State claims to conduct thorough BP-Hilcorp review, though it didn't tell legislators or public

The Dunleavy administration insists that it has not taken a hands-off approach to the Hilcorp purchase of BP’s assets in Alaska, it just didn’t bother to inform legislators or ask for public comment.

The revelation is enough to justify public hearings to belatedly involve Alaskans in the debate about a sale announced on Aug. 27. The companies have said they expect to conclude the $5.6 billion deal sometime in 2020.

That the Legislature has refused to step forward is a serious mistake by House and Senate leaders, though some legislators are talking about hearings in early 2020.

The Federal Trade Commission has already concluded that there are no antitrust issues with the sale, Corri Feige, natural resources commissioner, said in a letter to legislators Tuesday. She didn’t say when that FTC decision took place or why it wasn’t announced.

She gave the impression in her letter that the state has already hired a consultant to “rigorously examine Hilcorp’s ability to fulfill its obligations to the state under a set of stressful scenarios.”

But that hasn’t happened.

The Anchorage Daily News, which first reported this story, said that a contract has not been signed. It quoted Dan Saddler, the former GOP legislator who handles DNR publicity, as saying that the department is negotiating contract terms with consultants and won’t name them. No request for proposals has been issued, so perhaps this is another no-bid contract.

Instead of misleading legislators and the public by saying the department is “contracting with an independent and highly respected economics consulting firm to rigorously examine Hilcorp’s ability to fulfill its obligations to the state under a set of stressful scenarios,” Feige should have used the future tense.

“While it is early in the process, significant resources within this agency and the Department of Law are currently deployed to ensure this robust oversight,” Feige wrote to legislative leaders. “I invite you and others to check back periodically as DNR’s due diligence into the sale progresses.”

The decision to exclude legislators until now raises questions about the alleged “robust oversight.” So does the refusal to ask the public for comment.

Among the many issues that warrant an open process is the loss of $30 million or so in state revenue that would occur because Hilcorp, as a limited liability company, would not have to pay the oil income tax paid by oil corporations.

As far as it being “early in the process,” that’s an exaggeration. The Regulatory Commission of Alaska, the only state agency to engage in any public process so far, had planned to end public comment on its portion of the review Oct. 25 without fanfare. After complaints, the deadline was extended until Friday. On Thursday, the RCA extended the comment period again, this time until Dec. 13.

Instead of telling legislators to “check back periodically” on what is happening with the review of the sale, the Dunleavy administration needs to come forward with much more information so legislators and the public can see what is missing before the state completes its final report endorsing the sale.

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