HRES-260506-1300

ស្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រ ស្រុងស្រុងស្រុងស្រុងស្រុងស្រុងស្រុងស្រ ស្រុងស្រុងស្រុងស្រុងស្រុងស្រុងស្រុងស្រ ទំទំទំ ស្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រុង្រ ទ្ទ្ទ្ទ្ទ Thank you for watching the video I call this meeting of the House Resources Committee to order. It is 1.04 p.m. on Wednesday, May 6th, in Capital Room 124. Members present are Representative Fields, Representative Clome, Representative Hall, Representative Mears, Representative Prox, Representative Elam, Co-Chair Representative Dibert, and myself, Co-Chair Representative Freer. Let the record reflect that we have a quorum to conduct business.

Please take this time to silence your cell phone for the duration of the meeting. Thank you. I'd like to thank Cheryl Cole from Records and Renzo Moises from the Juneau LAO for staffing the committee today. This afternoon, we are continuing on with considering amendments to House Bill 381, the Governor's AKL&G Property Tax Bill. We will then reopen public testimony on House Bill 381.

Then seek the will of the committee. When we adjourned last night, we were on— we were just about to start on Amendment Number 28, Work Order G.36, from my office. So with that, I will hand the gavel over to Co-Chair Dybert for this amendment. And just let the record reflect that we were joined by Representative Sadler at 1:05 PM.

Pass the gavel over. With that, um, Co-Chair Dibert, I move Amendment Number 28. I will object for purposes of discussion. Uh, thank you, Co-Chair Dibert. I'd like to invite my, um, my committee aide Calvin Zulo up, um, for explanations on Amendment Number 28.

Thank you, Calvin, for being Good afternoon. For the record, this is Calvin Zulo, staff to Representative Freer. So Amendment 28, I have a very short 2-slide presentation here. Amendment 28 simplifies the AVT structure. So instead of 3 AVTs broken out across project components, there's one alternative volumetric tax.

It's set at 15 cents per 1,000 cubic feet of pipeline throughput, and it's applied at first gas. There is no abatement period under Amendment 28. And then it keeps the revenue distribution from Version G. And then it applies municipal property taxes to the gas treatment plant on the North Slope and the LNG facility in the Kilikinai Peninsula. The equity election language is also simplified. There's no AVT option under Amendment 28, so those two boroughs could choose to collect local municipal taxes, property taxes, or take equity in the project in lieu of property tax revenue.

This municipal property tax application is a reduction from the oil and gas property taxes, and it empowers those two boroughs to further reduce the tax burden on the project unilaterally based on negotiations with the project developer.

And if there are any questions, happy to take them. Thank you, Mr. Zullo, for your explanation of Amendment 28. Are there any questions? Representative Fields and then Representative Sadler. The way the tax reduction works is it takes it from 20 mils down to 18, so the borough can collect their maximum, but the state is not collecting the 2.

Is that correct? So in the North Slope borough, the mill rate is 17.99 mills. There would be no state collection of tax, and then the borough could lower that mill rate or modify it by ordinance. On the Kenai, I think the mill rate is 7 mills, which is much lower than 20. Follow-up.

Represent Fields. But I think the amount of reduction is on the state side, right? Am I understanding that correctly, Mr. Zula? I— on the North Slope Borough, yes. In Kenai, uh, it's a $7 mil rate versus a $20 mil rate.

Okay. Um, could I ask a follow-up? Yes, follow-up. So how much state money would— how much state revenue would be lost in Kenai? Mr. Zullo.

I don't have that math prepared for you. Is DOR on the line? Could they explain that? Let's look if DOR is online. We've got— they are online.

That would be— okay, it looks like we have David Herbert online. David, Mr. Herbert, if you can hear us, put yourself on the record and we can repeat the question for you.

Hello, this is David Herbert, commercial analyst for the Department of Revenue. I believe I heard the question. Just to restate it, it is what state production— state property tax would be lost in the Kenai Peninsula Borough. Is that correct? Yes.

All right. Through the chair, currently the LNG plant, which is the majority of the assets of the Alaska LNG Project in the Kenai Peninsula Borough, is not subject to the state oil and gas property tax. However, the state would lose some revenue associated with the pipeline. However, that is anticipated to be excluded anyway through the AVT, or Alternate Volumetric Tax.

Representative Fields. If I— you know, I really appreciate the follow-ups, just so I can understand this. So would the— if this was an export facility for AKLNG, would that change the potential to collect property taxes that in any way would flow to the state? Or are you saying that even as an export plant, this represents no lost revenue from the state?

For the portion of the revenue on the Kenai Peninsula Borough associated with the Alaska LNG plant, this would not represent a decrease in revenue to the state. Um, the LNG plant— or the gas treatment plant on the Marsh Loop would represent a small decrease in revenue to the state. Okay, thank you. I really appreciate it. Uh, thank you, Mr. Herbert.

Next in line of questions, I have Representative Sadler. Thank you, Madam Chair. I want to clarify just a little point before I ask my question. I just want to make sure I heard you clearly, sir, that you're saying that if Amendment 28 were adopted, there would be a slight reduction in the state of Alaska's property tax income on the LNG facility in the Kenai Peninsula Borough. It would not be much, but it would be some.

Is that a fair restatement? Mr. Herbert.

Through the chair, there would not be a decrease in the state's property tax revenue from the LNG plant in the Kenai Peninsula Borough. There would be a decrease on the GTP plant on the North Slope Borough. Okay. Very good. And I'm going to ask my next question, but before you answer, Mr. Herbert, I'm not sure if you're on a wireless or headset or something, but handsets are much more clear communication for us, if you would.

I think Mr. Zulu said that this amendment would allow the boroughs to lower their property tax rates. I think theoretically that might be the case. Actually, I apologize, this is actually directed toward Mr. Zulu. You said it would allow the boroughs to lower their property tax rates. Under what circumstance would they do that?

They would be giving up money. Why would they— it may be theoretically possible, but why on earth would they? Thank you, Rep. Sadler. Thank you, ma'am. Mr. Zulu.

Through the chair, Representative Sadler, again for the record, Calvin Zulo staff to Representative Freer. We, I mean, so local mill rates are set by local ordinance, so this would empower them to negotiate with the project developer with community benefits, some sort of arrangement in which they would lower their mill rates. So follow-up. Follow-up. To the extent I heard you, I think I understand you to say that this would provide a forum, a bazaar in which the Bureau could negotiate side deals on community benefit with the project.

Is that what I heard you say? That is correct. That is— I think that would tend to add complexity and uncertainty to the project, so that is a little bit problematic for me.

That is the end of my questions.

Representative Prox. I guess I would like to hear from the project sponsor and I guess Mr. Begich, get their thoughts on this amendment. All right, thank you, Representative Prox. Mr. Prestidge, would you like to come up to the dais and state your name for the record and give us your thoughts on this amendment. [Speaker:ADAM_PRESTIDGE] Thank you, Madam Co-chair.

Adam Prestidge from Glenfarn, project sponsor as a joint venture with the State of Alaska in 8 Star Alaska.

My thoughts on this general— on this amendment specifically and the process in general, there has been a tremendous amount of work and collaboration with the different municipalities, with this committee that have gone into this bill. There have been some amendments. I think one that's upcoming that reflects, I think, a very successful collaboration with the municipality to come out to a solution that works. Quite frankly, from the project's perspective, we don't view Amendment 28 as a problem. As a legislative option that does work for the project for some of the reasons that have been cited here.

One of the things, one of the main things to consider, and again, I urge the committee to take under recognition, is that this is already a very complex and challenging project. And so with many of these amendments that have been proposed, the question starts to feel like, how much more challenging can we make an already challenging, very challenging generational project before it just becomes impossible? To be a little bit more specific, the governor's bill proposed an AVT tax of 6 cents that was applied on the entire project, 6 cents total. What I see here with this proposal is, um, and please correct me if I'm interpreting it incorrectly, a 15 cents on the pipeline itself, uh, leaves in place another 10 cents on the LNG facility, and then an unknown, uh, tax on the, the gas treatment facility. And so you end up with obviously far more— you know, more than 25 cents of tax relative to where we view the project as needing to be at 6 cents.

So that's a challenge. There's also the obvious challenge that has been discussed in this forum and others that issuing equity in exchange for tax relief doesn't get a project built. You issue equity in exchange for dollars. That are spent to pay the laborers and to buy the pipeline and to get it installed. So that's the other major concern.

And then lastly, inserting just more hurdles of negotiation, breaking out more pieces and more conditions that have to be satisfied and more parties to negotiate with that can hold the project up will have the effect of holding the project up. Thank you, Mr. Prestidge, for your testimony. Follow-up, Co-Chair Freer? Yeah, thank you. I would just, you know, we sat here back in March shortly after— through the co-chair— we sat here back in March shortly after this, the governor's bill 381, was introduced.

I pushed back that We were— I think we're at day 363 is what I recall when we had you before us. And it was— there was testimony that property tax— we always knew that property tax was going to be an issue.

The conversations with the boroughs, the municipalities, the mayors began in December. With some of them, not all of them. And I think that, um, I think there's opportunity for continued negotiations. I think you've already been negotiating with the mayors. And so what this does is it puts a 15 cents for 1,000 cubic feet of pipeline throughput applied at First Gas.

It allows the municipalities at the top and the bottom to have those negotiations or continue those negotiations. There's nothing in here that says that at— with, with it being taxed under 2945, that the property tax has to be $1,799. I think that is a negotiation that the project producer could have, but I think that's recognition. I, I want to say, you know, out of the 60 members that represent the legislature, I'm the only one from the North Slope. So I have to put something forward that is— could potentially be supported.

These are, these are resources that will be extracted. I mean, this is gas that's coming from my district to benefit the rail belt. And I recognize that we have, um, if you look at the, the makeup of this committee, we have 5 folks from the Municipality of Anchorage. We've got 1 from Kenai, 2 from Fairbanks, and then me. And I— this is an amendment that I think works.

I think when we're also talking about $0.15, the $0.06 was based on a project that would be— that's approximately $46 billion from a number that AGDC put out in, I think, 2023. Is that correct? And I don't know if that is the correct number. I think 15 cents kind of relates more to what the actual project cost may be.

And so that is the purpose of this amendment. There are other components of the underlying bill that we had in there to protect the impacted communities. We've included the Municipality of Anchorage the municipality of Anchorage is participating in those negotiations.

But I don't see this to be unrealistic to me, and I will— I think that my staff had a comment to make. And—. All right, thank you, Co-Chair Freer. Can we let Mr. Zullo go, and then it looks like Representative Fields has a comment too, and then Mr. Prestidge. Mr. Zulo.

Uh, for the record, Calvin Zulo, staff to Representative Freer. I just wanted to clarify that under this amendment there is no 10-cent AVT applied to the LNG facility. It's just the 15 cents on the pipeline. The LNG facility and the gas treatment plant on the North Slope are taxed under municipal property taxes.

Representative Fields, did you want to add to this? I support the amendment and call the question. I would object.

That's your call to make. Can we speak up? I can't hear you. All right. Madam Co-Chair, if I can just make one last comment.

Yes, please, Mr. Prestidge. Thank you. Adam Prestidge from Glenfarn. I do want to say we recognize that this is a process, and we have appreciated a good dialogue with the mayor's group, and we look forward to continuing to work on negotiations and discussions to make sure that this project and the community benefits and impacts are structured the right way. Thank you for your wrap-up.

Representative Sadler. Madam Chair, I'm not sure if you've acknowledged that what I heard is a motion, but I just want to say that we have spent 7, 7.5 hours yesterday. We still have an hour and 15 minutes or more— I don't know— to continue now. I do not see the necessity of limiting debate in this very significant amendment. I respect every member's right to call a question or not, but I'm going to vote against it.

I think it's inappropriate. I think it's imprudent. I think it's irresponsible. We need to discuss this, know what we're voting on. And I don't know if I should take the opportunity now to talk about my issues with the amendment or we're just on that motion.

Can you take a brief at ease? Yep, brief at ease. Yeah.

House Resources back in session. Representative Fields. Sounds like there's an interest in more discussion, so I will withdraw my motion. Thank you, Representative Fields. There was a question from Representative Prox to hear Mr. Begich's thoughts on this amendment.

So Mr. Begich, if you can hear us State your name and begin your statement on Amendment 28. Thank you, Madam Chair, and I apologize, I was late so I didn't hear all the debate, but we are talking about Amendment 28 and this is switching, uh, um, the gas treatment plant to, uh, out of Title 43, is that correct? That is Correct.

Thank you very much, Madam Chair. Um, here is questions and concern, and I apologize if these have been addressed, but I— this is the concern with the amendment. Um, first off, uh, when it is shifted out of 43, in theory it should fall under 29, which would be taxable property under Title 29 under under the municipal codes, under state statute. The question is the following. The concern would be, does that mean they have to charge their current municipal rate?

Because under Title 29, you can't have differential rates unless there's a specific exemption. If that is answered, great. That's the concern that we would have. Second, if it doesn't have a cap on it, then we are subjected to negotiation that could end up, frankly, the project being held hostage.

To a rate that may be higher than economically viable because you don't have a cap. There's no limitation to what they can charge and go all the way up to the maximum allowable under a negotiation process. We would hope they— everyone would be reasonable, but these negotiations are somewhat difficult at times. The other issue is it does create a differential rate structure, if it's a mill levy versus everything else is an ABT. So that would be a concern.

The most important thing about this project is ensuring we have a unified system of taxation so it's clear and we know it's predictable, we know what it is, easy to manage. But if you do similar to what uh, Kenai has, then I believe you again have to have an exemption under Title 29 for that to occur. But in either case, we would want to have some management control on what that rate would be so we have some predictability. Otherwise, if we can't reach an agreement, then they'll have unilateral capacity to put the mill levy wherever they want or whatever the tax is. So I would say those are some concerns that are there.

Now, do I believe all those could be worked out through this amendment? Yes, I do. But those are the concerns we would address to Amendment 28.

Thank you, Mr. Begich. Co-chair Freer, do you have a follow-up? I do. I would just note that we do have Emily Nauman on the line, and she is the— she's the amendment drafter, and I would like to hear from her about some of what Mr. Begich's concerns are.

Ms. Nauman, if you could hear us, state your name and help us answer some of these concerns or questions.

For the record, this is Emily Nauman, Director of Legislative Legal Services, and I heard a direct I heard a general discussion, but a more direct question my way would be helpful.

For the record, this is Calvin Zulo, staff to Representative Freer. Could you speak about the variable mill rate issue for the, like, North Slope borough specifically?

Through the chair to Mr. Zullo, I don't have particular knowledge of the local municipal taxes, so I unfortunately am not the right person to weigh in on this. I can talk generally about how the bill— or the, excuse me, the amendment functions, but I think that's already been pretty well established. I could see if our municipal law attorney could jump online and join the committee, but I would also doubt that he has particular knowledge about individual borough rates.

Thank you. Co-chair Freer. Thank you. And just to follow up, the purpose of setting the gas treatment plant and the AKLG, the export facility, back under 2945 is to allow the local municipalities to enter into negotiations and to work with the project developer. I believe in specific ordinances.

In the municipal governments, they have the ability to do those kinds of negotiations already, uh, a PILT, uh, or setting a different mill rate. And we heard from the Department of Revenue that there would be little, little, very little or no state revenue lost potentially on the North Slope with the gas treatment plant. But what I'm trying to encourage is a negotiation between the project developer with the municipalities at the top and the bottom of the project.

Mr. Bagich, if that answers your question.

I'm on mute. Sorry, Madam Chair. I go on— every time I finish, they put me on mute, so I have no way to respond. But thank you for the question. Here's— There's two parts to this, and I totally appreciate the, uh, input there in regards to the goal, and that is to negotiate something.

But under Title 29, unless you have a specific— as a former mayor who's gone through this before, we have military housing in Anchorage that has a special rate structure, but it required an act of the legislature to allow us to have an exemption under Title 29. To that. You— if you have a single mill rate, which currently is about 14-point-something in Fairbanks, and then in North Slope, along with their school district, they are at 17.99. If they have a property that they want to have a lower rate mill levy, my understanding of the law is you have to have an exemption by the state. Otherwise, all properties within the jurisdiction of that borough must be the same rate unless it's a special service area.

So it's— your goal is our goal. Your goal is our goal. But the mechanism that I see in front of us is problematic in the way it's crafted. On top of that, I didn't talk about the equity concern we would have of how they are designing their equity language. So again, Madam Chair, I believe given a little bit of time, we could probably craft 28 to meet your goals and allow us to negotiate.

But right now, what happens if it— the way we read this, if this goes the way it is, it automatically falls in under 29 with no exemption, which means whatever rate structure they have as a mill levy today in the North Slope will be the mill levy they will be required to charge for the property that now will be in their jurisdiction, and that means 17.99. So it doesn't allow us to negotiate, the way I read this. And that is a— it doesn't accomplish what I think you're attempting to do, Madam Chair, and what we would love to do.

Title 29 is a very complicated process, but important because it's an equity issue among the jurisdiction that has the property tax authority. It's a very critical issue because you could literally start charging different rates for different people on different projects. For example, again, in Anchorage, for real estate properties to receive abatement similar like this on the gas line, it took a state law to establish that, to allow cities to do that. Fairbanks, for example, is now taking advantage of that state exemption to allow that.

Uh, Co-chair Feuer. Thank you. I would like to ask if we could have Ledge Legal— Director Nauman, if we could get your municipal drafter on the line so that we can get some clarification. Is that possible? And can we take an at ease until they get on the line?

Sure, I'll have Andrew Donmeyer call in. Thank you. Perfect. Brief it is.

Welcome back. House Resources back on the record. We were on the discussion of Amendment 28, uh, Co-chair Freer would like to hear from Legislative Counsel, Legislative Legal, Andrew Dunmire. If— oh, yeah, if Mr. Dunmire, if you could hear us, can you state your name and put yourself on record and address Amendment 28? Well, prior to— yes, thank you, Co-chair Dybert.

I just wanted to bring attention to 29-45050, and if Mr. Dunmire, if you can speak to those exemptions.

Good afternoon, this is Andrew Dunmire from Ledge Legal. Through the Chair, I have— was just advised to call in and was not privy to the earlier discussion, and I'm happy to answer questions about 29-45050. or other statutes in Title 29, but if the community could maybe rephrase the question, that would be helpful for me. Thank you, Mr. Dunmire. Co-chair Freer or staff? Mr. Zullo?

I think I can reframe the question. Okay. Co-chair Freer. So the intent of the amendment is to do AVT on the pipeline only and allow the North Slope Borough and the Kenai Peninsula Borough to negotiate under 2945 a rate with the project developer. There was concern from, from Mr. Begich, and maybe he can restate that concern, but we went back to the statute book and Specifically looking at 2945.050 and the ability for municipalities to adopt an ordinance that would allow them to negotiate.

And I—. If Mr. Begich wants to restate his concern, then that might be helpful for you in answering that question. Thank you, Co-Chair Freer. Mr. Begich, if you can hear us. State your name and address, or ask, or state your statement on 28.

Thank you, Madam Chair. Thank you very much. And again, to emphasize, I think we're all on the same page here. And so the question is, under— if this— if the, uh, treatment plant is moved out of current 43 code and into 29, or taken out of 43— that's what the way this is written, it just takes it out of 43 as taxable oil property, gas property in 43— does it fall under automatically then the taxing authority under 29 because it is a facility in the North Little Borough And the concern about that is if it falls under that ability to negotiate a lower mill rate than they currently collect boroughwide.

Mr. Begich, can you restate that last sentence? Um, it was lagging in—. Oh, I'm sorry. Um, let me try it again. That basically we want to know, because the way the current amendment works.

It takes the gas treatment plant.

Plant out of Section 43, and by default, it will probably then fall under the taxing jurisdiction of 29 because it's a facility within the borough. The question is, if it falls under 29, is there a need to put an exemption to allow the negotiation of a lower mill levy than what is currently collected area-wide the borough, or even a different type, like a volumetric type. Thank you, Mr. Begich. That came across a lot clearer the second time. Uh, Mr. Dunmire.

Mr. Dunmire with Ledge Legal, if you can hear us, state your name.

Apologies, I was on mute. This is Andrew Dunmire from Ledge Legal to the Chair. And as I understand the question, we are talking about real property like a production plant or something that would be real property, not personal property. So municipality would have to tax that on an area-wide or non-area-wide basis. And if the intent of the committee is to give municipalities the authority to negotiate for a lower tax rate for these kinds of properties, then yes, we would need to put an exemption into Title 29, something along the lines of what might exist already in Title— in 2945.050.

Or some of the other deferrals and exemptions that exist in that chapter.

Thank you, Mr. Dunmire, for that. Uh, Co-Chair Freer? Yeah, I'm looking— thank you, uh, Mr. Dunmire, through the co-chair. I'm looking specifically at, um, M, um, and it says 2945.050(m), a municipality may by ordinance partially or totally exempt all or some types of economic economic development property from taxation for a designated period. A municipality may by ordinance permit deferral of payment of taxes on all or some types of economic develop— er, economic development property for a designated period.

A municipality may apply an exemption or deferral under this subsection to taxes levied for special services in a service area that is supervised by an elected service area board Under AS 29-35-460, unless the elected service area board objects to the exemption or deferral by resolution adopted not later than 60 days after the effective date of the municipal ordinance enacting the tax exemption or deferral, a municipality may adopt an ordinance under the subsection only if, before it is adopted, copies of the proposed ordinance made available at a public hearing on it contain written notice that the ordinance, if adopted, may be repealed by the voters through through referendum. An ordinance adopted under this subsection must include specific eligibility requirements and require written application for each tax exemption or referral. This is the specific language I'm referring to, if you can speak to that section. Mr. Dunmire, um, through the chair to Representative Freer, I agree that that is a section that could be considered for this type of tax negotiation.

The term economic development is defined in Title 29 to mean an action intended to result in an outcome that causes an increase in or avoids a decrease of economic activity, gross domestic product, or the tax base. So just an initial textual reading of that, I think that a production facility could potentially fit into this existing exemption in subsection (m).

All right. Thank you, Mr. Dunmire, for that. And I have quite a few in the queue here. So I'm going to go ahead and— Representative Prox has been in the waiting. So, Representative Prox, I think my questions have been answered for now.

Great. Representative Mears, uh, thank you, uh, through the chair. Um, I'd like to explore a little bit what happens with Kenai Peninsula Borough. We've been talking— I'm not intimately familiar with the current discussion around LNG export being tax-exempt. I'm wondering if that's 29.4503.01 under a required property tax exemption.

And I'm— I got the statute books out trying to figure out context here.

Does a new LNG export facility under this project fall under what I think is an existing exemption for the existing facility, or are we kind of starting from scratch here?

I think this is for Ledge Legal. Okay, addressing it to Ledge Legal. Thank you, Rep. Mears. Mr. Dunmire, did you hear the question?

To the chair, I'm sorry, I could not hear the exact statute section that Representative Mears cited. Okay, Representative Mears. Thank you, I'll repeat it. So, 29 45-0301. It's under required property tax exemptions.

We've had some discussions about LNG export being exempt from local property tax. I'm piecing this together live, but I think that might be something that, if it's applicable to the existing LNG export facility, um, But we're talking in this project about a new facility, so I'm trying to parse out with this amendment if Kenai Peninsula Borough actually does have the opportunity to get property tax revenue with it, or if there's something under, you know, the existing exemption that that would be an issue. And I'll, I'll, I'll pull this back to the committee for some more perspective after we get that answer. Thank you, Rep. Mears. Mr. Dunmire.

Um, for the record, this is Andrew Dunmire from Ledge Legal. Through the chair to Representative Mears, I, um, I'm sorry, but I'm not going to be able to tell you right now whether 2945.030(a)(1) would be applicable, but it's something that I can certainly look into, do some research, and get back to you with an answer. Follow-up? Follow-up? Thank you.

And, you know, like I said, I'm— for the committee, I'm trying to parse this through now. So some of the larger conversations we've been having over in House Energy is the discussions on LNG import versus export. Import/export. There's two potential projects that are out there. One is utilizing the existing brownfields— or the existing facility that had been owned by Marathon that now is owned by Harvest.

We had a presentation earlier this year. They said that this facility was able to scale up and be able to be utilized for the project. Glenfarn is pursuing a separate greenfields development that would be able to do import/export as part of the as part of the project. I am not familiar enough with the tax— what sounds like discussion around the property tax exemption for the existing facility and how that might play into this. So if the project does take a turn and utilize that facility, then I think this amendment might exclude the Kenai Peninsula Borough from being able to take advantage of this amendment.

I'm not familiar enough with it and I have questions.

Thank you, Representative Mears. I'm not— I have questions to ask. There wasn't a question, so— but please pop in, Mr. Begich, Mr. Dunmire. If you can address that thinking.

And while we wait, I'm going to go ahead and go to Representative Elam. This is your area. Thank you.

Yeah, I really would like to hear what legal had to say as far as the details behind on what they're talking about. I do think that that the, the conversation of, of how this impacts the Kenai Peninsula is maybe a little different than some of the others. Um, just north of 40% of the project lives there, but in just a few miles. Um, and so being able to have a conversation about that and, and working some of that out, I do think, um, would be important, uh, for the, for the Kenai Peninsula to be able to have that conversation as far as what those exemptions look like. Um, so, uh,.

I would like to hear back from legal on what they have to say. I do believe that there are currently exemptions that exist that, you know, I mean, we have a low mill rate. That's one of the reasons how we've done that with the 7 mill rate. So, yeah. Thank you.

Okay. Thank you, Rep. Elam. Representative Sadler. Thank you, Madam Chair. I appreciate that.

There's been a fair amount of back and forth here, and I think I would like to clarify for my understanding and the public's and for the person doing the records of this kind of the dialogue, the dialectic that's gone on. Originally on Amendment 28, Mr. Begich raised the question if the amendment would create the possibility for differential tax rates, mill rates inside a borough. He expressed concern that that might require statutory specific authorization. My understanding is Mr. Dunmire said, mm, you would need a specific exemption statute. Then the Co-Chair Freyer read— Freyer, pardon me, Freyer, Brooks Freyer— read another statute and it seemed to indicate that differential tax rate was possible.

And I believe that Mr. Dunmire acceded, agreed to that. I just want to make sure for the record that is, in fact, what we have heard, and then I'm going to ask my question.

I'll go ahead. Yeah. Mr. Dunmire, did you hear just the recap of where we're— how we got to where we're at right now?

Yes, this is Andrew Dunmire from Larch Legal. Through the chair, to Representative Sadler, there are a number of optional exemptions in 2945.050 that municipalities already have. So to the extent that any future project falls under one of those existing subsections, a municipality could give it an optional tax exemption or exclusion. And I agreed with Representative Frears' assessment that Subsection M is a potential avenue that could fit the fact pattern of the development of this sort. Very good.

Okay, thank you, Mr. Dunmar. Thank you. Yeah, follow-up, Representative Sadler. Thank you. So yeah, if this amendment goes forward, Mr. Dunmar, I would hope that you and your legal colleagues would begin looking at those exemptions to find out specifically whether this amendment language would in fact allow that exemption.

That's an important question Mr. Begich raised. It does not appear like we are going to have an answer to that question before the motion and the vote are taken on this amendment. So that is a little concerning. Because my staff calls me Captain Obvious, I kind of want to recap where we stand on Amendment 28. Right now the bill before us as amended allows boroughs with a gas treatment plant or an energy plant inside their boroughs to apply their current property tax to 3 elements: pipeline, gas treatment, and the LNG plant.

But if the boroughs were to go with the alternative veteran tax, the rate would be 5 cents the pipeline per MCF, 5 cents per MCF in the treatment center— treatment plant, and 10 cents in LNG. They could either— you could do the tax or take an equity. And that would be equity that would come in the future at some time at some flow rate that is uncertain, which the project sponsors indicated that was kind of problematic. You don't know how much money it's going to be. It complicates the financing.

What this amendment does, it addresses part of that. It would begin collecting the AVT immediately on commercial operations with no throughput trigger, no chronological trigger. It would limit the AVT application to only the pipeline and would apply 15 cents per MCF just in the pipeline. And no AVT allowable on the treatment of LNG. But, and here's the essential part, boroughs could take equity equal to their current property tax.

And we hear that that would allow negotiations with the borough and the project sponsor, and it's still a question as to whether that's doable without extra statute. My take on this is that the equity provision for the boroughs to take an equity position is at least more predictable than what we have before us in the amended CS. And so while I would not call that great, I would call it less problematic. And that's kind of where I'm standing now, unless there are other issues that are raised that change my fundamental ambivalence, but ultimately probably okay on this. I remain to watch the debate and discussion and learn more.

There seems to be more coming. So not really a question, I just kind of wanted to kind of frame it for people. And if anyone wants to correct that or say I don't know what I'm talking about, I appreciate hearing that. Thank you, Rep. Sadler. Co-chair Freer.

Thank you, Representative Sadler. I think you summed up my wrap-up comments on—. Check.

Follow-up? Thank you for your indulgence, Madam Co-chair. Yeah, I wanted to ask if there is anybody— we do have some high-powered smart experts in the room and online. I don't know if anybody would want to offer any positions or opinions on the amendment that have not already been developed. Mr. Begich possibly in the ether, Mr. Prestidge who is here in person, I don't know.

And Rep. Sadler, before we do final wrap-ups on this, I do have Representative Kuren. Absolutely. Thank you. It is tough to get in the queue around this place. I have a couple of verbose colleagues.

It is frustrating because I've been wanting to say something for like 20 minutes, so I, um, I'm not sure I can add a lot, but I do— I did want to point out that the CS has some— which is what Rep Sadler was saying— the CS has problematic language. This has got to change. I thought the 15-cent MTF was fair. There's still some questions about the facility taxes, or, you know Maybe that's not perfect, maybe that needs to be fixed, but a couple things to remember. Um, we don't have another amendment to fix the problematic, um, um, wording in the CS.

I didn't like the 5 and the 5 and the 10. I think 15 is better. Um, and this is not the last stop for this bill, and I don't like to push it off on someone else, but it has been mentioned several times that when it comes to the money part of the bill, the MCF and, and possibly property taxes, that maybe that's more appropriate for the House Finance Committee. This isn't done. It is more stable.

And I think, you know, if we're going to try to move the bill forward and try to— like, we're running out of time. I would like it to go to House Finance with the new— with the amendment, even though, as was said before, I'm not sure it's the perfect amendment, but it does fix a lot of issues for me. And I am a little hesitant to you know, speak too much about the facilities on the ends of this pipeline because that's not my community. So I am listening and been open to hearing from the North Slope and from Kenai. You guys know your communities, you know what your mayors would like, you know what would be fair.

And so I want to just thank Co-Chair Freer for bringing an amendment that fixes a lot. May be something that we need to keep working on in the next committee, but I do— I think the MCF change is big for me. I think it's maybe still a little too high, but maybe not, but it's not what it was. And I do think it smooths out. I don't think it makes it more complicated.

I think what's in the bill right now is kind of complicated, and so I like the fix. So thank you. Thank you, Representative. Thank you, Representative Kollum. Representative Hall.

Thank you, Madam Co-Chair. I have a question for DOR if they're still online. Do you have—. Okay, thank you, Madam Co-Chair. Um, previously it was mentioned that there was going to be a small decrease in the amount of state revenue from the GTP in the North Slope Borough.

Can you describe what small is?

Thank you. Representative Hall. Mr. Herbert, if you could hear us, and if you, if you could answer the question.

Um, so for the record, this is David Herbert, commercial analyst for the Department of Revenue. Um, through the chair, when we're talking about the total property tax paid by the GTP plant on the Marshfield Borough, we're talking about a 10% reduction of that, um, which under current property tax law would be about the equivalent of $24 million per year.

Uh, follow-up, follow-up. Uh, thank you, Mr. Herbert. Um, I guess under current times and current statutes and everything, what is the state's take, uh, with, uh, property tax on the North Slope?

Mr. Herbert, uh, through the chair, just to clarify, are talking about the current North Slope on property taxes going to the state? Through the co-chair, if I'm understanding even myself correctly, yes.

Through the chair, I believe I have a table of that.

Handy. Let me just find it in— this is from the State Department of Revenue's Revenue Sources book from this last fall, Table 6-9.

And in our FY 2025 Revenue collections, the North Slope Borough, the state got $56.1 million from property currently in the North Slope Borough.

And in context, the $24 million I referenced would be revenue in the future associated with this is not in the current tax base.

Understood. Thank you. Um, uh, Co-Chair Freer, may we take a brief at ease? Brief at ease.

Back on record, House Resources on Amendment 28. Uh, Co-Chair Freer. Uh, thank you, Co-Chair Dybert. I know how much Ledge Legal loves conceptual amendments, um, as well as records, but I would like to move conceptual Amendment 1 that would provide an exemption using language similar to 2945.050 subsection M Allowing boroughs to negotiate variable mill rates on project properties subject to 2945 property taxes.

No objection. All right, Conceptual Amendment 1 has passed. Okay, are there any further Representative Prox. Yes, thank you, Madam Chair. I'm just thinking based on what we heard about Title 29 that that is possible to do.

I'm just taking a guess on the change. I think it is an improvement from the 10%. Tencent. And I'm also taking a guess that the facility that they're going to build is in the ballpark about as expensive as all the facilities at Pump Station 1, which are currently taxed. So we have a comparable— comparable, at least— facility to start with.

There was a comment that it makes it challenging, it makes more complicated. I agree, but there was willingness to negotiate. So I think at this point we should just go ahead and, and accept, adopt, I guess, Amendment 28 as amended. And if it needs to be fixed, that there can be additional thought. This is not cast in stone.

So I think I support I move to approve Amendment 28 as amended. Thank you, Representative Prox. Representative Sadler. Thank you, Madam Chair. I have kind of given my sort of wrap-up comments, maybe even the other co-chair's wrap-up comments, but I do want to say kind of for the record here that this amendment goes— if interpreted and implemented as intended, this amendment goes a long way towards accommodating the fiscal interests of the North Slope Borough, and I hope that as this project continues if that is sufficient inducement to encourage their support of this.

I think the overall benefits to the state and to the borough and the residents of the borough and everybody involved in this are to be obtained by getting a deal and getting a deal that can get approval and implemented. And I guess I'm just saying this is a give and I hope it's enough. Thank you. Okay. Representative Elam.

Thank you. I have to speak in support of this as well. I think that being able to specifically have some conversations around the endpoint infrastructure is going to be significant. This is going to be a significant project, and we're going to have to have some conversations about it. And so for the boroughs to be able to— those two that, again, 40-something percent of the infrastructure is going to live in a community that well, frankly, the road's about to fall off the bluff, and so we've got to fix some things.

And, um, only having a few miles of pipeline in Phase 2 isn't probably going to be enough, so we need to figure out how we're going to do that. The Kenai Peninsula has been a very good host community throughout the years, and so, you know, we need to fix a few things though that will be required for for this project. Thank you, Representative Elam. Representative Mears. Thank you, through the chair.

I, I think that, um, the amendment still needs some work on the pieces of the bill that it works on. So the choice is which work do we do— the work on the CS or the work on the amendment? I do have concerns, and I know I have a little different, different context with the LNG export-import facility stuff, but I'm concerned, you know, for Kenai, that if the project does turn to utilizing the existing plant, that's some serious concerns. And I think that that, for me, is too much of a concern to support the amendment at this point. But I absolutely I appreciate where a lot of pieces of this amendment are going.

Thank you, Representative Mears.

Uh, Co-Chair Freer. Thank you, Co-Chair Dibert. I just want to note that we do have a member that is not here, and I am I'm very supportive of this amendment, obviously. That's why it was offered. And I hear support around the table, but I, I would appreciate it if we could maybe try and get our other— take a quick recess while we can hopefully get Representative Fields here to participate in.

Okay, can we take a short recess or a quick brief— uh, brief—.

House Resources back on the record on Amendment 28 as conceptually amended. Are there any other further questions? Good. I remove my objection. Are there any further objections?

Object. Would you like to speak to your objection, Representative Mears?

Would the clerk please call the roll?

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

Yes. Representative Sadler. Yes. Representative Prox. Yes.

Representative Colon. Yes. Representative Elam. Yes. Co-chair Dibert.

Yes. Co-chair Freer. Yes. 8 Yeas, 1 nay. And with a vote of 8 yeas and 1 nay, Amendment 28 as conceptually amended to House Bill 381 is adopted.

And the next amendment is from me, so I will hand the gavel back to co-chair Representative Freer.

Thank you, Co-Chair Dybert, and thank you all for the discussion.

Okay, let me see if I can—.

So the next amendment that we have is Amendment Number 29, that's G.37, by Co-Chair Representative Dybert. And I will, uh, turn it over to you, Kocher. Oh, um, move your—. Yes, I move Amendment 29, and I will object for the purposes of discussion. Okay, um, brief it, ease, ease We are back on record in House Resources.

Uh, Co-chair Diver. Okay, thank you, Co-chair Fear. All right, we are moving to the community of Fairbanks on this amendment. All right, so Amendment 29, I'm really proud of the work that went into this. I worked closely with my mayor, Mayor Hopkins, on this, drafting it and working the language, and held really good discussions with Glen Farn Group to ensure the language would make sure the spur line is achievable for Fairbanks.

So Amendment 29, the meat of it is on page 14, and if you look at lines 4 through 6, on those lines it currently says it places a deadline on when construction of the spur line must begin. And what we had—. Our discussions, our conversations, it was clear that it is difficult to set a firm construction deadline when it is not yet known who will ultimately construct the spur line, how long the permitting process may take, or what other timing-related challenges that the project could face. So Amendment 29 instead adds new language that is doable, workable, stating that on or before completion of the 750-mile gas pipeline, the entity responsible for constructing the spur line must in good faith begin the necessary permit applications and take steps to meet all other regulatory requirements needed for construction of the spur line. Which includes the RCA process.

The amendment also clarifies that once all permits have been issued on the project and all regulatory requirements have been satisfied, then construction of the spur line to Fairbanks must begin within 1 year. I believe, Co-Chair Freer, Amendment 29 strikes a practical balance. It keeps the commitment to the Fairbanks Spur Line in place while recognizing the realities of permitting, which I've learned a lot about, regulatory review I've learned a lot about, still learning, and project development timelines. And I just really appreciate all the work that my office has done all the conversations to make this possible for House Bill 381. And Co-Chair Freer, I do have one conceptual amendment, one to Amendment 29, a simple one.

Okay, I move conceptual amendment 1, uh, and we discussed this yesterday, or yeah, yesterday, delete 750 miles, and we decided to insert 730 miles. To my amendment, and I—. Is there any objection to the Conceptual Amendment 1?

Are you objecting? I'm objecting for discussion, yes. Representative Proks. Just— I just wanted to make sure that this works because another alternative might be construction of Phase 1. So if they find a shortcut, they don't have to put another half a mile of pipe in.

Phase 1 is Phase 1, whether it ends at 750 miles, 730, or 720.

Representative Souther. Thank you. Can you continue the discussion? We have someone who might be able to offer some illumination as to where that's good. Could we possibly get Mr. Prestige to the witness table just to ask him a question, if that would be workable?

Mr. Prestidge, definitions count.

We don't have anybody from AGDC, by the way.

That's a good walk-up song.

Or the strut. Perfect. That's exactly how I planned it. Madam Co-chair, out of prestige from Glen Farn responding on the suggestion that we modify 750 miles to just referring to Phase 1 of the pipeline. I think that would work.

That would address exactly what Representative proxes identified that if for some reason we needed to adjust the— we found that it was beneficial to adjust the length of the pipeline by, you know, 10 miles give or take, that wouldn't put at risk, you know, potentially our tax arrangement. [Speaker:COMMISSIONER TREGONING] And just for the record, the conceptual amendment that is before us is not to just Phase 1, but it is to 730 miles, which— But Representative Mears. Thank you, through the chair. I don't believe we've got phase 1 identified anywhere in our documents, and making that change is a separate effort. I think adding that language in here at this point is going to be problematic, but I think perhaps that's a note as the bill moves through the process to have a definition of that and to utilize that as a marker for project progress.

I think where we're at in the process right now, I think it would cause more confusion than clarity. Thank you, Representative Mears. And we did hear from AGDC previously when Mr. Kissinger was on the line that the length of it for Phase 1 is 739 miles. So hopefully we don't lose 9 miles and prevent that from happening. But I agree with your— and I will turn to Representative Prox.

This is a detail fix, so that can be fixed if it needs to be fixed in the next committee. So I will either not offer— Or if I have offered, I will withdraw conceptual amendment. You did not. All right, we're good to go. Representative Sadler.

Thank you. In the nitpicking phase, looking on page 2, line 26, similar conceptual concerns that, uh, theoretical concerns that Representative Mears had is, uh, begin construction. We might kind of organically know what that means, but I don't know if that requires a specific, uh, definition anyplace. So if we're going to fix the 730 to the phase 1, I might suggest that we also note begin construction. Or maybe I can ask Mr. Prestidge through the chair if that begin construction is a definable milestone.

Thank you, Representative Sadler. I believe begin construction is defined in statute under— I'm not 100% positive, but maybe we could ask our legislative director, Emily Nauman, if begin construction is already defined.

All right, can you hear me? Yes, we can hear you. Okay, great. Uh, for the record, this is Emily Nauman, Legislative Legal Services. For this particular amendment, just looking at one thing really quick, begin construction is not defined, but I I would say that— page 14926— that this is a determination that will be made by the Commissioner of Revenue.

So ultimately, whether or not construction of a spur line has begun will be a determination for the Commissioner of Revenue. So there will be some interpretation by the Commissioner on what that phrase means, but I think we can assume it will be interpreted reasonably. Uh, thank you. Before we proceed with further discussion on Amendment Number 29, I do just want to note we are still on the conceptual amendment about changing from 730 or 750 to 730. Is there further objection to, um, the conceptual amendment to— conceptual amendment 1 to amendment number 29G.37?

Do you maintain your objection, Representative Prox? Okay, so the objection has been Removed. Is there further objection? Okay, conceptual Amendment 1 to Amendment 29 has been adopted. Now we are on discussion on G.37 Amendment number 29 as conceptually amended.

Uh, Representative Mears. Uh, thank you, through the chair. I'm grateful you're still at the table, Mr. Pressage. Um, I had a question, um, and I know that you're not the legal drafter here, but, uh, as the I believe you have a couple of hats that might fit owner of property. So page 2, line 15, each owner of property that could be taxable, blah, blah, blah.

Who is the owner? Is it 8 Star? Yes. Representative Mears, I believe that is the case. I would have to look at the language.

I don't have it in front of me. At the moment. That's— I follow up through the chair. I appreciate that, but I think that's something that would be helpful in our discussions to clarify so that we're all not making an assumption, but we've— we, um, we're all clear on, on that going forward. I have an additional question.

Representative Mears, if the question is, uh, who is the owner of the tax-exempt property, it would be 8 Star. Representative Mears, follow-up. I have an additional question. If you want me to get back in the queue. I do have Representative Colombe in the queue and then we can—.

I'll put you back in the queue. Yeah, this is a question for the maker of the amendment. It says that begin construction on a spur line within 1 year after receiving the permits. What happens if an environmental group sues? They have the permits, but something else delays it and they can't start it within one year.

Thank you, Representative Kloom. We had lots of thoughts and discussions about that, and I'm going to pass this over to Mr. Prestidge if you can help me with that part that we were talking a lot about. Certainly, um, Representative, uh, Colom, through the, through the chair, uh, I think that is a, that is a real risk. You can have permits issued, then those permits are subject to, to challenge and litigation. So you might have a permit that's issued but then subject to litigation.

You also just have, uh, you know, COVID or economic, macroeconomic events you can't foresee, or wars that could interrupt that. That's the risk of having a fixed date. And my reading of the amendment is that if that were to happen, even if there were COVID and the entire labor force became unavailable, that that would put the tax arrangement for the project at risk. So that's certainly a concern that we see here. And there's been some suggestion of language.

I don't know, Representative— Madam Co-Chair, if that's something I should propose here, but I think that is a risk that exists here. I think, yeah, I think follow-up, uh, yeah, represent—. Or Co-Chair Diver. Yeah, thank you, Mr. Prestidge. Um, yeah, we had a lot of talks about, um, if there is something like COVID or, um, the timing, like if the permits happened in August You know, when do you start?

You can't dig in January, you know. So we, we like the within one year, and we are talking with our mayor, and if that needs to be changed, we can— we are talking with our mayor every day, so if it gets to finance and it needs to be changed, It would be a simple change if that language doesn't work, but we're happy with this, and I believe Mr. Prestidge is happy with this. Madam Kuchar, would I respond? I do agree with what you said, and, you know, I think it's a risk. And if we think about it, if we work on it a little more and realize that it's a risk that needs to be resolved so we don't put the rest of the project at at risk.

I think that we'll be able to do that. If you'll allow me just to take a moment to comment generally, what I want to flag here is that since Glenfarm came into the Alaska LNG Project, we've had a very vocal commitment to work with communities to make sure that the things that we're doing are supportive of Alaskans, delivering low-cost natural gas to Alaskans, This is a good example of that. We were told about the need for a Fairbanks or the desire for a Fairbanks spur line, you know, a long time ago when we first came into the project. We have seen that other parties have expressed that they might want to build it.

We view this as a little bit, you know, outside of the kind of the required, the necessary parts of the project. This is an additional element to service a small or a relatively small community with this spur line.

It underscores our continual commitment to engage with communities, to listen to communities, and make sure that this project is designed and built and delivered in a way that works for Alaskans and responds to the needs of communities. And so I ask that this committee and the legislature and the population generally recognizes that this is Glenfarn talking the talk and walking the walk and stepping up to the commitments and the priorities that we've set to work with Alaskans to deliver this project the right way.

May I respond? Representative Krumm. Yeah, so that's— I mean, I guess I was asking the amendment sponsor because it was really prescriptive and we had had those conversations about like there's a lot of things that we don't know that can happen. And so I was trying to figure out how the 1 year got in there. But as the amendment stands now, it looks like it's still under the conditional effect, correct?

It hasn't been moved. Okay.

Thank you. That's correct. Representative Prox. Yes, thank you, Madam Chair. There is no doubt in my mind from conversations that we've had that Glenfarnon intends to see that a spur line is built at some point.

We're, in a lot of respects, we're entering into a contract. Only difference is now this is a law. But there, I'm thinking of force majeure. There's all kinds of things that could happen throughout this project that might make it go outside the statutory commitment. I guess if the alleged legal misnomer, is on how much latitude specifically in this commitment date if something goes wrong.

If the— as what was brought up was you can get a permit, then it can be challenged, then I guess there would be an injunction, and then really legally you don't have a permit anymore. Or if COVID comes along or flood happens, who knows what, would force— the concept of force majeure apply anyway? If there's things that are out of the project sponsor's control happen, I would think a reasonable person would say that's, well, okay. We still got a notice to proceed and away we can go. For the record, again, this is Emily Navin, Legislative Legal Services, through the chair to Representative Prox.

You know, I think a lot of what I hear the committee's consternation here might be resolved by understanding the— or rereading the lead-in to Section 23, which requires the Commissioner of Revenue to determine that each property owner has committed to doing these things, including the new material that we're inserting on page 2, lines 15 through 28. So what this looks like in real life— and it's very difficult to speak in hypotheticals, especially for attorneys at Ledge Legal— but what this looks like in real life is probably a contractual arrangement between the state and the property owners that spells out the requirements of this section with more detail and with more contractual particularity and firmness. So I think that it is the way that the section is— Section 23 is worded now. I think there's room for the state to continue to work with the property owners to figure out the particularities of what a quote-unquote commitment to this type of activity looks like. And I do think that there is room for those kinds of contractual exceptions to be built out in whatever the state and the property owners agree to.

Representative Prock's follow-up. Thank you. That satisfies me, but there is one other specific concern, and that is that it— there's still a possibility that the spur line to Fairbanks just doesn't make economic sense.

Until the tariff— until the flow rates go up to the export flow volumes and the tariffs go down. So there's a possibility under this that we could be requiring them to build the line 3 or 4 years before we could actually use it. And then somebody's going to have to pay the interest and— on an empty spur line.

If the— who would say no? Fairbanks North Star Borough, I guess, is the authority. Yes, the Fairbanks North Star Borough owns IGU, Interior Gas Utility. If, if they change their mind and say, hey, wait a minute, why don't we pause this for 3 or 4 years, that Is that under the same argument of something that is out of the project sponsor's control happens, the project sponsor is relieved of some responsibility? Wouldn't want them to build a line that remains empty or underused.

Thank you. Chair Dybert.

Thank you, Representative Prox. In our many, many conversations in drafting this amendment, IGU has— is fine with the language, and we're working with them.

They're not—. We've been— there's no hesitancy about the pipeline, a spur line. That's what I mean. Not so much the amendment, but the overall idea.

And we are more than willing to be working along with IGU as this moves forward.

Yes.

Through the chair—. Follow-up. Through the chair to the sponsor, that is what I would assume anyway. I just wanted all that kind of said publicly.

Representative Mears. Thank you. Through the chair, Representative Prox, I'm glad I got in the queue right after you because I want to— I'll address that, that I think it's an advantage to the larger project to have additional flow from and demand from Fairbanks in Phase 1. And I think that's— I know that's one of the reasons that I've been supportive of that from the core, is that the more customers that you have and the more we're building up that in-state demand. There's critical mass in Fairbanks for that.

But I'm also grateful because I appreciate Ms. Nowman's explanation that this is a commitment to— and under the conditional language, thank you, Rep. Colon, for bringing that out— because I do think there's a strengthening of that language on— about beginning construction.

It doesn't have enough teeth for me. And I, I'm grateful that this discussion that we've had gives me some more comfort that that's something that's forthcoming, because I've not been in those discussions. But I'm grateful that there's more to this process, and there's another checkpoint in there to make sure that it's not just, you know, laying a couple of sticks of pipe down because something else weird has happened in the project that makes that unattainable. So this amendment I think is a great leap forward. I think it's a huge improvement to the CS and thank you everyone for your work on it.

Thank you, Representative Mears.

Representative Sadler. Thank you, Madam Chair, Madam Co-Chair. I'll speak quickly. I know we're getting on time here. I do like that the amendment before us here acknowledges the challenging and significant steps that will have to take place before a spur line can become reality.

There's no dissent or debate that that's necessary and advantageous. And it clarifies and rationalizes the steps that must be taken. I do have some concerns that the 1 year, I mean, if we're trying to set all the possible things that can happen that we know have to happen, the steps, once those are all in hand, the permits, the resolution of any interfering lawsuits, the RCA tariff decision, if any is required, then a 1-year may be reasonable. But 1 year means a 3-month construction season. So I echo Representative Prox's concerns that maybe having a 1-year deadline, certain that clock ticking might still be a little aggressive.

Elsewhere in the bill, we did acknowledge the strange things that can happen by extending the kill switch on the EVT from 2030 to 2032. I appreciate that. That may be a template for, for this. So what I'm saying is I like it. Perhaps one year may need to be extended, but I'm not going to hold up this amendment or this bill based on that little niggle.

So thanks. Thank you, Representative Sather. Is there further discussion on Amendment 29?

Um, seeing none, I am going to take a brief at ease while we wait for our.

Other member to come back down and join us, so we'll take a brief at ease.

We are back on record in House Resources. Seeing no further discussion on Amendment Number 29 as conceptually amended. I am looking to, uh, I think I objected. I will remove my objection and looking to see if there's further objection. Yeah, object.

Okay, object. Let's vote. Uh, there is objection from Representative Sadler. I will ask the clerk to please call the roll.

This is Amendment Number 29 as conceptually amendment G.37. Representative Elam?

Yes. Representative Hall? Yes. Representative Mears? Yes.

Representative Fields? Yes. Representative Sadler? Yes. Representative Prox?

Yes. Representative Colon.

Uh, yes. Co-chair Dibert. Yes. Co-chair Freer. Yes.

9 Yeas, 0 nays. With a vote of 9 yeas and 0 nays, Amendment Number 29 as conceptually amended has been adopted. We, uh, have concluded the amendments, but we did have 2 that were rolled. Representative Fields. Yes, I was going to ask if I might— if we might return to Amendment 7 or G.10, and I might attempt to do a better job explaining what it does.

Representative Fields. Okay, so I'm going to move Amendment 7 or G.10. Okay. And I'm going to explain. Yes.

Okay. So I am very supportive of building a Fairbanks Spur. And distributing those costs as widely as possible to make sure that the spur gets built in a way that is economical for Fairbanks homeowners and business owners. Because if Fairbanksans had to finance it themselves, that would not be viable given the small number of existing gas hookups. Then the question before us is, do we spread those costs only across Alaskans, or do we attempt to spread the cost against all units, all MCFs of gas that are sold through the pipeline.

So what this amendment would do is try to spread the cost of the Fairbanks Spur across all the units of gas being sold in the pipeline, because if we only apply it to in-state customers, which is 6% of the total volume of the pipeline, that is a significant cost on people in every other part of the state. So this is— I see this as 100% supportive of paying for the Fairbank Spur. I want to pay for it in a way that spreads the cost as much as possible to protect homeowners throughout other regions of the state. And I hope that better explains that this is in no way hostile to paying for the Fairbank Spur. Instead, it's supposed to support that.

Representative Klobuchar. Yeah, thank you, Chair. So when DOR did their modeling They said that those prices included the spur project. And it didn't seem— and the increase was minimal. Could I, through the chair, if you run the numbers on $150 million across the Enstar rate base, it's about $500 per household.

So I guess the question is, $500 minimal or not, I would rather if the gas line achieves export customers, just share that burden with export customers. It's meant to be equitable.

So, my issue with it, Rep Fields, is I have no problem sharing the cost, but when you include the export customers, now we're changing the price of the export gas. And so, and since it's been reiterated that these are dollars and, or I mean nickels and cents that keep us competitive, that's my biggest issue with it.

Uh, I wasn't tracking over here, but I think I saw Representative Sadler. Yes, Madam Chair. Yeah, thank you. Um, my understanding and the intricacies and subtleties of the Fairbanks spur line issues— I understand the desire. My concern is sometimes I think Fairbanks wants to share the cost across the entire system and now across export under this amendment, but, um, not sure if they want to pair— share the rates and the burden of that.

So I actually, uh, I have a conceptual amendment I'd like to offer this, which may obviate the intent, but I'm going to offer it anyway. So my conceptual amendment, Madam Chair, is on page 8, line 27 through page 9, line 2, delete that language. And as I say, my concern is the AKLNG project is designed to do what it does and the Fairbanks Spur Line is important, but it is not by definition an essential part. It's an add-on. And right now the language we have in the bill makes the Fairbanks Spur Line basically on the same level as everything else, and, uh, I just don't know if that's helpful to the entire project.

So I anticipate it'll go down, but I just wanted to offer that to make sure we make that clear decision. Um, I will object to your conceptual amendment, Representative Sadler, and Representative Fields. Um, actually, because, um, of the depth of the rabbit hole, I'm going to suggest not objecting to Representative Sadler's conceptual amendment, and I will withdraw the underlying amendment because I think this might not be the time and place to deal with this. Okay, I will, uh, remove my objection, Representative Sadler, and I withdraw Amendment 7G.10. Thank you, Representative Fields.

Um, I object. To the conceptual amendment because I'm not sure I caught what it was actually going to do. Too late. Thank you, Representative Prox. And it— that we have moved on.

Amendment 7 has been withdrawn. We have, I believe, next we have Amendment Number 14, Representative Sadler. And I do just want to note we do have one person on for public testimony. Certainly. Madam Chair, I'm not going to offer Amendment 14.

Thank you. Okay, well, seeing, um, uh, that our amendment work is done, I am going to— we did previously leave public testimony open on this bill. Is there anyone in the room that would like to provide public testimony on House Bill 381 as amended? Oh, sorry, I had to open public testimony. Is there anyone in the room Seeing none, we will move online.

We have one person online to offer public testimony on House Bill 381. We've got Edna, uh,.

DeVries, the mayor of the Matsu Borough. Uh, Mayor DeVries, welcome to House Resources. Please put yourself on record and begin your public testimony.

Um, Mayor DeVries, are you on the line?

Is she on the phone or on Teams? Okay. Is it possible that you are muted?

Mayor DeVries, are you on the line?

Yes, I am. Okay. Please—. Have I muted myself? We can hear you now.

So please put yourself on record and begin your public testimony. Okay, thank you. Well, first of all, we thank you for allowing us this opportunity to provide this testimony. And I've been sitting here listening to you for the last couple hours. I can't say that it reminds me of being there, but— so anyway, the Mat-Su Borough recognizes the importance of advancing the Alaska LNG Project.

To improve energy security, long-term affordability for Alaskans, and the state's competitive position in the global LNG market. We appreciate very much the work this committee has done to refine the House Bill 381 and to balance statewide interests. To begin, the Natsū Borough supports the changes from the current tax protection to volume metric tax with a ramp-up period to improve the economics of the project. At the same time, the borough has concerns regarding the proposed restructuring in the revised version of the bill. Now, we did prepare this, this morning before we listened to the last two amendments in English.

As we understand it, the overall purpose of this bill to restructure the tax system is to increase the livelihood of the project development by reducing tax burden, not to reallocate revenues to jurisdictions that are not directly impacted by the infrastructure, especially when added components such as this FERMI, which I know you just did, discussed will have their costs shared by all of us ratepayers. Under House Bill 381, the tax abatement during the wrap-up period does not apply to the spur line. If ratepayers are concerned about the cost of the spur line, the spur line should be subject to the tax abatement described in the bill to keep prices low for Alaska ratepayers. At this time, there do appear to be any proposed amendments, and so this is all of the comments that we have at this time. But we are watching the bill closely, and— but our borough assembly has adopted a resolution that supports the Value Metric Tax, protects education funding by exempting the increased property value from new infrastructure.

Ensures that affected municipalities receive the distribution of taxes and provides the backstop if Alaska's values are not met over time. We encourage the committee to preserve these goals for the success of the project and to provide all Alaskans with affordable energy. Thank you for this opportunity. Thank you so much for your public testimony, Mayor DeVries. Not seeing any—.

Thank you for allowing me to give it. Not seeing anyone else online or in the room to offer public testimony, I am going to close public testimony. I would like to seek the will of the committee. Are there any final comments on this bill from committee members? Representative Sadler?

Madam Chair, I'm not going to make any final comments. Representative Klobuchar? I just want to thank the co-chairs for working really worked really hard on this bill. I've gotten a lot of feedback from the municipalities. They see the difference between us and the Senate.

It's clear that we're trying to make that work for all of Alaska. I think there's a lot of amendments that showed that. The Fairbanks amendment, we were worried about the Kenai, about North Slope. We got community benefit agreements and for everybody up and down. So I just thank you for the civil nature of the committee.

I really appreciate how it went and it was very transparent. Thank you, Representative Kollum. Representative Elam. Thank you. I want to maybe, you know, reiterate a little bit of what Representative Kollum had to say there.

I just really appreciated being a part of the process and the work that all of us put together into doing this and just hope that we can continue these efforts as we, you know, follow this work through to completion because I know that, you know, economically, from an energy perspective, the jobs, everything that we will be looking at. This is a generational decision that we're all making, and I just appreciate the seriousness that everybody brought to the table to try to make that work. So thank you. Thank you, Representative Ehlund. Representative Mears.

Thank you. I appreciate that the work we have here in this bill and where we are in this process is mostly focused on impacts to local communities because they're being asked to for forego local property taxes and there's two big impacts. One is construction impacts and one is, you know, what happens for income for communities as the pipeline— as the project realizes its full potential down the line.

I think we've made some pro— I like— I appreciate that That's a lot of the focus that we've had here. I appreciate that we've done some good work on the Fairbanks Spur and that we've been talking about our communities a lot. I think the establishment of the Alternative Volumetric Tax is supportive of the project and of communities so that as the project is realizing benefit, so, so do our communities. But For me, the adoption of Amendment 27 keeps me from supporting this bill moving out of committee. I know it will anyway, but I think that removing community benefit agreements and having a limited fund that is controlled by the project is too rigid for communities, and I don't think it's going to meet their needs.

So we've done some good work. We always knew that there was going to be more work to do out of here. Like, I purposely did not get into the discussion of like how much money would be brought in by this, how much would be foregone, like those economics. I was going to leave that work to Finance Committee anyway. But I think this, this backstep in this policy removes my support from being able to move it forward.

Thank you. Excuse me, Representative Mears, is there Any further discussion? Well, I just— oh, Representative Prox. Well, thank you, Madam Chair. I just want to say thank you to all the committee members.

There was a focus on the need to end up with something that does result in a pipeline, because if we fail in that goal, none of this counts. Just need to keep that in mind. And I especially want to thank you for the management of the discussion. It went very well. Everybody was included, and I think it— yeah, it's just very good.

Thank you very much. Uh, thank you, Representative Prox. And just, um, some closing comments for me. I really just want to thank my co-chair, our committee staff, uh, Calvin and Sarah, the amount of work that you guys have done, um, all of the folks that have been supporting us communications with Glenfarn, AGDC, Mr. Prestidge, as you know, just being here and continuing to be here while we're having the discussion, Mr. Begich, and all of the communication with the boroughs, the Building Trades Association, and having conversations about the importance of having a project labor agreement. I think that while it's not— I think it's pretty close to perfect.

I think we've got some good— I think we've got some good sidebars and We've accomplished a lot of really good work to hopefully— to see this project come to fruition, and it was a lot of work, and I'm so relieved that I'm going to ask my co-chair if she has a motion.

I move.

Thank you, Co-Chair Freer. And I just want to thank you for all of your work too. I'm going to put in my two cents. It's a testament to our commitment to each of the regions as representatives. Our work.

Chair in this committee. I'd like to thank all the members on this committee for your hard work and making sure— or in helping get affordable energy to folks across our state. And I look forward to the work that happens with this bill in the next committee. But thank you. All right, I move Chair Freer, I move House Bill 381 as amended, work order 34-GH-2038\G, as amended from committee with attached fiscal notes and with technical and conforming changes authorized.

Object. There is an objection. Representative Mears, did you want to speak further to your objection, or— I just had one more note, is that 6 and a half weeks ago is when this bill was introduced, and we have 2 weeks from today left in session, and there's still a tremendous amount of work left to be done on the bill. So, I mean, we've done a good amount, there's more to go, and I know it needs to get on to its next point in its process. Thank you, Representative Mears.

Will the clerk please call the roll? Representative Kulum. Yes. Representative Elam. Yes.

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

Yes. Representative Sadler. Yes. Representative Prox. Yes.

Co-chair Dybert. Yes. Co-chair Freer. Yes. 8 Yeas, 1 nay.

Thank you. With a vote of 8 yeas and 1 nay, House Bill 381 has moved from committee. Will the committee please stick around to sign the paperwork? And that completes the agenda for our House Resources Committee meeting today. Our next House Resources Committee meeting will be Friday, May 8th at 1:00 PM in Capitol Room 124.

We will hear SJR 20 from Senator Bjorkman relating to marine debris, followed by a hearing on House Bill 296 from Representative Mears relating to agricultural land use. The time now is 3:07 PM, and the Senate— the House Resources Committee is now adjourned.