Ending Juneau Access could mean penalty

An artist's rendering of The Road.

The Juneau Access Improvements Project has lasted a quarter-century and has cost millions of dollars. As the state’s fiscal climate shifts against the project, ending it could cost millions more.

 

According to a document dated Jan. 5 and released Friday by the state, ending the Juneau Access Project or the Knik Arm Crossing could require the state to refund the federal government tens of millions of dollars.

“Canceling the project without bringing it to a conclusion may result in the state owing the federal government all federal funds expended on the project,” states a document attached to a memo from Alaska Department of Transportation and Public Facilities director Patrick Kemp to Pat Pitney, director of the state’s Office of Management and Budget.

For the past year, the Juneau Access Improvements Project — intended to improve transportation among Juneau, Haines and Skagway — has been working to finish a final environmental statement and earn approval of the project from the Federal Highway Administration (FHWA).

In the last week of 2014, Gov. Bill Walker issued an administrative order directing “state agencies to halt to the maximum extent possible discretionary expenditures” for the Ambler Road Project, Juneau Access Project, Susitna-Watana Dam Project, Kodiak Launch Complex, Knik Arm Crossing and the Alaska Stand-Alone Pipeline Project.

Those megaprojects are six of the most expensive and controversial construction projects under consideration by the state as elected officials seek ways to cut spending amid falling oil revenue.

In his executive order, Gov. Walker directed the agencies behind the six projects to report by Jan. 5 all “discretionary funding obligations” that, presumably, could be cut. Walker’s order also directed the managers of the projects to report “potential costs to delay, suspend or terminate each contract or obligation.”

According to the DOT memo, stopping Juneau Access before FHWA issues its “record of decision” could force the state to refund some or all of $25.7 million in federal funding that has been spent on Juneau Access to date. It might also force the state to restart the environmental assessment process if it later decides to go ahead with Juneau Access.

“Delaying the project post-ROD would be less of an issue with FHWA,” the DOT memo states.

Under federal rules, the state must start construction within 10 years after FHWA issues its record of decision. Extensions to that timeline are allowed, and the state could under some scenarios shelve its Juneau Access plans for 20 years without penalty.

Grace Jang, spokeswoman for Gov. Walker, said the governor’s administration is evaluating the new information and no decisions have been made.

Even with a penalty, Juneau Access opponents say the cost savings are worth the project’s cancellation. The cost to complete the state’s preferred plan for Juneau Access is $578 million.

“In the report, Commissioner Kemp attempts to hide (the) fact that cancelling the megaprojects will save billions of dollars,” wrote Emily Ferry of the Southeast Alaska Conservation Council (SEACC) in an email.

SEACC was one of the leading organizations behind a lawsuit that prompted the state to revise its environmental assessment of the project.

• Empire reporter Katherine Moritz contributed to this report.

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