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Breaking: ConocoPhillips to cut Alaska production dramatically

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CRUSHING NEWS FOR ALASKA’S ECONOMY

ConocoPhillips Alaska today announced it is planning to curtail oil production of approximately 100,000 barrels per day gross for the month of June from the Kuparuk River Unit and Western North Slope (Greater Mooses Tooth and Colville River Units).

That’s one fifth of the entire pipeline flow, approximately.

The ramp-down to reduce production will begin in late May and is part of broader curtailments in the Lower 48 and other areas.

Any extensions of the curtailment beyond June will be determined on a month-to-month basis, the company said in a statement. The curtailment is not expected to impact operations of the Trans-Alaska Pipeline.

This decision was made in response to extremely low oil prices resulting from global oil demand destruction caused by the impacts of the COVID-19 pandemic, combined with a global oversupply of oil.

The curtailment will essentially leave the oil stored in the reservoirs, available for resumption of production at a later date. The actions ConocoPhillips Alaska is taking with this production curtailment underscore the extraordinary challenges currently facing the oil and natural gas industry in Alaska and elsewhere.

During the first quarter of 2020, ConocoPhillips Alaska produced 218,000 net equivalent barrels per day within the state of Alaska.

On the bright side, if ConocoPhillips sold those barrels now, they’re nearly worthless. Alaska North Slope crude was selling for $10.67 a barrel as of three days ago. The break even point for a barrel of oil in Alaska is about $40.

But while it’s in the ground, it will get a higher price later. Alaska will get its royalty share out of it eventually, but not this year.

The company is posting losses for the first-quarter of $1.7 billion, or ($1.60) per share, compared with first-quarter 2019 earnings of $1.8 billion, or $1.60 per share.

The company also announced a quarterly dividend of 42 cents per share, payable June 1, 2020, to stockholders of record at the close of business on May 11, 2020.

Squatters getting notice to leave urban encampments

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BERKOWITZ MAY SET UP VAGRANT SERVICE HUB AT THIRD, INGRA

Squatter camps around Anchorage will get new signage today: “No Camping.”

In a unanimous vote of 11-0, the Anchorage Assembly unanimously passed a resolution Tuesday ordering Mayor Ethan Berkowitz administration to immediately begin clearing out vagrant sites around Anchorage, particularly in two areas where serious squalor has set in at Third Avenue and Ingra Street and along Chester Creek between C Street and Ingra.

It’s something that Berkowitz has been reluctant to do. Although he ran on a “safe Anchorage” platform, he also maintains a core belief that Anchorage should be “a welcoming community,” as “Alaska’s largest village.” For years, he has had a homeless coordinator, but the expanding vagrant problem has become his signature achievement.

Assemblymember Chris Constant has had enough. He warned that unless action was taken to abate homelessness in and near his district, he would object to every single item on the Assembly agenda for as long as it would take to get action for something that he sees as a dire situation.

Constant said that the inaction on the part of the Berkowitz Administration is intolerable and that Berkowitz has been dragging his heels on the vagrant encampments for months.

“This inaction is just intolerable. I agree that we shouldn’t be mixing these people but I can almost hear the violins playing in the room,” he said, speaking from his home. “The fact is, our current actions for months have been to tolerate rampant criminality, defecation in the streets, trash piles everywhere, sick people piled on top of each other, marching from corner to corner to corner to corner across the downtown. They are not isolated or limited to a location.” Constant said.

The first step demanded by the Assembly is for the city to post the signs at the squatter encampments, and give the people staying in the tents and under tarps 10 days to clear out their possessions. The city will spend up to $180,000 cleaning up the camps, which will require hiring contractors.

Assemblymember Forrest Dunbar said in his talks with the Berkowitz Administration he was told the the camps haven’t been abated because the administration believed to disperse the vagrants might increase the spread of COVID-19, and the Centers for Disease Control recommends that encampments such as these remain undisturbed.

Rob Cupples, who owns property nearby at Third Avenue and Hyder Street, says that is a mistaken belief about the camps. He observes drug deals going on all day long, as people come and go from the sprawling squatter headquarters at Third and Ingra.

Cupples told Must Read Alaska, that the site has significant interaction with the general public because of the underground drug commerce taking place. The Administration’s rationale that the camps should not be abated because it is a contained community is unsupported by reality, Cupples said.

“Both the foot and vehicular traffic between the homed and unhomed to and from this location is non-stop.  Vehicles come from outside the neighborhood with individuals cycling in and out of the camp constantly. Camp occupants are moving all throughout the downtown and midtown corridors, interacting with the general public and returning to the camp.  On any given day 10 or more different vehicles, often with multiple occupants, drive to the location and enter the camps to purchase drugs that are being moved through the encampment by specific individuals,” Cupples said.

Cupples said he observed from his property as a woman from out of town who came by with a bag of hamburgers, and while she left her van running nearby, went into the encampment at Third and Ingra to hand out the hamburgers, only to return to find a man from the encampment had hopped in her van and taken off with it.

Cupples watched the whole incident unfold but wasn’t able to intervene because of the speed of the theft. The vehicle was found later, but the woman’s purse, phone and bike were stolen.

Chris Schutte, the municipality’s director of economic and community development, explained to the Assembly that by abating the camps, the people living there will be more likely to come into contact with people who have COVID-19.

Because they typically are living an unhealthy lifestyle and often have underlying health conditions, COVID-19 could be more deadly to them, he said, “if it does make its way into that population.”

Schutte said the Berkowitz Administration looked to “peer communities” to see what they are doing with their vagrant camps, and that they are all following the CDC guidelines to not abate the camps.

“And there’s a reason for that. For one, it’s a rule, a guidance from the federal government, most of us are operating under an emergency setting, and we will be relying on FEMA dollars to offset the cost that we are incurring. And I am one that believes if you are going to ask for money from the federal government you should probably not violate some of the rules and guidance of the federal government,” Shutte told the Assembly.

Schutte said that the peer cities he has looked at are providing masks, hand washing stations, and portable toilets for their vagrant camps, rather than clearing the camps. He said the Berkowitz Administration has considered doing that, but the Chester Creek encampment now poses a fire risk as Anchorage moves into wildfire season, and it has to be cleared.

As for the Third and Ingra encampment, Schutte said the Administration is developing an idea around satellite hubs to provide outreach services to the people living on the streets, and that the city may create an outreach hub at Third and Ingra with hand washing stations, masks, and toilets.

“One of the first sites that would be an excellent candidate for that is the Third and Ingra site, Schutte said.

“We have a population of individuals there that we don’t touch regularly, that we don’t communicate with regularly, and so it would provide an opportunity for the outreach hub and services and service providers who will use that to interface with them,” Schutte said.

Property owner Cupples, who is part of a group called “Third Avenue Radicals,” has another idea. He encouraged the Assembly to request an audit comparing the cost of fencing around the Third Avenue area and the cost of abatement.

“It is and has been the position of the community the administration has a responsibility to maintain the integrity of the fence, despite the costs.  We first took this position back in December when we learned of their opposition to maintaining it and have repeatedly warned the Administration that the situation we are experiencing today would be the end result of their position, but they refused to take our concerns seriously or reconsider their position,” Cupples said.

Quarantine flags on order, heading for Bristol Bay Fuel

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Bristol Bay Fuels of Dillingham and Naknek has put in an order in for 50 quarantine flags, also known as the “Lima flag.” The black and yellow checked flag, sometimes called the “Yellow Jack,” is used to indicate to others that there is a person onboard the vessel who is in quarantine, and to stay away. The term “Yellow Fever” is somehow traced to the use of this flag.

The company has also ordered 50 solid yellow “Quebec Flags,” which indicate the vessel is free from infection.

According to a MRAK source, the flags will arrive around June 1 for the commercial fishing season.

New State health mandates will require much of Alaska’s fishing fleet to have a quarantine flag on board this season. The requirement is only if fishing vessels or their crew members are coming from out of state. All people coming into the state need to quarantine for 14 days, although in many cases, the fishing boats will have been underway for most of that time before they reach the Bristol Bay fishing grounds.

Most of Bristol Bay’s commercial fishing fleet is from Washington state.

Attorney General blasts legislative auditor for overstepping authority

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AUDITOR ADVISED PERMANENT FUND CORP. TO HIRE OWN ATTORNEY

Attorney General Kevin Clarkson blasted a state auditor today for what he says is a misinterpretation of state law by someone who has no legal role in interpreting the law.

In a stinging letter to Kristin Curtis, the director of the Division of Legislative Audit, Clarkson disputed claims in an April 22 letter Curtis sent to the Alaska Permanent Fund Corporation’s Board of Trustees regarding a fiscal year 2019 finding.

Curtis had made a legal conclusion about the amount of royalties that must be deposited into the Permanent Fund, and had suggested that the Board of Trustees of the Alaska Permanent Fund should hire a private attorney, rather than follow the advice of the Attorney General. Curtis wanted more money deposited into the Permanent Fund from royalty receipts the state had received from oil.

“You must seriously reconsider your course of action. The Department of Law recognizes the important role of the Legislative Auditor. But it is also absolutely clear under Alaska law that the Attorney General is the legal advisor for state agencies,” Clarkson wrote.

“In fact, any contract by an executive branch department or the APFC for outside legal counsel, as you have suggested for APFC, must be approved and supervised by the Attorney General. The agencies to which you gave qualified financial statement opinions relied on a legal determination made by successive Attorneys General—Attomey General Lindemuth and myself. Your office was previously provided the Department of Law’s analysis as to how it reached its legal conclusion.

“There is no sound basis for you to issue qualified financial statement opinions for the state based solely on your personal legal interpretations. It is irresponsible for you, given the current fiscal conditions facing the state, to issue qualified audit opinions that are premised solely on questionable legal conclusions you solicited for the sole purpose of questioning the advice of two successive Attorneys General.

“It is paramount that the statutorily assigned role of the Attorney General be respected. Attorney General opinions should not be second-guessed by an auditor who lacks any legal training. It is an abuse of your position for you to misuse the legislative audit process, potentially creating fiscal difficulties for the state, in order to advance your personal opinions and objectives.The Legislative Auditor performs a valuable service when carrying out the auditor’s statutory responsibility, but it is the Attorney General who advises state agencies on the requirements of the law.
The Legislative Auditor works with the executive branch under AS 37.05.2l0 to complete the comprehensive annual financial report (“CAFR”). The Legislative Auditor’s role is to audit the State’s financial transactions “in accordance with generally accepted audit standards.” As stated in the CAFR, “The goal of the independent audit is to provide reasonable assurance that the financial statements of the State [in a particular fiscal year] is free of material misstatement.” To ensure there are no material misstatements, the auditor needs to understand the laws that apply to the financial transactions under audit and ensure there are no errors or fraud. Under Alaska’s legal framework, the role of providing that understanding of the law is assigned to the Attorney General. Nothing in state statutes or the scope of the audit grants the auditor authority to interpret the law—and in particular the Alaska Constitution—independently and contrary to the advice of the Attorney General.

The Attorney General is the officer under Alaska law who provides legal advice to state agencies about how to properly comply with the law.
Under AS 44.23.020(a), the Attorney General is “the legal advisor of the governor and other state officers.” The Attorney General also “administer[s] state legal services” and “draft[s] legal instruments for the State.”‘ The Alaska Supreme Court has broadly interpreted the Attorney General’s powers when it comes to the legal business of the State and the disposition of litigation? The Attorney General and his subordinate attorneys within the Department of Law perform the role of legal advisors to the State by complying with the Rules of Professional Conduct, which includes providing “competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.”
With few exceptions not applicable here, all executive branch agencies receive legal advice from the Attorney General and have no independent authority to ignore the advice of the Attorney General or to choose to follow the legal interpretations of the Legislative Auditor, an official who is outside the executive branch and not authorized to provide legal advice.

“The Attorney General advised state agencies including the APFC on the legal issues raised by the Legislative Auditor, and the Legislative Auditor is aware that the state agencies relied on that advice.

“The Department of Law determined that the Alaska Constitution requires an appropriation for any deposit into the permanent fund of royalties beyond 25 percent.

“Former Attorney General Lindemuth and myself both have concluded that a statute such as AS 37.13.010(a)(2) cannot compel the deposit of royalties beyond the constitutional minimum of 25 percent into the permanent fund without an appropriation. On November 9, 2018, the Department of Law provided your office a written analysis explaining the Department’s legal conclusion. Early last year I confirmed the opinion reached by General Lindemuth.

“Your April 22, 2020 letter to the APFC unreasonably continues to challenge the Department of Law’s conclusion. You assert that prior Attorneys General have reached a conclusion more in line with your own—in support of your assertion you cite a 1982 attorney general opinion. To put it succinctly, a lot has happened since 1982. In summary, as detailed in earlier communications with your office, after 1982 the Alaska Supreme Court clarified the matter and rejected your view. The Court has issued several decisions regarding the constitutionality of efforts to set aside state revenues through statutory provisions that attempt to dedicate revenues to a single purpose.”

The most recent decision that addressed the dedicated funds clause, Clarkson continued, was the court’s 2017 decision in Wielechowski v. State, Alaska Permanent Fund Corporation.

“This case holds that a statute cannot dedicate a portion of permanent fund earnings to a particular purpose and be expended outside of the appropriations process. In Wielechowski the Court specifically held that despite the existence of a statute establishing a formula for the calculation and payment of permanent fund dividends, money cannot be transferred from the Earnings Reserve Account to pay dividends except via the legislative appropriation process. At this time, Alaska Supreme Court decisions foreclose your contrary opinion about Permanent Fund deposits above the constitutionally mandated 25 percent,” he wrote.

Any suggestion that the APFC Board of Trustees’ fiduciary responsibility includes collecting royalties is baseless, Clarkson wrote.

“The Department of Law has informed state agencies and your office several times about the percentage of money constitutionally required to be deposited into the permanent fund. The Department has also advised the APFC and your office that the APFC’s sole responsibility under AS 37. 13.040 is to manage and invest the assets of the permanent fund in accordance with AS 37.13.010-37. 13.190. The APFC does not collect royalties—nor does it have any responsibility to collect more royalties than are appropriated to the fund. Instead, the APFC’s only responsibility is to invest state revenues initially received by the Department of Natural Resources (DNR) and the Department of Revenue that are then transferred by appropriation to the APFC for investment and management.”

Clarkson went on to say that the legislative auditor should not issue further “qualified audit options on this legal issue in reference to any state agency, including the APF.”

“You may disagree with the conclusion reached by the Attorney General. You may believe that state revenues in the form of royalties beyond the constitutional minimum of 25 percent can be legally dedicated and deposited into the permanent fund without an appropriation under AS 37.l3.0l0(a)(2). But your opinion has no legal standing,” Clarkson wrote.
“Not only have you ignored and disagreed with the advice given by two successive Attorneys General, you apparently also decided that the other attorneys knowledgeable on these issues—Legislative Legal Services—would not provide you an answer you liked. Thus, you skipped their advice and contracted with outside legal counsel to obtain an opinion consistent with your personal views.”

Clarkson wrote, “your use of outside legal counsel in this circumstance emphasizes the pre- determined agenda you had in this matter. As discussed above, your personal view of what you believe the constitution or statutes mean—as a legally untrained auditor—is ultimately immaterial to your determinations as an auditor. And to seek out opinions that best fit your personal view is, at the very least, unreasonable and inappropriate.
Any effort to pressure the executive branch to acquiesce to your opinion by continuing to issue qualified audit opinions—with potentially resulting harm to the state—is improper and raises serious separation of powers issues.”

“You have no basis to issue a qualified opinion to state agencies that follow reasonable legal interpretations made by two successive Attorneys General. Your continued refusal to accept that legal determination reflects your fundamental misunderstanding of your limited role under Alaska law. It is not the prerogative of the Legislative Auditor to make a legal determination. Your continued approach in these respects not only oversteps your authority; it also does a serious disservice to the State of Alaska as it is facing an unprecedented fiscal crisis.

“Your continued reliance on your own interpretation of the law is seriously damaging the State’s ability to navigate its way through the difficult fiscal problems that it faces at this time. Consequently, I respectfully but firmly insist that you terminate this practice immediately,” Clarkson wrote.

CDC: Socially distance Rover and Fluffy

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The Centers for Disease Control and Prevention wants pet owners to keep their dogs and cats at least six feet from other pets or humans.

This is after a small number of family pets have become infected with COVID-19 coronavirus.

The CDC says pets should not interact with other pets or people from outside the household, and dogs should be kept on a leash, while cats should be kept indoors during the Wuhan coronavirus pandemic.

CDC guidelines  also say dog owners should avoid dog parks or other public places where people and dogs gather.

In 2013, the Municipality of Anchorage estimated that there were 75,000 dogs in the Anchorage-Chugiak-Eagle River area. 

Rising star: Ketchikan school board member challenging Rep. Ortiz for House D-36

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Leslie Becker, a Ketchikan School Board member and former Greater Ketchikan Chamber of Commerce executive director announced her run for Alaska State House for District 36. The district is currently served by Rep. Daniel Ortiz, a legislator who does not belong to a political party but who caucuses with the Democrats.

“Alaska is facing a serious budget crisis and without the immediate structuralchanges necessary to achieve a sustainable budget, the economic viability of Alaska will be at risk, ” Becker said. 

“The mismanagement of Alaska’s resources has squandered billions in State savings, led to cuts in essential services, such as the Alaska Marine Highway system and resulted in the virtual elimination of the PFD paid to Alaskans.  I am motivated to run as your State House District 36th, representative to end the tax disparity imposed upon our communities, to prevent service shifting from the State that will increase local taxes, to protect the PFD and to assure that a sustainable budget includes a “Shared Sacrifice” from all Alaskans,” she wrote in her announcement.

The Legislature has failed Alaska and District 36th for many years, Becker said. She is running as a Republican in what has traditionally been a Republican stronghold. Ortiz has been an odd fit for the district as an undeclared, but was a popular public school teacher who is well known in Ketchikan.

Becker and her husband, Dr. Steven Becker, moved to Ketchikan in 2016. She had a 35-year career as a healthcare executive, working with hospitals, corporations, and multi-million-dollar budgets.

More about the candidate can be found on her campaign website.

COVID-19 update: 4 cases

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Four cases of COVID-19 coronavirus were diagnosed in the 24-hour period that ended at midnight on Tuesday. The four new cases were in Anchorage.

There were no new hospitalizations or deaths reported; those still stand at 36 and 9 respectively, of the 355 cases that have been diagnosed among Alaskans. There are currently 16 people hospitalized in Alaska with the illness.

To date, 240 Alaskans have recovered from the coronavirus that started human-to-human transmission in Wuhan, China and made its way across the world, infecting Americans in January.

19,119 Alaskans have undergone swab testing for the Wuhan coronavirus, which works out to more than 1-1/3 of every 50 Alaskans.

The total count of all cases that were ever diagnosed among Alaskans is as follows:

  • Anchorage: 180
  • Kenai Peninsula: 19
  • Fairbanks/North Star Borough: 81
  • Southeast Fairbanks Census Area: 1
  • Yukon-Koyukuk Census Area: 1
  • Kodiak: 1
  • Mat-Su Borough: 21
  • Nome Area 1
  • Juneau: 27
  • Ketchikan: 16
  • Petersburg: 4
  • Craig: 2
  • Bethel: 1
  • Sitka: 1

Tick tock: AK Supreme Court to rule on recall ballot item

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RECALL COMMITTEE GOES LIMP

It’s been nine days since briefs and responses requested by the Alaska Supreme Court were duly filed in the case that will decide whether the Recall Dunleavy Committee has sufficient grounds to have citizens go through a recall election. A decision will likely come this week.

The Supreme Court justices had asked both the Department of Law and Recall Dunleavy to further explain their positions on whether a governor’s veto is a violation of the “separation of powers.” In the Supreme Court’s hearing of the matter on March 25, it was clear that the justices questioned this particular grounds for recall, because the separation of powers is a principle, rather than a law. Since it is a key argument of the Recall Dunleavy Committee’s recall petition, the justices have asked each side to argue their positions in additional briefs.

The third ground for recall, which is in question is: “Governor Dunleavy violated separation-of-powers by improperly using the line- item veto to attack the judiciary and the rule of law.” 

The justices asked both sides to address the the historical basis of state constitutional provisions, and particularly the Alaska Constitution, Article II, section 15, regarding a governor’s discretionary authority to veto items in appropriation bills, as well as a requirement that the governor provide a statement of his or her reasoning for vetoing items; the constitutional limits, if any, that exist on a governor’s exercise of the authority to veto appropriations; and the legal framework the justices should use for determining whether the third ground for recall is “legally sufficient” as required by case law.

“How should the governor’s statement of his objections inform the analysis? Can the statement of objections itself demonstrate an “’improper’ use of the governor’s veto authority sufficient to support recall? Is an ‘improper’ use of the governor’s veto authority a violation of the separation of powers doctrine? As used in the recall petition, is ‘separation of powers’ a law — which the governor either violated or did not violate — or is it shorthand for something else? How should voters interpret the phrases ‘separation of powers’ and ‘the rule of law”’?

In its response, the Recall Dunleavy Committee admitted there is little, if any, case law to support their claim.

The legal briefs and responses are now on file with the high court. Among them are these, which readers may explore and analyze:

RECALL COMMITTEE TRYING TO GET TRACTION

Meanwhile, the Recall Dunleavy Committee has not been able to make adequate progress on its signature gathering on the recall petition itself, and appears stuck at 30,200 signatures since March 23. The group needs 71,252 valid signatures to force an election do-over, which would put Lt. Gov. Kevin Meyer in charge of the state.

The Supreme Court had allowed the group to proceed with signature gathering even though the court had not heard the case or decided its merits, and it now appears that at least one of the items on the petition may be thrown out. That could open up the petition to a lawsuit, because the question on the ballot would be substantially different from what was on the petition that people signed.

The Recall Committee plowed forward this week with a letter from three doctors who stated that cuts to the Health and Social Services budget of the state had left the state unprepared for the COVID-19 pandemic and that the cuts led to a rise in cases.

The letter, signed by an abortion doctor, a Native medical center doctor, and an internist, allege that Gov. Dunleavy is responsible for the continuing rise of COVID-19 castes in Alaska.

“You don’t need to be a medical professional to understand that COVID-19 has a firm foothold in Alaska and our hospitals and clinics are now on the front lines. As physicians bracing for this emerging crisis, we write to remind you that Governor Dunleavy’s fiscal policies have been no friend to healthcare in our state. With our recklessly under-funded healthcare system facing a global pandemic, it has never been more important to have a leader with the well-being of all Alaskans in mind.”

Alaska, in actuality, has the fewest number of cases of COVID-19 in the nation.

[See the state-by-state comparison at Statista.com]

ACLU TRIES TO WEIGH IN ON RECALL CASE

The American Civil Liberties Union tried to muscle its way into this court proceeding this month, saying that it wanted to file an amicus brief on behalf of the Recall Dunleavy Committee’s position.

The ACLU said that because it has a separate pending lawsuit in Superior Court over the legality of the governor’s vetoes, it has an interest in the outcome of the Recall Dunleavy case. That ACLU request was denied by the Supreme Court.

Anchorage opens slowly, but many merchants stay closed

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Only a few restaurants dared open this week in Anchorage for sit down service. And not many stores are open yet, although they can legally open.

Must Read Alaska readers ventured out to see if they could sit down in a restaurant, rather than order take-out food. Under the previous coronavirus health mandate, restaurants were forbidden from offering a table to patrons — you had to take your food with you at the few dining establishments that were prepared to shift to an all-to-go dining experience.

One airline employee relayed her dining safari in downtown Anchorage. After trying without luck to eat at Lucky Wishbone or the Glacier Brewhouse, she found that Simon & Seaforts was open, and she was easily able to make a reservation to eat in the bar area. There were about a dozen patrons, she said, and the waiter wore a mask. What’s more, the chef even made a special dish of halibut and slaw, something that is not normally on the menu.

Another MRAK reader said she and her husband “dined out” at Arctic Roadrunner, eating at the outdoor tables. “Lunch at Arctic Roadrunner was delicious as always with the perfect weather for our table by the creek!” she wrote. “We ordered our food with a plexiglass piece mounted in a wooden frame with a space underneath for the cash (because they don’t accept cards to go through).”

Bernadette Wilson, one of the organizers of the “Open Alaska” rally last week, wandered into the Dimond Mall to see if she could replace a broken butter dish. No such luck. While the mall was open, all the stores were closed, as her video shows:

The Dimond Mall may be open, but your money is no good there. Nothing was open on Tuesday.

Wilson said she talked to one store owner who said that the mandates are confusing and changing, and the company did not want to risk running afoul of the government.