STIP Amendment #1 partial approval resolves ten of 14 corrective actions.

(ANCHORAGE, Alaska) — The Alaska Department of Transportation & Public Facilities (DOT&PF) concludes the 2024 federal fiscal year with the successful delivery of over $1B of transportation related projects. This includes over $650 million in federally funded highways projects, over $300M in federally funded aviation projects, and many other projects funded through the State of Alaska capital budget.

“Overall, as in previous years, we obligated every federal dollar available to us on transportation projects” said Dom Pannone, Alaska DOT&PF Program Management and Administration Director. “Our team successfully obligated $662 million in Federal Highways dollars alone, despite the fact that the August Redistribution amount approved by FHWA was lower than recent years.”

In addition, STIP Amendment #1 partial approval was received this week. Five railbelt projects were excluded, including the Richardson Highway MP 346 Bridge project that was determined in March to meet federal regulatory requirements for exemptions from air quality conformity analysis. This was confirmed March 8, 2024, by interagency consultation facilitated by FAST Planning and comprised of experts from DEC, EPA, FTA, and FHWA. The project currently resides outside the MPO boundaries but within the air quality non-attainment area. DOT&PF will be evaluating this finding, among others, with federal partners.

Another 18 rural projects were excluded, which were all discretionary grants applied for by Tribal, village or other rural entities. This exclusion does not mean that the projects will not move forward, but rather FHWA’s preference for where the projects are listed. Whenever the directions from the federal government are not clear, the department will err on the side of caution, including discretionary grants in the STIP to avoid the project not being able to advance. The exclusion provides the clarity the state and local sponsors need to move forward.

Partial approvals have not been used in the past but are becoming more frequent for FHWA to communicate expectations to the State’s STIP team in writing to formally codify the new expectations with Alaska.

“We want to thank our federal partners for working with us over the past six months on successfully delivering Alaska’s transportation program in 2024,” said Commissioner Ryan Anderson. “Alaska’s unique challenges and opportunities require careful consideration of the State’s role in sovereignty in advancing infrastructure decisions, in coordination with federal, state, and local partners, in the last frontier.”

The Alaska Department of Transportation and Public Facilities oversees 237 airports, 9 ferries serving 35 communities, over 5,600 miles of highway and 839 public facilities throughout the state of Alaska. The mission of the department is to “Keep Alaska Moving through service and infrastructure.”

# # #

  dot, funding, highways

In a first-of-its-kind ruling, the Alaska Supreme Court said Friday that the COVID-19 pandemic does not qualify as “physical loss” or “damage” under common commercial insurance policies.

The decision likely means that insurance companies will not have to pay most claims related to business losses caused by COVID-19.

The ruling came in response to an unusual “certified question” request from Alaska’s U.S. District Court. All 49 other state supreme courts have considered similar questions about COVID-19 liability, but until Friday, Alaska’s had not. 

“Even with our insured-friendly approach to interpreting insurance contracts, we conclude that neither the presence of the COVID-19 virus at an insured property nor operating restrictions imposed on an insured property by COVID-19 pandemic-related governmental orders is ‘direct physical loss of or damage to’ property. ‘Direct physical loss of or damage to’ property requires a tangible or material alteration of property,” wrote Justice Susan Carney on behalf of the court.

The court’s decision, rendered unanimously, has major financial implications: If the court had decided differently, the ruling could have allowed businesses to collect millions of dollars from their insurance policies to cover the costs of COVID-mandated closures and health restrictions. 

In an amicus brief, the American Property Casualty Insurance Association said insurance premiums would rise as a result if insurers were required to pay out more. 

The Supreme Court was asked to rule after Baxter Senior Living filed suit two years ago against its insurance company, Zurich American.

Baxter operates a senior home in Anchorage and spent money to enact anti-COVID procedures that also limited its operations. Local anti-COVID rules also restricted its operations. The company filed a claim in 2020 with Zurich American, but the company denied the claim. 

At the time, Zurich American said Baxter’s policy covered “direct physical loss of or damage to” property, and it argued that “(n)either the mere presence of the COVID-19 virus … or any generalized threat from its presence constitutes the ‘direct physical loss of or damage to’” Baxter’s property under the policy.

Baxter challenged the denial in state court, and the insurer moved the case to federal court, which then asked the Alaska Supreme Court to decide whether the presence of COVID-19 constitutes “direct physical loss” or “damage” to property, and whether governmental orders pertaining to COVID-19 also constitute that loss or damage.

“Our answer to both questions is ‘no,’” Carney wrote in Friday’s published order.

Explaining at length, the order says that meeting the policy’s standard language requires “a physical alteration of property,” and COVID-19’s presence on a surface doesn’t alter its property.

“An analogy between the COVID-19 virus and water illustrates this point,” Carney wrote in Friday’s order. “COVID-19 is to property what water is to a plastic sheet: water does nothing to a plastic sheet but at most, it stays on it or attaches to it. But water transforms, alters, or changes the state of dry paper into a wet “mush” or makes it much easier to tear.”

“We conclude that ‘direct physical damage’ requires physical alteration of property. But because COVID-19 does not physically alter property and merely attaches to it, the presence of COVID-19 on property does not constitute ‘direct physical damage.’”

Friday’s order marked the first time since 2021 that the court had been asked to consider a certified question from the state’s federal court.

With the question resolved, the case returns to federal court for further proceedings.

Alaska’s highest court ruled against the City of Soldotna on Friday in the city’s long standing annexation case. The decision sends the city back to the drawing board in its efforts to bring more central Kenai Peninsula residents into Soldotna’s boundaries.

Soldotna City manager Janette Bower says Alaska Supreme Court’s ruling is disappointing.

“It’s, you know, not the decision we wanted, but you know, of course, we’re going to always respect the Supreme Court and then we’ll review to see what other options may be available to us and whether we will continue to pursue the annexation,” she said.

The Friday ruling caps more than five years of work by the city to annex about two-and-a-half acres of land in Ridgeway, Funny River and Kalifornsky into Soldotna city limits. And it has implications beyond Soldotna — it sets a new precedent for how the Alaska Local Boundary Commission can advance those types of petitions.

“No other municipality has had to, basically, take the decision to a vote,” she said. “ … It’s usually done, you know, by unanimous decision by LBC. So This is, you know, uncharted territory, and part of the reason why we did appeal is because it could have an effect on other municipalities in the state.”

The ruling’s rooted in a 2020 decision by the Alaska Local Boundary Commission to send the city’s proposal to voters amid opposition from residents living in the areas proposed for annexation.

The city says annexing the properties will allow the city to grow and more equitably distribute the cost of city services like road maintenance among properties that benefit from them. But property owners who oppose annexation say they intentionally chose to live outside city limits, so they wouldn’t be subject to Soldotna’s laws.

On a 3-2 vote, local boundary commissioners amended Soldotna’s petition. The amendment made annexation contingent on approval by voters in the city and in the areas proposed for annexation. That’s instead of making it contingent on approval by state lawmakers. It was the first time the commission amended a petition in that manner.

The city wanted the decision to go to the Alaska Legislature. So it appealed the commission’s decision, as well as the superior court ruling that affirmed the commission vote.

Throughout the appeal, Soldotna’s lawyers have argued that the commission acted outside its authority, that the decision was inconsistent and that the underlying regulation was invalid. Here’s Bower again.

“Our argument is, and continues to be – as it states in the decision that we argued – that the commission’s constitutional obligation is to make decisions about municipal boundaries apart from the political process and local self interest,” she said.

In Friday’s ruling, though, the Alaska Supreme Court said the Local Boundary Commission “acted within its statutory grant of authority and had a reasonable basis for converting the petition.”

It will ultimately fall to Soldotna City Council members to decide how the city should move forward. That could include submitting a new annexation petition.

“What are we going to do next?” Bower said. “I can’t tell you what we’re doing next, because we don’t know, you know, just a few hours into the decision, we’re not quite sure of what that will look like, but we’ll be putting that all together for a report to the council and making a decision.”

A full history of Soldotna’s annexation efforts is available on the city’s website at soldotna.org/government/annexation.