US deficit hits nearly $1 trillion. When will it matter?

WASHINGTON (AP) — The Trump administration reported a river of red ink Oct. 25. The federal deficit for the 2019 budget year surged 26 percent from 2018 to $984.4 billion — its highest point in seven years. The gap is widely expected to top $1 trillion in the current budget year and likely remain there for the next decade. The year-over-year widening in the deficit reflected such factors as revenue lost from the 2017 Trump tax cut and a budget deal that added billions in spending for military and domestic programs. Forecasts by the Trump administration and the Congressional Budget Office project that the deficit will top $1 trillion in the 2020 budget year, which began Oct. 1. And the CBO estimates that the deficit will stay above $1 trillion over the next decade. Those projections stand in contrast to President Donald Trump’s campaign promises that even with revenue lost initially from his tax cuts, he could eliminate the budget deficit with cuts in spending and increased growth generated by the tax cuts. Here are some questions and answers about the current state of the government’s finances. What happened? The deficit has been rising every year for the past four years. It’s a stretch of widening deficits not seen since the early 1980s, when the deficit exploded with President Ronald Reagan’s big tax cut. For 2019, revenues grew 4 percent. But spending jumped at twice that rate, reflecting a deal that Trump reached with Congress in early 2018 to boost spending. Why doesn’t Washington do something about it? Fiscal hawks have long warned of the economic dangers of running big government deficits. Yet the apocalypse they fear never seems to happen, and the government just keeps on spending. There have been numerous attempts by presidents after Reagan to control spending. President George H.W. Bush actually agreed to a tax increase to control deficits when he was in office, breaking his “Read my lips” pledge not to raise taxes. And a standoff between President Bill Clinton and House Speaker Newt Gingrich did produce a rare string of four years of budget surpluses from 1998 through 2001. In fact, the budget picture was so bright when George W. Bush took office in 2001 that the Congressional Budget Office projected that the government would run surpluses of $5.6 trillion over the next decade. That didn’t happen. The economy slid into a mild recession, Bush pushed through a big tax cut and the war on terrorism sent military spending surging. Then the 2008 financial crisis erupted and triggered a devastating recession. The downturn produced the economy’s first round of trillion-dollar deficits under President Barack Obama and is expected to do so again under Trump. Should we worry? As far as most of us can tell, the huge deficits don’t seem to threaten the economy or elevate the interest rates we pay on credit cards, mortgages and car loans. And in fact, the huge deficits are coinciding with a period of ultra-low rates rather than the surging borrowing costs that economists had warned would likely occur if government deficits got this high. There is even a new school of economic theory known as the “modern monetary theory.” It argues that such major economies as the United States and Japan don’t need to worry about running deficits because their central banks can print as much money as they need. Yet this remains a distinctly minority view among economists. Most still believe that while the huge deficits are not an immediate threat, at some point they will become a big problem. They will crowd out borrowing by consumers and businesses and elevate interest rates to levels that ignite a recession. What’s more, the interest payments on the deficits become part of a mounting government debt that must be repaid and could depress economic growth in coming years. In fact, even with low rates this year, the government’s interest payments on the debt were one of the fastest growing items in the budget, rising nearly 16 percent to $375.6 billion. Haven’t economists been making these warning for decades? Federal Reserve Chairman Jerome Powell says the day of reckoning is still coming but isn’t here yet. Most analysts think any real solution will involve a combination of higher taxes and cost savings in the government’s huge benefit programs of Social Security and Medicare. Any sign that Washington may take the politically painful steps to cut the deficit? In short, no. There has been a major change since the first round of trillion-dollar deficits prompted the Tea Party revolt. This shift brought Republicans back into power in the House and incited a round of fighting between GOP congressional leaders and the Obama administration. A result was government shutdowns and near-defaults on the national debt. But once Trump took office, things changed: The president focused on his biggest legislative achievement, the $1.5 trillion tax cut passed in 2017. This appeared to satisfy Republican lawmakers and quelled concerns about rising deficits. Democratic presidential candidates have for the most part pledged to roll back Trump’s tax cuts for corporations and wealthy individuals. But they would use the money not to lower the deficits but for increased spending on expensive programs such as Medicare for All. So the deficits won’t animate the presidential campaign? It doesn’t seem likely, though former Rep. Mark Sanford, who has mounted a long-shot Republican campaign against Trump, is urging Republican voters to return to their historic concerns about the high deficits. And economists note that today’s huge deficits are occurring when the economy is in a record-long economic expansion. This is unlike the previous stretch of trillion-dollar deficits, which coincided with the worst recession since the 1930s. But analysts warn that if the economy does go into a recession, the huge deficits projected now will expand significantly — possibly to a size that would send interest rates surging. Such a development, if it sparked worries about the stability of the U.S. financial system, might produce the type of deficit crisis they have been warning about for so long.

Movers and Shakers for Nov. 3

The Anchorage Downtown Partnership hired Mercedes Curran as office manager. Curran is a lifelong Anchorage resident and graduated in 2013 from the University of Puget Sound with a bachelor’s degree in music education. Since her return home, she’s been a member in the Anchorage Concert Chorus, coach and administrator for Anchorage Youth Soccer Club, referee and secretary for Anchorage Soccer Referees Association, and singer/performer in various Alaskan bands, theatre groups, and shows. She is also the co-host of the local talk/music radio show The Summit. Col. Brian Kile assumed command of the 168th Operations Group following his tenure as director of Operations of Joint Staff at Joint Force Headquarters, Alaska National Guard, assigned at Joint Base Elmendorf-Richardson. Kile enlisted the Air National Guard in 1990 as a loadmaster with the 210th Rescue Squadron. After serving several years in this position, he was selected for the Undergraduate Pilot Training Program, which marked his transition into the officer corps. Kile has served in numerous leadership positions, including 210th Rescue Squadron Assistant Director of Operations, 11th Air Force Rescue Coordination Center Deputy Director, 176th Operations Group HH-60G Standardization and Evaluation Pilot, 210th Rescue Squadron Director of Operations, 210th Rescue Squadron Commander, and 176th Operations Group Deputy Commander. Col. Richard Adams assumed command of the 168th Wing, Alaska Air National Guard, from Col. Bryan White during a change of command ceremony Oct. 20. Adams assumed command of the wing after serving as the commander of the 168th Operations Group, a position he had held since May 2018. Adams was commissioned in 1991 as a distinguished graduate through the ROTC program at the University of Colorado, Boulder. In 2004 he transferred from the active-duty Air Force to the Alaska Air National Guard. The Bristol Bay Native Corporation Education Foundation named University of Alaska Southeast education graduate Nancy Mills as their 2019 Student of the Year. From Chignik Lagoon, Nancy Mills was the first graduate from her school to earn a bachelor’s degree. Mills earned her master of education degree in special education from UAS in 2012. She is currently working toward a second master’s degree in educational leadership from UAS. She is the secondary and special education teacher at the Chignik Lagoon School. Trilogy Metals Inc. has signed an employment agreement with James “Jim” Gowans as CEO and president on an interim basis, effective Sept. 4. Gowans was president and CEO of Arizona Mining Inc. from 2016-18 when Arizona Mining was purchased by South32 Ltd. Previously he was a senior advisor to the chairman, co-president, executive vice president and chief operating officer at Barrick Gold Corp. from 2014-15. Gowans has extensive experience in Alaska. He completed the feasibility study for the Red Dog Mine, oversaw the design and construction of that mine and then operated Red Dog for three years after commissioning. The Alaska State Hospital and Nursing Home Association announced that Jared Kosin, JD, MBA, will become the organization’s new president and CEO. Kosin currently serves as the associate administrator of Mat-Su Regional Medical Center. He has worked closely with ASHNHA for seven years. Prior to his current role, he served as the executive director of the Office of Rate Review at Alaska’s Department of Health and Social Services. Other past experience includes policy and legislative leadership for the Colorado Speaker of the House, and Michigan Senate Majority Leader. Kosin will succeed Becky Hultberg, who announced in August she will depart ASHNHA in December to lead the Oregon Association of Hospitals and Health Systems. Kosin holds a juris doctor degree from Michigan State University College of Law, an MBA from the University of New Hampshire, and a bachelor’s in English with a minor in political science also from the University of New Hampshire.

UK sale close boosts ConocoPhillips income; nets $306M in-state

ConocoPhillips netted more than $3 billion in the third quarter as the major oil producer continues to focus its long-term strategy. Much of the large quarterly profit stemmed from closing a $2.2 billion sale of North Sea assets in Britain to BP during the period. The $3 billion net is a 60 percent year-over-year improvement and includes a nearly $1.8 billion gain from dispositions, according to the earnings report released Oct. 29. ConocoPhillips reported adjusted quarterly earnings — omitting one-time items — of $914 million, a 43 percent decrease from a nearly $1.6 billion adjusted profit a year ago. On the financial side, ConocoPhillips’ Alaska operations generated a $306 million third quarter profit, which was down 29 percent year-over-year from $427 million. Alaska spokeswoman Natalie Lowman wrote via email that ConocoPhillips paid $283 million in taxes and royalties to the State of Alaska in the third quarter. The company’s North Slope oil production increased 20 percent year-over-year to average 190,000 barrels per day; however North Slope oil prices for the quarter were down 18 percent from a year prior at $62.78 per barrel, according to the earnings report. ConocoPhillips invested $427 million in North Slope capital projects during the quarter, bringing its year-to-date capital spend in the state to more than $1.2 billion, compared to a full-year 2018 spend of just less than $1.3 billion. Lowman noted that the increased capital expenses mean the company “has reinvested 112 percent of our adjusted net income back into Alaska projects.” ConocoPhillips’ year-to-date adjusted net income in Alaska is $1.07 billion. The North Sea sale announced in July 2018 coincided with a North Slope deal with BP in which ConocoPhillips acquired the London-based major’s 38 percent stake in the Kuparuk River field, which it operates. The companies said at the time that the transactions generally amounted to cash-neutral asset swap. ConocoPhillips now holds 92 percent of Kuparuk; the legacy oil field produced 107,000 barrels per day during the 2019 state fiscal year, according to the Alaska Department of Revenue. Chairman and CEO Ryan Lance said in a formal statement that the third quarter results continue the company’s success since it reset its value proposition when oil prices bottomed out in 2016. “This business is all about having a sustainable strategy with consistent execution,” Lance said. “We believe ConocoPhillips offers both — a shareholder-friendly, returns-oriented value proposition and strong delivery on our commitments.” The net income totals were the product of nearly $10.1 billion in revenue during the quarter, which roughly matched the company’s third quarter 2018 revenue total when oil prices were markedly higher. The net income translated to quarterly earnings of $2.76 per share. ConocoPhillips stock closed trading Oct. 29 at $57.09 per share, up 2.5 percent for the day following the strong earnings report. ConocoPhillips also finalized its acquisition of the mid-sized Nuna prospect on the North Slope from small independent Caelus Energy in the third quarter. Company executives have described the Nuna deal as a roughly $100 million purchase. Now folded into the Kuparuk River Unit, ConocoPhillips Alaska leaders have said they expect Nuna to begin producing oil in 2022, with peak production hitting about 20,000 barrels per day. During the coming winter the company plans to drill seven more exploration and appraisal wells on its large lease holdings in the National Petroleum Reserve-Alaska, following up eight such wells the company drilled last winter in one of its busiest North Slope exploration seasons. ConocoPhillips is in the midst of constructing the Greater Mooses Tooth-2 oil project — peak production is pegged at up to 40,000 barrels per day — in the NPR-A as well as permitting its very large Willow prospect in the reserve. Willow is scheduled to come online in the 2025-26 timeframe with peak production estimates reaching 130,000 barrels per day. Elwood Brehmer can be reached at [email protected]

Board votes to keep Cook Inlet meeting in Anchorage

The tug of war over the location for the 2020 Upper Cook Inlet Board of Fisheries meeting seems to be over — with Anchorage as the winner. After going back and forth over the location for more than a year, the board members voted 4-3 Oct. 24 at their annual work session to keep the February 2020 Upper Cook Inlet meeting in Anchorage. They also voted unanimously to drop a policy previously adopted that recommended the board rotate the meeting every three years between the three major communities of the region: Palmer/Wasilla, Anchorage and Kenai/Soldotna. Board members Fritz Johnson, Gerad Godfrey and Marit Carlson-Van Dort voted against the motion to hold the meeting in Anchorage, with members Morisky, Israel Payton, John Jensen and John Wood voting in favor. Board members primarily cited cost and the neutrality of Anchorage as a meeting location for the decision at the work session. The board last met on the central Kenai Peninsula for a full meeting in 1999; it met there for a work session in 2016. At its annual work session in 2017, the board voted to hold the 2020 meeting in Anchorage; in March 2018, the members reconsidered and voted move it to Kenai/Soldtona. The board later revisited the decision in January 2019, but after objections from the stakeholders about a lack of fair notice, the Alaska State Ombudsman investigated and ruled that the board needed to do it again — this time with fair notice. The governments of the cities of Kenai and Soldotna and the Kenai Peninsula Borough offered in a joint letter to provide the board with free meeting space, with an eye toward making the decision based on cost easier. The area has enough restaurants, hotel rooms, transportation options and airplane service to meet the needs of the board, the city managers and borough mayor wrote in the joint letter. Multiple other commenters wrote that the cost for stakeholders coming from the Kenai Peninsula is higher than those who live in Anchorage or the Mat-Su, who can stay at home rather than in hotels. The board takes cost into consideration along with a menu of other variables, including internet access, adequate facility space, community relationship with the board and travel time for the board members and Alaska Department of Fish and Game staff, among other factors. However, because many Fish and Game commercial fisheries staff members live on the central Kenai Peninsula and the local governments offered meeting space for free, the cost differentials between the three locations were surprisingly similar, said Board of Fisheries Executive Director Glenn Haight. Board chairman Reed Morisky said he saw logistical issues with the area, including how spread out the area near the likely meeting space would be. Anchorage has more hotel rooms, restaurants and amenities within walking distance than Kenai/Soldotna does, he said. Johnson argued in favor of holding the meeting in Kenai/Soldotna, saying the board members get a valuable insight from being present in a community they may not when they don’t meet there, given that not all stakeholders have the money to travel to Anchorage for multiple days at a time. “I think over the years the board has been good at acknowledging that it’s important that we travel to the places that these industries are centered,” he said. “I think that by abandoning that notion, we may lose that connection with the stakeholders for whom this industry is their very backyard. And that would be a shame.” Morisky said sportfishermen and subsistence users are stakeholders in the Upper Cook Inlet fishery, too, many of whom live in the Anchorage area. One of the main contentions commenters asking the board to meet on the Kenai Peninsula have asserted is that the majority of people who attend the meetings, even in Anchorage, are from the Kenai Peninsula, and that Anchorage residents don’t attend as much even when the meetings are nearby. Morisky noted that even if people are not actively involved in the deliberations, they may still be following the decisions. “Just because people aren’t necessarily at meetings or don’t own a particular permit, it doesn’t mean they don’t have a common ownership in our resource,” he said. After the vote, ADFG Commissioner Doug Vincent-Lang said in response to Johnson’s comments that he was aware the board needed to stay connected to the fishing communities. “It’s a careful balancing act between cost and maintaining our (citizen advisory committee) system and maintaining the board structure,” he said. “To me, the clear mechanism that I want to do is make sure we continue a strong AC structure and we can bring those people into our meetings to engage no matter where they are. But I would hate to jeopardize that cost, in terms of our meeting locations.” At the same March 2018 meeting where the members voted to move the meeting to the Kenai Peninsula, the board accepted the policy that recommended rotation of the meetings between the three major communities. Former board member Al Cain, who proposed the idea, said it was meant to take the politics out of choosing the meeting location every three years. At the time, it passed narrowly. Board member Jensen said at the work session Oct. 24 that he didn’t think the rotational policy was fair and supported repealing it. “I don’t think it’s our purview to hold the future boards’ feet to the fire as far as meetings go,” Jensen said. “I’m not really supportive of this policy; I don’t even think we can do it. I don’t think it’s within our authority to tell a board 10 years from now where they’re going to have their meeting.” Board member Payton agreed, noting that he had been the one absent when the policy passed. The policy didn’t tie the board members’ hands — it was only a recommendation — but the public might not see it that way in the future, he said. “It’s what the board decided at the time that was just for all stakeholders, and I think the board should continue to have that flexibility and wisdom to decide what’s just for everyone and decide where we want to hold our meeting,” he said. Johnson reminded the board they had passed this a year ago to avoid some of the conflict and politics from the decision, and member Wood suggested approaching the local governments in the various communities to see if they had suggestions for how to alternate the location for the meeting. Ultimately, the board voted unanimously to discontinue the policy. ^ Elizabeth Earl can be reached at [email protected]

Alaska Airlines turning purchase into profits

Alaska Airlines’ parent company is starting to see the benefits of the $4 billion deal it made three years ago to purchase West Coast rival Virgin America. Executives for Seattle-based Alaska Air Group Inc. reported a $322 million third quarter profit on Oct. 24, a 48 percent improvement over the $217 million the company netted a year prior. The third quarter net income came on the back of nearly $2.4 billion in operating revenue, which was up 8 percent year-over-year. Alaska Air Group also operates regional carrier Horizon Air. CEO Brad Tilden highlighted numerous positives for the company so far in 2019 but he started an Oct. 24 earnings call by offering condolences to the passengers and their families impacted by the Oct. 17 crash of a Peninsula Airways plane that overran the runway in Unalaska while attempting to land in high winds. The crash killed one passenger and injured several others. PenAir is a code share partner with Alaska Airlines, which marketed the flight. “This is a somber reminder to me and the rest of our leadership team of the grave responsibility we should and of the continued need for us to underscore the importance of safety with our people and our partners at every opportunity and to back up this understanding with our actions every day,” Tilden said. To the quarterly results, Tilden emphasized the company’s focus on customer service is a foundational element of its strong recent financial performance. “We can’t thank our employees enough for their skill and dedication in serving our guests,” he said. The $322 million profit translated to earnings per share of $2.60. Alaska Air Group stock ended trading Oct. 25 at $71.57 per share, up nearly 4.1 percent from its Oct. 24 close following the post-trading release of the earnings report. The 8 percent revenue growth was on a system-wide passenger capacity increase of just 3.4 percent. Tilden noted that Horizon increased its capacity 24 percent year-over-year during the quarter through new aircraft but still managed to drop its per unit non-fuel expenses. The quarterly profit was aided in part by a 5 percent reduction in fuel costs, which make up approximately one-quarter of the company’s operating expenses. However, the fuel savings was overcome by an 11 percent increase in wage and benefits costs, which account for nearly one-third of operating costs. The wage cost increases included $24 million in signing bonuses related to contracts ratified during the quarter for ramp, passenger service and clerical employees represented by the International Association of Machinists and mechanics in the Aircraft Mechanics Fraternal Association, Chief Financial Operator Brandon Pedersen said. For the full year, per unit costs excluding fuel are expected to increase 2.2 percent on 2.1 percent capacity growth. “Normally we would celebrate unit cost declines, not increases, but given the step change increase in labor costs we’ve had this year and the very low growth relative to our recent history we’re pleased with the result,” Pedersen said. “It demonstrates what we can achieve with a back-to-basics approach to cost execution with a sharp focus on productivity and operating our business with a low overhead mindset.” He noted that 2020 costs will likely rise based on more major aircraft maintenance scheduled for next year as well as costs associated with starting to return leased Airbus aircraft formerly flown by Virgin America. Alaska Airlines had long flown the reliable and efficient Boeing 737 exclusively before taking on Virgin America’s fleet. Alaska does not currently have any of the grounded 737-MAX aircraft, but it is scheduled to take delivery of three in the coming months. Looking ahead, Tilden said full-year margins are expected to be in the 11-12 percent range, up from less than 9 percent in 2018. “We’re encouraged by our progress but we’re not at our destination,” he said, adding the long-term goal is to generate returns in the 13-15 percent range. The quarterly numbers were also buoyed by a load factor, or number of available seat miles sold, of 85.8 percent, a 0.9 percent year-over-year increase. According to Tilden, it marked the highest companywide quarterly load factor in five years for Air Group airlines. Chief Commercial Officer Andrew Harrison said the third quarter revenue per available seat mile of 13.6 cents was the best in three years. The company is enjoying growth in the number of Alaska Airlines mileage plan members and credit card holders, according to Harrison. That nearly one-third of new credit card memberships are from California — Virgin America’s primary market — is particularly encouraging, he said. Alaska announced Oct. 2 that its mileage partnership with American Airlines would be drastically reduced early next year, a move some analysts said is aimed at getting more passengers on its own planes as the airlines’ network grows. Nearly half of all Alaska passengers are loyalty members, Harrison said further. “Our value proposition hinges on offering low fares while providing award-winning service, generous rewards, and a premium product and our people are delivering on this,” he said. The fuller flights have helped the company mitigate per unit costs and drive up overall profits. As of Sept. 30, Alaska Air Group had a 12-month adjusted net income of $709 million — a 30 percent improvement over the prior 12-month period, according to Tilden — that it translated into $695 million of free cash flow. Alaska Air Group held $1.6 billion in cash at the end of the quarter and had generated nearly $1.5 billion in cash from operations so far in 2019, Pedersen said. Of that, approximately $525 million went to capital expenses, leaving about $950 million in free cash flow year-to-date, which is a $460 million improvement over 2018, according to Pedersen. Much of that cash is being used to pay down the debt incurred to buy Virgin America in 2016. The Air Group executives said deleveraging their balance sheet has been their primary objective with available funds and they expect the company will have repaid about 75 percent of the $2 billion it borrowed to acquire the San Francisco-based carrier. Alaska Air Group’s debt-to-capitalization ratio stood at 42 percent at the end of the quarter. Company leaders have a long-term goal of a 40 percent dept-to-cap ratio. “Strengthening our fortress balance sheet positions us to be flexible and opportunistic and make the best strategic and capital allocations in the future,” Tilden said. Pedersen often further detail, saying the company has refinanced more than 75 percent of its debt to be “fixed at historically low interest rates.” Air Group debt carried a weighted average interest rate of 3.2 percent at the end of the quarter, according to Pedersen. Additionally, Alaska Air Group made a $65 million voluntary payment towards its defined benefit pension plans, which are now 80 percent funded and increased its 2019 share repurchase allocation from $50 million to $75 million based on its strong cash balances, Pedersen added. With its quarterly dividend the company expects to return $248 million, or about a quarter of its free cash flow, to shareholders this year, he said. Elwood Brehmer can be reached at [email protected]

Treadwell-led group pairs with ExxonMobil on LNG from Point Thomson

Former Alaska Lt. Gov. Mead Treadwell is spearheading a new effort to sell North Slope natural gas with an offshore Arctic LNG plant and icebreaking tankers. Treadwell is CEO and chairman of the firm Qilak LNG. Leaders of the Anchorage-based startup announced Wednesday morning that they have a conceptual “heads of agreement” with ExxonMobil to purchase gas from the major producer’s Point Thomson field on the eastern North Slope for 20 years. The estimated $5 billion Qilak project would require building a gas treatment plant at Point Thomson to remove carbon dioxide and other impurities from the gas before it would be piped to a mobile LNG plant located six to 10 miles offshore. The plant would be served year-round by icebreaking LNG tankers that would take their cargoes to power plants in Asia. Treadwell said he has already been in discussions with buyers representing about 10 million tons of demand per year. The concept is a scaled-down version of Russia’s $21 billion Arctic LNG 2 project, according to Qilak representatives. The LNG plant would literally sit offshore in waters 13 to 16 meters deep meaning the project would not require costly ocean dredging. Qilak President and Chief Operating Officer David Clarke said the mobile LNG plant would store liquefied gas in underwater tanks beneath the deck of the plant and the whole facility would be sunk on the ocean floor. The project could eventually incorporate gas from Prudhoe Bay if the owners there, led by incoming operator Hilcorp Energy — which also acquired BP’s roughly one-third share in Point Thomson — elect to sell gas, Clarke added. Qilak expects to start a detailed feasibility study of its LNG project plan early next year. They are currently shooting for a final investment decision in 2021 or 2022 that could lead to a 2025 startup. The Point Thomson gas field, operated by ExxonMobil, holds approximately 8 trillion cubic feet of natural gas. “ExxonMobil sees the development of the Qilak LNG-1 project as an opportunity to develop Alaska’s gas resources,” ExxonMobil Alaska President Darlene Gates said in a statement released by Qilak. “As the largest holder of discovered gas resources on the North Slope, ExxonMobil has been working for decades to tackle the challenges of bringing Alaska’s gas to market.” Qilak is an Inupiat word for the environment and was suggested by a North Slope whaler, according to information provided by the company. The project concept has been in the works for about three years, according to Treadwell, who said the work is being funded by Lloyds Energy of Dubai. He emphasized that shipping from the North Slope is only about 40 miles farther to Asian markets than from Cook Inlet, which would be the endpoint for the Alaska LNG Project. Shipping LNG directly off the Slope has been considered several times before but sea ice and other factors challenged the economics the concept. “Markets have changed, technology has changed and ice conditions have changed,” Treadwell said. He also stressed that project officials would work with shippers and North Slope communities to schedule shipments and set ship routes around marine mammal subsistence harvests. He added that the tankers — powered by LNG with LNG cargoes — also limit environmental risks. “We are not moving oil through the Arctic Ocean,” Treadwell said. With a startup production rate of about 4 million tons of LNG per year, the project would be about one-fourth the size of the roughly $40 billion Alaska LNG Project that the Alaska Gasline Development Corp. is permitting through the Federal Energy Regulatory Commission. Under Gov. Michael J. Dunleavy’s administration AGDC has downsized and stopped seeking gas customers; instead, the state-owned agency hopes to turn the project over to private investors if it is deemed economic after ongoing analysis. What the Qilak project wouldn’t have, though, is an 800-plus mile gas pipeline bisecting the state. The estimated $10 billion gas pipeline portion of the Alaska LNG Project has long been viewed as the major economic hurdle to selling the state’s massive North Slope gas resources in the Point Thomson and Prudhoe Bay fields. But the line would also be the source of cleaner, lower-cost energy for communities along the route — notably the Fairbanks area — that largely rely on fuel oil for power generation and home heating. Alaska LNG advocates have also touted that project as a way to get lower-cost energy to the numerous Interior mine prospects that often have challenging economics largely due to the high cost of feedstock diesel used to power remote operations. The Qilak project was announced at a press conference at the downtown Anchorage offices of the national law firm Holland and Hart, which now employs former Gov. Sean Parnell, whom Treadwell served with as lieutenant governor from 2010 to 2014. It was Parnell’s administration that put together the initial Alaska LNG venture with BP, ConocoPhillips and ExxonMobil as equity partners along with the state. Treadwell said the project could possibly deliver LNG to Western Alaska communities as the tankers pass through the Bering Sea, but that would require lightering to smaller tankers or barges. The tankers would be too large to serve small ports and harbors and because there are no U.S.-made icebreaking LNG tankers, the Jones Act would prohibit from calling on Alaska ports unless a federal waiver was granted, acknowledged Clarke, a former executive with BP. Treadwell added that some amounts of LNG could potentially be trucked off the North Slope to reach road-accessible communities as well. “I promised the governor this morning that we would do anything we could to get gas to Alaskans,” he said. Dunleavy’s spokesman Jeff Turner wrote in an emailed statement that, “Gov. Dunleavy encourages and supports all business concepts that can successfully monetize the trillions of cubic feet of natural gas at Point Thomson and other areas on the North Slope.” Interim AGDC President Joe Dubler said in an interview that although Qilak’s plans would likely take part of the gas once intended for the Alaska LNG Project his agency is working on, he thinks any way to finally sell North Slope gas — a long-held dream of several generations of Alaskans — would be good for the state. “I’m an Alaskan and any project that can monetize North Slope gas is a good deal for me; that’s where I’m at. If (Alaska LNG) isn’t it, whatever one comes down that is it will have my support,” Dubler said. “We can cross the energy bridge for the whole state when we get there. Without a project that produces natural gas in marketable quantities that you can sell it doesn’t do any good to talk about anything else.” Qilak’s high-level agreement with ExxonMobil does not interfere with a binding gas sales precedent agreement AGDC signed with the producer in September 2018 for its share of Point Thomson and Prudhoe Bay gas because the preliminary AGDC-ExxonMobil deal was allowed to expire earlier this year, according to Dubler. He said the state corporation did not renew the agreement signed under the Walker administration because it was done prematurely and before other key elements of Alaska LNG had been settled. The Qilak project wouldn’t necessarily preclude Alaska LNG from utilizing gas from Prudhoe or other discoveries, Treadwell noted as well. Elwood Brehmer can be reached at [email protected]

FISH FACTOR: Kelp harvest rules under review; salmon summaries roll out

As more Alaskans eye the lucrative opportunities in growing kelp, many others are heading to beaches at Lower Cook Inlet to commercially harvest the detached bunches that wash ashore. That practice is now getting a closer look by state managers and scientists and could result in new regulations by year’s end. Detached kelp harvests have occurred at Lower Cook Inlet under special permits since the 1970s but matters of who needs permits, for how much and for what purposes are not clearly defined. Currently, a special permit is needed for commercial takes. “A commissioner’s permit is needed that describes where and when harvests will occur and how much will be taken. It needs to be documented thoroughly to make sure they are not taking the wrong species, or not taking from below the high tide line,” said Glenn Hollowell, area manager for finfish at the Alaska Dept. of Fish and Game office in Homer. Owners of the Anchor Point Greenhouse, for example, take 6,000 to 7,000 pounds from local beaches each September and over four decades they’ve created a booming business for a potting soil blend that is sold statewide. In the past, the detached seaweed has been considered dead. More recently, it’s been discovered that many clumps continue to release live spores. Hollowell said that may mean it’s important to sustaining those kelp populations, and all that beached seaweed might also serve other purposes. “Whether this is for reproductive reasons, or to provide shelter and food for a variety of wild animals, as well as a carbon source. It does feed a lot of other ecological needs. And we’re just not certain that the wholesale removal of this stuff in large quantities might not have a negative impact on the ecosystem in general. So, we’re approaching this very cautiously,” he explained. The state Board of Fisheries will take up two detached and live kelp proposals at its Dec. 10-13 meeting in Seward. One (No. 21) submitted by Al Poindexter of the Anchor Point Greenhouse, aims to better identify the commercial harvest of detached kelp off of beaches. “First, Fish and Game does not know production rates of seaweed and what keeps it sustainable…Another issue is what is commercial or home use and what amounts are those?” Poindexter wrote. “For instance, I will collect 6 small pickups and it is called commercial, but my neighbor will collect 10 pickups for his berry patch and that is called home use. Another may just collect a bucket full for his flower patch. Who needs a permit and who doesn’t? And for what purpose? Does anyone get grandfathered in or who decides by what criteria, amounts, geographic area or timing? Parameters would be based on what data?” “At this time, I believe that out of all the folks who collect seaweed from the beach, I have been the only one who has been required to get a permit for this activity,” he concluded. Another proposal (No. 241) would allow for the personal use harvest of aquatic plants in the Cook Inlet area outside of subsistence areas, similar to rules the Fish Board created in Southeast Alaska last year. Researchers at the University of Alaska Fairbanks are working with ADFG to learn what happens when kelp is removed from areas and how such harvests affect rejuvenation. “The department wants to be very cautious as we start doing new things with it, to make sure that we don’t allow something we will later regret. It might cause damage to that kelp population, or to other species of invertebrates or vertebrates that utilize it such as birds and fish,” Hollowell said. The outcome of those projects, he added, will likely shape future regulations. Comments can be made to the Board of Fisheries through Nov. 25. Eating fish boosts IQ For centuries what’s been regarded as an old wives’ tale has claimed that fish is brain food. Now there’s more proof that eating seafood does indeed make you smarter. A report out last week by 13 leading dietary scientists declared that children whose mothers ate seafood during pregnancy gained an average 7.7 IQ points compared to children of moms who did not. The findings came after a review of 44 different studies since 2000 that included nearly 103,000 mother-offspring pairs and more than 25,000 children. The brain benefits began with just one serving of seafood per week during pregnancy, and the beneficial outcomes appeared on tests given as early as three days of age and as late as 17 years. Along with IQ, measures included verbal, visual and motor skill development. Four studies looked at hyperactivity and ADHD diagnoses and showed that kids of moms not eating seafood had nearly three times greater risk of hyperactivity. The findings follow a report this year from the American Academy of Pediatrics that said U.S. children are not eating enough seafood. Dr. Tom Brenna, a professor of pediatrics and nutrition at Dell Medical School at the University of Texas, said it’s the omega-3s in seafood that boost brain growth. “The brain and the retina in the eye are omega-3 organs,” he said. “You can say that as calcium is to the bones, omega 3 is to the brain.” Brenna agreed it’s been tough to get the message to a wider audience. “We don’t have a good a way of getting the word out. Maybe we should have a contest to find a nice tag line that would identify seafood in the same way as ‘Got Milk’ or ‘Beef, it’s what’s for dinner,’” he added in a phone conversation. The IQ boost from eating fish report comes as the U.S. is updating its dietary guidelines through 2025. The Dietary Guidelines Advisory Committee will meet five times through March 2020 and written comments are being accepted until the committee completes its work. Salmon summaries Prince William Sound’s salmon harvest this summer came in at nearly 58 million fish, of which almost 50 million were pinks. The estimated fishery value was $114 million, including hatchery sales, and paid out at $81,600 per permit on average for the fleet of 504 drift gillnetters; 238 seiners averaged $218,000 per permit. Revenue generated for hatchery operations was approximately $18.6 million. At Copper River, a catch of nearly 1.3 million sockeye salmon was 28 percent more than the previous 10-year average, and the average sockeye weight of 5.5 pounds was the largest in the last five years. Those are just a few of the details in season summaries that will continue to trickle in by region to the Alaska Department of Fish and Game. At Lower Cook Inlet the 2019 salmon catch totaled 2.4 million fish, of which nearly 2 million were pinks. The commercial harvest value of nearly $3.6 million was above the 10-year average of $2.4 million. At Norton Sound, 145 permits were fished this summer, the second highest since 1993, and the fishery value topped $2 million for the third year in a row. The region saw well above average runs of chums, pinks, sockeyes and coho salmon. The chum salmon harvest of 157,035 was the third highest in the last 35 years. At Alaska’s farthest north salmon fishery at Kotzebue the chum harvest topped 400,000 fish for only the tenth time ever for 93 participants. The value of more than $1.5 million was down a third from last year due to lower prices, but it was the fifth time since 1988 that it exceeded $1 million. Fishery managers at Bristol Bay were the first to come out with a season summary showing a preliminary fishery value at $306.5 million, an all-time record. A total take of 44.5 million salmon, of which 43 million were sockeyes, was the second largest in history since the 45.4 million fish taken in 1995. Salmon summaries from other regions will soon follow and yield the preliminary dockside value for the entire 2019 fishery. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

Estelle gold prospect grows with additional acrage

Another large-scale gold prospect is gaining momentum in Southcentral Alaska. Australia-based Nova Minerals Ltd. announced Oct. 8 that it has secured exploration rights to approximately 25,100 additional acres of state mining claims at its Estelle prospect that sits deep in the western portion of the Alaska Range. The acreage adds to the nearly 29,300 acres the company acquired in November 2017. Located about 110 miles northwest of Anchorage near the divide that separates the Western Alaska Kuskokwim drainage and the Susitna drainage of Southcentral, the Estelle gold prospect was drilled by Anchorage-based Millrock Resources early this decade. Millrock and Canadian Teck Resources ended a joint venture and quit the project in 2016. Nova Minerals drilled 18 boreholes at the Estelle property and re-entered historic drill sites over the summer, according to a late September investor presentation. Company leaders currently estimate the prospect holds 2.5 million ounces of inferred gold resources with smaller accumulations of copper and silver also present. Specifically, Nova Minerals estimates the explored areas of the property hold 181 million metric tonnes of ore averaging 0.43 grams per tonne of gold given a cut-off of 0.18 grams per tonne. However, Nova Minerals Managing Director Avi Kimelman said Oct. 8 that the area drilled last summer — on the northern end of the prospect acreage — accounts for just about 1 percent of the overall Estelle property. For comparison, the producing Pogo underground gold mine near Fairbanks has produced approximately 3.9 million ounces of gold since mining started there in 2006, according to operator North Star Resources Ltd. Nova Minerals is currently contemplating an open-pit mine at Estelle if the project is fully developed, according to company documents. The additional acreage Nova Minerals acquired surrounds the northern portion of the original property that was drilled this year. “The expansion of the Estelle project area reinforces Nova’s commitment to expand our resource ounces and fast-track development across the project area,” Kimelman said in a formal statement. “This will allow us to enact much broader exploration and a discovery vision via the exploration of what we believe to be a regionally significant land package in the world-class Tintina gold belt.” Nova Minerals publications regularly note the Estelle prospect’s location on the southwest edge of the massive Tintina gold belt, which cuts across Interior Alaska generally between the Alaska and Brooks mountain ranges and extends into the Yukon Territory. Estelle is also adjacent to other advanced gold exploration ventures, most notably GoldMining Inc.’s Whistler project, which holds significant indicated copper, gold and silver resources. According to a September investor presentation, Nova Minerals leaders plan to continue drilling in 2020 and eventually combine upwards of 25,000 meters of drill core results with additional resource evaluation data. They also note the Estelle prospect is accessible for drilling year-round — a rarity among remote Alaska mineral projects — via winter trails in the area. The company expects to publish a full resource evaluation of the Estelle prospect late next year, according to the Oct. 8 release. ^ Elwood Brehmer can be reached at [email protected]

Slow, steady recovery continues for economy

Alaska’s economy is growing but the state has a long way to go to return to pre-recession levels. The state’s has consistently had about 1,000 to 2,000 more jobs this year than in 2018. Preliminary Department of Labor employment figures for September show the state had 340,600 jobs, which is 1,900 more than a year prior. Employment peaked in September 2015 at 351,100 jobs. As the state is pulling out of a prolonged recession that started in late 2015, Alaska’s unemployment rate is as low as it’s ever been. The state’s seasonally adjusted unemployment rate was 6.2 percent in August and September — record lows according to the Department of Labor and Workforce Development. Improving the economy has been the primary mission the Dunleavy administration’s first year in office. Gov. Michael J. Dunleavy said there is still ample room for future economic growth but he’s encouraged about what the unemployment rate points to. “There is optimism in Alaska’s economy, and this is just another indicator that we are heading in the right direction,” Dunleavy said in an Oct. 21 statement. “Private investment is up, GDP is up, personal income is up, and unemployment is down — these all point to an improving economy.” The state’s gross economic production, also referred to as GDP, has been on the increase since bottoming out at $49.4 billion in 2016, according to the Federal Reserve Bank of St. Louis. It hit just more than $54 billion in 2018 for 9.3 percent growth over two years. Additionally, according to the federal Bureau of Economic Analysis, or BEA, Alaska’s GDP grew 3.9 percent from the fourth quarter of 2018 to the first quarter of 2019. Personal income in the state also grew 5.6 percent in the second quarter of the year, a BEA release states, which was greater than the national average of 5.4 percent. However, economists often note that GDP, particularly in Alaska can be a misleading statistic because the value of the state’s economic activity is closely tied to the price of oil and other market resources such as gold. The state’s recent GDP growth generally tracks with trends in oil prices over the past couple years, which bottomed out in early 2016. Department of Labor economist Neal Fried also highlighted that the job growth, while encouraging, is very small even in a state with a small workforce. “We’re talking about real small differences. It’s kind of amazing how small they are. The upside and downside are not very far apart,” Fried said in an interview. The recession petered out near the end of 2018 with monthly job losses of less than 1 percent year-over-year. On the flipside, the gains have been similarly small. Many economists in the state predicted the roughly $1.2 billion in state government budget cuts Dunleavy proposed early in the year would push Alaska back into recession but the state’s economy has continued to grow with the more moderate budget cuts of approximately $650 million instituted by the Legislature and governor. Alaska indeed enjoyed record-low unemployment in August, but year-over-year employment growth for the month was about 2,200, or 0.6 percent. Numerous sectors were still contracting in August, with manufacturing, financial activities, information, professional and business services and retail all losing at least 100 jobs during the month compared to August 2018. Those losses were overcome by gains of 500 to 600 jobs each in the closely tied mining, oil and gas and construction industries, according to Labor statistics. Month-to-month, the state actually lost approximately 2,400 jobs from July, highlighting the extremely seasonal nature Alaska’s economy — fishing and tourism in particular — even when it is growing. September’s employment growth of about 1,900 jobs was 0.5 percent year-over-year growth. It was again led by the mining, oil and gas and construction trades, with continued losses in retail and information and overall losses in state and local government totaling 500 positions, according to the Department of Labor. Fried also said Anchorage, the state’s economic center, has lagged behind the rest of Alaska. He attributed it in part to most of the new oil and gas jobs being in North Slope work, rather than office positions in the city. With that in mind, he also noted that those jobs still benefit Anchorage, as many Slope workers live and spend their money there. Fried also said the state’s unemployment rolls are almost certainly smaller due to the continued strong Lower 48 economy. The national unemployment rate fell to a 50-year low of 3.5 percent in September. “Fewer people are coming here looking for work; more people are being attracted elsewhere in the country because the job market is so good and that’s effectively kept our labor market pretty good,” he said. “It’s not a bad labor market in Alaska in spite of the fact that we have relatively soft growth.” Because of the remarkably low unemployment rate nationwide, which Fried characterized as “almost new territory” for the country — economists usually consider rates in the 5 percent range full employment — Alaska’s record-low unemployment rate is still the highest in the nation. “It’s amazing that you can say both of those things,” Fried said. Elwood Brehmer can be reached at [email protected]

GUEST COMMENTARY: Respect Alaska Tribes’ rights on the Tongass question

The Central Council Tlingit and Haida Constitution declares as our peoples’ inherent right that our tribal government, “Protect, preserve and enhance Tlingit ‘Haa Aani’ and Haida ‘Íitl’ tlagáay’, our way of life, its ecosystems and resources, including the right to clean water and access to native foods and traditional practices through our inherent rights to traditional and customary hunting, fishing and gathering.” Tlingit and Haida works constructively with all elected officials of any political party without partisanship. We aim to be collaborative partners, working together in the best interest of Alaska — our homelands. Yet today we are challenged by our disagreement with Alaska elected officials that support the proposed full exemption of the Tongass National Forest from the Roadless Rule. Any elected official in Alaska who supports a full exemption is disregarding their constituents, undermining the public process, and ignoring the sovereign Tribal governments whose people have lived and depended on these lands and waters since time immemorial. The indigenous Tribal governments of Southeast Alaska know our traditional territory: we have lived, depended on, and stewarded these lands and waters since time immemorial. We know that the full exemption for development activities would forever harm our homelands. The Tongass National Forest is the United States’ largest national forest and the largest remaining temperate rainforest on earth. Some see it as a salmon forest, a timber forest, a vast wilderness to visit and explore. Indigenous people see it differently. The Tongass is the traditional homeland of the Tlingit, Haida and Tsimshian people, a lineage that stretches so deep in time, we call it immemorial. Our origin stories are derived from these lands. Our ancestors are buried here. Our songs and dances are created here. Our languages have always been spoken here. Who are we? Our people are professional athletes, entrepreneurs, artists, Hollywood actors, CEOs running corporations that have brought millions of dollars to our region, fashion designers, teachers, culture bearers, doting aunties, fishermen, and sovereign tribal governments. We are diverse peoples, but if there is one thread that unites the Tribes and people of Southeast Alaska, it is our relationship and connection to our sacred places known today as the Tongass. Our health and wellbeing, identity, and worldview are intricately woven into the fabric that is our homeland. Six federally recognized Tribal governments stepped forward to engage on the Roadless Rule proposals with the State of Alaska and consult with the U.S. Department of Agriculture; however, our tribes were treated as “cooperating agencies” instead of as sovereign Tribal governments exercising our inherent rights. Despite inappropriate treatment, these Tribes agreed to participate in order to be “at the table” instead of “on the menu.” In addition to answering our communities’ needs, and despite additional and significant impacts of government shutdowns and reduced program funding from our federal trustee, these Tribes satisfied arbitrary and expedited deadlines to meaningfully engage in with state and federal representatives. However, our pleas for respect and for justice have been ignored. Each of our Tribes have different needs and priorities. Some of our communities sought expanded protections to heal local lands after devastating logging practices. Others sought strategic adjustments to the Roadless Rule that would permit controls of local development. And not a single Tribal government engaged as a cooperating agency advocated for a full and complete exemption of the Roadless Rule. In a word, our Tribes are reasonable in being accountable to the unique needs of each of their communities. These cooperating Tribes cannot help but believe the entire process has repeatedly disrespected and ignored sovereign tribal nations and their tribal citizens. For example, the USDA compensated the Alaska Forest Association, a timber industry lobbying group, with $200,000 for their time and expertise in engaging in the Roadless process. The State of Alaska received $2 million. And yet, despite the Tribes’ traditional indigenous knowledge of their lands and waters, and despite their representation of the communities imbedded within the Tongass, our Tribes received no compensation. Our Tribal leaders have been repeatedly denied opportunities to engage face-to-face with U.S. Department of Agriculture Secretary Sonny Perdue, who will ultimately determine the fate of our homelands. Meanwhile, Secretary Purdue invited representatives of other governments, environmental non-profit organizations, and the timber industry to meet with key USDA officials in Washington, D.C. Our Tribal governments have repeatedly requested government-to-government consultation without success. Southeast Alaska Tribes believe the requisite environmental process has been arbitrarily and capriciously rushed to decision despite the magnitude of potential adverse impacts that lifting these protections could be expected to impose upon our homelands. Our Tribal governments concerns are shared by others. During the public scoping period last fall, the vast majority of written comments and public testimony, according to the administrative record of the U.S. Forest Service, favored no change to the Roadless Rule across the board. Sen. Lisa Murkowski and Gov. Michael J. Dunleavy support a full exemption of the Tongass from the Roadless Rule. We believe it is their obligation to respect the views of the first people of these lands, and their responsibility to develop compromises that are responsive to our needs. To do less is to undermine Tribal governments. We respect our federal and state elected officials and have successfully collaborated with them on numerous and often contentious matters. Yet we cannot compromise our homelands. As the original land managers of Southeast Alaska, we know that a blanket removal of protections for our remaining old growth is not a viable solution. A full removal of the Roadless Rule protections must be replaced with the opportunity for Tribal governments to meaningfully engage with state and federal government officials in the management of the lands we depend on. We acknowledge that compromise is necessary, and our desired outcomes are not unreasonable; however, no outcome is credible unless Tribal governments are respected as full partners in the decision-making process. ^ Richard Chalyee Éesh Peterson is president of Central Council of Tlingit and Haida Indian Tribes of Alaska.

GUEST COMMENTARY: Why I support Trump’s proposal to lift restrictions in the Tongass

News that President Trump might seek to exempt Alaska’s Tongass National Forest from the Clinton-era “roadless rule,” opening up more of the region to potential development, has met with the typical alarm from the president’s critics. So it’s time to set the record straight and explain why every statewide elected official in Alaska supports an exemption from the regulation. The Tongass, the largest national forest in the United States at 16.7 million acres, is larger than West Virginia. Located in Southeast Alaska, it is an archipelago and comprises more than 80 percent of the regional land base. It is overwhelmingly road-free, unlogged, rich in wildlife and, despite what you might have read, will remain so even if exempted from the Roadless Rule. That’s because protecting the unique roadless values within the Tongass has long been a priority in Southeast Alaska and nationally. Congress has enshrined many of those protections in law, designating 5.7 million acres of wilderness and another 728,000 acres that are managed in a roadless state to maintain wilderness characteristics. Sweeping stream buffers authorized under another measure protect fish and wildlife habitat. When combined with national monument and other natural-setting land-use designations, more than 13 million acres of the Tongass are already explicitly restricted from resource development or are required to be managed as roadless areas. That’s nearly 80 percent of the forest. It is also critical to understand that all of the designations listed above, and all of the protections they afford, will apply to the Tongass regardless of what happens with the Roadless Rule. Most would agree that prohibiting development on such vast expanses within a 16.7-million-acre forest demonstrates sufficient protection. That is why so many Alaskans believe the burdensome Roadless Rule is unnecessary, and why we are urging the U.S. Forest Service to restore balance in its management by exempting the Tongass from it. The regulation, implemented at the last minute by the Clinton administration, prevents road construction, road reconstruction and timber harvesting across millions of acres in the Tongass. Many Alaskans believe the Roadless Rule should never have been applied to our state because of the uncertainty and barriers it imposes. It works against common-sense projects such as renewable hydropower — raising costs, extending approval timelines and causing some projects to be nixed altogether. That’s a real problem for Southeast Alaska, where less than 1 percent of the land base is privately held. The region’s social and economic health is closely tied to resource-dependent industries, including fishing, forestry, mining and tourism. All of those depend on reasonable access to the Tongass, but over the years, that access has been significantly reduced. The result? While much of the United States is experiencing record-low unemployment, many communities in the Tongass are seeing fewer job opportunities, diminished incomes, high energy costs and even declining populations as residents look elsewhere for stable year-round work. The Roadless Rule has hurt the timber industry, which now consists of just a handful of small, family-owned forest products companies. It also affects mining, transportation, energy and more. But it is critical — and only fair — to acknowledge that lifting the Roadless Rule would not automatically result in the development of more of the forest. New projects in areas where development is allowed would still have to secure all relevant federal approvals, including compliance with the Tongass Land and Resource Management Plan, the National Environmental Policy Act and other applicable laws such as the Clean Water Act. The one-size-fits-all Roadless Rule is an unnecessary layer of paralyzing regulation that should never have been applied to Alaska. A full exemption from it has always been my preference, as well as the united preference of our state’s congressional delegation and that of Alaska’s governors, regardless of party. It will allow Alaskans to create needed opportunities for a sustainable year-round economy, while still being good stewards of our lands and waters. Lisa Murkowski is the senior senator from Alaska and the chair of the Energy and Natural Resources Committee.

GUEST COMMENTARY: How did we get the PFD formula in the Alaska statutes?

Editor’s note: This is the third installment of a continuing series on the Permanent Fund dividend and Alaska’s fiscal system. The Legislature created the formula for calculating the annual Permanent Fund dividend in the 1980s, but 2015 was the last year the formula was followed. Under a 2017 Alaska Supreme Court decision, the dividend amount is now set each year by the Legislature’s appropriation, subject to a veto by the governor. Given that the formula devised in the 1980s is still on the books, there is much debate over whether to follow that formula or change it. Where did this formula come from? Let’s begin with the formula now in the Alaska statutes, the collection of laws adopted by the Legislature over the years. The starting point is the annual net income of the Permanent Fund principal. The statutes characterize some of that net income as “income available for distribution,” currently defined as 21 percent of the Permanent Fund’s net income for the last five fiscal years (including the fiscal year just ended). The statutes direct the Alaska Permanent Fund Corp. to transfer each year to the Dividend Fund 50 percent of the income available for distribution. After deductions to pay for some dividend-related costs such as the expenses of running the dividend program, the amount left in the Dividend Fund serves as the numerator in the fraction that produces the dividend each year under the formula. The fraction’s denominator is that year’s total number of eligible Dividend applicants. Dividing that numerator by that denominator produces the annual dividend amount under the statutory formula. Some believe that the Legislature created the statutory dividend formula in 1982 by enacting the statutes establishing the per capita dividend we have today. This belief is incorrect in two ways. The first way that belief is wrong is that the 50 percent allocation of Permanent Fund’s earnings for dividends first appeared in 1977 in unsuccessful “Alaska Inc.” legislation for direct distribution. An allocation to the Dividend Fund of 50 percent of the Permanent Fund’s income available for distribution was also included in the original Permanent Fund dividend bill passed in 1980, which would have paid different amounts of dividends to Alaskans based on their different lengths of state residency. No dividends were ever paid under that “the longer you’re here, the more you get” bill passed in 1980, as a lawsuit blocked its implementation until the U.S. Supreme Court ruled in 1982 that the bill passed in 1980 was unconstitutional. Instead, all dividends have been paid under legislation adopted in 1982 that provides for equal payments for all Alaskans. The language with the 50 percent allocation for the Dividend Fund was one feature from the 1980 bill that stayed in the 1982 bill. Those of us who helped get that bill passed in 1982 talked about many issues involved in the per capita dividend legislation, but this 50 percent allocation was not one of them, because it just rolled over from the 1980 bill without discussion. (Fun fact: When the Legislature created the 50 percent allocation in the dividend bill adopted in 1980, the State of Alaska had a personal income tax; perhaps not quite part of the world that all those advocating for holding onto the original dividend formula long to return to.) The second way that “The dividend formula was created in 1982” story is wrong is that the Legislature has changed the dividend formula significantly since 1982. The biggest change occurred in 1986, when the Legislature changed the definition of “income available for distribution” from the average net income of the Permanent Fund for the last five fiscal years to 21 percent of the net income for the last five fiscal years. This change increased the base from which the 50 percent is allocated. The facts confronting the State of Alaska are much different than they were in the 1980s. Does the formula for Permanent Fund dividends created then make sense now? Cliff Groh is an Anchorage lawyer and writer as well as the legislative assistant who worked the most on the bill in 1982 that created the Permanent Fund Dividend we have today.

GUEST COMMENTARY: This land is your land

Woodie Guthrie didn’t mention Alaska by name in “This Land is Your Land,” his classic folk song celebrating the beauty and bounty of America, but he might as well have. We at the Alaska Department of Natural Resources share Guthrie’s belief that “this land was made for you and me.” That’s why I’m proud to share some of the ways we’re using our land and resources to benefit both Alaskans and visitors alike. Alaska is blessed with the largest system of state parks in the nation. Our Division of Parks and Outdoor Recreation manages 3.4 million acres and 156 state park units across the state. We welcome guests at 90 campgrounds and more than 80 public-use cabins, where folks can spend days and nights enjoying beautiful scenery and unmatched recreational opportunities for a nominal fee. It takes significant work to maintain and improve our parks, campgrounds, trails, parking areas and historic sites. Recent projects include repairing earthquake damage at Eagle River Campground and Eagle Rock Boat Launch, fixing winter storm damage at Anchor River and Deep Creek, improving trailheads in the Chena River Special Recreational Area, mitigating the impacts from spruce beetle damage at multiple sites, and installing a new foot bridge over Penguin Creek in Chugach State Park. Alaska’s selection of statehood lands on the oil-rich North Slope demonstrated we could keep our promise to use our resources to be self-sufficient. That effort to select lands important to Alaska’s future continues. Our Division of Mining, Land, and Water, or DMLV, is working cooperatively with federal agencies, Native corporations and other landowners to refine our remaining land selections so Alaska can receive the remaining 5.3 million acres of our 105.8 million acre statehood land entitlement. DMLW also defends Alaska’s claim to navigable waterways, and to public access to federal land across historic RS 2477 trails. And we’re pushing hard to correct federal errors in setting the western border of the Arctic National Wildlife Refuge, which would open more Alaska land for the oil development that generates oil royalties for state services and Permanent Fund dividends for citizens. Our respectful, but persistent requests that federal authorities remove 1970s-era Public Land Orders, or PLOs, blocking multiple uses and state control of state land found success this summer when the Bureau of Land Management lifted two PLOs on 1.3 million acres in Interior and Southcentral Alaska. But there’s more work to be done. For example, PLO 5150 was established in 1972 to guarantee federal access along most of the Trans-Alaska Pipeline System. Pipeline construction ended in 1977, but PLO 5150 remains, blocking development along this critical infrastructure corridor. Most importantly, Alaskans deserve the chance to own a piece of the land they love. DNR manages several successful programs that advance Governor Michael J. Dunleavy’s goal of putting Alaska lands into Alaskan hands. Our annual auction giving Alaskans first crack at bidding on state land with low-interest financing and 25 percent veterans discount has been such a success the governor added a fall sale. Properties unsold after Oct. 30 will join over 118 parcels currently available to Alaskans over the counter. (See dnr.alaska.gov/mlw/landsales) DNR’s popular Remote Recreational Cabin Site staking program lets qualified Alaskans submit bids for unimproved, remote land. DNR will also open bids Oct. 30 for three agricultural land tracts to help Alaskans grow the farming sector, diversify the economy and help enhance food security. DNR’s mission also doesn’t stop at the water’s edge. Ocean-ranching is a growing Alaska industry. DNR has 63 active leases of state-owned waters to grow oysters, mussels and geoducks, plus kelp, seaweed other aquatic resources. Another 22 leases are pending. Growing interest in mariculture has the Legislature considering a bill to help DNR speed lease renewals, build industry confidence and nurture growth in this new brand of resource development. Alaskans are rightly proud to live in a state where developing resources on the people’s land directly benefits the people. I am proud to lead Department of Natural Resources in working to deliver those benefits to Alaskans today, and those to come. I think Woody would be proud, too. ^ Corri A. Feige is commissioner of the Alaska Department of Natural Resources.

Efforts underway to streamline fisheries disaster relief

With an increasing number of fisheries disaster requests coming from all over the United States, members of Congress and the federal government are looking for ways to improve the relief process. Summer 2018 brought disappointing results for many fishermen across Alaska, particularly for sockeye salmon fishermen in the central Gulf of Alaska, but only two fisheries were officially granted federal disaster declarations: the 2018 Chignik sockeye salmon run and the 2018 Pacific cod fishery. While many other fishermen at least got a few fish to fill their wallets, Chignik fishermen had virtually no season, and Gulf of Alaska Pacific cod fishermen saw their total allowable catch reduced by 80 percent from 2017 because of low abundance. U.S. Secretary of Commerce Wilbur Ross announced a dozen commercial fishery disaster declarations Sept. 25 for the 2018 calendar year. Congress appropriated $165 million for fisheries disaster relief, to be allocated according to the losses in revenue for the selected fisheries. It’s the second time in recent years there have been disastrously poor returns to some fisheries. In 2016, the failed pink salmon run across the Gulf of Alaska left many fishermen holding empty nets, particularly in Kodiak and Prince William Sound, resulting in a disaster declaration in 2017 and eventually $56 million in relief funds for stakeholders. However, because of the long federal application and funding process, fishermen just received those disbursements in July 2019, nearly three years after the disaster. The slow process isn’t unique to Alaska. Senate Bill 2346, introduced by Sen. Roger Wicker, R-Miss., in July, seeks to speed up that process, in part by expediting relief funds being disbursed to fishermen. It also seeks to add avenues for relief for non-commercial fishermen, including charter operators. Fisheries disasters can be awarded in a variety of circumstances, including natural disasters, undetermined causes or causes beyond the control of fisheries managers. However, the current process only includes commercial fisheries, said Chris Oliver, the assistant administrator for the National Marine Fisheries Service. “I think the law should provide clarity and direction to us as to whether we could and should include (charter or sport fisheries) revenue losses in the calculation,” he said in a Sept. 25 hearing of the Senate Committee on Commerce, Science, and Transportation. NMFS is aware of the delay problem and is actively developing regulations for the disaster process that will streamline and improve it, Oliver wrote in his testimony to the committee. He wrote that SB 2346 aligns with many of the federal administration’s priorities for streamlining the process, such as providing deadlines for key steps in the process and clear requirements for what requestors need to submit. Rachel Baker, the deputy commissioner for the Alaska Department of Fish and Game, wrote in her testimony to the committee that while the process of declaring a disaster is well understood, distributing relief monies is less clear. The delay may make the process seem less useful to stakeholders, she wrote. “Under the current process, there is little to no guidance for requestors or the public describing the steps in the process or the criteria being used by the federal government to evaluate proposed spending plans for disaster relief funds,” she wrote. “This lack of clarity makes it challenging to navigate the process and inform affected fishery participants and the public about the potential outcomes and timelines for evaluation of a proposed spending plan and the distribution of disaster relief funds.” During the hearing, Sen. Dan Sullivan asked Oliver if the bill should provide more guidance to the National Oceanic and Atmospheric Administration and NMFS on how to determine disaster declarations and funding. “I think part of the point of the bill is that NOAA and, significantly, (the Office of Management and Budget) might have too much discretion under current law and not enough direction when it comes to the fisheries disaster process,” Sullivan said. “(Wicker’s) bill remedies that.” Ron Warren, the director of fish policy for the Washington Department of Fish and Wildlife, wrote in his comments that Washington has seen an increase in both the frequency and severity of fisheries disasters due to natural disasters since 2008, disrupting the state’s significant fishing economy. The delay in relief funding following the 2015 coho disaster was “especially concerning,” he wrote, as the request from Washington had been fast-tracked. “Given that NOAA scientists have noted another marine heatwave occurring off Washington’s coasts since June of this year, which may be comparable to that observed in 2014, our fisheries could face another disastrous year in 2020,” he wrote. “If that occurs, the local businesses within our fishing communities cannot wait another three years for any potential relief. These processes must be streamlined and improved — it’s that simple.” The Washington Department of Fish and Wildlife raised a few concerns about the bill in its current form, noting that the bill should ensure fast-tracked disaster relief funding shouldn’t come from other areas of NOAA operations and that fisheries remain a priority, especially when competing with aquaculture operations, Warren wrote. In their comments, multiple senators connect climate change impacts with increasing instability in fisheries. Outside Alaska, multiple Florida fisheries have been impacted for the past four years by increasingly pervasive algal blooms, and the flooding in the Mississippi River basin in 2019 led to freshwater incursion into the delta and Lake Pontchartrain, killing the majority of the oysters in the Mississippi Sound. Washington state has asked for two fisheries disaster declarations in 2018 and 2019, following a sweeping coho salmon disaster declaration from 2015. Warren told the committee that scientists have connected the recent decline in salmon runs to “the Blob,” a persistent ocean temperature anomaly in the Pacific Ocean from 2013-16 that was connected to a number of ecosystem disruptions. Oliver said in answer to a question that NMFS doesn’t have “the specific data” to say whether climate change will definitively increase fisheries disasters, though scientists have generally agreed that warmer ocean waters have contributed to an increase in harmful algal blooms and increased hurricane frequency. “I think that we are seeing movement of fish from one area to another,” Oliver said. “Whether those particular fish patterns of movements as they’re affected by warm water result in disasters would be difficult for me to speculate. Whether those changes result in fisheries disasters or not, we are in a constant pattern of trying to understand that so we can respond.” Elizabeth Earl can be reached at [email protected]

Coal as power source hits 40-year low

The volume of coal burned in the U.S. to generate electricity hasn’t been this low in almost 40 years — and it’s getting lower. After decades with coal at No. 1, natural gas took away the nation’s top spot for power generation in 2016 and hasn’t looked back. Coal-fueled power generation was at 48 percent of the U.S. electricity supply in 2008, down slightly from 50 percent in 1968, but it’s been in a steep downhill run the past decade. Coal’s share of the power mix plunged to 28 percent in 2018, according to the U.S. Energy Information Administration. The EIA projects coal’s share of electricity generation to fall to 25 percent in 2019 and 22 percent in 2020. And it’s not just low-cost natural gas that’s eating away at coal. It’s renewable energy. Electricity from renewables passed coal-fired power in April for the first time ever, the EIA reported. Renewable sources — which the EIA defines as hydroelectric, wind, solar, geothermal and biomass — provided 23 percent of total electricity generation to coal’s 20 percent for the month. It was a little bit of a seasonal anomaly, the agency explained, as overall U.S. power consumption is the lowest in the spring, with coal- and gas-fired power plants often undergoing maintenance during the slow period. Record generation from wind and near-record generation from solar contributed to the overall rise in renewables this spring, the EIA reported. Regardless of the asterisk on renewables passing up coal for one month, the EIA expects coal to remain ahead of renewables on an annual basis in 2019 and 2020. Renewables, however, will be the nation’s fastest-growing power source for at least the next two years, the agency said in January, on their way toward someday passing coal for an entire year. The cost for wind and solar power is dropping, making renewables more attractive as utilities, industries and states strive to reach emission-reduction targets. Northern Indiana Public Service Co. wants to be coal-free in 2028. Working toward that goal last year, it accepted bids from energy developers and learned that a mix of wind, solar and batteries would be cheaper than building a new gas plant to replace its retiring coal units, The New York Times reported. “Renewables in our particular situation were far more competitive than we realized,” said Joe Hamrock, chief executive of the company that owns the utility. “It’s hard to see any scenario where coal rebounds,” Joe Aldina, manager of coal research at S&P Global Platts Analytics, was quoted by CNN Business in September. Just since the January 2017 inauguration of President Donald Trump, who pledged during his winning campaign to bring back coal-mining jobs, approximately 15 percent of U.S. coal-fired power plants have retired, according to Platts. The energy reporting and analytics firm expects an additional 10 percent of the nation’s coal fleet will close down in 2019-20. “Coal is going to get phased out over the long term,” Aldina told CNN. Duke Energy, one of America’s largest utilities, announced in September its goal to achieve net-zero carbon emissions by 2050. “Retiring coal plants is an important part of achieving this objective,” said Lynn Good, Duke Energy’s CEO. Duke Energy plans to retire seven coal-fired units by 2024. That’s on top of the 49 coal units that have been shuttered since 2010, CNN reported. Besides losing power plants and coal-mining jobs, the industry is losing money and finding itself in bankruptcy court a lot more. More than half a dozen large U.S. coal companies have filed for bankruptcy in the past year, The Wall Street Journal reported Oct. 13, predicting that more companies are headed that way. The bankruptcies follow an even higher number of filings in 2015 and 2016, with the increasingly bad news hitting miners in Appalachia and the Powder River Basin of Wyoming and Montana. “Even if you have a totally clean balance sheet, if you can’t get the coal out of the ground at a price that works you’re going to have a problem,” Fredrick Vescio, a director at investment bank Houlihan Lokey, told the Journal. It’s not just small companies going under as demand for coal heads lower. Murray Energy, the nation’s largest private coal company, reported Oct. 2 it has entered into forbearance agreements on interest payments due on its debt. The move buys time to look at restructuring options. The closed power plants, closed mines and bankruptcies come as the coal market continues to get smaller, regardless of President Trump’s decisions to roll back environmental restrictions on coal-fired plants. The president cannot change the economics of cheap natural gas to generate electricity. Gas prices hit 20-year lows for the electricity-heavy air conditioning months of June and July this summer, averaging $2.40 and $2.37 per million Btu, respectively, according to EIA numbers. Next year could be even lower. Global energy consultancy IHS Markit reported Sept. 12 that the oversupply of gas in the United States could drive average prices in real terms at the Henry Hub benchmark to a level not seen since the 1970s. The analysts are predicting U.S. prices will average $1.92 per million Btu in 2020. At that price, it’s becoming increasingly difficult for power generators to pass up cleaner-burning gas. “I think that a lot of the management and boards of the coal-mining companies were unwilling to admit that this was really going to happen,” Karla Kimrey, a former vice president at Cloud Peak, which had roughly 1,235 employees when it filed for bankruptcy in May, told The Wall Street Journal. “Clearly, President Trump is an advocate for coal, but the ones who really matter are the senior utility executives who are deciding where electricity generation will come from in the future,” the Journal quoted Mark Levin, a managing director and senior analyst at Seaport Global Securities. Generating companies have plans to add more than 150 new gas-fired power plants across the country, the U.S. Environmental Protection Agency reported earlier this year. Larry Persily is a former Alaska journalist, state and federal official who has long tracked oil and gas markets and projects worldwide. He is the Atwood Chair of Journalism at the University of Alaska Anchorage School of Journalism and Public Communication.

Port commission tackles tariff schedule with year-end deadline

The traditionally mundane process of updating the fees charged to use the Port of Alaska has turned contentious as city officials search for ways to pay for repairing the ailing docks. Anchorage Municipal Manager Bill Falsey told the Anchorage Assembly’s Enterprise and Utility Oversight Committee Oct. 17 that port managers had come up with four basic options for updating the tariffs levied on the goods and materials that cross the docks at the port. “Before the year’s end we have to have something in place. That means big decisions have to be made,” Falsey said to Assembly members, noting the current tariff schedule is set to expire Dec. 31. The baseline, “keep the lights on” option would follow historical practice and provide port officials the revenue to conduct routine maintenance on facilities — which now includes about $2 million per year to repair dock support piles weakened by corrosion — while keeping 90 days of cash in reserve. The actual baseline tariff increases would be 3.5 percent for 2020, 3.93 percent in 2021 and 3.01 percent annually through 2027 with flat rates to 2029, according to an Oct. 10 letter Falsey sent to the Port Commission. Falsey has long stressed that the municipality would not raise tariffs to a point that would unduly burden Alaska consumers or would drive business away from the port and prevent the expected revenue from being raised. However, the port users contend the proposal reneges on a commitment city officials made when work was approved to rebuild the Petroleum and Cement Terminal, or PCT. They understood city officials to mean port tariffs would not be raised at all to fund PCT construction when the initial contract was awarded, the users claim. The Port Commission is an advisory group to the Assembly that historically has agreed with the tariffs recommended by officials at the municipal-owned port. Port tariffs have usually been updated on a five-year basis, but the need for long-term funding has pushed city and port officials to look at a 10-year schedule. The remaining three proposals would raise varying levels of additional funds through greater petroleum and cement tariffs to pay for at least part of the new petroleum and cement terminal, or PCT that will start to be built next year. In late July the Anchorage Assembly approved a $42 million contract for the first year of PCT construction but an informal consortium of the primary port user companies objected, highlighting the fact that the municipality does not have funding to pay for a second year of PCT work to finish the new dock. User company representatives at the time said they worried city and port officials would attempt to raise tariffs to cover the cost of finishing the PCT in late 2021. Overall cost estimates for the PCT have come down from approximately $220 million initially; the city now expects to need $81 million to finish it, according to Falsey’s letter. The PCT is the restart of major construction work at the Anchorage port — officially renamed the Port of Alaska in 2017 — since 2010 when severe damage to installed sheet pile was discovered and the port expansion project was halted. That project spent roughly $300 million of public money but left little to show for it. No one disputes that the aging docks at the port need to be overhauled or replaced, but how quickly that should be done while city and port officials try to reduce costs from a $1.9 billion ballpark price published in January is at the heart of the debate. Many port stakeholders fear large increases on fuel import tariffs could ultimately be felt at Ted Stevens Anchorage International Airport, where international air cargo carriers stop to refuel on flights between Asia and the Lower 48. The business model of carrying more cargo and refueling in Anchorage instead of carrying more fuel and overflying Anchorage could be disrupted by even small changes to fuel prices, they say. That air cargo traffic has made the Anchorage airport one of the five busiest cargo hubs in the world and has recently spurred several large warehouse development plans there. According to Falsey, he had said tariffs would not be increased to fund next year’s work. He said during the Oct. 17 committee meeting that he believes there is an “emerging consensus that tariff adjustments of some sort are inevitable.” “We’re going to need help and back and forth from the user group to figure this all out but we’re committed to figuring something out,” Falsey said. The increased tariff revenue likely wouldn’t be applied directly to the construction work because much of it would come after the work would hopefully be done. Instead, it would pay the long-term debt service on revenue bonds the port would sell to fund the work up-front and pay back over time. The city is applying for federal grants to fund portions of the work, but the prospect of that money is still uncertain. A second option would generate approximately $41 million to finish in-water work on the PCT in 2021 by increasing the petroleum and cement tariffs by 120 percent in 2020 and 1.31 percent per year afterwards through 2029. More specifically, it would raise the current petroleum tariff of 16.4 cents per barrel to 36.2 cents per barrel in 2020 and 40.7 cents per barrel by 2029. The cement tariff would increase by approximately $2 per ton in 2020 and much smaller increments in subsequent years, according to the letter. Finishing the in-water work in 2021 would largely alleviate permitting risks for the project, Falsey said, as the port has a two-year permit from the National Marine Fisheries Service to do the work in the habitat of endangered Cook Inlet Beluga whales. City and port officials have also said a structurally sound but unfinished PCT could be used as an emergency cargo dock if an earthquake or other event took the current cargo docks out of service. The fuel and cement companies that use the port have declined to specify exactly how significantly the higher tariffs would impact their business, but they have said it would force them to evaluate their options. Falsey has said the user companies’ somewhat understandable reluctance to disclose sensitive business information makes it difficult to forecast the impact of any tariff changes. Raising $81 million to finish the PCT in 2021 would require raising the tariffs by 235 percent next year, or by 39 cents per barrel of fuel and $3.93 per ton of cement. Those rates would remain unchanged through 2029, according to municipal figures. Making the PCT functional for offloading cement shipments would cost approximately $60.5 million and would raise the tariffs by 176 percent next year and 0.61 percent subsequently. Falsey said year-to-year adjustments could be made to the tariff schedules as long as the revenue goals would be met. He also suggested the Assembly and commission start considering tariff changes for bulk container cargo that crosses the docks to prepare for replacing the port’s cargo terminals — work that is expected to cost hundreds of millions of dollars. “We all believe now that the cargo side of the (port modernization) program is kind of back to the drawing board. I think we have in mind ways to skinny the cargo side of the project way down. We don’t yet have a consensus on what that’s going to look like,” Falsey said. “We do know it’s going to cost something and it’s going to be expensive.” Port Commission members said they are reviewing the tariff documents but have not come to a decision. A commission meeting to discuss the tariffs is scheduled for Oct. 23. Elwood Brehmer can be reached at [email protected]

Providence opens new line of express clinics across Anchorage

Anchorage residents will soon have access to a brand new type of medical service that Providence Health and Services claims will be faster, cheaper and accessible to everyone. The hospital group this month announced the launch of its ExpressCare services, debuting with five sites across the Anchorage bowl and telemedicine services available statewide. Some of the goals, according to program managers and providers, are to create a “front door” for patients who might not otherwise have a connection to primary care and to create another venue of care for patients who may not need a higher level of acuity. By the beginning of next year, Providence Health and Services will have five Express Care clinics: four in Anchorage and one in Eagle River. The first site, located at 1389 Huffman Park Drive in South Anchorage, opened in mid-October and has already begun seeing patients, said ExpressCare clinic manager Cindi Cieslak. Providence Health and Services already operates ExpressCare services in Washington and Oregon, but the Anchorage program originated from a market survey Providence conducted, said Tom Yetman, the chief executive of Providence Medical Group Alaska. “Instead of telling patients what we were going to do for them, we asked them what they wanted,” he said. “(They wanted) quick care, close to home, seven days a week.” ExpressCare is a step down from urgent care. Urgent care clinics typically provide some level of imaging services; the ExpressCare clinics will provide basic diagnostic tests and vaccines, but will escalate services like imaging and more acute conditions to urgent care clinics, primary care or, in some cases, to the emergency room. The broader availability, quick service and low-acuity services of an ExpressCare clinic would be best suited for low-acuity conditions, Cieslak said, such as an ear infection. The overutilization of emergency departments — where patients with conditions that don’t require the services of an emergency room go there anyway — has been recognized as a problem across the country. Emergency departments are some of the most expensive places to get care. Urgent care centers have proliferated in recent years nationally; between 2013 and 2018, the number of urgent care clinics has grown by more than 30 percent, from 6,100 to 8,447, according to the Urgent Care Association. Yetman said Providence thinks of ExpressCare as not competing directly with primary care or urgent care clinics. Instead, they envision the service reaching patients who may not have necessarily had contact with the medical system before, or who may have gone directly to the emergency department before. “It’s a very nice front door to care,” he said. “If you don’t need an ER, it’s the worst place to get care. It drives up costs for everyone … and you end up waiting a lot.” The care is also designed to be affordable. The clinics accept all insurances, and a visit costs $149. One of the ways they keep costs down is by using advanced practice professionals and certified medical assistants, and by opening clinics in areas with less expensive real estate around the Anchorage area. The location of the clinics also better serves many patients’ needs by being closer to their homes, Yetman said. Though the ExpressCare clinics are all in the Anchorage Bowl area, they’re actually accessible statewide — along with the clinic launches, they will see patients via telemedicine on a virtual platform through an online scheduling system. In addition to being faster and more accessible for some patients, they’re also cheaper at $49 per visit, Cieslak said. The availability of cheaper, lower-level care is appealing for multiple partnering organizations involved with ExpressCare, too. Rhonda Prowell-Kitter, chief financial officer for the Public Education Health Trust, said the organization is excited about the availability of ExpressCare as part of a long-term initiative to reduce costs across the board in the health care industry and for its members. The trust represents school district employees from various districts around the states, including thousands in the Anchorage area. Jill Gaskill, a family practice physician with Medical Park Family Care in Anchorage and a collaborating physician for ExpressCare, said she also thought it was a market likely not being tapped right now. Many people in Anchorage briefly or who don’t regularly go to the doctor may not have an established primary care physician, but may not need a full urgent care visit or emergency department service. “The way I would see this is as an extension of what we are able to provide in a family care clinic,” she said. “I do think that from what Providence has talked to us about and what they’ve kind of been promoting this (is) a way to fill in the gaps. A real key component of that is that there is a real communication base. It’s on Epic (electronic medical records system), which almost every provider is able to access as well.” The hours and accessibility are features that may help reduce emergency department use and connect people with the appropriate setting of care for their needs, she said. For example, primary care physicians are often scheduled several weeks to a month out, and urgent care clinics are not always close or open for the hours someone is looking for. She gave the example of flu cases, which often send people to emergency departments. At the same time, she said there will likely be a learning curve for patients to figure out what kinds of problems are acceptable to be treated at a place like ExpressCare. The clinics are connected to the larger Providence system, which allows them access to Providence’s patient health records, but the information still has to be sent to primary care providers in outside clinics. “It really does fall on the patient to try to figure out, ‘How acute is my problem?’ They don’t really know,” Gaskill said. “I think there will be a little bit of a learning curve. They don’t necessarily know… The other way I think express care will really meet a need is it will provide a door into primary care.” ExpressCare has a list of conditions appropriate at the clinics on its web page and is quick to escalate problems to a higher level of care if necessary, Yetman said. There is still a place for patients’ relationships with their primary care physicians, too, who may help them manage chronic conditions or more complex health problems than a smaller, quick clinic can deal with, too, Gaskill said. “We’re approaching this a little bit of an experiment, to see what we can do to make care for patients better in Anchorage,” she said. “Nobody likes to not have any option when they’re sick. The last thing we want them to do is to go to the ER. It’s always been the last step; if you can’t get access in any of the other ways … I think what we’re doing is trying to make that ladder (toward the high end of the acuity scale) a little bit taller.” Elizabeth Earl can be reached at [email protected]

Europe’s specialty food makers brace for US tariffs

MILAN (AP) — European producers of specialty agricultural products like French wine, Italian Parmesan and Spanish olives are facing a U.S. tariff hike that took effect Oct. 18 with a mix of trepidation and indignation at being dragged into a trade war they feel they have little to do with. The tariffs on $7.5 billion worth of European goods were approved by the World Trade Organization as compensation for illegal EU subsidies to plane maker Airbus. The U.S. has some leeway in deciding what goods it puts tariffs on. So while it is taxing European aircraft 10 percent more, it is walloping agricultural products an extra 25 percent. “It’s a nightmare,” says Aurélie Bertin, who runs the 700-year-old winery Chateau Sainte-Roseline in southern France. “We don’t know what will be the result.” Her rosé wine business has boomed in recent years thanks to American demand for the beverage. She fears her U.S. sales could drop by a third under the new tariffs. The punitive taxes take particular aim at European agricultural products that have a “protected name status.” Those are goods that can be sold under a name - like Scotch whisky or Manchego cheese - only if they are from a particular region and follow specific production methods. The result is they fetch premium prices, protect cultural heritage - and are shielded from competitors. U.S.-made Parmesan cheese, for example, is not allowed access to the European market as a copycat of the traditional Parmigiano Reggiano and Grana Padano - a barrier that the U.S. milk producers lobby are pressuring to bring down. Italian President Sergio Mattarella sought to impress on U.S. President Donald Trump during a White House Visit on Wednesday that the taxes may result in a “mere race between tariffs” after the WTO decides Europe’s case later this year over U.S. subsidies to Boeing. Trump was undeterred. European producers feel they are collateral damage from a political squabble entirely unrelated to their business. “We consider that we are hostages of politics. We are very, very far from aeronautics, even if our wines are served on planes every day,” said Burgundy wine producer Francois Labet. The president of the Parmigiano Reggiano cheese consortium, Nicola Bertinelli, said that its members “are embittered because one of the strongest sectors of our economy is being unjustly hit.” He noted that Italy doesn’t even participate in the Airbus consortium of countries that prompted the penalties. The four stakeholders in Airbus — Spain, France, Germany and Britain — were targeted with more tariffs than other EU countries. Spanish olives, for example, have been singled out, while those from Italy and Greece have been left alone. That has created additional anxieties, with Spanish olive producers worried that U.S. buyers will turn to buying from Italian companies instead. The U.S. tariffs appeared to be selectively chosen to hit premium items that well-heeled U.S. consumers could continue to afford even at higher prices — and not sectors that would more directly correlate to the unfair subsidies for Airbus, which could put a damper on the U.S. economy, said Gianmarco Ottaviano, an economics professor at Milan’s Bocconi University. “We don’t see a lot of tariffs on things that Italy is exporting a lot, like machinery. The reason is that this is probably more useful than Parmesan cheese to the U.S. economy,” he said. “You want to punish, but at the same time, you don’t want to shoot yourself in the foot.” A tariff is essentially a tax on importers and for small U.S. retailers , they come at a bad time ahead of the holiday season. WTO-authorized sanctions are supposed to prod the trade combatants into resolving their differences. But Trump, who has labeled himself “Tariff Man,” has enthusiastically slapped import taxes on foreign steel and aluminum and on thousands of Chinese products in separate disputes and has bragged that the levies raise revenue for the U.S. government. “There should be negotiations,” said Rufus Yerxa, president of the National Foreign Trade Council in Washington and a former U.S. trade official. “Unfortunately, it seems like we’ve got a president who’s tariff happy. That makes it harder to get those kinds of negotiations and remedies in place.” U.S. wine retailers, distributors and importers already expect some customers to seek alternatives from countries whose products aren’t being taxed. And any signs that customers are balking at higher prices will force retailers to absorb their increased costs. The vice president of Italy’s main industrial lobby, Lisa Ferrarini, said that European producers could in the longer-term shift exports away from the U.S. market. But director of the Spanish food and beverage industry director disputes that logic, saying, “there is no alternative to the American market.” European producers and diplomats were still pressing for a last-minute change of heart using all available channels, from social media to diplomacy. Italy’s agriculture minister, Teresa Bellanova, tweeted a photo to Trump promoting grapes and Italian Parmesan as a healthy snack, and the president of the Emilia Romagna region, where much of the cheese is produced, has launched a social media campaign in support of the product. Trump, meanwhile, rebuffed Mattarella’s in-person overtures, arguing that Europe “has taken tremendous advantage of the United States.” France’s finance and economy minister, Bruno Le Maire, will make another attempt to soften the tariff blow when he meets with U.S. trade negotiator Robert Lighthizer in Washington on Oct. 17. Le Maire told Europe 1 radio he will warn Lighthizer that Europeans would strike back if the tariffs took effect on Oct. 18. “We, Europeans, will take similar sanctions in a few months, maybe even harsher ones - within the framework of the WTO - to retaliate to these US sanctions,” he said. Parker reported from Paris. Daniel Cole in Marseille, France, and Joyce M. Rosenberg in New York and Paul Wiseman in Washington contributed to this report.

Movers and Shakers for Oct. 27

Steven J. Patin has been named chief Human Resources officer for the University of Alaska effective Oct. 25. Patin, who succeeds Keli Hite-McGee, currently is vice president at Alaska Communications overseeing all aspects of the company’s customer service functions. Patin joined Alaska Communications in 2011 and in his many roles at the company, he has managed its lean enterprise transformation, led field operations across Alaska and the Lower 48, and served as the company’s senior director of business transformation. Prior to his time at Alaska Communications, Patin enjoyed a distinguished military career in the United States Army, and retired in 2011 at the rank of lieutenant colonel. He served at various locations worldwide and as part of multiple contingency deployments. Patin has also served as a member of the UA Anchorage School of Nursing Community Advisory Board. He also served as professor and head of the Department of Military Science at UAF and led the expansion of the Army ROTC program at UAA in 2009. Patin has served as Deputy Chief of Staff, United States Army Alaska, as a Senior Advisor to the President of the Royal Military School, Kingdom of Saudi Arabia, and Assistant Professor/Program Director in Leadership Studies, U.S. Military Academy, West Point. Kathy Moran is the new chief financial officer for Calista Corp. in Anchorage. She began her career in public accounting before overseeing financial operations for companies in a variety of industries including Alaskan Native corporations. Most recently she served as CFO at Goldbelt Inc. She has a bachelor’s degree in accounting from Virginia Tech. Calista’s former CFO Sharon Lechner will be refocusing on Calista’s vast real estate holdings as the president of Ena Holding LLC and special projects for the Calista. Northrim Bank announced the hiring of Jonathan Tibbs as vice president, commercial loan officer-Fairbanks, and the promotion of Jason Gentry to vice president, lending branch manager-Ketchikan. Tibbs joins Northrim with more than 14 years of experience in Alaska lending. He holds a bachelor’s degree in business administration with an emphasis in finance from Brigham Young University. He is also vice chair on the Education and Workforce Development Committee for the Greater Fairbanks Chamber of Commerce and a board member for the United Way of Tanana Valley. Gentry has been with Northrim Bank for one year and has more than seven years of experience in the financial industry. He grew up in Utqiagvik and attended the University of Alaska Fairbanks. Stacey Frutiger, EIT recently joined R&M Consultants Inc. as an environmental specialist in the firm’s Environmental Group. Frutiger brings five years of environmental consulting experience to R&M, with a broad range of experience in air quality compliance and permitting, water quality monitoring, storm water conveyance design, and soil contamination for both government agencies and private industry. She has also prepared National Environmental Policy Act documents for federally-funded projects in Anchorage and around the state; conducted air dispersion modeling; and prepared permit applicability analyses for private clients in the resource development sector. Since joining R&M, Frutiger has supported environmental efforts for the Northeast Trail Connector project in Anchorage, Camp Carroll Environmental Assessment for the Department of Military and Veterans Affairs, and the GCI Fiber Optic Project at the Port of Alaska and Alaska Marine Lines. Frutiger has a bachelor’s degree in civil engineering from South Dakota School of Mines and Technology and a master’s degree in environmental engineering from the University of Alaska Fairbanks. The Alaska Travel Industry Association announced its 2019-20 board of directors on Oct. 10 at its annual convention in Juneau. The Executive Committee is: Board Chair Dan Oberlatz, Alaska Alpine Adventures; Southwest Vice Chair Bill Pedlar, Knightly Tours; Outside Past Chair Elizabeth Hall, John Hall’s Alaska Cruises &Tours; At Large Secretary/Membership Chair Holly Johnson, Wings of Alaska &Taku Glacier Lodge; Southeast Treasurer/Finance Chair Dave McGlothlin, Holland America Group; Outside Marketing Chair Colleen Stephens, Stan Stephens Glacier &Wildlife Cruises; At Large Government Relations Co-Chair Julie Saupe, Visit Anchorage; Southcentral Government Relations Co-Chair Scott Habberstad, Alaska Airlines; Outside Tourism Policy and Planning Chair Josh Howes, Premier Alaska Tours; and Southcentral President and CEO Sarah Leonard, ATIA. The rest of the board of directors are: Bonnie Quill, Mat-Su Convention &Visitors Bureau; Brett Carlson, Northern Alaska Tour Co.; Dan Rough, Holland America Line; Deb Hickok, Explore Fairbanks; Dennis McDonnell, Alaska Coach Tours; John Binkley, Riverboat Discovery; Kirk Hoessle, Alaska Wildland Adventures; Kory Eberhardt, A Taste of Alaska Lodge; Patti Mackey, Ketchikan Visitors Bureau; Tennelle Peterson Wise, Grande Denali LLC; Lt. Gov. Kevin Meyer. Board elected seats are Camille Ferguson, Sitka Tribe of Alaska; Carol Fraser, Aspen Hotels; Craig Jennison, TEMSCO Helicopters; and Dale Wade, Alaska Railroad Corp. The Alaska Communications board of directors has named William “Bill” H. Bishop president and CEO. Bishop has served as Alaska Communications’ interim CEO since June 2019. He joined the company in 2004 and has served in several leadership roles, including senior vice president of customer and revenue management and chief operations officer. Bishop will also serve on the company’s board of directors. Bishop joined Alaska Communications in 2004 and has served in several leadership roles in consumer and business sales and operations, including director of retail operations, director of business and wholesale, vice president of business and wholesale, senior vice president of customer and revenue management and chief operations officer. He brings more than 25 years of telecom and business leadership experience to this role, including positions at AT&T, McCaw Communications, and a federal government logistics contracting company. Bishop holds a bachelor’s degree from the University of Alaska Anchorage. Alaska USA Federal Credit Union announced three new executives. Michelle Bradshaw has been selected to fill the senior vice president of IM governance position. Bradshaw is an accomplished, senior-level leader with more than 20 years of experience in technology and project management. She previously held the position of vice president, IM applications. Laura Moore has been selected to fill the position of vice president, IM applications. Moore has more than 20 years of experience in technology transformation and automation prior to joining Alaska USA as the applications group manager. Victoria Worley has been selected to fill the position of vice president, operations. Worley joins Alaska USA with more than 15 years of Alaska financial institution experience and will oversee credit union operational functions.

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