Citizens file suit against state's deal with BP

Posted: Tuesday, November 23, 1999

Two past gubernatorial candidates filed a lawsuit Monday alleging the state's agreement with BP Amoco to allow a merger with Atlantic Richfield Co. is illegal.

Nick Begich and Ray Metcalfe claim the agreement between the Knowles administration and BP would be making a resource allocation, which can only be done by legislative act. The complaint was filed in Superior Court in Anchorage.

Metcalfe ran for governor last year on the Republican Moderate ticket. Begich was a declared write-in gubernatorial candidate that year as a member of the Alaskan Independence Party.

Metcalfe and Begich, joined by former state Senator Vic Fischer, sued BP Amoco and Arco in state court last month on antitrust grounds. The plaintiffs sought to halt the proposed takeover, or to force BP Amoco to sell its interest in the trans-Alaska oil pipeline system, along with a large chunk of its oil production.

Earlier this month, the state and BP announced the draft agreement contested in the latest lawsuit. Among other terms of the deal, BP would sell 175,000 barrels of daily oil production and part with 620,000 acres of exploration leases on state and federal land.

But the complaint filed Monday alleges the tentative deal would still allow a blatant monopoly that violates state antitrust laws.

The combined BP-Arco would ``use its production and pipeline control to open and close the spigot on Alaska oil wealth and directly affect Alaska politics, the Alaskan economy and the permanent fund,'' the suit said.

Opposition to the merger also came Monday from the Alaska Public Interest Research Group, which questioned whether BP is deliberately slowing down North Slope production to leverage support for the merger.

``Has BP used its pre-merger market power both in Alaska and worldwide to engage in anti-competitive behavior detrimental not only to members of the oil service community but all Americans?'' AkPIRG Executive Director Steve Conn asked in a letter to Gov. Tony Knowles and Federal Trade Commission Chairman Robert Pitofsky. ``Pre-merger behavior that harms Alaska and America generally is a good predictor of post-merger behavior.''

BP attorney Bill Noble disputed the charge, saying the company is ``frozen in place'' by outstanding questions about asset divestiture. Until the deal is ratified by the FTC, BP can't be sure what contracts to let, Noble said.

The Knowles administration is meeting with BP officials today to discuss possible changes in the tentative agreement with BP.

The Associated Press contributed to this report.

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