Business

Alaska’s embattled economic development agency has signed new contracts with seven law firms — reflecting what its leader says is a desire to handle its legal issues more quickly, and independently from the executive branch.

The Alaska Industrial Development and Export Authority, or AIDEA, is pushing an array of controversial projects across the state, from oil leasing in the Arctic National Wildlife Refuge to proposed roads through wild areas in the northwest and southcentral regions of the state.

It chose all seven law firms earlier this year, according to copies of their contracts obtained by Northern Journal through a routine public records request.

The firms AIDEA selected include two run by Alaska attorneys who have worked for the state before — Peter Caltagirone, a former legal advisor at the state Department of Natural Resources, and Craig Richards, the former attorney general who has another legal contract with Republican Gov. Mike Dunleavy’s office.

The other firms include Minnesota-based Dorsey & Whitney, Anchorage-based Birch Horton Bittner & Cherot, Washington, D.C.-based Van Ness Feldman, Texas-based Haynes and Boone, and California-based Nossaman. All seven contracts are open-ended, without specific assigned tasks, with caps ranging from $100,000 to $985,000.

The firms won’t be paid unless AIDEA authorizes specific work or billing, said AIDEA’s executive director, Randy Ruaro.

Ruaro, a former chief of staff to Dunleavy, said AIDEA has long used outside attorneys hired under contracts. What’s new, he added, is having the firms selected in advance — which he said will allow his agency to get legal help more quickly than if it has to go through the state’s procurement process each time an issue comes up.

“What we’ve done is kind of create this stable of attorneys who are ready at will if we have an assignment for them, that they can jump on right away,” Ruaro said in an interview.

Ruaro added that agencies like his should also be “entitled to their own legal counsel” when they encounter conflicts with other state agencies represented by the Department of Law.

In a two-and-a-half-page prepared statement released with the contracts, Ruaro said that legal services have been “particularly vital” for his agency in the past two years.

Two oil companies that it loaned money to “fell behind on payments” to AIDEA amid state cuts to tax credit payments, requiring the agency to negotiate and draft financial agreements, Ruaro said.

AIDEA has also filed and intervened in federal lawsuits involving Arctic Refuge oil leases it owned — which were canceled by the Biden administration last year — and a Northwest Alaska mining road project. And it also had to review and draft commercial agreements on new infrastructure projects on the North Slope and at Anchorage’s international airport, Ruaro said.

The seven legal contracts raise questions, said Anchorage Democratic state Sen. Matt Claman, though without further information, it’s hard to say if they’re appropriate, he added.

“I’d like to know more,” said Claman, an attorney who chairs the Senate’s judiciary committee.

It’s common for an entity like AIDEA to have independent counsel separate from the executive branch, Claman said. But, he added, “if I were a partner in a major law firm, I would be saying, ‘Can’t we provide all their independent counsel needs from this one firm?’”

Nathaniel Herz welcomes tips at natherz@gmail.com or (907) 793-0312. This article was originally published in Northern Journal, a newsletter from Herz. Subscribe at this link.

The board of Homer Electric Association, or HEA, unanimously approved a purchase contract on Aug. 13 with Renewable IPP, a power producer that’s built several large solar farms in the state.

Jenn Miller is the CEO of Renewable IPP. She said the company is working to give Alaskans energy options beyond natural gas.

“When we started the company, our mission was to not only diversify Alaska’s energy generation mix, but to do it in a way that actually reduces energy costs for Alaskans,” Miller said.

The path to get the project approved is years in the making.

Renewable IPP has been working with HEA to build a solar farm on the Kenai Peninsula since 2021. They previously considered a site in Sterling before settling on the current location. Miller said they expect to finish construction by 2028.

“While folks might say, ‘Man, can’t you move faster?’” she said, “you know, we spent three years working it, and I think without that level of due diligence, you wouldn’t have a project that delivers value on so many fronts like you do with this Puppy Dog Lake Project.”

The Puppy Dog Lake Project in Nikiski would be the largest solar farm in Alaska. Once it’s built, the farm could produce up to 30 megawatts, which is enough to power about 9,000 homes where the average household uses about 550 kilowatt hours a month. Renewable IPP also built the state’s current largest solar farm in Houston, which produces 8.5 megawatts of electricity — less than a third of the power the Nikiski project is expected to.

The purchase agreement comes as Alaska’s railbelt faces a looming shortage of natural gas, with utilities looking for ways to import natural gas.

Since Renewable IPP set its sights on the peninsula, the Kenai Peninsula Borough Assembly also approved property tax exemptions for independent power producers.

The new solar farm would double the amount of renewable energy the region uses from about 12% to 24%, according to HEA. Keriann Baker oversees strategy for the utility, and she said the contract will allow them to purchase electricity for less than what they currently pay for power. But, Baker said the utility continues to support developing natural gas.

“We’d like to see some policies like royalty relief that makes it easier for producers here, because a strong and thriving natural gas environment is healthy for everyone, but at the same time, we also want to protect our members responsibly from the volatility that we’re seeing in the fuel market, and we want to diversify,” she said, “we just don’t want to do it in a way that provides rate shock to our members.”

In addition to solar energy, the board also approved replacing an old, inefficient gas turbine at the power plant in Nikiski. The utility doesn’t expect the replacement to happen until late 2027 or early 2028. Once both projects are online, Baker said they could cut about one sixth of the natural gas currently being used.

HEA’s board threw out its old energy portfolio goal at the end of last year, which was to have 50% of energy coming from renewable sources by 2025. They updated the utility’s strategic plan to simply diversify its energy sources instead.

Baker said HEA is looking at other renewable energy sources outside of solar to accomplish that at the lowest cost to ratepayers.

“Really it’s anything right now. We’ve talked to tidal groups. We’ve talked to geothermal groups. We’ve talked to nuclear groups. We’ve talked to wind groups. I mean, we really are an all of the above utility,” She said.

HEA currently has an agreement with GeoAlaska, which is collecting data on Augustine Island to see if it’s possible to connect geothermal energy to the peninsula and beyond.

While the project and contract costs aren’t public until both parties finalize paperwork with the Regulatory Commission of Alaska, Miller said they received a $2 million grant from the Alaska Energy Authority that’s bringing down overall costs for ratepayers. They expect to finish the filing in the next couple months.

Are you craving that $1.50 hot-dog-and-soda combo from Costco? Be sure to have your own membership card handy.

Over the coming months, shoppers will have to start scanning their membership cards at the entrances to Costco warehouses rather than just presenting them to a store employee, the retail giant announced.

The Washington-based company is the latest to crack down on membership sharing, as businesses seek to prevent consumers from glomming onto their friends’ and families’ paid accounts without forking over membership fees themselves.

Costco members with active memberships will have to scan their physical or digital cards at a machine at the store’s entrance. Members who have cards without a photo will have to show a valid photo ID, and guests will only be able to enter a Costco store with an active member.

“If you have any questions or concerns, there will always be an attendant at the door to assist you!” Costco said in a statement.

Costco isn’t the only company out to stop some consumers from getting a free ride. Disney recently announced that it would start blocking Disney+ account holders from sharing their passwords to the streaming service outside their households.

A similar move by Netflix last year led to an uptick in subscribers but may also have damaged the company’s reputation, Fast Company reported.

Costco executive Richard Galanti told MarketWatch in January that the company was aiming to prevent nonmembers from dodging fees by using a member’s card to shop, an issue that emerged after the company introduced self-checkout lines.

Costco relaxed the enforcement of its rules during the height of the COVID-19 pandemic, Galanti said, when people asked others to shop for them to avoid going outside.

In response to the problem, the company announced that it would begin asking customers in self-checkout lines — in addition to regular checkout lines — to show their membership cards and a photo ID.

Costco has 128 million members and reported that it earned $4.6 billion in revenue from membership fees last year.

Costco’s annual membership fees are set to increase beginning in September, from $60 to $65 for Gold Star members and from $120 to $130 for Executive members.

Last week, Alaska Congresswoman Mary Peltola joined 27 other D.C. lawmakers from 16 states in a legal brief backing a lawsuit by federal regulators to block a massive, national grocery store merger.

Most Alaskans live in a community where a Fred Meyer store competes directly with a Carrs or a Safeway, so the proposal for one parent company to buy the other for $24.6 billion has a lot of Alaska consumers worried.

Here’s what we know about where the proposal is now, after it was first announced in October of 2022.

What’s at stake? 

If you take what the companies are saying in good faith, not much. They’ve made sweeping promises about the good things that will happen and the bad things that won’t if Kroger, which owns Fred Meyer, is allowed to buy Albertsons, which owns Safeway and Carrs. The companies say investors, customers, workers and communities are all supposed to benefit.

“We are confident our transaction with the proposed divestitures will mean lower prices and more choices for customers,” Kroger CEO Rodney McMullen said in a video about the proposed merger. “It will mean more opportunities for retail associates to grow their career while we secure the future of good paying union jobs.”

Here are some of the specific promises Kroger and Albertsons have made:

• No store closures
• No pharmacy closures
• No front-line job losses with protection for worker pay and benefits
• A $500 million investment in reducing prices
• A $1 billion investment in employee benefits
• A $1.3 billion investment to improve Albertsons stores

Kroger points to its 20-year track record that includes lowering its profit margins to keep prices down amid past acquisitions.

How can all of these promises be possible? 

The idea is if Kroger and Albertsons merge, they’ll be in better shape to compete with even bigger retailers, like Costco and Walmart, as well as growing competitors, like dollar stores that now sell groceries and even Amazon. Bigger scale means bigger efficiencies, and that’s where the upside is supposed to come from.

Of course, most Alaskans live in communities where Fred Meyer competes with Carrs or Safeway. Specifically, that’s Anchorage, Eagle River, Palmer, Wasilla, Fairbanks, Juneau and Soldotna.

Federal regulators are wary of mergers because they can be anticompetitive, concentrating too much market power and hurting regular shoppers. To try to win regulators’ approval, Kroger and Albertsons say they’re prepared to sell off all 15 of the Carrs and Safeway stores in those Alaska communities, plus three more in Girdwood, Kenai and North Pole, to a company called C&S Wholesale Grocers based in New Hampshire.

The Safeways in Seward, Valdez, Kodiak, Ketchikan, Nome and Unalaska are not on the divestment list and would remain with the merged company.

Nationally, Kroger and Albertsons plan to sell a total of 579 stores, plus six distribution centers and a dairy plant, to C&S.

Again, McMullen says these divested stores won’t close, because C&S is committed to running them as they are today.

Albertsons CEO Vivek Sankoran says C&S will make the landscape more competitive.

“Their deep industry knowledge and experience gives us great confidence in their ability to become even fiercer competitors moving forward,” Sankoran said in the video.

C&S CEO Eric Winn also says his company is playing the long game.

“We are confident this expanded divestiture package will provide the stores, supporting assets and expert operators needed to ensure these stores continue to successfully serve their communities for many generations to come,” Winn said in an April press release.

The United Food and Commercial Workers Local 555, which represents 30,000 grocery store workers in Oregon, Idaho and Washington, came out in support of the merger in February. However, the parent union, which represents 1.2 million workers, voted last year to oppose the merger. Other UFCW locals, including Alaska’s, also oppose the merger.

So what’s the problem? Why do people oppose the merge?

Basically, opponents just don’t believe the companies, and there isn’t anything in place to hold them to their promises.

In Alaska, the opponents include Democratic Congresswoman Mary Peltola, 24 state lawmakers, the grocery store workers’ union and lots of regular Alaskans.

“It’s a huge issue for Alaskans that resonates. It’s not a political issue, it’s a pocketbook issue,” said Veri di Suvero, executive director of the Alaska Public Interest Research Group, a statewide consumer advocacy nonprofit that also opposes the merger. “Whether or not it’s in good faith, about these spinoffs, we’ve seen over and over again that they don’t work.”

Di Suvero points back to 1999, when Safeway bought out Carrs. AKPIRG and Alaska’s attorney general got involved, and they worked out a deal to sell off seven stores to let the merger go through.

Six of those stores became Alaska Marketplace grocery stores. They all closed within about a year.

The seventh, at the University Center mall in Midtown Anchorage, survived and became a different grocery store, Natural Pantry, which eventually outgrew the space and built its current, standalone location off 36th Avenue.

Fast forward to 2015, and Safeway got swallowed up by Albertsons. Federal regulators approved that deal after the companies agreed to divest 168 stores. 146 went to a small Washington grocery retailer called Haggen.

Haggen wasn’t successful, either. Within a year, Haggen sued Albertsons and accused it of sabotaging stores it bought. It got sued back by Albertsons and filed for bankruptcy. In the ensuing firesale, Albertsons ended up buying back many of its divested stores, and ultimately what remained of Haggen itself.

Di Suvero is also concerned about how unique Alaska’s supply chain is, particularly its heavy dependence on a single port. Di Suvero and other opponents question if C&S has the expertise and wherewithal to step in and run its new grocery stores successfully.

So critics think C&S is setting itself up for failure, like Haggen?

Yes.

C&S isn’t a national player in the world of retail groceries. It owns the Piggly Wiggly brand and runs some Piggly Wiggly stores directly, but most are independently owned and operated under a franchise license. It also runs 11 Grand Union markets.

But C&S is a big deal nationally in grocery wholesaling, supplying more than 7,500 supermarkets. Forbes says it’s an industry leader in supply chain innovation, the largest wholesale grocery supply company in the country and the eighth biggest privately held company in the country. So C&S is in a totally different league from Haggen.

That said, the Federal Trade Commission says C&S doesn’t have its own store brand product lines, loyalty programs or e-commerce platforms it needs to successfully compete.

Does Alaska figure prominently into the overall merger? 

No.

Kroger and Albertsons combined have 36 stores in the state. That’s 11 Fred Meyers, and 24 Carrs or Safeways plus Crow Creek Mercantile in Girdwood. Across the country, they have about 5,000.

And unlike in the Safeway-Carrs merger in 1999, the governor’s office has been hands off. Gov. Mike Dunleavy has not weighed in. The state Department of Law, which has its own consumer protection unit, says it’s monitoring the merger and the Federal Trade Commission’s legal fight to stop it.

Outside of Alaska, eight states and the District of Columbia have joined the FTC’s lawsuit in federal court in Oregon.

And the attorneys general of Colorado and Washington have their own similar lawsuits.

What happens if the merger gets shot down? 

There’s a lot invested in this merger. A reporter with WCPO in Cincinnati, where Kroger is headquartered, dug through financial filings and found that through March, the two parent companies had already spent $864 million in merger-related expenses.

WCPO also found that Kroger had agreed to pay Albertsons $600 million if the merger fails.

So that’s a big incentive for Kroger to appeal if these legal fights don’t go its way.

So what’s next?

The legal stuff.

Hearings in the FTC case at the U.S. District Court of Oregon begin Aug. 26. This case is important, but won’t necessarily make or break the merger. The judge there is supposed to rule on whether or not to pause the merger, while more substantive arguments go before an administrative law judge in Washington, D.C.

The trial in the Washington state court is scheduled to begin Sept. 16, and, separately, a Colorado state judge last month imposed his own order to pause the merger, pending a legal challenge there. That trial is scheduled to begin Sept. 30.

For decades, The Tundra Drums newspaper served as a mouthpiece for the issues that mattered most to communities in Western Alaska. Now, a website posing as the former Bethel institution is stealing media content from across the state. But why it’s happening is a mystery.

Earlier this summer, KYUK got a call. Was the shuttered Tundra Drums, once a trusted news source for the Yukon-Kuskokwim Delta, resuming publication?

The caller was referring to thetundradrums.com website, which had been all but defunct for almost a decade. Over the past two months, though, the website has been prolific in its coverage of Alaska issues. One author, Hadiqah Shahid, has managed to stay on top of breaking news from Anchorage and across the state, all while offering up a rich variety of Bethel stories — using copy and imagery taken from KYUK stories posted just days earlier, among other sources. Shahid has also covered stories from Bethel Park, Pennsylvania, Ohio’s Bethel Township, and a Bethel College in Kansas.

Kenrick Mock, a computer science professor and founder of the University of Alaska’s Data Science and AI Lab, said that The Tundra Drums website bears the hallmarks of artificial intelligence.

“The website very strongly looks like it was generated by AI. It has a pretty broad range of stories, some of the common keywords, like Bethel, where it’s pulling in other stories about other places that have Bethel in the name,” Mock said. “Just the fact that a website of this scope could be set up in a small town like Bethel is also a little puzzling.”

Frequent contributor Shahid has no author biography or profile photo, and like other names that appear atop stories on The Tundra Drums website, does not appear to be a real person. Nearly all of Shahid’s news stories appear to be rewritten versions of coverage already online, though multiple short public safety stories, like one about a water outage in Bethel, were apparently written based on social media posts alone. Mock said that the content in the stories themselves also contains tell-tale signs of AI writing.

“(There are) lots of bullet points, (and) not going into kind of specific details or quotes. And so if we’re doing a summary, for example, of another story, they look kind of like this,” Mock said.

Online content farms

There are numerous active online content farms reportedly using AI to rewrite news stories from major publications. On the revamped The Tundra Drums website, articles are presented as original content and do not link back to original stories. Multiple stories contain photos republished without permission or attribution, and a line at the bottom of the website reads “All Copyright Reversed.”

However, the website is conspicuously free of ads. This surprises Mock.

“So of course I first thought when I heard about this was, ‘oh they’ve got some ad banner up there so they can make some revenue by people coming to the site,’ but there doesn’t appear to be any of that,” Mock said. “And obviously, it would cost them money to run the site.”

Some of that cost comes with hosting the site, and in mid-July, whatever privately registered entity is paying for the domain renewed their membership for another year.

“They kept that private by registering through a proxy. So it’s not clear who has actually registered this website,” Mock said.

To the undiscerning eye, thetundradrums.com is a legitimate news site – sleek, straightforward, and a one-stop shop for local, state, and world news.

If there were any question of whether the website is really claiming to be the authentic The Tundra Drums, its Facebook page bills it as “Alaska’s trusted news source since 1974,” the year the former Bethel newspaper was founded.

The current owner of The Tundra Drums newspaper, Edgar Blatchford, did not respond to multiple requests for comment regarding the website.

According to an Internet archival tool called the Wayback Machine, The Tundra Drums website has fallen into varying states of disrepair since 2016 when it, alongside the print edition, ceased publishing news.

But on May 10, the new incarnation of the website published what appears to be its first story, a summary of infrastructure projects in Bethel by an author named Rebecca Sean. It features an unattributed photo of an Anchorage intersection snapped by an Anchorage Daily News photographer.

On July 22, another unattributed ADN photo accompanied a story about former Anchorage Mayor Dave Bronson. But this time, The Tundra Drums story also appeared on a massive news aggregator called NewsBreak that does host ads.

NewsBreak pays contributors based on page views, and itself has previously been accused of publishing lifted local news content under fictitious bylines.

Mock, with the AI lab, said that the real endgame of The Tundra Drums website could go beyond simply being listed on profit-driven aggregators like NewsBreak.

“The other thought is it could be basically a test to see what someone can do,” Mock said. “So let’s pick a small place, they’ll mostly go unnoticed, right? But we can try these technologies out, and test them and see what happens, and hone the software for whatever future purpose someone might have.”

As the “About Us” tab on the website explains, “In a world where misinformation is rampant, we believe in the power of responsible journalism to empower individuals and shape society.”

The question of why the namesake of a long-vanished Bethel newspaper has become involved in this mission remains unanswered.

The Tundra Drums did not respond to a request for comment through its website, or through its domain hosting service.

Ellie Rubenstein, the investment manager at the center of an email leak affecting the Alaska Permanent Fund Corp. board of trustees, is resigning from her seat on the board, she said Wednesday.

In May, a series of leaked emails suggested some corporation employees felt pressured by investment suggestions offered by Rubenstein. Those suggestions could represent a conflict of interest, they said.

Following the email leak, the six-person board — which governs the $81 billion investment portfolio held by the Alaska Permanent Fund — voted to investigate the source of the leak, and Rubenstein became chair of a governance committee charged with drafting rules that govern interactions between staff and members of the board.

In response to the board’s actions, state lawmakers held a public hearing and questioned the board’s direction of the corporation.

Rubenstein is two years into a four-year term on the board and said through a spokesperson that her work on the board takes a large amount of time and she needs to focus on her private equity company, Manna Tree.

“That’s the impetus for resigning,” said the spokesperson, Christopher Ullman.

Her resignation is effective Aug. 1.

Rubenstein’s decision also comes shortly after Gov. Mike Dunleavy reappointed board chair Ethan Schutt. One of the leaked messages said Rubenstein had spoken to Dunleavy and that he did not intend to reappoint Schutt.

Asked whether the timing of Rubenstein’s resignation was due to the leaked emails, the reappointment or other factors, Ullman said, “Ellie has concluded that the scope and pace of change necessary to fully institutionalize the Permanent Fund are not compatible with the demands of leading her private equity firm.”

While Rubenstein was a member of the board, it re-established a bonus program for high-performing Permanent Fund employees, opened a controversial Anchorage office and raised the fund’s target for private equity investments, which are not publicly traded.