HRES-260505-0800

Hi, this is Doug calling from the LIO for sound check. This is microphone 1. Good. Microphone 2.

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Mic 5. Good. Mike-6. Good.

Mike-7. Good. Mike-8. Good.

Mike-9. 9'S good. Number 10.

Good. All right, and 11. Good. Secretary Mike? Good.

All right. Thanks, Doug. Oops. All right. Have a good meeting.

Bye. Thank you. Good morning, Dan. Hi. Good morning.

Good morning. The— this meeting of the House Resources Committee will now come to order. It is now 8:07 AM, Tuesday, May 5th, 2026, in Capitol Room 124. Members present are Representative Kloom, Representative Hall, Representative Mears, Representative Prox, Representative Elam, and myself, co-chair Representative Daibert. Let the record reflect that we have a quorum to conduct business.

Please take this time to silence your cell phones for the duration of the meeting. Thank you so much. I would like to thank Jordan Nicholson from Records and Renzo Moises from the Juneau LIO this morning for staffing the committee today. Good morning.

So today in House Resources, we will take up House Bill 381 and start with a presentation by the Department of Revenue on House Bill 381. Next, we will take up consideration of the governor's two, two appointees to the Board of Game, one appointee to the Big Game Commercial Services Board, and one appointee to the State Assessment Review Board. I would like right now to invite Dan Stickel and Brandon Spanos from the Department of Revenue to the table— Dan Stickel from the Department of Revenue to the table to give us an updated presentation on House Bill 381. Good morning. Please state your name and begin your presentation.

Hi, good morning. Dan Stickel, Chief Economist with the Department of Revenue. Do we have— I must not have opened up the right email. Do we have a copy of the presentation? Yes, we will get— yeah, Representative Proks.

Okay, we will get that to you. Thank you, Sarah.

We will get that to you momentarily.

Okay, thank you. Please begin your presentation. Again, Dan Stoeckl for the record, and I think Acting Director Spanos just gets his name on the presentation. So thank you, Mr. Spanos. So I have a list of acronyms we like to include at the beginning of these presentations on slide 2 for reference.

And so what we're going to do here today for the— we're going to walk through our understanding of the proposed legislation and then what we see is the revenue impacts. So we had done an analysis on the version G of the committee substitute, and then we We had worked with the Committee staff to get an understanding of what Version H— of potential amendments that were forthcoming to the bill. And so what we have put out here is our understanding of the forthcoming Committee substitute. We will walk through our implementation costs and detailed project modeling for the Committee Version as we understand it.

So starting on slide 5, a disclaimer. So again, we are working on our preliminary interpretation of the bill and how those provisions would apply to our spring revenue forecast and our baseline AKLNG model. And then as I mentioned here, based on the version G of the committee substitute, with additional modeling requests that we received from committee staff over the weekend.

So on slide 6, what would this bill do? So the, the core, the core tenet of the bill is to create a framework for exempting the Alaska liquefied natural gas project from state property tax and potentially from some municipal property tax, and then providing an alternative mechanism for receiving revenue from that project. So the specific impacts for Department of Revenue that we'll walk through is there's conditions around project eligibility for the exemption and alternative tax. There's provisions around municipal optionality for some components of, of the tax and how those municipalities receive revenues. There is the property tax exemption itself and then an alternative volumetric tax in lieu of the property tax for the pipeline component of the project.

Thank you, Mr. Stickel. And for the record, I'd like to welcome Representative Sadler at 8:10 a.m. All right, so moving on to slide 7. So note on the revenue impacts, we are showing an indeterminate a fiscal impact of this bill, and that's based on the uncertainty of whether the AK LNG project proceeds, um, both before the tax relief and then with this bill implemented. And to note that we are looking at— through the presentation, we're looking primarily at the direct impacts of the bill, but there's also indirect impacts to to revenues beyond just the revenues from the project itself.

There's impacts on the municipalities and then further economic benefits and costs for the state and municipalities.

Before we— thank you, Mr. Stickler. Representative Prox, on this slide? Yes. Thank you, and maybe you'll get to it, but are you also looking at the potential revenue from the sale of gas and other things that are happening on the North Slope? Representative Prox, through the chair, yes.

So we're including the, the revenue impacts from the project itself as well as the revenue impacts to the, the direct upstream impacts for, for gas production and oil production into the project. The fiscal note itself is very focused focused on the project-specific revenue impacts, but then we do have a broader analysis that looks at those additional upstream impacts. Thank you. Thank you, Representative. On this slide, Representative Mears.

Thank you through the Chair to Mr. Stickel. So I'm very much there that we are a little indeterminate. Places where revenue is going to come from is, is more known. We just talked about the broader what happens, what happens on the North Slope. Then once you get into the project on the upstream end with the producers, if we've got— we've got the project is looking at contracts from the producers, call it a dollar an MCF, and then there's royalty and production tax off that.

12.5%, 12.5%. So a quarter. You've got the pipeline portion, which is what's in front of us today. And then once— so those are the two direct impacts that we've got now. And then there's two more pieces once you get out there.

One is if we take an equity stake, and that's a completely different subject we haven't really gotten into. And then the other one is the income that 8 Star Alaska gets with their structure with the three corporations for the gas treatment plant, the pipeline, and the LNG facility. So I see those as the buckets of where that revenue is coming from, and we're just dealing with that pipeline piece and the ABT at the moment. Sure. Representative Mears, through the chair, and yes, you're correct.

We understand the sources of revenue, and we've laid out scenarios. Most of the analysis lays out a scenario assuming that the AK LNG project goes forward under, under any scenario. In our original fiscal note for the bill as introduced, we had a positive revenue impact shown on the fiscal note that reflected a modeling assumption that the project would not proceed under the current law scheme and would proceed under a— the tax reduction proposed by the governor. We've decided to change that to an indeterminate for these— basically for all of the iterations of these fiscal notes to reflect the uncertainty. We at Department of Revenue can't say with certainty at what point the project does and does not go forward.

We can only lay out the scenarios and leave, you know, leave that decision to the developer who would be the one to comment on at what point would a project go forward or not go forward. And so that is what the indeterminate refers to. Follow-up? Okay. Follow-up.

Thank you. Through the Chair to Mr. Schickel. I am confident you know where the potential sources of revenue are, but I want to make sure that we both in the room and, you know, anybody watching is clear about, you know, what is potentially out there and then that piece that we are just looking at because we are really in 381 just looking at a small section of the project. Thank you for—. Sure.

And Representative Mears to the Chair, I have detailed charts of state revenue coming up in the mid-20s in terms of slide count.

Thank you, Rep. Mears. On this slide, Representative Sadler. Thank you, Madam Chair. And just to follow on that, Mr. Sickel, the first point is that the revenue impact is indeterminate. It's important for people to understand this is not hard numbers.

This is indeterminate. Can you give me any subjective estimation as to how reliable these numbers could be, or what the major factors are that's going to impinge on the determination? What issues— what are the big variables here? Sure, Representative Sadler, through the chair. So the biggest source of uncertainty is whether the project goes forward.

You know, at what point— at what point does— is the state's tax base the state and local tax burden so much that it does not— that it causes a negative final investment decision, and at what point does that turn into a positive final investment decision. So we can't say that with certainty. Other key areas of uncertainty are the final project cost. We have an assumption in there, and, you know, we can run sensitivities around that. And then what is the purchase price of gas into the project?

From the producers. So those are two of the key uncertainties if you assume that the project goes forward, and we've presented sensitivity matrices around those two assumptions in particular. Thanks. Okay. Thank you.

Please proceed.

All right. Moving on to slide 8. So this— the bill sets eligibility conditions To be eligible for the property tax relief and the alternative tax, the project developer must commit to entering into community benefit agreements with every community within 50 miles of the project. The project developer must commit to setting aside a portion of project revenue for community impact payments, and they must commit to entering into a project labor agreement. And they must commit to construction of a Fairbanks spur that would be constructed before full export operations begin from the project.

Okay. All right. Thank you, Mr. Stickle. And for the record, I would like to welcome Co-Chair Freer to the Committee. Good morning.

Please continue. All right. Moving on to Slide 9. Some more information around the in-state gas requirements and the eligibility conditions. So this— the project must include a Fairbanks spur line sufficient to meet demand, constructed before Phase 2 full LNG export operations begin, connect to local infrastructure, deliver gas at the lowest reasonable cost.

Related costs must be shared system-wide. So that means that the Fairbanks spur line costs are not borne by the Fairbanks residents alone. They're shared among all buyers of gas. And then the project itself must be designed to maximize in-state use of natural gas.

Please continue. All of these eligibility conditions would be signed off on before for granting the property tax relief and making the project eligible for the alternative tax.

Please continue. And so on to Slide 10. So assuming the project meets those eligibility criteria, the tax exemption for the entire project, gas treatment plant and pipeline and LNG facility, would be exempt from state property taxes. Currently, the LNG facility is not taxed at the state level, so this exemption would be adding the exemption for the treatment plant and the pipeline. The bill would exempt the pipeline component from municipal property taxes, and as the default, the existing municipal property tax would continue to apply to the gas treatment plant and the LNG facilities.

The bill would set up an election for municipalities. They may exempt the treatment plant and LNG facility by passing a local ordinance. And then if the municipality chooses to make that exemption, they may negotiate for an ownership interest in lieu of property tax. There is no alternative volumetric tax for the treatment plant or LNG facility in this version of the bill. Bill.

And these exemptions would repeal if commercial operations do not, not commence prior to 2030. So that sets a very hard deadline for the project developer to get gas flowing through the project to qualify for the tax exemptions.

Moving on to slide 11, as far as the revenue impact goes, so our Official revenue forecast does not include revenue from the AK LNG Project to be conservative. So there is no revenue impact for state revenue compared to our official forecast for passing this legislation. For information, if the project were to proceed without tax modifications, the current law property tax revenue to the state would be about $25 million initially. In 2029, ramping up to $244 million by 2033. And then we also include the current law property tax to municipalities there for a total property tax burden of— on the project of about $50 million in 2029, ramping up to nearly $500 million in 2033.

Representative Sadler. Thank you, Madam Chair. Just on slide 11, I think it's important to state for the record that if the project were to proceed without tax modifications, that's what we hear clearly from the project managers and developers is that this project will not proceed without tax modifications. So to my mind, calculating what the revenue might go to municipalities and the state without tax modifications is hypothetical and not that useful. I just want to make sure people don't understand that.

We're not forgoing this money. It won't happen without the tax modifications. Thank you, Rep. Sadler. Representative Mears. Thank you through the chair to Mr. Schickel.

Just confirming the assumption in 2033 means, I believe, either $3.3 or $3.5 billion— dollar— million cubic feet a day, which is a full Phase 2. Representative Mears, through the chair, that is correct. Thank you.

And to the comment from Representative Sadler, so you add these two numbers up and in 2033 we are looking at a total property tax burden if the project were to go forward of nearly $750 million per year. And so that is the burden that is being reduced through this legislation.

Yeah, uh, Representative McColloch. Thank you, Chair. So, um, on the numbers for the gas treatment plant and LNG facility, is that based on a 20 mil property tax as it is right now? Uh, Representative McColloch, through the Chair, yes, that's the— that's what those would pay under the 20 mil property tax if the project went forward. Okay, thank you.

Representative Hall. Thank you. Through the co-chair, Mr. Stickell, I find this slide to be helpful because everything being what it is, it's, it's helpful to have something to relate to. Like, everything's relative, and having this understanding of what that tax burden is, or what it— just when it comes to future discussions, I find it to be helpful. So thank you for having this slide for us.

Yep. Representative Elam. Thank you. Um, it is, it is good to see some of the information here. I'm just curious if we have any data out there, and I'm not trying to send you down a rabbit hole of digging, but just, you know, if there's anything that comes to mind, um, where we have infrastructure out there that is taxed at this full rate, or do we generally have tax exemptions and at what level?

Some of those infrastructure projects out there we've done before in the past? Representative Elam, through the chair, so in general, the full 20 mils rate applies to all oil and gas property in the state. Thank you.

Please continue.

All right, so slide 11 laid out the current law if the project were to go forward. Slide 12 discusses the alternative volumetric tax. So An alternative volumetric tax would apply to the pipeline component only under this bill, beginning with first commercial production. So there is no ramp-up period or throughput threshold. Basically, once gas starts flowing, the alternative volumetric tax would apply to the pipeline, and that tax would be 15 cents per 1,000 cubic feet of throughput for the pipeline.

There would be an annual inflation adjustment every year based on a 5-year average look-back of inflation. I should note the bill has a technical concern around exactly how that 5-year look-back is worded in the language, but, you know, based— talking with committee staff, the intent is to do a 5-year average. Inflation with an annual adjustment period.

Moving on to Slide 13. So the state would levy and collect that alternative volumetric tax, and 50% of the tax would be shared proportionally with the municipalities along the pipeline route based on miles of pipe. So what percent of the pipe miles are in your municipality, we share that percent of of the tax with you. The state would retain the unorganized borough portion of that mileage-based sharing, and then the other 50% of the alternative volumetric tax would be distributed to all communities across the state on a per capita basis. So every community in the state would receive some benefit from this tax revenue.

In all, about 81% of the revenue from the alternative volumetric tax would be shared with municipalities, with the remainder retained by the state for its share of that 50% share that is in the unorganized borough.

And then all of the provisions of the alternative framework are scheduled to sunset in 2046. And so once we get to that, 20 years from now, current law would— the full 20 mills property tax would apply. So the The tax reduction and benefit are really for the initial startup period for the project, roughly aligns with the period that is going to be debt financed for the project. Okay. Thank you, Mr. Stickel.

I think I missed a question on Slide 12 from Representative Mears. Thank you through the Chair. So my understanding is a little bit different. Different, and maybe I'm missing a piece and something happens after a ramp-up period, but I'm looking at page 7 of the House version of the alternative volumetric tax, and we've got 5 cents for the gas treatment plant, 5 cents for the pipeline, and 10 cents for the LNG plant. And then, from the conversations we have been having last Monday in Committee, there will actually be required a Phase I gas treatment plant.

And I don't have on the record, but have had conversations with Matt Kissinger from AGDC that even though a portion of what would be coming through a Phase I gas treatment plan would actually, you know, go through the plant. The entire volume should be considered treated since any bid that doesn't go through the gas treatment plant doesn't meet spec. So, um, when we're looking at the actual implementation, there is a gas treatment plant component that would be included, and I think that's work that we still need to that I've taken on and haven't done yet to verify that that Phase I Gas Treatment Plant fits in the definition of what we've been thinking about as the Phase II Gas Treatment Plan as well. And I don't know if we might need any parsing of any definitions of that and phasing that out with— if we do have a different economic treatment for the different components of the pipeline.

So that's where my understanding is, and I don't know if there's clarification from the, from the co-chairs on my understanding. Um, I have, uh, Co-Chair Freer, do you want to respond? Yes, please. Um, thank you. Through the co-chair to Representative Mears, this is not what's currently in the bill, the House version of the bill, but this is one of the amendments that I'm proposing.

And so we asked DOR to model this based on 15 cents based off of my— an amendment that we'll be seeing later on today. Oh, that helps my clarification. Thank you.

Thank you, Co-Chair Freer. Representative Sadler. Thank you. Following up on Representative Muir's comment, I had presumed that the Phase 1 pipeline would require no gas treatment. We've heard from HGC that it would be non-utility grade gas that would go in at first.

But you've probed and found out, Representative Pierce, that there is going to be some treatment required. And so I also don't have clarity as to how much that's going to be, how much cost, and therefore how much foregone revenue if we don't tax gas treatment in phase 1. So that's an issue that does remain to be addressed, and thanks for bringing it up.

Uh, Mr. Stickell? Sure. So kind of two, two kind of lines of questioning there. So the first is, what are we modeling? So yes, we were working with committee staff over the weekend modeling our understanding of what the future bill might look like.

Originally, we thought that that was going to be in the form of a new committee substitute. Now it sounds like it's going to be a comprehensive amendment to the existing committee substitute. So what we have modeled is our understanding of what the bill would look like with that amendment adopted.

And then to the, to the other line of questioning around potential for gas treatment for Phase 1. So yes, in our initial AKLNG project modeling, we had considered the potential that Phase 1 gas, which would be the, the lower throughput with gas to Alaskans, that that could potentially be delivered without a requirement for treatment. There was an announcement about potential supply from the Great Bear Pantheon field. That's a very high-quality gas that that would not need to be treated, to be— it basically comes out of the ground utility quality.

Since then, it's appearing less certain that that gas source would be available, and so we've identified other potential gas sources for Phase 1, the potential to tap Prudhoe Bay and Point Thompson, which are the Phase 2 sources, as well as Northstar or other fields potentially for that initial Phase 1 gas, but those would require treatment. So those come out of the ground with 4% or more carbon dioxide content, and that needs to get down to about 2% carbon dioxide content for— to be utility grade for Phase 1. In our modeling, we are now assuming that there will be treatment costs associated with, with Phase 1. We don't have detailed numbers around the economics of that. We have assumed a similar per-MCF treatment cost as for the full project.

We— and again, AGDC has not told us that that's an unreasonable assumption, so that's what we've baked into our modeling. Exactly how that would be implemented is, is something that still needs to be determined. So is there an initial portion of the full gas treatment plant that's built? Is there a smaller gas treatment plant? Is there some sort of modular facilities?

Is the treatment perhaps carried out on the lease? Those are details that, that would have to be, have to be worked out. This bill currently would make no changes to the tax for gas treatment.

Okay, and on this slide I have a question from Representative Elam.

Thank you. And Representative Mears kind of hit on something that I may have missed somewhere along the way with the sort of the tiering of the— was it 5-cent, 5-cent, 10-cent? What was that? Representative Mears. Thank you.

Through the Chair to Representative Elam, our current version G on page 7 has that tiered structure, which I guess we're looking at amendment to remove that tiered structure. Okay.

And Representative Mears, can you repeat the 5-cent, 5-cent just for— Yes. Through the Chair to the Committee, on page 7 of Work Draft G, we've got 5 cents for each 1,000 cubic feet of natural gas transported through a gas treatment plant or carbon capture facility, 5 cents for the same quantity through a gas pipeline, and 10 cents for the same quantity processed by a liquefied natural gas plant. And so if I may follow—. Yes, follow-up, Representative Elam. The removal part was the— so it's still there, it's just it's Okay, I— it's in the amendments.

Okay, okay, thank you. That's a good background as we head towards amendments this afternoon. Yeah, so thank you, Mr. Stickell. All right, so we had been on slide 13, and so we can move on to slide 14. So given the 15 cents per MCF alternative volumetric tax— now these AVT numbers, they will scale, so if you wanted to understand the impacts of a different alternative rate, it's a— it would be a linear scale in our model.

But at 15 cents per, per 1,000 cubic feet, we assume a $10 million revenue in 2029. That's the start of the Phase 1 commercial operations, and then that would increase to nearly $200 million by 2033 when the full project export operations are ongoing. Again, as I mentioned earlier, 81% of that would be shared with municipalities. Unrestricted general fund revenue to the state would be $2 million in 2029, increasing to $37 million in 2033. And there is an annual inflation adjustment thereafter.

And we were asked by committee staff to also include a metrics at $0.12 per MCF alternative volumetric tax.

Okay. Representative Sadler. Thank you, Mr. Chair. And so this assumes that the start of Phase 1 is the 1 billion cubic feet a day, Mr. Zuckerman?

Representative Sadler through the Chair. Phase 1 is like a— it's 160— I think it's 165 million cubic feet per day for in-state gas. It's 65 billion cubic feet per year is the Phase 1 throughput. So you're— follow up here. So you're assuming that the start of Phase 1 operations will be 165 million cubic feet of gas per day?

Representative Sadler, through the Chair, roughly off the top of my head. Roughly, okay. And I will ask maybe where in the bill that is because I thought it was— my understanding of when Phase 1 would be operating would be at the trigger of $1 billion, but okay. And Rep. Sadler, it looks like we have a follow-up from Co-Chair Freer that might help. Co-Chair Freer.

Thank you. Through the Co-Chair to Representative Sadler, just as a So what we asked them to model is at first gas. So this would not be at 1 billion MCF or this would not be 10 years or 6 years. This is just— we asked them to model what it would look like at first gas. Appreciate that.

It is important we clarify the terms because some assumptions in terminology. I was assuming Phase 1 meant something, but I appreciate that precision. And I really, Chair, appreciate the dialogue back and forth. Forth. It helps eliminate a lot of aspects of a complicated bill.

That's very helpful. No, it's a, it's a complicated bill, so all of this discussion is worthwhile. And I appreciate the slideshow, Mr. Stickel. It's very helpful. Sure.

And just to add a little bit to Representative Sadler's question, we were asked a similar question in a committee last month, and in our April 27th response letter to the committee and presentation to go with that, we presented Some information around that. It was question 4 of that April 27th response document where Representative Sadler had asked us to model some different tax structures. I believe it was Representative Sadler looking at different throughput thresholds. The original bill from the governor set a 1 billion cubic feet per day threshold for the alternative volumetric tax, so there would be no alternative volumetric tax during Phase 1, and then it would kick in essentially upon full export operations for the project. Um, and to confirm, yes, we assume 165 million cubic feet per day throughput for Phase 1.

In our modeling, we have that coming online in 2029, a similar amount, and then 2030, and then exceeding that 1 billion cubic feet per day in 2031. And the full 3.5 billion cubic feet per day threshold in 2033. The, the bill before the committee with the proposed amendment added that we were asked to model does not have a throughput threshold. So as soon as first gas flows in 2029, we are modeling that that would be subject to the alternative volumetric tax.

All right, thank you. And before we move forward, Mr. Stickel, we have— there is a committee after us at 10:15, and so we will have to wrap up at normal time at 10:00 a.m. And so we have about 20 minutes left in this presentation so that we can get to governor appointees. So sorry about that, please proceed. And we will try to get through. I will work as quickly as I can.

Okay. Just for committees.

So moving on to implementation costs on slide 16. So we are requesting 4 positions to fully implement the provisions of the bill. This bill would require us to— we would still need to do appraisal work for property tax around the AK LNG project. That's a significant additional workload. And since the gas treatment plant and LNG facility— well, LNG facility is only taxable at the municipal level, but since the gas treatment plant is not exempted, we are requesting an additional position for that.

We're requesting an additional tax auditor to administer the new alternative volumetric tax. We're requesting an oil and gas revenue specialist to support valuation and audit work related to major gas sales and new regulations, and then a commercial analyst to increase our analytical bench related to gas-related issues.

Rep. Sadler. [FOREIGN LANGUAGE] Comes up. I understand the legislation exempts the project from the tender mercies of the Oil and Gas Property Assessment Council. I think I've got that name right. Is it— I don't know if the administration's representative can indicate why that is the case, and it may look as though we are duplicating expertise.

In oil and gas property appraisal. Is it at all possible to rely on the existing expertise in that appraisal review board? Uh, Representative Sadler, through the chair, our property tax group is— cannot take on more work. They are stretched absolutely to the limit. And follow-up, and that's why I say we do have an existing, you know, appointed structure which has responsibility for doing some of that.

Is it possible for DOR to reach outside your department's structure and ask for help or support? Representative Sadler, through the Chair, so certainly bringing on contractors is an option that we could look at. My question was whether the existing appointed Property Tax Appraisal Board could be helpful or used. It is—. Yeah.

Yeah. Representative Sadler, through the Chair, so I'm not intimately familiar with how the Appraisal Board works. My understanding is that they are more of a review board, that we do the actual appraisals in DOR. But, you know, certainly, we can reach out to the members of the board as we are implementing this and do it as efficiently as possible. All right.

Please continue. Thank you. All right. Moving on to Slide 17, so we are including a a capital request of $500,000. That's an estimate for our contract with our tax revenue management system contractor to implement the provisions of this bill.

Primarily, the, the new alternative volumetric tax would be set up as a new tax type within Department of Revenue.

And slide 18. is just a snip of those annual costs and the capital cost from our fiscal note. So a little over $800,000 per year ongoing for the 4 positions, and then the capital cost for the system upgrades.

And Mr. Stickell, before we move on, I'd like to welcome Representative Fields at 8:45. —Am.

All right. And then we have a few slides for detailed project modeling. These are similar slides to what we've presented previously in the committee.

Just to reiterate our key assumptions, so we're modeling 30 years of full export operations, 32 years of LNG sales in total. We're assuming a 46% $6.2 billion construction cost for the project and $1.50 per thousand cubic feet gas purchase price for the contract— for the project. And then, as I mentioned earlier, we are now assuming that Phase 1 production comes from a non-Great Bear field that requires gas treatment, and then Phase 2 production from Prudhoe Bay and Point Thompson as the anchor fields. We're assuming no net impacts to oil production at Prudhoe Bay. That's a significant assumption.

We're assuming a net increase of 270 million barrels per day of liquids production at Point Thompson over life of project. So the assumption there is that Point Thompson makes significant expansions to supply gas to the project that would not otherwise be undertaken and that we get oil production along with that. Representative Sadler. Thank you, Mr. Chair.

For the record, I think Mr. Stickle said we'd get liquid production of 270 million barrels per day. I don't think you meant per day, did you? Representative Sadler, through the chair, no, $270 million over the life of project. For the record, I want to clear that. Thank you.

Thank you, Representative Sadler. Representative Fields. How much does it change the assumptions if the construction costs are $57 billion or some, you know, sort of reasonable inflationary adjustment since those numbers were first developed? [Speaker:COMMISSIONER MAY] Sure. Representative Fields, through the Chair, we include some sensitivity analyses on that on slide 28 and 29 that might be helpful and happy to run any additional scenarios you'd like to see.

Please continue. All right, so slide 21. So what we've done here is we've laid out 3 different scenarios: the current law scenario, if the project were to proceed under current law; House Bill 381 as introduced by the Governor; and then our understanding of what the committee substitute will look like after that that amendment that was communicated to us. And each of these scenarios assumes that the project goes forward under the scenario for comparison purposes.

So slide 22, this is a slide that you've seen before, shows the current tax law summary with a in-state, given all of our assumptions, an in-state breakeven price of $4.86 in 2033, and then an LNG price into the global market of $9.07 in 2033. And for, for reference, current futures market prices for global LNG are in the $8 to $9 per thousand cubic feet range, looking out into 2033.

Representative Prox. Yes, just, you're getting ahead of me. You mentioned a bunch of numbers that I am not seeing on this sheet. Could you go over that a little slower, please? Representative Prox, through this chair, so I was referencing the bottom line numbers in the gray shading for cost of supply on slide 22.

In nominal 2033 terms, the end-state cost of supply would be $4.86 per thousand cubic feet, and the LNG breakeven price delivered into the global market would be the $9.07 per thousand cubic feet. And I mentioned those as kind of the key numbers to compare between the scenarios, and then they're also the numbers that we reference in our upcoming sensitivity matrices. Thank you. Okay, yep. Representative Sadler.

Briefly, and just describe, Mr. Tickle, the break-even price. I see that term here in many places. That's a term we're going to use a lot. What is that break-even price? What's on one side?

What's on the other? Sure. Representative Sadler through the Chair. So we are— the way our modeling is set up is it's set up as a— basically from the viewpoint of a tolling model from the developer's standpoint. And so assuming that the developer is purchasing gas for $1.50 per 1,000 cubic feet on the North Slope, assuming that they are funding the $46.2 billion pipeline— now there's an assumption that that's 70% debt, 20% equity— and assuming that they are targeting a 10% pretax rate of return, that is an assumption, What would they have to sell the gas for to break even with their 10% rate of return?

And that's what my point is, including that 10% return. Did you say 80/20 or 70/30? Representative Sadler, through the Chair, it's a 70/30 debt-to-equity split assumed. Thank you very much. Okay.

Thank you for that. Please— I have a question. Co-Chair Freer. Thank you. Chair, to Mr. Stickgold, is it possible that you could model that for us at a project not at $46 billion but at $57, $58 billion?

Sure, Representative Freer, through the Chair. So I have some sensitivity matrices coming up on slide 28 and 29 and happy— again, we are happy to run any additional sensitivities that the committee would like to see. Okay. Thank you. Please continue.

All right, slide 23 is the similar slide for House Bill 381 as introduced by the governor. And again, kind of zeroing in on those costs of supply, it would reduce the, the cost for Alaskans from the $4.86 to $4.43 per thousand cubic feet for breakeven. And it would importantly reduce the cost to into the global market from the $9.07 down to $8.48.

And then slide 24 is our preliminary modeling of the committee substitute, again with that proposed amendment adopted. It would be a tax reduction, but a smaller tax reduction than proposed by the governor. And so the, uh, The, the cost of supply would go from $4.86 under current law to $4.76 under the bill for in-state, and then for into the global market, it would drop by 11 cents from $9.07 down to $8.96 per thousand cubic feet in 2033. Thank you. Uh, Representative Fields, um, I would assume the Department of Revenue could also do an analysis of what these costs would be at an in-state level where you're not having the benefit of exports, because there's a very significant chance that if the project succeeded, there might not be significant exports.

Therefore, we would essentially be paying for it. What would the price level be? And my understanding is it's probably somewhere in the range of $20 per MCF, and it would just be good see that laid out, just because we can't assume that we will reach full export volume or even any meaningful amount of export. So just understanding the price range for Alaskans that we're looking at would be beneficial. Sure.

Representative Fields. Thank you. Representative Fields to the chair. So we presented some analysis of what is the cost to Alaskans if the project does not go forward. I know we've presented some of that in this committee.

We've presented some of it in the other body. We'd be happy to provide that to the committee. We have not yet put that Phase 1 only analysis together for this committee substitute as proposed, but that's something that we could add as well.

Thank you. Please continue.

All right. Moving on to Slide 25, so these are some charts again that We showed before, Slide 25 shows annual state revenues from the AK LNG Project by year and by the various sources of the revenue, those being property tax, both from the project itself as well as from additional upstream development, corporate income tax from additional upstream development, royalties from the gas sold into the project as well as additional oil production. And then the net impacts to the oil and gas production tax. And so slide 25 was these revenues by year if the project were to go forward under current law. And slide 26 was the same chart with House Bill 381 as introduced by the governor.

And then slide 27 was the same chart with the committee substitute and the adopted amendment. And so you can see some slight reductions to state revenue in the first 2 years of, of the project as we're anticipating significant upstream investments, and then revenue positive to the state beginning in 2031. And once the full project is in operations, around $800 million per year benefit to the to the state in most years, assuming the project goes forward. And these do not include the municipal revenues from the project.

Representative Sadler. Thank you, Madam Chair. I need to clarify. This says, Mr. Sickel, slide 27 includes adoption of amendments. I want to clarify which amendments we are speaking of and how much of this is speculative, because some amendments haven't passed yet.

Please clarify what exactly you are modeling here. Vis-à-vis amendments to this G. Yeah, and to answer your question, Co-Chair Freer. Thank you. I, through the co-chair to Representative Sadler, we asked them to model Amendment G.36. So—.

And only—. Yes, with the 15-cent first gas. And that was on slide— we could get that slide for the 27. Thank you, Rep. Sadler. Okay, uh, Representative Fields.

Um, through the chair, a couple of questions. I can't tell with the blue whether that is diminished. Through the chair, production tax revenue 2029 through 2031 And if so, where is that coming from? And then is the drop in production tax in 2020-38 from Point Thompson, or could you give a little more detail about potential downside risk on production tax? Sure.

Representative Fields to the Chair. So we are assuming significant capital expenditures at Point Thompson to make the significant expansion of that field to deliver gas into the project. As well as increased oil production. We're also modeling out some additional expenditures at Prudhoe Bay for gas-related costs. And so the reduction to state production tax for those first 4 years represents the impact of those lease expenditures and the production tax calculation.

We do have a net profits-based tax for the North Slope. I'd be happy to go into in any level of detail. I should note that over the first decade, the— well, before the first decade, but that production tax net impact to the state becomes positive fairly quickly once gas sales begin. Can I ask a follow-up? Follow-up?

Through the chair, I want to understand it's net positive to the state when gas sales begin. Is that contingent on a large volume of gas going through the pipeline, or is that true even if the volume is fairly low and it's primarily delivering in-state? And then I also wanted to ask you, could you provide that additional detail on Point Thompson and Prudhoe Bay units, um, respectively? I assure— Representative Field to the chair— so we'll follow up with, uh, the details on the Phase 1 only production tax impacts and exactly where that goes net positive. You know, a point there is going to be the significant expansion of Point Thomson to deliver the volumes of gas needed for the full project.

That probably does not happen unless there's a final investment decision for Phase 2 of the project. Ah, okay. Thank you. Representative Egan. Thank you.

As we get into the— I think it's what, 2052, you start seeing a slope and decline, and then it looks like those last two bars kind of start to stabilize back out again.

Why the— why the decline later on, and then where does it go farther out? Sure. Representative Elam, through the chair. So looking into those later years, there's really a lot of that is kind of an extrapolation. We do have a full volume of gas assumed from Prudhoe Bay and Point Thompson in the modeling.

Once you get into the later years, we have some— we call it yet-to-find gas in the modeling. Importantly, looking at the oil production impacts, we're layering the project on top of our spring revenue forecast. And again, once we get into the 2050s to 2060s, that's a bit of an extrapolation, but the official spring revenue forecast does have, um, oil production numbers dropping down pretty significantly, and associated with that is rather high netback costs. And so once you get out into the 2050s, again, in our extrapolation modeling, the value of additional oil production starts to drop because we're forecasting that that's less valuable given high transportation costs. We produce a— in terms of oil production, we produce a 10-year official forecast.

DNR gives us a 20-year forecast, and we extrapolate to decline rate trends beyond those 20 years. So the— from the— beyond the 20-year time horizon gets to be more speculative. Okay. And Representative Mears. Thank you.

Through the Chair to— I think Representative Belen, but the committee— another factor for 20 years is that's how long the contracts are LNG exports. So there's lots of things, I think, that start piling up at that, at that 20-year time frame. And I, I think we, you know, want to think about, you know, if we're having that level of production, we're having that level of, of sales continue. But, um, yeah, the further you look out, the fuzzier and fuzzier things get. But reducing, um, reduction in production is something that I don't know that we think enough about in declining gas and oil.

So things look good in the short term when things are bright and shiny and new, but what do we do with those declines? What's our plan for later? So just additional future planning. Sure. If I can comment real quick to Representative Mears through the chair.

So the hope and the expectation would be that there is oil yet to be found, oil and gas. Companies are actively exploring. We don't count those chickens before they're hatched, but the expectation and hope would be that this exploration ongoing currently results in new fields that would be contributing to the forecast. And so once we get into the— that 2050 time frame, it would be reasonable to assume a more stable source of revenue to the state.

Representative Sadler. There's a lot of numbers thrown around in consideration of this bill and this project, and a question I want to clarify is I've heard LNG contracts go for 20 years. I've also heard for 30 years, and I don't doubt that there's some that go 20, some 30. But what is the industry standard? Should we count on LNG export contracts being for a 20-year term or a 30-year term?

Representative Sadler, through the chair, I would defer detailed discussion of LNG contracts that are being negotiated to the operator and AGDC. Our assumption, which we did work with AGDC on, is that initial contracts would be over a 20-year time horizon and that that would roughly align with a 20-year debt horizon. So the project would be looking at 20-year contracts, 20-year financing, 20-year modeling. We've We've extended the model out to look at 30 years to incorporate some of what happens after those initial contracts. But— Thank you for that clarification.

—Defer that to the developer. Do you have a follow-up? Follow-up on that question. Yeah. Rep. Elam.

I appreciate the conversation. So it sounds like really a lot of it starts getting more fuzzy, more speculative as we get farther out. I mean, I appreciate that.

When we start talking about the, the gaps. So I noticed that the property tax declines at a faster rate than the royalty one does, um, but at least it kind of looks proportionately like, you know, the gray stays larger than the light blue for, for longer. Is there a reason royalties stay higher than the production tax?

Representing Elam through the chair, so more stable, I should say. So in general, royalty is going to be a more stable revenue source than production tax because royalty is based on gross value, whereas production tax has element— has a net and gross. So Production tax tends to be more volatile and more sensitive to price. Does it suggest then that the volume might be still higher, just that the production tax might be lower?

Representative Elam to the chair, I guess I'd need to understand exactly which, which years we're looking for. Um, it's fine, it's far enough out that it doesn't really matter, but I was just curious. Thank you. Thank you, Representative Young. Probably just a high-level— thank you.

Representative Hall. Thank you, Madam Co-Chair. Mr. Stickell, a few minutes ago, I just— I need some clarification because I don't think I understood your comments correctly. Did I hear you say when you were talking about the significant capital expenditures at Point Thompson in order to get the gas out, did I hear you right when you said It likely does not happen unless FID is reached for Phase 2. Representative Hall, through the chair, yes, that would be, that would be a speculation.

So we're assuming that Point Thomson owners will invest multiple billions of dollars to expand that field to bring online the volumes of gas needed for the second phase of the project. Follow-up? Follow-up? Through the co-chair, thank you very much, Mr. Sickles. So it's not that— it's not that those significant capital expenditures wouldn't impact Phase 1 because those capital expenditures to deliver gas for Phase 1 would be smaller.

Am I understanding that right? Sure. Representative Hall, through the chair. So my comment there was to the question from Representative Fields about what would those what would the net reductions to production tax be over the initial years of the project in a scenario where only Phase 1 happened and the full export project did not happen? And my comment there was that those reductions to production tax in the first 4 years of the project are driven by our assumptions around those Point Thompson lease expenditures and how those would impact the production tax.

And that it is unlikely that the operators of Point Thompson would expand the field so significantly without a final investment decision on Phase 2. Understood. Thank you very much. Thank you, Madam Co-chair. Thank you.

And just a time check. It's 9:06. We do have 3 appointees to hear from this morning before 10:00. So please proceed, Mr. Stickel.

Representative— or, Commissioner Dibert, so I have 2 more slides of content and then a conclusion slide and then happy to answer any other questions. Excellent. Let's do that. Thank you. So slide 28 and 29 are break-even matrices.

These are similar to what I've presented in the committee before. So slide 28 looks at the price for in-state gas, and then slide 29 looks at the price for export gas delivered into the global market. The top two sensitivity matrices are the same as what I presented previously, which show current law and a House Bill 381 as introduced. And then the bottom matrix shows our understanding of the committee substitute with that amendment 36 adopted. And so the way these matrices are set up, just to reiterate, is on, on the top we have a range of upstream gas prices.

This is the price paid to the, the producers for the gas. Our baseline assumption is $1.50 per thousand cubic feet, and then we have a range ranging from $1 to $5. And then looking at capital costs, On the left-hand side, our base assumption is the $46.2 billion of capital costs, and we present increments of potentially higher capital costs. This gets at some of the questions earlier about what if the project costs more than $46.2 billion, and we range those all the way up to 100% higher capital cost. And so under To look at this, for the in-state price of gas to utilities, under current law, we would assume a $4.86 breakeven.

Under the bill as introduced by the governor, it would be $4.43. And under our understanding of the bill before the committee, it would be $4.76. So these are the prices to utilities. Prices to end consumers, you can add a little over $4 to these amounts.

Yes, Representative Sadler. Thank you. I want to clarify that. So you just said, so looking at the $4.76 and the CS version under base CAPEX of $4.76, that's the price we would expect utilities to pay for the gas, or I think you said we need to like double that, add $4 for the consumers? Sure.

To Representative Sadler, through the chair. So we've, we've set this up from, from a project economics viewpoint. And so we're looking at what is the cost of supply to utilities would be the $4.86 or the $4.76 under this bill. We did another analysis in the other body where we looked at how does that utility price translate into price to the end consumer. Looking at— we were looking at Instar in particular, and looking out to 2030, it was a little over $4 is what we're extrapolating for their cost of service, so their distribution and infrastructure rate of return and whatnot.

Okay. And to put a point to that—. Rep. Sadler. Again, base case, $4.76. $8.76 Compared to about the $14 per MCF that the NSTAR is paying right now.

So this is even just an in-state break-even, so it's a significant cost advantage to ratepayers under this CS version. Glad to clarify. Thanks.

Yes. Representative Sadler, through the chair, if the full project goes forward, it's a significant reduction in cost to Alaska.

And to reference that exact number, we assume— we were assuming an estimated delivery cost of $4.36 per 1,000 cubic feet in 2033. That was based on slide 14 of an analysis that we presented to the Senate Resources Committee last week. Thank you. And we would be happy to provide that to the Commission. This committee as well.

Thank you, Mr. Stickel.

So slide 29 is the similar sensitivity matrix but looking at the breakeven price of LNG delivered into the global market. And so again, current futures market prices looking out into the early 2030s are in the $8,000 to $9,000 per thousand cubic feet range, which is demonstrates the marginal nature of, of this project competing to get that gas into the global market. And so we show what would that breakeven price for the developer need to be under, under current law as proposed by the governor, and then under this bill with the various gas purchase price and capital expenditure cost sensitivities.

Representative Kluhm. Thank you, Chair. Okay, so, so at the bottom, when we look at the version, the 381 version that we're dealing with, the base capex is $896.50. It seems like— so if we're— where it sounds like we're competitive around $9, $8 to $9, or $9 to $10. It doesn't seem like this has as much, um, cushion for, uh, over— cost overrun.

So if you go down plus 20, plus 40, you start— if I'm understanding this right, it starts to— we're not really competitive in the global market after— if we go over the overruns 40% on the overruns. Am I understanding that right? Yeah, Representative Colon, through the chair, so the bill before the committee is a smaller tax reduction than the bill as proposed by the governor. So the alternative volumetric tax on the pipeline is higher than what the governor had proposed for the alternative volumetric tax on the entire project. We've added in the cost of the Fairbanks spur line, and then the gas treatment plant and the LNG facility are still subject to municipal property tax.

So yes, the governor's original proposal would make the project more competitive than the bill before the committee. Yeah, and a follow-up, uh, follow-up. Yeah, so I was just looking at the chart before. If we're looking at the gas prices, as Rep. Sadler said, we could we could actually have a lot of cost overruns and still provide cheap gas to Alaskans. But here, I mean, to me, it's really important that we're competitive with the global market.

And so this doesn't give us a lot of room. Even the Governor's bill doesn't give us a lot of room, more room, I guess, for cost overruns. But we get up into the $10 and $11 range. A little faster. So thanks for the clarification.

Sure. And Representative Kolum, to the chair, so the, the low in-state prices are contingent upon the full project, okay, and the ability of us to— basically, we're shipping so much volume into the, into the global market that the costs of operation are spread across so many billions of cubic feet of production that we're able to offer a very low cost of supply to the end-state residents. Great. And a follow-up. Follow-up.

Yeah. So if it was just the pipeline and we didn't export, then we would see those costs to Alaskans go way up. We're depending on that export. So what we— Rep Fields had mentioned before, you know, the end-state costs, we've heard it could be up to $20. That's a scenario where we're not exporting, right?

Uh, Representative Kolumbu, through the Chair, that's correct. Okay. Thank you. Okay. And just to clarify, um, these numbers in these models assume a 10% rate of return for project investors?

Uh, Co-Chair Daibert, that's correct. We assume a 10% pre-tax rate of return. Representative Sadler. Thank you. Yes, and that's kind of the price at which this is marketed globally.

I want to caution us against thinking we can squeeze that rate of return down and try and achieve a project. But there's an impression I want to make sure that we are giving correctly to the public. Looking at charts 28 and 29, it looks as if the in-state gas, just Phase 1, is a better deal resulting in lower prices. We're then looking at $4.76. And I want to make sure that's not the proper interpretation of this.

Looking at LNG, you know, basically doubles the capital cost of the whole project. And, uh, which it looks like, oh, we can get gas at $8.96 or we can get it for just $4.76. Why is that not a fair interpretation of this? Please make that clear for the record. Sure.

Representative Sadler, through the chair. So both slides 28 and 29 assume the same upstream purchase price of the gas. They assume the same full project construction cost. They both assume that the full project goes forward, including the export gas. The difference is that for the in-state gas analysis, we are accounting for the cost of gas treatment and the cost of the pipeline.

For the export gas, we're assuming— accounting for the cost of the LNG export facility. And so the delta between The difference between the numbers on 28 and 29 represents the added cost for the LNG export facility. So we assume that the LNG export portion of the project is borne entirely by the LNG exports. Gotcha. Thank you.

Okay. And please wrap up, Mr. Stickler. All right. I have one last slide. Conclusions on slide 30.

So, uh, AK LNG project has the potential, uh, to be, uh, really a game changer for the state of Alaska, uh, tens of billions of dollars, uh, for the state, federal government, local governments. Um, and then, uh, beyond that, enhancing, uh, energy security for the state and the nation, uh, creating thousands of jobs. Um, the bill as introduced, House Bill 381, was a material decrease to the cost of gas. That would make the project more attractive to investors. The version before the committee is a tax decrease overall, but not to the extent of the original bill as introduced.

The bill before the committee also provides some significant benefits for communities that were not in the original version of the bill.

That's all I have. All right, thank you so much. This was very helpful. Thank you for your time, and if there are further questions, just reach out to myself or my staff and we could help get those answers to you. Thank you, Mr. Stickler.

I'm going to go ahead and take a brief at ease as we transition. Brief at ease.

All right, back on the record here for House Resources. We will now turn our attention to our governor appointees. We will start with the members of the Board of Game. The Board of Game is made up of 7 members appointed by the governor and confirmed by the legislature, each serving 3, 3-year terms. The board's primary role is to conserve and manage Alaska's wildlife by setting hunting seasons, bag limits, and regulations, while the Department of Fish and Game carries out day-to-day management based on those decisions.

So first off, Stanley, aka Stosh Hoffman, has been a member of the Board of Games since 2008, and if reappointed, he will then serve his 7th term. He currently lives in Bethel and is an experienced guide. Mr. Hoffman is joining us via Teams, and I will not ask him to put himself on the record and be— I will ask him to put himself on the record and make in his statement. So Mr. Hoffman, if you could hear us.

Yeah, hello, good morning. This is Stosh Hoffman. Can you hear me? We can hear you. Okay, I'll proceed.

Yeah, Madam Chair. Yeah. Okay, good morning, House Resources Committee and members of the House Committee. It's not— it's an honor to be be here before you today. For the record, my, my name is Stanley L. Hoffman Jr., and, and like you stated, everyone calls me Stosh.

I'm a lifelong Alaskan, born in Bethel. I grew up in McGrath, and I currently live in Bethel now, where I've lived for the last 30 years, where my wife and I have raised our two sons and, and my nephew. We enjoy a subsistence lifestyle and all that it has to offer out here in western Alaska. I am a former assistant guide, all my guide activity took place in 19B Bravo. However, my assistant guide license expired in 2017.

I am also a commercial fisherman, well, but commercial fishing hasn't took place in my region since 2007, but I do hold a lower Kuskokwim, Kuskokwim Bay limited entry permit since the late 1980s, and it's my hopes that commercial fishing will return someday. I was also— I was appointed to the Board of Game by Governor Palin in 2008, and I've been reappointed since then.

So Alaska has the best public wildlife management process in the world. I've enjoyed my time on the Board of Game over the years, and I feel— I still feel I have Alaska has a lot to offer. I look forward to serving if I am reconfirmed to help manage and conserve the amazing game populations in this great state. And I look forward to continue working with the, the Aces Department, general public, other stakeholders, and other Board of Game members to help manage Alaska's wildlife resource. And I appreciate your consideration for reappointment.

Thank you, Mr. Hoffman. Questions from the committee?

Representative Sadler. Thank you. Through the chair, Mr. Hoffman, I respect your long years of service, but I do have to ask the question.

No one's indispensable forever. What do you— what do you have any concerns about having served on the board for so long that it's kind of hard to question your own qualifications? Is your experience still worth keeping on compared to maybe getting someone with a new perspective on things? It's difficult to envision your own determination aboard, but explain for me why such a long-term service is still beneficial to the board and to the resources.

Well, thank you for the question. Um, yeah, it is, um, there's pros and cons, I agree, um, but, uh, right now we You know, there's a lot of things that we've had been in play for a while now, and I'd kind of like to see how these things work out here, or at least be part of the process to see, to help it get to a better place.

And, you know, its longevity has its assets. It's several times my role as the board again. We get to a place that we've been before, and it's— I think it's helpful to convey or articulate to other board members that how this type of situation was handled before, or what, you know, those types of nuances. So, um, yeah, thank you for the question. I think it, um, I think it, I think it helps more than it hinders.

I had to ask. Thanks. Thank you, Mr. Hoffman. And we have a question from Representative Elam. Thank you, Mr. Hoffman.

I appreciate your, your service and willingness to serve again. I guess the, the question that I have is, how do you balance access to resource management? In Alaska here, we have such a tough time with, with access. Much of our of the state is inaccessible short of using a plane or a boat, but yet many of our citizens and folks here in Alaska want to be able to access these resources. So how do you balance wildlife management with access?

[Speaker:JAMES] Thank you for the question. That is a good question.

All areas of the state are different. They have their different challenges. As a board member, I like to listen to the public and see— they come up with the best ideas and ways to do that. But the department has ideas, so we listen to everyone and see if we can come up with the best idea to help all Alaskans get to the resource. All right.

Thank you, Mr. Hoffman. And Representative Kulum. Uh, thank you, Mr. Hoffman, for your years of service. So, um, I see on your resume that you did say yes if you had been convicted of a misdemeanor or felony. Can you say if that was related to Fish and Game in any way?

You don't have to tell me— I didn't know if it was a violation regarding anything around fishing and hunting. It did not.

Okay. Thank you. Thank you, Mr. Hoffman. Seeing no other questions, thank you, Mr. Hoffman, for being here this morning, and we're going to move on to our next appointee.

Okay, we'll now move on to David Loring. Mr. Loring was appointed to the Board of Game in 2023, has lived in Fairbanks since the mid-'70s. Mr. Loring worked with the Alaska Department of Public Safety as a wildlife trooper, but now works as a commercial pilot. Mr. Loring is joining us over the phone. Mr. Loring, would you please put yourself on the record and begin your statement?

Yes, good morning. My name is David Loring. For the record, I live in Fairbanks, Alaska. And I welcome members of the House Resources Committee. I have a short statement, about a minute and 30 seconds, if that's okay.

I'll go ahead and start that. Please proceed. I like that. Yes, I'm a member of the Board of Game and a member of the Big Game Commercial Services Board appointed by the governor in 2023. My wife Teresa is retired from the Fairbanks North Suburban School District.

And my two boys are Alaska Wildlife Troopers who are stationed in St. Mary's and Soldotna.

I have one daughter who lives in Fairbanks, one in Anchorage, and one in Minnesota. I have a bachelor's degree in wildlife management from the University of Nevada, Reno. I worked as an intern for the Nevada Department of Fish and Game through college and worked as a biologist at the Alaska Department of Fish and Game inspired to become a wildlife trooper. I graduated from Trooper Academy in 1576 and attended the FBI National Academy in Quantico, Virginia. I retired from the wildlife troopers in 2001 and I worked as a commercial pilot for Wright Air Service in Fairbanks until I retired in 2023.

I also worked as a criminal justice planner for the Department of Public Safety.

I refereed high school wrestling, worked as a facility logistics manager for the 2014 Fairbanks and the 2024 Matsu Arctic Winter Games. I have an airline transport pilot certificate with a commercial seaplane and advanced ground instructor rating from the FAA. I'm also a master falconer licensed in the state of Alaska and I hunt small game and waterfowl with falcons. My family's been active in both subsistence hunting and fishing activity in Alaska I teach my children and grandchildren the values and ethics associated with harvesting and consuming wild fish and game and sharing the harvest with others who have a need for the fish and game but can't harvest it themselves. I'm respectively requesting confirmation for reappointment to the Board of Game.

I'm available to answer any questions or concerns that the committee has at this time. Thank you. Thank you, Mr. Loring. Are there any questions from the committee?

Representative Sadler. Yes, sir. Can't let Mr. Loring go by unquestioned. Mr. Loring, you've been one term on the board. You're looking for another reappointment.

What kind of issues do you think the Board of Gamers is going to be dealing with, would be dealing with in your next term? Well, there's 3 or 4 issues, Representative Sadler, that are really important that are going on right now. The first one is the Mochadnik Caregiver Intensive Management Program that, you know, Bobbin's operating under, and it's in court right now waiting for a hearing, judgment from the judge on a hearing that just happened a couple days ago. The next important one is the Delphi population decline and how we can get that back. I guess not a hunting issue, it's more of a weather problem that's caused that.

Also, there's some conflicts between air-based and boat-based transporters, and these are conflicts between big game hunters and big game guides in the transporting industry. We also have resident/non-resident allocation of permits that are controversial at this time on drawing permits. And we want to try to get the big game guide concession program implemented. That may or may not happen in my next 3 years, but that's important. So those are the kind of things that I see that are important, fixing not only the Board of Game but also other residents of the state of Alaska.

Thank you, Mr. Loring. If possible, I'm not sure if you're using your speakerphone. But it's difficult to hear. If you could just use your regular hand, you know, not use the speakerphone, it's clear on our end. I have a question from Representative Elam.

Okay, I just turned the speaker off. Yes. Oh yeah, way better.

Representative Elam, thank you, appreciate you serving on the board Board here. I guess my question here is specific to how do you, as a Board of Game appointee, how do you balance in-state use and access to non-resident access to our hunting resources, our wildlife refuge resources, and then also with some of the subsistence areas as well? [Speaker:MICHAEL] That's a good question. We're required under the U.S. Constitution to provide an opportunity to non-residents in Alaska. It's the Board of Games' decision on what that opportunity is.

So, you know, through our Board of Games process, we decide, you know, we have populations that are lower numbers on how many permits go back and forth between residents and non-residents and what that allocation is. And then the other thing is that, you know, access, that is, as members often say, you just have to look at each individual situation and where that access is being questioned and how it's being handled and just get information from the public and the user groups involved in that. Thank you. Thank you, Mr. Loring. And Representative Sadler.

Yeah, thank you, Mr. Loring. I understand as Board of Game member you are designated also on the Big Game Commercial Services. Give me your brief thoughts on how the guide concession area program is operating in Alaska.

Yeah, that's right. I'm the Big Game Commercial Services Board. Um, Bill under Title 8 requires a Board of Game member to be part of that board, and that's That's my position. I've been on it for the last 3 years. That big game guide concession program, there's several areas in the state, Unit 19, Game Management 20 south of Fairbanks, and Unit 25 up in the Chandelure area, is all state land.

It does have quite a large number of guides operating in there that's causing conflicts between guides and residents, hunters, and that type of thing. Those are the three main areas that really need to be looked at as far as assigning a specific number of guides to a concession, similar to what we used to have before OSESHA back in the day and also how the federal government manages their lands as far as reducing those user conflicts. I think that's really important in my point of view. To move forward and see how that's going to work, get those implemented, and work through the process. Okay.

Yeah, hope it works. Great. Thanks.

All right. Thank you, Mr. Loring. Seeing no further questions from the committee, we're going to move on to our next appointees. We will now move on to the Big Game Commercial Services Resources Board. This board has 9 members.

8 Are appointed by the governor, including representatives of guides, transporters, landowners affected by these activities, and the public. The 9th member is selected from the Board of Game and cannot hold a guide or transporter license.

I would like to— Rudy, I would like to introduce Rudy. Rudy John Martinez. He is a new member to the service board. He has joined us by Teams. We can see you there, Mr. Martinez.

Please put yourself on record. Thank you for being here and begin your testimony.

Thank you for the board. Rudy John Martinez going on record. I go by John, uh, born and raised in Colorado, been in all Alaska since 2009. Been in the hunting industry my whole life. Started with an assistant guide in 2012, got my registered guide, and have been a full-time outfitter since 2020.

Live in Wasilla, uh, and I'm also a commercial pilot, instrument rated. And seaplane pilot.

Okay, thank you for your testimony. Are there any questions for Mr. Martinez?

Representative Mears. Thank you. Through the chair, Representative Sadler is really excellent with these questions, but he has just stepped out, so I'll see if I can make up some of that stead. So what has you interested in serving?

Mr. Martinez.

John, through the chair, I am interested in serving to help with the guide concession and a couple other programs that we've been working through to move forward on with that stuff. And there's a couple other regulations packages that I've helped with. Okay, a follow-up. Uh, thank you, through the chair, to Mr. Martinez. So have you been attending meetings, and what are your thoughts so far?

I've been attending meetings since I got assistant guide license. They're, they're very interesting and very dynamic in different aspects, um, with the guide concession program in mind. It has a couple hangups that we didn't see happening through the financial part of it and then the process that was missed. So we're working through that now.

Okay, follow-up, follow-up through the chair to Mr. Martinez. So a couple of us here at the table were involved in passing that legislation. So are the fix you're seeing— do you have the tools to do that? Within the board, or do you need some support from the legislature to make some statutory fixes?

We would definitely like some help through the, through the board to help with that. I think it'd go a lot quicker if we had help just through the process, the little things that we're getting hung up on.

Thank you.

Representative Sadler is back here. A question, Mr. Martinez, I often like to ask. It's I know it's kind of a softball, but often there are one or two nominees on the joint session where surprises come out of left field or accusations or points about the nominee's record or history. I want to give you the opportunity to let us know if you think there's anything that might be percolating out there and to give you the opportunity to pre-address them in this meeting. [Speaker:MR. HALL] I know I have no previous incidences or anything to my knowledge.

I have no investigations. I have no qualms with anybody. Glad to hear it. Thanks. Excellent.

Any further questions? Seeing none, Mr. Martinez, thank you so much for being here and for your testimony and interest in moving forward in this position. Thank you. All right, finally we have one more One more appointee. We will consider the Governor's Appointee to the State Assessment Review Board.

The board has 5 members appointed by the Governor, all— pardon me— all knowledgeable in pipeline property assessment. It hears appeals on oil and gas property values set by the Department of Revenue, and members serve at the Governor's pleasure without fixed terms. I'd like to introduce the committee to Jana Weltson, who was added to the board back in March. She is now joining us by telephone. Mrs. Weltson, please put yourself on record and begin your statement.

And if possible, please don't use your speakerphone. We find it's easier to hear without the speakerphone.

Thank you. Good morning, Chair and members of the committee. Can you hear me okay? Yes, we can.

Okay, great. Thank you for the opportunity to be here. My name is Jana Waltsine. I'm a lifelong Alaskan born and raised in Fairbanks. I currently practice law in Anchorage as the principal attorney at JDW Council, which I established in 2015.

For more than 10 years, my practice has focused on administrative law, regulatory matters, and land use, with a material portion of my work involving quasi-judicial proceedings property valuation issues, and tax assessment disputes. I've handled property assessment appeals and Department of Revenue audit and determination matters, although none are directly related to oil and gas. I routinely work within the administrative framework that, that require careful statutory interpretation and record-based decision-making. My work involves developing and evaluating evidential records and applying governing statutes and regulations to complex factual situations. Situations.

I also advise clients on business valuations and negotiations, particularly where the regulatory decisions directly impact asset value. In addition to my legal practice, I served for over 5 years on the Anchorage Planning Board where I participated in quasi-judicial hearings involving property rights and land use and decisions. And I currently serve on the Alaska Advisory Oil and Gas Royalty Board. That board works with the Department of Natural Resources to review proposed transactions like royalty-in-kind contracts. We look at financial terms, economic impacts, and statutory factors, and then we prepare a written recommendation to the legislature.

My experience on these boards have helped reinforce the importance of impartial, evidence-based decision-making and adhering to the governing law. I'm also a commercial property owner and landlord, which gives me practical familiarity with valuation methodologies and financial impacts property taxation and regulatory decisions. I understand the State Assessment Review Board requires members to have experienced property assessments. It's actually not specific to pipeline assessments, it's, it's just property assessments, um, and my background in handling assessment appeals, valuation disputes, and administrative proceedings does directly align with that requirement. I'm seeking this appointment because I believe the board plays a critical role in ensuring assessment decisions are fair and consistent and grounded in statute.

If confirmed, I will approach that responsibility with neutrality, diligence, and a strong commitment to applying the law to the record before the board. Thank you for having me, and I'm happy to answer any questions.

Thank you, Miss Weltson. Are there any questions from the committee? Uh, Representative Fields? Uh, I don't have any questions. I'm familiar with Miss Weltson and really appreciate her willingness us to serve on this board.

Thank you. Representative Sadler. Thank you. Through the chair, Ms. Wilson, this position has a lot to do with property assessment, so I understand it does not have a direct impact on local zoning, but my question to you is, you have been— I've known you as well as an advocate for changes in local zoning regarding the location and permitting of cannabis review retail shops, particularly in Chugiak/Eagle River. So my question, will you continue to advocate for those things, or is that an activity you would forswear as a member of this State Assessment Review Board?

Well, I want to say I forswear it. We, you know, through a client, exercised a lot of community engagement in the Chugiak/Eagle River area. Um, I think we spent probably about a year and a half holding community meetings, and we ultimately determined that the community's will was not to have a cannabis shop in the Eagle River area. Right now. So if that ever changes, I wouldn't say that I would forsaken it or forswear it and never, you know, advocate for that change.

But from what I saw in those community meetings, and I think you attended some of them, it just didn't seem like it was the community's will to have that type of establishment in their community. So may I clarify? Uh, follow-up. Thank you, Miss Wilson. So you're saying the local population said no right now?

And did I hear you say would not engage in that advocacy effort or would continue to do so. Please be clear.

If I ever felt that the community— the community said, yeah, we want a cannabis shop there, then I'd be open to pursuing that for a client. But from what I gathered from about, you know, a year and a half of working in the community and having all those community council meetings and community meetings in general, it just doesn't seem like Eagle River is intrigued yet area is wanting our campus shop. Follow-up. So to be real clear, so you're gonna be passive on this issue until you hear otherwise?

Until I hear otherwise from the community. Okay. All right, thank you, Miss Waltson. Any other questions from committee members? Seeing none, thank you, Miss Waltson, for being here and for your willingness to serve.

Thank you for your time this morning. We will now move— thank you— we'll now move to public testimony on the governor's appointee to the Board of Games, Stosh Hoffman, and David Loring. Also Rudy John Martinez to the Big Game Commercial Services Board and Jan O'Bolton to the State Assessment Review Board.

First off, is there anyone in the room who wishes to testify. Seeing none. Now, is there anyone online who wishes to testify?

I see— I believe we have Mark Richards online to testify for David Loring. Uh, Mark Richards, if you could hear us, state your name and affiliation and begin your testimony.

Thank you. Good morning, Co-Chairs Geibert and Freer, and members of the House Resources Committee. For the record, my name is Mark Richards. I'm the Executive Director of Resident Hunters of Alaska. Resident Hunters of Alaska strongly supports the reappointment of Dave Loring to the Board of Game.

Dave has done an excellent job during his first term on the board and is an asset to the board in many ways. His experience as a wildlife trooper and then commercial pilot brings extensive knowledge of different areas of the state and its people. He understands the issues, and as a former trooper liaison to the Board of Game, he knows how the system works and greatly helps the board move through the various proposals that come before them and keeps the board on track. Dave also engages with the public in ways that make people feel at ease during public testimony and asks probing questions to better understand their viewpoint on issues. He's a perfect fit on the board, and we strongly support his reappointment.

Thank you.

Thank you so much, uh, Mr. Richards. It's great to hear your voice, and thank you for your testimony. Seeing no one else online, uh, to test for public testimony, I'm going to go ahead and close public testimony.

Co-chair Freer. Do we have a motion? Yeah, thank you, Co-Chair Dibert. Um, in accordance with AS 39.05.080, the House Resources Committee held a hearing on Stotch Hoffman and David Loring to the Board of Game, Rudy John Martinez to the Big Game Commercial Services Board, and Jana Wilson to the State Assessment Review Board. A signature on this report does not reflect intent by any of the members to vote for or against the confirmation of the individual rules during any further session.

Thank you, Co-Chair Freer. Hearing no objections, we will forward these names to the full hearing of the House and Senate. I will ask committee members to stick around to sign the reports. So for now, House Resources is now going to take a recess until 1 PM, where we will meet in the Grunberg Room, Room HB 420 and take up amendments to House Bill 381. We are now at recess.

Thank you very much.