Arctic infrastructure bill passes Legislature

Establishes state fund to assist with financing the construction, improvement or expansion of facilities in Arctic & western Alaska

Alan Bailey

Petroleum News

On April 20 the Alaska Legislature passed Senate Bill 140, a bill that establishes a funding program through the Alaska Industrial Development and Export Authority, or AIDEA, to assist with the financing of infrastructure development in the Alaska Arctic. The bill was passed by the Senate on April 2 and has now been passed by the House.

The concept behind the bill came from a report published by the Alaska Arctic Policy Commission, an entity that the Legislature established in 2012 to formulate a state Arctic policy and implementation strategy. The report identified a need for public and private investment in Arctic infrastructure, including aviation and maritime emergency response infrastructure.

A shortage of support infrastructure is often cited as an impediment to economic development in the Arctic and as posing an emergency response risk for Arctic activities.

Sen. Lesil McGuire, who co-chairs the Alaska Arctic Policy Commission with Rep. Rob Herron, sponsored the bill.

The fund will operate in a similar manner to the Sustainable Energy Transmission and Supply fund, or SETS, which AIDEA already administers. The idea is to help private organizations progress projects that are beneficial to the state but economically challenging. The SETS program is, for example, providing loans to help with the development of a North Slope liquefied natural gas plant, to provide a gas supply for Interior Alaska.

The new fund, termed the Arctic infrastructure development fund, takes a broad view of the extent of region within which funding support may be provided, with that region including western Alaska, the Bering Sea and the Aleutian chain, as well as the region north of the Arctic Circle. Funding support may be provided for projects involving the construction, improvement or expansion of facilities that meet certain criteria. To qualify, a facility must aid in development activities, meet emergency response needs or support an Arctic fishery. And work anywhere in the state that supports the development of an Arctic facility may qualify for funding assistance.

Money for the fund may be appropriated by the state Legislature, or may be transferred into the fund by AIDEA from another fund that the agency controls. AIDEA has discretion in deciding on which specific mechanisms to use for funding support. But support in the form of a loan may not exceed one-third of the capital cost of the supported project, and loan guarantees are limited to loans of up to $20 million.