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‘Final offer’ gasline bill sent to House, Senate floor; chances of passage uncertain
- Mark Sabbatini
- 2 hours ago
- 5 min read
After extensive closed-door negotiations by stakeholders and a few lawmakers, the full Legislature will be asked Thursday to pass a bill affecting the state’s finances for decades
By Mark Sabbatini
Juneau Independent
After weeks of closed-door negotiations by a handful of lawmakers, the full Alaska Legislature is being asked Thursday to vote on a gasline bill, even though supporters acknowledge members may not be fully familiar with its specifics and it likely will need further work in upcoming sessions.
A joint House-Senate conference committee, meeting at 8 a.m., advanced House Bill 381 to a floor vote by both chambers, with each chamber expected to meet later during the day at times still being determined as of 10 a.m.
Sen. Lyman Hoffman, D-Bethel, a member of the committee and longest-serving member in the Legislature, said during the meeting "this particular opportunity that we have before us is the best opportunity that I've seen in many years."
"If we had the time to delve into this I'm sure we could come up with something that would satisfy everyone at this table, the (governor) and the general public," he said. But he said there is widespread agreement that there is currently a favorable set of circumstances for the project and "so I'm here to support this particular piece of legislation with the understanding that additional work has to be made."
However, Rep. Justin Ruffridge, R-Soldotna, said he’s concerned the bill is very similar to one previously passed by the Senate and rejected by the House — and that as a minority caucus member of the committee he was left out of key negotiations.
"It has been essentially closed-door sessions," he said. "I saw this for the first time this morning."
Rep. Calvin Schrage, I-Anchorage, the committee’s chair, said after the meeting the most important element of negotiations with the governor and industry stakeholders is coming up with a bill acceptable to them as well as a majority of the Legislature. He also acknowledged the full Legislature will be asked to vote on a bill that will affect the state’s future for decades without many members getting time to fully understand its provisions.
"I've been here for six years and in six years I've learned that no matter the issue, no legislator is able to understand every facet of every issue before the Legislature," he said. "We function as a team and you have to rely on your colleagues to understand the issue, and that they have done the best job in carrying forward your priorities and your interests."
Sen. Jesse Kiehl, a Juneau Democrat who was among numerous legislators in the audience during Thursday morning’s committee meeting, said afterward he understands the changes made to the compromise bill.
"I just have to decide if I'm OK with the compromises," he said.
A statement by a coalition of industry groups issued a statement Thursday morning opposing the existing version of HB 381.
"The conference committee bill misses the mark. Rather than focusing on advancing the Alaska LNG Project, it injects targeted industry and income taxes that threaten the very companies producing energy for Alaska's homes and businesses," the statement notes. "The Alaska Oil and Gas Association, Alaska Support Industry Alliance, Alaska Chamber of Commerce, and Resource Development Council urge the Legislature to reject these counterproductive provisions and pass a clean bill focused on getting the gasline built and delivering lower energy costs for Alaskans."
The Legislature has four days left in a second 30-day special session (including Thursday) to consider a bill incentivizing the proposed 800-mile natural gas pipeline from the North Slope to Cook Inlet, along with gas treatment and other support infrastructure. The primary developer is Glenfarne Group LLC with a 75% ownership stake, while the state-owned Alaska Gasline Development Corporation owns the other 25%.
Glenfarne has told lawmakers the project may cost $44.5 billion to $54.5 billion, but the state Department of Revenue has stated cost overruns could result in a price tag exceeding $90 billion. The corporation and other gasline supporters say large tax breaks are needed to make the project economically viable, while many lawmakers in the Senate in particular say such exemptions could give Glenfarne tens of billions of dollars in profits that rightfully belong to the state and municipalities.
A key portion of the bill largely exempts the gasline project from property taxes, instead imposing a tax on the volume of gas produced after an initial construction period. The specifics of those amounts are among the primary issues of contention between legislators, the governor and the project’s developers.
The revised HB 381 also includes a so-called "S Corp" provision — making privately owned oil and gas companies subject to the state’s corporate income tax — that Gov. Mike Dunleavy has called a "red line" he considers unacceptable. But the provision exempts income from the natural gas line from that tax.
Jeff Turner, a spokesperson for the governor, stated in a text message about an hour after the committee passed HB 381 that "the bill is under review."
Dunleavy has called two consecutive special sessions to consider gasline legislation after the regular session ended without a bill he considered acceptable. He told the Alaska Beacon on Wednesday it is likely he will call yet another special session unless legislation he is willing to sign passes.
Schrage, when asked if the version of HB 381 passed Thursday morning is a "final offer" to Dunleavy and industry stakeholders, said he considers it as such.
"I see the capacity for coming back for a third special session to further refine this legislation is non-existent," Schrage said.
The possibility of final legislative action on HB 381 on Thursday resulted in about a dozen protesters gathering on the steps of the Alaska State Capitol, who voiced objections to both the cost and environmental impacts of the proposed gasline.
Doug Woodby, co-chair of 350 Juneau, which organized the protest, said he agrees with experts inside the Capitol and elsewhere who have stated the gasline does not appear economically viable. He said while those arguments may have been heard many times by legislators, the gathering on the steps was intended to make that clear to a wider audience.
"It’s the public that needs to know," he said, adding "people are just oblivious to the economics."
• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.
