Key Takeaways
Alaska Native governments and groups from the North Slope are suing against Biden’s plans to shut down most of the Indiana-sized NPR-A, and the state is suing against cancellation of leases in ANWR for which the state is due royalty sharing.
The Biden Administration has been foreclosing federal oil contributions to the Alaska Pipeline by canceling leases in ANWR and enforcing prohibitions on energy development in the NPR-A, which flank the state’s lands at Prudhoe Bay.
Green groups have long held that shutting off new sources of oil for the Alaska Pipeline would hasten its closure, while leaving billions of barrels of oil in the ground on- and offshore Alaska.
Two lawsuits have been recently filed against the Biden administration over lost leases on Alaska’s North Slope. A coalition of North Slope local and regional governments, tribal governments and Native corporations has sued the Biden administration in the U.S. District Court in Anchorage for prohibitive environmental protections President Biden placed on the National Petroleum Reserve in Alaska (NPR-A). And, the state of Alaska has filed suit in the U.S. Court of Federal Claims to recover lost revenues from nine canceled federal oil and gas leases covering lands in the Arctic National Wildlife Refuge’s (ANWR) Coastal Plain. Alaska’s state budget is heavily reliant on its oil production as are jobs of Alaskan residents. Oil and gas jobs represent about one quarter of all jobs, and generate about half of the state’s economy, while providing as much as 90 percent of state unrestricted General Fund revenues. Virtually all of Alaska’s oil transits the 800-mile Trans-Alaska Pipeline System (TAPS) from state lands at Prudhoe Bay to a marine terminal in Valdez.
NPR-A Lawsuit
The NPR-A lawsuit, filed by the organization Voice of the Arctic Iñupiat, claims that the rule enacted by the Department of the Interior on April 19 should be invalidated because it resulted from a flawed process. The rule was enacted improperly because of several legal shortcomings, including the agency’s failure to conduct a full environmental impact statement, the diversion from four decades of NPR-A management that emphasized oil development and a lack of “meaningful” engagement with the people of the North Slope. The lawsuit claims the rule “turns vast swaths of the NPR-A into a de facto conservation system unit.” The new rule was proposed by the Bureau of Land Management last September and finalized in April. At 23 million acres, the National Petroleum Reserve is an area the size of the State of Indiana, established as a petroleum reserve in 1923.
The rule makes changes to the Integrated Activity Plan that was issued in 2013 by the Obama administration. That plan put about half of the reserve off-limits to leasing and identified five “special areas” as sites closed to development because of their ecological and cultural importance. The new rule codifies protections that are in the integrated activity plan, making them requirements rather than guidelines. It makes the protections for the five designated areas more permanent and contains provisions for possible future additions.
The members of Voice of the Arctic Iñupiat, a diverse group that includes the North Slope Borough government, Arctic Slope Regional Corp., the Iñupiat Community of the Arctic Slope and Ilisagvik College in Utqiagvik, have significant interests in continued oil development in the reserve. The members benefit from revenues and employment generated through the area’s oil development.
The new rule followed a Trump administration plan to replace the Obama-era integrated activity plan. That plan would have opened 82 percent of the reserve to oil leasing, including the areas in and around Teshekpuk Lake, the North Slope’s largest lake. The Trump plan, which was finalized in the final days of the Trump administration, was never enacted, and management continued under the 2013 Obama administration plan.
The petroleum reserve, located on the western side of the North Slope, holds large amounts of oil in a geologic formation called Nunashuk, according to the U.S. Geological Survey. Though development there occurred much later than that at Prudhoe Bay and other sites on state land, there have been some large discoveries within the reserve that are connected to the Nunashuk formation. The most prominent is Willow, currently under development by ConocoPhillips and expected to start production in 2029. Little exploration has occurred in the region but the area is known to have enormous potential for oil, gas and coal.
ANWR Lawsuit
The state of Alaska sued the Biden administration to recover lost revenues after it canceled oil and gas drilling leases in the federal Arctic National Wildlife Refuge (ANWR). The state in its lawsuit said the cancellation of the leases issued during the Trump administration cost the state hundreds of millions if not billions of dollars. Alaska lawmakers in 2017 secured the opportunity to develop the leases through a provision included in a tax cut bill that was signed by President Trump. In the final days of the Trump administration, it issued nine, 10-year leases for drilling in ANWR after a lease sale was held January 6, 2021. Two of the entities that won leases withdrew from their holdings in 2022, and Biden’s Department of Interior canceled the remaining seven leases last September, which had been issued to the Alaska Industrial Development and Export Authority. In October, the state agency filed a separate lawsuit which remains pending before a federal judge in Anchorage that argues the administration’s decision violates a clear Congressional mandate in the 2017 tax bill to open up ANWR to drilling.
The state in the most recent lawsuit focused on the financial impacts of the Biden administration’s actions on Alaska and sought to “compel the United States to face the logical and legal consequences of its policy decision.” Under the Tax Cuts and Jobs Act of 2017, the state was entitled to a royalty of 8.335 percent of the revenues generated through production of oil and gas under the leases. The lease cancellations also deprived Alaska of expected revenue derived from corporate income taxes and local taxes stemming from the oil and gas construction activities, which would have produced billions of dollars in revenue that would benefit the education, health and well-being of residents of Alaska, whose state budgeting is heavily reliant on oil production. The case is the State of Alaska v. United States, U.S. Court of Federal Claims, No. 1:24-cv-01017.
Conclusion
Alaska and some of its residents are suing the Biden administration over lost opportunities for oil production on the state’s North slope which would provide billions of dollars for the state budget and jobs for Alaskan residents. The Biden administration cancelled ANWR leases that were provided as a provision in a tax cut bill signed by President Trump. The Biden administration also required the removal of areas of the NPR-A from further oil and gas development for environmental reasons that was originally issued as only guidelines under the Integrated Activity Plan of the Obama administration. The National Petroleum Reserve was established in 1912 as a backup source of oil for the federal government, originally for the Navy, as it was at one time referred to as the Naval Petroleum Reserve. The Biden administration actions regarding oil production in the ANWR and the NPR-A are costing Alaskans billion of lost dollars and numerous jobs.
ANWR lies to the east of Prudhoe Bay and TAPS while the NPRA lies to the west. They both are federally owned, and have geological potential to contribute to the pipeline, which is currently running at less than ¼ of nameplate capacity. If additional oil is added from these federal sources, it will extend the life of the line, while allowing Alaska full development and production of its resources, while supplying additional domestic production of energy. Green groups have long held that shutting off new sources of oil for the Alaska Pipeline would hasten its closure, while leaving billions of barrels of oil in the ground on- and offshore Alaska.
