plane ever developed in history.” Its propulsion system and stealth technology are “pretty groundbreaking,” he said on a conference call detailing the conglomerate’s first-quarter financial results. In addition, the aircraft’s computer processing power and communications systems make it “much more than just a single-purpose fighter,” Taiclet said. “So having said all that, it’s an expensive machine,” he said. “It’s expensive to maintain in large part because of the stealth technology that’s more advanced than anywhere else.” Lockheed Martin says it’s producing F-35As below the $80 million unit cost, by $1 million to $2 million a year earlier than planned. The F-35A is a variant of the F-35 used by U.S. Air Force. Aviation analyst Richard Aboulafia of Teal Group in Fairfax, Va., said the F-35 has “been a feature of the landscape for some time” and is the biggest program in the industrial base ever. “It’s what makes it relatively secure,” he said. The F-35 industrial base — a strong presence of Pratt &Whitney suppliers in Connecticut and, with Lockheed Martin’s supply chain elsewhere in the U.S. — includes more than 1,800 manufacturers and about 254,000 direct and indirect jobs in the U.S., according to congressional supporters of the aircraft. Congress usually approves a “plus-up,” the practice of adding additional planes to the president’s proposal. That’s now unlikely because of the ballooning cost of the F-35. “There is a prospect that Congress stops adding money on top of the base budget,” Aboulafia said. “It’s not really a major threat. On the other hand, it’s been good for the program to get cash added.” Larson agreed that future budget add-ons for the F-35 could end. “It’s a “fairly accurate description,” he said. Aboulafia said a rival version could eventually be developed. “They’ve got to be mindful of long-term competitiveness,” he said. “It could be accelerated if Congress gets frustrated, but there’s no sign of it.” Sen. Richard Blumenthal, a Connecticut Democrat and member of the Senate Armed Services Committee, said Congress has “heard virtually nothing specific” about the administration’s military spending priorities. He defended the F-35 as an “absolute must.” “It clearly has capabilities that other aircraft lack, and it’s becoming increasingly cost effective,” Blumenthal said. “The cost per plane comes down as more are made.”

Do EVs actually have a smaller carbon footprint than gas-powered cars?

WASHINGTON — A quiet partisan battle is brewing in the nation’s capital over government’s role in helping the fledgling electric vehicle market off the ground. As Democrats push President Joe Biden’s $174 billion electric vehicle proposal with the hopes of out-competing China and reducing carbon emissions, many Republicans are calling the administration’s approach an anti-free market plan that costs too much; and that when it comes to emissions, the cure could be worse than the disease. How the debate ends could have profound implications for Detroit automakers and their rivals, who all generally agree that the road to an electrified fleet should be paved in part by government subsidies to speed consumer adoption. Derailing the Biden push could make that transition slower. “While EVs are branded carbon-free or emission-free, that is simply not the case. The electricity comes from somewhere, and that somewhere is predominantly power plants that are reliant on fossil fuels,” Rep. John Rutherford, R-Fla., told Transportation Secretary Pete Buttigieg in one such exchange during an April committee hearing. “I fear that the $174 billion that we’re about to invest in what really are the Model A, I think, of electric vehicles — we’re going to invest that and our environment, our emissions and our air quality could actually be worse off, not better.” Buttigieg’s response: That without electric vehicle adoption, “we have very little chance of meeting our climate goals before it’s too late.” “I take your point that the carbon profile of driving isn’t just about the tailpipe. It’s about the power that goes into the vehicle, too. And we do want to be conscious of that — although I would suggest that unlike the carbon profile of driving a diesel or gasoline vehicle, it stands only to get better each passing year as our generation sources get greener.” Scientists say the emerging debate has an answer: EVs are not “emissions-free,” but they already produce fewer emissions over their lifetimes than gas-powered cars. While the grid must expand to accommodate more EVs on the road, forecasts indicate it likely will get more renewable in the coming years. According to the U.S. Department of Energy, nearly 80 percent of electricity in the United States comes from fossil fuels. There’s no exhaust coming from electric vehicles, but the process of producing and charging them still produces carbon emissions. However, life cycle analyses of electric vehicles — which account for all of the emissions created by producing, using and recycling them — show that EVs already produce fewer greenhouse gas emissions over the course of their lifetimes than gas-powered vehicles, and only stand to produce fewer such emissions as technology advances. “Even if the grid is powered by coal or natural gas, an EV of the same vehicle size and capability still typically has better CO2 emissions,” said David Tuttle, a researcher at the Energy Institute at University of Texas at Austin. “So, it’s a catchy soundbite, but a false statement that conventional vehicles produce” fewer carbon emissions than their EV counterparts. Fewer emissions overall Scientists studying electric vehicles’ lifetime emissions have found that their carbon intensity tends to be on the front end. Gathering the raw materials and producing EVs typically makes more greenhouse gas than gas-powered cars, according to a recent congressional analysis of the scientific literature. But gas-powered cars quickly outpace electric ones in emissions once they hit the road. Amgad Elgowainy, senior scientist and leader of the electrification and infrastructure group at Argonne National Laboratory, and his team have spent years doing “cradle to grave” analyses. They found in 2016 that plug-in hybrids, battery electric vehicles and fuel cell electric vehicles already had lower emissions than gas- and diesel-powered vehicles and a higher capability to improve. In their newest study, which will come out later this year, that gap has only widened. “Using the average carbon intensity to make a unit of electricity that goes into battery electric vehicles — if I compare that today to a gasoline internal combustion engine, it cuts the emissions by half,” he said. Even if gasoline-powered engines start using the lowest-emission power source — forest residue, a renewable biomass fuel that can be treated in order to be used in conventional cars — it would still emit more greenhouse gases over its lifetime than an EV being charged with its lowest-emission power sources, solar and wind electricity. The share of renewable energy sources making up the average U.S. grid has grown in the last five years while coal use has declined, and renewables are only expected to continue to grow, according to the U.S. Energy Information Administration. Making EV batteries lighter and more compact also decreases vehicles’ carbon footprint because it takes less energy to propel them. “There’s no silver bullet there to see into the future. It’s all about scenarios. But in general, if you look … at how the grid will evolve into the future, it is definitely evolving into a lower-carbon portfolio,” Elgowainy said. “The grid will become cleaner over time regardless.” Jessika Trancik, an M.I.T. professor who runs a lab studying emerging energy technology, also told The Detroit News via email that battery electric vehicles “reliably and substantially reduce greenhouse gas emissions relative to internal combustion engine vehicles” even on today’s power grid. For example, the Tesla Model 3 produces 87 percent fewer emissions over its lifetime than a comparable gas-powered car, the Mercedes-Benz A220, and the Chevrolet Bolt produces 68 percent fewer emissions than the comparable gas-powered Mazda 3, according to an analysis tool developed by Trancik’s lab. That’s not to say that EVs are totally environmentally friendly: Environmental and human rights groups have raised concerns about methods used to mine the raw minerals such as cobalt and lithium needed to make electric vehicle batteries. The majority of the world’s cobalt comes from the Democratic Republic of Congo, where many workers, including children, dig for the material by hand and are exposed to frequent safety hazards. Congolese cobalt mines can also produce hazardous waste and air pollution. Mining lithium, primarily from Australia and South America, can be particularly water-intensive; batteries can take more than 50 percent more water to produce than an internal combustion engine. Expanding the grid But Republicans note it’s not just about how EVs perform now; it’s about what will happen if a majority of cars on the road are powered by electricity rather than gasoline. If the United States’ energy levels remain the same, it would put a strain on the grid, Department of Energy officials acknowledge. Rep. Larry Bucshon, R-Ind., asked Energy Secretary Jennifer Granholm during a House Energy and Commerce subcommittee hearing last month how the administration plans to account for increased electricity demands due to more EVs on the road. “There definitely will be increased demand,” the former Michigan governor said. “And that means we have to add additional energy sources to the grid. That’s why a lot of the new energy that is coming on, like solar and wind, which are cheaper than others, is an opportunity for us to continue to provide affordable electricity.” Bucshon noted those sources will not only have to expand existing energy capabilities but will also have to replace fossil fuel energy if the administration is successful in its plans to reach carbon pollution-free electricity generation by 2035. “It’s a big challenge,” he said. Biden’s proposed budget includes $10 billion to support clean energy projects — which would include wind, solar, hydro and nuclear power, among others — and would increase the Department of Energy’s overall budget by more than $4 billion over the last fiscal year. In the short term, as EVs become a larger share of cars on the road, that extra demand on the grid may or may not translate into more emissions depending on when and where the vehicles are charged, Elgowainy said. Some areas have electricity grids supported by much cleaner energy sources than others. In the long term, meeting the administration’s clean power goals likely will require a significant expansion of wind and solar energy generation with some regional differences, according to the department. About 75 percent of new additions to the U.S. grid in 2020 were renewable, largely solar and wind. “For the grid to get to 100 percent clean, we need to have flexible loads and storage both” to balance variability and ensure consistent energy availability, said Michael Berube, Deputy Assistant Secretary for Sustainable Transportation at the Department of Energy. One strategy, he said, is developing regional charging strategies to take advantage of peak times when renewable sources are available. For example, supporting mid-day workplace charging in places like California, where solar can meet the extra need. Another way is to build energy storage into charging stations and buildings to meet needs at surge times. “Transportation, our studies show, will be the largest new load to the grid, but also the most flexible,” he said. “We’re very focused on thinking about smart charging technology so that you have the capability to manage when you charge those vehicles to help flatten the load.” While the transition to electric vehicles marks a major technology shift, Berube said it’s not unprecedented; the electric grid has adapted in the past to field big new loads like air conditioning and refrigeration. “It’s not out of the norm of what’s been done. One of our key messages is: If you wanted to do it all next year, that might be close to impossible. But if you want to do it over the next 15 years, that looks and feels a lot more like what we have done as a country over time and that’s a lot more plausible,” he said, adding that’s also why “there’s urgency. We need to get going now.”

Strained supply chains squeezing Alaska business owners

A surge of diners returning to restaurants are squeezing food supply chains, with impacts extending all the way to Alaska, where suppliers are short on stock and restaurant owners are scrambling to find ketchup, chicken and other items. Jerry Purcell, an owner of Sunday’s Caribbean Cuisine in northeast Anchorage, visited three restaurant supply stores on June 4. But even then, he couldn’t find all the right to-go containers. “Used to be one spot, you get everything,” Purcell said while shopping at Alaska Restaurant Supply in Midtown. “Not anymore.” Purcell said he couldn’t find the flat plastic lids he needed for the Caribbean and Hawaiian restaurant, soon to be renamed Sunday’s Loko Moko Deli. He’s covering the spicy oka, a raw fish salad like ceviche, with aluminum foil. He’ll top the island smoothies with domed lids, using whipped cream to fill the empty space so patrons feel like they got their full value. He also couldn’t find certain sizes of clamshell containers, so he had to use larger ones. He hasn’t seen anything like this after about two decades in the restaurant business, he said. “It’s a shortage all right,” he said. The COVID-19 pandemic altered consumer habits and worldwide shipping patterns as people stayed home, contributing to supply snarls for everything from lumber to laptops. Food, beverage and kitchen utensils, as well as appliances, are a current problem. The disruptions are the latest challenge for a hospitality industry struggling to recover from dine-in closures during the COVID-19 pandemic, and, more recently, contending with difficulties hiring available workers. Saint Coyote restaurant in South Anchorage hasn’t been able to buy lamb chops from its distributor for months, forcing owner Jesse Gallo to shop for them at stores around town. “It is a big frustration not having what you need,” he said. He can’t find certain brands of whiskey and tequila from suppliers, he said. And for about a month, Costco ran out of bulk containers of ketchup. “It was just like toilet paper at the start of the pandemic,” he said. “The only kind I could find at the store was organic ketchup in little jars.” Racheal Anaruk, manager at Alaska Restaurant Supply, said dishes, glasses, silverware and some pans are in short supply or out of stock. Items imported from overseas can be on back-order for long periods. The surge in restaurant activity is compounding the delays, she said. “Everyone is just getting back to work (all at once),” she said. “Seasonal places that didn’t open last year. We’re seeing those again.” The restaurant business has come “roaring back” and restaurants and bars across the U.S. suddenly need supplies, said Meghan Cieslak, with the International Foodservice Distributors Association, a trade group based in Washington, D.C. The supply chain is trying to catch up, she said. During much of the pandemic, food suppliers focused on getting retail products to grocery stores, where business was booming, Cieslak said. They turned their attention away from bulk products sought by restaurants and bars, where activity had slowed. Also, social distancing and other restrictions on food processing plants, plus occasional outbreaks of COVID-19, limited production of meats and other items. A lack of workers is slowing transportation and also affecting other companies along the food supply chain, she said. Adrianne Foltz is a former spirits and wine distributor in Anchorage who recently opened The Broken Blender, a cocktail bar and restaurant in Anchorage. She said Alaska is often the last state to receive shipments for alcoholic beverages, in part because of relatively low demand compared to other states and the logistical challenges of getting items here. She said her distributor hasn’t been able to find Crown Royal whiskey from Canada for weeks. She’s had to shop at Costco for it. There’s not enough Coors Light and Blue Moon beer to keep up with demand, she said. And specialty beers are hard to find. Companies aren’t making draft beer as much, she said, referring to beer from a keg or cask, rather than a bottle or can. Jay Ramras, owner of Pike’s Waterfront Lodge in Fairbanks, said he can usually buy chicken for biscuit sandwiches and orange juice in large quantities, for free breakfasts at the 180-room lodge. But the distributor, U.S. Foods, couldn’t obtain them in recent weeks, he said. One problem with the chicken shortage is that roosters with Tyson, one of the world’s largest meat processors, aren’t meeting breeding expectations, among other issues, Ramras said. “It’s a schizophrenic marketplace,” Ramras said. “Nothing is working like it’s supposed to work.” Instead of large deliveries to the restaurant’s back door, managers are buying retail-sized items from grocery stores. That adds pressure to the hotel’s bottom line, he said. “It takes time for a food and beverage manager to stand in a checkout line,” he said. “But we’re moving a whole lot more sandwiches than we were last year.” He added, “We’d rather have the problems we have this year, than the ones we had last year.”

Hilcorp leads in methane emissions, but not from North Slope

Nationally, oil company Hilcorp releases more methane, a potent greenhouse gas, than its much-larger U.S. peers, a new report shows. But a closer look at Hilcorp’s operations in Alaska shows its rate of methane emissions here is smaller compared to most of its Lower 48 operations. The report was commissioned by Ceres, an investment network targeting climate change, and Clean Air Task Force, an environmental group. It provides an unprecedented basis for comparing oil and gas companies’ greenhouse gas releases, officials with the groups said. Across its operations in Alaska and the Lower 48, Hilcorp had about 40 percent more methane emissions than ExxonMobil, the nation’s largest oil and gas producer, the report shows. Its overall greenhouse gas emissions were just behind ExxonMobil’s. Hilcorp is now Alaska’s second-largest oil producer, behind ConocoPhillips. But nationally in 2019, the year data in the report was collected, Hilcorp was the nation’s 19th largest oil and gas producer, behind ConocoPhillips, BP and others, the report shows. “They are punching above their weight and not in a good way when it comes to their emission intensity,” said Andrew Logan, senior director of oil and gas at Ceres. However, in Hilcorp’s North Slope fields in Alaska, the methane emissions associated with exploration and production were relatively tiny, according to the report. Its rate of carbon dioxide emissions on the Slope was more middle-of-the-road compared to its U.S. peers, said Lesley Fleischman, senior analyst with the Clean Air Task Force. Those emissions largely stem from turbines and engines used to power the North Slope oil field operations, she said. Hilcorp’s Cook Inlet operations show a fairly high rate of methane emissions, compared to many of the company’s U.S. counterparts, Fleischman said. But the rate is lower than other Hilcorp locations in the Lower 48. The findings are based on 2019 data the companies reported to the Environmental Protection Agency — before Hilcorp acquired BP’s North Slope assets in 2020. It looks at emissions related to exploration and production, not activities that come later, such as oil and gas processing and shipping. A factor in Hilcorp’s high rates of methane and other greenhouse gas emissions is its business model of acquiring aging fields, Logan said. The older equipment at those fields has a higher potential for releases, he said. “They can’t be responsible for the state of these assets when they brought them into their company,” Logan said. “But what they do with those assets once they own them is on them.” Hilcorp invests in older fields to safely extend their operational life, said Nick Piatek, a spokesman in Hilcorp’s headquarters in Houston, Texas. The company’s record of upgrading old equipment and improving operations is unique, he said. The report’s calculations do not account for the modernization and retrofits of that equipment, he said. Hilcorp has decreased emissions across its Alaska operations, including 24 percent at its offshore operations, Piatek said. In addition to its onshore North Slope fields, Hilcorp operates offshore production facilities in the Beaufort Sea, as well as Cook Inlet. Piatek said the report is designed to advance the agenda of the groups behind it. The report was written by consulting firm M.J. Bradley &Associates, an environmental consulting group, in collaboration with the two nonprofits. The nonprofit groups are pushing for policy changes, including a leak-detection and repair program to help clean up greenhouse gas releases in oil and gas fields, Fleischman said. In general, more regulations are needed to control releases of methane and other greenhouse gases, she said.

Movers and Shakers for June 13

Helge Eng joined the Department of Natural Resources as director of the Division of Forestry and Alaska state forester, after a 21-year career at California’s forest management and wildlife firefighting agency. At the California Department of Forestry and Fire Protection, Eng had been deputy director for forestry since 2015. He had previously spent two years as assistant deputy director for resource protection, nine years as state forests program manager, and three years as state forest biometrician for the department. He has served in a variety of membership and leadership roles in forestry, including registered professional forester and member of the Society of American Foresters; member of the California Licensed Foresters Association, chair of the Northern California Society of American Foresters, and state representative on the Society of American Foresters Policy Committee. Eng earned a bachelor’s degree in forest resources management from the University of British Columbia. At Oregon State University, he earned master’s and doctoral degrees in forest management, as well as a master’s degree in statistics. Eng succeeds Chris Maisch, who retired as director and state forester in February after 21 years with the Forestry Division. Craig Richards was reappointed to the Alaska Permanent Fund Corp. Board of Trustees for the term of July 1, 2021, to July 1, 2025. Richards served on the Board of Trustees from 2015 to 2016 and was reappointed in 2017. Richards majored in finance at the University of Virginia, received his MBA from Duke University and his juris doctorate from Washington &Lee University. After serving as law clerk for Judge Ralph Beistline, Richards worked in private practice with a focus on oil and gas. He served as Attorney General for the State of Alaska from 2014 to 2016 and has since reentered private practice in Anchorage. Jessie Alloway was appointed to the position of Solicitor General for Civil Appeals. In this role, Alloway will serve as the state’s chief appellate lawyer for civil appeals and supervise the Opinions, Appeals, and Ethics Section of the Alaska Department of Law. Alloway joined the Alaska Department of Law in 2011 as a member of the Natural Resources section, where she represented the Alaska Departments of Natural Resources and Fish and Game in state and federal trial court on a range of issues, including the Alaska National Interest Lands Conservation Act, the Submerged Lands Act of 1953, and other critical federal and state constitutional issues. Alloway also worked in the Special Litigation section of the Department of Law, defending the Department of Administration in cases regarding the Alaska Constitution’s diminishment clause, and worked closely with other colleagues on a wide range of litigation. Since January 2020, she has served as a senior assistant attorney general handling an array of civil appeals. Before joining the Department of Law, Alloway served as a trial attorney for the U.S. Department of Justice where she worked for the Environmental and Natural Resources Division, investigating and prosecuting criminal cases throughout the country. Alloway began her legal career as a law clerk to the Honorable Richard C. Tallman of the U.S. Court of Appeals for the Ninth Circuit. She received her J.D. from the University of Montana School of Law and is a graduate of the University of Montana School of Forestry. Alloway assumed her new position on June 3, 2021.

FISH FACTOR: Salmon buyers eager to replenish depleted inventories

Eager buyers are awaiting Alaska salmon from fisheries that are opening almost daily across the state and it’s easy to track catches and market trends for every region. Fishery managers forecast a statewide catch topping 190 million salmon this year, or 61 percent higher than the 2020 take of just over 118 million. But globally, the supply of wild salmon is expected to be down amid increased demand. The Alaska Department of Fish and Game’s Run Forecasts and Harvest Projections for 2021 Alaska Salmon Fisheries and Review of the 2020 Season, provides breakdowns for all species by region. And salmon catches are updated daily at ADFG’s Blue Sheet, found at its commercial fisheries web page. They also post weekly summaries of harvests broken out by every region along with comparisons to past years. Predictions for the 2021 mix of fish call for a catch of 269,000 chinook salmon, up slightly from 2020, but 25 percent below the 10-year average. The projected sockeye harvest of 46.6 million will help replenish low inventories that saw strong export prices in early 2021 and “a continued promising market,” said Dan Lesh, a fisheries economist with the McKinley Research Group who compiles weekly updates during the season for the Alaska Seafood Marketing Institute. The 2021 coho forecast of 3.8 million is 56 percent higher than 2020, and similar to the 10-year average. Coho represent only around 5 percent of Alaska’s salmon harvest value. A catch this year of 15.3 million chum salmon represents a 23 percent drop from the 10-year average, but a nearly 80 percent increase from the dismal 2020 harvest of 8.5 million. Japan is the main destination for chum roe, which saw increased prices to $17.83 per pound in the third trimester of 2020, up 42 percent from the previous year. This year’s pink salmon harvest is pegged at 124.2 million, mostly from catches at Prince William Sound, Southeast and Kodiak. This summer, the Nome Nugget reports that Icicle ​Seafoods plans to bring a processing vessel as well as four or five fishing tenders to buy pinks from local fishermen. Icicle’s headquarters are in Seattle, but the company has roots in Alaska​ processing groundfish, primarily in the Dutch Harbor area and herring in Kodiak and Togiak. Last year’s statewide pink salmon catch of 60.7 million fetched an average dock price of 33 cents per pound, the lowest in five years and a drop from 40 cents in 2019. Other per pound salmon prices to fishermen in 2020 (with 2019 prices per pound in parentheses) averaged $4.74 for chinook ($4.36); $1.06 for sockeye ($1.61); $1.24 for coho ($1.13); and 46 cents for chums (54 cents). Those prices come from the newly released Commercial Operator’s Annual Reports from Alaska processors who are required to provide purchasing and sales reports for all species by April 1 of the following year. The COAR data can be found at ADF&G’s commercial fisheries web page under Statistics and Data. Salmon saint Salmon has its own heavenly patron: Saint Kentigern of Scotland. Born in 518, Kentigern was the illegitimate son of a king’s daughter. He trained as a priest at a monastery, where his saint-hood evolved around a dangerous love-triangle. Legend has it that the king suspected his wife of having an affair because she had given one of her rings to a court favorite. The king took the ring when the man was sleeping and threw it far out into the River Clyde. When he returned home, the king angrily demanded that his wife show him the missing ring and threatened her with death if she could not produce it. The queen beseeched Kentigern to help her. He took a fishing rod to the spot where the ring had been flung into the river and quickly caught a salmon and cut it open. Amazingly, the ring was found in the salmon’s belly. The queen was able to deliver the ring to her doubting husband and peace was restored. From the time of his death in 603, Kentigern was regarded as Scotland’s patron saint and the cathedral at Glasgow was built in his honor. To this day his figure and symbols, including salmon, make up that city’s coat of arms. So who knows; perhaps a quick prayer to the patron saint of salmon will lead more fish to your nets. Fishing updates Along with salmon, lots of other fishing activity is ongoing or gearing up across Alaska. Southeast’s Dungeness fishery opens June 15 and crabbers are hoping for another good season. Combined catches for last year’s summer and fall fisheries totaled nearly 6.7 million pounds, more than double the 10-year average, and just shy of the record 7.3 million pounds taken in 2002. Kodiak crabbers also are dropping pots for Dungeness crab in a fishery that last year neared 3 million pounds. A red king crab fishery opens at Norton Sound on June 15 with a 290,000-pound catch quota. Southeast Alaska’s summer pot fishery for spot shrimp is pulling up the last of its 546,000-pound catch. Beam trawlers also are on the grounds targeting a 1.8 million-pound harvest of pink and sidestripe shrimp. Southeast divers are still going down in some areas for the remainder of a half-million pounds of Geoduck clams. Prince William Sound extended its spot shrimp season to September with up to 60 boats vying for a 70,000-pound pot catch. Alaska’s scallop fishery opens in regions from Southeast to the Bering Sea on July 1. The total catch has not been announced yet but last year the small fleet of 3 to 4 boats dredged up a reduced quota of 277,500 pounds of shucked meats, nearly half from the Yakutat region. Alaska’s halibut catch has topped 5 million pounds with Homer, Seward, and Juneau the leading ports for landings. Prices are still running more than $2/pound higher than last year, ranging from $5.50 to $6.75 or more in most major ports, and reaching $7 per pound at Homer. Alaska halibut fishermen have a nearly 20 million-pound catch limit this year. Black cod (sablefish) catches have topped 13 million pounds with most deliveries going to Sitka, Seward and Kodiak. Those prices also are up considerably, ranging from $1 per pound for two pounders to $5.80 per pound for 7-ups. That fishing quota this year is 40.5 million pounds. And as always, fishing continues throughout the Gulf of Alaska and Bering Sea for a huge mix of Alaska pollock, cod, flounders, rockfish and more. Mask reminder The federal mask mandate remains in effect for fishing crews on all U.S. vessels. And while the Center for Disease Control has relaxed the rules for fully vaccinated people, fishermen are not included. Many have pointed out that it’s critical on noisy boats to be able to read lips or facial expressions and Sen. Lisa Murkowski pressed that point at a May Senate hearing. “This is more a safety hazard than anything else — you’re out on a boat, the winds are howling, your mask is soggy wet. Tell me how anyone thinks this is a sane and sound policy,” she said. Murkowski recently co-wrote a letter to the CDC and Coast Guard asking them to exempt fishermen from the mask requirement, and the pushback has been joined by lawmakers from other coastal states. Meanwhile, the Coast Guard has stated it will be checking for compliance and not wearing masks could mean restricted access to ports and operations, along with civil or criminal penalties. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

Gov: ‘No other choice’ but to fix budget, PFD this year

Gov. Mike Dunleavy insists he will do what it takes this year to solve the state’s fiscal dilemma that has led to a nearly decade-long run of budget deficits. That starts with legislators agreeing to start splitting the roughly $3 billion in annual Permanent Fund revenue evenly between the dividend and other government expenses now, which would result in roughly $2,300 PFDs, before his compromise plan to put such a “50-50” fund earnings split into the Alaska Constitution is acted on, the governor said during a June 7 phone conversation with the Journal. “I think it would be a tremendous step forward if they were talking about a 50-50 because that’s the mindset that I think people need to get around. When I talk to the people of Alaska, what they’ve said to me is, they don’t think that it’s fair for the government to take more out of the Permanent Fund dividend than what they get,” Dunleavy said. He also acknowledged there is discussion among lawmakers of a smaller, negotiated dividend amount as has been done in recent years to limit damage to the state’s dwindling savings and avoid overdrawing the Permanent Fund Earnings Reserve Account. The Senate Finance Committee approved an operating budget that would fund PFDs in the $1,000 per person range at a cost of $674.9 million from the General Fund. The $2,300 per person PFDs adopted — almost literally at the last minute — by the Senate during floor debate on the budget would cost roughly $1.5 billion and result in what many legislators fear would be a precedent-setting overdraw of the Permanent Fund. Another stalemate in the Legislature over the size of the PFD has left the fiscal year 2022 state budget unresolved into June, again leading to the prospect of layoff notices for state workers and bringing on the threat of a July 1 government shutdown. Some legislators feel the result will be a truce over dividends of about $1,000 to narrowly avoid a shutdown, as has happened in years past, but the political dynamics aren’t all the same. More legislators who, like Dunleavy, previously demanded dividends according to the formula in statute have initially backed the 50-50 concept, potentially making larger PFDs more likely this year than in the past. Dunleavy said he has offered any resources his administration can provide legislators to reach a resolution on the budget, noting he is back in Juneau to talk with them, but he is not injecting himself into their negotiations. He feels a compromise can be reached soon. “We’re looking at next week,” Dunleavy said June 7. “We have to prepare for the potential of layoffs on July 1; I am still very optimistic that is not going to occur. I think you’re going to see movement this week into next week.” At its core, the Permanent Fund amendment formally known as Senate Joint Resolution 6 would put the 5 percent of market value, or POMV, annual draw on the Permanent Fund currently in law into the Constitution along with the 50-50 split of the draw. Doing so would prevent future overdraws from the Fund that could erode its long-term value, but the governor’s plan also calls for a one-time $3 billion “bridge” transfer from the Earnings Reserve to the Constitutional Budget Reserve in separate legislation. The overdraw — which would be the second totaling $4.5 billion if both the Senate’s PFD plan and SJR6 are approved — is necessary to provide the state with a couple years of reserves while ways to close the rest of the budget deficit are hashed out, according to Dunleavy. (Editor's note: Office of Management and Budget Director Neil Steininger said after publication of this story that the adminsitration is requesting $3 billion from the Permanent Fund beyond the annual 5 percent draw. If the Senate's plan for $2,300 PFDs is ultimatley approved by the full Legislature, the governor will reduce his current request for a $3 billion transfer from the fund to the CBR, according to Steininger.) The CBR, which held nearly $14 billion several years ago, has been reduced to just more than $1 billion, which officials in both the Dunleavy and former Gov. Bill Walker’s administrations have said is near the practical minimum amount needed to manage day-to-day government cash flows and operations. Dunleavy emphasized a belief that the near-term performance of the Permanent Fund and other state investments has put Alaska in a unique position to take action now, even if it means taking more from the Fund in the near-term than its Board of Trustees and most financial advisors would recommend. Booming balance The Permanent Fund had a balance of $77.8 billion as of April 30 with $11.3 billion of realized and uncommitted income in the earnings reserve account. It has since grown to a latest unaudited value of more than $81.3 billion while it started the 2021 fiscal year last July at $65.3 billion. “The fund has made 25 percent here from the end of last (fiscal) year. Our pension obligations have closed considerably, by billions,” Dunleavy said. “If ever you want to take an opportunity to really fix something forever — you have the assistance of an Earnings Reserve that has grown by billions and billions to do it.” Many legislators, however, are entrenched in their conviction that the state should not spend beyond the 5 percent draw limit on the Fund, which some also say is too high, because the money spent today cannot provide revenue forever. Some have said continuing the current situation is even preferable to an overdraw. Based on the Permanent Fund’s historical performance, the combined $4.5 billion in addition to the POMV that Dunleavy hopes to appropriate from the Fund for this year’s PFD and the CBR transfer would generate roughly $300 million per year in annual investment income. Others remain wary of putting the PFD on the same required spending plateau as education, public safety and the Judiciary. Senate President Peter Micciche has said he has no interest in the $3 billion transfer because of the forgone revenue, though he supports putting the 50-50 PFD solution in the Constitution. The governor countered that the state has been forgoing economic opportunities brought by private investors who for years have avoided Alaska because of the ongoing and untenable fiscal situation of state government. “One just can’t view Alaska solely as the state budget,” Dunleavy said. “That’s part of the problem.” As for his embrace of the “50-50” PFD after campaigning largely on restoring use of the statutory dividend formula and issuing PFD “back payments” for prior-year amounts cut by lawmakers, the governor said he sees it as a compromise solution after his prior effort to balance the state budget was rejected. His proposed cuts and more than $440 million in vetoes in 2019 were also the primary cause for an ongoing effort to recall him from office. “I would’ve loved for the Legislature to take a serious look at expenditures and the size of the budget and as you know the first year we did and proposed significant reductions; and once again it was not something the Legislature was significantly interested in,” Dunleavy said. “Some of us have made significant movement; we just need others to make significant movement.” He has been consistent in his stance that “the people of Alaska will be the ones to decide in the end,” he added. Dunleavy has also proposed constitutional amendments that would put a strict cap on state spending and require voter approval of all new state taxes, though they have garnered less attention from legislators. Revisiting revenues While it would resolve the PFD, SJR6 would still leave an annual deficit in the hundreds of millions and the exact size of the gap is another cause for disagreement. Department of Revenue officials have told legislators in recent hearings on the 50-50 plan that when the Permanent Fund’s recent performance, improved oil prices and potential new oil production from North Slope fields under development are factored into their economic models the state’s annual deficit will be approximately $300 million by the time the $3 billion in bridge funding is nearly exhausted in fiscal year 2025. In that scenario, the state would not need a broad sales or income tax and instead could achieve fiscal neutrality and eventually small surpluses with incremental cuts and revenue measures, according to Revenue Commissioner Lucinda Mahoney. Administration officials are working on revenue measures to propose during the special session Dunleavy called for August, when he hopes to resolve the remaining budget issues if the Legislature passes some form of SJR6 before the current special session ends June 19. “We think the gap is close and with the bridge draw on the Earnings Reserve, if we keep our budget in check the growth can be managed with what we have coming out of the Permanent Fund and oil,” he said. Legislators skeptical of the positive financial outlook contend the state’s oil forecasts have routinely been proven artificially rosy and the financial markets driving the Permanent Fund’s returns are due for a correction. Leaders of the Alaska Permanent Fund Corp.’s advisory firm Callan said earlier this year that relying on the Fund’s historical return average of nearly 7 percent per year, which underpins the sustainability of the 5 percent annual draw, might be overly optimistic for the future. Rather, Callan representatives suggested a POMV draw closer to 4 percent per year could be necessary to maintain the real value of the Fund based on their long-term market outlooks. When asked about the revenue options administration officials are considering, Dunleavy said, “We will let you know in August,” later adding that “It won’t matter if the Legislature decides to add several hundred million (dollars) into the budget because then you’re just chasing revenue again.” Building support for 50-50 split Some Democrats in the Legislature also contend Dunleavy did not do enough behind the scenes to gain support for SJR6 before going public with it. They insist administration officials first asked for support of the 50-50 plan just hours before the May 12 press conference in which the governor unveiled it backed by a nearly all-Republican contingent of legislators, and that they weren’t briefed on the proposal until well after it was submitted. The requirement for supermajority votes to approve constitutional amendments in the Legislature means at least some Democrat support will be needed to pass SJR6. Dunleavy’s spokesman Jeff Turner called it a “mischaracterization” of the events in a follow-up email, noting the governor’s staff held meetings with the leaders of the four legislative caucuses prior to the briefing. “It is important to recognize that three of the four caucus leaders not only attended, but spoke during the governor’s press conference on May 12. In fact, around 20 lawmakers, a third of the entire Legislature participated in the press conference,” Turner wrote. “Keep in mind that the purpose of a press conference is to make an announcement.” Whether or not Dunleavy did enough to garner the support needed to pass SJR6 in the coming weeks as he wants — while also finishing this year’s budget — he said he’s committed to seeing it through before another election cycle in 2022 could grind fiscal discussions to a halt again. “We’ll take as much time as we need to get this entire thing taken care of this year,” Dunleavy said. There’s no other choice.” Elwood Brehmer can be reached at [email protected]

Without options in Congress, Murkowski urges lawsuit over ANWR

It took nearly four decades to get a bill opening the Arctic National Wildlife Refuge coastal plain for oil exploration to the desk of a president who would sign it, but several months after the first lease sale the state’s congressional leaders are mostly relegated to the sidelines as the Biden administration has suspended the highly contentious program. When Interior Department officials announced June 1 they would be suspending the ANWR oil and gas leasing program, they were making a common bureaucratic move to review actions by the prior administration for legality’s sake. In that regard, suspending the leasing program finalized in the last months of the Trump administration is akin to Interior under Biden reviewing the environmental impact statement for ConocoPhillips’ $6 billion Willow oil project on the North Slope. However, with the Willow review Interior leaders ultimately decided to back the Trump administration’s approval of the development in lawsuits challenging its adequacy in late May court filings. For that, Rep. Don Young and Sens. Lisa Murkowski and Dan Sullivan lauded Interior Secretary Deb Haaland for supporting the oil project because of the potential jobs and revenue it could provide the state. A similar outcome is much less likely in the case of the ANWR leasing suspension, as it would also be an initial step towards making good on a campaign promise to reverse the prospect of energy exploration in the uniquely positioned refuge. And despite the rider hitched to the 2017 Tax Cut and Jobs Act by the delegation requiring Interior to develop and conduct an oil and gas leasing program in the coastal plain, there appears to be little they can do about it. Murkowski said in a lengthy statement provided by her office that she wasn’t surprised when the administration suspended the lease program but she was “incredibly disappointed” Interior did so to leases that have already been issued and patented. She also asked for help from state officials. “I don’t understand how Interior can take that position. Through the natural resources title that I authored in the Tax Cut and Jobs Act of 2017, Congress mandated in statute the establishment of an oil and gas leasing program in the non-wilderness coastal plain of ANWR. The department doesn’t get to pick and choose which laws to follow,” Murkowski said in the statement. “Since the federal land manager is choosing not to follow the law, unfortunately the only option to uphold Congress’ explicit direction is to use the court system. Consequently, I urge the State of Alaska and other leaseholders to sue the Biden administration to implement the law.” When asked about options to counter the administrative move, Alaska Oil and Gas Association representatives declined to comment, citing an ongoing lawsuit the trade group is a party to. AOGA intervened as a defendant in a suit by national environmental groups challenging the Trump administration’s environmental considerations in the ANWR leasing plan. Nate Adams, a spokesman for Sullivan, wrote via email that the senator is considering “all options at his disposal to counter the Biden administration’s misguided decision to suspend leases in the (coastal plain).” A second lease sale in which at least 400,000 acres are offered must be held before December 2027 to comply with the schedule laid out in the tax bill. An Interior spokesman wrote in response to questions about complying with the 2017 tax law that the department had nothing more to offer beyond the June 1 press statement announcing it would “initiate a comprehensive environmental analysis to review the potential impacts of the program and to address legal deficiencies in the current leasing program’s environmental review under (the National Environmental Policy Act).” The Alaska Industrial Development and Export Authority dominated bidding in the Jan. 6 lease sale, collecting nine of the 11 awarded lease tracts. Small firms won the two other leases and no major oil companies bid in the first ANWR sale. Many industry insiders now believe the 23 million-acre National Petroleum Reserve-Alaska covering much of the western North Slope, and where Willow is located, is a much more attractive development region for its geology and political considerations. The state-owned development bank also intervened as in the lawsuit to defend the leasing program and attorneys representing AIDEA from the national firm Holland and Hart roundly denied all the claims in the suit in their initial answer brief. Elwood Brehmer can be reached at [email protected]

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