Alaska sues Interior over canceled ANWR leases

Oct. 19, 2023
A public corporation owned by the state government of Alaska sued the Biden administration Oct. 18 over the cancellation of oil and gas exploration leases on the coastal plain of the Arctic National Wildlife Refuge (ANWR).

A public corporation owned by the state government of Alaska sued the Biden administration Oct. 18 over the cancellation of oil and gas exploration leases on the coastal plain of the Arctic National Wildlife Refuge (ANWR).

The Alaska Industrial Development and Export Authority (AIDEA) filed a complaint in federal court arguing that the lease cancellations violated the law that mandated the lease sales, violated the Administrative Procedure Act, and were done under false pretenses, carrying out a political agenda disguised as a matter of environmental law.

AIDEA asked the US District Court for the District of Columbia to issue a declaratory judgment invalidating the cancellation of its leases and an order directing Interior to proceed with leasing, exploration, and development of tracts in the ANWR coastal plain as prescribed by the Tax Cuts and Jobs Act of 2017.

The lease sale was held Jan. 6, 2021, for tracts in the Section 1002 area of ANWR, the section designated by a 1980 law, the Alaska National Interest Lands Conservation Act, for possible oil and gas development. AIDEA was the most active bidder, and the few other bidders have since voluntarily surrendered the leases they won. This September, Interior announced it was canceling the remaining leases—seven leases held by AIDEA (OGJ Online, Sept. 7, 2023).

“The federal government is determined to strip away Alaska’s ability to support itself, and we have got to stop it,” said Gov. Mike Dunleavy in a statement released the same day that the legal complaint was filed.

“This lawsuit wouldn’t be necessary had the Biden administration followed the law that I drafted, consulted with the Alaska natives who actually live on the North Slope, or simply acted in America’s best interest,” said Sen. Lisa Murkowski (R-Alas.).

The case is Alaska Industrial Development and Export Authority v. US Department of the Interior.

Environmental complications

The Interior Department said it decided to cancel the leases because of deficiencies in the environmental analyses done in support of the lease sales.

In its lawsuit, AIDEA said the alleged errors involve details of how operations of the leases will proceed in the future, not whether the leases themselves were illegal. As a result, Interior violated the Tax Act when it canceled the leases rather than revising the environmental protections required for future operation of the leases, and it violated the Administrative Procedure Act by making a decision that was arbitrary and capricious, AIDEA said.

The Tax Act allows development of “up to” 2,000 acres of production and support facilities for a lease. In canceling the leases, Interior said the planning of the lease sale should have included consideration of limiting development per lease to less than 2,000 acres.

That is a misinterpretation of the law, which was setting a cap on the number of acres an operator could use, not giving Interior the option of restricting development to less than that, AIDEA argued. “Moreover, no provision in the leases addresses interpretation of the 2,000-acre clause,” the state corporation said.

The issue of calculating downstream effects of greenhouse gases also does not justify lease cancellations, because the Tax Act mandated the leasing regardless of greenhouse gas effects, AIDEA said.

False pretenses

The lawsuit addresses the tricky question of honesty in Interior’s claims about the leasing. “The stated grounds for both the earlier lease suspension and the subsequent lease termination were pretextual,” AIDEA said, using polite phrasing for “a pretext,” as in false pretenses.

On this point, the words of Interior Secretary Deb Haaland and President Biden are used in support of charges against them.

Joe Biden, when campaigning for office in 2020, said he was completely opposed to drilling in ANWR and added, “No more drilling on federal lands, period.” Haaland, in the Sept. 6 press conference that announced the lease cancellations, said she would not allow drilling in ANWR. She did not say she was halting lease work to study matter, but instead said “no one will have rights to drill for oil in [ANWR],” according to the lawsuit.

“DOI’s assertions of pre-lease legal defects (both at the time of lease suspension and at the time of lease cancellation) were a pretext to paper over a predetermined political decision to defeat AIDEA leases and to never allow drilling,” AIDEA said.

AIDEA also said Interior failed to provide the Alaska corporation with due process. The Supreme Court has said that a regulatory action like this must provide the leaseholder with “full rights of participation” in the administrative proceeding, but Interior provided nothing of the sort, AIDEA said.

Finally, Interior failed to follow the lease cancellation procedures that the Tax Act mandated. The act copied its regulatory procedures for the ANWR leasing from the Naval Petroleum Reserves Production Act of 1976, with phrasing that says, “Producing leases or leases known to contain valuable deposits of oil or gas may be canceled only by court order.” Interior has obtained no such court order.

AIDEA argued that there is adequate evidence for the assumption that AIDEA’s leases contain oil, thanks to the US Geological Survey’s studies of the area and the presence of oil in adjacent areas just outside of the western boundary of ANWR.

“In light of these facts, AIDEA reasonably spent substantial sums to lease the favorable locations at the western end of the coastal plain,” the lawsuit said.