The Biden Administration Is Being Sued by Alaska Over Canceled Arctic Oil, Gas Leases

An Alaskan state agency is taking the Biden administration to court for its choice to terminate oil and gas leases on Alaska’s North Slope.

The lawsuit, filed in a federal court in Washington on October 18, challenges the U.S. Interior Department’s September 6th move to eliminate seven oil and gas leases in Alaska’s vast 19 million-acre Arctic National Wildlife Refuge.

This region, among the nation’s largest untouched federal lands, is also the habitat of numerous protected wildlife species, including grizzly and polar bears, snowy owls, and caribou herds.

Prior to their cancellation, the Alaska Industrial Development and Export Authority (AIDEA) held these leases. AIDEA is currently petitioning the U.S. District Court for the District of Columbia to reinstate the leases, asserting that the federal government’s action breaches a specific directive from Congress in a 2017 tax bill to allow drilling in the Arctic.

As per Alaska Governor Mike Dunleavy, a Republican, it essentially comes down to the Biden administration’s endeavor to strip away the state’s autonomy.

“The federal government is determined to strip away Alaska’s ability to support itself, and we have got to stop it,” he said in a statement.

The terminated leases were auctioned off in the ending days of the Trump administration. Prior to that, Alaskan authorities had been involved in a decades-spanning effort to allow drilling in the refuge, with the expectation that it would have given a boost to the local economy.

The state agency then became the exclusive bidder for most of the land. In 2020, prominent oil and gas companies opted out of the auction, which generated a little more than $14 million in the same year.

However, this fell significantly short of the anticipated $1.8 billion in bids that a 2019 Congressional Budget Office report said could be generated from two auctions in the refuge spanning a decade.

The refuge’s coastal plain contains almost 12 billion barrels of oil, but there is no infrastructure to support its extraction, which likely stifled interest from drilling companies. Other factors included oil market volatility, risks from legal challenges, and political uncertainty about the future of any leases.

Two other entities won leases at the 2020 sale but withdrew from their holdings in 2022.

The Interior Department said last month that the remaining seven leases were canceled as a result of serious flaws in the previous administration’s lease sale. The flaws allegedly pertained to climate change effects from oil and gas drilling on the North Slope.

According to the lawsuit filed by the AIDEA, however, the 2017 tax law didn’t give the agency discretion to avoid those effects by declining to issue leases.

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By Hunter Fielding
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