GUEST COMMENTARY: Back PFD payments are the stimulus Alaskans need now

As Alaskans face the current COVID-19 outbreak, we face a lot of uncertainty about how severe the disease’s spread will be. We hope that the disease’s spread can be slowed, and Alaska’s public health community is doing yeoman’s work to slow it. But we already know that with this health crisis comes a severe economic crisis. We already face business closures, layoffs, and wage losses. And we aren’t out of the woods yet; far from it. Alaskans will get through this as we always do: with tenacity, hard work, and caring for one another. But part of that means that we in state government need to do everything we can to help Alaskans ride out this economic crunch as best we can. Economists disagree about many things, but nearly all of them agree: in times of economic crisis, the monetary authorities need to inject liquidity – cash – into the economy. The federal government knows this well, and regularly takes steps to increase the money supply in times of economic crisis, usually by slashing interest rates. But there’s a limit to how low interest rates can go, and we’re almost there already. Fortunately, there’s another solution: direct cash payments to Americans. Sounds like something Alaskans know well, doesn’t it? In Alaska, we know that our Permanent Fund dividends always provide a boost to our economy. We see it every year. The federal government knows it too, which is why President Trump and Senate Majority Leader Mitch McConnell each have proposals to pay cash directly to Americans. Paying cash to every American is a big job, and it will take some time for the federal government to get set up to do that. But here in Alaska, we are already prepared – we do it every year. We already have the applicants, their eligibility has already been verified – because we paid them just a few months ago. The Permanent Fund dividend is part of being Alaskan, but it is so much more than that. It has been found to significantly reduce obesity in Alaskan children. But most importantly, it has been found to lift between 15,000 and 25,000 Alaskans – especially children, rural residents, and Alaska Natives – out of poverty every year. There really is no way to seriously address our looming economic crisis without giving this serious consideration. Many Alaskans are already finding themselves without income. The dividend is income. It’s the most direct solution, providing direct relief to the specific problem Alaskans are facing. There are numerous examples of how Alaskans might use their dividend as relief from the hardships of this outbreak. A family in Chevak might use it to pay for fuel costs in rural Alaska; elderly Alaskan who can pay $500 per month for incontinence products not covered by Medicare could use it to pay for three months of adult diapers; a laid-off single mother could use it to put food on the table. If this payment means that a family can pay their rent one month more, that by itself can keep them from losing their housing, having to go on expensive state services, and having their lives permanently and negatively disrupted. The Legislature should immediately vote to pay the remaining dividend of $1,300 from our reserve account. This account currently has about $16 billion dollars. A withdrawal of $750 million from this account would cover the back dividend from 2019 and would fulfill a promise made to Alaskans in law. Another dividend should be paid to Alaskans in October. This can’t wait. Restaurants, bars, schools, and many, many other gathering places and businesses have already been closed all over the state. They will remain closed for the duration of this COVID-19 outbreak, and we don’t know how long that will be. The Great Alaska COVID-19 Recession is already here, and we need to act now to help Alaskans get through it as best we can. Alaskan wage earners are already finding themselves without hours to work and staring down bills they don’t know how to pay. It’s not a distant future, or even an imminent one; it’s here now. We can help Alaskans now, and we should. Sen. Mia Costello is a lifelong Alaskan who represents West Anchorage in the Alaska Senate.

Financial institutions aim to aid battered customers

Alaska’s financial institutions are doing what they can to help businesses and individuals through the economic consequences of the response to COVID-19 and they’re largely doing it from a position of strength. “We’ve got plenty of funds to lend,” Northrim Bank Chief Lending Officer Michael Huston said March 24. The state’s largest banks were all growing and nearly all of them had significant net income increases and strong loan portfolio performance based on third quarter results. Northrim, for example, had a 45 percent year-over-year increase at $7.8 million in net income. Anchorage Economic Development Corp. CEO Bill Popp said the state’s banks and credit unions are “in the best possible situation we could’ve hoped for” given the dire economic situation facing thousands of Alaskans and people worldwide brought on by government-mandated business closures and event cancellations aimed at limiting the spread of the virus. “There’s great leadership in our financial institutions and they have the resources to stay solvent,” he said. Popp is also a co-chair of the Economic Resiliency Task Force formed by Anchorage Mayor Ethan Berkowitz to help city leaders navigate the unprecedented situation and minimize its impact on Anchorage’s economy. It’s unclear exactly how many workers will ultimately be impacted by attempting to pause the state and national economies, but what is certain is the numbers will be painfully large. State Labor Department officials reported roughly a six-fold increase in unemployment claims in the days after the state and local governments began restricting public gatherings and closing bars and restaurants in mid-March. Popp said he’s heard numerous lenders are aggressively working to modify business loans, refinance mortgages and defer payments and interest for businesses that have had to close and individuals who have had their income cut off so quickly. He stressed a need for an immediate cash infusion into the economy. Popp said the explosion of the pandemic and the quick nature of the subsequent government responses left many business owners without time to react. “Businesses have been caught without sufficient cash resources to ride this out,” he said. Based on information the task force is receiving, Popp said the group expects the virus and resulting movement restrictions to be in place for months, not weeks. A survey published by the National Federation of Independent Business indicated that as of March 24, more than three-quarters of Alaska small businesses were being negatively impacted by the response to the virus. Approximately 5 percent of mall businesses have been positively impacted. At the time, 68 percent of small business owners said they were very concerned about the potential impact to their business, according to the survey. Gov. Mike Dunleavy said on March 20 his administration had reached an “understanding” with members of the state’s banking community to partner on a program to offer state-backed bridge loans to small businesses. Bank executives said they are generally supportive of the concept but they are waiting to hear more details about it. A spokesman for Dunleavy did not respond to questions about the loan program in time for this story. In a March 23 statement, officials with the Alaska Industrial Development and Export Authority encouraged its borrowers in need of assistance to contact the private lender that participated in the loan with AIDEA. “The authority can then work with the lender to help achieve a positive solution for the client,” the AIDEA statement reads. The state-owned development bank regularly participates in private commercial loans at up to 90 percent of the loan, many of which are in the tourism and hospitality sectors. Some of the lending Northrim is doing is in the form of short-term loans to businesses that are trying to pay their employees through the work stoppage, Huston said. Northrim is providing 90-day payment deferrals and 120 days of interest-only payments on business loans, according to Huston. The statewide bank has different options for individuals with loans or mortgages, he said. “We have significant resources to assist any borrower that is having difficulty as a result of this pandemic,” Huston said. James Wileman, president of Anchorage-based Credit Union 1, said his institution is offering loan extensions, reduced monthly payments, 60-day deferrals and giving borrowers 1 percent back on new loans. Credit Union 1 workers search the cooperative’s records when local companies announce layoffs, Wileman said, in an attempt to determine if any members have been impacted and reach out to them for assistance if need be. “We’re just looking for ways to help,” he said, noting the juxtaposition of needing to help fuel the economy in any way we can while also severely restricting nearly all activity. Popp additionally noted that waiving late fees and other payment-related penalties during extraordinary times can prevent compounding an already difficult situation. Aside from more traditional means of assistance, on March 24 CU1 began encouraging members to support certain local restaurants with takeout and delivery orders, and each time someone posts a photo of their food on social media with the #cu1foodie hashtag, the credit union will donate $50 to that restaurant. Steve Lundgren, president of Denali State Bank, said his institution is handling each borrower independently. The Fairbanks-based bank first began hearing from Aurora-centric and winter tourism operations impacted by initial international travel restrictions before many other businesses were hit by state and local government mandates. “We’ve made a lot of concessions in terms of payment modifications with those borrowers,” Lundgren said. He implored state officials in a March 24 interview to issue a strict “stay at home” mandate across Alaska in an attempt to blunt the impact of the pandemic as quickly as possible. Lundgren said he believes sharp immediate measures will prevent the COVID-19 pandemic from lingering any longer than it needs to. “The quicker we can get this issue resolved the quicker we can help our economy recover,” Lundgren said. Elwood Brehmer can be reached at [email protected]

NEPA revisions continue with senators’ support

They’re undeniably complex, dry, arcane and seemingly always published in painfully hard-to-read print, but the Council on Environmental Quality’s proposed changes to the implementing regulations for the National Environmental Policy Act are likely to have an outsized impact on Alaska. That’s because, from the smallest commercial fishing boat to the most remote eco-tourism trek to the largest oil project, Alaska’s economy is inextricably linked to its natural resources and federal jurisdiction on nearly every level. On Jan. 10 the Council on Environmental Quality, or CEQ, published 47 pages of changes to National Environmental Policy Act regulations in the Federal Register, an action that officially opened the proposed regulations for public comment. It officially marks the only major change to NEPA regulations since the council first approved them in 1978. A public comment period closed March 10. The CEQ is an arm of the White House tasked with implementing NEPA requirements. The sweeping regulatory changes precipitate from Executive Order 13807, which President Donald Trump signed in August 2017, directing agencies to complete reviews for major infrastructure projects within two years, among other things. NEPA, the landmark federal environmental policy signed into law by President Richard Nixon in 1970, was so transformative it is often referred to as the “Magna Carta” of environmental law. In conjunction with the Clean Water and Air acts, it forms the national basis for environmental protection, pollution control and land conservation. At the highest level, the regulatory reforms are aimed at shortening the length of environmental reviews in terms of both time and page count of the final documents. Proponents of the changes, which include Alaska’s congressional delegation, insist the current process for conducting environmental impact statements, or EIS — the most thorough reviews under NEPA — results in unnecessary permitting delays that routinely hamper economic and infrastructure development nationwide. Skeptics worry the proposed regulatory overhaul is a backdoor attempt by a very pro-development presidential administration to weaken fundamental environmental protections nationwide. Brian Litmans, a senior attorney for the Anchorage-based environmental nonprofit firm Trustees for Alaska, said he believes NEPA is important for all Americans simply because it requires federal regulators to examine all aspects of a proposed project or action holistically so they can make informed decisions when issuing major development permits or making long-term land-use decisions. “NEPA doesn’t require a particular outcome and that’s one of the great things about it,” Litmans said. “It simply tries to get all of the relevant information on the table so the agency can understand what’s at stake and make a decision and I think because of that NEPA has been a success and projects can be better because of it.” The basic EIS structure involves an agency issuing a notice of intent to start evaluating a project or plan deemed to a “major federal action,” followed by a public scoping period to solicit input as to what aspects of that action stakeholders feel should be studied in the EIS. A draft EIS is published following the scoping period, after which a final EIS is published and then a record of decision, or ROD, is issued. Public comment periods of varying lengths must also follow the publication of each version of the EIS. Few direct stakeholders dispute the value of its core goals, but a largely Republican group of lawmakers at the state and federal levels largely in Western states where federal land ownership is extensive has grown increasingly frustrated at the persistent growth of NEPA reviews, particularly environmental impact statements. Part of that is because the NEPA framework is so commonplace in federal agencies. The simple process is used to adjudicate mines and oil developments, public land-use plans and road construction projects. Legal hurdles Sen. Dan Sullivan, for one, said the rulings in NEPA-related lawsuits that have piled up over the decades have led to an unrealistic burden on EIS drafters, or NEPA practitioners, as they are often known. They must account for so much case law, often from seemingly unrelated issues or projects, that writing an EIS has become a practice in writing a “legally defensible” document as much as it is conducting a thorough environmental review, according to Sullivan and others. “This is something my Democrat colleagues agree is a problem; my Republican colleagues certainly agree it’s a problem: this big issue that under our federal permitting system and to some degree state and local, but a lot of it’s federal — that you have this super-long lead time that’s required for any major infrastructure project,” Sullivan said in an interview. “Of course, it costs money and it costs time. Money and time are usually enhanced by litigation and it makes it very difficult for us to build stuff.” Eric Fjelstad, an Anchorage-based partner with the national business law firm Perkins Coie, has spent roughly 20 years working on NEPA issues. He believes the current system benefits no one — except maybe attorneys. That’s because there is nearly always a contingent that opposes a large project or major federal planning decision for a myriad of reasons. Those groups then regularly sue the decision-making agencies to overturn a record of decision or delay the process based on perceived legal flaws in a given EIS. “It’s devolved into somewhat of, I’ll call it a ‘gotcha’ review process where the process is a series of hurdles with people playing different roles and ultimately the courts at the end exacting a gotcha sanction,” Fjelstad. “Is there any realistic world where it should take four, five, six years to study something at this level? And this isn’t the only study that occurs on big projects,” he added, referring to an EIS. According to CEQ figures, approximately half of the 1,161 EIS reviews conducted from 2010-17 took longer than three years and seven months to complete. Roughly one-quarter took more than six years and the average time from a notice of intent to a record of decision was 4.5 years. About one-quarter of those analyzed took less than two years and two months to complete. Ted Boling, an associate NEPA director for the CEQ, said during a February presentation at the Alaska Forum on the Environment conference that the council primarily wants to modernize the regulations to help produce more timely and effective NEPA reviews. The council also seeks to codify years of court rulings in the proposed regulations to clarify exactly what is required under the law, according to Boling. “Much of that guidance and case law is reflected in modern agency NEPA practice but it’s not reflected in the regulations,” he said. In addition, the proposed regulations meet the president’s orders by directing agencies to complete an EIS within two years and a less rigorous environmental assessment within one year. New guidelines The CEQ is also seeking to harden current guidelines for the length of an EIS. Current NEPA regulations recommend the text of a final EIS be less than 150 pages. An EIS of “unusual scope or complexity” should be limited to 300 pages, according to the regulations. It’s 75 pages for an environmental assessment. The new regulations would make those recommendations mandatory in most cases. However, the 2010-17 EIS review found that the average length of a final EIS from the time period was 669 pages, with about one-quarter each less than 300 pages or more than 730. Boling emphasized that the harder timeline and length directives are “not just a get out of jail free card” for agency officials looking to do less work. The proposed regulations allow for senior agency officials to exempt certain complex or highly scrutinized reviews from the limitations. “Ideally, the senior agency official says, ‘Yes, this is an important project so I will read more pages than usual,” Boling said. The new language also defines reasonable alternatives, which are a required part of an EIS, as alternatives that are “technically and economically reasonable” to be in line with longstanding Supreme Court decisions, according to Boling. He further added that the council is proposing to clarify that a project’s effects should not be considered significant — and therefore not be studied — “if they are remote in time, geographically remote or they result in a lengthy causal chain.” That also codifies a Supreme Court ruling, Boling said. He acknowledged that it’s a “great point of debate” as to whether or not the new regulations will ultimately change what projects necessitate an environmental assessment or EIS. “It really gets into the question of how will the case law work?” he said. Many of the high level reforms to the parameters of an EIS were in part pulled from Sullivan’s Red Tape and Rebuild America Now bills, according to the senator. He said one of the first conversations he had with President Trump was about the need for NEPA reform. While he would prefer to make the changes in statute, Sullivan said regulatory reform via an executive order “is really good.” “We have been kind of ground zero for this” in Alaska, Sullivan said, noting it took nearly 20 years to reach a record of decision on the Kensington gold mine near Juneau and other projects. That project only began after a Supreme Court decision. He dismissed concerns that the changes will weaken environmental protections. “We don’t want to cut corners in Alaska,” he said. “It’s about timely permitting — certainty in the permitting process — so people can make investment decisions to move forward on infrastructure projects.” ‘Morphed into its own entity’ Sen. Lisa Murkowski similarly said the EIS process has become overly burdensome over the years. “It has morphed into its own entity, the NEPA process, far beyond what the act initially required,” Murkowski said in an interview. The legislation itself is a relatively brief seven-page bill that outlines Congress’ desire for a national environmental policy, establishes the CEQ and describes very generally how that policy should be implemented. “The Congress recognizes that each person should enjoy a healthy environment and that each person has a responsibility to contribute to the preservation and enhancement of the environment,” NEPA states. Sullivan and Murkowski said the status quo of EIS timelines and particularly lengthy documents discourages public involvement, contrary to NEPA’s intent. “The whole point of NEPA was to bring the public into the permitting process. You do that by having an EIS that’s 100, 200 pages; something that the average citizen can sit down and read. That was the point. Public involvement, public engagement, public input,” Sullivan said. Boling went a step further and said the council wants to make an EIS more readable for the senior agency officials tasked with making major permitting decisions based on them. The page limits are designed to help get to the core detailed statement of an EIS, Boling said, adding that appendices to the main document are “free space” that do not count towards the limit. “We’d be concerned if people were trying to take really complicated projects and just reduce it all to 150 pages but we’re also equally concerned that decision-makers need to actually be able to use those documents,” he said. “Ultimately, it’s not a paperwork exercise; it’s designed to be something that decision-makers can actually read, digest and respond to.” Litmans, of Trustees for Alaska, said the EIS timeline and length statistics can be skewed by a few exceptional cases. He noted that a very small number of projects reviewed by federal agencies are actually subject to an EIS. The vast majority are given a finding of no significant impact, or FONSI. Litmans referred to a 2014 Government Accountability Office report that found less than 1 percent of projects subject to a NEPA analysis resulted in an EIS and less than 5 percent required an environmental assessment. The rest receive a categorical exclusion, meaning a formal environmental review isn’t needed. He said Boling is “far off the mark” in saying the CEQ is simply codifying case law in the regulations. “This rule completely guts or removes from the regulations the concepts of cumulative effects and indirect impacts. These are aspects of a project that have to be considered under NEPA,” Litmans said. A section of the regulations attempting to define “effects” and “impacts” states that a “but for” causal relationship does not constitute a particular effect under NEPA. “Analysis of cumulative effects is not required,” the regulations state further. Fjelstad said he believes an EIS should be narrowly focused on roughly five to 10 areas of study that are particularly germane to a project. “It’s the old maxim, pick a few things and bring real rigor to the table and do it right rather than trying to solve everyone’s issues,” he said. Litmans said there is a large body of case law defining the requirements of a cumulative effects analysis and simply cutting it out lends to a whole new round of lawsuits. “This rule just removes key aspects of what’s required in an agency review and adds new terms that will have to be defined by the courts,” he said. Litmans also said that permit applicants are regularly the cause of delays in the process because they were not armed with the requisite information an agency needs for an EIS when they start it. Such is the case with the Pebble mine EIS, he said. “You have a project that’s sorting things out as it goes along and as a result the reviews are going to take longer,” Litmans said of Pebble. “The shouldn’t, in the middle of the process, while the draft EIS is being written and completed say, ‘Well, we’re going to go get some more field data this summer,’ which is what they did.” Murkowski joined a series of state and federal resource agencies in roundly criticizing the U.S. Army Corps of Engineers’ draft EIS for Pebble published in February 2019, contending it lacks detailed information and minimizes the project’s potential impacts to the region’s salmon and other resources despite being approximately 1,400 pages. In response to a question about how she reconciles support for the regulatory reforms with the Pebble EIS Murkowski said, “When you say a project needs a review that’s fair and thorough, that fairness and thoroughness is not necessarily measured by pounds of paper or the length of time within a process.” Pebble spokesman Mike Heatwole wrote via email that the company has not had an unusual number of information requests from the Army Corps of Engineers for a project of its size. More people than normal are interested in Pebble and therefore the intricacies of the process have been made more transparent than normal by the Corps, according to Heatwole. He added that midstream changes to the project did not fundamentally change the layout of the project or the company’s approach to mining the resource. “The modifications were improvements upon the environmental impacts of the project and in many cases reduced the footprint of the project,” Heatwole wrote. Boling said agencies can better meet the new, firmer review timelines by making sure applicants have all of the information needed at the ready and Fjesltad acknowledged that “a lot of people start when they’re not ready.” The CEQ received 598,989 comments on the proposed regulations, according to the Federal Register. CEQ spokesman Dan Schneider wrote March 17 that modernizing the environmental review process for infrastructure projects is a priority for the administration and the council is currently reviewing the comments. ^ Elwood Brehmer can be reached at [email protected]

GUEST COMMENTARY: Success of oil and gas industry vital to success of Alaska economy

Oil prices have plunged in the past few weeks, a result of global market forces and COVID-19. With jobs and government revenue sure to be impacted, it is useful to consider how a drop in oil prices played out in Alaska before. McDowell Group recently completed a comprehensive analysis of the oil and gas industry’s role in Alaska’s economy. For many years we have tracked jobs and wages associated with industry spending and payments to government. This analysis was different, coming on the heels of a recession in Alaska driven mainly by a sharp drop in oil prices and revenues. Oil prices started sliding in late 2014, falling from $110 per barrel to $30 per barrel by 2016. Oil and gas industry spending and employment sank, as did tax and royalty revenue to the State of Alaska. All told, Alaska lost 12,000 jobs before emerging from recession in 2019. Like Alaska’s economy, the oil and gas industry is again on the rise, adding 500 jobs in 2019. Though the oil and gas industry downsized during the recession (nationally and in Alaska), it remains a critical component of the Alaska economy. Oil industry spending supported 41,800 jobs and $3.1 billion in wages in 2018, including all multiplier effects. This tally of employment does not include nonresidents employed by the oil and gas industry in Alaska. The 17 companies that produce, transport, and refine oil and gas are the heart of Alaska’s oil industry, spending $4.4 billion in Alaska in 2018. 84 percent of these companies’ employees are Alaska residents earning 83 percent of wages paid in Alaska. The industry also paid $3.1 billion in taxes and royalties to state and local governments in 2018. As government uses oil- related taxes and royalties to fund operations, programs, and capital projects, thousands of public and private sector jobs are created. Government spending of oil-related taxes and royalties accounted for an additional 29,300 jobs and $1.5 billion in wages in Alaska. The Permanent Fund, and the dividends it generates for Alaskans, is a legacy economic impact of the oil and gas industry. PFD spending in Alaska supports 6,500 jobs and $260 million in annual wages. All told, including jobs related to private sector spending and payments to government, the oil and gas industry accounted for 77,600 jobs and $4.8 billion in wages, or 24 percent of all wage and salary jobs and 27 percent of all wages in Alaska in 2018. For each job with Alaska’s 17 oil and gas producers, pipeline companies and refineries, there are 15 additional jobs in the Alaska economy connected to the oil and gas industry. No other industry in Alaska can match the employment footprint of the oil and gas industry. Alaska oil production has been declining steadily since 1988 when we produced 25 percent of all U.S. oil. Now Alaska accounts for 4 percent of domestic U.S. production (and just a small fraction — 0.6 percent — of global production). While U.S. oil production outside Alaska grew 143 percent between 2008 and 2018 — largely due to rapid growth in North Dakota, Colorado, Texas, New Mexico, and Oklahoma — Alaska production declined 30 percent. Recent history has proven that a healthy oil and gas industry is essential to Alaska’s economic wellbeing. That fact, coupled with our much-diminished role as an oil producer and another severe drop in oil price, underscores the importance of keeping Alaska an attractive and competitive place for oil industry investment. Jim Calvin is the McDowell Group’s senior vice president and senior economist.

GUEST COMMENTARY: Short- and long-term fixes for ferry system in the works

While I know the novel coronavirus has rightly captured our attention, I think it’s important that we don’t forget the Marine Highway. In recent months, I’ve read disappointing reports of communities throughout the Inside Passage being unable to obtain food and vital supplies. Having represented Hoonah, Angoon, and Kake in the legislature for many years, I found it surprising that these self-reliant communities were supposedly struggling so severely. But after calling a few local friends, I learned the situation was far different than what some were representing. The people were not starving. Chartered barges have continued to deliver goods and supplies to Hoonah and Angoon; landing craft were quick to restore depleted grocery shelves. One friend told me they are gatherers and have been ready since November. After the weather cleared, I visited these communities myself and was relieved to find they were doing fine given the circumstances. That said, the outpouring of support from Petersburg and elsewhere was greatly appreciated. The willingness to help each other shows how much things have changed during my 72 years in the Southeast. Of course, most places in Alaska and the country are now facing supply issues because of the coronavirus, but these temporary stocking issues are unrelated to the ferry system. None of this is to understate the importance of fixing the Alaska Marine Highway System. Earlier this year I spent nine weeks cooped up in Juneau as ferry cancellations and weather-related flight delays prevented me from going home to Haines. And while I know our communities are home to many generations of skilled gatherers of both land and sea, I realize that ferry service is integral to modern life. Thankfully, service is already being restored. The brand-new Tazlina is providing service to Angoon, Hoonah, and upper Panhandle communities like Haines and Skagway with other ferries soon to follow. Emergency funding has been requested by the governor, and a work group is developing a detailed, long-term plan. But it’s important to keep in mind that the Marine Highway’s problems built up over decades. Way back in 1963, I sailed with my future wife, Joyce Marie, aboard the very first ferry into Alaska (we were flown down for the inaugural voyage alongside Governor Egan and the Chilkat Dancers from Haines). That vessel, the Malaspina, remained in service until just a few months ago. The mechanical deterioration that placed it out of commission happened over many years. Likewise, the LeConte and Aurora, built in 1974 and 1977, respectively, suffer from years of rust damage. Long-term planning has been equally problematic. Beginning in the 1970s, we stopped building boats for 21 years. When we did construct several aluminum ferries in the early 2000s, they were a bad fit for Alaskan waters. Clearly, we need to take a step back and develop a sustainable, thoughtful course for our ferry system. Other troubles, like the breakdown of the Matanuska’s brand-new reduction gear and the bulkhead failure and electrical issues aboard the Tazlina, can only be chalked up to misfortune. As a commercial fisherman of some 50 years, I’ve seen firsthand how unexpected setbacks often occur at the worst of times. Fortunately, most folks I spoke with during my recent trip were boat people and understood these unpredictabilities. Even this virus is working against us as worried shoppers clean out store shelves. But much like hoarding toilet paper is unlikely to slow the pandemic, spreading exaggerated information about impacted communities isn’t going to cure the marine highway. Everyone is hard at work on short-term fixes, and long-term solutions are on the way. We need to work together instead of blaming each other for a problem that’s nearly as old as our state. My good friend Clay Koplin of Cordova said it best: I want to be part of the solution, not the problem. Bill Thomas of Haines represented Southeast Alaska in the Alaska House from 2004 to 2012.

FISH FACTOR: Flattened prices greet fishermen to start halibut season

The Pacific halibut fishery opened on March 14 amid little fanfare and flattened markets. The first fish of the eight-month season typically attracts the highest prices and is rushed fresh to high-end buyers, especially during the Lenten season. But that’s not the case in this time of coronavirus chaos, when air traffic is stalled and seafood of all kinds is getting backlogged in global freezers. Alaska’s share of the 2020 halibut catch is about 17 million pounds for nearly 2,000 fishermen who own shares of the popular flatfish. A week into the fishery, fewer than 50 landings were made totaling just more than 262,000 pounds and, as anticipated, prices to fishermen were in the pits. Earliest price reports at Homer were posted at $4.20 to $4.40 per pound, Kodiak prices were at $3.25 for 10- to 20-pounders, $3.50 for halibut weighing 20 to 40 pounds and $4 for “forty-ups.” Prices ranged from $3.75 to $4 at Yakutat and $3.50 “across the board” at Wrangell, according to Alaska Boats and Permits in Homer. The highest prices of $5, $4.75 and $4.50 were reported at Southeast ports that have regular air freight service, although they are expected to drop by $1 to $2 per pound, a major buyer said. The average statewide price for Alaska halibut in 2019 was $5.30 per pound and $5.35 in 2018. For this season’s start, some Alaska processors were buying small lots of halibut on consignment or filling existing orders; others were not buying at all. “We are tentatively going to be buying longline fish on the first of May after the Columbia ferry gets back on line,” said a major buyer in Southeast who blamed not having traditional ferries that haul thousands of pounds of fish each week, and a lack of air freight options at smaller communities. “We’re down here where transportation is dictating where fish has to go,” he added. Most of Alaska’s halibut goes into the U.S. market where in recent years it has faced stiff competition from up to 8 million pounds of fresh Atlantic halibut, primarily from eastern Canada. And although Russia has banned purchases of U.S. seafood since 2014, increasing amounts of halibut caught by Russian fishing fleets are coming into our nation. Trade data show that 2 million pounds of Pacific and Atlantic halibut were imported to the U.S. over the past year through January 2020, valued at nearly $6.7 million. A major Alaska buyer said: “One of our salespeople shot us a deal showing that right now you can buy frozen at sea, tail off, 3-5 and 5-8 pound Pacific halibut from Russia for $3.25 a pound.” Also newly appearing on U.S. shelves: farmed halibut fillets from Norway retailing at $9.99 a pound. Hatchery hauls Alaska salmon that got their start in hatcheries made up 25 percent of last year’s total statewide catch. In 2019, roughly 50 million hatchery salmon were caught by Alaska fishermen, mostly pinks and chums, valued at $118 million, or 18 percent of the state’s total salmon harvest value. That’s according to the annual salmon enhancement report by the Alaska Department of Fish and Game. Currently there are 30 hatcheries producing salmon in Alaska, of which 26 are operated by private, nonprofits. ADFG operates two sport fish hatcheries in Anchorage and Fairbanks, the federal government runs a research hatchery near Sitka, and the Metlakatla Indian tribe also operates a hatchery. The hatcheries are funded by a fishermen’s tax and sales of a portion of the returning fish and receive no state dollars. They also produce salmon for sport, subsistence and personal use fisheries at no cost to the state of Alaska. “For the coastal communities the hatchery program is a lifesaver for many of the people who fish for a living. It gives about 25 percent of the salmon harvest and that supplementation is a critical component for their business model,” said Steve Reifenstuhl, who on March 15 retired after 40 years as general manager at the Northern Southeast Regional Aquaculture Association. At Prince William Sound, where most of Alaska’s hatchery fish call home, 31 million salmon were caught last summer valued at $64 million, or 56 percent of the region’s total dockside value. Nearly 83 percent were chums, 61 percent were pinks and 34 percent were sockeye salmon. For Southeast Alaska, the second-largest hatchery region, fishermen harvested about 6.5 million hatchery fish valued at $32 million, or 37 percent of the region’s landings value. Chum salmon contributed $24 million of that total. Kodiak has the state’s third-highest hatchery production and about 3.4 million hatchery salmon were caught last year, nearly all pinks. The value to fishermen was close to $5 million, or 11 percent of the total dockside value for Kodiak fishermen. Three hatcheries in Cook Inlet produce primarily sockeye and pink salmon. About 42,000 hatchery-produced salmon were harvested there last year for a total of nearly $2 million, or nine percent of the value for the region. About 1.7 billion tiny salmon were released by Alaska hatcheries in 2019 which operators predict will product a total return of about 52 million salmon in 2020 including 35 million pinks, 13 million chums, 2.2 million sockeyes, 1.2 million cohos, and 100,000 Chinook salmon. Alaska’s on acid Alaska waters are showing effects of increasing acidity faster and more severely than lower latitudes because cold water is richer in carbon dioxide and melting sea ice and glaciers worsen the problem. The off kilter ocean chemistry reduces the amount of minerals sea creatures need to build and maintain their shells. That’s the verdict in the 2019 report by the Alaska Ocean Acidification Network, which updates the science going on around the state. The Network has modeled 40 years of ocean changes in the Gulf and is doing the same for the greater Arctic. At Sitka, researchers are testing the effects of acidification and ocean warming on the earliest life stages of herring; early signs point to warming as the bigger threat. At the Alutiiq Pride Shellfish Hatchery at Seward, studies on razor clams indicate they are hurt by increasing acidity. Tiny swimming sea snails called pteropods that make up 40 percent of the diet of juvenile pink salmon already are showing extensive shell corrosion in both the Gulf of Alaska and Bering Sea. The 2019 report also updates the monitoring being done since 2017 by the ferry Columbia as part of an unprecedented Alaska/Canada project to learn how increasing ocean acidity affects fisheries. The 418-foot ferry sucks up water samples every two minutes and has produced more than 700,000 measurements. The monitoring will resume when the Columbia is back on the water in May. “The fantastic thing about this vessel is it’s going from Bellingham to Skagway and back every week. That’s a 1,600-kilometer run. Nowhere in the world is there a ferry system that’s outfitted with CO2 sensors that’s running that scale of a transit. This is really exciting,” said Wiley Evans, program technical lead with the Hakai Institute. Early data point to an extremely variable seascape in which the surface water is more corrosive in fall and winter, representing the most vulnerable time for species that are sensitive to acidity. When spring arrives, the phytoplankton bloom removes carbon dioxide from the water through photosynthesis, and the water gets warmer making conditions more favorable for shell production. So far, only a limited number of Alaska’s commercially important species have been studied for their response to increasing acidity. Laine Welch lives in Kodiak. Visit or contact [email protected] for information.

Global oil storage capacity shrinks amid supply glut

As Saudi Arabia and Russia — and even U.S. shale producers — pump more oil than the world needs, the price for crude is dropping while the price for storing all that excess oil is rising. There are worries that demand for storage will overwhelm capacity. “I don’t see how you don’t exhaust global storage capacity, if this goes on until summer at the production numbers talked about,” Jeffrey Currie, head of commodities research at Goldman Sachs Group told Bloomberg. “We believe … the market will soon come to realize that it may be facing one of the largest supply surpluses in modern oil-market history in April,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy, an Oslo-based research and business intelligence company. Until supply and demand come back into balance, the oil will keep stacking up worldwide. Traders and buyers are storing cheap crude for consumption when they need it later, or in hopes of an eventual profitable resale. The price for a barrel of Brent, the global benchmark crude (which North Slope oil tracks), has crashed from about $68 at the start of the year to about $28 at the start of trading March 23 as Russia and Saudi Arabia out-produce to see which one wins. Global supply was already expected to exceed demand this quarter by 3.5 million barrels per day, according to the International Energy Agency. And that number will get a lot bigger after March 31, when OPEC member nations further boost their output as production limits expire. “We could have global market oversupply of over 10 million barrels per day. Which is insane and unprecedented,” Abhi Rajendran, director of research at Energy Intelligence, told CNBC on March 16. IHS Markit, a global energy research and analysis firm, forecasts the same oversupply of up to 10 million barrels per day, adding as much as 1.3 billion barrels to storage by the end of June. Bloomberg has an even bigger number. If the market fight between Russia and OPEC continues, and the COVID-19 world economic collapse extends into later in the year, Bloomberg calculated that global crude inventories could grow by 1.7 billion barrels. Don’t look for Saudi-led OPEC to blink first. “Any large political power sometimes needs to remind its adversaries and competitors of its might. We believe Saudi Arabia seeks to teach the market a lesson,” Rystad’s Tonhaugen said in a posting on the company’s website March 18. Global oil storage could fill up within four months, Antoine Halff, the chief analyst of Paris-based consultancy Kayrros, told The Wall Street Journal. Kayrros tracks global storage by using satellite imaging. About 65 percent of the world’s total 5.7 billion barrels of oil storage is currently in use, according to Kayrros. At current fill rates, oil could reach the top of the tanks and caverns in just over a year, the company estimates. “The fill rate that we are experiencing now is totally unprecedented,” Halff said. The oil hub in Cushing, Oklahoma, is home to about 15 percent of the U.S. commercial storage capacity, or almost 80 million barrels. The tanks were about half full a week ago — and filling up. Storage rates at Cushing doubled over the past month and were running as high as about 50 cents per barrel per month, Reuters quoted two traders. “Everyone and their mother is scrambling to fill up tankage,” a trader said. The federal government’s Strategic Petroleum Reserve in salt caverns in Texas and Louisiana can hold about 750 million barrels and was storing about 635 million barrels as of early last week. Though 115 million barrels may sound like a lot of spare capacity for U.S. shale oil production, it’s not. About two-thirds of the Strategic Petroleum Reserve capacity is designated for sour crude — with a sulfur content greater than 0.5 percent. But the crude pumped from the shale rock of West Texas and other shale basins has very low concentrations of sulfur, if any, and the sweet crude is not suitable for blending with sour crude. Different caverns are designated for the different crudes. The caverns for low-sulfur, or sweet crude, had room a week ago for about 25 million barrels, while the sour-crude caverns had room for an additional 95 million barrels. Other countries, notably South Korea, also have large onshore oil storage tank farms. But those are filling up, too, pushing traders and buyers to look to sea to park their crude. Reuters reported March 10 that tanker rates are surging as traders need a place to store their cheap oil. The cost of renting a very large crude carrier, or VLCC, which can hold 2 million barrels of crude, was quoted March 10 at more than twice what it was a month ago, ship brokers told Reuters. Other news sources were reporting even steeper rate hikes last week. “We are seeing several deals being negotiated for short-term (6 to 12 months) charters. … The fall in oil prices has made floating storage more attractive, although the margins are still relatively thin,” shipbroker and consultancy Poten &Partners said in a research note. The margin being whether buyers can pay the costly storage fees and still turn a profit. As the charter rate climbs for the biggest ships — whether for storage or to deliver cheap Middle East crude to refineries — a growing number of Asian oil buyers are looking to smaller vessels to save money. Bloomberg reported that the rate hikes for smaller tankers were much less than the boost in VLCC rates. Too much oil and not enough capacity to move it to market has been a growing problem in landlocked Alberta, with its growing oil sands production is outpacing the ability to get new pipelines built. The provincial government has been limiting oil production the past year in an effort to hold down oversupply and boost prices, and now says it might mandate further cuts if rising supplies and falling prices threaten the survival of companies. 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.

GUEST COMMENTARY: Alaskans will rise to meet latest challenge

Where were you when the pandemic came to Alaska? Future generations will demand an answer from each of us. Did we change our habits to protect the vulnerable? Did we make sure our elderly neighbors had everything they needed? Long after the virus disappears from the public consciousness, these are the questions we’ll be left to grapple with. For so many, we look to government to provide services during a crisis. We forget, as Franklin Roosevelt once said, that “government is ourselves.” It’s understandable. Few have experienced an event of this magnitude. But we are not alone. Generations of Americans stood where we stand today, facing problems of enormous weight – wondering who they were as a people. Invariably, they rose to meet the great challenges of their day. They gave of themselves, sacrificing much to sustain this great American experiment. Alaskans will choose a similar path; I have little doubt. Time and again, be it the Anchorage earthquake, last year’s fire season, or our highest-in-the-nation percentage of veterans, Alaskans consistently reaffirm their commitment to service. You may say, “But I have nothing to contribute.” I would urge you to reconsider. All over the world, people are finding ways to aid their communities by donating their time, skill, and even blood. Perhaps, you hung up your stethoscope years ago to enjoy retirement or pursue a new career. You wonder if your services could be useful. The answer is yes. Maybe you own a manufacturing company that can produce medical equipment, or a rental car company that could offer vehicles to transport volunteers. Others may have the means to contribute to a local food bank or buy supplies for an emergency shelter. All across our state, Alaskans are saying, “I can do that,” and stepping up. At Joint Base Elmendorf-Richardson, soldiers and airmen are packing meals for needy families; in Anchorage, volunteers are sending out 30-day food supplies to seniors while healthcare workers perform drive-up tests in the cold and snow. Behind the frontlines, our state workers are busy processing business bridge loans, reviewing unemployment insurance cases, and ensuring that your government provides the best possible response to this crisis. Even grocery clerks and delivery drivers are providing a critical service, keeping Alaskans fed and healthy. But the question remains: How will you answer the call? When our children ask, “Where were you?” will we be able to tell them that we served in an army of Alaskans who did everything in their power to look out for one another? If the past is any indicator, I’m confident the answer will be yes. For those that choose to heed the call of service, I offer you the thanks of a grateful state as we face this historic challenge together.

BROWN'S CLOSE: The Young and the Restless

Like many of my fellow residents of the Municipality of Anchorage, I am currently living under a state of quarantine, social distancing, and general loneliness. It’s been difficult, mostly resulting in me chewing on my leg out of sheer boredom. All, however, is not lost. Thus far, I have accomplished the following tasks: I’ve made it to Season 5 of The Office. Any show with even a mite more plot is proving too overwhelming in this chaotic time. I’ve compared quarantine snack choices with anyone who will entertain the question. We’ve concluded peanut M&M’s and popcorn are the most popular snacks. Curiously, one survey participant said oatmeal was his favorite snack; he was mildly crushed to hear that Quaker Oats is selling for $30 per unit online. I’ve disinfected my television remote three times. I obtained a quarantine haircut. Prior to complete isolation, I had my hairdresser cut my hair into a nineties style bob. I’m good on haircuts for the next four months. My brother’s hair, on the other hand, is now long enough to be tied back with a rubber band. I’ve purchased canned vegetables and baked beans for the first time in my adult life. When this is over, canned food drives will be more bountiful than in any prior decade. Aside from my little triumphs, my community and its residents are fighting back, overflowing with self-improvement. For example, everyone I know has turned into a public health expert. I am pleased how much my Facebook friends have improved their scientific knowledge, seemingly overnight. No one, however, beats out newly minted epidemiologists, and my beloved parents, Fred and Ann Brown, for coronavirus pandemic preparedness. Fred and Ann Brown are currently quarantining their mail. It is encouraging to see how seriously businesses are taking this crisis. Businesses of all sizes have a coronavirus task force, regardless of the applicability of said task force to any particular business’ industry. Thus far, I have received coronavirus protocols from the credit union where I opened my first bank account at age eight, Groupon, Ollin Tea & Café, Nordstrom, and the Whistler Film Festival (which is not currently scheduled to take place before December). While I find it comforting that Spirit of Alaska Federal Credit Union has a coronavirus task force, I’m really much more curious what United Healthcare intends to do about all of this. Small business owners are finding ingenious ways to keep their customer base intact. For example, prior to the Mayor’s order closing all bars, restaurants, and sites of recreation, my gym sent out sweet, optimistic, daily emails describing how the floor was antimicrobial, how management was capping class sizes, how staff were increasing cleaning regimens, and how instructors would no longer touch the students. Pure Barre on 36th and Old Seward was determined to remain a sanctuary for the women who faithfully frequented it. Post mayoral mandate, this happy little community disbanded for all of three days. Not to be gainsaid, they surged back, offering online streaming classes. Come what may, they will lift, tone, and burn. My daily online workouts require some adjustments as I do not have a complete supply of gym equipment at my house. For example, my hand weights for these online classes consist of two giant jars of baby dill pickles from Costco. Magically, the weights are getting lighter as time goes on. I must be getting very strong indeed. I attempted to get Fred and Ann Brown to take these online classes with me. I did one class with each parent. Afterwards, they opted for the workout regimen prescribed by The Wall Street Journal for “The Aging Athletes.” Exercises consist of pushups against countertops and rising up and down on your tippy toes. The highlight of my day is usually an hour-long walk around my neighborhood. Since schools closed and most businesses sent employees home, the streets of my neighborhood are more crowded these days than they used to be on a typical weekday afternoon. My neighbors, to their credit, are very respectful of my space; they regularly run to the other side of the street whenever they see me approaching. Apart from my neighbors, however, everyone else I know has gotten abundantly chatty. Before the pandemic, the only person who would call me on FaceTime was my brother. Now, FaceTime requests have increased 5,000 percent and I am very rarely camera ready. Anchorage’s Mayor is pleading with citizens to cease hoarding behavior. Until this time when the mania ends, may there be a paper towel in every kitchen, and a roll of toilet paper in every bathroom. Sarah Brown is a shut-in. She can be reached any time, day or night, at [email protected], and on Twitter @mesarahjb. “Close” is a British term for alley or cul-de-sac.

Dunleavy pushes for PFD check, lays out $1B plan for virus response

Gov. Mike Dunleavy pressed legislators in a Friday noontime address to quickly approve funding to pay Alaskans the $1,306 he says they are owed to fulfill last year’s Permanent Fund dividend payments as the central piece to his administration’s COVID-19 economic stabilization plan. The governor said he has also ordered $1 billion to be transferred from existing state accounts and put into a disaster relief fund to cover a surge in unemployment payments and demand on other assistance programs indirectly caused by the virus. The state released more details on the plan later, which calls for paying the statutory PFD in two installments for 2020 — June and October — in addition to to the supplemental request for 2019. “Immediate and far-reaching economic relief is needed right now, not tomorrow, not two weeks from now, but right now,” Dunleavy said during a roughly 10-minute address that was streamed from his state Facebook account. He pointed to the fact that Congress is working on an economic relief plan that includes direct payments to Americans — up to $1,200 to many and $500 per child — that largely mirror the PFD in urging legislators to approve the payment and said the state checks could be issued as soon as next month. Most lawmakers have opposed full, statutory PFD payments for several years as the state has grappled with billion-dollar-plus annual deficits. “Never in the last 40 years has the payment of the PFD been more critical,” Dunleavy said. The state is partnering with Alaska banks to provide bridge loans for small businesses that have been hurt by government-mandated closures or in other ways as health officials try to slow the spread of the virus. The bridge loans will be made at interest rates offered by the Small Business Administration, according to Dunleavy. “The state will 100 percent guarantee these loans to ensure our lenders aren’t at risk,” he said. Spokespersons for the governor’s office and several local banks could not immediately provide additional details on the small business bridge loans. While it’s unclear exactly how many Alaskans have been put out of work as a result of mandated and voluntary business restrictions intended to reduce social contact, the impact is undoubtedly widespread and is expected to have a huge impact on the coming tourist season. Division of Employment and Training Services Director Patsy Westcott wrote in an email that the state can’t yet release its most recent unemployment data due to federal reporting requirements, but wrote generally that, “our claims workload has increased significantly this week and is expected to do so in the coming weeks.” The leisure and hospitality industry employed more than 44,000 people during its summer peak last year, according to the state Labor Department. Senate Republican leaders sent out an open letter to Alaskans shortly after the governor’s address ensuring them that the Legislature is exploring all the ways it can assist impacted individuals and mitigate the long-term economic damage caused by the response to the virus. The letter does not address policy specifics, but states clearly that “No Alaskan in need will be left behind.” “This virus has wreaked havoc on the price of oil, the stock market is in retreat, and now countless workers will go without paychecks as business owners are forced to close-up shop. The uncertainty of the next weeks and months will only compound the harm to the private sector of our economy. Without a swift response, this virus could cause long-term damage beyond the health impacts,” the letter states. Senate President Cathy Giessel and Finance Committee co-chairs Sens. Bert Stedman of Sitka and Natasha von Imhof, of Anchorage signed the letter. Dunleavy further said he signed an emergency order protecting the approximately 13,000 Alaskans that receive rental assistance from the state-owned Alaska Housing Finance Corp. He also ordered AHFC to stop rental evictions for at least 60 days and loan servicers have been authorized to grant forbearances to homeowners who have had their finances affected by the response to the virus. On Monday, Anchorage Mayor Ethan Berkowitz ordered all bars, restaurants and entertainment facilities to close, except for drive-through, take-out and delivery services. Dunleavy ordered them closed statewide Wednesday evening through April 1. Additionally, $75 million has been authorized to underwrite emergency health care facilities and provide health care workers with personal protective equipment. Dunleavy said another $100 million will be made available to address the added demand on state programs and workers, particularly state health workers. “We need our state workers protected and safe and we need them to continue the functions of state government,” he said. Resources will also be set aside to help local governments deal with unexpected costs and lost sales revenue. Dunleavy told Alaskans to expect additional economic assistance measures as well as further health mandates to attempt to slow the spread of COVID-19. State health officials reported 12 cases in Alaska when the governor made his announcement. A 13th case was confirmed shortly afterwards. Elwood Brehmer can be reached at [email protected]

ConocoPhillips, Oil Search cutting Alaska spending by $270M

ConocoPhillips and Oil Search announced early Wednesday that they will be scaling back their North Slope operations in response to the collapsed global oil market. For ConocoPhillips, which has the largest share of overall oil production in the state, the belt-tightening will result in a roughly $200 million reduction to the company’s capital spending plan in Alaska for the year through “laying down a couple of (drilling) rigs” at the Alpine and Kuparuk fields, Chief Operating Officer Matt Fox said in a conference call with investors. According to Fox, the Houston-based company expects to see a production impact of about 2,000 barrels per day on the Slope from less development drilling the remainder of the year. ConocoPhillips produced nearly 130,000 barrels per day from Kuparuk and 56,000 barrels per day from Alpine in February, according to state Revenue Department figures. Alaska North Slope crude sold for $27.73 per barrel on March 17, according to the Revenue Department. According to aggregated figures provided by Revenue, Alaska companies currently spend nearly $39 per barrel, on average, to produce oil and ship it to West Coast refineries. Papua New Guinea-based Oil Search, a relative newcomer to the Slope, announced in a lengthy statement from its Sydney office Wednesday that it would be slowing work on its large Pikka Unit oil development until more favorable market conditions return. The slowdown amounts to a roughly $70 million pullback in Alaska for the rest of the year. Oil Search had previously expected to spend about $230 million in the state for the remainder of 2020; that’s now been revised to the $160 million range, according to the statement. ConocoPhillips Alaska spokeswoman Natalie Lowman wrote in an email that she couldn’t provide any further details to what was discussed in the conference call at this point. The Alaska reduction is part of a $700 million pullback to the company’s global 2020 capital program, CEO Ryan Lance said, which amounts to a 10 percent curb in spending overall. The company spent approximately $1.5 billion on North Slope capital investments last year, according to its 2019 earnings report. ConocoPhillips executives also said they will be cutting the company’s share repurchase program from $750 million to $250 million per quarter starting April 1. It all amounts to $2.2 billion less in spending for the rest of 2020. Lance said the moves to limit spending immediately are meant to stabilize cash flow, while stressing ConocoPhillips is much better prepared to weather this price downturn than it was in 2015-16. ConocoPhillips leaders have said they restructured their operations in response to the 2015-16 price collapse — which bottomed out at $26 per barrel for Alaska crude — to be profitable at prevailing prices of $40 per barrel. “Today, we believe we are in a strong position to take this methodical approach because ConocoPhillips is in a relatively advantaged position compared to the rest of the industry,” he said. The company ended 2019 with roughly $14 billion in liquid reserves, according to Lance. He also didn’t rule out making acquisitions while oil prices are low, but acknowledged that the combination of a pandemic-induced demand drop for oil and a surge in supply from the price war between Russia and Saudi Arabia is an unprecedented situation. “We know in our minds that it will pass but it doesn’t bring much comfort at the moment,” he said. Oil prices began falling in early February from a long run in the mid-$60s per barrel as traders reacted to lower demand forecasts from China due to the country’s reaction to COVID-19. That price decline accelerated earlier this month when Saudi and Russian officials could not agree on curbing production rates to stabilize oil markets in the face of less demand due to the virus curtailing economic activity worldwide. That disagreement quickly turned into a price war, with officials from each side refusing to cut production on the premise they can outlast the other in a time of painfully low prices for each oil-dependent government. The Energy Information Administration earlier this month forecasted that Brent benchmark crude — which Alaska oil follows closely — will average $43 per barrel in 2020 and return to $55 per barrel in 2021, but those projections could change along with the global response to COVID-19. Fox said ConocoPhillips is checking the temperatures of its North Slope employees and asking them to fill out a health questionnaire before they begin their work rotations. The company is also reducing staffing levels at its remote operations — which include parts of Norway and China in addition to Alaska — to provide space for quarantining workers that might contract COVID-19, but so far no cases of the virus have been indentified amongst employees in those locations. Lance added that the global response to the virus has not impacted oil or gas production so far. BP Alaska spokeswoman Meg Baldino wrote via email that the company is focused on "safe, reliable and compliant operations" until the pending $5.6 billion sale of its Alaska assets to Hilcorp Energy, which includes the large Prudhoe Bay oil field, is complete. A spokesman for Hilcorp Alaska did not immediatley respond to a request for comment. Oil Search According to its statement, Oil Search will continue early development activities at Pikka, such as laying gravel roads, to meet its state and federal permitting requirements but work on production facilities and other aspects of the complex project “will be placed on hold.” The statement also says that some engineering work towards full field development at Pikka will continue so the company is ready to make a final investment decision on the project when market conditions improve. Oil Search will also complete testing of the two exploration wells it drilled this winter, which both encountered oil, the company noted. Oil Search has significant producing operations in Papua New Guinea, but the Pikka development is its first foray into the United States. “While Oil Search is fortunate to have world-class assets, these unprecedented times require us to take immediate and decisive steps to position us for a potentially extended period of lower oil prices and business uncertainty,” Managing Director Keiran Wulff said. Spokeswoman Amy Burnett said she could not offer any further details at this time. Oil Search completed an $850 million buyout of Armstrong Energy and a silent owner in Pikka in 2018 to take a 51 percent operating stake in the unit. Spanish major Repsol holds a 49 percent interest in the Pikka Unit and its Nanushuk oil project. As recently as October the company was working to move up its initial production target on the nearly $5 billion project roughly a year from late 2023 to 2022. Oil Search received its record of decision on the Nanushuk project from the U.S. Army Corps of Engineers last spring. Once fully developed, its expected the Pikka Unit will produce upwards of 120,000 barrels of oil per day at its peak. Look for updates to this story in an upcoming issue of the Journal. Elwood Brehmer can be reached at [email protected]

Fed launches second lending program to ease credit flows

WASHINGTON (AP) — The Federal Reserve on March 17 announced its second emergency lending facility in an effort to smooth the flow of credit to businesses and households struggling amid the virus outbreak. The facility, like the previous program the Fed launched earlier March 17, is a revival of a financial-crisis era program launched in March 2008, known as the “primary dealer credit facility.” It essentially allows a wider range of financial institutions to access short-term loans from the Fed — in this case investment banks and securities trading divisions of large banks — and allows them to pledge a wider range of collateral in return for the loans. In the Fed’s other short-term lending programs, which were ramped up to roughly $1 trillion per week last week, banks could only use Treasury securities as collateral. The program was first used by the Fed during the 2008 financial crisis to unclog a short-term lending market for what is known as “commercial paper.” Large businesses issue commercial paper, essentially IOUs, to raise cash to meet payrolls and cover other short-term costs. “An improved commercial paper market will enhance the ability of businesses to maintain employment and investment as the nation deals with the coronavirus outbreak,” the Fed said in a statement. Borrowing rates in the commercial paper market have been spiking as more companies have sought to raise cash in the expectation that their revenue will plunge. At the same time, money market funds, among the largest buyers of the short-term loans, are seeking to sell commercial paper themselves. They need to raise money because they expect large institutional investors to withdraw funds, and they need cash to cover those withdrawals. All that activity has made it harder for banks and other companies to raise the cash they need. “The goal is to prevent a larger catastrophe that includes soaring bankruptcies, unemployment and underemployment,” said Joe Brusuelas, chief economist at tax advisory firm RSM. “While we are encouraged by this policy step, the Treasury will need to step up with other funds and bridge loans” that can help companies with lower credit ratings. Only companies with top credit ratings are eligible to borrow from the Fed’s new facility. In its announcement, the central bank said it set up the investment vehicle to buy commercial paper with the approval of the Treasury Department. The Treasury has also committed to guarantee up to $10 billion of the loans to prevent the Fed from taking losses. Companies that borrow through the facility will pay a small fee and interest. “The economic disruption and uncertainty created by COVID-19 has created challenges for the commercial paper market, constraining access to short-term credit for American businesses,” Mnuchin said. The Fed action comes after the central bank unleashed a massive program of stimulus March 15, when it cut its benchmark short-term interest rate to near zero and said it would purchase $700 billion in bonds. The Fed also allowed banks to lend from cash reserves that it had previously required banks to hold. Many analysts say they expect the Fed to revive other financial-crisis-era programs in the coming days, including one known as the term auction facility, or TAF. This facility allows a wider array of banks to borrow from the Fed and to pledge a range of collateral, such as corporate bonds, rather than just Treasuries.

Movers and Shakers for March 22

The Armed Services YMCA has honored Alaska USA Federal Credit Union chairman Bobby Alexander with its inaugural Civic Leader of the Year award. The Civic Leader of the Year award is given to individuals who have displayed outstanding dedication to bettering their community and an unwavering commitment to the armed forces. Alexander’s service to his country includes two tours in Vietnam with the 5th Special Forces Group, where he was selected as the noncommissioned officer in charge of the group’s financial section and responsible for more than 5,000 soldiers. During his time in the military, Alexander received numerous awards and commendations. After retiring from the U.S. Army, Alexander returned to serve in a civilian capacity as the deputy chief of staff for the Manpower and Force Management Division. Alexander has devoted more than 38 years of volunteer service to credit union boards and committees and has served on the Alaska USA Federal Credit Union board of directors since 1996. Northrim Bank announced the opening of a Loan Production Office in Kodiak and the hire of long-time Kodiak resident Mark Anderson as VP-commercial loan officer IV. Anderson joins Northrim Bank with 22 years of experience in the financial industry. He worked as a vice president and branch manager in Seward and Kodiak. Most recently, Anderson was the CFO for Brechan Construction in Kodiak since 2014. He has a bachelor’s degree from Bethel University in St. Paul, Minn. Anderson is on the board of directors for the Kodiak Community Foundation and is the current board chair for the Kodiak Island Borough Citizens Board of Equalization. The Kodiak Loan Production Office opened March 2 and is located at 2011 Mill Bay Road adjacent to Northrim subsidiary Residential Mortgage. Bering Straits Native Corp. announced the promotion of Jørg Jensen to director of operations. Jensen joined BSNC in 2015 and has more than 20 years of operational and management experience managing multi-million dollar programs in government and corporate sectors within the United States and abroad. Jensen was born and raised in Alaska and after graduating from the United States Military Academy, he served in Southwest Asia as an Army officer. Jensen formerly served as program manager and engineer for Raytheon, for whom he led international teams in Saudi Arabia, Iraq and South Korea. He earned an MBA from the University of Liverpool and a bachelor’s degree in management and system engineering from the United States Military Academy West Point. First National Bank Alaska hired Laura Asgari as a management officer and wealth management officer. She will be based out of corporate headquarters in Anchorage. Asgari is an alumna of the American College of Financial Services, a Retirement Income Certified Professional and a Wealth Management Certified Professional. She has worked in finance and financial advising for more than 30 years.

FISH FACTOR: More non-seafood ‘seafood’ proliferates in market

Genetically tweaked salmon that grows three times faster than normal fish…fillets grown in labs from fish cells…now plant-based seafoods such as “vegan shrimp,” or “Toona” are gaining footholds in the marketplace — and confusing customers. A new study by FoodMinds for the National Fisheries Institute showed that about 40 percent of consumers believed plant-based imitations contain actual seafood. Up to 60 percent thought the products had similar nutritional content as real fish. Still, fake seafood producers are pushing back against more accurate labeling, claiming without any evidence that customers know what they are getting. “We have to ensure that the labels are educating people about something as simple as what’s in the package. A lot of these plant-based alternative makers have even suggested that they have the ‘first amendment right’ to call their products whatever they want. And that’s simply not the case,” said Gavin Gibbons, NFI vice president for communications. Good Catch Foods, for example, positions itself as a “seafood company” and New Wave foods calls itself “shellfish evolved.” “During our consumer research, three of the five vegan seafood products we displayed were less nutritious than real fish. They had less protein and more saturated fat and sodium. Yet, almost 60 percent of the respondents thought that they all had similar nutritional content between actual fish and the highly processed plant based alternatives. So they’re actually being misled in some of these particular labeling scenarios,” Gibbons said. “In what society is it not a proper government role to ensure that consumers get the food that a label claims is in the package? The government has a legitimate interest in ensuring accurate labeling of foods. Otherwise, why not call ground meat filet mignon?” John Connelly, NFI president, wrote in a March 2 opinion piece. There’s nothing wrong with the vegan seafood products, Gibbons said, and they can make an important contribution to a growing world. But the makers don’t even want the term “imitation” seafood included on their packaging. “Consumers have a right to know what’s in the package and what’s more, a package has something called a Statement of Identity on it,” he explained. “A lot of these products have labels that tell you what is not in the package. For instance, it says ‘vegan shrimp.’ Well, it’s a vegan product that does not contain shrimp. And that is not how a Statement of Identity works. It has to tell you what is in the product. And those labels currently do not do that.” Gibbons said that along with the dairy, beef and poultry industry, NFI is working to get a federal labeling fix. “We have seen time and time again where the Food and Drug Administration does not take action on a labeling issue and then it becomes mainstream,” Gibbons said, using “almond milk” as an example. “Obviously, almonds don’t produce milk but they’re right next to cow’s milk on the shelf and labeled as milk. We want to get ahead of this now and we are talking to the FDA and folks on Capitol Hill to let them know that this is a problem that has to be fixed through an active regulatory effort.” Ironically, fake seafood makers brutally bash the seafood industry in their promotions as being unsustainable and cruel and urge customers to “leave fish off their plates for good.” On a related note: NFI has created a website to answer questions about seafood safety and the coronavirus at Fishing updates The Pacific halibut fishery got underway on March 14. A fleet of nearly 2,000 Alaska longliners will share a 17 million-pound catch during the eight-month fishery. It was set to be a bumpy start in the face of jittery markets and transportation snags. No ferries and limited air freight meant no way to move the fish in many Southeast Alaska ports. A major processor there was not buying any halibut until April. Sablefish (black cod) also opened March 14. That market remains poor with a backlog of small fish in the freezers. For the second year, Sitka Sound’s roe herring fishery is not likely to occur this month due to small fish and no markets. Fishery managers had anticipated a harvest of 25,824 tons (nearly 57 million pounds), double from 2019. Just more than 10,000 tons of herring spawn on kelp can be taken from pound fisheries near Craig and Klawok. Herring pounds contain from 900 to 9,000 blades of kelp to catch the herring spawn. Alaska’s largest roe herring fishery at Togiak in Bristol Bay has a huge quota at nearly 39,000 tons (over 85 million pounds). That fishery typically opens in April but many fishermen are opting out due to low herring prices of less than $100 per ton. The winter troll fishery for Chinook salmon closed in all waters of Southeast Alaska on March 15. Boats are targeting black rockfish throughout the Gulf and along the Aleutians. Lingcod also is open in Southeast, and some areas are still open for golden king crab and Tanner crab. A Tanner fishery opened in Prince William Sound on March 2 and the Kodiak fishery is still going slow in one open region. The snow crab fishery in the Bering Sea has yielded about 70 percent of its 34 million-pound catch quota. A red king crab fishery for 13,608 pounds opened at Norton Sound on Feb. 29 but no one showed up due to no buyers. Many stakeholders fear the stock is declining and opted not to drop pots (through the ice) for the winter fishery. Fishing for pollock, cod, mackerel, perch, flounders and many other whitefish continues in regions of the Gulf of Alaska and Bering Sea. Fishing fellows The call is out for young Alaska fishermen who want hands-on training in management, advocacy, research, marketing, conservation, business and more. The Young Fishing Fellows Program, now in its fourth year, is an initiative of the Alaska Marine Conservation Council. This year it includes six mentor groups: the Copper River / Prince William Sound Marketing Association, Kachemak Bay National Estuarine Research Reserve, Homer Charter Association, Alaska Longline Fishermen’s Association, North Pacific Fisheries Association and the Alaska Fishermen’s Network. The fellowships, which begin in the fall, are open to fishermen 35 and younger who are paid $16 to $26 an hour, depending on experience. The hours are flexible by design, said Jamie O’Connor, AMCC working waterfront director. “It usually ends up being about 10 hours a week for three to five months. There’s a lot of flexibility so people can work around their winter schedules and of course, work around fishing seasons,” she said. O’Connor, who fishes at Bristol Bay, was part of the first cohort in 2017 and it resulted in her job at AMCC. “One of the most beneficial aspects of this fellowship is access to the people who can open doors and show our young fishermen the work that’s being done on behalf of our oceans and our fishermen and our communities she said.” Apply by May 4 to the Young Fishing Fellows Program at Questions? Contact O’Connor at [email protected] Fish art contest update The deadline for entries to the State Fish Art contest is March 31. The contest is open to kids from kindergarten through grade 12 and can include any Alaska fish. For a new Alaska Fish Heritage category added this year, chinook salmon should be the star. “Here in Alaska, the chinook is our state fish. That’s something a lot of people don’t even know,” said Bobbie Jo Skibo, U.S. Forest Service regional partnership coordinator in Alaska, host of the state art competition. Young artists also can enter an international competition called the Fish Migration Award . Find entry forms at COVID cancellations The North Pacific Fishery Management Council meeting on March 30-April 7 in Anchorage has been cancelled following the announcement of Alaska’s first confirmed case of the coronavirus. The 41st ComFish Alaska trade show at Kodiak set for March 26-28 has been rescheduled until Sept. 17-19. The fourth Kodiak Area Marine Science Symposium scheduled for April 21-24, sponsored by Alaska Sea Grant and the University of Alaska/Fairbanks, has been canceled until next year. ^ Laine Welch lives in Kodiak. Visit or contact [email protected] for information.

GUEST COMMENTARY: Alaska’s hospitals and nursing homes are prepared

For good reason, information about COVID-19 is constantly evolving and dominating our daily lives. With all this information and noise, Alaskans can be assured that Alaska’s hospitals and nursing homes are here, and we are as prepared as possible to meet the challenge before us. Many people ask, what can we do? As a hospital leader recently told me, “it is the simple things that will get us through this.” Wash your hands, don’t touch your face, practice social distancing, and do not go to a hospital emergency room unless it is a true emergency. While it may seem overly simple, these steps are critical to slowing the COVID-19 spread. If we can slow the spread, then we can protect our health care capacity from being overwhelmed. Alaskans are now washing their hands and covering coughs more than ever. So, what are Alaska’s hospitals and nursing homes doing to meet this challenge? First and foremost, emergency preparedness is nothing new in Alaska, especially in our hospitals and nursing homes. Our facilities have emergency operations plans in place, and drill year-round for a wide range of crisis situations. We routinely treat patients with infectious diseases, and our staff — from nurses and doctors to custodial workers — are well educated on precautions to ensure safety. Alaska’s hospitals and nursing homes have assessed and prioritized operations so that we can adapt in real-time to the COVID-19 event. This includes activating precautions for screening at entrances, safely triaging patients in our emergency rooms, and carefully monitoring contact, especially for our more vulnerable populations in nursing home communities. We are also constantly communicating. Through the Alaska State Hospital and Nursing Home Association, Alaska’s hospitals and nursing homes have a direct communication link to the State’s emergency operations center and key public health officials. We are effectively assessing system-wide needs, sharing information, and responding to real-time situations on a daily basis. Finally, we are learning from our neighbors. Some of Alaska’s hospitals and nursing homes have sister facilities in areas that have been hit hard by COVID-19, such as Washington state. The Alaska State Hospital and Nursing Home Association is connected to associations in every other state and at the federal level. These connections put Alaska in a good position to learn lessons every day and adapt our operations accordingly. I have been privileged to work in Alaska’s health care system for more than seven years, both inside a hospital, and within state government. There is no doubt the COVID-19 challenge can feel scary, but I sleep easier at night knowing that Alaska’s hospitals and nursing homes are here, and will continue to be here in Alaskans’ time of need. Let’s work together and stay safe, Alaska. Jared Kosin, JD, MBA, is the President and CEO of the Alaska State Hospital and Nursing Home Association. ASHNHA represents more than 65 hospitals, nursing homes, and other healthcare organizations who employ over 10,000 Alaskans.

Spill response comments range from status quo to modernization

Department of Environmental Conservation officials received a mixed bag of comments, but not a huge volume, to their somewhat controversial opening of the state’s oil spill prevention and response regulations to possible revisions. While the decision last fall to solicit public input on and proposed changes to the regulations drew sharp responses from numerous conservation and fishing industry groups as well local governments in coastal communities, just more than 120 businesses, trade groups, community organizations and individual Alaskans commented over the 153-day comment period that ended March 16. Most members of the public urged DEC officials to maintain the current levels of protections in the regulations and many questioned why the department would open the regulations to possible changes given the state’s reliance on marine resources and the relative lack of large fuel or oil spills in the state since the Exxon Valdez in 1989. DEC Commissioner Jason Brune said he wanted to make sure the regulations weren’t unnecessarily burdening industry without a corresponding environmental benefit and had no intent to do away with the requirements prior to opening the scoping period last October. Brune said at the time that he had heard from industry representatives that there are ways the detailed rules could be improved; however, he declined to elaborate on specific suggestions, saying he did not want to color any subsequent public comments. He said in a department statement following the close of the comment period that he's excited about the feedback the department recieved. "It is not our intent to roll back environmental protections. If the department determines there are changes to be made to the regulations, those will go through a fully transparent public process later this year that will include additional opportunity for the public to provide comment," Brune said. Local government officials by and large also emphasized a general desire for the department to uphold current levels of oversight on the oil and gas industry while also suggesting some changes to clarify and strengthen the existing regulatory code. City and Tribal councils and assemblies from Cordova, Homer, Kodiak, Valdez the Kenai Peninsula Borough and Kotzebue submitted resolutions against actions to ease the regulations. Oil and gas producers did not offer comments but businesses in other subsets of the industry such as fuel shippers, oilfield service companies and Alyeska Pipeline Service Co. all offered numerous ways they feel the regulations are too rigid, unclear, or outdated. The Prince William Sound Regional Citizens’ Advisory Council offered 12 pages of comments stressing a belief that the regulations are not necessarily flawed as written. The council acknowledged that it’s likely the “current regulations could be clarified or simplified to improve their usability,” but also said the oil discharge prevention and contingency plans that all companies processing and shipping fuels and crude must have to operate in the state serve seven broad objectives to protect the environment. The contingency plans, often referred to as C-plans by stakeholders, amount to “working” emergency plans that provided detailed and long-term response procedures, according to the PWS council. They are also a way to assess past spills at a facility and serve both as a demonstration that the plan holder is using best available technology in its operations and as “a permit to operate that, if not followed, is a violation of law,” PWS council officials wrote. Cook Inlet Regional Citizens’ Advisory Council Executive Director Mike Munger similarly emphasized the seven functions of the regulations and wrote that council officials “believe that sweeping changes to the current requirements are not warranted,” adding that any changes easing spill prevention, preparedness or transparency would be “unacceptable.” The councils for Cook Inlet and Prince William Sound, established following the Exxon Valdez spill and mandated by the Oil Pollution Act passed by Congress in 1990, used the scoping period to offer several ways the regulations could be strengthened or otherwise improved. The Cook Inlet council, for instance, requested that international standards be used to determine oil skimmer recovery rates and that efficiency mandates be established in the regulations. “At this time, there is no generally required methodology for response organizations to determine the best equipment to use or for plan reviewers to assess the adequacy of the equipment included in plans,” Munger wrote. Skimmers are towed behind or alongside vessels to collect oil from the surface of the water. While widespread in oil spill response, questions to their efficacy, particularly in waves or ice conditions, are regularly raised amongst stakeholders. Jim Ayers, a former director of the Exxon Valdez Oil Spill Trustee Council and chief of staff to former Gov. Tony Knowles argued against major changes to regulating an industry “that has repeatedly proven its inability to self-regulate,” and urged DEC to continue incorporating lessons from the Exxon Valdez and the 2010 BP Deepwater Horizon Gulf of Mexico spills into its oversight of the oil industry. “DEC’s supposition that this framework is too burdensome — after 30 years of industry compliance and numerous revisions to streamline regulations — is not only untrue, but also transfers the burden of another disaster to the communities and environment DEC is charged with protecting,” Ayers wrote. Alyeska Pipeline Emergency Preparedness and Response Director Andres Morales suggested numerous technical and clarification changes that company officials feel would help “optimize” the regulations. Alyeska is owned by the major North Slope Producers. It operates the Trans-Alaska Pipeline System and the Valdez Marine Terminal. Morales offered a handful of examples where Alyeska officials believe state regulations are duplicative to federal requirements; requested more specificity in areas of regulation that defer to “department discretion;” and — as did other industry stakeholders — asked for more standardized timelines and processes in approving C-plan amendments and other procedural mandates. The Alaska Oil and Gas Association supplied 28 pages of comments asking DEC officials to modernize regulatory language and standards to reflect current industry standards. AOGA Regulatory and Legal Affairs Manager Patrick Bergt also wrote that the trade group does not believe a “best available technology” analysis should be required in instances when C-plans must be in line with good engineering practices, applicable industry standards and state and federal regional and area contingency plans. “AOGA believes these issues can be addressed and the regulatory schemes streamlined without increasing any risks of damage or harm to the environment,” Bergt wrote. “More certainty in the requirements and a clearer description of compliance standards would lend itself to more consistency in implementing spill prevention.” The Alaska Fuel Storage and Handling Alliance, multiple fuel shipping companies and Marathon Petroleum Co., which owns the Nikiski refinery, submitted similar comments along those conceptual lines. Elwood Brehmer can be reached at [email protected]

Trump wants quick checks sent to public in virus response

WASHINGTON (AP) — President Donald Trump is asking Congress to unleash a torrent of emergency economic aid to help people through the financial pain of the coronavirus crisis, with sizable checks directly to Americans as part of the deal. Trump wants checks out to the public within two weeks, Treasury Secretary Steven Mnuchin said March 17 as state and local officials acted more forcefully to restrict gatherings and mobility in the face of growing sickness. “The president has instructed me we have to do this now,” he said. The proposal to send checks requires approval from Congress. Details were scant, except Mnuchin said the yet-to-be disclosed amount should be significant and millionaires won’t get it. “We want to make sure Americans get money in their pockets quickly,” Mnuchin said. After a savage drop March 16, the stock market rose during the briefing at which Trump and his aides sketched out elements of the economic rescue package. Mnuchin was pitching the roughly $850 billion package to Senate Republicans at a private lunch, with officials aiming to have Congress approve it this week. Some lawmakers were skeptical. “I’m going to be very leery of doing something like in 2008,” said Indiana Republican Sen. Mike Braun. But the other senator from Indiana, Todd Young, chairman of the Republican Senate campaign committee, said he was open to approving $1,000 checks and wants aid out the door as as soon as possible. He said he was the only passenger on his flight back to Washington. Earlier, Senate Majority Leader Mitch McConnell promised swift action of some sort. “The Senate will not adjourn until we have passed significant and bold new steps above and beyond what the House has passed to help our strong nation and our strong underlying economy weather this storm,” McConnell said. Bigger than the 2008 bank bailout or the 2009 recovery act, the White House proposal aims to provide a massive tax cut for wage-earners, $50 billion for the airline industry and $250 billion for small businesses. Two people familiar with the request described it to The Associated Press on the condition of anonymity because they weren’t authorized to speak publicly. House Speaker Nancy Pelosi and the chairman of the House Transportation Committee, Rep. Peter DeFazio of Oregon, spoke by phone with Mnuchin in the morning. The Democrats “emphasized that protecting workers’ paychecks and benefits was their top priority, and that immediate action was needed,” said Drew Hammill, Pelosi’s spokesman. Congress was being asked to approve the most far-reaching economic rescue package since the Great Recession of 2008. “There’s great spirit” among lawmakers, President Donald Trump said at the White House briefing as he outlined several elements of the rescue plan. “I can say that for Republicans and Democrats.” But it’s an enormous political and economic undertaking as a slow-moving Congress tries to rise to the occasion of these fast times. The debate is sure to revive the sharp divisions over the costly bank bailout and economic recovery of the Obama and Bush era. Particularly striking is McConnell’s urgency after having adjourned the Senate over the weekend while House Speaker Nancy Pelosi muscled through an aid package. Angry senators from both parties boarded planes returning to a changed Washington, as Trump declared a state of emergency, the virus spread and the economic free-fall worsened. Despite federal guidelines against so many people gathering, senators had no choice but to convene. Legislating cannot be done from home. The House is on a recess. The White House hopes the measure will pass quickly, possibly this week, an enormous political undertaking as the administration scrambled to contain the economic fallout of the severe disruptions to American life from the outbreak. The rush to inject cash and resources into the economy is an effort unlike any since the 2008 economic crisis, with political and economic interventions and eye-popping sums to try to protect Americans from the health and financial fallout. The new proposal is beyond the House’s estimated $100 billion aid package of sick pay, emergency food aid and free virus testing that was approved over the weekend and is pending before the Senate. Now Congress will be rushing to pass two — a massive, sweeping response to the virus outbreak that is rewriting America’s way of life. Muscling the aid will test Congress and the White House at a pivotal moment in the crisis and in an election year when the two parties have vastly different outlooks on the best way to prop up the economy and help Americans. Senate Democrats have proposed their own $750 billion package — boosting hospital capacity and unemployment checks for the suddenly jobless — with deep negotiations to come. All sides — the House, Senate and White House — agree more federal resources are needed to handle what’s coming. At the start of the month, Congress approved $8.3 billion in initial aid. Trump quickly signed into law the measure, which provided federal agencies money for vaccines, tests and potential treatments, and funding to help state and local governments respond to the threat. During the recession, the American Recovery and Reinvestment Act of 2009, passed in February of that year, had an initial price tag of $787 billion which was revised later to $831 billion. That was under Barack Obama. The TARP passed in the fall of 2008 to help troubled banks had a price tag of $700 billion. It was put together by the George W. Bush administration, and provided money for the auto bailouts for General Motors and Chrysler. All of that money for the banks and the auto companies was paid back. Now, Republicans often reluctant to spend federal dollars did not flinch at the head-spinning number, as a roster of America’s big and small industries — airlines, hotels, retailers — lined up for aid. Sen. Mitt Romney, R-Utah, called for sending $1,000 to every adult American — an idea the White House now is proposing, though not necessarily that sum. Industries representing a broad swath of the economy are seeking help in withstanding the fallout as schools close and Americans are being told they should stay inside, skip nonessential travel and avoid gatherings with 10 people or more. That means no dining out, no boarding planes, no shopping the malls as a great national shutdown sparks business closures, layoffs and lost paychecks for rents, mortgages and everyday needs. The nation’s largest business organization, the U.S. Chamber of Commerce, asked the Trump administration and Congress on March 16 to act rapidly to help companies have access to cash and avert a “potentially devastating” hit to the economy. The request from the U.S. airlines alone could easily top $50 billion, according to Airlines for America, the trade group representing the carriers. Pulling together the new package will challenge the basic logistics of governing as Congress itself struggled to adapt to the new normal. House Democrats were told on a conference call they won’t be recalled to Washington until the next package is ready for action, according to people familiar with the call but unauthorized to discuss it and granted anonymity. For most people, the new coronavirus causes only mild or moderate symptoms, such as fever and cough. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia. The vast majority of people recover from the new virus. According to the World Health Organization, people with mild illness recover in about two weeks, while those with more severe illness may take three to six weeks to recover. Associated Press writers Andrew Taylor, Matthew Daly, Martin Crutsinger, Colleen Long and Kevin Freking in Washington, Philip Marcelo in Boston and David Eggert in Lansing, Michigan, contributed to this report.

Tax traps that side hustlers should avoid

Millions of Americans earn extra money outside their regular jobs — as ride-hailing drivers, Airbnb hosts, eBay sellers and freelancers of all kinds. Their side hustle income may help make ends meet, but it also can create tax traps. Side gigs usually count as self-employment, which triggers different rules, additional tax forms and plenty of confusion for people accustomed to filing as employees, tax experts say. The first time people file with a side gig, they’re often shocked by how much tax they owe, says Mackey McNeill, a CPA and personal finance specialist in Bellevue, Kentucky. “It’s like, ‘How could I owe this much tax on this little bit of income?’” says McNeill, who is also a member of the American Institute of Certified Public Accountants’ Consumer Financial Education Advocates. Side gigs also offer tax advantages, including more ways to save for retirement and the ability to deduct legitimate business expenses. Sadly, many side hustlers miss these opportunities because they don’t know what they don’t know. Here are some key mistakes: Keeping lousy records The self-employed can deduct business expenditures such as mileage, advertising, supplies, internet and other services they use to support their businesses. But those deductions need to be tracked and documented to survive an audit, McNeill says. “Keep records as you go along rather than try to figure it out after the fact,” McNeill says. Mileage tracking apps such as MileIQ and Hurdlr can help, as can expense management apps such as Expensify and Shoeboxed. Ideally, side hustlers would open a separate checking account for their extracurricular income and expenses. Having a credit card just for the business can be a good idea as well. But a credit card statement isn’t enough to prove a legitimate business expense in an audit — the IRS wants to see the receipt as well, McNeill says. Tax pros recommend scanning or photographing paper receipts, since they can fade or be lost over time. And speaking of tax pros, consider hiring one, especially if this is your first time working for yourself. A good CPA or enrolled agent can help you find deductions while keeping you out of trouble with the IRS. Not paying taxes as you earn the money Employees usually have income taxes withheld from their paychecks throughout the year. Typically that’s not the case with side hustle income. Waiting until it’s time to file a tax return to pay the taxes can trigger not just a big tax bill, but penalties as well. The IRS wants people to pay taxes as they earn money, through withholding or estimated quarterly tax payments. Most taxpayers can avoid penalties if, through withholding and estimated payments, they pay in at least 90 percent of the current year’s tax bill or 100 percent of the previous year’s tax amount. Even those who dodge a penalty likely will still owe taxes on net self-employment income, however. (Net self-employment income is what’s earned from the side gig, minus deductible expenses and retirement plan contributions.) McNeill suggests putting aside 25 percent to 30 percent of any side hustle income to cover the tax bill, since people who work for themselves usually have to pay a 15.3 percent self-employment tax to cover Social Security and Medicare contributions in addition to regular income taxes. Ignoring retirement savings options Tucking away some side gig income for retirement can help make your future more comfortable while reducing your tax bill today. Two good options for side hustlers are a SEP IRA and a solo 401(k). A simplified employee pension individual retirement account is easy to set up and allows people to contribute up to 25 percent of net self-employment income, to a maximum of $57,000 in 2020. A solo 401(k) has the same $57,000 cap, but it allows contributions up to 100 percent of net self-employment income. Solo 401(k)s involve a bit more paperwork, and the contribution limit is per person, so contributions to an employer’s 401(k) or other retirement plan count against the cap. McNeill has one final caution: Make sure your side gig is actually worth your time. Some people discover they’re making less than minimum wage after paying taxes and other expenses, such as fees to an online freelancing platform. Review what you’ve cleared against the time involved to determine whether the extra hours are worthwhile. “If you’re going to do it, do it right,” McNeill says. “Make sure you’re going to make money.” This column was provided to The Associated Press by the personal finance website NerdWallet. Liz Weston is a columnist at NerdWallet, a certified financial planner and author of “Your Credit Score.” Email: [email protected]


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