Alaska Legislature: SMIN-20260617-1630

All right. Well—. What's up? Nothing, you're good. Oh, sorry.

Welcome to the Senate Minority Caucus press conference that we have today. We have Senator Young, Senator Kaufman, Senator Myers, Senator Rauscher, Senator Tilton, and myself, Senator Cronk, here. And obviously we are here today to talk about the gas line. And we're pleased to be collaborating with Glenfarn the House, the executive branch, and the majority caucus to push this project forward. This project benefits nearly every Alaskan, whether it's directly through cheaper energy costs, indirectly through PCE, or by employment or economic opportunities.

Our goal is to pass a clean bill that allows this project the opportunity to be built. And with that, I'm going to turn this over to Senator Young. [FOREIGN LANGUAGE] Yeah, thanks everybody for coming. So I just wanted to visit a little bit about the volumetric tax system and why I believe, and I think all of us firmly believe, it's a much better system. So property taxes are very, I don't want to say argumentative, but they're discretionary, right?

So every year somebody comes in and assesses them, and then all the time you wind up in lawsuits over the values. You know, that's going to cost the taxpayers a lot of money in the future. We've already seen that with TAPS. It costs the developer a lot of money. Volumetric is very clean, very simple.

You see a lot of projects shut down at the end of their lifespan because the property tax rate is still what it's been the whole time, but as volume and production comes down, then it's no longer worth it. And so the other thing is, is it just—. It's—. It's a much more fair system, honestly. So it doesn't tax a project that's going to take years to build before it even starts producing.

So I definitely think the volumetric is the system to use in regard to this pipeline.

Thank you, Senator. Senator Kaufman. I think this is a pretty simple situation. Either we build a gas line or we're dependent. For the rest of our lives on buying gas.

And that's not a pretty picture. Mm-hmm. The stage 1 of the gas line brings gas to Alaskans. Stage 2 brings it to the world. And that's where the economic prospect really kicks in.

The tax treatment that we need is the tax treatment that will enable this line to get built. Glenfarn's here. They've been doing a good job. We've had good hearings. There's been a lot of transparency with them and AGDC.

On things that were— other people had questions about previously. So I felt we were on a pretty good arc. Mm-hmm. Until just lately when suddenly everything kind of crashes and suddenly committee hearings are being canceled and the majority's caught in a huddle apparently trying to figure out what they're gonna do. So I hope with all of my heart that we can get a clean bill to the floor and we can have a good up and down vote.

If people wanna try some amendments, do it. But I think it all should be done in the light of day. If we're squabbling over revenue that comes from this thing, we need to remember no revenue comes from bought gas. No revenue comes from windmills. None comes from solar panels.

So let's get real about what we're talking about. We're talking about an opportunity. Let's not lose that opportunity because of squabbling over details. Thank you, Senator Kaufman. Senator Rauscher.

Yeah, thank you. So the President of the United States is on board. We have his administration. We have the Secretary of the Interior, Doug Bergman. We have Secretary of Energy Chris Wright.

We've got the EPA Administrator Lee Zeldin, our congressional team in Washington. We've got the governor working hard. We've got a developer. The stars are aligned here. And what message will we be sending if we fail?

Do the investors see a legislature that says we can't get out of our own way to invest in Alaska's future? [SPEAKING NATIVE LANGUAGE] Or do they see one that says, "We're ready to go to work and we're willing to invest in our state and its future." Do we see a place where the time and resources will be wasted? Or do we see a state that is open for business, serious about creating opportunities and the next generation? We need to pass this, a clean version of HB 381. We could use before the end of this special session is over.

I'm looking forward to getting it passed. I'm looking forward to a yes vote. Yes. And I'm hoping that it will be a clean vote. Thank you, Senator Rauscher.

Senator Myers. Yeah, I think we're clear that this is a generational project. This isn't just, you know, something that's good for some short-term construction jobs. You know, the biggest benefit here isn't going to be the tax revenue to the state. The biggest benefit is a stable gas supply to Alaska.

For me coming from Fairbanks, Fairbanks is already living South Central's future. We're paying almost 40 cents a kilowatt hour for electricity. Gas to my house is $25. Imports, if that— that's the only— imports is the only viable alternative out there right now. And doing imports locks us into high prices without a path to lower prices, and it locks us into the variability of the world market.

You know, we've talked a lot about what the price spikes have done to oil and to natural gas with the Iran war this year. But we've forgotten that just a few years before that, when Russia invaded Ukraine, the natural gas price in the North Pacific spiked to over $50. That is the variability that we'd be subjecting ourselves to if we go the import route instead. And then of course you gotta add another few bucks on top of that before it actually gets to the consumer. That's just the wholesale price.

For us up in Fairbanks, Even gas burned in Anchorage would let us shut down our diesel generator. To be able to send electricity up that inner tie would be huge for us. And if we can get the spur built, then the spur lets us start replacing some of our aging coal power plants in Fairbanks that are really starting to fall apart. This is a volume business. Higher usage lowers the unit cost for everybody.

And that's even before the exports start. And as Senator Cronk and Senator— or Senator Kaufman mentioned, the—. Yes. You know, the exports is when things really get cheap for us. We're not going to get lower costs right away.

We know that. But this project caps the costs and gives us a path forward to lower costs. There's no other option that does that for us. Personally, just this morning, I paid my gas bill back home, and I'd like to vote for a gas bill tomorrow. Thank you, Senator Myers.

Senator Tilton. Thank you, Senator Gronk. There's a lot of key benefits that come with having this gas line, and I want to say thanks to the House for the passage of HB S.3381 and getting it over to the Senate. Now it's our job to get it to the people. You know, not— we know that there's affordable energy for Alaskans.

The project brings the rest of gas to south central Alaska, lowers costs of energy for families and businesses, and that means relief on heating bills and more competitiveness prices for industry and greater energy security. I think that another thing that we need to consider is that it also— it creates jobs and economic growth. Thousands of construction and permanent jobs will be here for Alaskans, which I think is a really important piece that we need to consider. Um, there's gonna be billions in private investment coming into our economy. Um, this project puts our resources to work for Alaskans first, creating opportunities across the state.

Um, not only that, it's responsible revenue for state, um, and communities. Um, as, uh, Senator Young talked about, the volumetric tax ties revenue to actual production and flow. It's smarter and more sustainable than taxing infrastructure before the revenue is generated. And the bill also includes protections for communities with impact funds, reimbursement for construction impacts at the Fairbanks Spur Line, and project labor agreements. The other thing that we need to consider, that it also gives Alaska global competitiveness and energy security.

It aligns Alaska with successful LNG projects across the world, and it positions us to export— to high-demand markets with prioritizing our in-state needs first and strengthening America's energy independence. This is a fiscally responsible development that honors our Constitution, which we hear about all the time, the constitutional mandate to maximize the benefits of our resources for current and future generations. So lastly, I'll just say that HB 381 and passing this key piece of legislation isn't about choosing between revenue and development. It's about securing both for Alaska's future. And I look forward to being a yes vote to vote on a clean piece of legislation.

Thank you, Senator Tilton. With that, the Senate Republican Caucus has appreciated working with Glenn Farnes, the Governor's Office, the House, and the Majority Caucus. Over the next few— couple days, I was going to say few days, but over the next couple days, it's essential we ignore partisan distractions such as the S corp tax or other potential items that may derail this bill. This is not the time. We have a clean bill.

We need to get this passed. So much hard work has been put into this bill by everyone involved, and it's essential we stay focused to get the legislation across the finish line. And with that, I'd like to thank the House because, you know, we always hear this bipartisan stuff when something passes, but the House passed a true bipartisan bill. It was 35 to 4. A lot of times bipartisan's 24 to 16.

This was 35 to 4. They did work. They worked together. They came up with a product that worked with everybody. So I'm gonna really thank the House for that.

Thank you. We've just come too far to be sidetracked now. This has been a project forever. I've been here for 6 years and I look back and I say, what have we truly done for Alaskans? Well, this project is something that is an Alaskan project.

This will affect our kids. This will affect our grandkids. I am super excited to be able to say I voted for a legacy project that moves Alaska forward. So with that, we would happily take any questions.

Hello, Eric Stone with Alaska Public Media. So we know that there are not currently 11 votes within the majority caucus to bring the bill to the floor. There are 6 of you. I'm wondering if you believe, number 1, if there are 11 votes in the Senate to pass the bill. And I guess I'll stop there.

Well, I wouldn't assume anything about votes. I think it's more of a bit of a power struggle, you know, so what people would be willing to do if there were a path to get the bill to the floor. That's— so there's a lot of dynamics inside a caucus, and I know that they're having a pretty rough time over there just because we keep canceling committee meetings that are calendared. So they're having some struggles right now. I think if we get it to the floor, there will be the votes.

I don't know what the effort might be to make it unpalatable to people to vote for it, the old poison pill idea. I don't know how far we might go down that road if it comes to the floor, but I think the best thing we can do is get it to the floor and do it in the light of day, just like we should have been having committee meetings to get the final bill in shape and then send it to the floor. But instead, we've kind of collapsed into this closed-door caucus meetings rather than the committee meetings and the process that we should should be following. So let's get it back on process. Let's have open meetings and let's get the thing to the floor, and then it can live and die on its own merits, which is what I propose for this piece of legislation the whole time.

Let's argue it on its merits and not tie it to other things, other policy questions, whether it's the past attempt to try and link it to a pension or the current one, apparently, to try to link it to additional taxes that are actually unrelated to the matter at hand. Senator Johnson. Henry, yep. Speaking of that, I'd like to dig in a little bit on the keeping it clean that James just talked about. So everybody's fully aware that I firmly believe the S corp, some call it loophole, needs to be discussed, but it needs to finish the process.

It's got to go through committee. It needs financial modeling. We did not get there with that piece of legislation. I think it's a conversation for in the future. Everybody knows I cannot stand crony capitalism.

I'm not a fan of one person having an advantage over the others in the same industry. But again, we are nowhere near ready to even consider that right now. So it needs to stand on its own merit in a year or 2 years or 4 years or possibly never. But we got to finish the financial modeling. We cannot— I don't think we should be considering jeopardizing this once-in-a-lifetime opportunity over something that we haven't even finished the committee process on.

So I'll just leave it at that. Anyone else like to comment? Good. Okay. Next question.

Pass it on? Sorry, we're missing our president. Getting closer. Senator Dunbar told Alaska Beacon, I think, that some of this might be about organization and next year. And two of you, Senators Tilton and Rauscher, are up for reelection and Senator Myers is leaving.

So I'm wondering if that's a consideration and how that organization plays into all of this next year. I'll take this. Anybody else wants to? I'll be honest, I have never done anything for the future reelection, and when it comes to something this important, I think that's a foolish statement to say because this is a project that affects everybody's lives for the next 20, 50, 100 years. So I think that's I'll be honest, I think that's a foolish statement to say because this is what's in front of us.

It's not about organization next year. It's about doing something for Alaska. Like you said, Jeff, when have we built something last in this state to move us forward? We haven't. We haven't done anything since TAPS.

This is our next generational project. Senator Kaufman? No, you hit what I would say pretty much. I think it's, you know, that feeling's pretty broad. This is a major There's only 3 or 4 cases of policy considerations like this that's occurred in Alaska.

Statehood and TAPS, I mean, there's some big ones, and this is one of them. And I think we need to rise above those kind of partisan or organizational difficulties that we might have and just consider it on its merits and get things out. Sunlight is the best disinfectant. Let's get any questions people have out in the light of day in committee hearings. Lord knows we've had enough of them here in this legislature over the bill.

It's really gotten a good hearing. So I think we should just move it forward in light of day and not let things like that come into consideration. Senator Meyers. We can't let a 2-year decision slow down a 50-year decision. That's really what this boils down to.

Senator Rouse. Yeah, this is not about elections at all. This is about a project that we've grown to endorse completely months and months and months ago. This thing started last year and it's still evolving and it's still escalating and it's still rolling along. And we still believe what we believed a year ago.

We haven't changed our opinions at all. This project is the most important thing that could happen. We're running out of gas in the inlet. This is a very important thing for the rail belt. This is a very important thing for Alaska's manufacturing.

We don't have all kinds of things we could have if we had gas, so this is important. Senator, yep. I got a good basketball analogy for Dunbar. He's pretty competitive and he's very good at basketball, and of course we got one of the past state players of the year over here. So you remember when Allen Iverson was upset?

He was saying, practice? You would talk about practice? Let's talk about games. And that's really what caucusing and next year, that's all practice stuff. This legislation is game time.

We got to leave all that stuff on the side and get in the ring and start competing. And that's really what this legislation is. So yeah, there's your basketball analogy for the day, Cronk. There you go. And Denbar, I know he'll like that one too because I'm sure he's I love it.

I love it. Senator Tilton. Yeah, I better—. The good ones do. I guess I better jump in there since everybody said something.

And I would say that, you know, I think that you have to look at legislation on the merits of the legislation and not be thinking about, you know, what an organization is gonna look like or what caucusing is gonna look like or what your next election is gonna look like. This is a— this piece of legislation is historic. I think you— we heard that a lot, many times on the House floor when people spoke, and I think that you would be very short-sighted to be looking at it from the lens of an organization or a caucus or anything like that. So I think it's really important, again, that we be here and be present for this legislation as it is a benefit for Alaskans using our resources. [TAK] Thank you, Senator Tilly.

I'm feeling a little housey. Every single person spoke on that. Well, I was—. So that's perfect. Thank you, Senator.

You started it. We do have two great reps in here, so this is making them feel comfortable. Yeah. Senator Yant, you spoke on this briefly, but in terms of passing a clean bill, obviously majority is in and out of caucus meetings today. As I understand, two of the things that they're considering is adding an S-Corp provision and potentially shortening the sunset clause, for yourself, Senator Yunt, and others in the minority, would you still support this legislation with either of those pieces added?

I will tell you, and I don't want to speak for anyone else, but I'm hoping that there's 10 votes to kill any amendments that would jeopardize this project. With that being said, if there's 11, The pass is one. I'm still a yes on the legislation. I will let our governor make the decision on what happens next. And I think, you know, the goal is to be— to get something across the line, the best piece of legislation possible.

And if it's not quite good enough, then I say we get back here and get to work again. So I'll just leave it at that. Senator Myers. Yes. I mean, I think the developer was pretty clear in in committee meetings the last few days that it's a 30-year loan based on 30-year contracts, so they're asking for a 30-year tax treatment.

That makes total sense. It's not quite the same way it's being done in Texas or Louisiana right now, but Texas and Louisiana have already built, what, 13 of these types of projects? We're trying to get one done. We're in a challenging environment, and so not everything is going to be a one-to-one analogy. So I think what they're asking for is fair.

You know, they've made it pretty clear that you start to shorten that and that jeopardizes the economics of it. They need it to match the loan. Yeah, thank you. Thank you, Senator Myers. And I think the issue here is this has never been a highly profitable project.

It's marginal, but this allows us to access our gas And we know that initially the first phase isn't going to bring us the cheapest gas. It's the export phase that's going to be the game changer for Alaska. So we need to make sure that they have the ability to build this, you know, and what they have in the bill is what is needed for this project. And I see Mark Sabatini on. Mark, are you there?

Yeah. I guess I'm curious a little bit about— I hear a lot of hopes. Hold on a second. I'm going to mute this because I'm getting feedback. I'm playing this on both my phone and my computer.

Okay. I hear you all talking about what you hope to achieve, but this is also noted— this is kind of collapsed into a series of caucuses right now from the majority. I guess I'm wondering, you've got 2 days left and any changes have to also go through the House. So if this can't clear through, what's the next step from your perspective? I mean, is this something that should be taken up this year or you have folks certainly in the majority who argue it's better to do a good bill, you know, during the next year or 2 than a rushed bill that might cost the state a lot of money right now.

What are your thoughts on what happens if things can't get done by Friday? In my opinion, if things can't get done Friday, I hope the governor calls us back immediately within the hour and we get back to work. We don't have time to wait. Senator Myers. Yeah, we've gotten some information from the developer and a couple of others that they really need to be finalizing this project and all the contracts and everything by about September-ish, give or take, based on some of the agreements that they signed last year.

Waiting until next year does not work for this project. They are going to have to start from square one on so many things. So, you know, on so many issues, I would say, yeah, you know, postpone it, don't rush it, but this is not one of those because we are operating based on timelines that we cannot set here in this building. Thank you, Senator. Jeff?

Hello. I've been watching all these Senate finance hearings and Senator Cronkite and Kaufman are on the Finance Committee. Does this feel— this feels to me like the preliminary hearings of a bill, not the end-stage hearings of a bill. So I'm curious, with 2 days left, it doesn't feel to me like the end of a bill. Does it feel like that to you?

I'll take a bit of that, Jeff. I think what the committee was doing was kind of their concept was the due diligence of, you know, get the players in. And I think there was a bit of a sea change when with the conversations that we started to have with Glen Farn and with AGDC. So there was a pivot there, I think. It felt meaningful both in what was happening simultaneously in the House.

I think all of that taken in context, I can see what you're saying, but I think that there was an intent to move through it, to have the hearings in Senate Finance, to give it its due in the room, but I felt like we were on the way to a reasonable bill that could then come to the floor and live or die by its merits on the Senate floor. So I think that what you were seeing was just the desire to do, you know, the hearings that one would expect a committee to have. And it also surfaced information because again, the amount of information that Glen Farr and AGDC were able to convey, and I just think we saw improvement there. And what I was picking up in the middle of the process was a pretty good mood. It felt like we were gonna be able to come up with something and that we'd come to the floor, but it was always seen that there would be an amendment battle on the floor based on the conversations that I had.

This getting to the point where suddenly things just collapse in committee and then we go into these caucus meetings, you know, behind closed doors. That was really kind of a breaking point that occurred that I think is unfortunate. But I felt like we were on the arc of taking the good work that the House did, having the hearings, and yes, some of them were basic, but they were setting the framework so that the public could see that we were addressing all of that. And then moving on to a, I would say, a modest retouch of the House bill. Is what I anticipated.

Yeah, thanks, Senator Kaufman. You know, yeah, I think he summed it up pretty well, Jeff. I kind of have the same feeling, but I just don't want the fact to be lost here. There's 6 of us here, and I'm going to round that number up. We represent about 240,000 Alaskans.

It's not quite that high, but you know, just rounded it up. We deserve to say in this process, we deserve this bill to come to the floor and cast our votes for our constituents. So I don't want that fact to be lost in this process.

Thanks.

Eric Stone with Alaska Public Media. I wanted to ask a kind of inside— inside baseball kind of question. Do you guys plan to try to discharge the bill from committee? And if so, would that be tomorrow? Would that be Friday?

That's a gotcha question for anybody that wants to—. I'll take that. Yeah, I've got that. Yeah, I'll just say we need to play this by ear. I'm hoping that the better angels of our spirits prevail and that people run the process.

Let's get back on track. Let's do this the way we should. There's no reason for this. It's too important. And there's controversy around this big project.

It's complex. It's expensive, it's narrow margins, it's not something that you want to play with because delay does cost money. An old joke in project management is that the fastest growing thing around is an open charge number because people have to charge their time to something. So work is being done, people are charging to it. And the other reason, I believe, for haste, global situations.

So right now, you know, things are changing over with Iran. Mm-hmm. The rebuilding will only accelerate should some type of peace deal be made and things start to get put back together. That's going to have an effect on the global price of commodities. So everything from pipe to the steel that makes pipe and all of that is only going to go up as that rebuilding curve goes up along with inflation.

Nothing gets cheaper. So the idea that there's no reason for haste, well, There's reason for prudent haste. And we certainly had enough hearings, I think, by now. If we don't know what we need to know, we're not asking the right questions. And that brings another question up.

So I think we've had good hearings on it. We've gotten good information. You can't know everything, but you don't have to do everything in this bill. It's really just a tax treatment to make the funding formula work for it so that they can get on with it try and get the investors to step up and get the funding package put together, along with the commitments at each end of it, gas in, gas out. So that's all that it is.

And I think that gets a little bit lost. So I think we should just get back on track and not worry about, you know, maneuvers and all that. It's too important. It's so big that it just deserves everything to be above board, done in the light of day.. And if people have problems with it, they can state that on the record and we can have a debate and sit on the floor and hash it out.

But I hope we don't have to get down to any maneuvers like that.

Sorry, Senator Young. Yeah, so since I was teasing Eric, I better take a piece of that too. So it's my 6th year doing this if you count, you know, my 4 years on assembly. And what I can tell you is the public process is Typically it's a pretty ugly process, right? But I do think when this is all said and done with, we're gonna come out of it with a good piece of legislation that benefits all Alaskans.

And let's give the benefit of the doubt right now on the record that we have senators in the state that don't have any natural gas in their area, right? And they've got constituents with concerns. They need to ask tough questions on the record. Everybody needs to ask tough questions. There's, you know, so the committee processes have been good.

The finance table's been working really hard. Some of us were down here the last 2, 3 weeks, participating as well. I think we're making good forward momentum. And I think we have a lot of people in Alaska that have to look at different areas of this and see how it affects their community, even if they don't have natural gas. So again, I'll, you know, the public process isn't always pretty, but I do believe that we have 20 senators that love this state very much so.

And I believe we're gonna come out of this at the end of it with 11 or more votes makes for a good piece of legislation. Just to zoom out just a tiny bit, I wanted to ask you to sort of engage with some of the criticisms and skepticism that we have been seeing from the majority.

What I get kind of is a sense that they don't necessarily trust that the promises that are being made by the developer, by AGDC and folks associated with the process, I get the sense that they don't trust that those promises promises will be fulfilled. Things like, you know, we're not going to come back to the state and ask for more money. You know, there's no way that the state of Alaska could be on the hook for cost overruns and things like that. I wonder if you guys, you know, sort of trust those statements that are being made by the developer and associates and why that is. Senator Myers, go ahead.

Yeah. So, you know, they've been pretty clear from both Glenfarnon and from AGDC in Incentive Finance that a whole lot of these questions that people are concerned about, these are contractual questions. This is— a lot of these have already been resolved in the— excuse me— in the contract between AGDC and Glenfarm that they set up last year. So, you know, we have recourse if something is not going right. You know, we've got recourse in arbitration.

Worst-case scenario, we have recourse in the courts. You know, that's why we set up these things. The other question I would ask is, what's your alternative? You know, we don't have another buyer or another developer or, you know, one of the oil companies up here with big pockets saying, yeah, we want to do this. You know, we don't have those kinds of companies lining up to do this project for us.

This is the company that said that they're interested, and I think that we should pursue that in good faith because of what this project means for the state. You know, that this— we are pursuing it. They say that they're— they are pursuing it as best that they can. Then we're getting, uh, you know, they're getting traction. They're making— quite frankly, they are, are making, uh, progress that we've never seen before.

When you've got overseas buyers signing letters of intent. I don't think that's happened in, what, 30 years, at least on, you know, I mean, we've been talking about the gas line longer than I've been alive. I know that. And it'd be really easy to just be cynical and say, oh, yeah, here's the next version. Here we go again.

But, you know, these guys have made progress that we have never seen before. You know, maybe a smaller, leaner, faster moving company is what it takes to get this thing across the finish line. I'm, you know, I was skeptical last year too when they showed up. I'd never heard of Glenfarm before. You know, I was hearing all the stories about gas lines growing up here.

I was like, okay, this is just the next one on the list. But they've done the work. They've shown us the work product. They've got the contract with AGDC. We've taken some of that contractual language put it in the bill.

We've put some of the INSTAR contract language in the bill. We're headed the way that we need to. You know, nothing in life is guaranteed here. And I think everybody agrees that passing this bill does not guarantee us a gas line, but not passing this bill guarantees we don't get a gas line. This is the last thing that we as a state can do to help this process along.

We want to be as helpful as we can.

One more question. Do any of you know what the Governor is going to do on any of these two dozen bills like the tobacco bill and the digital tax bill and the pharmacy bill and the Engineers and Surveyors Board, all these bills? I think this is part of all of this happening is these bills that are due tomorrow. We're going to send Senator Yount back to the House. Senator Yount, he's waiting on us to let us know what we want him to do.

So let's get a good bill passed. We can't tell what the governor is going to do. We have no idea what the governor is going to do. All I can tell you is he's thinking about it. Past that, I have no idea.

Hats off to Senator Young for leveraging that question. 10 Points for that one. The governor has actually said that he takes every bill into consideration on its own merit. There is nothing that he looks at which is going to be bargained with for another bill like that, and these are all in that category. Well, we just want to say thank you everybody for coming, especially Representative Bynum and Klom for coming and joining us here.

We know what time they came in the room. I don't. I did not write that time down. You know, I, I think for our, our caucus here, we're excited about this, this bill. We're excited about the opportunity that this, this this gas line can present to Alaskans.

And, um, you know, right now the world's watching, Alaska's watching, you know. So I think it's, uh, it's time to take care of Alaska. It's time to build the line. So with that, thank you guys for allowing us to have a conference. Thank you.

Build the line.

Hello. Hello.