SRES-260515-0900

I call Senate Resources Committee meeting to order. Today is Friday, May 15th, 2026, and the time is 9:00 AM. Please turn off all cell phones. Um, Senator— or senators present today: Senator Rauscher, Senator Myers, Vice Chair Senator Wilkowski, and myself, Senator Giesel. We have a quorum to conduct business.

Thank you to Heather, who's keeping the records of this meeting, which by the way are legal documents, and we appreciate her diligence. And help— thank you to Chloe, who is keeping this audio functional so that the public can listen in. We are addressing Senate Bill 280, the Supporting a Gas Line for Alaskans Act. This is our 31st meeting on this topic since March. Yesterday we adopted Version L of the bill, and today we're going to hear a sectional presentation about it.

In other words, we're going to go through the sections of the bill, mainly talking about the changes that were made, but also the details of it. We do have a hard stop at 9:55 today due to some other commitments. So I will welcome to the table— first of all, thank you, uh, welcome Senator Kawasaki for joining us. I will welcome Sonya Kawasaki, who is the Senate Majority Legal Counsel, who will go through a presentation on the bill. Welcome, Ms. Kawasaki.

Good morning. Good morning, Madam Chair, members of the Senate Resources Committee. For the record, Sonya Kawasaki, Senate Majority Legal Counsel. Today we'll go over presentation of Mostly the changes in the CS that was presented yesterday, which is version L of the SAGA Act supporting a gas line for Alaskans. Good morning.

SB 280 version L, the Senate Resources CS addresses certain important gas line policy changes and some technical clarifying and conforming changes from the prior CS.

First of all, there was a section in the bill that we had originally incorporated from the governor's introductory bill and version of the bill, and it had excluded from the education local contribution the amounts that an AVT would generate to a municipality. Thereby doing— in doing so, the, um, that provision could have, uh, the exemption could have allowed municipalities and school districts to overspend that, uh, money to— um, above a cap that's in law right now for required local contributions and voluntary local contributions. Um, those values are normally 2.65% for required local contribution and 2— I'm sorry, 2.65 mils for required local contribution and up to additional 2 mils for the voluntary local contribution. In removing this provision from our bill, we allow those dollar figures that come into the municipality to be subject to the caps. And that way we're intending to prevent the municipalities from exceeding the caps and possibly causing the state to fail the disparity test.

And the disparity test is funding that the state receives for if school districts can maintain between our, um, between our most well-funded and least well-funded school districts, a 25%, um, just a 25%, um, difference, then the state will receive a federal impact reimbursement of what we have been receiving is around $80 to $90 million. And so the state has an interest in avoiding failing the disparity test. If you would pause there, please. Sure. Any questions about that from committee members?

Okay. It was— it's a correction.

—That was actually pretty important that we needed to remove from the governor's proposed bill. Go on, please, Ms. Kawasaki. Thank you. Thank you. The next bullet on this page is that we modified existing law regarding the public notice requirements of the Open Meetings Act, and we had received Input from people that AGDC often doesn't provide enough notification for when meetings were going to be held.

And I looked into an old Attorney General's opinion that basically said that the Open Meetings Act, which in law right now only references reasonable notification, Um, the Attorney General's opinion stated that it was probably best for state agencies to give at least, uh, 10 days, uh, notice for general meetings and then 3 days in exigent circumstances. So I asked Legislative Legal to commit that to ADDC's notice requirements for the Open Meetings Act, and then in a regular— with a regularly scheduled meeting, they have to inform the public 24 hours upon awareness of scheduling the regularly scheduled meeting. So if you— again, if you would pause there. Sure. AGDC will be holding 25% of the ownership of this project going forward.

And the public needs to have access to these board meetings. And so that's why, again, this was an important piece. I realize it seems trivial, but it actually is meaningful for the public to have information about how our asset is being managed, even though it's only 25% of this project. Thank you, Madam Chair. Any questions about that?

I don't see any. Oh, Senator Myers. Yeah, thank you, Madam Chair. So I'm just curious how that compares to our other publicly held corporations and other railroad, AHFC, et cetera. Ms.

Kawasaki, do you know that right offhand? Madam Chair, through the Chair, Senator Myers, I don't believe other state corporations have minimum requirements because the Open Meetings Act already sets these schedule at reasonable— provide reasonable notice. And so the interpretation of that was something that I found in an Attorney General's opinion, because if the notice is not reasonable, then the Public Open Meetings Act is sort of negated for public to have access to meetings anyway. Okay, thank you. Oh, and I also, Madam Chair, would like to respond to a question that Senator Myers had on the record The last time I presented the last version of the bill, I think there was a misunderstanding on a provision that actually referenced the Open Meetings Act, but had to do more so with the Administrative Procedures Act.

And so it was actually just a conforming statute. It was meant to allow AGDC to use the Administrative Procedures Act to have to address the new procurement code requirements that we put in the last version of the bill. And that's just a process for them to have to come up with regulations for the procedures for their contracting. And so Senator Myers did ask whether we were subjecting AGDC now to the Open Meetings Act, but it was already a requirement of AGDC. So I just wanted to respond to Senator Myers on that issue.

Thank you. All right. Next bullet point.

The third bullet, we clarified what constitutes a cost overrun that may not be passed on to Alaska ratepayers. And this will be for the gas pipeline constructed from the North Slope to Southcentral. And we placed a limit on what defines an overrun as $15 billion. I know we received some questioning yesterday on that. The number how it would operate if the project came in under $15 billion.

It was a good question and we will explore that. But I did want to mention, Senator Myers also asked a good question about our caps and how that might interplay with the $15 billion overrun. I thought about it overnight and I— if the amount Basically, the, uh, the project would be subject to both not being able to pass the overruns and the two caps, which the one is the $5 before— but after the LNG is online, and $12 prior to LNG exporting. And I think that it would— the way we have it written, notwithstanding that we should revisit it, but the way we have it written, it would work. To limit the, uh, amounts that tax ratepayers would pay, because if the pipeline comes in under $15 billion, um, they would still be, uh, limited to— by the $5 and $12 caps.

Thank you. And, um, Ms. Kawasaki, the $12 cap is actually the piece that applies when only the pipeline is functional. Madam Chair, that's correct. Thank you. Senator, uh, Rosier.

Yeah, thanks. So this is the only part that I have hard trying to wrap my head around. So basically, to restate what I think I heard, is a cost overrun is a dollar over what it costs, or a hundred $15 billion over what it cost, but we're going to stop the ratepayers from being held to be liable for that cost overrun up to $15 billion. After $15 billion, they are not liable for it anymore. Did I state that correctly?

Through the Chair, Senator Rosser, that's approximately how that would operate. All right. Thank you very much.

All right. I see no further questions. I'll let you go on.

Next slide, slide 3, further changes. This CS includes the committee's adopted amendment from the prior CS, um, which ensured that Cook Inlet producers have the ability to access capacity in the gas pipeline, which was Senator Rauscher's amendment. Um, it has been incorporated into the CS. And then, um, the next change is there were a few changes to the AGDC transparency section. Um, first of all, we removed provisions regarding the legislature's access to confidential information that would be shared in a regular or special session that would be due to the parties consenting to that information being shared.

I think there was, um, a sense that that provision wasn't necessarily needed now. And then we made some technical changes to information that may not be subject to confidentiality agreements and the legislature's ability to obtain information related to effects on the state project economics and appropriations. Those were mostly just technical clarifications. Are there any questions on those elements? All right, seeing none, slide 4.

Yes, slide 4 changes the requirement for legislative approval of relationships with foreign entities to simply a notification requirement that's quarterly. Um, this change is sort of based on input from the developer about how burdensome it is to seek approval from the legislature for, um, relationships with foreign entities. These would be legal relationships, basically, um, in the sense that the foreign entity would be seeking to invest or, um, have a share of equity in these projects, and for a purpose of their obtaining monetary returns from the project. And I think that there was a feeling that we wanted to know which foreign entities that the developer was in a relationship with, but that based on Glen Farn's testimony that this would be overly burdensome and it's a normal course of business to engage with foreign entities. We wanted to lighten that burden on them.

Let me add at this point, the other thing that Glen Farn told us is that the federal government requires them to divulge this information. So we pursued that, and actually it's only required if they've received a federal loan. So this— at this time is a private pipeline. Seeking private investors. So I don't see a pathway where the federal government would have jurisdiction, uh, but, uh, we will keep an eye on that, and, and we are asking for notification.

Thank you, Madam Chair. I'll let you go on. Sure. The next bullet on page 4 establishes RCA oversight authority for the similar requirements that we placed on AGDC, but RCA having the oversight authority was important, we thought, because they have regulatory authority, and so the ensure— the assurance that The gas pipeline cost overruns won't be passed on to Alaska ratepayers, and the price caps of $12 before the LNG plant is in commercial operations and $5 upon commercial operations of the LNG plant have been established under AGC— or, I'm sorry, RCA oversight authority.

All right. Very good. I see no questions. Slide 5. Sure.

Under slide 5, um, so the next couple slides are any changes that are in the bill related to the oil and gas production tax system. Um, in this version of the bill, we raised the minimum tax floor from 4 to 6% for North Slope production, and that would be effective January 1st of 2027.

So we know that— here's rationale, in case you're wondering how this was arrived at. We know that it's nearly impossible to separate the production costs, the lease expenditures, to separate gas expenditures from oil expenditures. And so we know that that will facilitate the 4% minimum tax, what we call floor. It's the minimum oil tax requirement. It will allow it to be, as we say it, penetrated.

That is, the producer pay less than the 4% minimum. So we are adopting the governor's suggestion in a previous bill, a tax bill, Senate Bill 227 for reference, to raise that tax minimum to 6%.

Any questions, comments about that? Senator Dunbar. Thank you, Madam Chair. I just want to point out it's not an insignificant difference. It's not an indistinct— it's not an insignificant point that this is not retroactive as some revenue measures has been.

This is, this is next year. When also, I mean, should be mentioned that Glenfarnett has said that they're going to start construction, which means that the lease expenditures will start to flow as well. So good timing is important. Thank you, Senator Dunbar. Further comments?

Senator Myers. Yeah, thank you, Madam Chair. So we've got a lot of conditional effects in this bill, um, a lot of it having to do with pipeline construction and like This is not a conditional effect, though, so the oil companies are going to get stuck with this change in the tax structure regardless of whether or not the pipeline actually moves forward. Why didn't we make this— if the point here is to capture the changes up there because of gas now becoming produced and sold rather than just produced and then shoved back in the ground, why aren't we making this portion conditional on the pipeline starting construction as well?

Well, Senator Myers, the governor didn't make it conditional on a pipeline— a gas pipeline either. The governor's proposal was to increase the source of revenue for the state. So that is a partial rationale. Senator Wilkowski? Yeah, just, um, I mean, it is partially to address the lease expenditure issue on the North Slope, which we know has existed for years and we tried to fix, uh, probably a decade ago.

Um, we spent a summer here, in fact, trying to fix it, decouple oil and gas, and only to have it vetoed by Governor Parnell at the time. Um, I think the pressing issue though, and, and it was recognized by the governor, is the fact that when you have projects like Willow, for example, which, uh we believe probably cost the state of Alaska $500 million in lost revenue this year, uh, because Conoco is able to write off all the costs of their, uh, of their ex— of their lease expenditures off of their existing production taxes. And when it goes into production, we get no royalties, we get very little if any production taxes. So, um, and that's, uh, $500 million this year is probably $300 million last year, $300 million the year before, probably $300 to $500 million next year. And so this is simply a way to try to stop the bleeding of how we're getting crushed by our existing oil tax structure, from my perspective.

I'll add to that, and it was a question that Senator Rosier asked yesterday when we were speaking with AOGCC. We're not hardening the floor, I will also add. And for the public, that means we're not making this a floor that the company cannot deduct under. It's still a very flexible floor. Senator Myers?

Yeah, so I mean, yeah, this part came out of the governor's bill from the beginning of the year, but he also had some conditional language in there too, making it conditional on the spending cap and one or two other things. I'd have to check again. But so what I'm hearing though is that the rationale for this is really has mostly to do with oil taxes and oil production in general. It has very little to do with the pipeline. Is that accurate?

Madam Chair. Ah, it's up to your interpretation, Mr.— Senator Myers. Okay. Senator Dunbar. Thank you, Madam Chair.

I think to Senator Myers' points about making this conditional, I'm trying to visualize what that would actually look like. Because the other portions, um, you know, making it conditional on the construction of a pipe or making it conditional on, um, commercial operation couldn't work here because of what Department of Revenue told us, which is to say, if we're trying to address, um, uh, lease expenditures, we cannot differentiate between oil and gas lease expenditures. So there could be significant gas lease expenditures in 2027 that we don't know if they're towards this project or towards the other. I mean, that was exactly what we tried to do. We had a thing here trying to do decoupling, and they and the oil industry said they couldn't do it.

So there, to me, I— because we can't differentiate between the two, I don't think we can make this conditional. You know, we have to go, okay, well, we will only— we will only put this into effect if you start doing lease expenditures on the pipeline, but they, they won't and can't do that. And they're not going to tell us whether it's a gas lease expenditure or an oil lease expenditure because they've told us specifically they cannot do that. So I think there will be significant lease expenditures next year on— that will eventually be used for a gas pipeline, for drilling wells and that kind of stuff at Point Thompson. And It won't even be producing gas at that point.

It will be producing oil, but it's still lease expenditure associated with this project because they've told us they can't differentiate the two. So I don't think there's an effective way to make this conditional. Senator Kawasaki, did I see your hand up? No. Senator Roscher.

Thank you, Madam Chair. But, um, yes, it's true the floor is not hardened, but I think in— well, I know in Senate Finance they're hearing SB 227, and I believe they actually took away the per-barrel credits, which essentially hardens the floor in that bill. So it's in the works. So I just thought I'd make that statement out there because that's actually happening in a different bill. Thank you, Senator Roscher.

I will note that they canceled their meeting this morning. Senator Myers. Yeah, just to Senator Dunbar's point, you know, I understand, I understand your point. We're not—. I'm not saying that this is an attempt to try to decouple gas and oil or anything like that, but if the goal here is to, to address those lease expenditures, those lease expenditures won't happen if we don't start construction of a pipeline.

If they— and the pipeline itself is not a lease expenditure. So it seems to me we should be able to make it conditional on construction of— I wouldn't say I wouldn't do the commercial operations because that's 3, 4, 5 years down the line. But if you start construction of a pipeline in, well, let's say December, and it may or may not be that, but that's been one possibility thrown out there, then that could be the trigger. If so, that makes pretty— that makes sense to me. Senator Wilkowski.

Well, we heard from AGDC, Mr. Richards, I believe, that the pipeline is, I think, 98% likely to go forward. And we heard from Glen Farn that they expected to have FID, well, last December, and then it was January before session, and then it was early March. So I have full confidence that they're going forward on this based on the statements they've made in this committee. Can I just—. Senator Dunbar.

I'll just keep it short because I don't want to just restate what I had said, but the issue, right, is that they could be doing lease expenditure.

In anticipation of a pipeline and not be able to articulate it because they can't differentiate the two. So, you know, and they could be doing that for years and not differentiate the two, and we wouldn't be able to either because we can't decouple them. So I, I just don't think you can make it conditional on, on the pipe itself because we can't tell what pro— what, which of their expenses are directly related to the pipe or not. So I think this is— and I'll say, the last thing I'll say is this was not directly suggested, but it was one of the levers that Director Stickle said was easier to implement than the attempted decoupling that we put in there. He said, pull a lever that you already have.

This is a lever the governor pulled. And so I think it makes sense to do it in this way.

All right. Ms. Kawasaki, the second bullet on slide 5. Sure. Thank you, Madam Chair. For the record, Sonya Kawasaki, Senate Majority Legal Counsel.

The second bullet, we address rephrasing of the DOR determination of prevailing value for oil and gas to ensure that the mandated application of that policy applies only to the oil and gas sold at no cost or unreasonably low cost, um, and not when oil or gas is produced and not sold or simply stored and sold later. The current law addresses all three scenarios except for rather than making the determination mandatory for the prevailing value for oil or gas that's, um, sold at a low or unreasonably low cost. So to ensure that the state receives its value in production tax, the 13% gross production tax, as well as its royalty in value determinations, we wanted to make sure that the DOR was mandated to ensure that those values met prevailing values, but the way that the provision was written in former versions of this bill, I think, caused some concern by industry because it seemed to imply that the parameters for the determination would apply to all 3 conditions, and we understand that It's a very common, um, it's very common in operations to produce gas and simply use, uh, inject it, re-inject it, or store it. And we didn't want that determination to be mandated on those two conditions. So to clarify a bit more, we had heard prior to session, even at the beginning of session, that A company called Great Bear with a subsidiary, I think, called Pantheon had actually stated that gas production on their lease, which has not occurred either for oil or gas on their lease, uh, would be such that they would be happy to give it away free to the pipeline.

And this would affect, of course, the state's property tax and royalty, as Ms. Kawasaki alluded to. So we wanted to make sure that we were establishing a prevailing value that would set a fact that we would get a production and royalty from it.

We also did not wish to rope in the gas that is produced and reinjected as pressurizing— in order to pressurize fields to continue the oil production. One of the things that we also found out is that the prevailing value for the use of that gas, as they sell gas from one company to the other on the North Slope, is about $3. And yet the company, Glenfarm, is stating they're predicting a value— the price of gas from the North Slope to be $1.50. This, if we required them to publish, if we required the Department of Revenue or DNR Natural Resources to publish a prevailing value, it would interfere with the commercial negotiations that Glenfarn would have with producing gas companies on the North Slope. And so the, the publication of this we removed, and we will leave it to DOR, Department of Revenue, to, to appropriately apply a value of gas without publishing anything so that there's no commercial interference.

Any other comments? All right, we're going on now to slide 6, I think.

Yes, Madam Chair.

On slide 6, the first bullet, we clarified that the infrastructure maintenance surcharge of 30 cents per barrel is intended for use along the James Dalton Highway corridor specifically. Know that Senator Kawasaki noted that the language seemed to indicate that the funds could be used along the general pipeline corridor, which actually deviates in Fairbanks and goes to Valdez. And so it wouldn't even— it would not follow even the gas line corridor. But the policymakers' real intent was to focus those funds on the James Dalton Highway corridor anyway. And so we just rephrased it in the bill so that intent was captured better.

Senator Dunbar, comment? No, Senator Meyer has a question. Senator Meyer. Thank you, Madam Chair. So, with the saying corridor rather than just the highway itself, does that mean it could also be used on the Deadhorse and Coldfoot airports which are state-owned?

Through the Chair, Senator Myers, I am not sure about how that would be interpreted, if it would mean that it could be used on the airports. I'm sorry, could you clarify your question? Well, yeah, I'm just— it's stating a corridor, which, you know, up until recently when it's been the federal government owning it, you know, it's 5 miles on either side of the highway for the federally owned portions of it at least. The state owns the airport at Coldfoot. The state owns the airport at Deadhorse.

The guys that main— the guys that go out and plow the— both the people and equipment that plow both of those airports are also the same guys that go out and plow the highways in those areas.

And so I was wondering if the— and as a general rule, DOT manages the air— with the exception of the Fairbanks and Anchorage airports, DOT manages the highways and the airports together for the maintenance portion. And there is an airstrip at Galbraith Lake. I cannot remember if that's state-owned or owned by Alyeska off the top of my head. So I'm just wondering if that money would also be available to be used on those airports as well. Senator Dunbar.

Thank you, Madam Chair. Let's build a legislative record, Senator Myers. Which would you prefer? I would like it to be broader so that they could. But if you'd like it to be narrower, we could either build that intent now or we could run an amendment together.

Which would you prefer? Thank you, Senator Dunbar. Senator Wilkowski. Thank you. I would just note that this is not a dedicated fund.

And we can't dedicate where the funds are used. The Commissioner of Transportation testified in front of this committee that the Dalton Highway would need $450 million over the next 6 years, which equates to about $75 million per year. That's currently being subsidized 100% by the people of Alaska. The federal, federal government, of course, contributes federal highway funds, but this is simply an attempt to have some of those costs picked up by the major users of the Dalton Highway. My intent in this is— or my preferred intent is that it go to the highway and not be used for the airports.

I think that's where the money is needed. But if there's a— it's not a dedicated fund, and if the department decides they need to use some of that for the airport, then I don't think there would be anything in this —bill as it's written, that would prohibit them from doing that. I would also add those airports are important transportation structures that no doubt need ongoing maintenance. They will be transporting materials related to this gas pipeline. If not materials, certainly personnel to those important locations along the road for maintenance.

Further discussion?

Seeing none. Next, second bullet point on slide 6. Sure. Thank you, Madam Chair. I might also add that similar along the lines to what Senator Wieleckowski pointed out, that the legislature has appropriations authority.

And so to Senator Meyer's question, you know, the legislature will consider how to spend the money and it is discretionary and it's under the authority of the legislature whether or not to direct those funds.

To those purposes. So next bullet point on page 6, we deleted a disclosure requirement that was actually inadvertently appearing in the prior CS that had to do with being able to release information of oil producers when they're aggregated in 3— by 3 or more producers. This was a remnant of another policy that we were trying to incorporate, which when we were considering publishing the prevailing value, but then since we received feedback from the industry and the Department of Revenue that we should probably avoid setting these gas values by publishing them. That provision ended up in the bill accidentally when we released it, and I did note— I do note that AOGA mentioned it in a concern letter that they had sent to the committee, and so hopefully they'll be happy to hear that we eliminated that from the bill. Ms. Kawasaki, what is AOGA?

Oh, thank you, Madam Chair. AOGA is The Alaska Oil and Gas Association, and it is an alliance of gas— oil and gas producers. It's a trade organization. Thank you. All right, I see no further questions on Slide 6.

We can go to Slide 7.

The next change we addressed— this was a change in the last CS, but we— there were just some technical moving around of the locations where the terms appear, but I did want to bring it up because basically in existing petroleum property tax, we decided to pull in the marine export terminal and the liquefied natural, natural gas plant specifically into petroleum property tax definition of taxable property, just in case when the state ends up taxing these types of properties that they are already included in that provision. We did note that there is probably an existing liquefied natural gas plant on the North Slope that we wanted to make sure that we didn't subject immediately to the tax, the Petroleum Property Tax, which would be the state's portion of the Petroleum Property Tax. And so we set a delayed effective date to that of 4 years into the future. And— but we also believe that the North Slope Borough has about an 18 mill tax rate on that property already. So the state's portion under current petroleum property tax law would only allow 2 more mills.

And that would have that delayed effective— date of implementation against that existing facility. Thank you. Senator Myers. Thank you. Ms. Kawasaki, does this also affect the taxable status of the old Marathon plant down on the Kenai that's now owned by Hilcorp?

Um, is it— I'm through the chair. Senator Myers, could you explain what that kind of property is? Um, so that's a— it's an LNG facility. It hasn't been used as one for, for a few years now, hasn't shipped anything out. But if I remember right, it was— it was a— I don't know why, but it was exempt from state petroleum property taxes.

And so if I'm reading this correctly, that facility would now be pulled into it and it would start paying property taxes. There is talk of it becoming a— potentially becoming a import facility, but I don't believe those plans have been finalized yet.

Um, through the chair, Senator Myers, I believe that we are preventing taxing an import facility, and that LNG plant in Nokiski, my understanding is that if the state is not taxing it, then the borough is taxing it already. Um, I, I I don't believe— if it's going to be turned into an import facility, then it would not be subject to this change in law. Okay. Thank you. No other questions?

Slide 8.

So now we're moving on to the alternative volumetric tax changes in the bill from Receiving input from the public and from Glenfarm, um, we wanted to reduce the rates because the state has such an interest in seeing this project move forward. And so working with Glenfarm and their statements to us in public and private meetings, we decided to attempt to allow them to get to the point that they can get their investors on board and start constructing these projects. And so we changed our former tax rate that we had in the alternative volumetric tax. I'm sorry, Madam Chair, I need to look for it.

Yes, I have a slide. I'm sorry, I don't seem to— I had a slide telling me what those were. I think it was 15, 15, and 25. Yes. Thank you.

Thank you. Thank you to the committee. It was 15 on the gas pipeline, 15 on the gas treatment plant, and then 25 on the LNG export facility, and this is per 1,000 cubic feet. Um, and so in attempt to allow some more leeway for the developer to be able to start up these projects, we reduced it initially. The initial in-state demand will be the 6 cents per MCF, which sort of matches what the governor introduced, and that would be on both the gas treatment plant and the gas pipeline.

And then once the export demand starts up, we would— I apologize, I have a typo here— seek 10 cents per MCF on the gas treatment plant, 15 cents per MCF on the gas pipeline, and 15 cents per MCF on the LNG export facility. Madam Chair, on full exporting, that would add up to 40 cents total of volumetric tax.

Very good. Any questions? All right. Seeing none, slide 9.

Slide 9. This is addressing again the alternative volumetric tax. We focused a little bit on the inflation adjustments for the alternative volumetric tax. As the committee probably remembers, the governor suggested a 1% increase that wouldn't start for, I believe, 10 years after commercial operations Um, we will allow 5 years of commercial operations on the gas pipeline without any inflation adjustment, and from there it will begin annually under the CPI inflation for urban Alaska, um, rates as, um, through the U.S. Department of Labor. And so the gas pipeline is expected to not receive an inflation adjustment on their rates until 5 years of operations.

And then from there, it will be an annual adjustment. And then when export operations come online, that will kick in the higher alternative volumetric tax, in which case we will restart inflation adjustments from starting the very next year. And then on the export facility, the The inflation will be adjusted annually starting from operations.

All right. I see no questions. Slide 10.

Under slide 10, we didn't have any changes to the revenue sharing formula, but I just wanted to add in the slide so that we could reorient ourselves on that expected revenue sharing distributions. So for the alternative volumetric tax, we expected to provide 50% of the gas treatment plant's AVT to the North Slope Borough, and then the state would retain 50% of the revenue from the alternative volumetric tax. Then on the gas pipeline, 50% would go to municipalities along the corridor based on the ratio of miles of pipeline contained in the municipal boundary, um, and then the state retains the proceeds for the unorganized boroughs. And then 50%, um, of those funds received from the gas pipeline alternative volumetric tax would go to the communities in Alaska through the current Community Assistance Program, which is administered by DCCED. Which is what department?

The Department of Community, Commerce, and Economic Development, Madam Chair. Thank you. And finally, for the export.

50% Of the AVT to the Kenai Peninsula Borough and 50% to the state.

Any questions on this slide? Seeing none, slide 11. Thank you, Madam Chair. Um, so slide 11 gives a Phase 1 sort of estimate of what to expect in revenue.

Um, you can see there we have the ABT rate at 6 cents for the gas treatment plant and the pipeline per— in miles, and then the population, um, the pipeline per population and the expected revenue for the pipeline only at in-state demand, which is currently 65 billion cubic feet. Per year. You can see the distributions, and then the expected total would be about $8 million during that time frame under just Phase 1, which is the gas pipeline and the gas treatment plant on the North Slope. Ms. Kawasaki, I note that you have on the first line there, in-state demand only, 65 BCF per year, which is accurate from what I have heard from utilities. However, I believe that the Glenfarm prediction would be somewhere between 400 and 500 BCF per year.

Perhaps this is a question to ask the producers— excuse me, the owner, the owner of this private pipeline. It is a private pipeline, uh, and the Department of Revenue. But I know there is some discordance between those two numbers. I'll just point that out at this point, and, um, we'll have further discussions. Thank you.

Thank you, Madam Chair.

Then, are you on slide 12 now? Yes, Madam Chair. Moving on to slide 12, this is an estimate of the, um, revenue to each of the, uh, communities and then the state based on full development for export, which we projected at 1.2 trillion cubic feet per year. Um, and as you can see, when the export facility comes online, the expectation would be that all of the communities, uh, receiving AVT revenue will receive quite a boost in, uh, revenue and The total number between the state and the communities is expected to be $450 million.

Any questions on this slide? All right. Slide 13. Oh, Madam Chair, I should bring up— I know Senator Myers asked in a prior hearing about the per capita distributions through the Community Assistance Program, and we had reached out to DCCED who said that no individual gets counted twice. So essentially, if a city is contained in a borough, that the populations will be receiving their own separate distributions through the Community Assistance Program.

Thank you for that. All right, are we moving now to slide 13? Yes, Madam Chair. Slide 13, the changes to the Community Impact Program. Now this CS adopts the changes to the community impact program that differ from the monetary amounts and distribution mechanisms that the committee adopted a couple of days ago in an amendment that was put forth by Senator Rauscher, which I know the committee appreciated and did adopt it.

But then we were sort of fleshing out a community impact program that would bring in similar or would bring to the state similar revenue amounts as the Senator Rascher amendment. But we were trying to work on a formula for that that would help the developer and the communities receive benefits from the Community Impact Program. So I just wanted to note that as we move on. Pause, please. Sure.

Are there any questions? All right. We are going to discontinue at this point. There is another event taking place in this room, and so we do need to vacate. So at this time, we will set this presentation aside.

Our next meeting is this afternoon at 3:30. At that time, we are going to conclude this presentation.

And we have provision for an amendment that Senator Myers has offered that needs to be dealt with. And then we'll be opening public testimony. So at this time, this meeting will stand adjourned. Let the record reflect the time is 9:50 a.m.