HRES-20260505-1300

ទំទំ ទំទំ ទំទំ ទំទំ ទំទំ ទំទំ ទំទំ ទំទំ ទំទំ ទំទំ ទំទំ ទំទំ ទំទំ ទំទំ ទំទំ ទំទំ ទំទំ ទំទំ ទំទំ ទំទំ ទំទំ ទ� ទ្ទ្ទ ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ� ប្រាន់។ ប្រាន់។ ប្រាន់។ ប្រាន់។ ប្រាន់។ ប្រាន់។ ទ្ទ្ទ្ទ្ទ ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ្ទ�.

We are back on record in House Resources. Uh, we, uh, it is once again, um, well, it's 3:40 PM on Tuesday, May 5th, 2026. We are now in Capitol Room 124. Members present are Representative Fields, Representative Colon, Representative Hall, Representative Mears, Representative Prox, Representative Elam, Representative Sadler, co-chair— excuse me— Representative Dibert, and myself, co-chair Representative Freer. Let the record reflect that we once again have a quorum to conduct business.

I also want to note that we have Representative Johnson, our minority leader, in the room. I want to thank excuse me, uh, Cheryl Cole from Records and Susan Quigley from the Juneau LIO for staffing the committee today. And I want to thank you all for regrouping, joining us back here in our, our home committee room, uh, Room 124. Uh, we are back to considering amendments to House Bill 381. We are on amendment number 16 of 29.

I do want to note that on the line we do have, um, we do have folks from DOR. We've got David Herbert, commercial analyst with the Tax Division, as well as Owen Stevens, a commercial analyst with the Tax Division. From Ledge Legal, we have Director Emily Nauman. We have Frank Richards, the president of AGDC, as well as Matt Kissinger, the commercial director for AGDC. And Mark Begich, a consultant from the Governor's Office, here and available for questions on these amendments.

We left off earlier this afternoon on Amendment No. 16; That's G.14. And that is an amendment from Representative Sadler. So Representative Sadler, I will turn to you for a motion. Thank you, Madam Chair, and a welcome break.

Thank you for that. Madam Chair, I move Amendment 16, also G.14.

Thank you, Representative Sadler. I object for purposes of discussion. Representative Sadler. Thank you, Madam Chair. This is the first of a series of 3 what I will call probing amendments which have a couple different elements.

Amendment 16 and 17, 18 all have similar aspects, and I'll mention them in sequence. Amendment 16 would phase in the alternative volumetric tax at a trigger of 500 million cubic feet a day at a rate of 2 cents per 1,000 cubic feet. At each additional 250 million cubic feet per day, the tax rate would increase by 2 cents per MCF until reaching a top of 6 cents per MCF at 1 billion cubic feet a day. This rate would be applied to all portions of the project individually, and once the rate did reach 6 cents, Amendment 16 would increase the rate by 2% annually. Additionally, this amendment would remove the 6-year chronological abatement period And it would also allocate the volumetric tax revenue on a 50/50 basis divided by the length of pipeline within a municipality and secondarily under a per capita distribution.

If I may, Amendment 17 and 18 tweak those acceleration rates and triggers slightly. So I don't— we have to consider one at a time, but just understand that these are kind of probing. So those are my amendments. Thank you. The amendment— pardon me.

Thank you, Representative Sadler. Is there discussion on Amendment No. 16? Representative Mears. Thank you.

Through the Chair, so I've got 2 comments on this. One is that my— where I'm at in the process here in House Resources is to work most diligently on the policy surrounding the bill and not into the numbers of what those rates are. So that's just where I'm coming from in this process. But I wanted to dig a little bit more into these graduated rates and talk a little bit about what those volumes look like with the different phases. It is challenging to keep up with the units and the quantities and the perspective of things, but our in-state use now is less than 200 million cubic feet a day.

In order to get more than that, so for—. If we're—. If it's more than we're using in-state, the LNG, the liquefaction facility and the export terminal are up to date, are in operation. So the amount of time it will take to go from 200, 250 million cubic feet a day, to substantially more than that is very sharp. So having a graduated rate in there, I think, is pretty moot.

So I appreciate the thought of how that works over time, but I think just that timing of going from Phase 1 to Phase 2 negates the thoughtfulness of that approach.

Thank you, Representative Mears. Is there further discussion on Amendment 16? Representative Fields. Yeah, I just don't support reducing the AVT. I think the AVT is already extremely modest.

I can't hear you, sir. I do not support further reductions in the AVT. I think it's already very modest. So thank you, Representative Fields. Is there further discussion?

Do you have a wrap-up? Well, actually, Madam Chair, I'm going to do something. I'm going to offer a conceptual amendment to my own amendment, if I may. Given the complexity of this process and the short timeline we're in, I apologize for doing this, but we're at committee tables, so I'm going to offer this. What I would like to do in my conceptual amendment to Amendment 16— I understand it may go down anyway, but I'm going to offer it to the other ones— is to split that 6 cents among all 3 elements.

For a total of 6 cents per MCF instead of assessing it on each of the elements. This would adjust the function of the volumetric tax so that the rate does not stack but is just one total rate encompassing all parts of the gas line project. And as new parts of the project came online, like the gas treatment plant on the slope and the LNG liquefaction on the Kenai, the tax rates would be divided equally among them. For example, for example, if there was a total tax rate of 6 cents per MCF as the bill currently envisions, when the pipeline and the treatment plants reach their whatever throughput trigger we have here, that 6 cents would be divided equally, 3 cents per MCF for each. Then, when the LNG plant would come online, the tax would go down to 2 cents per MCF on each of those 3 elements, always staying inside that 6 cents per MCF, trying to provide stability at the rate which the gas strategies analysis showed would help make this project work.

That was quite the conceptual amendment. This is quite the legislation.

So did you move the conceptual amendment? I believe I did, but I can restate it if necessary for the Secretary. I didn't follow you. Yeah, that was— if you could restate it in the form of a motion. Okay.

Thank you, Madam Chair. I move conceptual amendment 1 to amendment 16, that is amendment G.14, and not quoting the language, but the import and the effect would be to divide the 6 cents per MCF so such that that was the total on the project regardless of how many of the 3 elements were online. For example, if there are 2 elements, the pipeline and the gas treatment, it would be 3 cents for each. If it was all 3, the pipeline, the treatment, and the LNG, it would be 2 cents. Thank you.

That's clear enough for the purposes of this. Representative Sadler, thank you. I will object for the purposes of discussion, and I will take a quick second to go at ease and make sure that records was able to capture your conceptual amendment. So, brief at ease.

Back on record in House Resources, um, Thank you, Representative Sadler, for your conceptual amendment. I've objected for discussion. Is there— Representative Sadler? Thank you, Madam Chair. Appreciate it.

Might I ask the representative from— Mr. Prestidge to come up and kind of give us his thoughts on that? It might provide some elucidation of what that might look like. Mr. Prestidge, would you like to join us at the dais and give your thoughts on the conceptual amendment to Amendment Number 16G.14.

Thank you, Madam Chair. Adam Prestidge from Glenfarn.

Generally speaking, the initial proposal for the AVT of 6 cents was a number designed, a number that we viewed as being reasonable. Fair for the project and relative to other North American major LNG infrastructure projects. Even by going off of Gaffney Klein Gas Strategies and Wood Mackenzie reporting, probably a little bit high compared to other projects. Those things in mind, we think that $0.06 is a number that allows the project to go forward and stay competitive. And so that's Just a reminder that that is what we view the project as needing to be able to go forward.

With that in mind, we view Amendment 16 as relatively within the same ballpark and the conceptual amendment that Representative Sadler has offered is also working for the project to be able to go forward. [Speaker:COMMISSIONER ARKOOSH] Thank you. Is there further discussion regarding the conceptual amendment? Representative Mears. Thank you.

Through the chair, I'll just comment on sort of that format of stacking things up for different components of the project. There's value for some of that. However, I think what goes through the gas treatment plant and through the pipeline is either the same or virtually the same. But once you get to what comes out of the, the LNG facility, I believe it's roughly 15% consumption of natural gas to make that process happen between the cooling and pressurization. I'm seeing some nods from Mr. Prestidge.

I don't— I, you know, I think in that 10 to 15% is about that consumption. So that number would be less by about that factor. But if you've got that total volume and you're splitting it up between the 3 pieces or between 2 pieces for the whole thing, I don't think it really changes the math that much. I think in the current version of the bill, when you've got those different pieces going to different places and doing different things is different than just splitting it up amongst the total volume. If it's all going to the same place, there's not a big volumetric difference.

Some, but not substantial. Thank you, Representative Mears. Is there— Representative Sadler? Thank you. Thanks for this question.

As I look at this and did the analysis, the concession for this was kind of early in the process. The function of this rate would be to lower the threshold. It would be to lower the— the fiscal pressure on this project early, and if our goal is to incentivize a final investment decision, lowering the expense early on is going to be advantageous to that goal. And that's what this amendment would do. I think Representative Beers is right.

We've understood now that the gas treatment function will probably come on sooner than we had really envisioned. It's not just pipeline and gas treatment and LNG, but more pipelines and treatment and the LNG. Still, this amendment would account for that and have a gentler slope of imposition of financial burden on the project and therefore increase the likelihood that it can get to the final investment decision. [Speaker:COMMISSIONER ARKOOSH] Thank you, Representative Sadler. Is there further discussion on the conceptual amendment to Amendment 16G.14?

Seeing none, I am going to maintain my objection for G.14. And encourage members to vote no. May the clerk please call the roll? Oh, are we voting on the conceptual amendment or the amendment? You know what, I will remove my objection on the conceptual amendment.

Is there further discussion on the— on Amendment Number 16 as amended?

Representative Prox.

Through the Chair to Mr. Prestige, does this still apply that this as amended, this amendment works, still makes, still is acceptable for the project? Representative Proksy, through the Chair, I believe so, yes. Okay, thank you.

Okay, seeing no further discussion, I maintain my objection to this amendment as well. Will the clerk please call the roll on Amendment 16G.14 as conceptually amended?

Representative Sadler? Yes. Representative Prox? Yes. Representative Colon?

No. Representative Elam? No. Representative Paul? No.

Representative Mears? No. Representative Fields? No. Co-chair Diver?

No. Co-chair Powell? No. 2 Yeas, 7 nays. Thank you.

With a vote of 2 yeas and 7 nays, Amendment Number 16 as conceptually amendment G.14 is not adopted. Uh, Representative Sather, you have Amendment Number 17, G.13, I believe. Thank you, Madam Chair. A little Groundhog Day here. I will move Amendment 17.

I will object for the purposes of discussion. Thank you, Madam Chair. Amendment 17, or GDOT 13, is similar in structure but different in the triggers and the numbers. It would eliminate the separate tax for 3 elements of the entire AK LNG project in favor of one rate at 8 cents per MCF, starting at 2 cents at the trigger level of 250 million cubic feet a day and then 4 cents at $500 million, half a billion cubic feet a day, 6 cents at $750 million, and 8 cents, the full rate, at 1 billion cubic feet a day. And it would have an escalator thereafter of 2.5%.

It would also delete the alternative chronological trigger of 6 years, which I think, as we've laid out before, is if there's no gas flowing through to apply a voluntary tax, a trigger of chronology doesn't make a whole bunch of sense. So, and I.

I am kind of trying to probe what the project sponsors believe might be advantageous and still be respectful of the state's need for revenue. And further provision of the amendment is it does allocate the revenue from the alternative volumetric tax 50% based on the miles of pipeline in a municipality and 50% of it per capita. That's a feature we've seen elsewhere in the bill. And I guess I can cut to the chase and offer my same conceptual amendment to this as well. It would be in order, I'm sure.

Representative Sadler. Thank you, Madam Chair. So I will offer conceptual amendment 1 to amendment 17G.13, and I can't say ditto, but my goal is to, uh, to split the 8 cents among each of the 3 elements such that as new parts of the project achieve the throughput trigger, the total tax rate would be divided equally among them. And I hope that is clear enough without going into the math. Thank you, Representative Zadler.

I oppose your conceptual— actually, Representative Zadler, I will not object to your conceptual amendment. Thank you, Madam Chair. Your conceptual amendment has been adopted. Representative Mears. Thank you, through the Chair.

So, Representative Zadler, I'll repeat. Splitting this up between the components is relatively moot unless you are going to have a different application of what happens to the funds. And just an explanation that I think practically what will happen is that we will blow past the triggers of 250 million cubic feet, 500 million cubic feet, 750 million cubic feet and go directly to a million cubic feet of natural gas a day at an 8— cents per thousand MCF threshold. So I think that's practically and effectively what would happen here. Okay.

Representative Sadler. Might I be so bold as to invite Mr. Prestidge to the table to give us his thoughts on that one as well?

Mr. Prestidge, would you please join us at the testifiers?

Madam Co-chair, Adam Prestidge from Glenfarm. Um, I think my comments here are pretty similar to the comments that were given on Amendment 16, uh, where again, you know, our driving effort is to lower the cost for gas to Alaskans and lower the tax on Alaskan taxpayers. Um, if I could, I think it might be beneficial to hear from Mark Begich, who represents the state on this, and I believe he's on the line. Mr. Begich, are you on the line and do you have thoughts about Amendment Number 17G.13 as conceptually amended?

Yes, I see it in front of me. Madam Chair, thank you again. Mark Begich, contractor with the Governor's Office, State of Alaska.

This one seems to be workable, but I want to think about— can you repeat for this discussion, Representative Sattler, can make clear on the rate structure he has there? I think this is workable. I think I'd want to tweak something, but maybe I can ask that question, Madam Chair, just to make sure I follow his lead on this. Representative Sattler. Thank you.

Through the Chair, Mr. Begich, I'll try and make it as general as I can. The idea is to split the now 8 cents per MCF cost cost among all 3 elements of the gas line. And as new parts of the project achieved throughput trigger, whether 250, 500, 750, whatever it is, then the total tax rate would be divided equally and allocated equally among those different elements. And there's an explanation. Yeah.

I'm sorry, I didn't mean to interrupt you, Representative Sabler, but yes, I think we can conceptually agree to this. Madam Chair, this is workable for us. I think, you know, if we have some commentary back that's telling me to see something we did not see here, we'll be back to you pretty quickly. But I think the way I'm seeing it, the way I saw it in the amendments given to us yesterday, I think we could work with this.

Thank you, Mr. Begich. Is there further discussion on Amendment number 17 as conceptually amended.

I am going to— with that, I'm going to maintain my objection on Amendment 17G.13. Will the clerk please call the roll?

Representative Fields. No. Representative Sadler. Yes.

Representative Prox. Yes. Representative Klum? No.

Representative Ehlund? No. Representative Paul? No. Representative Mears?

No. Vote Chair Dibert? No. Vote Chair Freer? No.

Uh, 2 yeas, 7 nays. With a vote of 2 yeas and 7 nays, Amendment Number 17 as conceptually amended, that's G.13, fails to be adopted. Representative Sadler, you've got Amendment Number 18, that's G.12. I do indeed, Madam Chair. I move Amendment Number 18, G.12.

I will object for purposes of discussion. I've got my rap down real fast now. This amendment would eliminate the separate tax for all different 3 elements. It would impose a much more gradual ramp-up of 1 cent for MCF at 100 million cubic feet per day increasing by 1 cent per MCF each tranche of 100 million cubic feet up to 10 cents per MCF at 1 billion cubic feet per day. Thereafter, increasing at 3% per year.

It also deletes the 6-year chronological trigger that would kill the gas thing unless there's some kind of flow. And again, similarly as other amendments, allocates the AVT 50/50 between municipalities based on miles of pipe and per capita. Thank you, Representative Sadler. Is there discussion on Amendment G.12? Representative Sadler.

Thank you. And for consistency, Madam Chair, I must move— offer to move a conceptual amendment to Amendment G.12, Amendment 18. I will state— can you state that in the form of a motion? Thank you, ma'am. I would offer Conceptual Amendment 1 to Amendment 18, G.12.

Can you describe what that conceptual amendment is? What the conceptual amendment 1 would do is similar to the conceptual amendments to the previous amendments. It is to split the— this would now be a total of 10 cents per MCF among the 3 elements of the project as they came online. Again, once you got to the total of 10 cents per MCF, it would be divided 1/3, 1/3, 1/3 for those 3 elements. Similar in concept.

Should be familiar. And again, also, that would have a— I'm sorry. Oh, that's it. Thank you, Representative Sadler. Seeing no objection, your conceptual amendment is adopted to Amendment No.

18. Is there further discussion? Oh, Representative Mears. Thank you through the chair to Representative Sadler. Although I maintain my concerns about the ramp-up being moot, I have an additional concern on this amendment, which is having the 1-cent per 1,000 cubic feet at 100,000 cubic feet of natural gas per day.

All of the other versions that we've been considering is that ABT doesn't come into effect—. So far—. Until there is export amount of volumes, 100,000 cubic feet a day. I mean, 100 million cubic feet a day is a level that we do utilize in-state. So it would be spreading that ABT directly, probably pretty directly into consumers.

So that's a wrinkle on this amendment that is slightly different than the other ones. But, you know, I still maintain that having the ramp-up between about 200 million cubic feet a day and a billion cubic feet a day is a pretty fast threshold and moot to try and do a complex treatment like this. Thank you, Representative Mears. Representative, uh, Elam. Thank you.

I, I know you put a lot of work into these amendments, and I appreciate it. I, I have not been able to support it. I've had concerns related to breaking out some of the liquefaction and the particularly the LNG pipeline, but I do appreciate the diligence that you've put into the amendments. Thank you, Mr. Chair.

Representative Sadler. Thank you, Madam Chair. I appreciate the comments and the thoughtful consideration of the amendment. This actually— part of my goal here is with this, uh, this last amendment is if my goal is to try incentivize a final investment decision to get a gas line built and to accrue all the benefits to the state and our communities that that would bring to us, the idea is to have a thin point, uh, edge of the wedge to begin assessing property tax on this at one, you know, $0.01 per MCF at 100 million cubic feet— I'm sorry, 100 million cubic feet a day. My numbers here, my metrics.

I believe that that would cover a little bit less than what in-state used to be for NSTAR. I think we heard, I think under 200 million cubic feet a day.

Would be the demand from Enstar, so we'd be at 2 cents during the operation of the pipeline until such time as the export functions were online and working. So this would have the effect of lowering the financial burden on the project, thereby increasing the likelihood that we'll get financial decisions and commitment to this, and thereby bringing all the benefits to the state that would be. I've introduced these 3 amendments with your indulgence kind of to probe as to what structure of the imposition of the ABT might best favor the project and balance those interests with the community. So that's, that's the basis of these three authors. Thank you for your consideration.

Thank you, Representative Sadler. Is there further discussion on Amendment Number 18, 2.12, as conceptually amended? Representative Prox? I would like to hear from Mr. Begich if he's still with us.

Uh, yeah, Mr. Begich, if you wouldn't mind weighing in on thoughts on Amendment Number 18G.12 as conceptually amended?

Yes, Madam Chair, it's kind of like Goldilocks. The first one was good, the second one is okay, this one is pushing two things that kind of work a little bit against it. The concept we are not opposed to, first let me make that clear. This ratchet approach is, if that helps the revenue stream to the state come a little bit earlier or different fall volumes, because that's been one of the questions. I think we understand it and are not opposed to that.

The price point you moved up now to 10 cents on the long-term rate, and I'm frankly nervous about that because, um, we will probably want to run some models. But the concept— inflation is pegged at 3%, fixed rate— and so that bothers us there too. So We're a little concerned about this one, but the concept, I must say, is intriguing to us, this ratchet approach. So you can not have to wait for the long term, what we would consider the export element at the magnitude of a bill, you know, $1 billion. So this one, we, we have some mixed views on this one, Madam Chair.

Uh, thank you, Mr. Begich. Is there further discussion or questions regarding Amendment Number 18, G.12, as conceptually amended?

Seeing none, I will maintain my objection and ask the clerk to please call the roll.

18, Right? This is G— or this is Amendment Number 18, G.12. Representative— oh, as, as— sorry, I apologize. Please void that roll, or avoid the roll. And yes, as conceptually amended.

Thank you.

Representative Elam? No. Representative Hall? No. Representative Mears?

No. Representative Fields? No. Representative Sadler? Yes.

Representative Prox? No. Representative Kollum? No. Co-chair Dibert?

No. Co-chair Freer? No. 1 Yay, 8 nays. With a vote of 1 yay to 8 nays, Amendment Number 18G.12 as conceptually amendment is not adopted.

See, the next amendment is amendment number 19G.8, also by Representative Sadler. Thank you, Madam Chair. Um, with some trepidation, I see we're losing votes every minute. I offer amendment number 18 or G8— a number— number 19G. Uh, I object for the purposes of discussion, Representative Sadler.

Thank you, Madam Chair. Let me flip over to the— okay, this is Amendment 19. Um, Very generally, this removes the option for municipalities along the pipeline's envisioned route to keep their current property tax rather than accepting the alternative volumetric tax or taking equity, taking their AVT obligation in equity.

You know, it— I think I'll just leave it there. It requires municipalities to pick either equity or AVT. And not the existing property tax. We've heard that the property tax— now, the analysis of the project said that the local property tax burden that Alaska would put on a gas line is the largest burden on the finances of the project. So I think my amendment tries to eliminate or ameliorate that burden and make it— make the project more likely to be committed to.

Thank you, Representative Sadler. So further discussion on Amendment Number 19G.8? Representative Prox. I would like to hear from Mr. Prestidge, please. Uh, Mr. Prestidge, would you like to join us at the table and tell us what your thoughts are on Amendment Number 19G.8?

Madam Chair, Adam Prestidge from Glenfarm. I want to make sure that we are interpreting how this amendment is put forward. Our biggest concern with the committee substitute and the— this election option is that we would pass a bill and then municipalities would have the option to either elect into the tax structure put forward in this bill or default to the existing property tax arrangement, which is not feasible for the project. So if I may seek clarification on if that's the intent of this amendment. Representative Sadler.

Very clearly, Madam Chair, through the Chair, Mr. President, no, my goal is to not allow local municipalities the option to keep their current property tax. I would add this would leave them the options of adopting the alternative volumetric tax or taking equity in the project. It would not allow them to keep their local property tax mill rate. Thank you, Representative Seller. Representative— Madam Chair, I think the next question then is, as we have said on recent occasions, we are very favorable to having municipalities participate in equity ownership in the project through the participation in the state's 25% investment option.

But that is based on investing investing in equity, funding cash in exchange for equity alongside all other equity investors in the project, not in exchange for tax reduction. So that's the priority for us. I'm sorry, excuse me. And to say beyond that, it's not simply just a priority for us. It functionally does not work for the project to issue equity in exchange for reduction from the existing tax— Tax law.

Thank you, Mr. Prestidge. Representative Klobuchar. Yeah, so I guess I need clarification. So I thought the property tax option was just on the two facilities, North Slope and Kenai. That wasn't an option for anything on the pipeline, right?

That is correct. So this amendment is saying that KPB and North Slope cannot have property taxes on the structures that are built in there?

Districts? Madam Chair, I confess I am stumped. A lot of moving pieces, a lot—. Because I thought, I mean, we all agree that property taxes, you can't do that on the pipeline, but I thought that the CS said it was just in those two cases, the LNG plant, the treatment facility.

We doing these briefings? I don't want to say brain—.

We are back on record in House Resources. Representative Sadler, uh, I'm not sure, Madam Chair, if we want to get Ms. Nelman on the line to try and answer that question. If not, then I'd be willing to pull this back. Offer later with more explanation and ability to answer that question, but I apologize for not having a clear answer right at hand. Do— so is it your request that we ask Ms. Nauman, okay, what the effect of this amendment would be?

Ms. Nauman, did you hear the question?

For the record, this is Emily Nauman, legislative liaison.

Community Mental Health Services. I heard the general discussion, but I'm not sure— I would— it would be helpful for me to have a specific question. I can represent. So, Miss Nauman, it's my understanding the CS only allows for the property tax option for the two structures in KPB and North Slope. This amendment's removing the option for a property tax for a municipality.

So my question is Does this amendment remove that option for KPB in North Slope for the structure?

Through the chair to Representative Kwon, maybe it would be helpful to explain or just start with an explanation of the process for the equity option in Section 6 of the bill. So currently, a municipality may elect to exempt for municipal taxation, the property subject to tax under 4359.020(b)(1) and (2), so that's the natural gas treatment plant and the liquefied natural gas plant. So as the bill is drafted, in order for the equity option to kick in, the municipality has to elect to exempt those facilities from the quote-unquote normal property tax. Okay. If they do that, then they have a second gate, which is they can have the state collect the volumetric tax on their behalf or for those properties, or they can enter into a PILT agreement or an equity option, as it's being called in the bill.

Under the Amendment G-8, which I understand to be Amendment 19, That initial option for the municipality to exempt from the quote-unquote normal property tax the gas treatment plant and the liquefaction facility is removed from the bill. So what's left is municipality can elect either to have the volumetric tax collected by the state or to enter into the agreement with the equity agreement. Okay, thank you, Ms. Nauman. Is there further discussion on Amendment Number 19? Yes, ma'am.

Representative Zeller, with your indulgence, could we ask Mr. Prestige if he has thoughts on this? Mr. Prestige, what are your thoughts on Amendment Number 19? Madam Chair, um, generally speaking, um, we view the way that we've proposed this to be set up, which is that this is a tax bill that increases certainty for the project by creating a uniform or predictable tax arrangement across the project. It allows us to go to FID quicker, faster, with more certainty because the tax or burden on the project will be knowable and forecastable. We are in front of banks literally this week, last week, presenting the opportunity to fund this project.

That is on the basis of a known and forecastable tax arrangement. This inserts more uncertainty into the project. It creates more complexity by having different tax regimes in different boroughs, different equity levels, different equity participations in different boroughs. And so generally speaking, we see it as unhelpful to the project.

Representative Klobuchar. So is there— to Mr. Prestige— so is there any way to make those deals with North Slope and Kenai now so it would be predictable? If they were to choose a property tax option for the buildings? Representative Kolum, I think that is— I will say that is an element that has been introduced. Again, the relationship with each of those boroughs is important.

Having the uniformity of one single tax arrangement across the whole project is obviously much, much better. Um, quite frankly, we're trying—. There's just a—. There's a matter of feasibility and efficiency of trying to put this project together as quickly as possible, um, to, to advance the pipeline, to bring gas to Alaskans sooner. And you're just layering more complexity, more negotiations, and more holdout value potentially on the project.

Thank you.

Uh, Representative Fields and Representative Souther. In the interest of everyone speaking, I was going to have the— we call on Mark Begich. Thank you. Thank you, Representative Fields, for the great suggestion. Mr. Begich, are you on the line?

Can you offer some thoughts on Amendment Number 19?

Yes, thank you, Madam Chair, uh, Representative Fields, for allowing me to say a few words. First off, um, we understand the goal, and that is to ensure that any borough or an investor borough could invest in the pipeline or the treatment or the liquefaction plant. We think there's a better approach. This is problematic for a variety of reasons. We're taking operational dollars off— we're taking the tax off the table the way this is laid off— laid out, and them getting equity, which really equity, we got to raise cash, and this doesn't raise cash.

So from a bottom perspective, in all due respect, Representative Satter, this amendment would be very problematic. Now, to the question that was asked on equity, We're— this— what we have suggested and not opposed to at all is that the state's 5 to 25% of equity, which is maintained in option, which is maintained in both all three elements of the pipeline, the pipeline, the treatment plant, and the, um, liquefaction plant, all three of those have options for the state to invest. If the state does not elect to do any or all of it, whatever remaining, we have no problem in allowing preferential treatment to the boroughs to invest as they see fit at whatever number of percent that they negotiate. Also, the reason why you want to have it, as laid out by Adam, you want to make sure you have a unified tax system no matter where the property is, the ABT. Nothing prevents, for example, if we settle on 6 cents ABT, and I'll use North Slope is receiving X dollars from that, they can leverage that revenue stream of tax to get equity by buying a bond.

They go out to the marketplace, they say we're going to guarantee the next 30 years of that ABT tax they're collecting. To a capital that they can raise. They take that capital and they invest it into whatever percentage of whatever element of the project that they negotiate into. That allows the cash into the project, but keeps the tax in place, but they're utilizing the tax as they see fit. This is very complicated, this Amendment 19, and will, I believe, cause— very different rate structures and deal structures.

It's better just to leave the ABTE across the board, and if a borough would like to invest, they have an option as the state expires their option or doesn't fulfill all their options. They can buy in at that level. Thank you, Mr. Begich. Mr. Prestidge. Thank you, Madam Coacher.

Just to, just to, um, agree and reinforce with, uh, with Mark's point. Uh, this is, this is getting more and more complicated. We start with a complex, challenging project already, and, and this committee is well aware of the, the decades of work that have gone into trying to take this project forward. Alaska has an opportunity. We can put a, a relatively straightforward tax across this project, and I urge the committee to take that opportunity to do so rather than adding layers and layers of complications that will ultimately delay the project and make it more expensive.

Thank you, Mr. Prestidge. Representative Sadler. Thank you, Madam Chair. I'll say wrap-up. My intention had been to try and reduce the complexity and reduce uncertainty.

It appears I have missed the mark. My goal was to remove the option for local property tax and the burden that would impose and then leave the two options of AVT, which is kind of what the bill envisions, or taking equity, which I hear the project advocate saying would be possible. It appears I've missed the mark, or at least we're not interpreting it right, or maybe I misinterpreted it. So let's take the vote and it'll go down. We'll move on.

Thank you, Representative Sadler. Is there further discussion? Seeing none, I'm going to maintain my objection to Amendment Number 19G.8 and ask the clerk to please call the roll.

Representative Hall. No.

Representative Mears? No. Representative Fields? No. Representative Sadler?

Yes. Representative Prox? No. Representative Glom? No.

Representative Elam? No. Co-chair Dibert? No. Co-chair Freer?

No.

1 Yay, 8 nays.

With a vote of 1 yay and 8 nays, Amendment Number 19, G.8, has failed to been adopted. Um, next up we've got Amendment Number 20,.

G.19 by Representative Mears. Thank you, Co-Chair Freer. I move amendment number 20, also enumerated as G.19. Thank you, Representative Mears. I will object for purposes of discussion.

Can you describe G.19? Ah, yes. So the way the CS is now talks about 50 miles and communities within boroughs, and the effect of that is that there are 6 affected boroughs. And although there are concerns about being very specific about naming communities, in effect, this bill affects this project and these communities. So this amendment clarifies that instead of having language of what does this mean, it enumerates North Slope Borough, Fairbanks North Star Borough, Denali Borough, Matanuska-Susitna Borough, Municipality of Anchorage, and Kenai Peninsula Borough.

And as discussed in committee, those boroughs are acting also on behalf of the communities within them. So they are not just for themselves, but, you know, with any communities within them. So that's the effect of the amendment. Thank you, Representative Mears. Representative Fields.

I just want to say thank you. This simplifies the bill, simplifies executing the project. No reason not to move it forward. Thank you, Representative Fields. Representative Sadler.

I just want to echo that. I think this is good. I think the— it's more making sure it's clear on the record that our goal is to ameliorate the impact and of these communities through which this gas line is going to pass and who are going to be most directly affected. Certainly every community in Alaska will benefit indirectly from the revenue and jobs and so forth, but In terms of the direct benefit, I think it is absolutely proper that we enumerate by name these boroughs and the boroughs because they will be most directly affected. So it's neat, right, proper, and salutary that we should include them on the community benefits or whatever impact aid we provide.

Thank you, Representative Sadler. Representative Prox. Yes, thank you.

There is a legal services memo on this particular amendment, I do believe.

Yes, there is. And they seem to cast some doubt on that. Could we get clarification from Ms. Newman? Thank you. Ms. Nauman is on the line.

There is a legal memo regarding local and special, and we just want to check in with you, Ms. Nauman.

Sure, for the record, this is Emily Nauman, Legislative Legal Services. For the committee's understanding, yes, G-19 did include an amendment flagging the local and special issues. So our constitution prohibits legislature from passing an act that is local or special in nature if a general act can be made applicable. And generally, a court will look at whether or not a general act can be made applicable, and that's a fact-specific determination that they— that the court will make, including looking at whether the particular legislation is of statewide application. And then, in addition, whether or not there's a fair and substantial relationship to the classification established by the legislature.

I understand this is a highly technical explanation of the test, but I would suggest that if the legislature wishes to pass a bill naming specifically locations in it, that they set out in the record the purpose of naming only these specific municipalities and why it might not work to refer more generally to areas of the state or as the previous— as the previous CS did or the existing CS did, you know, communities within 50 miles of the— of the qualified property.

Thank you, Ms. Nauman. And just want to recognize that we do have two legislators in the room that I did not recognize previously. Representative Ruffridge has been with us since we got back from recess, and Representative Costello— don't know the exact time you joined us, but want to recognize that Representative Costello is also in the room. Representative Fields, Yeah, I'm just going to do what Emily Nowman said, which is explain for the record why these jurisdictions are named. These are the largest jurisdictions providing services in the pipeline corridor.

They're the most directly affected. This is not a local project, it's a regional project affecting the majority of citizens in the state. And the reason for the Community Benefits Fund is to avoid adverse financial impact on households in this corridor so that we achieve the energy production benefits of the project without negative impacts on existing residents. I think this is extremely defensible in court. It is obviously not a local and— local and special legislation at all.

It is simply a clean way of addressing impacts from a very large regional project.

Representative Sadler. I want to echo that, and something— a point occurred to me. I believe the PCE, the power cost equalization formula, is based based to some degree on the energy prices that in areas that would be affected by this pipeline corridor and would get some of the benefit of this. So it generally— I think it's without dispute that the benefits of a gas pipeline would extend statewide, but the impacts will be felt most on the named boroughs here. So it's absolutely appropriate.

Thank you, Representative Southerland. Just want to let— for the committee's awareness, I do support the amendment. Um, and we have several more amendments. Representative Elam, then Representative Prox. Thank you.

I, uh, appreciate the amendment as well, and I just wanted to point out there are multiple places in statute that do actually refer to specifically boroughs, especially as you start getting into things like education funding and the formula. So it's not the first time that that has been limited in there. So thank you. Thank you, Representative Elam. Representative Prox.

Yes, through the chair, I would just like to ask Ms. Newman, Nauman, whether she agrees with that analysis. Thank you, Representative Prox. Ms. Nauman.

Again, for the record, this is Emily Nauman, Legislative Legal Services, and through the chair to represent Representative Prox.

As I said when discussing the rule generally related to local and special acts, this is a fact determination by the court and the record that the legislature sets out legitimizing the necessity of naming specific places as opposed to general— as opposed to general— like, general— a general description of that place will ultimately be a decision for the court. I would say, you know, when I was thinking about this problem, I was considering what would happen if unlikely but possible, a new municipality arose or was created that was within 50 miles of the project but wasn't specifically named. And I think that that's something— that's probably one of the genesis of the constitutional provision is to keep the legislature thinking about that possibility. And I guess that's sort of what I can add. I don't necessarily know how a court would rule on this given the specific nature of this project and the specific nature of the impacts, I think there's a good case that it could survive a local and special challenge, but I can't be certain given that there might be other ways to generally describe these areas that will be impacted other than listing out the specific, uh, municipalities that are impacted by name.

Uh, Representative Prox, thank you. Uh, through the chair to Ms. Nauman, Given— well, there's a— there is some possibility that, um, if that Tower Hill Mines project goes through, Live and Good could be reinvigorated. And if the Ambler Road project goes through, um, now I just forgot the name of the —kind of community up.

Wiseman. There we go. Could be established. Does that affect this or—?

If that question was for me, again, this is Emily Nauman, Legislative Legal Services. Through the Chair to Representative Prox, you know, it could using the hypothetical that I outlined. If either of those projects resulted in the creation of a new municipality. And I'm just using that example as sort of like an intellectual question, a test case for whether or not there is some other way to describe these regions of the state that might not involve naming them specifically, because I think that might be the type of thing that the court investigates too. But that said, I think if the legislature justifies the reasoning for naming these specific places by name, and I'm hearing part of that being developed here about the specific impacts related to the project, that will help it overcome a challenge.

I would also note.

—As Representative Ilan mentioned, there are several places in statute where we do mention specific locations by name. And, you know, those mentions for the most part haven't been challenged. And so there's also the question of, is someone going to challenge this to begin with? Okay.

Thank you. Okay. Thank you, Ms. Nauman. Wrap-up, Representative Mears. Thank you, and wrap-up.

So I'd like to note that, I mean, we are looking at a very specific project. We've already talked today about having a very specific, you know, end time on this, this bill. Our discussion of community impacts, either the fund or community benefit agreements, are largely, largely around, you know, construction benefits. The potential for a new municipality to spring up from the soil and the administrative process in that time frame is extremely unlikely. We also have more ways to— more road to tread in this process.

So it's something to consider if, since it's come up in advocacy, to, as this bill moves along, to have any tweaks to that. But I have a lot of comfort that we are being appropriate with naming these communities in this very specific iteration of this very specific project with this very specific timeline.

Thank you, Representative Mears.

Seeing no further— oh, Representative Prox. Thank you. Sorry. But just to make sure we've thought about it, the city of Neenah, Does that need to be added? Does that complicate things?

I don't know. Thank you, Representative Prox. I believe—. Well, the reason I bring that up, I think the city of Ninana is within the unorganized borough. That would be correct.

Representative Mears.

Um, I think hearing from some folks from the project, perhaps Mr. Begich might be able to help with that as they have been having negotiations with communities and where that might fit in. Thank you, Representative Mears. Mr. Begich, have you been in conversation with the City of Nenana?

Could you answer that question, Mr. Prestidge? Uh, Mr. Kissinger, sounds like we lost Mark on the line. Would you be able to comment on whether there have been conversations with the City of Nanana?

Yeah, sure. This is Matt Kissinger for the record. Um, Chair Freer, I'm not aware of any, but I actually have not been directly involved in those negotiations. And so perhaps if Frank Richards is on the line— I'm not sure if he is— he'd be able to weigh in. But I'm not aware of the discussions directly with Nanana.

Thank you, Mr. Kissinger. Mr. Richards, are you on the line? And Did you hear the question?

Yes, thank you, Chair. Again, um, Representative Pax, through the Chair, the, um, the conversations have been with the, with the boroughs and have not extended to the individual municipalities outside of borough boundaries, such as Indiana or Cantwell. Um, so we have not had those direct conversations, but those are the two communities I think that would be directly outside of borough boundaries.

Thank you, Mr. Richards.

Is there further discussion? Okay, I'm going to remove my objection on Amendment Number 20, G.19. Wait, yeah, G.19. Is there further objection on Amendment 20?

Seeing and hearing none, Amendment Number 20 is adopted.

We've got Amendment Number 21, G.18, by Representative Mears. Uh, thank you. I move Amendment Number 1, also enumerated as G.18. Amendment 21. I'm sorry, I move Amendment 21, also Number G.18.

And I will object for the purposes of discussion. Thank you. So this one's got a little bit more complexity to it. And I kind of wanted to recall back to some other conversations that we've had about the moment in time that we're at with the gas line project. So as we've discussed in committee and outside of committee is that it is the moment.

For this project, the headwinds for it, international markets, friendly federal administration, market interest, many, many things. But also, as we were discussing earlier today, there are other project— energy projects that have been forgone— foregone that do not make sense if this gas pipeline project happens. And as such, Amendment 21 dissolves AGDC if this project does not happen by 2030.

Thank you, Representative Mears.

Representative Sadler. I wonder if I could ask the maker of the motion to describe the goal here to expanding the definition of natural gas pipeline. Is the definition elsewhere not broad enough, or help me understand a little bit more what the intent of the Representative Vitz, please.

Oh, I'm sorry. This is the one with lots of pieces.

Yeah. So Representative Seiler, yes, it's a 6-page amendment and it does a lot of unwinding and the definition of the natural gas pipeline. I— I'm going to have to think on that for a moment.

I think it's just— it's— oh, as I'm reading further, it has the meaning as given in AS 31.25-390, so I'm guessing that has the definition of the natural gas pipeline, so we will need to redefine it. So this doesn't foreclose at all the need to look at utilizing stranded gas on the North Slope and the energy needs of South Central. But AGDC's focus is very narrow on a pipeline project. And, um, at the moment, we've got the urgency for this, we've got the momentum for this. And if this isn't happening, what then is our option?

And if AGDC's mission is only this very narrow pipeline project, what other options are we forestalling? We had a discussion around the table earlier today about the Sisseton-Wahpeton Dam. What other projects, energy projects, are out there that we are not exploring because this one is just so transformational? So this in no way— in my mind undermines the project, undermines the mission that AGDC is pursuing. It just looks to the future and what are our other options.

Thank you, Representative Mears. Is there further discussion? Oh, sorry, Representative Ulland. Thank you. I do realize that AGDC has been, you know, very focused on this particular project, but I do know that they've also, uh, when we were talking about the Spur pipeline and, and other things, they were talking about, you know, being able to do some of that kind of work.

And so my, my question, I guess, initially here is, is there anything outside of the scope that AGDC is working on other than this particular pipeline project, or are there other benefits also to the state when it comes to our abilities to work on natural gas pipelines just in general or other pipelines.

Thank you. Representative Elam. Thank you. Through the chair to Representative Elam, I see this more as not restricting what— I mean, AGDC is a narrow scope, but they're foreclosed from looking at other opportunities for utilization of stranded gas and, you know, what our energy opportunities are for that. We've had a lot of, you know, ancillary discussions about, you know, data centers or utilization of electricity up on the slope.

Is there a product or is there a service or something that we can do that? Pipes are only one way to move gas. There's, you know, although opportunities for moving forward with shipping from the North Slope are also limited, you know, that's an option. And AGDC is foreclosed from looking at those other options. So this is just saying if this pipeline doesn't work,.

What other things do we need to look to as a state for the utilization of that North Slope gas and for the energy needs of the Rail Belt? Thank you, Representative Mears. Representative Sadler. Thank you, Madam Chair. My apologies for earlier on, I had given my bill file construction.

I thought it was just one element. There are several elements of this amendment that I'd like to ask questions about. I don't know if I should take them in turn. Or ask them all and it bounces back and forth right now, but what I'm going to go to first is on page 3 is a new Section 21, which the effect of that, as I understand it, correct me if I'm wrong, is to mean that RCA will no longer consult with AGDC in certifying that this project is designed to maximize in-state use of natural gas. Now, I've got concerns as to how the RCA is going to certify a design to maximize in-state use of natural gas.

RCA passively accepts proposals and then decides them, so the definition of maximizing in-state use of natural gas is a tough one, and I'm not sure I like that. So, but does the— this basically leaves RCA consulting with Department of Revenue to certify whether a natural gas pipeline is designed to maximize in-state use of natural gas. How are they supposed to do that? What criteria are they going to bring to that?

Um, can we take a brief 50s?

On record in House Resources, Representative Colon. Uh, I call the question. The question— the question has been called. I maintain my objection to Amendment G.18, which is Amendment 21.

Will the clerk please call the roll?

Representative Kollom? No. Representative Elam? No. Representative Hall?

No. Representative Mears? Yes. Representative Fields. Representative Sadler.

No. Representative Prox. No. Co-chair Dibert. No.

Co-chair Freer. No. 1 Yay, 8 nays. Vote of 1 yay to 8 nays. Amendment 21, or G.18, is failed to be adopted.

I've got— sorry, that was a lot of pages. Take a brief at ease.

Back on record, Amendment Number 22, or G.6, by Representative Mears. Representative Mears. Uh, thank you. I move Amendment Number 22 also numbered G.6. I will object for purposes of discussion.

Representative Mears. Thank you. Amendment 22 introduces some reporting requirements for the project. I just want to start off by saying these are not intended to be probing, analytical, what is getting to your bottom line super secret information. It is based on a number of questions that we keep asking in committees and I imagine we will keep asking as the project develops.

So it requires February 15th and August 15th reports to the legislature from the ATDC Board, regardless of who owns the project, of the project status over the two previous fiscal quarters. It asks to describe any budget changes, cost savings, or cost overruns, current state status of projects including construction timelines and remaining phases, assessment of effects of state labor market, on the state labor market, the number of jobs created by the region, estimation of payroll, which is the money cycled towards local economies, resident versus non-resident employees and contractors, and secured intake and offtake contracts by, by annual volume. It defines a natural gas line project as including pipeline, treatment facility, carbon capture storage, liquefaction, import/export facility associated with the project. This amendment is so that the legislature is getting automatic updates, not just the people that have been plugged into the project, but we all get updates of where the project is at that time.

The project is being sold as an economic boon for the state, so let's track the impacts in real time and help the legislature know if any action needs to be taken to support the workforce or current stages of the project. So in order to have a large project like this within the state, we, we kind of need to know what's going on and if there's other tweaks that we need to have in our policies.

Thank you, Representative Mears. We do have a— in the current form of the CS, there is a reporting requirement. It's not as in-depth, but it would be before we get to Phase 2 of the project that it would come back to the legislature. I'm I'm going to speak in opposition to this amendment, and, um, um, and I'll just leave it at that. There's further discussion.

Representative Hall. Thank you, Madam Co-Chair. I have a question for AGDC if Mr. Kissinger is still on the line, but my question basically is, will there be a fiscal implication with this? Like, would it generate a fiscal note, or would it— I guess, like, is there a fiscal impact to AGDC? Uh, thank you, Representative Hall.

We— I'm not sure if we still have Mr. Kissinger on the line, but Mr. Richards is also on the line. Are they both on? Okay, Mr. Kissinger, can you respond to Representative Hall's question?

Yes, sure. This is Matt Kissinger, uh, for the record. Um, through the chair, Representative Hall, it most certainly would create a fiscal note because It's quite a bit of reporting, and the obligation to report obviously has— the impact of not meeting these requirements has obviously a major impact on the project. So, we haven't gone through yet and determined what the actual cost would be, but it would— I would say it would be considerable considering our very, very small team at this point. It would be a considerable increase to our costs and our personnel.

Follow up. Thank you, Madam Co-chair. Mr. Kissinger, am I understanding you correctly then? You would have to hire a new position, or perhaps more than one position, for this reporting requirement?

Representing the whole— to the chair, absolutely. I would say multiple positions would be required to comply with this amendment. Thank you.

Is there further discussion on Amendment No. 22G.6? Do you have wrap-up?

Yes, to the Chair, that seems excessive and it is not intended to be there. I believe this is information that the project is going to need to have at their fingertips to move forward.

If this is excessive reporting, then I think that we need a proposal from ADDC on what information they will provide to the legislature on a regular basis. Having a few legislators that are intensely interested in watching the project, having to draw answers out about things in front of committee meetings is— it's not a good process. You know, we're already struggling to get information. We have to ask the right questions to get the information, and we're not always getting it. It seems very reasonable for a project like this that we have that information.

There are huge impacts to our communities. There's huge impacts that we're, you know, to our state budget, to our local communities, and we need to know if we need to make adjustments. So if this is too much, then we need to know what is reasonable. And so if this amendment doesn't pass, then I hope that you help us define what that is. And if it does pass, I still hope that you help us define what that is.

But I think asking for twice a year reporting during construction on what's happening with this consequential, consequential project is not too much to ask. Thank you, Representative Mears. Representative.

Mr. Adler. Thank you, Madam Chair. While I appreciate the desire to keep tabs on the big project, huge project, I think some of the language sets out a very broad range of inquiry. For example, the total estimated payroll dollars attributable to the projects, that's going to require primary, secondary, and tertiary analysis of, you know, dry cleaners who are hired to address cleaning uniforms. The number of jobs created or affected listed by region, that's going to be a tough one.

Current status of the projects, I think if it was— that seems a little more reasonable. But the committees, legislators will still have the opportunity and in fact the obligation to bring AGDC or 8STAR people before the committees to get updates. I don't think we are prescribed from getting this information. Again, the lens we bring sometimes is legislature, we want reports and task force and so forth, but the whole focus of this project is to empower private industry to get this thing done. So I think there's nothing to prevent us from getting this information if we ask for it, but to require this degree of reportage at this frequency is going to— would be a burden on the project, I think.

Thank you, Representative Sadler. Is there further discussion on Amendment No. 22?

Seeing none, I am going to maintain my objection on Amendment No. 22G.6. Will the clerk please call the roll?

Representative Prox? No. Representative Elam? No. Representative Colombe?

No. Representative Hall? Yes. Representative Fields? No.

Representative Mears? Yes. Representative Sadler? No. Co-chair Dybert?

No. Co-chair Freer? No.

2 Yeas, 7 nays. With a vote of 2 yeas and 7 nays, Amendment Number 22, or G.6, has failed to be adopted. Um, the next amendment is Amendment Number 23, G.34, by Representative Colon. Uh, Representative Colon? I move G.34, Amendment 23.

Thank you, Representative Klobuchar. I will object for the purposes of discussion. So Amendment 23 basically says— is guaranteeing $7 per MCF gas. There was a drafting error in the amendment, so I would like to do a conceptual amendment real quick. Representative Klobuchar, so line 11, add this section applies at first export.

So what I'm trying to get at is when it's all said and done and they're exporting gas, I'm trying to make sure that Alaskans get cheap gas. So this pipe— the pipeline has so many benefits to jobs and things, you know, in the construction, and I see that. But what I really want is I want lots of supply, and I want it affordable. My constituents are getting smushed with their utility rates. And so I did see in the other body that they had put a $5, um, per MCF when it's all said and done.

So I thought $7 is under what we have heard from the governor and from a lot of hearings. And so that's what the amendment does, and I would definitely like Mr. Prestidge to come and comment on it. Thank you, Representative Colon. There was a motion for a conceptual amendment and there was not an objection, and so I will— so the conceptual amendment to Amendment 23G.34 has been adopted, and I'd like to invite Mr. Prestidge back to the table to comment on Amendment Number 23 as conceptually amended.

Madam Chair, Ada Prestidge for the record, thank you. I will restate for clarity and so there is no misinterpretation. Our objective is to deliver the lowest possible price gas to Alaskans on this project. I believe in this committee several weeks ago there was a presentation of the step-down in pricing. There was a graph that showed the step-down.

And that price does— that's a reflection of the contract structure that we are negotiating with NSTAR right now that does result in a Phase 2 price that is meaningfully lower than $7.

And so I am just making it very clear, not just our intent, but what we are negotiating and on the verge of executing right now. That contract then, of course, would go to the RCA for review and a transparent process, and the RCA would give an approval of that. Our position is that those types of pricing discussions should be handled between the companies negotiating them with the oversight of the Regulatory Commission of Alaska, who has a very experienced team and staff qualified to evaluate whether those are the right prices. Um, so that's, that's the general principle that we didn't have price caps in legislation. I think that's just a general economic principle.

And then lastly, just want to point out that any gas price, any commodity price will have an escalation rate that rises with inflation. And so eventually, as a gas supply contract increases or gas price increases with escalation, which is totally standard, You're going to start to— you're going to hit that cap and the project's not going to be economical at that point.

Okay, so— Thank you. Follow-up? Okay, so you're saying that the price quoted to us after all is said and done, I'm not doing this until we're exporting gas, there's still going to be enough fluctuation that it could go over 7? I thought 7 was way above what you guys were talking about, so I tried to give it some room. It is, but I'm just saying, if this becomes the law that governs the project for many years to come, we'll have a price that starts day one of the— of Phase 2.

There will be a low price, but that price will go up with escalation, with consumer price index escalation every year. Eventually, over years to come, that that number gets above $7. But that's years down the road, but it then it would be bumping into the hard price cap from this legislation. Okay, Representative Fields. I move conceptual amendment number 2 to link the $7 to CPI.

Um, I will object for purposes of discussion and to check with Andrew to see if He captured that conceptual amendment. Uh, Representative Fields.

I agree inflation will take place and support the underlying amendment, and it sounds like the amendment sponsor is okay with this conceptual amendment. Okay, I will remove my objection to the conceptual amendment. Is there— I'm sorry, not on the conceptual. Okay. So, um, wait, I need a briefcase.

We were on— Back on record in House Resources. So both of the conceptual amendments to Amendment Number 23 were adopted, and now we are back on the underlying Amendment Number 23 as conceptually amended twice.

Representative Sadler. Gotta love those conceptual amendments. You know, if our concern— if our goal is to have low-cost consumers, and that's one of my goals in this, the The way to do that is to structure the bill financially to have the lowest cost to get to FID and deliver gas. If I believed we could set the price by statute here, I, I've got more power than I think I do with my little vote here, but I don't think we can repeal the laws of economics. So if it costs $10 per MCF to deliver and the law says we have to sell it at $7, we are scaring away investors.

So much as I respect the desire to keep the rates low for our constituents and ratepayers, I'm going to have a hard time supporting this. This is state price controls and you really— I don't think you do well when you try to interfere with the laws of economics.

Thank you, Representative Sadler. Representative Mears. Thank you to the chair of the committee. I very much appreciate the concept of capping that. I'm not—.

I'm going to refer to Senate Resources and I know that they have this in their bill and I.

I don't recall the conversation, you know, where they are at with that. There are a lot of meetings over there. I am concerned about different unintended consequences than Representative Sadler, that, you know, putting that out there might actually inflate a lower number for consumers.

I can't untangle the thoughts of some unintended consequences from having this, but I have I very much wish that I could support it, but I just— I'm too concerned about some of those other factors that are in there. And yeah, I'd love this to be a very high cap that we never reach at phase 2. So can I respond? Representative Kahl. Yes.

So I had the same a concern that they could probably go lower, and then they see the 7 and it kind of inflates it, and that's not my intention. If I was in charge of this, I would give them the 6 cents. I would reduce all the things. I would do what you need to do to get the pipeline. But unfortunately, I'm not the only one in the building.

And so— and I would have to say I have a lot of concerns. What's going on in the other body and their resources committee. So if I'm looking at, you know, if we can't get it down low enough, and it's been clear that if we keep the taxes up, it's going to fall on the ratepayer. This was an attempt to at least say, hey, you know, try to keep downward pressure on all the taxes and all the fees, all the things that are going into it. And we have a ceiling at $7 with CPI.

That was the motivation behind the amendment. I'm not looking for, you know, state controls or whatever, but I'm just reading the building. And I, I think, you know, if, if we can't get this, you know, at a rate where the project is competitive and it doesn't just fall on all our ratepayers— I was attempting to you know, push back on that. So I don't think I have enough support for the amendment, so I'll go ahead and withdraw it. Okay, uh, Amendment Number 23 has been withdrawn.

Let's see, the next amendment that I have, Amendment Number 24, um, is G.26 by Representative Elam, and I'm just going to take a brief at ease while we swap out, um, so, briefities.

We are back on record in House Resources at 5:20 PM. The next amendment that we have is Amendment Number 24, G.26, by Representative Elam. Representative Elam. Thank you. I move Amendment Number 24, which is G26.

I will object for purposes of discussion. Representative Elam, speak to the amendment. Thank you. Um, yes, so what Amendment 26 does, it changes the meaning of the term local contribution to expressly exclude tax revenue resulting from property taxes on gas treatment plants, carbon capture facility, or liquefied natural gas facilities related to the natural gas project as it is defined in Title 43. Basically, under these changes made in this amendment, school districts will not or may not include tax revenue resulting from the property taxes— oh, I'm sorry, I dropped— yeah, I'm on the right line there— treatment plant.

It's been a long day and I am all over the page here. So I apologize. A city or borough therefore could increase the school districts outside of the cap funding using the tax revenue, but could in effect, or could have an effect on the state failing the disparity test and resulting. So with all that jumbled up mess that I just— thank you— said there, in short, what happens is in districts where we have large pieces of capital investment, it can really cause our tax structure to get out of whack. And then with the local contributions, it can really have some impacts on local contributions.

And sorry, my—. No, you're fine. Okay, please proceed. Yes, we are on Amendment Number 24, Representative Sadler. Yeah, so Thank you.

But, uh, with that, I don't know if I made my explanation very clear, but happy to have any conversation. No, thank you, Representative Elam. Representative Colon. Yeah, so if this amendment doesn't pass, how does that affect KPB? Thank you.

Through the chair, um, the local contribution would be significantly larger. It creates a fairly significant gap to the tune of whatever that facility ultimately winds up costing, and that would be the gap that would be needed. So if you're giving a large tax break to the facility, then the local taxpayers would also need that gap so that they're not obligated to fill that disparity gap. Okay, thank you. Thank you.

And I know that Representative Prox had some questions about this. We do have Emily Nauman on the line, the director from Legislative Legal Services. I don't know if there are any questions for her, but I'm looking around and I'm not seeing— oh, Representative Mears. Thank you. Through the chair, I'm not on education and have not spent a lot of time with this the topic.

I believe this is, you know, a payment in lieu of taxes thing, and I did not read fully the 3-page legal memo on— I just don't have a full enough feeling of how this is different from what was added in the CS, if there was some protection added there and this is this is needed. I, I'm just not getting a full enough picture of what, what this is doing and what the need is for it. Um, through the, through the chair, uh, I did not see any protections in the, in the CS specifically to address the gap, um, in what would be the full and true values of the facilities that would be in the Kenai Peninsula or on the North Slope or really anywhere along the, the pipeline. And so, um, part of the revenues that would be generated in having that kind of a facility there would also be revenues that would go to fund, uh, services within those areas. And so, uh, because of that gap that gets calculated, you have the, the, the floor and then the cap of what you can contribute locally.

Um, that, that gap gets larger when there's more property values. And so like last year, for example, we increased the the BSA. Ultimately, because our property values on the Kenai in particular, which I'm much more familiar with, uh, our property values went up, and so the gap went up. And so we actually wound up taking a multi-million dollar cut to our funding. Um, and so this is going to preserve some of those.

Uh, Representative Fields. Yeah, um, Representative Elam is right. This is a good amendment to protect funding for schools and avoid a cost shift from the state to local property taxpayers.

Thank you, Representative Fields. Representative Prox. Yes, thank you. I agree that this is a significant protection, but there is this long 3-page legal memo that we have, so I wonder if we could get Fudge Legal's opinion on this. Thank you, Representative Prox.

Ms. Nauman, are you on the line currently? We've had some folks drop off and drop back on. Yeah, I'm still here. Okay, thank you for your patience and for being with us for this long while we have sat with each other for 7 hours.

Director Nauman,.

Woman, can you speak to Representative Prox's question?

Sure, just one moment here to catch up with— I'm looking for the memo that was referenced. Oh.

In my— sorry, in my collection of things I have here.

It's the white piece of paper. Okay. White piece of paper, you don't say. Okay. Through the record, this is Emily Nauman, Legislative Legal Services.

And I can speak sort of generally about this topic. But to the extent that the committee wants to really delve into this, I would suggest and our education attorney is still in the office if you'd like her to call in. But what I can say about these two bill sections, which is Section 2 and Section 3, is that they are carried over nearly identical from the Governor's A version. And so I don't, I can't speak to the intent of why they were, why they are in the bill. It's my general understanding they might be in there because the value of this projects would be difficult to calculate and therefore might cause some issue in executing the local funding calculation set out in education-related law.

And that this was the governor's attempt at trying to fix that by removing the property from the calculated value base that is then used to calculate the local contribution.

That said, um, As the committee, and as many members of the committee might be aware, that triggers a couple concerns, or one specific concern related to equal fund— equal protection and school funding. Amending the definition of local contribution may result, in this case, in more funding going to certain school systems than others, and that triggers an equal protection concern. Whether or not these sections have the actual effect of that, and this would include the new to altered calculation under Amendment 24 that you're considering is not something our office has a specific answer to. It would take some economic modeling to understand the financial effects of this amendment and the underlying bill to understand whether or not this is really a constitutional issue. I'm happy to see if our education attorney is able to jump on if you would like further analysis.

Thank you, Ms. Nauman. My office is contacting your office to try and get Marie on the line. Um, and it looks like she might be there. Is she there? Okay.

Representative Fields? Um, I think we're gonna continue to have other kind of vaguely worded legal memos that we may or may not have some result, and I'm supportive of just passing the amendment, moving on.

Thank you, Representative Fields.

Is there further discussion? Do we want to— Representative Prox? Well, I agree this is a long discussion, but I think we need that because this, this could cause problems somewhere down the road. I don't know, I don't know whether it would affect the project itself. It just affects— Representative Fields, it wouldn't—.

Through the chair, would not affect the project itself, Representative Proks. If there was a lawsuit, only this provision would be addressed by it.

Okay, it looks like—. That's my guess. We—. It, it's taking a minute for her to get on the line. I'd like to proceed if there are— no, I don't think so.

Brief it is.

Back on record in House Resources. Is there further discussion from committee members regarding Amendment Number 24? Representative Hall. Thank you, Madam Co-Chair. I'll be brief.

I do not feel comfortable with the amount of information I have in front of me right now to, to vote in favor of this amendment. Thank you, Representative Hall. Is there further discussion?

Hearing none, I'm going to remove my objection on Amendment Number 24G.26. Is there further objection? There is an objection, and I believe you spoke to it. I don't know if you— okay, uh, can— may the clerk please call the roll on Amendment Number 24G.26?

Representative Prox. No.

Representative Colon. Yes. Representative Elam. Yes. Representative Paul.

No. Representative Mears. No. Representative Fields. Yes.

Representative Sadler. Yes. Co-chair Diver. Yes. Vote chair Freer.

Yes.

6 Yeas, 3 nays. Uh, with a vote of 6 yeas and 3 nays, Amendment Number 4— 24, excuse me, G.26 is adopted.

Uh, let's see.

Okay, next we've got Amendment Number 25, G.33, by Representative Elam. Representative Elam. Thank you, Madam Chair. I move Amendment 25G33.

I will object for the purposes of discussion. Representative Elam. Thank you. Amendment 25, um, constitutionalizes the, uh, a fund But it still puts the vote before the people for education funding, and then it ties the revenues from this particular project to a— to that fund. Again, it all goes before the people.

It's subject to the vote of the people. What this does though is it takes education funding and puts it in a dedicated fund which also takes pressure off of things like the POMV. It also takes pressure off of districts to not know some consistency with where some of the education funding is coming from. And with that, I will take any questions.

Thank you, Representative Veland. Representative Fields. Yeah, I support the amendment, but I'm going to move conceptual amendment 1 to change 100% to 80%, which aligns it with the underlying statute around Rural Energy Fund and with the previously adopted amendment on REF.

Conceptual Amendment 1 to Amendment Number 25. Is there any objection to the conceptual amendment?

Seeing and hearing none, Conceptual Amendment Number 1 to Amendment Number 25, or G.33, is adopted. Representative Fields. And if I might just follow up, I think this amendment makes a lot of sense. The Senate already passed an SJR, I think it was by a 17-3 vote. So this very much aligns with the constitutional amendment that we're going to have in our body.

It will go to a vote of the people. It's conditional. I think it makes a lot of sense to give people this choice.

Thank you, Representative Fields. Is there further discussion on conceptually amended Amendment Number 25, G.33? Representative Stadler. Yeah, with respect, I'm going to have to oppose the amendment. Our Constitution has prohibitions against dedicated funds for good reasons.

The legislature is closest in touch with the people and can reflect the needs of the people on a very tight timeline, can turn. Dedicating a huge chunk of money for education funding— while education is certainly necessary and beneficial and always gets lots of money from the state, if we start to lock up revenue streams now, future legislators will rue that day. I think this money is going to get to the money that's going to come from a gas line, will find itself into the system to educate our students. But locking it in now and prescribing any other options is not appropriate given our constitutional authorities and responsibilities. Representative Sadler.

Representative Klobuchar. Yeah, so I just want some clarity on it. So, um, this— well, now 80%, that's just the state share that would be going in. Does this affect any municipality share?

Yeah, when it goes 50/50 and all that. Representative Ewan. Through the chair, no, it does not. It solely affects the state contribution, the state shares. And I would point out that all of the revenue projections that we're seeing are actually just a fraction, maybe half of what current education funding levels are at.

So— Representative, follow-up. So are you envisioning that this would offset the costs for the BSA? Or so I guess I'm trying to figure out if this happened, would this be additional money to education or could it be used to help pay for the BSA? Through the chair. Representative Ehlund.

You know, without making adjustments to the BSA formula, one would be speculating. At this point, my, you know, vision is that it would take funding needs off of the general fund. It would also take the needs away from things like the PFD and the POMV.

Okay, thank you. Thank you. Representative Mears. Thank you, through the chair. I am again finding myself with not enough information to make a decision here.

I mean, the concept of, you know, constitutional amendment for education funding is a completely separate issue. And I don't have the information in front of me about what other sources of revenue would go in there, you know, how this affects things. And it's spending money we don't have yet on something specific. And, you know, my thoughts on the REF from earlier is, I mean, that decision was already made by a previous legislature to spend it on energy. And to me, that's a different concept than what we're looking at here.

And as I stated earlier today, I'm looking on the larger policy issues and not to be doing some of the specific financial decisions and work. And that's where I'm finding myself with this amendment here, is that this is getting into the fiscal matters, and I— that's not where I'm at today. So concepts and, you know, larger pictures are fine. Working on an amendment that I don't have enough information on is totally different. Thank you, Representative Mears.

Representative Fields. Yeah, I just want to provide some additional background. So the SJR that passed the Senate 17-3 is one of the few and precious opportunities for the legislature to work together in a bipartisan, bicameral way to address a core issue that voters are demanding that we address. The constitutional language around designated funds is there for a reason, because voters should be able to choose if we're going to dedicate funds. And all that the SJR, if we pass in the House, will do is give voters that option.

I think it makes imminent sense that this project, which I hope is transformational— will be transformational in the way the permanent fund constitutional amendment was in 1976, which when voters passed it said we are going to take a non-renewable resource and turn into a perpetual endowment for the funding of public services. So I see this is very consistent With that permanent fund decision, we're taking a non-renewable resource, gas, and setting up a perpetual vehicle, a constitutionally protected education fund, and injecting revenue in there so it can support Alaska students and human capital development for generations to come. So I realize it hadn't received a lot of press. It's extremely important. And I think that, you know, and as with another amendment, if we include this language, it's provisional on voters adopting this with a two-thirds with the vote of the people.

But I think this provision in this bill will absolutely get broader statewide buy-in for the gas line, and that's really important. So I support it and appreciate the member bringing it forward. Thank you, Representative Fields. Representative Sather. Yeah, the permanent fund amendment to the Constitution already provides for a designation, but money from the permanent fund already does go to support education.

I don't— again, I'm concerned. I respect the desire, but I don't want to start the state of Alaska down the path of dedicating a revenue stream to noble-sounding and good causes. We have always funded education. We have done so generously. And this amendment kind of prejudges or presupposes that money generated will go to education.

It's going to create an incentive by placing a halo effect expenditure at the end of the gas line. The gas line revenues I hope we get from this can be spent for whatever purpose the legislature wants, whenever the legislature decides to do that. Education is a constitutional requirement to fund. We don't want to put in a constitutional obligation for a funding source. So I think this is a kind of a foundational and philosophical statement on my part.

Much as I wanted money to come for education from resource development, I don't want to designate that as such. Thank you, Representative Sadler. Is there further discussion on Amendment number 25. Representative Paul. Thank you, Madam Co-Chair.

I appreciate the thought behind this amendment, but I'm finding myself in greater alignment with Representative Mears. Just thinking about the broader over— overall scope, I kind of feel like this is something that should be taken under in House Finance. So I'm not sure exactly how I'm going to vote yet, but I'm likely a no vote. I will not vote. Thank you, Representative Hall.

Is there further discussion?

I guess I would just— Representative Elam? It's all still subject to appropriations. Right. Thank you, Representative Elam. With that, I'm going to ask the clerk to please— I will— well, I'm going to remove my objection.

Is there further objection? There is objection. Repres— or, uh, well, the clerk, please call the roll. Representative Sadler objected. Sadler?

No, that— no, it was Prox. I didn't hear.

She was— there was— she was clarifying who objected.

Representative Sadler? No. Representative Prox? No. Representative Kloe?

Pass. Representative Elam? Yes. Representative Hall? Pass.

Representative Mears? No. Representative Fields? Yes.

Representative Colon. Yes. Representative Hall.

No.

Co-chair Daibert. Yes. Co-chair Freer. Yes.

5 Yeas, 4 nays. With a vote of 5 yeas and 4 nays, Amendment Number 25, or G.33, is adopted.

Okay, we are on to Amendment Number 26. That's G.9. Representative Sadler. Madam Chair, I offer a move amendment to 26 G.9. And I will object for the purposes of discussion.

Representative Sadler. Thank you, Madam Chair. Amendment 26 is a simple amendment. It would delete Section 7 of the CS version in the bill, which charges the Regulatory Commission of Alaska with the responsibility to certify that the project is— several certifications— project designed to maximize in-state use of natural gas, that the AK LNG project includes a Fairbanks spur line that must meet Fairbanks' needs, that will share costs across the entire regions along the rail belt, and will begin operations after the Phase 1 pipeline commercial operations begin. Those are a lot of conditions to load on.

I think the bill would be better and the project would be better without them. So just to restate, adopting this amendment would remove the requirement that the RCA certify design for max in-state use. I'm not quite sure how the RCA certifies a design. I think if they get a rate case, they make a decision on it. Further, it would remove the requirement that the Department of Revenue essentially has to second-guess and double-stamp the RCA's position.

And again, it eliminates the requirement that the cost for a pipeline includes the 3 elements— the pipeline, gas treatment, LNG— includes a spur line. So I think it kind of streamlines it and makes it a better bill. Thank you, Representative Sadler. Representative Mears. Uh, thank you to the chair.

I'll not be supporting this amendment. I'm sorry, I will not be supporting this amendment. Thank you, Representative Mears. I will also not be supporting this amendment. Is there further discussion?

Representative Prox? Yes, I'm wondering what the project sponsor thinks about the amendment. So if we could hear from Mr. Prestige or Mr. Kissinger, I guess. Thank you. We've got Mr. Prestige right in the room with us, so I will invite you back up to the table and Mr. Nelson, hear your thoughts on Amendment No.

26. Thank you, Madam Chair. On Amendment 26, we are supportive of that for a lot of the reasons that Representative Sadler articulated. We think it essentially removes or streamlines the oversight of the project.

The oversight for that particular provision of the law is through the Department of Revenue.

That is a more suitable and proper agency to be regulating the matters in this bill. Thank you, Mr. Prestidge. Is there further discussion? Representative Souders. I just want to pose a question.

I also want to ask RDC, how would they certify that a design was maximized— was designed to maximize in-state use? What would a design be that did not maximize state use? I can't conceive of what that would be. And so requiring the RCA to make that determination I think is kind of redundant and superfluous. So again, the desire to get a gas line, I share it.

The desire to get it to meet our state's needs, I get it. But to have this extra do-loop of RCA certification, I don't think is helpful to the project. Mr. Prestidge. Thank you, Madam Chair. Just to concur, when we read this amendment, we envisioned a scenario with many, many rounds of hearings of the RCA trying to interpret the law that is written in very broad language.

As Representative Sadler has articulated. It also presents to me the question, does maximizing in-state use prohibit exporting natural gas as LNG? That's a concern that I think any regular— the regulatory commission would need to spend, you know, significant amounts of time and effort and legislative dollars and project involvement to determine the answer to that question. And so, again, I agree, I don't think it actually makes any sense for the project. Thank you, Mr. Prestidge.

Representative Prox. Yes, thank you. Through the chair, do you have any guess of how long it would take RCA to make that determination? Representative Prox, no, because I think it's such a vague determination that would be asked by the regulatory commission to make. The regulatory commission reviews contracts and approves things that are in the best interest of the consumer, of the ratepayer.

This is quite a much broader and more theoretical determination that's being asked to be conducted by the agency.

Follow-up?

Excuse me.

I was trying to think of somebody else that's online that might have a— I guess because I think that this would take about a year for the Regulatory Commission of Alaska, maybe longer, but they have a long time to answer these questions. Uh, busy. Thank you, Representative Prox. We do not have anybody with the RCA on the line. Yep.

Representative Sadler. And thinking through the list of folks that we have had online, would Mr. Richards from AGDC himself, I don't know if he might bring a special— he's been involved in this, soaking in this milieu for a decade or more. He might have some perspective that might be helpful as we consider this amendment. Is Mr. Richards— are you still on the line?

And did you hear the question?

Hello, can you hear me?

Yes, we can hear you.

Okay, it would be helpful if Representative Chau could ask the question again, please. Certainly. Through the chair then, Mr. Richards, thanks for coming on. My question is, generally, is the requirement that the RCA certify the design of a gas pipeline to maximize in-state use, is that something achievable? Is that something RCA has set up, staffed, equipped, knowledge base to do that, or would that tend to, as I believe it would, add time and— it's not their mission to do that.

It would add time that would not be productive or support the ultimate construction of this project. Any thoughts, I guess my general question, any thoughts about the requirement that the RCA certified that the design of a natural gas pipeline system would be to maximize in-state use?

Through the chair, Representative Chandler, thank you for the question. I, I'm not an expert around RCA, but I would say that, you know, certifying the design, it has gone through significant reviews by design professionals within the Federal Energy Regulatory Commission as well as the Pipeline Hazardous Materials and Safety Administration on this. And so those certifications are in hand, and so I'm not sure what additional value would be for the RCA. Feedback. I think, Mr. Richards, I just want to clarify, you were a little bit muffled there.

So you're saying you're not sure if the RCA's involvement in that certification would provide value? Is that what you said? Through the Chair, if you didn't sound like— that's what I said, yes. Thank you, sir. Thank you, Mr. Richards.

Thank you. Sorry, I was trying to read a note. I'll go to Representative Fields and Representative Prox. I wasn't paying attention to who had their hand up. I guess I'm trying to understand this amendment.

It looks to me like this amendment actually maintains the requirement for the Fairbank Spur and simply eliminates this particular certification by the RCA. Is my understanding of that accurate? So if we adopt this amendment, would we still have the Fairbank Spur requirement? I'm curious what the co-chair from— Fairbanks thinks about that. I believe it would.

Yep, brief it is.

Back on record in House Resources, Representative Fields. Um, if I could ask Emily Nowlin, so it looks to me like this amendment, by deleting the core of the amendment, is Leading lines 4 through 8 on page 9. So, Miss Nowman, could you confirm that this would maintain the requirement that there be a Fairbanks spur and, uh, commencing with construction of that spur within 2 years, the gas line is required for the tax relief under the bill? So all this amendment does is just eliminate this RCA certification process. Am I reading the amendment properly?

For the record, this is Emily Nauman, Legislative Legal Services, through the chair to Representative Fields. Yes, Amendment 26G.9 just has the effect of removing the certification requirement by the Regulatory Commission of Alaska. Okay, um, I mean, Representative Fields, yeah, to the chair, to the co-chairs, I mean, if the co-chair from Fairbanks is all right with it, I'd be fine voting for this amendment. Definitely defer to her, but I don't see this as doing a whole lot other than removing a little bit of bureaucracy. [FOREIGN LANGUAGE] And I would note for the record that RCA will still exercise its proper authority to review gas supply contracts and protect ratepayers as they approve or modify them.

So RCA would still play a part, but just not in certification with the design of the gas line. Thank you, Representative Sadler. I think we are on the same page with this, um, Amendment, Amendment Number 26. So I will remove my objection on Amendment Number 26. Is there further objection on Amendment Number 26?

Seeing none, Amendment Number 26, G.9, is adopted.

Uh, the next amendment is Amendment Number 27. That is my amendment, or one of my amendments, and, um, I'm going to take a quick brief at ease. Do you have to.

All right, back on the record. House Resources. We are on Amendments 27 and 28, which is from Co-Chair Fearr's office. I move Amendment 27. No, I'll— oh, sorry, I apologize.

We passed the gavel over. I'll move Amendment 27, G.31. I will object for purposes of discussion. Thank you. Thank you, Co-Chair Dibert, for taking over the gavel.

So what Amendment 27 does is it replaces the CBA, the Community Benefit Agreement language, with a specific impact fund language. What it currently does is it deposits $30 million into a designated community impact fund with several conditions, including that 25% of the anticipated cost to the municipality related to the construction of the gas pipeline would be upfront, and then the rest of it, any impacted municipality can submit to the fund administrator additional actual costs. So, and I believe this was supported by the project developer, but I would offer, conceptual amendment to Amendment 27. So I will move Amendment 1 to Amendment 27 to, on line 7 after deposit, uh, where it says $30 million, I would increase that to $40 million. Okay, I will object.

Object. Would you like to speak to your objection? Yes. Senator Johnson. Yeah, thank you, Madam Chair.

I had an amendment that would be $25 million and I thought going up to $30 might be appropriate. There's going to be a lot of impacts, but I think a 25% increase over this might be a lot to add, not knowing what the impact that would have on the project economics. And I would also say that I think this bill, while important, is not going to be the last and final say on impact aid. Future legislatures, should we be so fortunate as to get a final investment decision, may decide that the $30 million in this amendment for impact might not be sufficient, and the legislatures could make appropriations into some kind of impact fund or use other mechanisms. So I appreciate the desire to mitigate the local impacts.

I think $30 million, again, is even higher than I would have supported originally, but I can go there. It's my wish not to overburden. Let's not be so generous and accommodative as to kill the, you know, kill the baby with the bathwater. Rep. Sadler, I didn't hear a motion to move a conceptual amendment to, but—. I don't believe he was moving.

He was objecting to— Yeah. I— I— would ask folks to support the conceptual amendment to increase it up to $40,000. I think there's going to be significant impacts. I mean, sorry, 40— I think there will be significant impacts to the impacted communities, including impacts in Fairbanks for the, you know, needs for the Fairbanks Pipeline Training Center. There will be housing impacts.

There will be, there will be, you You know, folks are— they're going to be flying through Anchorage, going through the ports. I think that we need to anticipate that. You know, we've heard that there will be 7,000 workers, but then we've heard in a different document that was distributed that there would be a need for 12,000. And so I think— I think it's important, and I think we need to be able to support the different boroughs up front in anticipation for not only the, the impacts of more people being here, but education and the hospitals, public safety. And so I would just push back, Representative Sadler, and I would hope that folks will support the conceptual amendment.

Can I see— seeing any further questions? Representative Kloom. I just wondering if we could have Mr. Prestidge come up and see what his thoughts were on the 30 and the 40. Absolutely.

Mr. Prestidge, if you could come forward, state your name for the record, and address this amendment. Adam Prestidge, Glenfarm. To address this amendment, I want to remind where this concept came from. It was the project, it was 8 Star, it was Glenfarm leadership. That took into account the discussions around how the project will engage with the community.

We saw the request for Community Benefit Agreements and we took the proactive step to propose a Community Impact Fund with a certain amount of funds. And so, you know, that was something we were willing to do. I feel it is a little bit unfortunate to then see it turn into essentially just a tug-of-war to try and push that number higher. That number we came to with support of our independent advisors who evaluated the expected tax implications— or sorry, impacts on this project. And so we're not supportive of this amendment.

Thank you. Oops, sorry, your turn. Okay. Thank you for your statement, Mr. Prestidge. Are there any further questions?

Representative Prox. Yes, thank you.

Well, I guess we would want their thoughts on it too. Through the Chair to Mr. Prestidge, there isn't any guidelines that I've heard of or any estimates of what might be a potential impact. You can see that police protection road maintenance, but I don't know if creating a flower garden somewhere is an impact, a direct impact, to the pipeline. So do we need to put some side rails on this amendment?

Thank you, Representative. Lose or draw, I guess. Thank you, Representative Prox. Um, I don't know, Mr. Prestidge, would you want to take a stab at that? Representative Tibbetts, the, um, Madam Co-Chair, uh, the— what we see, or what we, what we think works well, is for this fund to fund actual documented, uh, documented community costs to the community.

Uh, that concept is based on, uh, to the way the state manages disaster relief funds as well, and it is for a pretty narrow subset of cost to the community by things that are not already compensated by the project. And so the project already has the obligation to repair and maintain all roads and restore them to the original or better condition than they were before the project— we started working on the project. When it comes to using existing infrastructure like airports, it's, you know, they're There's payment for landing fees, payment for use of waste disposal sites like the dump in Kenai. The project will have its own medical services for its staff. So many of these, many of these cost concerns are already accounted for within the project.

So we're really looking at things beyond that, which would be actual documented costs. Thank you for that, Mr. Prestidge. I have a couple more questions. Representative Mears. Thank you.

Through the co-chair to Mr. Prestidge, what was the dollar amount that your advisor came up with? The dollar amount was approximately $30 million. Follow-up? Follow-up. Through the co-chair to Mr. Prestidge, what was the— what feedback are you getting from communities on what their needs are?

Madam Chair— sorry, Representative Mears, that number I would say fits consistently with our discussions with the borough mayors, those at least. And I'll tell you.

We have spent a lot of time working with the mayors to try to find out what the right number for this was because the project is willing to compensate communities for the impacts. We have had some discussions with some of the mayors, particularly those that will be the most impacted by construction in their communities, and we think this number aligns with the needs, with the stated needs of those mayors.

Thank you, Mr. Prestidge. Representative Kulum. Oh, I think, um, he just answered my— well, actually, just to confirm, so if this wasn't amended to 40 and it just stayed at 30, you would be supportive of that? Representative Kulum, that's, that's correct. Okay, thank you.

Okay, seeing no further Representative Prox.

Yes, just another thought that this is right now, it is, it appears to me to be $30 million deposited. It doesn't say when or if that's just up to, up to $30 million over the next however many years it completes. It takes to complete the project. Do we need to delineate that specifically?

Thank you, Representative Proks. Um, Co-Chair Freer, do you want to take a stab at that, or Mr. Prestidge? Uh, thank you. Um, through the co-chair to Representative Proks, I I would defer to Mr. Prestidge. I don't have an answer about when, or I mean, it's before the communities are impacted, and, but as far as when it's funded and when, when the fund administrator is going to pay the impacted municipalities, I'm not sure if that needs to be prescribed in this amendment.

But thank you, Co-Chair. Mr. Prestidge, do you want to add to the discussion? Yes, please. Representative Proksy, the Co-Chair, the way we envision this would that there would be an allocation of funds by the project. I don't necessarily think that this would require like the opening of a separate account and depositing funds into.

I think there would be, there there would just be an allocation and an expectation that the project would pay for these impacts upon receiving documentation of those expenses. $30 Million would be the limit to that. So assuming— I think the details of exactly how that would work, like if there were funds left over well after construction were completed. I guess it would be the purpose of the fund would be exhausted. So that's one of the details, I guess, that would have to be worked out.

Representative Sadler. [SPEAKING NATIVE LANGUAGE] I'm going to offer just kind of a metaphor in my wrap-up. The metaphor is the camel. A camel can carry a lot, but if you keep adding more and more straws to it, eventually you're going to add one straw too many, you'll break its back, and you won't be able to get where you are. And I'm concerned that much as their desire— I share the desire to mitigate the impacts on our communities.

And I will probably support the underlying amendment if we can, if we get to that. But I am just concerned that the AK LNG project can bear some extra baggage and I just want to make sure that we don't overload it at the front end to the point where it just becomes uneconomic and then we have nothing to go for. I think that the initial— what we have now is $30 million into a fund to mitigate direct impacts for impacted areas. I like that. And if we find out that after we've gotten to FID and construction begins and the AVT is flowing, we may be able to be in a position as a legislature to appropriate more money to address the direct impacts.

I have no doubt that the local communities will not come to us if they have additional impacts. But again, our mission— let's remember, our main mission is to incentivize the decision to do this. If we pass this addition, it may or may not be the camel's— the straw that broke the camel's back. But I don't want to risk doing so. So thank you, Rep. Sadler.

All right, and I just— I'll go ahead and put my two cents into the conversation. Um, the pipeline goes through 2 miles of my community, and I know it's this very small amount, but it will definitely have impacts on Fairbanks. So I will be supporting the amendment. Any further questions? Clarification, we're on the adoption of the conceptual amendment, is that correct?

Yes. Yes. Okay, thank you. Yeah, Co-Chair Freer. Yeah, thank you, uh, through the Co-Chair, to, uh, Mr. Prestidge, you know, we are trying to come up with a number that works We heard that $30 million is the number.

You know, we went back on the Community Benefits Agreements, the CBAs, to try to give the project developer more leeway in how that works out. I mean, if this is not suitable or if this number is not fine, I mean, we can withdraw Amendment Number 27 and go back to the language that it was previously. But I want to stick with— I mean, I hope that members support the conceptual amendment. Thank you. All right.

Representative Fields. I was going to propose that we vote. Okay. All right. So we are— no more further questions on the conceptual amendment.

To Amendment 27. Are there any further objections? I'm sorry, I missed— yes, I do object to conceptual amendment. Okay. Yes, I hope I made that clear.

Okay, very. Um, would the clerk please roll the call? Call the roll. I'll do both if you'd like.

This is, uh, 27. 27. Thank you. Representative Fields? Yes.

Representative Sadler? No. Representative Crocs? No. Representative Colon?

No. Representative Elam. No. Representative Paul. Yes.

Representative Mears. Yes. Co-chair Diver. Yes. Co-chair Freer.

Yes. Uh, 5 yeas, 4 nays.

Okay, and all right, and with that We need to vote on the amendment. That's—. Hold on a second. Yeah, I do.

And with a vote of 5 yeas, 4 nays, amendment— the conceptual amendment number 1 to Amendment 27 to House Bill 381 is adopted. All right, so now we move on to 28. Oh no, we have to vote on 27. Or if there's further—. You have a sheet there.

Okay. All right, so now we're going to vote on the conceptually amended Amendment 27. Chair Diamant, brief it is.

House Resources back on the record. Um, are there any objections to the conceptual amendment 1 to amendment 7? Amendment 27. Oh, we were—. We were just— discussion on District 27.

Okay. Are there any further discussions on Amendment 27? Representative Ramirez. Thank you, through the co-chair. I strongly object to the adoption of Amendment 27.

I think there are substantial benefits and flexibility to communities to have a community benefit agreement directly with the project developer and having the legislature not be in the middle of deciding how much that is. Um, the opportunity for negotiating for local hire, training opportunities, things that are in-kind, other sorts of trades, um, is eliminated by, um, removing the Community Benefit Agreement. Um, I have concerns about the fund, um, that it'd be administered by the primary owner. Uh, the way we have the impact fund now, it goes through.

The state, I believe, and having the primary owner control the purse strings, control how— like, what gets approved, the timeline for it. We, you know, we've been discussing in the legislature timelines for prompt payment. There's nothing in here about that. And I think that this amendment strips away a lot of the protections we've been trying to provide for local communities in the CS version G that we have in front of us. And I won't go on and on, but I think, I think my points have been made.

Any further? Actually, I have Representative Prox. Yes, well, I kind of agree with Rep. Mears, and we heard from the project sponsor that they are negotiating with the communities. I don't think that this amendment is necessary, and, and I think there is going to be— there is going to need— there will need to be some sideboards put on that so they can understand what is an impact and what is just nice to have. And that could get way out of hand.

But at this point, the sponsor, project sponsor, has agreed to negotiate with the municipalities. I think we should leave well enough alone and therefore pass Amendment 27. Thank you, Representative Prox. Representative Sadler. Thank you.

I am going to support this amendment. I think clearly there's going to be impact on the affected communities. And for the record, I will say that I think the impacted municipalities defined on page 2, line 10 through 12 are appropriately named because it's clear to all of us, I think, that these are the communities through which the pipes will run, the communities in which the gas processing facilities and LNG impacts facilities will be located, and Anchorage being the central logistical hub for the state, the redirect impacts. I think that is appropriate. And so there will be impacts clearly, and I think a hard dollar figure will give some assurance to the communities that there's money there.

We're not just going to give us your questions and we will answer later maybe. Having a hard dollar commitment, it is going to be imposed on the owners of this project and the owners of the elements. But I think having that money there is a clear indication that the project sponsors do understand the impacts, even at the risk, and I must emphasize that, that even at the risk of this $40 million now would potentially tip the scales against this being a profitable, financially doable project. So with some trepidation, but understand the need and the obligation and the impetus to benefit the communities, I will support the amendment. Thank you, Rep. Sadler.

Representative Fields. Uh, thank you. I'm, I'm comfortable supporting the co-chair's amendment. I think it streamlines addressing community impacts. Um, the covering cost is pretty straightforward.

It's policing, schools, plowing, basic public services. It is true, as Representative Mears said, that the The localities will not be— will not be negotiating local hire and trades, but there's already a provision in the bill requiring negotiation for a PLA. So that provision covers local workforce, and it is certainly true that the state has a compelling interest in local hire on the project, and that is a compelling state interest for several reasons. The biggest— one of the risks that we face in terms of pricing and economic competitiveness of the project is cost overruns. The number one way to avoid cost overruns is to use skilled local labor.

You are going to deliver a project faster and better with someone who has worked in an Arctic environment than someone who has only worked in Texas or Louisiana. So we are going to get those craft workers. We are going to get them because of the PLA language that is already in the bill. And in my view, we don't also need a CBA where the localities are negotiating that because that can be done through the craft unions and in concert with the contractors. I think it is just a cleaner way of addressing that local workforce issue which is very much central to delivering the project.

Thank you, Representative Fields. Representative Kluhm. Thank you, Chair. So a couple of things. So this— there is— I didn't support the amendment.

I think it should be $30 million, but here we are, we are at $40 million. Difference between the CS and creating this impact fund. This was actually offered in good faith from Glenfarm. Everybody seemed to agree with it. They— the option— if they don't have that language, whether you, you can argue the money, how much it is, they're going to have to go through all the communities and try to get community benefit agreements with all these communities up and down the pipeline.

It's untenable. It will take too much time. It's too much. And maybe some of the communities are good negotiators and some aren't. I really appreciate the fact that they're willing to put 25% up front.

They're just going to give it to people. They're just going to give it to the communities. They're not required to do that under the construction of the pipeline right now. They don't do any of that. They could just say, too bad, I'm doing what I got to.

And So I'm going to support the amendment. I think there has been so much I have heard from Glenfarm trying to mitigate the impacts to communities. This is far and above what they actually have to do. And even though maybe, like I said, maybe I disagree with the number, I think that's maybe something in finance they could fix. I think the language in the amendment is important to get in the bill, so I'll be supporting the amendment.

Thank you. Representative Hall. Thank you, Madam Co-Chair. I'm hoping that the sponsor of the amendment can talk about the genesis of this and the thought process behind it. Co-Chair Freer.

Yeah, thank you.

So we heard concern, as, as Representative Calom just described, we heard concern about the way that the language is currently in in work version G about the community benefit agreement, about the potential to have to work with each of the smaller communities. And we were, you know, talking with the, with the producer, trying to get to a place where, you know, they're comfortable with and we're comfortable with. And So that was, I guess, the genesis of exactly the conversation that you're hearing right now is how we got here. And we realized that that wasn't included in the current CS version. And we just wanted to prescribe something, some kind of impact fund and a way that we can get funding to the communities that are going to be most directly impacted.

And to identify which communities those are, which ones are going to be directly in the corridor with the municipalities, and identify a method for reimbursement for actual costs of goods and services, or well, goods. And so that's where this came from. Follow-up? Yep, follow-up. Thank you, Madam Co-Chair.

So, uh, Co-Chair Freer, I might have missed this in this long dialogue with this being such a long day, but, um, how do these communities feel about this? I think I might have missed that. Co-chair? Yeah, thank you. Uh, uh, thank you, Co-Chair Dybert.

Um, to Representative Hall, I, I mean, I'm not, I'm not the one that's been negotiating directly with the municipalities. I just hear from, you know, reports back from the municipalities. So I would direct that question, probably defer to Mr. Preston Mr. Prestidge about how those conversations, or maybe even Mark Begich, if they can describe what that process has been and how that's supported by them.

Thank you. Mr. Prestidge, please come forward. State your name. Thank you, Madam Co-Chair. Adam Prestidge from Glenfarm.

This, this is a direct output of our discussions with the mayors over an extended period of time. We heard a lot of concern from the mayors' group that they are concerned about the financial impacts of construction on their communities and also the recognition that under the current tax law, the communities would be entitled to no compensation for any construction impacts. So this was the result of our months of working sessions with the mayors to understand the needs of the community and how we can address them. And if I may, Mark Begich was very involved in those conversations, in each of those, all of those working groups as well. So if he has additional comments, I think it might be useful.

It looks like he is online. Mr. Begich, if you could hear us, please state your name. It's Mark Begich. I work in the Governor's Office. Thank you, Madam Chair.

It has been, we have been talking to the mayors individually, also as a group for many many, many weeks. And the idea of community engagement or community impact construction funds are very important. And as you've heard from Glen Farmer,.

Their willingness to participate. I will say, you know, I understand you've already had the debate on the amount, and every time you raise the amount, it frankly makes it more difficult to negotiate because somehow the needs expand. But I will say this, that they have been very responsible generally. We feel very good about where we're headed. The question is, you know, for us, we want to make sure it's accountable, meaning that they are direct impact expenses, meaning if it's not already covered by the agreement, for example, road improvements, things like that, that you heard Adam talk about in detail already that are covered.

If they are additional things that have direct impact due to the construction, then we will deal with it. We have been with the mayors individually, feeling very positive where those are going. Along with that, what Representative Fields said, under a project labor agreement, many of the issues that people are concerned about— housing, those kinds of issues— get addressed in those 'cause a lot of them are camps offsite, not near the communities, even though they may come through the communities. The medical services, all the food services, all that is dealt with within— a lot of it is dealt with, I should say, in the PLA. So, you know, I believe, you know, when it was recommended around $30 million, that seemed to be a fair number based on all the input we're getting.

And again, we'd rather, you know, for example, if you put the money in that account into a fund, and let's say they come across and we're in a remote area and a community says, "Can you— we use your equipment in exchange for impact funds?" We will not have that choice because we'll have to put cash into an account. Some will want that because of the mobilization of this project. And this starts to restrict that ability to be— basically more innovative and frankly get more value for them and us. And I say from the state perspective, getting things done in the communities that would be very difficult maybe to move equipment for one project that has to be done. They may have a road that needs to be regraded, but you know, here's the project has that equipment there, but in order for them to get that use, they will have to pay for it because we put the money into the fund.

So, but again, Um, there is general agreement if that's where you want to do it, we'll work with it. But I just want to put— because we heard there was issues on the money, and so we wanted to make sure we were amenable. But there are complications when you make it only that.

Thank you so much for that, Mr. Begich, for your, your, uh, answer to that question. Um, we have a follow-up from Representative Prox. So through the chair, There was a little maybe misinterpretation. Direct question: does this Amendment Number 27 help or hinder the negotiations that you are currently involved with, with the communities?

Mr. Bagich?

Madam Chair, again, I am not representing Glen Farmer HSR on this, but from a state perspective, Anytime you put a number in, it discloses kind of where the cap is. So if you're trying to keep the project cost down in order to make the project work, you know, you want lower cost, but you also want real information from the different mayors on impact. And when you put a cap or a number, you're gonna— we're gonna spend that money. That's what's gonna happen.

Follow-up. So just to confirm, I think what you said was no, this doesn't help advance the project.

Yeah, it's a small amount on the large end, but for our negotiations it makes it more difficult. Yeah. Okay, thank you. Oh, uh, Representative Elam.

Thank you. I just wanted to make the, uh, brief statement, um, saying, you know, I wish it was, uh, still at 30, but, um, I do like this framework much better, so I'm going to go ahead and support the bill. Thank you. All right, thank you for your wrap-up. Any further thoughts or questions?

Um, yep, we— there he is, he's getting a snack. All right, so, um, Rep. Mears, do you maintain your objection?

Yes. Would the clerk please call the roll?

Representative Mears. No. Representative Fields. Yes. Representative Sadler.

Yes. Representative Prox. No. Representative Colon. Yes.

Representative Elam. Yes. Representative Hall. Yes. Vote Chair Diver.

Yes. Vote Chair Spence. Yes. 7 Yeas, 2 nays. All right, and with the vote of 7 yeas, 2 nays, Amendment 27 as conceptually amended is adopted.

And we're gonna take just a brief-a-dees, um, before we move to Amendment 28. Brief-a-dees.

Okay, we are back on record. In-house resources. We've spent, I think, 8.5 hours together at this point now today, um, and I appreciate all of the committee's work on getting through 27 amendments. We did roll a couple of amendments and some were not offered at this time. And so, um, with that, the next amendment is Amendment 28, and we are going to conclude our business for today.

I'd like to see my kids before bedtime and eat dinner. So we have not— we have not completed the amendments. We are going to hold 381 over until tomorrow. That is going to complete our agenda for House Resources Committee meeting today. Our next Resources Committee meeting is tomorrow, Wednesday, May 6th, at 1:00 PM, right here in Capitol Room 124.

Where we will finalize the amendment process, have more public and invited testimony on 381, and then seek the will of the committee. So the time now is 6:37 PM, and this hearing of the House Resources Committee is now adjourned.