API: Cancellation of Alaska Leases Sets Concerning Precedent

The American Petroleum Institute (API) has condemned the rescindment of oil and gas leases covering over 430,000 acres in the Arctic National Wildlife Refuge, warning the latest tightening on the industry by the Biden administration sets a "concerning precedent".

The Department of the Interior (DOI) said last week it had canceled the remaining leases awarded by the Trump administration in the Arctic National Wildlife Refuge over alleged legal shortcomings in environmental clearance. The decision means all nine leases issued under the Coastal Plain Leasing Program have now been canceled following a review ordered by the government of President Joe Biden.

“Today’s announcement sets a concerning precedent for the future of oil and natural gas leasing, exploration and production on federal lands", API vice-president for upstream policy Holly Hopkins said in a statement on behalf of the group.

The leases in Alaska state were to last 10 years. But on January 21, 2021, a day after his inauguration, Biden ordered the DOI to review the program through Executive Order 13990. Interior Secretary Deb Haaland then issued Order No. 3401 on June 1, 2021 suspending all DOI activities related to the Arctic Refuge leasing program.

The secretary's preliminary review of the program found "multiple legal deficiencies in the underlying record supporting the leases, including, but not limited to: (1) insufficient analysis under the National Environmental Policy Act, including failure to adequately analyze a reasonable range of alternatives in the environmental impact statement (EIS); and (2) failure in the August 17, 2020, Record of Decision to properly interpret Section 20001 of Public Law 115-97 (Tax Act)", read the text of the order.

Following the secretary's order, two of the nine leases were canceled with refunds to the awardees on their request, the DOI said in the announcement last week.

The remaining seven leases covering 365,000 acres have now also been voided, the DOI said in the statement as it issued a draft Supplemental Environmental Impact Statement (EIS).

The awardees were the Alaska Industrial Development and Export Authority for seven tracts, Knik Arm Services LLC for one tract and Regenerate Alaska Inc. for one tract, as announced by the DOI's Land Management Bureau January 19, 2021.

In last week's statement the DOI reaffirmed its earlier findings. The statement said "the 2021 lease sale was seriously flawed and based on a number of fundamental legal deficiencies, including: insufficient analysis under the National Environmental Policy Act, including failure to adequately analyze a reasonable range of alternatives and properly quantify downstream greenhouse gas emissions; and failure to properly interpret the Tax Act".

The API statement said, "This industry needs clear, consistent policies in place to support the long-term investment needed to produce affordable, reliable energy, but the Biden administration instead continues to send the wrong signals. 

"We urge the administration to stand up for Alaskan communities and the economy by establishing a forward-looking vision for domestic energy production in the state and across the country".

Gulf of Mexico Legal Battle

Earlier the industry group sued DOI officials after the area for the auction for leases in the Gulf of Mexico has been shrunk and other restrictions have been added. The motion for preliminary injunction filed August 29 seeks to prevent Lease Sale 261 from happening until restrictive changes are canceled.

The final notice of sale from the DOI's Bureau of Ocean Energy Management (BOEM) published August 23 offers 12,395 blocks on about 67 million acres on the USA outer continental shelf after exclusions based on a Supplemental EIS.

The BOEM has excluded certain blocks to, among other reasons, "protect sensitive benthic habitat in Garden Banks" and avoid potentially coming into conflict with the protected Rice's whale species, as well as protect sediment resources and reserve areas for wind energy development, according to the text of the sale decision.

"Congress’ directive is clear in the Inflation Reduction Act that the Department of the Interior must hold offshore Lease Sale 261 in the Gulf of Mexico in order to help meet the energy needs of the American people", the API said in a statement August 29 about its suit filed in the district court of Louisiana's Western District. "However, the Biden Administration has instead pursued illegal roadblocks, removing more than 6 million acres from this lease sale and imposing new and unjustified restrictions that target American energy workers".

The state of Louisiana and Chevron USA Inc. have joined API as plaintiffs in the suit.

The BOEM plans to hold Lease Sale 261 September 27. The Inflation Reduction Act requires it to be held by September 30.

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