Legislature(2025 - 2026)

2026-05-21 Senate Journal

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2026-05-21                     Senate Journal                      Page 2915
SB 2001                                                                                                                       
SENATE BILL NO. 2001 BY THE SENATE RULES COMMITTEE                                                                              
BY REQUEST OF THE GOVERNOR, entitled:                                                                                           
                                                                                                                                
          "An Act relating to the taxation of certain natural gas                                                               
          project property and related facilities; relating to the                                                              
          determination of the value of taxable real and                                                                        
          personal property for purposes of calculating local                                                                   
          contributions for public school funding; relating to                                                                  
          municipal property taxes; relating to the Alaska                                                                      
          Gasline Development Corporation; relating to                                                                          
          revenue from a North Slope natural gas project;                                                                       
          relating to an alternative volumetric tax on natural                                                                  
          gas throughput; relating to agreements and payments                                                                   
          related to a natural gas project; relating to community                                                               
          impact grants; relating to the regulation of liquefied                                                                
          natural gas import facilities by the Regulatory                                                                       
          Commission of Alaska; relating to an Alaska                                                                           
          liquefied natural gas project mitigation fund; and                                                                    
          providing for an effective date."                                                                                     
                                                                                                                                
was read the first time and referred to the Finance Committee.                                                                  
                                                                                                                                
The following fiscal information was published today:                                                                           
 Fiscal Note No. 1, Department of Revenue                                                                                       
          Fiscal Note No. 2, Department of Commerce, Community, and                                                            
          Economic Development                                                                                                  
         Fiscal Note No. 3, zero, Department of Commerce, Community,                                                           
          and Economic Development                                                                                              
                                                                                                                                
                                                                                                                                

2026-05-21                     Senate Journal                      Page 2916
Governor’s transmittal letter dated May 20:                                                                                     
                                                                                                                                
Dear President Stevens:                                                                                                         
                                                                                                                                
Under the authority of Article III, Section 18 of the Alaska                                                                    
Constitution, I am transmitting a bill relating to the taxation of certain                                                      
natural gas pipeline property, municipal taxation limitations, the                                                              
establishment of an alternative volumetric tax on natural gas                                                                   
throughput, and the allocation of revenue from that tax for the Alaska                                                          
Liquefied Natural Gas (AKLNG) Project.                                                                                          
                                                                                                                                
This legislation builds on the bill transmitted earlier this year and                                                           
reflects the most recent negotiated framework developed during the                                                              
regular session. It preserves the central purpose of the original                                                               
proposal: replacing a property-tax structure that creates front-end costs                                                       
and uncertainty with a volume-based tax structure that is tied to                                                               
project performance, while adding provisions intended to address local                                                          
community impacts, revenue allocation, labor stability, and in-state                                                            
energy access.                                                                                                                  
                                                                                                                                
The AKLNG Project remains one of the most significant economic                                                                  
and energy-infrastructure opportunities in Alaska’s history. For                                                                
decades, Alaska has sought a way to deliver abundant North Slope                                                                
natural gas to market while ensuring affordable and reliable energy for                                                         
Alaskans. The need for action is urgent. Cook Inlet gas supplies are                                                            
declining, energy costs remain a serious burden for families and                                                                
businesses, and Alaska must make the necessary decisions to secure its                                                          
long-term energy future.                                                                                                        
                                                                                                                                
Development of the AKLNG Project will help lower long-term energy                                                               
costs for Alaska families and businesses, provide long-term energy                                                              
security for communities across the state, and enable the responsible                                                           
development of North Slope oil and gas resources that might otherwise                                                           
remain stranded. The project will generate thousands of construction                                                            
jobs, long-term operations employment, and significant economic                                                                 
activity. In addition, the project will provide substantial stable new                                                          
revenue for state and local governments while supporting long-term                                                              
economic growth across multiple sectors of Alaska’s economy.                                                                    
                                                                                                                                
                                                                                                                                

2026-05-21                     Senate Journal                      Page 2917
The project includes a 739-mile natural gas pipeline in Phase One, and                                                          
completion of the pipeline, compressor stations, a North Slope gas                                                              
treatment facility, and an LNG export facility in Cook Inlet in                                                                 
subsequent phases. Phase One is key to bringing affordable energy to                                                            
Alaskans. Access to North Slope natural gas will help stabilize and                                                             
lower long-term energy costs for homes, businesses, and utilities                                                               
throughout Alaska.                                                                                                              
                                                                                                                                
Under the existing annual 20 mill, or two percent, property tax on oil                                                          
and gas property, investors have indicated that the AKLNG Project                                                               
would face a tax structure that imposes significant costs before the                                                            
project is fully operational. To deliver energy at the lowest possible                                                          
cost to Alaskans and improve the project’s ability to attract private                                                           
investment, this bill adopts an alternative method of taxation based on                                                         
natural gas throughput rather than assessed infrastructure value.                                                               
                                                                                                                                
This modified proposal continues to provide tax relief during                                                                   
construction and initial operations, while establishing clear conditions                                                        
for when the alternative volumetric tax begins. The alternative tax                                                             
structure applies when the project reaches the throughput threshold or                                                          
the applicable initial operating period has concluded, as provided in                                                           
the bill. This approach gives the project a predictable path through                                                            
construction and start-up while ensuring that public revenues are tied                                                          
to actual project performance.                                                                                                  
                                                                                                                                
The bill establishes an alternative volumetric tax structure for major                                                          
components of the AKLNG Project, including the pipeline, gas                                                                    
treatment and related facilities, and LNG facilities. By tying the tax to                                                       
throughput, the legislation aligns public revenue with the volume of                                                            
gas moving through the project, provides greater predictability for                                                             
investors, reduces the risk of repeated valuation disputes, and supports                                                        
the short- and long-term economic viability of the project.                                                                     
                                                                                                                                
This version also incorporates additional protections and commitments                                                           
developed through the legislative process. The bill provides for the                                                            
allocation of revenue between the State and affected municipalities,                                                            
recognizes the impacts on communities that will host or support                                                                 
project infrastructure, and includes a community impact fund to help                                                            
address construction-related effects. It also includes provisions related                                                       
to a Fairbanks spur line commitment and project labor agreements to                                                             
support in-state energy access, labor stability, and timely construction.                                                       

2026-05-21                     Senate Journal                      Page 2918
The bill further provides that the alternative tax structure will not                                                           
remain available indefinitely if the project does not move forward. If                                                          
the project does not meet the construction and development                                                                      
requirements established in the bill, the tax structure will terminate                                                          
and the project will revert to the existing oil and gas property tax                                                            
framework. This ensures that tax relief is tied to actual project                                                               
advancement.                                                                                                                    
                                                                                                                                
This legislation provides a clear, predictable, and performance-based                                                           
tax structure for the AKLNG Project while incorporating additional                                                              
community, labor, and revenue protections. It advances a project that                                                           
can deliver affordable energy to Alaskans, strengthen Alaska’s energy                                                           
security, support economic growth, create jobs, and unlock the full                                                             
potential of North Slope natural gas resources.                                                                                 
                                                                                                                                
I urge your prompt and favorable action on this measure.                                                                        
                                                                                                                                
Sincerely,                                                                                                                      
/s/                                                                                                                             
Mike Dunleavy                                                                                                                   
Governor