Federal infrastructure bill proposes billions of dollars for Alaska highways, ferries, broadband and sanitation projects

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Aug. 4—The $1 trillion infrastructure bill under consideration in the U.S. Senate contains billions for Alaska projects, including top priorities like ferries, road construction and sanitation.

State and local officials, as well as others familiar with Alaska's infrastructure, said they're still reviewing the 2,700-page proposal. But several interviewed Tuesday identified sections of the bill that pay for needed projects or address areas in need of funding.

"It makes a difference, it moves us forward, and hopefully significantly," said Nils Andreassen, director of the Alaska Municipal League.

"There will still be this real scramble to figure out. How do you prioritize everything? It probably ends up being something of a limited resource," he said.

The bill came together last weekend with a bipartisan compromise that included Democrats, Republicans and President Joseph Biden. Sen. Lisa Murkowski, R-Alaska, was one of the key figures behind the bill, and she added several Alaska-specific provisions.

Alaska would receive billions under the current version of the bill to fill potholes and build roads, support the ferry system, improve water and sanitation systems and improve broadband capacity — among other projects.

Some of the details of the measure could change. The bill is still being amended and needs to pass the Senate before it moves to the U.S. House. Advocates say it would make historic investments, upgrading the nation's infrastructure, while Republican critics say the bill is too costly.

The state has a long list of deferred maintenance projects, and Alaska received a C- grade for its infrastructure, according to the Infrastructure Report Card, as noted in the spring as part of the White House's American Jobs Plan.

Here's a rundown of what's in the bill for Alaska:

Water and sewer

For villages, cities and boroughs, Andreassen said, water and sewer infrastructure is the top priority. The Alaska Department of Environmental Conservation has said the state needs at least $1.8 billion to provide adequate drinking water and sewage service in rural Alaska. That figure doesn't include the needs of urban areas such as Ketchikan, Kodiak and Anchorage, Andreassen said.

The infrastructure bill contains over $180 million for the state, an amount that will be spread across five years. Rural Alaska villages also will receive a share of $3.5 billion designated for Indian Health Services facilities nationwide. That amount would also be spread across five years.

Road construction and repair

About $3.5 billion would be provided over five years in Alaska to build, repair and maintain roads and highways, a statement from Murkowski's office said.

The measure should provide $225 million in Alaska to address more than 140 bridges considered to be "structurally deficient."

And it will allow federal money to be used on a portion of the Alaska Highway in Canada, between the border and Haines Junction, and the highway that goes from the junction to Haines in Alaska.

The Department of Transportation and Public Facilities is preparing to take advantage of funding opportunities in the bill that will improve Alaska's infrastructure and provide construction-related jobs, said Andy Mills, a spokesman with the department.

"In advance (of the bill's possible passage), the department is preparing internally for any infrastructure funding from D.C. so that our state is positioned to capture and utilize those funds to the greatest extent possible," Mills said in an emailed statement.

Support for tribes

Murkowski, who was part of a 10-member group of Republicans and Democrats that helped create the proposal, said the measure includes various provisions to allow Alaska's tribal governments to receive funds.

In an interview on Tuesday, she said infrastructure funding is often focused on urban areas, but she made sure that rural areas where tribes are often located also received a lot of attention in the bill.

Nationally, tribes are eligible for about $2 billion through the Tribal Broadband Connectivity Grant program and another $1 billion is available for middle mile broadband Infrastructure grants.

About $215 million will be available over five years to help tribes adapt to climate issues, she said. Of that, $130 million is for community relocation, which can help Alaska villages where land is eroding as temperatures warm.

About $150 million will be available to tribes involved in cleaning up old oil and gas wells, such as the federal wells drilled decades ago on the North Slope, Murkowski said.

Ferry service

The bill creates a five-year, nationwide subsidy for ferry service in rural areas. The subsidy, which Murkowski said she added to the bill, is about $200 million per year, but it isn't clear how much of that money will go to the Alaska Marine Highway System.

In the fiscal year that ended June 30, the ferry system had a budget of $108 million, paid for by the state.

The bill also changes federal law so the Marine Highway System can use federal highway-aid money to pay for operations and repairs. The exact amount of ferry funding will still be set by the governor and Alaska Legislature.

"You still have to get it through the political process ... to direct any money to the Marine Highway," said Sen. Bert Stedman, R-Sitka and a supporter of the ferry system.

He speculated that any federal money could simply replace what the state already spends, rather than boosting service beyond what exists.

"It doesn't necessarily mean it's going to be an additive to existing operations. It could be a supplantation," he said.

He would prefer additional service, particularly to Prince Rupert, British Columbia, a port dropped from the ferry schedule.

Most of Alaska's state ferries were built decades ago and are due for replacement. Under the Dunleavy administration, plans for a new oceangoing ferry, useful for routes to Kodiak and the Aleutians, have been repeatedly postponed.

The bill provides $570 million over the next five years for the construction of new ferries and ferry terminals nationwide.

Another separate section allocates $250 million for a test program to build electric or "low-emitting" ferries that pollute less than a traditional ferryboat. The bill says at least one grant under the test program must be distributed in Alaska.

Beyond that program, another change says the federal government will pay 85% of the cost of a new ferry — up from 80% — if the new ferry emits less pollution than the one it's replacing.

Airport funding

As for airports, the measure includes $15 billion to support airport improvement projects and air traffic control towers nationally.

About $5 billion will be available in grants for a new Airport Terminal Improvement Program, with some of the money set aside for small, rural airports, Sen. Lisa Murkowski's office said in a statement.

Alaska owned and operated 237 airports as of 2019, most in rural Alaska, according to state figures.

Mining and the gas pipeline

The measure supports development of critical minerals that are needed for renewable energy infrastructure, such as graphite used in lithium-ion batteries.

Some $6 billion will be available for battery processing and manufacturing, including grants for processing facilities that make materials for renewable batteries, according to Murkowski's office.

This could benefit firms that are looking to produce and refine battery materials such as graphite and rare earth elements in Alaska, Murkowski's office said.

Projects to develop critical minerals will also be eligible for federal loan guarantees, to help them secure financing, as well as more efficient permitting timelines.

A representative of Graphite One, a minerals prospect in the Nome region, said the bill's focus on batteries for renewable energy could help reduce America's dependence on foreign countries for critical minerals.

The bill "is the next step towards a strong U.S. technology sector," said Anthony Huston, chief executive of Graphite One, based in Canada, in an email on Tuesday.

The measure also ensures $18 billion in loan guarantees is available for the $38 billion Alaska LNG project that seeks to tap long-stored natural gas from the North Slope for delivery in Asia.

The Alaska Gasline Development Corp., which is developing the project, supports that provision and will be looking for funding opportunities in the bill, said Tim Fitzpatrick, a spokesman for the agency.

"We are certainly supportive of this provision and we are watching the legislative process as it unfolds," he said.

Sen. Dan Sullivan, R-Alaska, is still closely reviewing the bill to make sure nothing in it will harm the state, officials in his office said. He has not yet taken a position on it.