Bizarre salmon season winds down short of state projections

Editor's note: This article has been updated to correct that 21.2 million pinks had been caught in Kodiak in the 2020 season. On top all the other effects of the coronavirus pandemic, it’s been a strange year for Alaska’s commercial salmon fisheries. As the fisheries are winding down, the total landings are about 17 percent behind the projections statewide. The Copper River sockeye run was a flop, as was the chum run statewide, and the silver salmon harvest was down everywhere except Kodiak and Bristol Bay. Prices were down, too, and processors had the extra expense and responsibility of keeping workers healthy in remote communities at close quarters. Copper River’s early season sockeye openers seemed to bode ill for the state. After just a few paltry catches, the Alaska Department of Fish and Game closed the fishery, hoping to boost escapement. The reds just never showed up. The sonar at Miles Lake stopped counting July 28 and met the minimum escapement, but without a commercial fishery. Sockeye runs started similarly slowly in Upper Cook Inlet, and stalled out when poor king salmon returns led to a complete closure for East Side setnets and restrictions for drift gillnets in mid-July. Bristol Bay largely shrugged off the poor news of the early season, though, and delivered close to the same number of landings as last year: just 9 percent fewer, with about 39.2 million sockeye landed. On top of that harvest, the Egegik, Ugashik, and Naknek-Kvichak districts exceeded their sockeye escapement goals. The Naknek River blew its goal away; more than 4.1 million sockeye passed that river before July 21, the highest escapement on record, according to ADFG. Bristol Bay is the heavyweight in the wild sockeye salmon world; more than three quarters of the sockeye harvested in the state come from there. So the prices posted there for the beginning of the season are usually an indicator for what the value of the harvest is going to be. Usually. “What we’ve seen when it comes to salmon prices is a general decline across the state and across all species,” said Garrett Evridge, an economist specializing in fisheries with the McDowell Group. “Because Bristol Bay is such a high value fishery, a lot of attention is paid to the base price that is posted there, and that was down about 50 percent from last year. There’s a lot of reasons for that.” One of those reasons is because of all the costs processors had to swallow related to the pandemic. Bringing in workers, quarantining them, testing them regularly, and providing protective equipment is expensive. But on top of that, the Bristol Bay sockeye hit in a big pulse rather than being spanned out. Because of capacity, the processors generally moved toward head-and-gutting rather than more added-value products, like filleting and roe, Evridge said. While Alaska fish are entering a more favorable market because the retail sector is recovering and some other stocks haven’t been producing, like Russian farmed fish, prices are generally lower for farmed fish, which may harm the retail prices for Alaska fish, he said. There’s also the economic pressure on consumers to consider. Overall, it paints a picture of uncertainty for Alaska seafood. “2020 is an unusual year, and the early indicators are one of a decline in value, but we’re really going to have to wait and see how it all shakes out in terms of price adjustments made throughout this winter,” he said. “We will have a better handle on what the final price is in the spring of next year.” The Bristol Bay Regional Seafood Development Association noted strong retail sales in a press release Sept. 8, praising the fleet and industry for its pandemic prevention measures “Grocery and seafood retailers took notice of this year’s harvest, with several new partners signing on for summertime promotions of fresh sockeye salmon from Bristol Bay,” the organization stated. “Eight retail chains containing over 1,200 individual stores hosted branded Bristol Bay Sockeye Salmon promotions or promoted salmon from Bristol Bay online, with many seeing significant sales gains.” Kodiak also saw a significantly better season than other regions. As of Sept. 3, about 21.2 million pink salmon had been harvested, more than three times the harvest in 2018. The sockeye harvest was behind the 2019 landings, but silvers were slightly ahead, with 377,000 silvers landed. The South Alaska Peninsula is doing better than last year for pink salmon, with about 4.1 million harvested, but is still tracking behind the multi-year averages. On the other hand, Chignik experienced one of its worst seasons on record. Both the early and late sockeye runs were extremely weak, prompting closures on the commercial fishery there. Up until ADFG pulled out the weir in the Chignik River on Aug. 27, only 309,702 sockeye had been counted for the entire season, which wasn’t enough for either run to meet its escapement goal. That’s the third year in a row for the early run, and ADFG doesn’t project that any remaining fish will help the late run meet its escapement goal. The chum run made its escapement in the Chignik Management Area made its escapement, but the pink run did not. Two years ago, the community received a federal disaster declaration for a similarly poor run and closure and is just now seeing funds distributed to cover that disaster. Elizabeth Earl can be reached at [email protected]

Remote work perks don’t work for all professions

DALLAS — Working from home has become more than a way to get through the pandemic. It’s now a favored perk for some employees and a necessary lifestyle for others. For some companies, it’s also become a powerful recruiting tool. AmeriSave Mortgage Corp. has been hiring people from around the country to report to the office in Plano, Texas. By leading with the opportunity to work remotely, it’s attracted a flood of candidates even while raising the qualifications to apply. “I jumped on it because I’ve known about the opportunities at AmeriSave, and I didn’t want to leave my family in Nebraska,” said Noah Peters, who worked for the city of Omaha before becoming a work-from-home loan originator in July. “I’m an in-person kind of guy, but this was pretty seamless. I love what I’m doing and I’m happy I made the change.” Bottle Rocket, a technology firm based in Addison, Texas, adopted a “work from everywhere” policy early in the pandemic and said it was permanent. That caught the attention of three former employees in Seattle, Austin and California, and the company quickly rehired them. “These are very valuable hires who have the institutional memory of our culture and processes,” Bottle Rocket founder and CEO Calvin Carter said. “They were up and running instantly.” The new policy has also helped attract diverse candidates from the Dallas-Fort Worth area, Carter said. These were folks who weren’t willing to make a long daily drive to the headquarters in Addison. “These are benefits we didn’t see coming,” Carter said. “It makes us more competitive in the human capital wars.” But work from home doesn’t work for a lot of people. Many don’t have the right computer, software, broadband and training. Other jobs, such as serving food at a restaurant or performing surgery at a hospital, cannot be done from home. As a result, the work-from-home phenomenon is heavily skewed by education, ethnicity and industry. “This is one way in which inequality manifests itself, especially in the education gap,” said Karel Mertens, a senior economic policy adviser at the Federal Reserve Bank of Dallas and co-author of a recent working paper on remote work. In February, a similar share of the U.S. workforce was working from home regardless of education — roughly 7 percent to 8 percent, the study found. By August, 38 percent of college grads were still working remotely compared with 11 percent of those with a high school diploma or less. A greater share of white employees also worked remotely compared with Hispanics and Blacks, the study said. In hotels and restaurants, among the hardest-hit industries, only about 10 percent of workers were remote in August (based on February employment levels). By the same metric, half the workers in banking, finance and insurance were remote, the study showed. In professional and business services, one of Dallas-Fort Worth’s largest job sectors, 44 percent were working at home. “Certain conditions are needed to work from home, and there can be a lot of barriers,” said Laurie Bouillion Larrea, president of Workforce Solutions Greater Dallas, a nonprofit that manages government-funded programs for workers in the region. Larrea said gaps in education and communication skills can be significant, and many workers don’t have the space or money for a dedicated home office. She sees a mismatch in the local labor market right now: Most employers want workers to staff their physical facilities, but many unemployed want to work from home. Concerns are high about child care, remote learning for school and the risk of COVID-19. “This is the single biggest conversation we’re having with job seekers right now,” Larrea said. A statewide job bank shows that Dallas County currently has over 3,200 openings for laborers, material movers and counter clerks. Nearly 2,500 jobs are listed for production workers, truck drivers, assemblers and helpers for production lines. These jobs cannot be done from home, and Larrea warned about misinterpreting recent trends. Most remote workers are doing the same tasks as before the pandemic, she said, and that’s different from creating new remote positions. “Work-from-home jobs are not the same as work-from-home job postings,” Larrea said. “Many of these remote jobs are not for people who are unemployed now.” But AmeriSave’s openings were a good fit for Peters, who’s 37 and married with two kids, and has family near his home in Omaha. He took the company’s online training and passed a national exam for a mortgage loan originator’s license. To stay connected, he does a lot of webcam and phone work — daily huddles with colleagues and managers, group texts about sports and other trivia, and friendly competition over sales goals. It may not be the same as in-person contact, but it’s good: “I’m with these guys — and not with these guys — for eight to 10 hours a day,” Peters said. “There’s no real feeling of missing anything.” In a 2013 study of a major Chinese travel agency, researchers found that working from home led to strong productivity, low attrition and high job satisfaction. But remote working also reduced promotions by about 50 percent, in part because supervisors didn’t notice those workers as much. “One story that is consistent with this is that home-based employees are ‘out of sight, out of mind,’” the researchers wrote, dubbing it “a promotion penalty.” Peters in Omaha isn’t worried about his prospects at AmeriSave in Plano. In the past month, he’s seen the company hiring and promoting trainers, managers and team leaders. “Everyone’s in the same boat: We’re all remote,” he said.

Analysis: initiative would ‘erode’ Slope competitiveness

The leaders of Vote Yes for Alaska’s Fair Share insist their oil tax increase will provide upwards of $1 billion per year to the state when it’s needed most but an independent economic analysis of the measure concluded it would take an already marginally competitive regime to near the bottom of the heap. Irena Agalliu, the vice president of upstream energy at the London-based financial research and consulting firm IHS Markit emphasized that the oil production tax changes in the Fair Share Act initiative would be enacted at a time when the industry is facing two crises — the pandemic and an oil price collapse exacerbated by a dispute between Saudi Arabia and Russia. It’s a point industry advocates and other opponents of the tax increase have also highlighted in recent months. The sponsors of Ballot Measure 1 for the November general election counter that few, if any, oil projects are profitable at the very low prices seen while the most strict pandemic response measures were in place earlier this year. Agalliu discussed the IHS Markit comparisons of Alaska’s current and potential oil tax systems against other oil provinces domestically and worldwide during a Sept. 2 videoconferenced presentation hosted by the Alaska policy think tank Commonwealth North. According to the IHS Markit analysis of Alaska’s current and proposed oil taxes against Lower 48 and offshore international oil developments, the large North Slope oil fields the measure would apply to are currently more competitive based on average cash flow than many Lower 48 shale oil plays in the $35 per barrel price range because of higher private royalties across the rest of the country and the ballot measure would change that only slightly. However, Agalliu noted that investments in new projects simply would not be made in most places, including Alaska, based on those market prices. “At $35 per barrel a majority of the jurisdictions have a negative NPV per barrel,” Agalliu said of Alaska, Lower 48 shale and large offshore oil fields worldwide. NPV, or net present value, is a calculation of the cash outflows and inflows resulting from an investment, in this case in an oil field. IHS Markit analysts expect oil prices to eventually return to the pre-pandemic average of roughly $60 per barrel, according to Agalliu, but that may take two to three years, she said. In the $60 per barrel range, both the current tax, commonly referred to by its bill title Senate Bill 21, and the ballot measure begin to make large Alaska projects fade in terms of investment competitiveness both domestically and against comparable investments worldwide, Agalliu said. That’s because North Slope oil projects have relatively high development costs and the state’s tax regime is heavily progressive, meaning the net profits tax increases significantly along with oil prices. “The government in Alaska tries to capture most of the upside,” Agalliu said. Under SB 21, the 500 million-barrel North Slope field modeled by IHS Markit analysts has an NPV of $1.16 per produced barrel of oil. That same barrel would have an NPV of $0.25 under the Fair Share Act, according to Agalliu. “Under Ballot Measure 1 Alaska’s NPV is barely positive and even the current fiscal system yields four to five times lower value per barrel to investors than let’s say Brazil or U.S. Gulf of Mexico (oil projects),” she said. The Fair Share Act would increase both the current 4 percent gross minimum and the tiered net profits tax rates. Initiative backers stress that SB 21 has resulted in the state receiving less than 20 percent of the gross revenue from North Slope oil in recent years, while historically the state has gotten 28 percent of that pie. Opponents retort that the ballot measure would give North Slope projects a higher “government take,” or the amount of gross oil revenue captured through royalties and taxes, than nearly all of the Lower 48 unconventional oil plays they are competing for capital against. However, Agalliu said the government take metric does not always give an accurate comparison of project investments because projects can be uneconomic but have little government take. At a higher level, she said the frequent amendments and overhauls to Alaska’s production tax code over the last roughly 15 years have indeed impacted investment in one of the state’s primary industries. “There’s been reports of a loss of confidence in the investor system,” Agalliu said of Alaska, a point frequently noted by ballot measure opponents. She also said other states and countries — if they are going to change them — generally lower taxes during periods of low oil prices, while the Fair Share Act would do the opposite. Initiative supporters contend several of the state’s tax changes since the mid-2000s have benefitted industry, most notably SB 21 in 2013, and the price-tax relationships must be analyzed over the long-term, not just at low prices. Elwood Brehmer can be reached at [email protected]

Movers and Shakers for Sept. 13

Steve Brown is the new director for the U.S. Small Business Administration Alaska District Office. Prior to assuming the role of district director in August, Brown served as the chairman of the Bannock County Commission in Idaho for two years where he oversaw all county, support city and municipality government services for 88,000 citizens with a staff of 450 employees. From 2010 to 2017, Brown served on the Pocatello City Council and was council president for the last two years. He also served on the board of directors for the Bannock Development Corp. and the Pocatello Development Authority where he helped both organizations build the economic health of eastern Idaho. Additionally, Brown has worked as a regional director for former U.S. Sen. Larry Craig and U.S. Rep. Mike Simpson, both of Idaho. Brown has also owned several small businesses including an insurance agency and a consulting company which he operated for 24 years. Four women will take on new leadership roles at Anchorage-based Thompson &Co. Public Relations. Ariel Walsh-Amand and Ally Day will help lead the agency’s executive strategy, and Bri Kelly and Kailee Wallis will contribute to the agency’s senior management team. Walsh-Amand was promoted to chief operating officer. Walsh-Amand is already an expert in onboarding new employees, accounting and managing employee benefits, among many other skills developed over 11 years at T&C. Day was promoted to vice president, Client Services. Day brings 10 years of T&C experience in leading client successes to the agency’s executive strategy team with her promotion. Day will further develop T&Cs client services practice with a focus on client-agency relationships, retention and continuity. Kelly was promoted to senior account manager. After nine years at the agency, Kelly will also take on an increased role as mentor for T&C’s management team. Wallis was promoted to Digital director. Wallis is a founding member of T&C’s digital team, and she has largely contributed to it being T&C’s fastest-growing department. Having helped create the path for digital services offered at the agency, Wallis will lead the digital department in mediums like graphic design, video, photography, social media strategy and more. Stephanie Gann has joined KeyBank as branch manager of the Behrends branch in Juneau, which is scheduled to re-open Sept. 8. In this role, she will be responsible for day-to-day operations and coaching her team, as well as providing financial services, including investments and mortgages, to both small business and consumer clients. Gann relocated from Phoenix, where she was branch manager for the Delta-T Group and managed regional sales. She has also served as a senior business development manager for Accountants International and as an assistant branch manager for a mortgage company. She graduated from Santa Clara University with a bachelor’s degree in finance.

FISH FACTOR: Senate debate on for Kodiak; legislators get earful over board picks

Kodiak has again scored a first debate between candidates in one of Alaska’s most high-profile political races: the U.S. Senate. Kodiak has been hosting debates for congressional and gubernatorial hopefuls since 1999 with a single focus: Alaska’s seafood industry. The date and format for the U.S. Senate faceoff are still being finalized, but it will occur in close proximity to the annual ComFish event on Sept. 17 and 18, bumped by COVID-19 from its traditional dates in March, and now set to be a virtual experience. Republican Sen. Dan Sullivan and Independent challenger Dr. Al Gross are working out the details of their participation, said Sarah Phillips, executive director at the Kodiak Chamber of Commerce and ComFish organizer. Viewers can livestream the debate via Facebook, YouTube and the comfishak.com website, Williams said. Those platforms also will be used for the many educational forums that will be presented virtually and made available online long after. Phillips is certain there will be a great deal of interest in the debate and ComFish events, based on the response to a virtual five-day annual Crab Fest the Chamber successfully pulled off last month. “We actually had an audience of 44,000 tune in for Crab Fest so we got a lot more reach than we typically do,” she said. “We are very aware that we have a big audience outside of Kodiak.” Still, Phillips admits that Islanders will miss the swarm of visitors, trade show exhibitors and industry experts that normally fill the town during a normal ComFish. “We can’t deny that our local hospitality industry is very highly impacted by this,” she said. “Everything from our hotels to our B&Bs and restaurants and bars. Kodiak is a really fun place for our attendees and vendors to come to, and we are missing that significant economic driver. And our fishing industry really relies on the goods and services and information that ComFish brings.” On a related note, Pacific Marine Expo also has canceled its event planned for early December in Seattle. A virtual “Expo Online” will instead be presented by National Fisherman on Nov. 17-19. BOF earful Hundreds of Alaskans gave legislators an earful at recent hearings on controversial appointees to the Board of Fisheries, which oversees management of the state’s subsistence, commercial, sport and personal use fisheries. Comments are still being accepted and had topped 500 after two virtual hearings, one on Aug. 28 convened by Sen. Peter Micciche, R-Soldotna, and another held jointly by the House Fisheries and Resources committees on Sept. 3, where more than 100 people also called in to testify. The overwhelming majority of Alaskans expressed polite outrage at Gov. Mike Dunleavy’s selection of Abe Williams of Anchorage, director of regional affairs for the Pebble Partnership. He would be the second member to be affiliated with Pebble should he be approved by the full legislature. During the five-hour Sept. 3 hearing, only four spoke in favor of Williams’ appointment. Nearly all comments also sharply criticized the makeup of the seven-member board that would be dominated by sportfish seats, and that only one member, John Jensen of Petersburg, represents a coastal fishing region. Alaskans also finally got a chance to hear from unknown appointee McKenzie Mitchell of Fairbanks, a self-proclaimed hunting and sportfish guide, small plane enthusiast and an adjunct professor in “economics and recreation management” at the University of Alaska Fairbanks. As credentials for serving on the board, Mitchell offered her graduate thesis titled “Determinants of Anglers Willingness to Pay to Support the Recreational (Halibut) Quota Entity Program.” (Halibut is not a state managed fishery; it falls under the jurisdiction of the International Pacific Halibut Commission.) Rep. Geran Tarr, D-Anchorage, revealed that Mitchell had never attended a board meeting until after she was appointed by the governor, and directly questioned her lack of qualifications and experience to serve on such a complex board. Ms. Mitchell’s verbatim response: “Yeah, absolutely. Thank you for that question. I can understand that I have not really been involved in this process, you know, prior to the appointment and last winter when I, you know, the, you know, I became aware that, you know, some positions were going to be coming open and, you know, and then I decided to put my name in for a seat and, and the reason I guess I wasn’t involved before is I, I just graduated school in May of 2019. “And so I, you know, my life kind of went through a big transition over the last year and a half as I completed school and completed my pilot ratings that I’ve been working at, and, you know, during those years I was waiting tables five and six nights a week while I was in school, but, you know, it’s just and now all of a sudden I’ve graduated and I have a more stable employment. “And, um, you know, I have the credentials to support a different lifestyle as opposed to, you know, trying to be a student and pay for school and whatnot, and all of a sudden I, my life has changed in the last year and a half and has given me the opportunities to be, become involved, and that’s, I guess, what I’m trying to do. So, thank you.” A stream of commenters called Mitchell “woefully lacking in experience,” and “a glaring example of why there is no trust in the system,” and called her appointment “an insult to the process” and “criminal.” Four testified in support, each saying they believed Mitchell would provide “fresh perspectives.” Although they have not been confirmed by the Alaska Legislature, Mitchell and Williams will be voting members on upcoming Prince William Sound and Southeast Alaska fish issues if the Board of Fisheries convenes its meeting cycle starting in October. According to Rep. Louise Stutes, R-Kodiak, the governor could call a special session and include confirmations on the agenda, but that must be done by Dec. 15. If no special session is called, “the current appointments would be interpreted as a no vote by the Alaska Legislature and they are not eligible for reappointment during the next session,” Stutes said. It all could become a moot point. The Board of Fisheries will hold a listen-only teleconference on Sept. 16 from 2:30-4:30 p.m. to consider its 2020-21 meeting schedule due to constraints posed by the COVID-19 pandemic. A live audio stream of the teleconference will be available at www.boardoffisheries.adfg.alaska.gov. The board accepted public comments on the topic from July 22 through Aug. 31, and the majority voiced support for postponing the meetings as opposed to holding them online. Additional written comments may be sent through September 11 to [email protected]/ or mailed to Boards Support Section, P.O. Box 115526, Juneau, AK 99811-5526. Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

GOP pitches election as choice on energy policy

The U.S. middle class faces an existential crisis under a Biden-Harris administration and its promise to use the Green New Deal as the foundation for its energy policy. That’s the verdict of three high-ranking elected officials who participated in a video call Aug. 20 for an energy-focused nonprofit organization. U.S. Sen. Ted Cruz, R-Texas, Nebraska Gov. Pete Ricketts, and Louisiana Attorney General Jeff Landry, all Republicans, spoke at length on the economic benefits of increasing energy production, as has happened under President Donald Trump, versus the essential shutdown of the sector that would occur should Joe Biden be elected. “There is as sharp a divergence on energy as we have ever seen,” Cruz said. “Joe Biden let Alexandria Ocasio-Cortez write his energy plan. They will ban fracking. They will do everything they can from the federal government to shut down energy jobs, to shutdown oil and gas jobs, to make us dependent once again on hostile governments who don’t have America’s interests in mind.” Indeed, Biden’s presidential campaign website states that he “believes the Green New Deal is a crucial framework for meeting the climate challenges we face.” The call was hosted by The Empowerment Alliance, a nonprofit organization that started operations late last year to challenge the Green New Deal and promote natural gas. As a nonprofit, the group does not have to disclose its donors, but Executive Director Jim Nathanson told Politico last year that it plans to be “a significant factor in the 2020 election.” The alliance is promoting its Declaration of Energy Independence, which states: “We, the undersigned, are committed to achieving the above goals and establishing America’s Energy Independence for the lasting good of our nation and future generations.” Cruz, Ricketts and Landry are among the notable signers. The call focused on energy production as a job-creation engine, the ability of the sector to create wealth and prosperity for the middle class and energy independence as a crucial factor of national defense. “When we no longer have to depend on oil coming out of the Persian Gulf and the Straits of Hormuz, that gives us more flexibility to deal with rogue nations like Iran,” Ricketts said. Ricketts noted a California company making an enormous investment in Nebraska to produce carbon black — a material created by burning heavy oil — and used as filler in rubber tires and as pigment in plastics, paints and inks. Monolith plans to invest between $80 million and $100 million in an effort to produce 220,000 tons of carbon black by 2022 not by burning oil, but by using natural gas, which is abundant in Nebraska. Creating an environment that allows the private sector to innovate will ultimately benefit workers, Ricketts said. But Biden’s energy policies would slam the brakes on that. “The contrast here couldn’t be more stark,” he said, comparing Trump’s efforts to grow the sector to the estimated impact of the Green New Deal. “If we (go) down the path of what Democrats want to do, it’s going to hurt low-income Americans the worst.” The Green New Deal began as a nonbinding resolution introduced by Ocasio-Cortez soon after she took office as a newly elected congressional representative from New York City. The plan was widely panned after details such as providing a “living wage” to people who didn’t want to work and canceling cows since they create methane through their flatulence emerged. Nonetheless, the progressive wing of the party took up its mantle and it has become a litmus test for Democratic candidates. Cruz said that former President Barack Obama’s administration had a “deep animosity” toward energy production, seeking to erect barriers to oil and natural gas exploration offshore and on federal lands. “The AOCs and Bernie Sanders and Elizabeth Warrens of the (Democratic) Party who are now driving energy policy — they make Obama seem mild given their zealotry,” Cruz said. Cruz’s harshest criticism was reserved for “idiot politicians” in New York who have stunted job creation by refusing to allow fracking in the state. New York permanently banned fracking in the fiscal year 2021 budget. Meanwhile, Pennsylvania and other states that have tapped into the Marcellus Shale, which also runs under New York, have seen booms in job creation and increased median incomes for workers directly and indirectly connected to the natural gas industry. Cruz also hit California, which is experiencing planned, rolling energy blackouts for the first time in 15 years. “Part of being a First World Country is actually having electricity,” Cruz said. “What does it say that California can’t provide air conditioning because their policies are such a disaster? And what does Biden say? Let’s take the disastrous policies of California and take them nationwide.”

GUEST COMMENTARY: Industrial policy needed to compete with an aggressive China

For years, Wall Street enthused about the merits of shifting manufacturing out of the United States. Globalists on Wall Street advocated a simplistic worldview: “It doesn’t matter where things are made — cheaper is better.” But they overlooked the impact this would have on America’s future economic and national security. And now, 20 years later, the United States has lost almost 90,000 factories, nearly 5 million manufacturing jobs, and a wide array of essential supply chains. This industrial loss has largely been China’s gain. In 2000, for example, the U.S. enjoyed a $5 billion annual trade surplus in advanced technology products. By 2019, however, that had shifted to a $133 billion annual deficit. Pharmaceutical production has been eviscerated, too. Ninety percent of the generic medications that Americans use each day are now imported. And even the raw materials for manufacturing overwhelmingly come from imports. China is the dominant supplier for 23 of the 35 metals and minerals deemed critical for U.S. national security. China’s manufacturing boom has come on the back of horrific environmental and labor practices that have been conveniently ignored for too long. Each year, a massive brown cloud of soot and debris drifts east from mainland China. And Chinese factories spew an estimated 40,000 tons of ozone-depleting carbon tetrachloride into the atmosphere annually in violation of international agreement. China also employs forced labor, including more than 1 million ethnic Uighurs and other minority groups driven into a vast network of “indoctrination” camps. It’s impossible to excuse these wanton practices, and even free-trade advocates are waking up to China’s ugly behavior. Such lawlessness has allowed China to gradually surpass America’s high-tech lead, and has finally prompted congressional action. Recently, a bipartisan group of senators introduced bills to aid U.S. semiconductor producers and microelectronics manufacturers that compete with China. These are important efforts. But will they come in time? Beijing is intent on global dominance and has already launched a “Made in China 2025” campaign to overtake key industries like information technology, robotics, aerospace, electric vehicles, and medical devices. Wireless networks and renewable energy systems will likely be a key part of China’s growth strategy. And that leaves the United States in a particularly poor position. Beijing already holds a major advantage in the production and processing of raw materials for high-tech industries. That gives them preferential access to the building blocks of everything from lithium-ion batteries to solar panels. And every iPhone that Americans purchase helps to fund irresponsible mining projects like the Bayan-Obo, a Chinese rare earths site that has dumped toxic sludge into a waste pond three times the size of Central Park. Despite possessing an estimated $6.2 trillion in mineral reserves, the U.S. still imports nearly $7 billion worth of metals and minerals each year. This is especially relevant for rare earth metals like neodymium, dysprosium, and lanthanum that are used to manufacture electric vehicles, wind turbines, and smartphones. In fact, China supplies roughly 80 percent of the rare earths imported by the United States. If Congress is serious about bolstering our national and economic security, it must prioritize the rebuilding of key industries. A bipartisan senate bill introduced in May would allocate $10 billion to establish regional technology hubs. That’s a helpful start, but far more is needed. The U.S. must aim for greater industrial self-sufficiency and start producing more of the raw materials — like lithium, graphite, nickel, and rare earths — needed for 21st Century technologies. To reduce strategic vulnerabilities and lessen global environmental harm, Congress should speed the domestic production of key metals and minerals. The U.S. already adheres to the world’s strictest mining safety and environmental standards. It makes no sense to tolerate China’s continued stranglehold over these key commodities. It’s time for Congress to pursue a comprehensive, bipartisan strategy to win the global competition for good jobs and industries. Michael Stumo is CEO of the Coalition for a Prosperous America. Follow him @michael_stumo

Tax credit bond scheme shot down

The Dunleavy administration is going to ask the Supreme Court to reconsider a unanimous decision barring the state from selling bonds to pay off more than $700 million worth of oil industry tax credits, according to the attorney that won the case. Juneau-based attorney Joe Geldhof said a representative from the attorney general’s office called him Sept. 7 to discuss the administration’s plan to file a request for a rehearing of a lawsuit challenging the state’s complex plan to pay off its outstanding oil and gas tax credit obligation, which currently stands at $743 million, according to a statement from the governor’s office. The five-justice court in a Sept. 4 ruling unanimously overturned a January 2019 Superior Court decision that dismissed the lawsuit over the constitutionality of House Bill 331, the legislation to enact the bond plan first proposed by former Gov. Bill Walker’s administration. Passed by the Legislature in the spring of 2018, HB 331 authorized the Department of Revenue to establish Alaska Tax Credit Certificate Bond Corp. for the sole purpose of issuing 10-year bonds to pay off the large sum of accumulated tax credits. The plan was pitched as a way for the state to improve its standing with large investors following Walker’s decision in 2015 and subsequent decisions by the Legislature that the state could no longer afford to pay off the balance of the credits earned in a given year. Prior to Walker’s $200 million tax credit budget vetos in 2015 and $430 million in 2016, the Legislature had appropriated, and the administration had spent, funds to pay off all of the industry activity credits earned by small oil and gas companies each year. The credits were largely issued to small exploration companies that did qualifying work, but they were then often used as collateral for loans issued by investment banks to support additional exploration work. A commonly used credit for explorers with no production and no tax liability had the state paying 35 percent of the cost of qualifying work in cash. The Legislature largely ended tax credit program in 2017 as state revenues remained low and savings started to dwindle. However, the credits earned but unpaid in previous years remained. When the earned credits weren’t paid off in full in the fiscal years 2016-18 state budgets, as had previously been done, the banks holding them mostly stopped lending into the Alaska oil sector. Walker administration officials and Republicans in the Legislature — often at odds over oil tax policy — particularly touted a provision requiring the companies to accept a 10 percent discount off of the face value of the credits they held. The 10 percent discount would allow the state to cover interest on the bonds and administrative fees without ultimately paying more than the sum of the actual tax credit certificates. The court’s 63-page ruling, written by now-retired Justice Craig Stowers, states that along with other factors, “the plain text” of Article IX of the Alaska Constitution controlled the justices’ decision to invalidate HB 331. The state Constitution generally limits the Legislature from bonding for debt to general obligation, or GO, bonds for capital projects, veterans’ housing and state emergencies. In most cases the voters must approve the GO bond proposals before the bonds are sold. State corporations can also sell revenue bonds, but those are usually linked to a corresponding income stream and only obligate the corporation to make payments, not the State of Alaska as a whole. State attorneys contended HB 331 was legal because the bonds would’ve been “subject to appropriation” by the Legislature and therefore would not legally bind the state to make the annual debt payments. They also noted the state has used similar bonding plans to fund projects, such as prisons, without objection. However, Stowers wrote that “sanctioning subject to appropriation bonds would create ‘two classifications’ of bonded indebtedness, solely for the sake of legislative expedience” and records from the state’s constitutional convention indicate the framers rejected that concept in multiple ways. Eric Forrer, the retired contractor and former University of Alaska regent who filed the public interest lawsuit said in an interview that from the outset he believed HB 331 was “unconstitutional on its face” given the tight constitutional sideboards that control state debt. The ruling, he said, will force the oil companies and banks holding the credits to compete for funds alongside traditional government expenses such as education and public safety as the constitutional framers intended. While he objected to the specifics of the plan in HB 331, Forrer said he was particularly concerned over what local governments might do if the law went unchecked, as they could have been able to set up similar bond corporations to fund many types of work. “(The ruling) will prevent municipalities and lighter-weight governments from getting themselves into serious trouble,” Forrer said. “Borrowing has grave consequences regardless of the worthiness of the subject.” A statement from Gov. Mike Dunleavy’s office noted that the administration will not move forward with a bond sale in light of the ruling. “The Department of Revenue and Law have undertaken an in-depth review to understand the impacts of the Forrer decision,” the statement reads. Geldhof said he took the statement — combined with the expectation that the state will petition the court for a rehearing of the case — to mean the administration is looking a way around the court’s ruling. “It’s clear the administration has embarked on a review to come up with a new scheme,” he said. “The creativity and the ability to find workarounds in the financial industry is awesome.” Under Alaska Court Rule 506, the court can order a rehearing if it determines a fact, statute, or other relevant matter has been overlooked or misconstrued but the petition must be filed within 10 days after the decision is issued. When asked about a petition for a rehearing, Department of Law spokeswoman Maria Bahr wrote via email that the state “needs more time to analyze its options, and to that extent, will be asking for an extension of time to consider filing a petition for rehearing.” Dunleavy spokesman Corey Young wrote in response to a question about the administration’s plan to pay down the obligation that the governor is considering all available options to deal with the situation. “He looks forward to working with the Legislature to come up with solutions that are fiscally responsible for the entire State of Alaska,” Young wrote. Republican Senate President Cathy Giessel, a staunch defender of the initial tax credit program who was defeated in the August primary election, said in an interview prior to the Supreme Court decision that she was unsure if the state could afford to either pay off the credits if HB 331 were shot down or even follow through with the bond plan given a roughly billion-dollar deficit is projected for the current 2021 state fiscal year and state savings accounts are nearly dry. Sen. Bill Wielechowski, D-Anchorage, was one of the first lawmakers to question the constitutionality of HB 331 in committee hearings. He said in an interview that he supported paying off the accumulated credits annually when the state had the money, but now the lesser, formula-driven amount called for in statute should simply be used again until the credits are paid off. “The oil companies have to come in and make a compelling argument that we should pay above the statutory amount,” Wielechowski said. “Now they’re competing with everything.” According to Department of Revenue projections, the state should have appropriated $36 million in the current fiscal year to meet the statutory calculation but lawmakers and administration officials chose to rely on a favorable ruling from the Supreme Court, which turned out to be a losing proposition. In the future the state would have to pay between $40 million and $78 million per year to meet payment obligation laid out by the statutory formula. Initial interest-only payments on the bond debt were calculated at $27 million when HB 331 was passed in 2018. At the time, with higher oil prices and more production tax revenue, the statutory payment formula called for the state to make a credit payment of $184 million. Alaska Oil and Gas Association CEO Kara Moriary said the decision is a “huge disappointment” for the industry and also questioned how it would impact the state’s attempt to fund other activities. “Clearly it reinforces an impression that the investment world has about Alaska — about being an unstable place to do business,” Moriarty said. She noted that the companies that earned the credits simply took what the state was offering for their work. “Those companies are caught up in it. They have done nothing wrong,” she said. “I think the state has a moral obligation to pay them at the very least.” Geldhof insisted there will be a lot of pressure on the administration and the Legislature to prioritize paying the tax credits in the lead up to the January start of the legislative session even with the state’s bleak financial outlook. “There’s too much evidence that the lobbyists and the companies holding these things want to go to the front of the line,” he said. ^ Elwood Brehmer can be reached at [email protected]

BROWN'S CLOSE: Love in the Time of Corona

Dating behavior has changed due to the coronavirus. Singles are now encouraged to pursue socially distanced dating, be that virtually, or through wholesome, six foot spaced walks.  This phenomenon has been a boon to online dating platforms. Bumble, the dating app with the second highest userbase in the United States, saw more than a 20 percent increase in usage during the early days of the pandemic, and hit the 100 million user mark in July. The app is geared towards women, with females bearing the brunt of messaging matches first. Men have twenty-four hours to respond, or not. I am a veteran online dater, and have used Bumble specifically. The field of candidates on the app is endlessly fascinating, and the details men choose to put in their profiles is telling. Over the years, I’ve honed a fool proof vetting method for profiles, based on several cardinal offenses. For example, you must have all of your clothes on in all of your pictures. Possible exceptions can be made for beach pictures, but in that case, you cannot have more than one beach picture.             And then there are the Selfie Sins: One must never post selfies in bed; One must never post selfies in the bathroom; One must never post selfies in the car; If all of the photos in your profile are selfies, I am forced to assume you have no friends, or anyone else in your life who could take your picture. Bumble does appeal to female empowerment enthusiasts, and in keeping with this theme, users are encouraged to post information on their profile that traditionally would not be discussed in mixed company. Bumble asks users to disclose their political and religious affiliations, and whether or not the user votes. Singles can then filter out matches who do not conform to their preferred affiliations. You can also filter by the most important quality of all: the astrological sign. I’ve had dating success on Bumble, with “success” defined as dating people long term whom I met through the app. Those aren’t the fun stories, however. People just want to hear about the disasters. Not to disappoint, some dates were resoundingly painful. For example, I went out with a college educated, 6-foot-7 math major. He was a self-proclaimed Catholic opera lover and cello player, who now worked as a commercial fisherman. Reading all of these specifics in his profile piqued my curiosity; he sure seemed to have a lot going on. We had coffee at Starbucks for the requisite 47 minutes. I asked questions, and he took full 30 second pauses before he would answer each. He would drag on his drink, look off ponderously at some destination just above my right shoulder, and sigh, “You know, I never thought about that.” A few days after the date, he texted: “My brain hurts from your questioning. Are you always that intense?” To be fair, I did ask him a lot of questions. Those questions, however, were about deep topics like, “What’s your favorite movie?” After he sat silently for a time, and then announced he’d never thought about it, I downgraded to an easier level: “What’s your favorite color?” That too was a head scratcher. Among a few other life lessons, Bumble’s most persistent impact on me is to be skeptical of people I find on the Internet: People on the Internet may not be all there. I stopped seeing one man after he screamed about how much his genitalia hurt while we were at the Anchorage Symphony. People on the Internet do not waste time. Multiple men over the years have asked me to move in with them on the third date. One even asked me to move across state lines. And yet — People on the Internet are flaky. I once had a guy miss our date at 11 in the morning on a Saturday because he did not set his alarm. Willing to give him a second chance, I agreed to meet him for lunch the following week. He texted to confirm lunch plans that morning, and then later that he was on his way. The trouble was that he texted to say he was leaving his house in the suburbs 10 minutes after the date had already started, and it would take him another 27 minutes to arrive. Honestly, waiting around for another half-hour would have been the death knell to my dignity. People on the Internet are weird. One man’s profile had a photo of him completely nude, submerged in a bathtub full of royal blue paint. No other explanation or notation. Sure, online dating can be fun. It can also be the source of a stellar headache. Good luck to all the Single Ladies. Sarah Brown is the Love Doctor. Write to her at [email protected], and on Twitter @BrownsClose1. “Close” is a British term for alley or cul-de-sac. For more of Sarah’s musings, visit Browns-Close.com.

S&P 500 closes out longest weekly win streak of 2020

NEW YORK (AP) — The gains keep piling up on Wall Street, and the S&P 500 rallied again on Aug. 28 to close out its fifth straight winning week. The benchmark index rose 23.46, or 0.7 percent, to 3,508.01, setting another record high and several more superlatives. It was the seventh straight day of gains for the index. It also capped a 3.3 percent rally for the week to cement its longest weekly winning streak since December, before the coronavirus pandemic swept the world and sent economies tumbling into recession. The Dow Jones Industrial Average rallied 161.6, or 0.6 percent, to 28,653.87 and clawed its way back to a tiny gain for the year. It’s just 0.4 percent, but it’s the first time the Dow has been up for 2020 since late February. The Nasdaq composite climbed 70.30, or 0.6 percent, to 11,695.63 to set another record. It’s lapped the other U.S. stock indexes many times over, thanks to market-leading gains for big technology stocks, and it’s up 30.3 percent for 2020 so far. A report released before trading began showed that U.S. consumer spending grew more in July than economists expected. That’s key because consumer spending is the main driver of the nation’s economy. Consumers increased their spending by 1.9 percent for the third straight month of gains, though it was a slowdown from June’s 6.2 percent growth. Income also rose by 0.4 percent for Americans last month, snapping back from a drop in June. It adds to other reports showing the economy has improved since the worst of the business lockdowns of the spring, though it remains well below where it was before the pandemic. Data recently has also been relatively mixed. Ulta Beauty, a company that relies on consumers opening their wallets, jumped 5.8 percent for one of the biggest gains in the S&P 500 after it reported a drop in profit for the latest quarter that wasn’t as bad as Wall Street analysts expected. Technology stocks also again helped to pull the market higher. HP rose 6.1 percent after it reported better profit for the latest quarter than analysts expected. The pandemic means more people are working and learning — and printing documents — from home, which helps sales of all kinds of products for HP. Stocks are continuing to rise after the Federal Reserve on Aug. 27 unveiled a change in strategy that likely means interest rates will stay low for a long time, even if inflation rises above the 2 percent target level of the central bank. It’s something Fed Chair Jerome Powell called a form of “average inflation targeting” in a widely anticipated speech, and its full ramifications are still to be determined. “Markets are trying to figure out what the Fed actually meant by its average inflation target,” said Jamie Cox, managing partner for Harris Financial Group. Low interest rates and massive amounts of bond purchases by the Fed have helped prop up the economy, and they’re a central reason the S&P 500 has been able to recover from its nearly 34 percent plunge earlier this year, even though the pandemic is still raging. With aid from the Federal Reserve firmly in place, investors want to see Congress also deliver more support for the economy. Weekly benefits that it approved earlier for unemployed workers have run out, and investors say the economy desperately needs another lifeline from Capitol Hill to carry it through its current weakness. “You can already see some cracks forming in what consumer spending will look like if there isn’t much support in the future,” Cox said. House Speaker Nancy Pelosi and the White House’s chief of staff resumed talks on a big aid package Aug. 27, the first attempt to restart talks after negotiations fell apart earlier this month. But no deal seems imminent with both sides remaining far apart. Stock indexes abroad were mixed as the Fed’s momentous decision continued to work its way through currency and other markets. In Europe, Germany’s DAX lost 0.5 percent, and France’s CAC 40 slipped 0.3 percent. The FTSE 100 in London was down 0.6 percent. The Nikkei 225 lost 1.4 percent after Japanese Prime Minister Shinzo Abe said he is resigning due to health problems. Abe stepped down from a brief earlier term as prime minister in 2007, also for health reasons. He recently became Japan’s longest continuously serving prime minister. Elsewhere in Asia, Hong Kong’s Hang Seng climbed 0.6 percent, South Korea’s Kospi added 0.4 percent and stocks in Shanghai jumped 1.6 percent. The yield on the 10-year Treasury gave back a bit of its big rise from the day before, dipping to 0.73 percent from 0.74 percent late Aug. 27. The 30-year yield rose to 1.51 percent from 1.50 percent. Longer-term yields remain well above shorter-term yields, including the two-year yield at 0.14 percent. A wider gap between them can indicate rising investor expectations for the economy and inflation in the future. Benchmark U.S. crude oil slipped 7 cents to settle at $42.97 per barrel. Brent crude, the international standard, fell 4 cents to $45.05 per barrel.

Opposition grows to expanding fish farming

PORTLAND, Maine (AP) — President Donald Trump wants to dramatically expand aquaculture production in the United States, but a coalition of environmentalists believes his plan would be bad for the oceans, unnecessary for food security and difficult to implement. Trump’s bid to grow fish farming is designed to address the so-called “seafood deficit,” which refers to the fact that nine-tenths of the seafood Americans eat comes from overseas. The seafood trade gap with other countries approached $17 billion in 2017, according to one federal government report. The president issued an executive order in May that promised broad changes in how the U.S. regulates fish farming. It included provisions to expedite the development of offshore aquaculture in deep federal waters. That sector of the industry has yet to emerge in the U.S., where most aquaculture takes place near shore where farmers grow salmon, oysters and other popular seafood items. The Trump administration and the aquaculture industry said the order, which is being implemented now, represents common sense steps to ease the burden of rules on fish farmers. But environmental groups said it threatens to increase pollution and over-development in the ocean at a time when many consumers aren’t buying seafood. “They’re trying to somehow connect open-water aquaculture with the need for domestic food. But it just doesn’t make sense,” said Marianne Cufone, executive director of the Recirculating Farms Coalition, one of several environmental groups that oppose the move. “Why we’re seeing it during a pandemic, I don’t know, I’m shaking my head.” The executive order gives the nation’s regional fishery management councils, which regulate fisheries, six months to recommend “actions to reduce burdens on domestic fishing.” One of the order’s stated goals is “more effective permitting related to offshore aquaculture and additional streamlining of fishery regulations,” with ”the potential to revolutionize American seafood production.” The order aims to bring seafood production to the U.S. instead of keeping the nation dependent on other countries, said Paul Doremus, deputy assistant administrator for operations at the National Oceanic and Atmospheric Administration’s National Marine Fisheries Service. “We’re a major seafood consuming country and we could be producing more of that seafood internally,” Doremus said. “That’s the driving force behind the executive order as a whole.” Aquaculture in federal waters has support from some major fish farmers, including Cooke Aquaculture, a Canada-based seafood giant. Cooke spokesman Joel Richardson said the order shows Trump’s administration knows “the world needs more aquaculture to feed the world.” The company’s operations include salmon farms in the nearshore waters of Maine. Hallie Templeton, senior oceans campaigner at Friends of the Earth, said it’s not the right time to grow fish farming. Seafood is popular in restaurants, and the coronavirus pandemic has caused many to shutter, at least temporarily. Seafood sales to restaurants fell 90% in the early weeks of the pandemic. The industry has since seen an infusion of CARES Act money to help it recover, but continues to struggle. Templeton called offshore aquaculture “floating factory farms” and said they are more likely to cause pollution in the marine environment than provide sustainable food. A recent court ruling dealt a blow to the prospects for offshore fish farming. The 5th U.S. Circuit Court of Appeals said in a decision Aug. 3 that federal law granting NOAA authority over fisheries does not also let the agency set rules for offshore fish farms. That scuttled rules that could have regulated fish farms in the Gulf of Mexico. Environmental groups heralded the court’s ruling because it likely makes it more difficult for farmers to start large offshore operations that would raise species such as tuna, salmon and seabass. “Allowing net-pen aquaculture and its environmental harms in the Gulf of Mexico is a grave threat, and the court properly held the government cannot do so without new and proper Congressional authority,” said George Kimbrell, Center for Food Safety legal director and a lead counsel in the case. The prospect of offshore aquaculture has been contentious for years. President Barack Obama also took steps to permit deep water fish farming during his tenure. The aquaculture industry remains hopeful that Trump’s executive order can help pave the way for more fish farming, both nearshore and offshore. Paul Zajicek, executive director of the National Aquaculture Association, said the order isn’t about eliminating regulations but rather “removing barriers to aquaculture permitting” for farmers. Some fishing groups have also come out in support of the order. Scot Mackey, director of government affairs for the Garden State Seafood Association, which advocates for fishermen as well as farmers, said the order “will help the industry weather the current crisis and come back stronger.” Neville Crabbe, spokesman for the Atlantic Salmon Federation, a conservation group, said the federal permitting process should be creating land-based aquaculture rather than fish farms in the ocean, let alone offshore. “It’s not clear how locating that production just further away from the coasts would help with things like diseases and parasites and other problems that plague the industry today,” he said.

Trilogy: Copper prospect still profitable at higher costs

Costs have grown but expectations remain high for what developers hope will be the first in a series of hard rock mines in Interior Alaska. The Arctic copper, zinc and precious metals prospect has a post-tax net present value, or NPV, of approximately $1.3 billion at current metal prices and a value of more than $1.1 billion based on longer-term price forecasts, according to a feasibility study conducted by Trilogy Metals Inc., which owns claims to the deposit. The study also concluded that the project would have a post-tax payback period of 2.6 years and a final investor return rate of about 27 percent. Those figures are despite the fact that the total expected capital cost for the remote mine has increased 34 percent to more than $1.2 billion largely due to findings that the project will likely have to treat a lot more water than was once thought. A 5 percent increase in dilution, or mined waste rock, also slightly lowered the grade of the copper, zinc, gold, silver and lead reserves in the project. However, with 2.1 billion pounds of probable copper reserves averaging more than 2.2 percent, Arctic is still one of the highest-grade copper prospects going, according to Trilogy leaders. A pre-feasibility study published in February 2018 pegged Arctic’s all-in capital cost at $910 million. “Overall, we’re very happy with the results of this feasibility study considering the capital increases that we’ve seen in the project and factoring in that there’s no new resources that have been included as part of this project,” CEO Tony Giardini said in a call with investors. Located in the middle of the Ambler mining district on the southern edge of the Brooks Range, the Arctic mine project is the most advanced prospect of more than a dozen in the roughly 75-mile long district. It also would likely be the first mine serviced by the state-sponsored Ambler access road, which has drawn the ire of many area residents and conservation groups. Giardini also said the company has identified opportunities to extend the open pit mine beyond its current 12-year life — as part of the current prospect and processing other deposits through the Arctic facilities — that need to be studied further. Bob Jacko, the operations director for Vancouver-based Trilogy said a roughly 30 percent increase in annual precipitation at the mine site in recent years will require larger sewage and water treatment systems than previously thought, adding to the capital and operating expenses of the project. The new water will also necessitate a more robust tailings dam; the initial tailings infrastructure cost has gone from $30.3 million in the 2018 study to $69 million currently. “It gets us in every area of the operation,” Jacko said of the additional water, noting the need to treat larger quantities adds to closure costs. Giardini said the increased capital costs are the primary driver in a reduction of cash flow — from $4.5 billion pre-tax in 2018 to $3.7 billion today. While Arctic was initially explored by Trilogy, a junior mining firm, Australian-based South32 bought into the project late last year and the company’s have since formed Ambler Metals LLC, the operating company for the advanced Arctic and nearby Bornite multi-metal prospects. Trilogy and South32 each hold 50 percent of Ambler Metals. Even with Arctic’s positive — if slightly tempered — financial indicators, a decision to ultimately build the mine will depend primarily on how quickly the Alaska Industrial Development and Export Authority can progress development of the Ambler access road, Giardini said. Trilogy leaders have long said the 211-mile industrial-use road is a prerequisite to constructing any mine in the remote mineral belt. The toll road concept is modeled after the DeLong Mountain Transportation System owned by AIDEA that feeds the Red Dog zinc mine in Northwest Alaska. Ambler Metals signed a memorandum of understanding with the state development bank in June in which the company agreed to fund half of the stakeholder outreach and pre-development engineering and study costs up to $35 million. Estimated in 2017 to cost between $280 million and $380 million for basic gravel construction, the road’s final environmental impact statement, or EIS, conducted by the Bureau for Land Management, now pegs the total construction cost at approximately $520 million. BLM issued a record of decision approving the project July 23. Trilogy Chief Financial Officer Elaine Sanders said there is no firm toll agreement with AIDEA for use of the road, but Trilogy factored a toll of $8.04 per metric ton of material hauled, up from $4.70 per ton in the pre-feasibility study, which reflects the change in the expected cost of the road. Overall, Trilogy expects the project would pay roughly $20 million per year in road tolls plus another $2.50 per ton in maintenance fees, according to Sanders. “We all know we’re going to be paying some type of toll,” she said. Local governments for villages near the road’s planned intersection with the Dalton Highway have formally opposed the road over concerns it will impact migrating caribou and could eventually be opened to the public — thus increasing hunting and recreational pressure — in areas relied upon for subsistence harvests. Critics have also questioned the economics of the toll road concept given the Arctic prospect is the only one in the region anywhere close to development-ready. AIDEA spokesman Karsten Rodvik wrote via email that authority and Ambler Metals officials are in continued discussions about funding the next phases of the road. “Based on preliminary estimates, and assuming a negotiated minimum annual assessment with Ambler Metals similar to the DeLong Mountain Transportation System, one mine could be sufficient to finance the toll road structure, Rodvik wrote. “Given the established access, AIDEA anticipates that over time, other mines within the district will be developed and opened, paying fees to use the road.” Giardini said a decision to break ground at Arctic would likely come shortly after what is expected to be a roughly three-year development period for the road, putting early work at the mine in the 2024-26 timeframe. Elwood Brehmer can be reached at [email protected]

FISH FACTOR: Processors shelling out tens of millions for Covid-19 precautions

Alaska seafood processors are paying tens of millions of dollars extra to cover costs from the COVID-19 pandemic, and most of it is coming out of pocket. Intrafish Media provides a first, in-depth look at how costs for providing protective gear like masks and gloves, testing thermometers, extra staff to handle sanitizing demands between work shifts, and modifying worker lines for social distancing are playing out in the nation’s seafood processing sector. At Bristol Bay, for example, where around 13,000 workers from outside Alaska come to work on fishing boats and in 13 plants of varying sizes, it’s estimated that all major processors combined likely spent $30 million to $40 million on Covid-19 related costs during the two peak fishing months of June and July this summer. Alaska processors covered extra costs for putting up employees in hotels and other 14-day quarantine sites, as required by the state. That alone added up to an estimated $3,500 per worker. Seafood companies also paid for pricey charter flights to isolate workers from passengers on commercial flights. Most medium to large processors had medical professionals onsite for the duration, at a cost of $30,000 to $60,000, Intrafish said. Workers were tested multiple times for the virus, with costs amounting to $175 per test. Intrafish cited testimony by Silver Bay Seafoods CEO Cora Campbell at a virtual U.S. Senate committee hearing on July 29. “In the past several months, Alaska seafood processors have spent tens of millions of dollars implementing proactive health and safety protocols to ensure we are minimizing risks to Alaska communities, protecting our seasonal and resident workforce, and maintaining operations,” she testified. “The industry is taking on these costs out of pocket at the same time we are facing severe disruption in key markets and multiple pre-COVID cost burdens,” Campbell told the senators. “While a fraction of these costs may be reimbursed, we face significant uncertainty because there’s no specific congressional directive to support health and safety protocol costs for critical seafood supply chains.” Covid prevention measures have not been included so far in federal relief loans and funds. It is unknown if they will be added into a stimulus relief package Congress could eventually pass when it returns in September from a month-long vacation. Symphony of Seafood expands The call is out for products for Alaska’s biggest seafood bash: the Alaska Symphony of Seafood. The annual competition, now in its 28th year, showcases a wide array of new market-ready Alaska seafood items at venues in Seattle and Juneau. Seafood lovers get to sample the goods that are privately judged in several categories. And as part of the event’s expansion plans, more opportunities have been added. “This year, we expanded the product categories to feature whitefish and salmon categories in addition to food service, retail and Beyond the Plate, which features products made from seafood byproducts,” said Riley Smith, communications director with the Alaska Fisheries Development Foundation, host of the Symphony. The event also has added a special platform for Bristol Bay. “Additionally, we expanded the special awards category to include a Bristol Bay Choice which will be awarded by the Bristol Bay Regional Seafood Development Association to the best sockeye salmon product. And included in that will be promotional and marketing support from the BBRSDA team,” Smith said. Partnering with the fishermen-funded and operated BBRSDA will help Symphony winners grow their promotions and marketing, Smith added. Through savvy branding and marketing strategies, the Bristol Bay model has seen its sockeye salmon sales expand to over 2,000 U.S. retail outlets in just a few years. –“Down the line we hope to create more partnerships with retailers and in- store promotions for our winners, and we’re really trying to approach this from every angle to increase the positive impact of the Symphony for companies big and small,” Smith said. One of the most unique things about the Symphony competition is that it levels the playing field between the biggest seafood producers and the smallest mom and pops. Last year, for example, Bullwhip Hot Sauce by Barnacle Foods of Juneau was a triple winner at retail, the Juneau People’s Choice and the overall Grand Prize. Big Symphony wins have led to shelf space at CostCo and other major outlets for Alaskan Leader Seafood’s cod fish and chips meal kit, as well as a pet food deal with Purina for its Cod Crunchies dog treats made from fish trimmings. “The Symphony is recognized around the world as a spearhead of product development coming out of Alaska and the annual competition is a super great place to show off your favorite recipe,” said Keith Singleton, president of Alaskan Leader’s value-added division. “It may lead to e-commerce, retail, club store or food service companies that will carry your brand to consumers.” “It’s worked amazingly well for us,” he added. “Everyone thought we were just a fishing company, but in reality, we are a ‘seafood’ company. The winnings that we’ve enjoyed have landed us in some wonderful markets around the world. So go for it!” All top winners get a free trip to the big Seafood Expo in Boston in March and entry into its national competition. This year’s lineup of new Alaska seafood products will be judged in late November and top winners will be announced at Pacific Marine Expo in early December. The Symphony then replays in Juneau in February where more winners will be announced. Smith said even if the Expo or the Symphony events are upended by the Covid-19 virus, the show will go on. “Absolutely! There will be a judging and there will be awards and promotions to retail associated with the Symphony,” he said. Find Alaska Symphony of Seafood entry forms at www.afdf.org/ Deadline to enter is Oct. 6. Grant give backs American Seafoods is accepting applications for its Alaska Community Grant Program from the following regions: Kodiak Island, Aleutian and Pribilof Islands, Western Alaska Peninsula, Bristol Bay, Lower Kuskokwim, Lower Yukon, Norton Sound and regions north. Since 1997, American Seafoods has granted more than $1.7 million to Alaskan groups and programs through its regional programs. “Our goal is to provide assistance and financial support to organizations that are making a real difference in the communities where we operate,” company president Inge Andreassen said in a press release. The amount available for grant awards for this round is $45,000 to fund community projects such as food security, housing, safety, education, research, natural resources, cultural activities and other pressing social needs. The majority of grant awards will range from $1,000 to $7,500 each. Find applications at www.americanseafoods.com, or contact Kum Lynch at [email protected] or by calling 206-256-2659. The deadline to submit applications is Oct. 12.The grant recipients will be announced by the company’s community advisory board on Oct. 28. Seafood savvy sought The Alaska Seafood Marketing Institute, the state’s lone marketing arm, is seeking committee members who advise on strategic operations and selling of nearly every fish in the sea. ASMI, which is a public/private partnership between the state and industry, is guided by a wide range of stakeholders who provide market insights and strategies for outreach to more than 110 countries. “For example, we refer to one group as the species committee and they focus on issues specific to whitefish, salmon, shellfish. Their issues are all very different and they differ across Alaska, so we have representatives from those fisheries to guide us,” said Ashley Heimbigner, ASMI communications director. Other ASMI committees provide expertise on domestic and international marketing, communications and technical support. Deadline to apply for an operational or species committee seat is September 30.You can apply for more than one committee. Email applications to Sara Truitt ([email protected]) Laine Welch lives in Kodiak. Visit www.alaskafishradio.com or contact [email protected] for information.

GUEST COMMENTARY: Ballot Measure 1 is not a family affair: Vote no

I respect my brother Joe. Please don’t listen to him. My family has deep roots in Fairbanks, going to back to the mining days of the early 1900s. I worked on the pipeline starting in 1975, and know what boom and bust looks like. Trust me, we Alaskans should aim for boom. My brother Joe is going for bust. Like any family, we disagree on what is the best path forward for our state. My brother Joe is a retired legislator and attorney. He often appears in news articles talking about the need for Alaska to get more money for its oil. What he neglects to say is that he is really a “keep it in the ground” environmentalist who would like to see oil’s days in Alaska end sooner rather than later. When that viewpoint is understood, his support of Ballot Measure 1 makes more sense, because its passage would speed up that process. It won’t be pretty, folks. I stand with the majority of Alaskans who support our oil and gas industry and want to see it prosper and grow. And with all due respect to the oil companies and their CEOs, that support is not rooted in fondness for them, but rather their impact on us. Alaska would not be Alaska without decades of oil industry investment and economic activity they brought to the state, and continue to bring. As a safety specialist and laborer, I have had a front row seat in seeing how Alaska changes for the better when oil is discovered and produced. While the initial pipeline boom may be history, we have more bright days ahead if we get our act together and vote no on Ballot Measure 1. Our state is still in the grips of an economic crisis made worse by COVID-19. How anyone can think this is an ideal time to raise any industry’s taxes by 150 percent to 300 percent is crazy to me. Oil prices are still low, and there are fewer rigs working on the North Slope that at any time in our state’s history. This is a bad place to be, because we need those jobs and investment to boost Alaskans’ employment and opportunity. Chasing away our best chance for economic recovery with a punitive new tax is quite possibly the worst thing Alaska could do at this critical moment. The next time you see an editorial written by my brother Joe, please take it with a giant grain of salt. He committed his career to waging a strange, misguided war against the oil and gas industry, both as an attorney and legislator. He lost his seat because if it, thankfully. Don’t let his Green New Deal, anti-ANWR view of the world make Alaska’s economic situation even worse. If you want to see Alaska pull itself out of the economic ditch, and think more oil flowing through that beautiful pipeline of ours is a good thing, join me and vote no on Ballot Measure 1. Charlie Paskvan worked in Alaska’s oil industry for decades, including work on the Trans Alaska Pipeline and in Prudhoe Bay. He lives in Fairbanks. Family dinner conversations about oil and gas policy are part of the Paskvan tradition.

GUEST COMMENTARY: Perfect storm hitting Alaska Marine Highway System

Over the past 18 months, Alaska’s ferry system faced unprecedented challenges: a reduced budget, a strike, unanticipated mechanical and structural issues with five aging ships, and a global pandemic. This spring, as the pandemic hit, the Alaska Marine Highway System had four of those ships scheduled to enter service, a workable budget in place and expected sufficient revenue to provide reliable ferry service throughout the year. Due to the dramatic decline in revenue as commerce all but stopped, the financial impacts on AMHS have been severe. Because ticket sales support the AMHS operating budget, we’re now facing a shortfall of almost $45 million. This shortfall, caused by the pandemic, equates to a budget cut of the same amount. The resulting winter schedule is not what we expected to provide. It’s not what Alaska’s coastal communities consider to be a satisfactory level of ferry service. Last winter, the system was hit hard with unexpected mechanical issues. Now, our ships are in good shape, but there are not enough funds to operate them. When our draft winter operating schedule came out, there were some complaints that we didn’t provide enough time for comment. The reality is we accept comments year-round, and we frequently adjust our schedules to accommodate requests from communities. One point to keep in mind is that most of this year’s community and school events we build our schedule around have already been canceled. Right now, AMHS needs to finalize its winter schedule so travelers can begin making reservations for our October through April travel season. In addition to the budget issues we’re facing, pandemic conditions have added a whole new level of complexity to running our ships and keeping passengers and crew safe from another outbreak. I applaud AMHS for its outstanding response to the challenges created by COVID-19. It’s been incredibly complicated to coordinate everything, but we’ve managed to run the mainline route since late June without an outbreak. With the insidious menace of COVID-19, it’s not a matter of if, but when an outbreak will occur on an AMHS vessel, so we count every week of successful operation a blessing in these very challenging times. Our crew has done an exceptional job following protocol, and that’s been the key to continuing operations. A recent incident occurred aboard the M/V Matanuska when a group of passengers learned en route that they had been in close contact with a COVID-19 positive person before they boarded the ship. Matanuska’s crew followed protocol — the affected passengers were quarantined in their cabins with meals delivered for the duration of the voyage. When several of those passengers later tested positive for the virus, we promptly tested the entire crew. Thankfully, all 47 crew received negative results and Matanuska returned to service, but not without a one-week delay, considerable cost and lost revenue. What could have easily resulted in a shipboard outbreak and weeks of the entire ship in quarantine was averted by a quick and reasoned response from a well-trained crew. This pandemic has affected nearly every aspect of our lives and will continue to do so for some time. The incident on the Matanuska is just one example of the commendable job AMHS is doing — they continued providing ferry service when it didn’t seem feasible. But in the midst of the pandemic, we have to accept the fact that fewer travelers mean less revenue, and reductions in service are required to keep the system afloat. At the Department of Transportation and Public Facilities, we take our responsibilities seriously for all of Alaska’s communities – those on the road system, the 35 serviced by AMHS, and the 140+ that are neither on the road system nor on the ferry routes. The AMHS Reshaping Work Group has met regularly over the last six months, receiving input from a diverse group of stakeholders who either compete with, operate, or rely on our ferry system. I look forward to the work group’s final report, and to implementing fundamental changes to keep reliable ferry service running in Alaska for the long term. John MacKinnon is Commissioner of the Alaska Department of Transportation and Public Facilities.

GUEST COMMENTARY: Complicated tax policy should not be decided at the ballot box

The issue of what to do with oil taxes is once again before us. The question will be presented in the form of Ballot Measure One in November. While Alaskans have proven to be smart and savvy voters, I confess to a well-developed skepticism about putting complicated fiscal issues on the ballot for a simple up or down vote. For that reason, I intend to vote no – not because of the merits or because I have more insight into this issue than other Alaskans – but because the initiative process in this instance leaves too many questions unanswered. In my opinion, the paramount importance of oil taxation to the future of this state calls for a measure like this to go through the scrutiny of the legislative process. For sure, that process is messy; we’ve all heard the quip about the comparison to making sausage (perhaps an insult to sausage makers!). But in a democracy, it is the only way I know to ensure a rigorous analysis of important and complex policy choices. I have the privilege to know, and have worked with, several of the ballot measure’s sponsors, and I hold them in the highest regard. However, I do not believe they should replace the legislature as the primary crafters of state tax policy, and I respectfully disagree with their decision to skip the legislative process and to toss this issue straight to voters. Ideally, if Ballot Measure One were introduced as a bill – and I suspect there are legislators who support the measure – it would endure many hours, if not days, of hearings before several committees in both bodies of the legislature. There would be input from all stakeholders: representatives from the oil industry would state on the record how the initiative would impact their Alaska business; independent economists and experts would model the tax proposal to provide a third-party view of what the measure would actually do; proponents of higher taxes would explain and justify their reasons and clarify their intent; and members of the public would testify as to its pros and cons. It is admittedly a long and tedious process, but the give-and-take among stakeholders, and the additional analysis that accompanies such measures, invariably leads to a balancing of interests – including the public interest — resulting in a bill that is informed of the facts and capable of garnering the necessary support for passage. Some knowledgeable observers have criticized Ballot Measure One’s language as ambiguous and confusing. This, too, can be addressed through the legislative process with amendments to clarify or cure deficiencies and ambiguities in the text. If Ballot Measure One is passed, those issues will be left for the courts to decide, post-enactment – and without the benefit of any legislative record to assist in their analysis. The biggest elephant in the room today is the historic collapse of oil prices and the widespread economic hardship caused by COVID-19. In fairness to Ballot Measure One’s sponsors, I don’t believe this could have been predicted. Nonetheless, reasonable Alaskans must wonder about how the ballot measure will impact the oil industry in our state in light of these unprecedented events. Again, it may be my personal bias, but I have serious reservations about leaving an incredibly complicated and nuanced issue like oil taxation to the persuasion of sloganeering and sound bites. The legislative process is not pretty and it can be very frustrating, but that is how our system is supposed to work in my humble opinion—particularly when dealing with issues so important to the financial stability of our state. Given all these factors, I intend to vote no on Ballot Measure One. ^ Michael Geraghty served as Attorney General for the state of Alaska during 2012–14.

AOGCC considering revisions to well bonding requirements

State regulators under the Dunleavy administration are continuing to tweak bonding requirements for oil and gas wells overhauled just more than a year ago. The Alaska Oil and Gas Conservation Commission held a brief public hearing Sept. 1 to take testimony on proposed changes to the bonding requirements that would increase the amount of time an operator has to post a given bond amount. The amended regulations would also allow the three-member commission to reduce the state’s minimum bond requirement on a case-by-case basis if a landowner requires a bond be posted to cover plugging and abandonment costs. The commission, which oversees technical drilling and other subsurface oil and gas industry matters and is chaired by Gov. Mike Dunleavy’s former deputy chief of staff Jeremy Price, published the prospective changes following numerous appeals heard last winter from operators to the new requirements. Examining and repealing business regulations deemed burdensome or unnecessary has been a focal point of the Dunleavy administration. After nearly two years of hearings and deliberation, in May 2019 the AOGCC approved regulations that greatly increased the bond amounts companies with wells are required to post. When those bonding minimums were being considered, commissioners noted the amount the state requires well holders to hold for well plugging and abandonment costs hadn’t been updated for decades. They cited a 1991 Legislative Budget and Audit report that said the State of Alaska should update its minimum well bonding requirements then. At the time, the bonding requirements were $100,000 for one well and a minimum of $200,000 for multiple wells and a “statewide blanket bond,” which were the required amounts until the 2019 revision. The 1991 report concluded that an operator with a $200,000 bond then likely wouldn’t be able to cover plugging and abandonment costs. The new five-tier bond schedule requires those holding up to 10 wells to post $400,000 per well. Operators with between 11 and 40 wells must post a cumulative $6 million bond and the amounts gradually increase to $30 million for operators with more than 1,000 wells. Alaska’s largest fields, Prudhoe Bay and Kuparuk River, each contain more than 1,100 well bores. Former AOGCC chair Hollis French — appointed by former Gov. Bill Walker and fired by Dunleavy for alleged poor work habits — said the effort to update the bond amounts was aimed particularly at small oil and gas companies after bankruptcies in the industry following the collapse of oil prices in 2014-15. Leaders of Malamute Energy, a small North Slope operator that holds two wells just inside the federal National Petroleum Reserve-Alaska, testified in a January hearing that the company is in a rather unique situation that justified an exemption from the new requirements. Malamute’s minimum bond for the Umiat Unit that contains the wells had recently been increased by the Bureau of Land Management from $200,000 to $1.25 million, much greater than the $800,000 the company must eventually hold for the state, company President Leonard Sojka said at the time. While the vast majority of oil and gas development has historically been on state acreage on the North Slope and across the Cook Inlet basin, the industry — led by ConocoPhillips — is increasing activity in the NPR-A and the prospect of exploration in the Arctic National Wildlife Refuge could lead to similar situations. Alaska Native corporations have also sought more exploration on their lands in recent years; some of that work — as with Doyon and Ahtna — has been done by the companies themselves but traditional oil operators have also signed agreements to explore on Native lands. The commissioners did not comment during the meeting and Price did not respond to follow-up questions in time for this story. Kenai Peninsula resident Jim White testified Sept. 1 that the state’s costly bond requirements prevent individual Alaskans from participating in the state’s oil and gas industry. White said in prior testimony objecting to the bonds that he holds subsurface mineral rights to 4,600 acres on the peninsula. “(A homesteader) can’t own that oil and gas until he gets the oil to the surface so when the bonding requirement gets so high, he’s being deprived of what he paid for,” White said in describing his situation. “The homesteader feels like he got a raw deal; he didn’t get what he paid for.” The proposed regulations would also take the number of installments operators can use to reach the required bond amount from four annual payments to seven. The second through sixth installments would be due each Aug. 16 “of the first five years following the first installment and must be a minimum of one-sixth of the difference between the operator’s level of bonding and, if required, security after payment of the first installment and the level required under (other regulations),” the proposed regulations state. John Hendrix, who purchased the Cook Inlet gas producer Furie Operating Alaska out of bankruptcy earlier this summer, submitted written testimony supporting the changes as long as they also account for a bond or other financial security an operator has with another state agency. Furie has set up a “sinking fund” with the Department of Natural Resources for dismantlement, removal and reclamation of the company’s offshore Cook Inlet platform. “Ensuring continued investment and production from Cook Inlet will allow the Railbelt utilities and the Interior to provide reliable energy for a sustainable economy,” Hendrix wrote. “We appreciate the Commission’s efforts to eliminate redundant financial responsibility requirements that are currently required by multiple State agencies.” The commission is accepting public comments on the proposed regulations through Sept. 10. Elwood Brehmer can be reached at [email protected]

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