The island village of Kivalina, an Alaska Native community of 400 people the White House chose to highlight as a community at risk from rising sea levels, as seen from Air Force One as President Obama flies to Kotzebue, Alaska, Sept. 2, 2015. (REUTERS/Jonathan Ernst)

Two years ago this month, the Denali Commission and its 12 employees exploded into national headlines when its own watchdog declared that it should be put out of business. The inspector general told Congress that the tiny federal agency had lost its way and its budget and recommended it be deep-sixed.

For the economic-development commission based in downtown Anchorage, Alaska, it’s been a taxing two years.

[A federal employee tries to get himself and his agency fired]

The agency was subjected to a federal investigation and congressional inquiries about its mission. Its annual appropriation from Congress, which peaked nine years ago at $150 million, shrunk to $14 million. The inspector general, who wrote to Congress without telling his co-workers, quit abruptly after no small amount of bad blood was spilled between them.

This week the Denali Commission is back in the headlines —but it’s far from dead. President Obama tapped the agency on his two-day trip to Alaska to oversee his ambitious plan to save the largest state from the drastic effects of climate change.

[Read former inspector general Mike Marsh’s letter to Congress about the Denali Commission]

“We’re now on offense and we’re ready to play,” Joel Neimeyer, the commission’s federal co-chairman and effective executive director, said in an interview Thursday from his Anchorage office.

“It’s wonderful for us and fantastic for Alaskans,” he said. “We have a new assignment, a new life.”

The commission’s resurrection was unlikely. It was formed in 1998 as a pet project of then-Sen. Ted Stevens (R-Alaska) to help Native Americans in rural Alaska by building power plants, roads, offering job training and improving health care. It received millions in earmarks Stevens pushed through. Its role is as a middleman, administering federally funded grants to projects in bush communities.

[The photo that says more about Alaska than the president’s Instagram feed]

But after a little more than two years as inspector general, Mike Marsh sent a seven-page bombshell to Congress in the summer of 2013. He recommended stopping all federal funding to the little agency.

As our colleague David Fahrenthold wrote in September 2013, Marsh called his agency “a congressional experiment that hasn’t worked out in practice.” He laid out a case for abolishing federal funding (and his own job). Among his arguments: Some of the communities getting new power plants or medical clinics didn’t have the money to keep them going. He described the commission as an unnecessary middleman.

[Obama is using Alaska to add urgency to his climate change warnings]

Marsh’s plea was well received by some congressional Republicans, but not by Alaska’s powerful congressional delegation, which made sure the Denali Commission lived.

But it was more or less hanging by a thread. The Government Accountability Office began audits of Marsh and the agency’s management. After Stevens’ defeat in 2008 and death in 2010, the commission had lost a strong funding stream from Congress, which banned the earmarks known as political pork.

By the time Marsh was telling Congress to ax the commission, it was down to 11 full-time employees. The general counsel was just part time. The program director’s job was vacant.

“All of these thing were oppressive,” Neimeyer said. “They just seemed like impediments for the agency moving forward. Many good people believed in our mission, but people are still talking about what Mike Marsh did.”

Marsh did not respond to a call to his home near Phoenix, where he returned full-time when he quit in December 2013.

Early this year, the commission discovered that it had $2.5 million in grant money left over from last year. The commissioners started conversations with state environmental leaders and with Alaska’s lieutenant governor. Then in June, the governor’s office got a call from the White House. Would Alaska be interested in working with the federal government on short- and long-term programs to protect and repair coastal villages at risk from the warming climate? And would it help relocate some villages inland that wanted to go?

[The remote Alaskan village that needs to be relocated due to climate change ]

One thing led to another. The commission became the logical agency to coordinate government assistance, with $2 million in seed money from the pot left over from last year.

On Wednesday, the president unveiled a series of steps to fight climate change that put the Denali Commission front and center in a new role.

The agency will coordinate ”short – and long-term solutions” to mitigate the impact in 31 communities, a White House statement said. It called the commission a ”one-stop shop for matters relating to coastal resilience in Alaska” that will collaborate with state, local and tribal agencies working with the federal government.

The president also called on Congress ”to provide significant funding for the commission’s critical activities.”

Even the commission seemed surprised by the attention from Washington.

”I think that this is unprecedented to have a president of the United States mention the Denali Commission, ” commissioner Julie  Kitka told KNOM, a radio station in Nome, Alaska.

Neimeyer, a civil engineer who himself grew up in a rural village, said he envisions the commission as a “conduit between rural Alaska and the policymakers in D.C.” He doesn’t expect its budget to grow, but rather he hopes to work with federal agencies to identify projects to fight the effects of climate change.

“I don’t see us as growing big,” he mused. “I don’t see this as empire building.”

In the last year, the the commission secured a new inspector general from the Commerce Department, who was made official in July. A full-time general counsel (its first) and program director are in place.

DenaliCommission Acting Commerce Department Inspector General Dave Smith (left) and Denali Commission co-chair Joel Neimeyer sign an agreement in Washington this summer for a new watchdog (Denali Commission)

The coda to these unusual story is that last fall, GAO issued an unusually blunt audit of the inspector general’s office under Marsh. It found that he provided “limited oversight” of the commission’s projects, skipping some altogether. He had no annual work plan to document planned audits, provided “insufficient evidence” to support the conclusions of the audits he did and did not meet professional standards for inspectors general, auditors wrote.

“David is finding issues with us,” Neimeyer said of Marsh’s successor, David Sheppard. “I like it. IGs are supposed to keep you out of trouble.”