Dunleavy's Alaska LNG Compromise Bill Stalls as Legislature Declines to Reconvene

Alaska Gov. Mike Dunleavy, who is term-limited, introduced a compromise bill in mid-August 2026 establishing a tax and oversight framework for the roughly $50 billion Alaska LNG pipeline project. The bill set a 2% corporate income tax on S corporations tied to the project, lower than the 9.4% rate a legislative conference committee had previously proposed, with the tax effective in 2030 or when gas begins flowing; it would also extend the state's corporate income tax to oil and gas companies, exempting the Alaska LNG project while applying it to Hilcorp. The Legislature had been scheduled to reconvene in Juneau on August 20 to consider the measure. A coalition of trade groups and the Alaska Chamber of Commerce sent a letter opposing the compromise bill, and Senate President Gary Stevens said lawmakers needed to review the changes carefully before proceeding. Senate Majority Leader Cathy Giessel raised concerns about transparency and criticized the administration's handling of the process. House Minority Leader DeLena Johnson said a letter from minority members signaling willingness to keep discussing the bill did not amount to support for it, while House Speaker Bryce Edgmon said it did not make fiscal sense to reconvene without a clear resolution in sight. Legislative leaders ultimately said they would not meet to advance the bill, and Stevens indicated he likely would not reconvene the Senate. Dunleavy said he was "deeply disappointed" and stated there was "little reason" to continue the special session after leaders declined to advance the measure, warning that legislative inaction could send a negative signal to investors. The issue will now be left to the next Legislature and the incoming governor, since both Stevens and Edgmon are not returning to their current leadership posts and the 35th Alaska State Legislature convenes in January after Dunleavy leaves office. Separately, Japan's JERA and Tokyo Gas have signed preliminary deals to buy LNG from the project, though developer Glenfarne has not yet reached its target of binding offtake agreements for 80% of planned export capacity. It remains unresolved whether or when the Legislature will take up gasline tax legislation again.