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Alaska Legislature Considers Reeling In Rogue State Agency
By Hal Shepherd
Anyone familiar with the operations of the Alaska Industrial Development and Export Authority (AIDEA) should not be surprised that this shadowy state entity operates under the radar of the general public virtually without oversight and serves primarily at the behest of special interests. AIDEA is a State of Alaska public corporation, created in 1967 by the Alaska Legislature among other things “to increase job opportunities and otherwise to encourage the economic growth of the state, including the development of its natural resources, through the establishment and expansion of manufacturing, industrial, energy, export, small business, and business enterprises.” The agency is similar to a bank in that it provides loans and bonds and invests in projects to help finance the state’s economic development.
Not only does AIDEA’s corporate nature, however, not work as a public entity of the State of Alaska, but its flawed structure makes its decision-making intricately tied to the political whims of the administration currently in power. Each of the seven-member board of directors, including a Commissioner of Revenue, Commissioner of Commerce Community Development, and five public members, for example, is appointed by the governor without legislative confirmation.
Additionally, board members, who serve a four or five-year term, are usually representatives of the construction or extractive industry or have ties to them, and terms are supposed to be staggered, but members can be replaced at any time by the governor. In addition to a lack of diversity, board members often lack experience regarding the operations of a public agency.
AIDEA’s independent structure, therefore, allows it to fund its or other development projects without meeting federal or state planning requirements or obtaining approval from the legislature. At the same time, the agency uses its semi-governmental status to annually gobble up state subsidies that it spends almost exclusively on mining, oil and gas development and other resource extraction projects. This spending strategy, which has been called "the Governor's piggybank for his pet projects," is vastly different from similar state projects such as transportation that are subject to comprehensive legislative and public scrutiny.
Although AIDEA operates like a bank in lending and investing, there are also big differences between the agency and the private sector. These include the fact that businesses that receive loans from AIDEA pay lower lending and bonding costs and potentially receive less scrutiny than they would through a private bank or investor funding.
AIDEA’s decision-making process also undercuts accountability and focuses on rhetoric, public relations, and media hype rather than legitimate public involvement. Materials for board meetings, for example, are shared with the public just days before a meeting allowing limited time for review. Worse, members of the public who take the time to attend board meetings are given just two minutes to testify (about enough time to finish saying your name) and while the public can also send in written comments, the Board merely considers comments and is not required to respond to them. Finally, federally recognized tribal governments and organizational representatives have no special status as commentators from the public and are not allowed more time to provide testimony or an opportunity to consult on proposed decisions.
On the other hand, AIDEA Private Executive sessions are commonplace and often used as an excuse to invest funds in otherwise highly controversial projects. At the beginning of the COVID-19 pandemic, for example, AIDEA took advantage of the state-designated emergency declaration to rush through funding for the controversial Ambler Mine Road. According to the agency, the sudden infusion of $35 million to start fieldwork during the summer of 2020 on the road that would cut a 200-mile swath through the pristine Brooks Range foothills for access to the Ambler Mining District, was justified due to the coming economic emergency caused by the coronavirus pandemic. After holding an 8-hour executive session on the decision to fund the Road, Tom Boutin, AIDEA’s chief executive officer and executive director said: “The need for a quick start to work on the Ambler road justified emergency action, given the coronavirus pandemic-related economic crisis ensures that we won’t miss a minute of that 2020 field season.”
The fact that AIDEA has never met an extraction industry project that it doesn’t, like no matter what the environmental or economic costs, however, is illustrated by frequent bad and irresponsible investments. In fact, while several major banks recently adopted policies to divest in drilling in the Arctic due to concerns about climate change, the agency continues to invest, promote and actively defend such projects. While, due to potential difficulties of securing funding and its controversial nature, for example, other oil and gas companies avoided the politically charged and highly controversial oil and gas lease sale in the Arctic National Wildlife Refuge, AIDEA plowed right ahead, using states funds to be the high bidder on nine of eleven tracts. Then, when the Biden administration put a hold on the lease sale in order to provide for adequate environmental analysis of the impacts, AIDEA filed a lawsuit to prevent the administration from interfering with drilling.
In an effort to reform AIDEA, on January 18, state representative Andy Josephson introduced House Bill 271 that would make the following changes on how it operates including requiring:
That the five public members of the board and the Director be confirmed by the legislature;
That the public members of the board include a wider variety of sections other than just the extraction industry interests including representatives, tribal government, with experience in socially responsible investing, and with experience in renewable energy project development;
That the Board serve staggered 4-year terms instead of at the discretion of the governor;
Increased visibility and scrutiny, including public involvement in and local consent of all proposed investments over $10 million;
That the 25 to 50 percent dividend AIDEA pays to the state be increased to a minimum of 50 percent;
All proposed changes to regulations to include 30 days public notice and a written justification;
That members of the public be allowed at least two minutes to provide testimony on decisions and a written response of public comments be made available before voting on the action in question; and
The creation of a Regional Resource Advisory Councils.
While HB 271, therefore, would be a major improvement in how AIDEA operates, as written, it’s just the beginning of what is needed to fully reform the agency. The AIDEA is a rogue state agency that is operating outside of the law and out of reach of the general public it is supposed to serve. With the proper checks and balances, negative impacts to water and subsistence resources throughout the state could be avoided while serving the economic interests of the state.
WHAT YOU CAN DO:
Sign up to get updates on AIDEA Reform legislation at www.BadAIDEA.org. When legislative hearings are scheduled on the AIDEA Reform legislation, you can call in to testify in favor of the legislation and strengthening amendments. Ask legislators to amend HB 271 to require more public notice of meetings, longer comment periods, restrictions on meeting in executive sessions, and other standards to increase visibility and public involvement in Agency decision-making and investments.
You can also get information on upcoming AIDEA board meetings at www.BadAIDEA.org and call into or submit written comments to AIDEA board meetings to make your voice heard.