Alaska Senate passes HB 381 12-8; Republicans call it doomed

The Alaska State Senate passed HB 381 on June 19 by a vote of 12 to 8, but the Senate Republican Caucus voted against the bill and immediately announced plans to push for a replacement during the upcoming special session. The following account is drawn from a Senate Republican Caucus press release issued the same day; the caucus is an interested political party and its characterizations of the bill reflect its own position.

The bill, formally titled to address taxation of natural gas project property and local contributions for public school funding, passed the Alaska House before reaching the Senate. The Senate Republican Caucus said the version that reached the Senate floor would doom the AK LNG Project before it breaks ground. The caucus said it wholeheartedly wants to see the project built and was disappointed to vote against the bill, but argued the Democratic-led majority added provisions that make the project unfinanceable.

The caucus identified three provisions it says are fatal to the project. The first imposes new taxes targeting S corporations, which the caucus said would raise costs for the LNG project and burden oil and gas companies already supplying heat and power to Alaskans. The second ties tax relief to strict construction timelines with no allowance for supply chain delays or other disruptions. The third alters a project labor agreement that developer Glenfarne had already signed with local unions, a deal the caucus described as precedent-setting and said the majority had altered in a way that increases the potential for labor shortages, delays, and uncertainty.

"Investors will not finance a project facing a tax structure dependent on events beyond the developer's control," the caucus said.

The Stakes for Railbelt Residents

The caucus framed the stakes in direct terms. "Alaska is facing a gas shortage crisis. A failure to supply gas to the Railbelt will negatively impact families, communities, and businesses with higher costs and constant uncertainty on whether their lights and heat will stay on," the statement said. The Railbelt corridor stretches from Fairbanks through Anchorage and depends on Cook Inlet gas supplies that have been declining for years. Manufacturers and other large energy users are also among the stakeholders whose costs turn on whether a long-term North Slope gas supply comes online. The effort to monetize North Slope gas and secure in-state supply stretches back decades.

What Comes Next

The Senate Republican Caucus did not call the project dead. The caucus said it will work with House Republicans starting Saturday, the first day of the third special session, to draft a clean, bipartisan LNG bill that removes the provisions it says would deter investors. The caucus said both House and Senate Republican caucuses will continue to champion the most important contributors to the AK LNG Project, Alaskans. Whether a replacement bill can clear both chambers during the third special session remains the open question.