Alaska lawmakers blew past a special-session deadline Saturday without a deal on a multibillion-dollar tax break for the proposed trans-Alaska natural gas pipeline, after the House rejected the Senate's version of HB 381 by a lopsided 12-28 vote and the two chambers agreed to hash out their differences in a conference committee.
The Senate returned the favor moments later, voting 0-16 against the House's version of the bill. Neither body budged. Gov. Mike Dunleavy immediately proclaimed a new 30-day special session, the state's second, to keep the negotiations alive. As the Alaska Beacon reported, members of the House rushed out of the Capitol Saturday afternoon to catch flights home from Juneau, with no confirmed schedule for when the conference committee will meet and a tentative plan to reconvene for votes on July 1.
The collapse matters because the AK LNG project, an 807-mile pipeline from Alaska's North Slope to Cook Inlet, with a second phase extending to an export facility on the Kenai Peninsula, cannot move forward without the kind of tax relief HB 381 is designed to provide. The bill centers on an alternative volumetric gas tax, or AVGT, that would replace the existing tax structure and, in theory, attract the private investment needed to get the pipeline built.
The House passed HB 381 on June 12 with a larger tax break. When the bill reached the Senate, lawmakers rewrote it substantially, trimming the tax relief and layering on amendments the House had never vetted.
The Senate added a corporate income tax provision targeting privately owned oil and gas companies, specifically Hilcorp and Glenfarne, the company that owns 75 percent of the AK LNG project. The state-owned Alaska Gasline Development Corp. holds the remaining 25 percent. The House had already voted down a similar corporate income tax proposal earlier this spring.
House Majority Leader Chuck Kopp, a Republican from Anchorage, told colleagues on the floor that the corporate tax provision was the wrong signal at the worst time:
"It is considered economically counterproductive at the moment the state is trying to attract final investment decisions on phase one and phase two of the gas pipeline."
Kopp also warned that the Senate's late-night amendments had not been properly examined:
"These amendments were not vetted or extensively explained on the other body's floor, and we do not yet know their full impact."
Beyond the corporate income tax, the Senate attached at least four other amendments. One would cap gas prices for Southcentral Alaska residents and tie increases to inflation, barring developers from passing on cost overruns to Alaskans. Another required pipeline builders to pay prevailing wages and hire Alaskan workers and apprentices. A third mandated that Glenfarne and its developers disclose ties to foreign companies. A fourth declared that if developers abandon the project, it reverts to the state at no cost, Glenfarne could not seek a buyout.
The Senate also imposed hard construction deadlines: phase one completed no later than 2032, phase two no later than 2036. The Senate's version included a plan for gradual tax increases over time, shrinking the tax break compared with what the House had approved.
Dunleavy did not stay neutral. Late Friday night, after the Senate passed its revised bill, the governor voiced objections, telling reporters there were "serious questions about all the amendments." On June 19, Kopp had joined Dunleavy at a news conference, a signal that the House majority and the governor's office were aligned against the Senate's approach.
Dunleavy's communications director, Jeff Turner, struck a more diplomatic tone Saturday in an emailed statement:
"Governor Dunleavy is encouraged by House and Senate leadership's decision to send HB 381 to a conference committee. It's an opportunity for both bodies to agree on a version of the bill that can incentivize the Alaska LNG Project while still providing steady, predictable revenue to communities along the pipeline corridor using a volumetric tax mechanism."
House Speaker Bryce Edgmon, an Independent from Dillingham, made clear the governor's involvement would be essential. "If he's not involved, and that's going to make the pathway ahead problematic," Edgmon said. The speaker described the Senate's heavily amended bill as a "starting point going forward" and pledged to work "with a strong sense of resolve" toward an agreement.
Whether Dunleavy can bridge the gap between the chambers is an open question. The House wants a bigger tax break to attract investment. The Senate wants more guardrails and more financial disclosure from Glenfarne before committing state resources. Those two positions are not easily reconciled, especially when lawmakers are scattered across a state the size of Texas, with no firm date for the conference committee to begin work.
Sen. Bert Stedman, a Republican from Sitka who co-chairs the Senate Finance Committee, laid out the upper chamber's concerns in blunt terms after Saturday's vote. Glenfarne, he said, has not provided enough financial detail to justify the concessions the House version offers.
"They still haven't clearly delineated how much benefit or burden the property tax existing structure actually is on it."
Stedman went further, arguing that even a complete property tax exemption would not be enough to make the project pencil out financially:
"Even if we made no property tax on the gas line, it does not make it economic. It helps economics, it does not get it over the hurdle."
That is a significant admission from a senior Republican. If the project's economics do not work even with maximum tax relief, the state faces a harder question: how much public subsidy is too much for a pipeline that may never reach a final investment decision? Stedman's answer was direct:
"We gotta protect the treasury, that's our job. If you're going to give concessions, they need to show us why they need them, and the impact."
The demand for transparency about Glenfarne's foreign ties adds another layer. The Senate's disclosure amendment suggests at least some lawmakers are uneasy about who, exactly, stands behind the project, a reasonable concern for a deal that could cost the state billions in forgone revenue. The fact that Glenfarne owns three-quarters of the venture and the state-owned AGDC holds only a quarter makes the balance of risk and reward a legitimate worry.
The conference committee includes members from both chambers: Edgmon, Rep. Calvin Schrage of Anchorage, and Rep. Justin Ruffridge of Soldotna from the House; Stedman, Sen. Lyman Hoffman of Bethel, and Sen. Mike Cronk of Tok from the Senate. Edgmon said there will be public meetings, but no schedule has been confirmed.
The new special session runs through July 19. Lawmakers have tentatively agreed to return to Juneau for potential final votes on July 1. Four senators were excused absent from Saturday's votes, a reminder that holding a quorum in Juneau during the summer is its own logistical challenge. The political dynamics in the Alaska Legislature have produced no shortage of friction this session, including unrelated controversies involving Capitol staffers.
The all-Republican House minority caucus huddled outside the chamber before Saturday's vote, though no public statements from that group were reported. The 12 House members who voted to adopt the Senate's version were nine votes short of what was needed.
Energy projects of this scale require political certainty as much as they require favorable economics. Developers watching from the outside see a state government that cannot agree on the terms of its own incentive package, hardly the signal that attracts a final investment decision. Across the country, federal energy policy battles and judicial intervention have already created headwinds for major infrastructure projects. Alaska's internal gridlock only compounds the problem.
The core dispute is not complicated. The House believes a generous tax break is the only way to attract the private capital needed to build an 807-mile pipeline and, eventually, an LNG export facility. The Senate believes the state is being asked to hand over billions in tax relief to a private developer that has not shown its financial cards. Both sides have a point, which is exactly why this should have been resolved weeks ago.
Dunleavy's new special session buys time but does not buy agreement. The conference committee will need to resolve the corporate income tax question, the size of the AVGT break, the construction deadlines, the consumer price protections, the labor provisions, and the foreign-disclosure requirements, all before July 19. That is a tall order for a group of legislators who just demonstrated they cannot agree on any of it.
The risk of inaction is real. Alaska's North Slope holds enormous natural gas reserves, but reserves in the ground generate no revenue, no jobs, and no energy security. Every month of legislative delay is another month the project's developers can point to political uncertainty as a reason to hold back investment. Cities like Seattle have already learned what happens when political leadership drives capital away.
Alaska cannot afford to let a generational energy project die on the floor of a conference committee because lawmakers could not agree on how much to ask a private company to show its books. Protect the treasury, yes. Demand transparency, absolutely. But at some point, the state has to decide whether it wants a pipeline or a perpetual negotiation.
Right now, it has chosen the negotiation. The pipeline is still waiting.
