House Panel Advances $40M Community Impact Fund for Gas Pipeline

The House Resources Committee on Tuesday adopted an amendment establishing a $40 million community impact fund for municipalities affected by the Alaska LNG pipeline project, after first approving a conceptual amendment that increased the amount from $30 million.

The committee approved Amendment 27 by a 7-2 vote following adoption of a conceptual amendment by Co-Chair Representative Robyn Niayuq Freer. The fund would provide 25 percent of anticipated costs upfront to affected boroughs, with the remainder reimbursing actual documented costs related to pipeline construction.

"I will move Amendment 1 to Amendment 27 to, on line 7 after deposit, where it says $30 million, I would increase that to $40 million," Freer said.

Six boroughs would be eligible for the funding: North Slope, Fairbanks North Star, Denali, Matanuska-Susitna, Anchorage, and Kenai Peninsula. The amendment replaced earlier language requiring community benefit agreements with a specific impact fund structure.

Adam Prestidge of Glenfarne Alaska LNG expressed concern that the higher amount exceeds the project's economic modeling. The company had worked with borough mayors to develop the $30 million figure based on anticipated community impacts.

"That number we came to with support of our independent advisors who evaluated the expected tax implications, or sorry, impacts on this project," Prestidge said. "And so we are not supportive of this amendment."

Mark Begich, a contractor with the Governor's Office, said the higher amount could complicate ongoing negotiations with municipalities and create pressure to spend to the cap. "Anytime you put a number in, it discloses kind of where the cap is," Begich said. "So if you are trying to keep the project cost down in order to make the project work, you know, you want lower cost, but you also want real information from the different mayors on impact. And when you put a cap or a number, you are going to, we are going to spend that money. That is what is going to happen."

Begich also noted that a fixed fund could limit flexibility for in-kind solutions, such as using project equipment for community needs like road regrading, because the money would have to go into a cash account.

Freer defended the increase, citing significant impacts expected in Fairbanks and other communities that would require support for workforce training, housing, and public services.

Representative Sadler opposed the increase, warning that additional costs could jeopardize the project's economic viability. "I am just concerned that the AK LNG project can bear some extra baggage and I just want to make sure that we do not overload it at the front end to the point where it just becomes uneconomic," Sadler said.