HEX Cook Inlet, LLC and Subsidiaries presents a check to the Alaska Industrial Development and Export Administration in October of 2023. (Photo courtesy of the Alaska Industrial Development and Export Administration)

HEX Cook Inlet, LLC and Subsidiaries presents a check to the Alaska Industrial Development and Export Administration in October of 2023. (Photo courtesy of the Alaska Industrial Development and Export Administration)

My Turn: The Legislature should rein in AIDEA

This story has been updated to correct the photo caption, which originally stated AIDEA was presenting a check to HEX Cook Inlet, rather than the company presenting it to AIDEA.

The Alaska Industrial Development and Export Administration (AIDEA) is second only to the Alaska Permanent Fund in raising cash, but only a fraction of its earnings flow into the treasury. Instead, it has a long history of funding projects favored by politicians that fail spectacularly.

In FY2022 AIDEA had a net balance of $1.4 billion, while it contributed only $17.9 million to the state treasury.

AIDEA’s board of directors is appointed by the governor and is not subject to legislative confirmation. This unelected board is pushing ahead with a 211-mile road to access mining claims along the Kobuk River that a draft Environmental Impact Statement estimates will cost nearly a billion dollars over a 50-year period.

The Ambler Road faces opposition from Alaska Natives who live near the proposed mines, lawsuits filed by well-funded conservation groups and other difficulties. Importantly, the proposed mining operations are still in the exploration phase and are not licensed to mine. (See “Alaska development agency deserves scrutiny from lawmakers” in the Alaska Beacon.)

Another current AIDEA project, the 100-mile West Susitna Access Road, also is moving forward without active mining partners. AIDEA is promoting the West Susitna Road as a boon to recreational activities, something not in its charter. The road will cost $350 million to build.

Gov. Dunleavy inserted a request in the state’s five-year road plan to funnel a total of about $64 million of federal funds and almost $7 million in state matching funds for building the West Susitna Access Road between 2024 and 2027. The five-year plan is currently on hold by the federal government. The governor also inserted $24 million for road construction in the pending capital budget.

Both road projects are classic examples of putting the cart before the horse.

A real head-scratcher has been AIDEA’s successful bids in the Alaska National Wildlife Refuge (ANWR) when no major oil companies purchased exploration leases in December 2020. The only private companies to submit bids were very small companies with no Arctic oil experience. The companies later withdrew their bids.

“To date, AIDEA has spent $12,802,615 on the Section 1002 Area leases, which includes the initial bid amount, the first-year lease payment that was due with the bid amount, and a small processing fee,” according to an AIDEA press release.

These examples are a drop in the bucket when examining AIDEA’s history with “special projects.”

Two reports by three very experienced Alaska economic specialists, Gregg Erickson, Ginny Fey and Milt Barker, examined 26 AIDEA projects. Here’s Erickson in an opinion piece in the Anchorage Daily News in response to AIDEA’s criticism of the reports:

“Still, it’s no surprise that AIDEA doesn’t like our report. We found that Alaska would be $10 billion richer – or Alaskans could have received thousands more in the Permanent Fund. We documented that since AIDEA’s inception, the majority of its 26 projects have either produced no new jobs, floundered or gone bankrupt.”

Dismantling the agency is not a good option as it has a very successful loan program catering to Alaska businesses and certainly it can be an important tool in expanding our economy. However, it is clear AIDEA should be making wiser business decisions regarding its “special projects” and can contribute more to the state treasury.

One idea is to require AIDEA’s “special projects” to go through the capital budget process where they will get better vetting and more public scrutiny, but this probably would require changes in statutes. Requiring AIDEA to contribute more to the state treasury would require the legislature to pass a bill.

An independent performance audit might be a good first step.

• Rodger Painter can trace his Alaska roots to 1798 when an Alutiiq woman married a Russian trader in Kodiak. He is a former journalist, legislative staffer and has played a major role in the Alaska seafood industry. He now is retired and lives in Douglas.

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