In a major development for the state’s transportation infrastructure, the Alaska Railroad Corporation (ARRC) has been awarded a $249 million federal grant to complete the long-awaited Port MacKenzie Rail Extension.
The funding announcement was made by U.S. Senators Dan Sullivan and Lisa Murkowski, Congressman Nick Begich, and U.S. Department of Transportation Secretary Sean Duffy. Provided through the Federal Railroad Administration, the landmark investment will support the construction of 32 miles of rail to connect Port MacKenzie’s deepwater port facilities directly to the Alaska Railroad’s 500-mile main line.
“We made history in Palmer yesterday,” Gov. Mike Dunleavy said of the investment. “I want to thank Secretary Duffy, his staff and the Trump administration for prioritizing this critical infrastructure project. This will go a long way to unlocking Alaska’s resources.”
Once completed, the new transportation corridor will bridge Southcentral and Interior Alaska. It aims to enhance links between maritime shipping, rail transit, and industrial development while bolstering domestic energy projects and supply chains.
The total cost of the rail extension project stands at $311 million. The $249 million award will be supplemented by a $62 million non-federal match that consists of in-kind contributions from the Mat-Su Borough alongside cash contributions from the Alaska Industrial Development and Export Authority and the Alaska Railroad Corporation.
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In announcing the investment, U.S. Transportation Secretary Sean P. Duffy said Alaska serves as a “natural resource powerhouse” but requires robust infrastructure to move materials safely. Duffy attributed the momentum behind the new rail line to Alaska’s congressional delegation and President Trump, adding that it will “unleash American energy dominance, and enhance our national security.”
The announcement follows months of coordinated advocacy. On July 21, 2026, Senator Sullivan led a joint letter from the delegation supporting the ARRC’s funding application. Shortly after, in August, FRA Administrator David Fink conducted an aerial tour of the Port MacKenzie right-of-way to view completed embankment work and assess the area’s industrial capability. With funding secured, local, state, and federal partners are prepared to advance the final phase of construction.
