US federal court keeps the brakes on oil, gas leasing activities in Arctic refuge

A US federal judge scuttled efforts by the state of Alaska and others to begin the work necessary to allow the start of oil and natural gas drilling within the coastal plain of the Arctic National Wildlife Refuge, upholding the Biden administration's temporary suspension of work in that area.

The Aug. 7 court order is a win for President Joe Biden, who issued an executive order on his first day in office applying a temporary leasing moratorium to ANWR. That pause on pre-development work in ANWR was later extended by Interior Secretary Deb Haaland to afford the Interior Department time to conduct a new environmental impact statement on the lease sale that opened ANWR to oil and gas development.

Alaska's state-owned development finance corporation, the Alaska Industrial Development and Export Authority, expressed disappointment with the court's decision. It issued seven oil and gas leases, spanning 365,775 acres within ANWR, Jan. 19, 2021, the day before Biden was sworn into office.

In a 74-page order, US District Court Judge Sharon Gleason said that the Biden administration was well within its authority to order a temporary moratorium while Interior takes steps to correct alleged legal deficiencies in its environmental analysis.

No 'express deadline'

"Neither AIDEA's leases nor any federal statute or regulation prohibit the moratorium or provide an express deadline by which [the administration] must allow oil and gas activities on the coastal plain to proceed after a lease sale is conducted," Gleason said in the order.

She also pointed out that the leases themselves include a disclaimer that subjects leaseholders to "reasonable regulations and formal orders," as well as language that gives Interior "the right to alter the 'timing of operations' conducted pursuant to the leases," further supporting a temporary moratorium on post-sale oil and gas activities.

AIDEA sought to proceed in 2021 with plans to market its leases to industry, but Interior blocked its attempts to begin the initial stages of oil and gas exploration, such as conducting archeological investigations and seismic exploration. The department in June 2021 suspended all activities related to the leases, citing possible defects in the environmental review leading up to the lease sale.

Along with the North Slope Borough, Arctic Slope Regional, Kaktovik Iñupiat, and the state, AIDEA sued Interior in November 2021, seeking an injunction vacating the moratorium and compelling Interior to implement the leasing and development program within ANWR (AIDEA, et al v. Biden, et al, 3:21-cv-00245).

But the US District Court for the District of Alaska dismissed all claims against the department. This means AIDEA cannot commence any work on its leases until Interior wraps up its environmental review. According to court documents, Interior plans to release a draft supplemental EIS in the third quarter.

"Interior failed to specify what specific items were deficient in the determination. This lack of clarity will likely lead to an open-ended and costly delay," AIDEA Executive Director Randy Ruaro said in a statement.

"This is another example of why comprehensive permit reform is needed," he continued. "Agency decisions must be final at some point and not subject to politics and the whims of changing administrations."

An appeal may be moot

The 1980 Alaska National Interest Lands and Conservation Act that created the 19-million-acre Arctic Refuge designated a 1.6-million-acre area of ANWR's northern coastal plain for further study of its oil and gas potential but left to Congress the decision to conduct lease sales and open the area for exploration.

Congress in 2019 included authorization for leasing in a tax reform act. And a lease sale was held in January 2021 during the closing days of the Trump administration.

ANWR is located in far northeast Alaska, east of the large producing oil fields on the North Slope. Geologists feel the region has potential for major oil and gas discoveries, but conservation groups have fought fiercely to keep the refuge closed.

Alaska has remained steadfast in its desire to drill in ANWR's coastal plain while the oil industry has seemed largely ambivalent to the refuge.

AIDEA is the only entity to still hold tracts in the area. Two private companies that won ANWR leases have since surrendered them and had their bids and initial rental payments refunded.

Attorneys familiar with the case said that an appeal of the district court's ruling would likely be moot as Interior is set to conclude its environmental review later this year, and the outcome of that review could see the ANWR leases reaffirmed, voided, or subjected to additional mitigation measures.