BP-Arco payment to state not unusual

My turn

Posted: Tuesday, February 15, 2000

Relying on the adage that ``facts are irrelevant,'' the Juneau Empire in its Feb. 11 editorial decried the requirement that BP and Arco pay the state for its legal fees in connection with the settlement negotiated between Alaska and the companies last December. The editorial misses the mark in two respects: First, requiring such payments is good public policy. Second, the state's participation in the federal court proceedings is not in defense of BP, but in furtherance of the state's own interests.

As part of the state's settlement of its antitrust claims against BP and ARCO, the companies were required to reimburse the state for its costs and attorneys' fees, including any costs and fees that the state might incur in the future related to the implementation of the settlement.

This is a continuation of a 25-year Alaska practice, one that's followed in virtually every state in America and one that saves Alaskans money. In the last year, similar provisions were included in settlements involving Carrs-Safeway and Exxon-Mobil. Outside the antitrust realm, payment was a feature of our recent settlement with Royal Carribean Cruise Lines.

The policy behind these reimbursement provisions is that the merging companies, not the citizens of the state, should ultimately pay for the investigation, review, implementation and enforcement of a merger. Alaska did not ask for the merger to occur. It will be dramatically affected by the outcome, whether or not the merger is ultimately approved by the Federal Trade Commission. The financial burden should be placed on the companies alone.

Two aspects of this agreement distinguish it from others, though neither is justification to reject payments from BP and Arco.

First, Alaskans are divided over the merger and the settlement between Alaska and the companies to resolve Alaska's antitrust issues. Reasonable people can differ over the wisdom of our settlement, but it provides little basis for treating BP and Arco more favorably than the companies involved in the Exxon-Mobil or Carrs-Safeway mergers, for example.

Second, while the companies were able to resolve their differences with Alaska, they were unsuccessful in their negotiations with the Federal Trade Commission. Yet that is a matter of chance rather than design. The governor and his team crafted the Charter to protect Alaska's interests, not those of the nation as a whole.

The Charter required a pattern of divestiture that would lead to renewed development and competition on the North Slope, make Alaska more competitive globally, and ensure a high level of commitment by BP on environmental and social issues important to Alaskans. The Charter is a contract between Alaska and the companies.

When Alaska intervened in the litigation initiated by the FTC, it intended to preserve the benefits of the bargain it negotiated. Thus, protecting Alaska's interests - not BP's or ARCO's - is what is at stake in Alaska's intervention. The state, and no one else, will control that intervention and the presentation of the state's case in defense of the Charter. That BP and ARCO may be forced to make the state whole once the dust settles does not change that fact.

Some have asked whether these payments are simply a blank check to the state. They are not. The litigation is financed by appropriations made to my department for oil and gas litigation generally and for merger review specifically.

The $1.5 million that BP and ARCO have reimbursed the state thus far has been deposited directly into the state treasury, where it must stay until appropriated by the Legislature. Any future payments by the companies to reimburse the state for fees and costs will - and must - be handled the same way.

Bruce Botelho is the attorney general for the state of Alaska.

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