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Third gasline special session fizzles out; focus shifts to next year and next governor
- Mark Sabbatini
- 3 hours ago
- 5 min read
Developer says inaction on Alaska LNG Project will inflate price tag; election likely to play large role in whether deal can advance during next legislative session
By Mark Sabbatini
Juneau Independent
Nearly 100 days and more than $1.2 million beyond its original finish line, the 34th Alaska Legislature has finally run out of gas.
Months of political wrangling over a long-proposed natural gas pipeline from Alaska’s North Slope is set to carry over into next year, when there will be a new governor and new legislators. The expectation among political and industry stakeholders is the Nov. 3 midterm elections will loom large for if and how quickly the project moves at the Alaska State Capitol next session.
Nearly all legislators were absent from Juneau throughout the latest of three 30-day special sessions called this summer by Republican Gov. Mike Dunleavy, who was hoping to sign legislation advancing a gasline before departing office in December because he is term-limited. He waited until the 17th day of the final special session to introduce a bill, which was swiftly rejected by legislators and industry stakeholders alike.
A final House floor session on Monday lasted 31 seconds, with two of 40 members present. A Senate floor session lasted 45 seconds, with one of 20 members present. Both chambers cancelled technical floor sessions on Tuesday, the final official day of the special session.
What’s next for the gasline
One meaningful action that did occur after the regular session ended May 20 was a joint House-Senate committee bill during the second special session to advance the gasline, said Sen. Jesse Kiehl, D-Juneau, after presiding over Monday’s floor session as the only legislator present. But that bill was unacceptable to Dunleavy and deadlocked on a tie vote in the House after passing the Senate.
"We’ll see if a new governor changes the dynamics," Kiehl said.
Two Democratic candidates who generally align with the approach in the compromise bill (Jonathan Kreiss-Tomkins and Tom Begich) and two Republicans who generally align with Dunleavy’s approach (Bernadette Wilson and Dave Bronson) are leading in votes tallied so far after the Aug. 18 primary. A final unofficial tally is scheduled Friday and results are set to be certified by Monday.
Legislative races will also play a role in the gasline’s future fate, with primary results so far indicating both the House and Senate may retain bipartisan majorities comprised of Democrats, independents and moderate Republicans. The Senate currently has a 14-6 majority-minority split and the House a 21-19 split, meaning a change either way in the latter could break the deadlock that occurred if a version of the compromise gasline bill comes up for another vote.
Dunleavy sought to largely exempt the gasline from property taxes, and instead collect a much lower amount based on gas flowing through the pipeline, arguing the incentives were needed to make the project economically viable. Skeptical lawmakers said they didn’t have enough information from the administration and project developers to know its true costs and potential profits, and expressed concern the state could both give up a large amount of tax revenue and be stuck paying out more incentives to ensure completion of the gasline.
Another key sticking point in the final months was a so-called "S Corp" provision that makes privately owned oil and gas companies subject to the state’s corporate income tax of up to 9.4%, based on earnings. The Legislature’s compromise bill included the tax, but largely exempted the Alaska LNG Project.
Dunleavy, after adamantly opposing the S Corp provision as a red-line issue for months, introduced a last-minute "compromise" bill with a 2% flat rate. Majority caucus legislators rejected it as unacceptably low and a coalition of industry groups rejected the imposition of the new tax at all.
The project’s primary developer, Glenfarne Group LLC, stated during this year’s sessions the gasline project will cost $44.5 billion to $54.5 billion, although the state Department of Revenue told legislators that cost overruns could result in a price tag exceeding $90 billion. The company’s hope was to get the project online by 2029, with production extending beyond 2060, but in a statement after Dunleavy’s final bill fell flat declared the cost and target date will be affected.
“This will cause schedule delay and cost increase on the gas line,” the company’s statement noted. “This outcome hinders our efforts to deliver North Slope natural gas to Alaskans as quickly and affordably as possible and to offset declining production and rising costs from Cook Inlet. We are evaluating alternative paths forward while continuing to advance the commercial, engineering and financing work required to deliver the full Alaska LNG project, including the LNG export terminal.”
The 34th Alaska Legislature finally comes to an end
The end of the special sessions means security screenings for visitors will halt until the Legislature convenes next January, legislative staff doing extra work well into summer can now make other plans and longtime lawmakers who announced their departure months ago can actually retire.
The first two special sessions called by Dunleavy this year cost $749,729.13 and $434,442.12, with the less-attended third session costing $75,783.77 as of Monday, according to Legislative Affairs Agency Executive Director Jessica Geary. The first two sessions included a number of floor sessions and committee meetings with a significant number of legislators participating, while costs for the third special session were mostly staff-related due to the absence of lawmakers.
The final special session saw the House and Senate continuing to meet for floor sessions every three days as required in the state constitution, but due to the absence of a quorum they were technical sessions where no legislative action could be taken. Kiehl presided over most of the Senate sessions in an otherwise empty chamber, while Juneau Democratic Reps. Sara Hannan and Andi Story alternated presiding over most of the House sessions.
On those days visitors were subject to security screening that was first implemented last year for times when official legislative activities are occurring. Among the visitors who had to pass through it on Monday were David and Katie Sprague, a Los Angeles couple visiting friends in Juneau, who said they were used to security screenings elsewhere and those at Alaska’s Capitol were a comparatively pleasant experience.
"We are not accustomed to lovely, polite security guards who are engaging and interesting to talk to," Katie Sprague said.
The couple also, after catching the final few seconds of Monday’s brief Senate floor session, spent several minutes chatting with Kiehl in the chamber.
While most of the senator’s desks in the chamber were clear of personal belongings, one notable item was a decorative wood bowl presented 25 years ago to Sen. Lyman Hoffman, D-Bethal, the seniormost member of the Legislature, who is retiring this year after nearly 40 years of service. His tenure was extended when he was appointed one of the six lawmakers on the conference committee that drafted the compromise gasline bill that ultimately failed to pass.
• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.
