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BP holds firm, won’t give Walker & Co. info

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BP's Northstar unit.
BP’s Northstar unit.

BP TO GOV: CAN’T HELP YOU, BRO’

In a letter hand-delivered to the Division of Oil and Gas at the Department of Natural Resources on Thursday, Sept. 1, BP Alaska basically told the governor “no can do.” It’s not able to give the State of Alaska a marketing plan for gas because of signed and sealed confidentiality agreements:
“As you know, BPXA, the State, and other PBU [Prudhoe Bay Unit] working interest owners, have signed the Alaska LNG [Liquified Natural Gas] Project Confidentiality Agreement. The latter agreement expressly prohibits sharing or discussing the marketing information that the division is requesting. Furthermore, BPXA possesses neither the right, nor the ability, to direct the PBU working interest owners to market gas nor to provide gas marketing information to the division. These confidentiality agreements and antitrust law prohibit BPXA from requesting, possessing, or discussing the PBU working interest owners’ proprietary marketing information. In any event, that information is not related to the operation and development of the PBU as set forth in the Prudhoe Bay Unit Agreement.”
Nothing much changed from the earlier [May 2] letter that BP sent the State, other than the date of Sept. 1. The May letter stated that “The division’s [April 11] letter seeks extraordinary additional information concerning ‘the timing and type of activities that will be conducted to prepare for major gas sales.’ These new requirements asserted by the division are contrary to the terms of the [PBU Agreement] as well as the division’s regulations and the division’s own interpretation of its regulations over many decades.”

The Sept. 1 letter just said no.

Even ConocoPhillips wrote to the Division of Oil and Gas in support of BP’s position in the spring. No means no.

After the May 2 “thanks, no thanks” from BP, the administration of Gov. Bill Walker threatened the company with one last chance to provide him their plan for marketing gas.
The deadline for BP to fork over its gas marketing plan was set at Sept. 1. Once again, the letter arrived before close of business at the State, but the answer was probably not satisfactory.
What happens next? The Walker Administration is not saying. The transparency he promised may not apply to this high-stakes game of chicken with Prudhoe Bay producers.
Many insiders speculate that Gov. Walker will propose a gas reserves tax on gas left in the ground at Prudhoe Bay. He may attempt this through legislation that he’ll propose after the general election, if he gets the Legislature he wants: Majority Democrats.
Until recently, most gas has been used to scour out reservoirs for the more valuable oil. But those days are coming to a close. In the next few years, the gas will simply be reinjected until a time when it’s economical to ship it to market.
A gas reserves tax would certainly precipitate a lawsuit, because you cannot sell gas if you have no way to ship it. Litigation would likely extend many years and throw the AK-LNG project into a state of uncertainty, since companies could not negotiate to sell their gas, as they would not know if they actually own it. Some lawyers will get very, very wealthy in the process.

WHAT WALKER SAID IN JULY

Earlier this summer, the governor rather angrily threw down the gauntlet on BP, when he said: “As we see the very same producers announcing competing projects elsewhere around the world, it is important for us to know where Alaska stands in getting Alaska’s gas to market. Based on meetings this week on this very issue with the top Alaska executives of BP, ConocoPhillips and ExxonMobil, I have no reason to think that information will not be provided to our satisfaction during the additional 90-day period we provided.”
“I don’t see putting them in default as being realistic at this point because there’s just too much discussion going on back and forth,” Walker told reporters. “If they were completely stonewalling — but they’re not, they are being very forthcoming with information and discussions about it so I’m encouraged by that.”
Now that BP has repeated its refusal, it’s Gov. Walker’s move. He has promised he will not default the leases at Prudhoe, but he also left the door open by saying it was not “realistic at this point.” A gas reserves tax, however, is something he has also wanted and may still pursue.
Grand Prince Hotel
Grand Prince Hotel, New Takanawa, Tokyo.

GOVERNOR HEADS TO TOKYO, THEN QATAR

This fall, Governor Walker will head to Tokyo for the LNG Producers Conference. He’ll likely stay at the Grand Prince Hotel New Takanawa. He attended the Tokyo conference last year and was a speaker, but is not on the agenda yet for this year.

After Tokyo, Walker is scheduled to head to Qatar for unknown business, presumably relating to the gasline. No one outside the administration knows why, as the trip is a closely held secret.

Governor Walker's Facebook post.
Governor Walker’s Facebook post.

Earlier this year, Walker met with the Qatari ambassador, who came to Alaska and delivered a $25,000 donation to help start a domestic violence shelter for women.

“Thank you for your generosity,” Walker wrote on his Facebook page, to Mohamed Jaham al-Kuwari.

According to Amnesty International, Qatar is a country well known for its widespread human trafficking and abuse of women.”The Qatari authorities are failing to protect migrant domestic workers who face severe exploitation, including forced labour and physical and sexual violence,” Amnesty International said in a 2014 report.

“My sleep is my break”: Exploitation of domestic workers in Qatar details the working conditions of women who were recruited as slaves for the wealthy in Qatar, with promises of great salaries and luxurious conditions. The women work extremely long hours — up to 100 hours a week is common — and many are subjected to sexual assault and systematic beatings.

“Migrant domestic workers are victims of a discriminatory system that denies them basic protections and leaves them open to exploitation and abuse including forced labour and human trafficking,” according to Audrey Gaughran, Amnesty International’s Global Issues Director. “We have spoken to women who have been terribly deceived, then found themselves trapped and at the mercy of abusive employers, banned from leaving the house. Some women said they were threatened with physical violence when they told their employers they wanted to leave.”

Some 84,000 women migrant domestic workers are thought to work in Qatar, most coming from Asia.

HINT: IT’S NOT A HUMANITARIAN TRIP

Presumably Governor Walker will be not there investigating human trafficking, but will instead tour one of the world’s largest LNG plants, which is in Qatar.

But even more likely, he’ll be talking to the overseers of the Qatar Investment Authority, which is said to have $35 billion to invest in the U.S. during the next five years.

The Qatar Investment Authority is that country’s sovereign wealth fund, structured differently than the Alaska Permanent Fund. It invests primarily in international markets, such as the United States, Europe and Asia-Pacific and is the ninth-largest sovereign wealth fund in the world.

Kenneth Rogoff, the cousin of Alaska Dispatch News publisher Alice Rogoff and one of the leading world experts on the subject, wrote an opinion in the ADN last year regarding sovereign wealth funds and Alaska’s Permanent Fund.

He wrote, “There is certainly scope to manage the sovereign wealth fund somewhat more aggressively, at the very least the amount in excess of the state’s debt. Other resource-dependent countries like Norway try to strike a balance between risk and return. It would probably behoove Alaska to look at other sovereign wealth funds and how they are managed.”

Indeed, perhaps Gov. Walker has been persuaded by the Rogoffs to look more closely at how other sovereign wealth funds are managed. If so, he’ll want to find out if Qatar’s sovereign wealth fund really lost $12 billion last year and whether it’s dipping into its principle to support the Qatari government.

Miller time, but has he missed something?

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Screen Shot 2016-09-06 at 5.25.18 PM

CAN JOE MILLER REALLY BE PRO-CHOICE?

The Alaska Republican Party issued a statement today concerning Joe Miller filing as a Libertarian for U.S. Senate.

“Lisa Murkowski received more than 70 percent of the vote in the primary. She won our party’s nomination and the Alaska Republican Party will be completely dedicated to her re-election,” Babcock said.

“We look forward to working with our Republican delegation, and feel that Alaska is best represented by Senators Murkowski, Dan Sullivan, and Representative Don Young as an effective, experienced, and well-respected team in Washington, looking out for Alaskans and our state’s interests each and every day.”

The Republican primary voters have spoken, said Rick Whitbeck, vice chair of the party: “Lisa Murkowski is our nominee for 2016. We look forward to working with the senator on her re-election bid and know she will continue to be part of a cohesive team in D.C. fighting for Alaska’s interests, economic prosperity and unique way of life.”

Miller appeals to the more conservative wing of the Republican Party, as well as members of the Libertarian and Alaska Independence parties. He might pose a strong challenge to the senior member of Alaska’s Washington delegation.

But times are different in 2016 than they were in 2010. Back then, Mark Begich was our junior senator. Since then, our delegation has swung more conservative with Sen. Dan Sullivan.

What better example than 2014, when Miller had a chance, but was not chosen as the conservative standard-bearer for the party? Instead, Sullivan went on to be the nominee who went on to beat Begich.

Miller, forever the wild card, refused to back Mead Treadwell or Sullivan.

The opposition research may have something to say. Word is, there is an extensive file on Miller that has been worked over for the past six years by mainstream Republican

Back in 2010, Miller compared Murkowski to a prositute when he had this to say about the rumor that she might file as a Libertarian:  “What’s the difference between selling out your party’s values and the oldest profession?”

The tweet disappeared, but was captured by many and it’s now making the rounds.

Even more concerning, can Miller truly become pro-abortion? The Libertarian platform is simply not the same as the Republican platform. Here is what Joe Miller is representing:

LIBERTARIAN PLATFORM

As Libertarians, we seek a world of liberty; a world in which all individuals are sovereign over their own lives and no one is forced to sacrifice his or her values for the benefit of others.

We believe that respect for individual rights is the essential precondition for a free and prosperous world, that force and fraud must be banished from human relationships, and that only through freedom can peace and prosperity be realized.

Consequently, we defend each person’s right to engage in any activity that is peaceful and honest, and welcome the diversity that freedom brings. The world we seek to build is one where individuals are free to follow their own dreams in their own ways, without interference from government or any authoritarian power.

In the following pages we have set forth our basic principles and enumerated various policy stands derived from those principles.

These specific policies are not our goal, however. Our goal is nothing more nor less than a world set free in our lifetime, and it is to this end that we take these stands.


STATEMENT OF PRINCIPLES

We, the members of the Libertarian Party, challenge the cult of the omnipotent state and defend the rights of the individual.

We hold that all individuals have the right to exercise sole dominion over their own lives, and have the right to live in whatever manner they choose, so long as they do not forcibly interfere with the equal right of others to live in whatever manner they choose.

Governments throughout history have regularly operated on the opposite principle, that the State has the right to dispose of the lives of individuals and the fruits of their labor. Even within the United States, all political parties other than our own grant to government the right to regulate the lives of individuals and seize the fruits of their labor without their consent.

We, on the contrary, deny the right of any government to do these things, and hold that where governments exist, they must not violate the rights of any individual: namely, (1) the right to life—accordingly we support the prohibition of the initiation of physical force against others; (2) the right to liberty of speech and action—accordingly we oppose all attempts by government to abridge the freedom of speech and press, as well as government censorship in any form; and (3) the right to property—accordingly we oppose all government interference with private property, such as confiscation, nationalization, and eminent domain, and support the prohibition of robbery, trespass, fraud, and misrepresentation.

Since governments, when instituted, must not violate individual rights, we oppose all interference by government in the areas of voluntary and contractual relations among individuals. People should not be forced to sacrifice their lives and property for the benefit of others. They should be left free by government to deal with one another as free traders; and the resultant economic system, the only one compatible with the protection of individual rights, is the free market.


1.0 Personal Liberty

Individuals should be free to make choices for themselves and must accept responsibility for the consequences of the choices they make. Our support of an individual’s right to make choices in life does not mean that we necessarily approve or disapprove of those choices. No individual, group, or government may initiate force against any other individual, group, or government.

1.1 Self-Ownership

Individuals own their bodies and have rights over them that other individuals, groups, and governments may not violate. Individuals have the freedom and responsibility to decide what they knowingly and voluntarily consume, and what risks they accept to their own health, finances, safety, or life.

1.2 Expression and Communication

We support full freedom of expression and oppose government censorship, regulation or control of communications media and technology. We favor the freedom to engage in or abstain from any religious activities that do not violate the rights of others. We oppose government actions which either aid or attack any religion.

1.3 Privacy

Libertarians advocate individual privacy and government transparency. We are committed to ending government’s practice of spying on everyone. We support the rights recognized by the Fourth Amendment to be secure in our persons, homes, property, and communications. Protection from unreasonable search and seizure should include records held by third parties, such as email, medical, and library records.

1.4 Personal Relationships

Sexual orientation, preference, gender, or gender identity should have no impact on the government’s treatment of individuals, such as in current marriage, child custody, adoption, immigration or military service laws. Government does not have the authority to define, license or restrict personal relationships. Consenting adults should be free to choose their own sexual practices and personal relationships.

1.5 Abortion

Recognizing that abortion is a sensitive issue and that people can hold good-faith views on all sides, we believe that government should be kept out of the matter, leaving the question to each person for their conscientious consideration.

1.6 Parental Rights 

Parents, or other guardians, have the right to raise their children according to their own standards and beliefs. This statement shall not be construed to condone child abuse or neglect.

1.7 Crime and Justice

The prescribed role of government is to protect the rights of every individual including the right to life, liberty and property. Criminal laws should be limited in their application to violations of the rights of others through force or fraud, or to deliberate actions that place others involuntarily at significant risk of harm. Therefore, we favor the repeal of all laws creating “crimes” without victims, such as the use of drugs for medicinal or recreational purposes. We support restitution to the victim to the fullest degree possible at the expense of the criminal or the negligent wrongdoer. The constitutional rights of the criminally accused, including due process, a speedy trial, legal counsel, trial by jury, and the legal presumption of innocence until proven guilty, must be preserved. We assert the common-law right of juries to judge not only the facts but also the justice of the law.

1.8 Death Penalty

We oppose the administration of the death penalty by the state.

1.9 Self-Defense

The only legitimate use of force is in defense of individual rights—life, liberty, and justly acquired property—against aggression. This right inheres in the individual, who may agree to be aided by any other individual or group. We affirm the individual right recognized by the Second Amendment to keep and bear arms, and oppose the prosecution of individuals for exercising their rights of self-defense. Private property owners should be free to establish their own conditions regarding the presence of personal defense weapons on their own property. We oppose all laws at any level of government restricting, registering, or monitoring the ownership, manufacture, or transfer of firearms or ammunition.


2.0 Economic Liberty

Libertarians want all members of society to have abundant opportunities to achieve economic success. A free and competitive market allocates resources in the most efficient manner. Each person has the right to offer goods and services to others on the free market. The only proper role of government in the economic realm is to protect property rights, adjudicate disputes, and provide a legal framework in which voluntary trade is protected. All efforts by government to redistribute wealth, or to control or manage trade, are improper in a free society.

2.1 Property and Contract

As respect for property rights is fundamental to maintaining a free and prosperous society, it follows that the freedom to contract to obtain, retain, profit from, manage, or dispose of one’s property must also be upheld. Libertarians would free property owners from government restrictions on their rights to control and enjoy their property, as long as their choices do not harm or infringe on the rights of others. Eminent domain, civil asset forfeiture, governmental limits on profits, governmental production mandates, and governmental controls on prices of goods and services (including wages, rents, and interest) are abridgements of such fundamental rights. For voluntary dealings among private entities, parties should be free to choose with whom they trade and set whatever trade terms are mutually agreeable.

2.2 Environment

Competitive free markets and property rights stimulate the technological innovations and behavioral changes required to protect our environment and ecosystems. Private landowners and conservation groups have a vested interest in maintaining natural resources. Governments are unaccountable for damage done to our environment and have a terrible track record when it comes to environmental protection. Protecting the environment requires a clear definition and enforcement of individual rights and responsibilities regarding resources like land, water, air, and wildlife. Where damages can be proven and quantified in a court of law, restitution to the injured parties must be required.

2.3 Energy and Resources

While energy is needed to fuel a modern society, government should not be subsidizing any particular form of energy. We oppose all government control of energy pricing, allocation, and production.

2.4 Government Finance and Spending

All persons are entitled to keep the fruits of their labor. We call for the repeal of the income tax, the abolishment of the Internal Revenue Service and all federal programs and services not required under the U.S. Constitution. We oppose any legal requirements forcing employers to serve as tax collectors. Government should not incur debt, which burdens future generations without their consent. We support the passage of a “Balanced Budget Amendment” to the U.S. Constitution, provided that the budget is balanced exclusively by cutting expenditures, and not by raising taxes.

2.5 Government Employees

We favor repealing any requirement that one must join or pay dues to a union as a condition of government employment. We advocate replacing defined-benefit pensions with defined-contribution plans, as are commonly offered in the private sector, so as not to impose debt on future generations without their consent.

2.6 Money and Financial Markets

We favor free-market banking, with unrestricted competition among banks and depository institutions of all types. Markets are not actually free unless fraud is vigorously combated. Those who enjoy the possibility of profits must not impose risks of losses upon others, such as through government guarantees or bailouts. Individuals engaged in voluntary exchange should be free to use as money any mutually agreeable commodity or item. We support a halt to inflationary monetary policies and unconstitutional legal tender laws.

2.7 Marketplace Freedom

Libertarians support free markets. We defend the right of individuals to form corporations, cooperatives and other types of entities based on voluntary association. We oppose all forms of government subsidies and bailouts to business, labor, or any other special interest. Government should not compete with private enterprise.

2.8 Labor Markets

Employment and compensation agreements between private employers and employees are outside the scope of government, and these contracts should not be encumbered by government-mandated benefits or social engineering. We support the right of private employers and employees to choose whether or not to bargain with each other through a labor union. Bargaining should be free of government interference, such as compulsory arbitration or imposing an obligation to bargain.

2.9 Education

Education is best provided by the free market, achieving greater quality, accountability and efficiency with more diversity of choice. Recognizing that the education of children is a parental responsibility, we would restore authority to parents to determine the education of their children, without interference from government. Parents should have control of and responsibility for all funds expended for their children’s education.

2.10 Health Care

We favor a free-market health care system. We recognize the freedom of individuals to determine the level of health insurance they want (if any), the level of health care they want, the care providers they want, the medicines and treatments they will use and all other aspects of their medical care, including end-of-life decisions. People should be free to purchase health insurance across state lines.

2.11 Retirement and Income Security

Retirement planning is the responsibility of the individual, not the government. Libertarians would phase out the current government-sponsored Social Security system and transition to a private voluntary system. The proper and most effective source of help for the poor is the voluntary efforts of private groups and individuals. We believe members of society will become even more charitable and civil society will be strengthened as government reduces its activity in this realm.


3.0 Securing Liberty

The protection of individual rights is the only proper purpose of government. Government is constitutionally limited so as to prevent the infringement of individual rights by the government itself. The principle of non-initiation of force should guide the relationships between governments.

3.1 National Defense

We support the maintenance of a sufficient military to defend the United States against aggression. The United States should both avoid entangling alliances and abandon its attempts to act as policeman for the world. We oppose any form of compulsory national service.

3.2 Internal Security and Individual Rights

The defense of the country requires that we have adequate intelligence to detect and to counter threats to domestic security. This requirement must not take priority over maintaining the civil liberties of our citizens. The Constitution and Bill of Rights shall not be suspended even during time of war. Intelligence agencies that legitimately seek to preserve the security of the nation must be subject to oversight and transparency. We oppose the government’s use of secret classifications to keep from the public information that it should have, especially that which shows that the government has violated the law.

3.3 International Affairs

American foreign policy should seek an America at peace with the world. Our foreign policy should emphasize defense against attack from abroad and enhance the likelihood of peace by avoiding foreign entanglements. We would end the current U.S. government policy of foreign intervention, including military and economic aid. We recognize the right of all people to resist tyranny and defend themselves and their rights. We condemn the use of force, and especially the use of terrorism, against the innocent, regardless of whether such acts are committed by governments or by political or revolutionary groups.

3.4 Free Trade and Migration

We support the removal of governmental impediments to free trade. Political freedom and escape from tyranny demand that individuals not be unreasonably constrained by government in the crossing of political boundaries. Economic freedom demands the unrestricted movement of human as well as financial capital across national borders. However, we support control over the entry into our country of foreign nationals who pose a credible threat to security, health or property.

3.5 Rights and Discrimination

Libertarians embrace the concept that all people are born with certain inherent rights. We reject the idea that a natural right can ever impose an obligation upon others to fulfill that “right.” We condemn bigotry as irrational and repugnant. Government should neither deny nor abridge any individual’s human right based upon sex, wealth, ethnicity, creed, age, national origin, personal habits, political preference or sexual orientation. Members of private organizations retain their rights to set whatever standards of association they deem appropriate, and individuals are free to respond with ostracism, boycotts and other free-market solutions.

3.6 Representative Government

We support election systems that are more representative of the electorate at the federal, state and local levels. As private voluntary groups, political parties should be free to establish their own rules for nomination procedures, primaries and conventions. We call for an end to any tax-financed subsidies to candidates or parties and the repeal of all laws which restrict voluntary financing of election campaigns. We oppose laws that effectively exclude alternative candidates and parties, deny ballot access, gerrymander districts, or deny the voters their right to consider all legitimate alternatives. We advocate initiative, referendum, recall and repeal when used as popular checks on government.

3.7 Self-Determination

Whenever any form of government becomes destructive of individual liberty, it is the right of the people to alter or to abolish it, and to agree to such new governance as to them shall seem most likely to protect their liberty.


4.0 Omissions

Our silence about any other particular government law, regulation, ordinance, directive, edict, control, regulatory agency, activity, or machination should not be construed to imply approval.

 

 

 

 

 

Nageak down by just four votes

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Rep. Ben Nageak
Rep. Ben Nageak

The Division of Elections has issued the official results, and in the far-north District 40, Democrat Dean Westlake is ahead of Democrat Representative Ben Nageak by 4 votes, 819-815.

Evidently there were 14 absentee-in-person votes that came into Nome from Barrow and those went heavily for Nageak.

The four-vote difference means that the state will have to do a recount at its own expense for District 40. Yet it will likely certify the results, and there will probably be a legal challenge. The vote summary is here:

http://www.elections.alaska.gov/results/16PRIM/data/results.htm

Shungnak results are: 47 Westlake 3 Nageak, whereas before today it was reported as 48 Westlake and 2 Nageak. The Division shows 100 cards cast in Shungnak, where 50 voters got to cast two ballots — one for Democrats and one for Republicans. That means the vote in Shungnak was illegal.

The precinct breakdown is here:

http://www.elections.alaska.gov/results/16PRIM/data/sovc/hd40.pdf

The Alaska Democratic Party weighed heavily in this primary race, pouring tens of thousands of dollars into challenger Westlake’s race against the elder incumbent.

Westlake, who has a record of domestic violence incidents with the Alaska Court system, is in his second attempt to unseat Nageak, who is a conservative Democrat.

Governor sues Exxon through his new attorney general

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Governor Bill Walker
Governor Bill Walker

SHOCKER: EXXON KNEW THE CLIMATE IS CHANGING?

BY FRANK MCQUEARY

What if you read the headline, “Alaska’s governor supports stopping ANWR development”?

You’d be understandably shocked. But by joining in a lawsuit against Exxon Mobil, that is exactly what Gov. Bill Walker is doing: He’s opposing development of Alaska’s Arctic energy potential.

Attorney General Jahna Lindemuth tried last week to explain that the Walker Administration suing Exxon Mobil is a 10th Amendment matter.

In her letter to House Speaker Mike Chenault and Rep. Gabrielle LeDoux, Lindemuth said the lawsuit is merely a protection of our state’s rights and has nothing to do with climate change itself.

But let’s look at what’s behind the case.

New York Attorney General Eric Schneiderman and 16 other Democratic state attorneys general initiated the lawsuit earlier this year. This group calls itself “AGs United for Clean Power.” That is the organization Lindemuth is now part of, whether she knows it or accepts it.

In March, Schneiderman spoke plainly about the lawsuit’s premise: “The bottom line is simple: Climate change is real.”

Schneiderman, in his wisdom, has established climate change as a fact. Many of us agree with him on that point; in fact, anyone who has been on the planet for the last million years would likely agree that climate change is real. There is nothing illegal about climate change. Yet.

But he further argued that companies are committing fraud if they hold an opposite view from him concerning the quantifiable dangers of climate change.

In other words, there is only one view about the cause and the perils of climate change; any other view on the sliding scale of opinions is subject to litigation.

On Schneiderman’s state-funded web page, he lays it all out in his headlines:

“Unprecedented Coalition Vows To Defend Climate Change Progress Made Under President Obama And To Push The Next President For Even More Aggressive Action” 

“Attorneys General From California, Connecticut, District Of Columbia, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Mexico, New York, Oregon, Rhode Island, Virginia, Vermont, Washington State And The US Virgin Islands Agree To Coordinate Efforts”

“Schneiderman: Climate Change Is The Most Consequential Issue Of Our Time. This Unprecedented State-To-State Coordination Will Use All The Tools At Our Disposal To Fight For Climate Progress”

This is what Walker and Lindemuth have agreed to be a part of. It would be one thing if Lindemuth was an elected official, but she is not. She is Walker’s attorney general.

When the Walker administration joined this lawsuit against Exxon Mobil, you could almost hear a gasp across the state of Alaska.

Here we are, an energy-producing state that has at least 150 years more of recoverable oil and gas to support the services of our state and provide jobs to thousands of people and energy to a world that needs it.

Let’s be clear that by filing an amicus brief on this case, our governor has sued one of our state’s major producers. Again.

Yet his attorney general would have us believe Walker doesn’t really believe in the merits of the case.

“Our decision to join the amicus brief does not and should not in any way reflect support for the merits of the Attorneys General’s underlying investigation,” Lindemuth wrote in her letter to Reps. Chenault and LeDoux.

“The amicus brief asserts, and I agree, that where there is a comprehensive process for challenging a subpoena in the courts of the Attorney General’s state, that challenge should be brought in state court, not by going to a federal court in another state.”

The Walker administration seems to have cognitive dissonance.  On the one hand, Walker has jumped at the chance to poke Exxon in the eye, and on the other hand he’s asserting this is just an exercise that relates to “forum shopping.”

It is absurd for the attorney general to make the embarrassing argument that Alaska is suing Exxon as a state’s rights issue when there are any number of other ways the same goal can be achieved. Just the other day, Lindemuth and Walker refused to uphold Alaska’s rights in another important case involving Indian country. And earlier this summer, the governor went limp rather than fight for wildlife management in Alaska.

(Exxon fires back.)

This lawsuit against Exxon isn’t about state’s rights. This is about environmentalists in other states trying to shut down the economic foundation of our state.

Walker’s litigation against Exxon is about stopping the Arctic National Wildlife Refuge from ever being developed. It’s about stopping offshore oil development in Alaska. It’s about shutting down Prudhoe Bay prematurely. These are the goals of the environmental lobby.

It won’t be long before we read another headline, when the activists behind the Exxon lawsuit issue this statement: “Even the governor of Alaska joined in our lawsuit to shut down oil and gas development in Alaska.”

Frank McQueary is a business leader and political activist. He is the former vice chairman of the Alaska Republican Party.

Is this a naked grab on the Permanent Fund?

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It's magic! The Permanent Fund can pay off the debt of the operating budget.
It’s magic! The Permanent Fund can pay off the debt of the operating budget.

10 QUESTIONS ABOUT GOV. WALKER’S ‘DISTRESSED DEBT’

Mere mortals are having a difficult time understanding why Alaska’s Permanent Fund should purchase debt the State of Alaska owes a handful of small oil and gas explorers.
The debt is said to be about $775 million in tax credits, although that amount each is owed is not easily verifiable. There are various types of tax credits for different parts of the oil and gas sector, and this is why journalists writing about this stick to generalizations: The outstanding credits are not easy to track because they are part of companies’ confidential financial information.

Some companies in the middle of developments are Caelus Energy’s Nuna project and Brooks Range Petroleum’s Mustang Project. Then there’s Blue Crest Energy’s Cosmopolitan site in Cook Inlet. The combined development of these three alone would bring 25,000 barrels or more per day by 2018.

“It doesn’t work without the tax credits or some type of incentive,” said Benjamin Johnson of Blue Crest earlier this year. “We know that we have large amounts of resources…These resources need to be developed. The tax credits are really critical to make sure that that’s done.”

They have all been stiffed on their tax credits by Walker and the Democrats in the Legislature.

Now, the governor is asking the Permanent Fund to pay for something the General Fund owes. This means using the Permanent Fund corpus to pay for government itself.

SIMPLE QUESTIONS FOR A COMPLICATED TRANSACTION

Our resident private equity underwriting expert puts it this way: The tax credits Governor Walker wants the Permanent Fund to buy are what is known as a distressed investment. They’re distressed debt, to be more precise.

1. How did Alaska’s tax credits get to be distressed investments? The State of Alaska caused them to be distressed when the governor did not fund their payment. Companies interested in exploring in Alaska were given a book titled, “Dispelling the Fear Factor,” which showed how the State would help take the risk out of exploring in Alaska through attractive tax credits. It’s so expensive to drill and produce in Alaska that tax credits helped improve our state as an investment opportunity.
That worked until the governor decided to stop paying the credits. At least one company has undergone reorganization due to not having the cash flow expected from the payments due.
The Legislature could have overridden the veto but did not have the votes because Democrats, who until two years ago were the biggest cheerleaders for the tax credits, have distanced themselves from them and now don’t want anything to do with tax credits.
2. Why would any investor be interested in such an investment? Public pensions, sovereign wealth funds and private equity firms like to buy distressed assets that have a clear path to a government treasury. It’s easy money.

3. What makes this one unique? What’s odd is that we have a governor who has simply stopped payment. This same governor is now courting the Alaska Permanent Fund, which is our own sovereign wealth fund, to pay for something the operating budget owes.

What’s more, if the Permanent Fund buys a major portion of these distressed tax credits, then the governor will know the price the Permanent Fund paid.

He then has all the information on both sides of the transaction, as he has two commissioners and a former commissioner sitting on the board Permanent Fund Board, one of whom is the commissioner of Revenue, which approves the credits in the first place.

Revenue Commissioner Randall Hoffbeck would be both in charge denying the payment of them (as part of the governor’s inner economic circle) and now deciding if the Permanent Fund should buy them.

4. Why would that matter? There may be overlapping interests. This means the governor can fund the tax credits at a rate where the Permanent Fund makes a profit, but not as much as the tax credits’ full value. It also matters because it’s an end run around the people of Alaska.
5. Who gains? The Permanent Fund might get a higher return — if the state pays the credits off quickly to the Permanent Fund.
6. How much are the credits worth? They appear to be what is called a Level 2 or Level 3 investment, which means a market value is uncertain and not easily ascertained. The amount owed right now in arrears are said to be $775 million.
7. Who else might be looking at the tax credits as an investment? Other sovereign funds or pensions may see these distressed investments as a way to extract a higher yield than the low government bonds out on the market.
There is likely a lot going on behind the scenes as private equity companies start “sniffing around,” as Richards told the Permanent Fund board they are already doing.
Usually, the buyers of  distressed debt are the large institutional investors with access to a lot of resources, such as hedge funds and private equity underwriters.
The Carlyle Group, one such company, has been in communication with Richards, probably to walk him through how to do this unusual and highly specialized transaction.

Companies that specialize in this bottom-feeding trading are sometimes referred to as vulture funds. Carlyle has not specialized in distressed debt up until two years ago when the firm, owned by David Rubenstein,(husband of one of the governor’s economic advisors, Alice Rogoff) purchased debt in Texas Competitive, a failing utility. Rubenstein bought the debt at a discount, with the plan of making good money when restructuring took place.

The speculation is that Carlyle is looking to buy up distressed companies at the same time advising the State of Alaska on how to restructure its debt through the Permanent Fund. Rubenstein, speaking about distressed energy companies at international conferences recently, said this will be a target-rich environment for investors.

8. Does this have anything to do with actual restructuring of the Permanent Fund? Not directly. The governor attempted to restructure the fund during the last legislative session, but his SB 128 legislation did not pass. The current attempt on the fund does, however, fundamentally change the relationship between the fund and the people of Alaska.
The Permanent Fund’s integrity is kind of like virginity: You only have it until you don’t have it. If political decisions start influencing the fund’s investments now, what else might the governor want from it in the future as he makes an effort to restructure the fund? Collateral for a gasline?
9. Is this a raid on the Permanent Fund? It is actually a naked grab. This is the governor using the executive branch to influence some obscure financial moves that allows him to put his hand into an account that he is not allowed to put his hand into. If the board approved this proposal, it would likely draw a constitutional challenge that would take years to resolve.
10. What happens next? It’s likely the current board will not approve the proposal. But the governor controls two to three seats on the board, and will probably replace another one in less than a year, which will give him majority control of the Permanent Fund. He now has total control over the Alaska Gasline Development Corporation and the Alaska Oil and Gas Conservation Commission. When he has control over the Permanent Fund itself, we don’t know what will happen. We can only guess.

Bright, shiny objects: State fair, apology demand, pumpkin spice

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Fair wear at the Alaska State Fair on Saturday.
For the win: This guy took the prize for fair wear at the Alaska State Fair in Palmer on Saturday.

APOLOGIZE! NOW DO IT AGAIN!

Although the Tanana Valley Fair was browbeat into apologizing to a pair of Native/black rappers for cutting their performance short due to inappropriate lyrics, the apology isn’t good enough. This is the kerfuffle that some just won’t let die.

Three Alaska Native organizations say they want to see a more sincere show of remorse or they won’t be able to support the fair in the future.

Fairbanks rappers Bishop Slice and Starbuks had their mics cut off and were kicked out of the fair by Fair Manager Joyce Whitehorn. That caused a social media meltdown for the fair, which continued until the board issued an apology. And then it continued some more.

“The members of your board stood behind this behavior and your manager, further fostering an atmosphere of poor management and leadership,” the Native organizations wrote in response to the apology. “The public statement that you issued was not only vague in nature, but it solidified your inability to take responsibility for the aforementioned actions.”

The letter was signed by the Tanana Chiefs Conference, Fairbanks Native Association and Denakkanaaga. The groups went on to declare that the fair condones systemic racism. That supports the allegations of Starbuks, who said to Whitehorn shortly after the incident began, “What I’m starting to personally think the way you approached this, the stage was just a little too dark for you.”

For those wanting to continue their support of the Tanana Fair, they’ll have their fall festival on Oct. 1. There will be no rappers and you can get your pumpkins.

BRING ON THE SPICE LATTES

Speaking of pumpkins and Starbucks with a “c”, three-day weekends are the best, but a reason to look forward to Tuesday is that Starbucks will roll out not only the PLS (pumpkin spice latte), which is our favorite caffeine-and-carb loading beverage, but there’s a new one:  Chile Mocha.

The CM has its official launch Tuesday, but if you know what to order you can get it today. The Chile Mocha has a sprinkle of cayenne, ancho chile, paprika, cinnamon, sea salt, and a little sugar. Sweet, spicy, a bit Mexican, this is definitely going to give the PSL a run for its money. And ours.

NEWSLETTER WILL BE IN YOUR INBOX TUESDAY

Are you a subscriber to our Monday Must Read Alaska newsletter? We’re taking Labor Day off, so it will arrive Tuesday morning this week. Subscribe here.

More than 8,300 Alaskans subscribe already to the newsletter, which is a saucy take on Alaska politics and culture. We’ve published the e-newsletter since April, 2015, starting with 600 subscribers and growing by the month. Our 8500th subscriber will win a $25 Starbucks gift card, and we’re less than 200 to go to reach that milestone.

MUST READ BY THE NUMBERS

Launched May 15, the Must Read Alaska web site has also quickly grown. We just surpassed 175,000 views, and we’re barely out of the box we’re so new.

Here are a few other stats from Google analytics:

  • 57 percent of our identifying readers are male.
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  • If you have news tips you want us to know about, do connect here: suzannedowning907 at gmail.
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What we derived from the Permanent Fund board meeting

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ALASKA PERMANENT FUND TO BUY DEBT FROM STATE OF ALASKA?

Craig Richards, the former attorney general of Alaska and the governor’s closest ally, wasted no time today.

He had but one half hour in front of the Alaska Permanent Fund Board of Directors to make the case that the State of Alaska’s Permanent Fund Corporation should buy up the State of Alaska’s debt.

Craig richards starts his presentation to the Permanent Fund Board.
Craig Richards, top table, starts his presentation to the Permanent Fund Board.

To summarize, the governor proposes that the Permanent Fund Corporation buys the hundreds of millions of dollars in tax credits it owes oil producers.

This would be done through complicated financial mechanisms that would make State government owe the Permanent Fund Corp. the $775 million, instead of owing it to the oil and gas companies who have been waiting for their payments.

$775 million is the current approximate value of what Gov. Bill Walker has yet to pay a handful of independent producers.

Permanent Fund CEO Angela Rodell described it this way to KTVA reporter Liz Raines: “[y]ou pay a dollar out of the general fund that then, or would have paid a dollar out of the general fund, but then pays 60 cents out of the permanent fund to buy that dollar and then the general fund pays the permanent fund a dollar, so the permanent fund gets an extra 40 cents on that.”

On the one hand, this would be a way for the government to offload a great big bill it has — a debt that is causing financial stress and bankruptcy for many of the smaller oil companies that came to Alaska to explore in the smaller or more risk-laden oil patches that the majors like ConocoPhillips, ExxonMobil, and BP are not interested in.

The tax credits can generally be traded, but different rules apply to different conditions. Sometimes the tax credits can be sold to other producers to help them offset a taxable profit. But right now, there’s no real market among the producers for tax credits; they simply aren’t making enough money to need more credits.

If the Permanent Fund Board doesn’t bite on the worm dangled by the governor, Craig Richards said some private equity investors were “sniffing around” for an opportunity at buying the credits. Someone will bite.

The basis of the board’s decision might hang on whether they believe the State of Alaska will make good on its payments. It has always done so in the past, but as the old investment disclaimer goes, “Past performance does not guarantee future results.”

HOW WOULD THIS HELP?

If you’re a small producer and you’re owed millions of dollars from the State of Alaska, getting your money allows you to pay your creditors and possibly avoid financial collapse. From the companies’ perspective, this would be beneficial. They could get on with their lives, although they might never bank on Alaska tax credits as part of their business model again, now that they know the governor can just veto those credits or delay to the point where they are effectively worthless.

If you’re shareholder in the Permanent Fund Corporation (and that’s all of us Alaskans), you might see a better return on your fund’s investment by buying up these credits. That’s the fiduciary decision that the board must make. Past State investments by the Alaska Industrial Development and Export Authority —  have not always ended up profitably. Think of the dairies and farms and grain terminals that were a “sure bet.” Enough Alaskans remember those investments that they might doubt whether this one is more prudent.

If the State of Alaska drags its feet and doesn’t pay for four or five years, there’s the problem of the time value of money, which is the idea that money is worth more the sooner it is received.

And what could the Permanent Fund do if the State did not pay? Not much, since the board is appointed by the governor and has to walk a narrow path.

Having the Permanent Fund Corporation be the lienholder on state government would fundamentally change the relationship between the two entities. Our own savings account would now have a lien us.

What’s more, it’s seen by some as the camel’s nose under the tent: If Walker can get the Permanent Fund to buy his debt, what else can he get the Fund to do once he replaces one more director, which he’ll be able to do next August.

HOW TO EXPLAIN IT TO THE PUBLIC?

Derivatives are complicated instruments. This one walks like a credit derivative, something few Alaskans are knowledgeable enough about to make a good judgment on. But plainly, there is risk with trading in debt. Debt only needs to be traded when things have gone rather badly and then.

The Alaskan public will not get to witness an actual Permanent Fund Dividend announcement this year, as it has every year since the dividend was started.

Usually it’s one of those great events in September that we all look forward to. There’s no announcement, because the governor vetoed more than half of the funding for the dividend, and announced in June what the dividend will be: $1,000. There’s certainty, so no secret envelope needed.

That means he doesn’t have to face the awkwarad juxtoposition of announcing a check that should have been $2,300 or so, and at the same time using the Permanent Fund to pay up to $1 billion to small oil and gas companies.

An alternative way to sell it to the public would be to create a fund within the Permanent Fund, into which Alaskans could invest. This fund would be used to buy up the debt that the governor cannot pay.

But that, dear reader, would be called a bond. (And yes, it would likely violate SEC rules.)

Democrats’ press release defends illegal voting

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Screen Shot 2016-09-01 at 6.11.54 PM

DEMOCRATIC PARTY CHAIR BRINGS PUBLIC RADIO FUNDING GRIEVANCES INTO THE MIX

The Alaska Democratic Party issued the following statement today in support of the recent, widespread voting irregularities identified in District 40:

Democrats to AK GOP: Stop Meddling in Our Primary 

Republicans seek to silence an entire community of rural Alaskans in Democratic Primary

ANCHORAGE: Alaska Democratic Party Chair Casey Steinau today released the following statement in response to Republican Party Chairman Tuckerman Babcock’s call for the State to invalidate the Democratic Primary election results for the HD 40 state representative.

“The Republican Party has taken inappropriate, though not unprecedented action, to stifle the voices of another rural Alaskan community. Republican Party Chairman Tuckerman Babcock has taken it upon himself to advocate for the dismissal of all votes from Shungnak in District 40. This attempt to meddle in a Democratic Primary and silence rural Alaska is a blatant overstep by Republican leadership, designed to undermine a result they don’t like.

After arguing to defund rural public radio, threatening to shut down rural schools, and ignoring rural infrastructure needs, the Republican Party is once again disregarding the needs and voices of rural Alaskans.

“If the Republican Party wanted to have a candidate appear on the November ballot, then their candidate should have run as a Republican.

“It is unnecessary to invalidate the election or have another vote, as Republicans are advocating, because errors that have been identified didn’t change the outcome in any race.  

“The people of District 40 have spoken and we must respect that. If Mr. Babcock succeeds in undermining their voice, that would be the real failure of this election.”

The Alaska Democratic Party today sent the attached letter to the Director of the Division of Elections.

REPUBLICAN RESPONSE

AK-GOP amazed that Democrats support illegal election

Anchorage, Alaska – In response to a request by the Alaska Democratic Party to certify an illegal election in District 40, Alaska Republican Party Chairman Tuckerman Babcock issued this statement:

“The Democratic machine in Anchorage has stooped to a new low by calling the primary a ‘Democratic Primary.’ It’s very clear that the ADL ballot is an open ballot, available for all voters to use if they so choose. That ballot is open to Republicans, Libertarians, and undeclared voters. That is what the Democrats publicly claim they want.

“The Division of Elections has admitted that voters in District 40 were allowed to vote two ballots in violation of Alaska law. The Republican ballot is a closed ballot, not available to members of other organized parties, but only to Republicans, nonpartisans, and undeclared voters.

“We believe all voters in rural Alaska should be able to vote in a legal election,” Babcock said. “And we have provided the Division of Elections with appropriate remedies for solving the problems that the Division created when it allowed illegal voting to occur.”

“Not only in Shungnak, but in the Barrow precincts as well, the process was so flawed that no one knows how the people really voted.  Casey Steinau’s assertion that the vote outcome would have been no different if people had been allowed to vote legally is just baseless guessing,” Babcock said.

“Steinau says the people of District 40 have spoken. Well, the voters tried, but the Division of Elections messed up.  Many voters were confused, told they could not vote when the law said they could, and even voted twice when they should have voted once.

“It’s stunning that the chair of the Democratic Party would want her favored candidate to win so badly that she openly endorses illegal voting,” Babcock said.

ELECTION TO BE CERTIFIED FRIDAY?

As dueling press releases and letters fly, the State Election Review Board and the Division of Elections may certify the election on Friday, or possibly Tuesday, owing to the three-day Labor Day weekend. That action may draw one or more lawsuits.

The Alaska Republican Party has asked for a new election in District 40 and has outlined in a letter to Division of Elections Director Josie Bahnke how to remedy the situation. Candidate Ben Nageak has secured an attorney to assist him in determining what laws were broken and which voters were denied their constitutional rights.

Ben Nageak, as an Alaska Native, is on the verge of losing his seat in the House of Representatives, under questionable circumstances. That raises federal questions of violations of the Voting Rights Act.

It would be ironic if the lieutenant governor, whose sole job is to oversee elections and who has been noticeably absent and unresponsive since Election Day, all of a sudden demands that the Election be certified, even though both he and the Division of Elections has admitted to serious procedural problems.

Governor to ask Permanent Fund Board for $1 billion special investment

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DETAILS EMERGE: FORMER AG RICHARDS PROPOSING HIGH-RISK ALLOCATION

Craig Richards, when he was law partner of Bill Walker, speaks to a conference about LNG in 2012 in Valdez.
Craig Richards, when he was law partner of Bill Walker, speaks to a conference about LNG in 2012 in Valdez. YouTube video screen shot.

The Permanent Fund Board of Directors is about to endure an unprecedented attempt by a governor of Alaska to influence the direction of its investments.

The meeting is Friday, Sept. 2 at the Atwood Building in Anchorage, and is available by teleconference.

Sources inside the Administration tell Must Read Alaska that our earlier report is spot on, but there’s more: Governor Bill Walker will request a $1 billion plus Permanent Fund investment into a high-risk, highly concentrated allocation that is centered on an specific industry and a specific geography.

The Permanent Fund has an allocation like this already, but with nowhere near the concentration that is being proposed.

The industry and the geography would be oil and gas companies in Alaska, particularly in Cook Inlet, which are suffering because Gov. Walker vetoed the tax credits that their company business models depended on and that they were owed.

The Permanent Fund buying oil tax credits as an investment to prevent companies operating in alaska from going bankrupt would be an unprecedented risk of Alaskans’ savings account. So far, the governor has been silent on this move, not releasing a press release or a statement about his intentions.

Although Walker was advised even by members of his administration not to veto the payments owed to explorers, he cut $774 million over the past two years. Some companies are now in bankruptcy proceedings, and the downstream effect on other businesses is being felt throughout the Alaska oil patch economy.

The Walker Administration had already made a similar run at the Alaska Retirement Management Board with such a proposal, which was soundly rejected, according to Administration sources.

Two of the commissioners on the retirement board are also on the Permanent Fund Board. They are Commissioner of Administration Sheldon Fischer and Commissioner of Revenue Randall Hoffbeck; it’s likely this proposal is familiar to them already.

Former Attorney General Craig Richards served on the Permanent Fund board until he suddenly — and quite mysteriously — quit as AG in June and had to leave the board. He then received a $50,000 (renewable) contract with the governor, which was retroactive and which avoids the procurement process. He’ll now appear before the board to argue the governor’s proposal.

The Carlyle Group is one of several “private equity and special opportunity” fund managers used by the Permanent Fund Corporation, and it manages 5 percent of the $54 billion fund.  The Carlyle Group has designed custom program of private asset investment strategies, that focuses on natural resource investment.

Richards has been in talks with the Carlyle Group as he prepares to make the case to the Permanent Fund directors on how the structure of the proposed fund would work.

A small economic development working group inside the Walker Administration may also have a role. In June, the governor announced two new additions to his staff who are tasked with working on economic development issues.

The two recent hires are the state’s former chief economist, John Tichotsky, who is one of the architects for restructuring the Permanent Fund, and Ed King, who was a commercial analyst for the Alaska Department of Natural Resources.

The group within the Governor’s Office is said to be attempting to create a venture capital market in Alaska, possibly encouraging it by using state assets.

A previous story on this topic is here.

The KTVA story on it is here.