Alaska Supreme Court hears arguments in city of Valdez’s effort to unlock Hilcorp financial secrets

The Alaska Supreme Court on Tuesday heard oral arguments in a case involving confidential documents in the $5.6 billion deal in 2020 that allowed oil company Hilcorp to acquire BP’s Alaska assets.

The city of Valdez is asking for Hilcorp’s financial information to be publicly released so it can determine if the company has the financial wherewithal to, say, clean up a major oil spill, if one should ever occur.

On the opposing side, the state and the two oil companies argued that Valdez does not have the standing to make a case, and that the issue is moot in part because the transaction closed after Valdez did not take timely and proper steps to stop the process.

The case is unique because it involves the largest transfer of Alaska oil field assets in decades. Past transfers have involved publicly traded companies that are required to disclose their financial information.

The courtroom drew more than 100 spectators, including Vic Fischer, the last living delegate to the Alaska Constitutional Convention in 1955. He said he was opposed to the confidentiality.

Also occupying the courtroom were dozens of protesters who earlier had stood outside the Boney Courthouse with signs and a bullhorn denouncing Hilcorp’s confidentiality with shouts of “Spill secrets, not oil!” They faulted Hilcorp for its long list of safety violations that has been cited by state oil field regulators as a concern.

“We are here to demand transparency in the biggest oil deal in a generation,” Tara Chrisman with the Fairbanks Climate Action Coalition told the protesters. “We want no secrets, no spills.”

Lawyers for the state Regulatory Commission of Alaska and oil companies argued on Tuesday that Valdez had not adequately followed procedures at the state agency before the agency agreed to transfer regulatory approvals involving BP’s stake in the 800-mile trans-Alaska pipeline and other assets. The transfer in late 2020 drew wide public interest, generating more than 300 comments.

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They said the Superior Court had properly dismissed the case on those and other grounds in 2021. That decision led to the appeal by the city of Valdez.

David Wilkinson, a state attorney representing the agency, said the case is not about what the state agency did or did not do. Rather, it’s about what Valdez failed to do.

“It failed to seek a stay of the underlying proceedings, allowed the underlying transaction to close and then today, 2 1/2 years have passed since that sale has closed,” Wilkinson said. “It’s challenges to the RCA proceedings that led to that closure, that transfer of approval, have long been moot, and they grow more stale by the day.”

Attorney Robin Brena, representing the city of Valdez, argued that the case should be returned to the Superior Court for further consideration. He said the agency should be required to release Hilcorp’s data to help the public better understand the potential consequences of the massive transaction.

“As it stands today, neither the Alaskans nor the city of Valdez, nor this court has any way to determine whether or not the largest owner of the most important publicly regulated facilities in Alaska has $1,000 in the bank,” Brena said, much less the financial capacity to safely operate them in the public interest.

Valdez, located near the site of the 1989 Exxon Valdez oil spill, does not want to undo the transaction, Brena said. But the city wants to modify the terms of the transaction to provide ongoing financial disclosure and protect the public interest.

The justices had a lot more questions for the lawyers representing the state and oil companies than they did for Brena.

Joel Bolger, who resigned from the court in 2021 but on Tuesday was filling in for Justice Dario Borghesan, seemed to have difficulty understanding why Valdez wouldn’t have a standing in the case, essentially, the right to pursue a lawsuit. (Borghesan had recused himself from the case.)

“It’s hard for me to get my arms around this argument,” Bolger said.

Bolger noted that the city is the site of the Valdez Marine Terminal, where the trans-Alaska pipeline ends and oil is loaded onto oceangoing tankers. He said the city has pointed out during the transfer process that an accident akin to the Exxon Valdez spill could be disastrous for its 4,000 residents.

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“How can you say that these interests are not sufficient to confer standing for Valdez to make this appeal on behalf of its citizens?” Bolger said.

He continued, “I understand your procedural objections, but when you get right down to the substance, I can’t think of anyone that’s more concerned about this transaction.”

Attorney Anne Marie Tavella, representing Hilcorp, argued that Valdez has not in fact been harmed, a requirement for standing in this case.

“Valdez’s argument is hypothetical,” she said. “It may be adversely affected at some point in the future, depending on what might happen, but that’s not factual aggrievement.”

Bolger also challenged Brena, expressing puzzlement over why the city of Valdez didn’t simply file a formal protest, as the Regulatory Commission of Alaska has argued was necessary, to hold an evidentiary hearing to further pursue its arguments before the agency.

Brena said that the city never protested the transaction, but it took other steps in its effort to affect it.

“We fought like the dickens to get the confidential information public,” Brena said.

“The commission was on notice for months that we were concerned about their process, that our constitutional rights were at risk, because they were moving forward with the most important transfer, the most highly contested transfer” ever, he said.

Attorney Michael McLaughlin, representing BP, said he’s never seen an evidentiary hearing like what the city of Valdez is seeking, though he’s argued for years in dozens of matters involving transfers.

“Probably because there hasn’t been a transfer like this in any of our legal experience,” said Justice Susan Carney, one involving a private corporation seeking to keep everything confidential.

That doesn’t change the agency’s clear process for entities seeking to have their issues raised with the agency, which Valdez didn’t follow, McLaughlin said. He argued that Valdez did not exhaust all potential administrative challenges at the regulatory commission before turning to the courts.

“Shouldn’t the administrative agency have the first opportunity to weigh in on its own procedures?” he said. “Isn’t that the essence of exhaustion? You try and get these things resolved at the lowest possible level, rather than involving the courts.”

Brena closed his case by arguing that access to public records is necessary for Alaskans to effectively participate and contribute to government proceedings.

“Alaskans should have a voice in this process,” he said. “This court should protect that voice.”

Chief Justice Peter Maassen said the court will issue a decision at a later date.