Before Feb. 11, the Regulatory Commission of Alaska will rule if Hilcorp is permitted to shield its finances from the public as part of its deal with BP. By default, the RCA requires that companies disclose certain documents to the public. But Hilcorp seeks special treatment to keep its finances hidden. Hilcorp’s lawyers argue that, “There is no public interest requiring disclosure which outweighs (Hilcorp’s) privacy interests.”
The RCA should reject Hilcorp’s arguments for four reasons.
First, thanks to the foresight of our constitutional framers (and unlike states where Hilcorp has historically operated — like Oklahoma and Texas), Alaskans own our mineral resources. We are an “owner state,” to use former Gov. Wally Hickel’s evocative phrase. So when Hilcorp wants to buy out BP, they are also asking to partner with the people of Alaska to develop our resources. Alaskans give permission to companies to extract our resources, and in return we receive taxes and a royalty from the sale of these resources. This deal relies on the public making sure we get a fair price for our resources and protecting our most regenerative assets — our lands and waters.
Ultimately it is the Alaska public, through the election of our representatives and through ballot initiatives, who determines how our resources are developed. But this can only be done properly when the public and our legislators have the basic facts of those parties extracting and moving our resources.
This oversight extends not just to oil leases on public land at Prudhoe Bay but also to the Trans-Alaska Pipeline System, or TAPS. The pipeline effectively monetizes our oil reserves. How the pipeline is operated is directly linked with the extraction and sale of the public’s natural resources. As oil companies and Alaska leaders have long understood, the pipeline is inseparable from the economics of North Slope oil extraction. Ensuring TAPS’ owner companies are transparent, which the RCA is about to rule on, matters tremendously for overseeing the safe and profitable extraction of state resources.
Since Alaskans currently have access to BP’s financials as a public company, not requiring Hilcorp to disclose its financial statements would result in the public having far less information and transparency. This would be a regressive policy that would harm the public. As major oil producers sell out to smaller, private companies, this RCA decision will establish a precedent for how transparent the next generation of corporations will have to be. The RCA, as a protector of the public interest, has a responsibility to ensure public access to critical data that allows Alaskans to make decisions about the sale of our resources.
Second, all Alaskans have a material interest in ensuring that companies that transport hazardous substances through public lands and waters have the ability to clean up spills. Hilcorp is tiny compared to BP — roughly 3% of its size.
“Alaskans ... need to know that an oil company has the financial ability to deal with a major oil spill,” the Fairbanks Daily News-Miner asserts. In short, “State regulators and legislators should press the company for openness.” Similarly, the Alaska Press Club contends, “The public has a compelling interest in understanding the degree to which the owners of (the trans-Alaska Pipeline) have the financial assets and capacity to continue operating the pipeline and tankage in a safe and environmentally sound manner.”
Third, ensuring that Hilcorp publicly discloses its finances is imperative for public trust in the regulatory process. There are excellent reasons why the default under Alaska law requires that records in the possession of the RCA are open to the public. Such transparency allows the public to see the basic facts upon which politically appointed regulators adjudicate critical issues. Members of the public provide a check against the state to ensure that transactions — like the unprecedented BP-Hilcorp deal — are properly scrutinized and provide appropriate benefits. No matter your politics, we can all agree that citizen oversight is essential for a healthy democracy.
Finally, the RCA should ensure transparency because it’s clear that Alaskans want Hilcorp to be open and honest. When asked in a December 2019 poll conducted by Alaska Survey Research, 62% of Alaskans agreed that, “Hilcorp should have to publicly disclose their finances as a condition of the sale,” while 31% disagreed and 6% were not sure. By a 2-to-1 ratio, Alaskans want transparency from Hilcorp.
But this case is about more than what Alaskans want; it’s about access to the basic information that Alaskans need to be good citizens and good stewards of our natural resources. Regardless of what Hilcorp and its lawyers argue, Alaskans have an overriding public interest in the management of our resources and sovereignty of our lands.
Philip Wight lives in Fairbanks and is a policy analyst for the Alaska Public Interest Research Group. He recently completed his Ph.D. dissertation in history, “Arctic Artery: The Trans-Alaska Pipeline System and the World it Made.”