Biden’s Arctic Refuge Oil Lease Auction Ripe for Challenge (1)

The Biden administration’s decision to include restrictions in the auction of oil drilling rights in part of Alaska’s Arctic National Wildlife Refuge is legally vulnerable as the state looks to the next administration to allow more oil development.

The Bureau of Land Management on Monday finalized a decision to lease 400,000 acres of the Arctic coastal plain within ANWR for oil and gas development as required under a 2017 tax law. The lease sale, scheduled for Jan. 9, is the second of two such sales that the law requires.

The decision included a long list of restrictions on drilling, such as keeping more than 1 million acres of the coastal plain unavailable for leasing and blocking all land-surface development on 58% of the land area included in the lease sale. Of the 400,000 acres up for lease, the BLM expects just 995 surface acres to be developed as wells tap a far greater area underground.

The bureau’s decision says the leasing plan effectively upholds the refuge’s mission to protect ecosystems while also allowing for oil drilling.

Alaska Gov. Mike Dunleavy (R) in an X post said the Biden administration has “cloaked its latest sanction on Alaska as a lease sale in ANWR,” which is “designed to fail” and part of an anti-energy “nightmare” for the state. Dunleavy said he expects President-elect Donald Trump to prioritize oil drilling in Alaska.

The first Trump administration planned to allow oil development across a broader area of the refuge.

The Alaska Industrial Development and Export Authority objects to Biden’s lease sale because it offers fewer acres for lease than the law requires and “imposes extensive and infeasible restrictions” on development, said James Lister, partner at Birch Horton Bittner & Cherot PC, who represents AIDEA.

The decision “is legally deficient,” Lister said.

AIDEA purchased leases in the 2021 ANWR lease sale and sued the Biden administration for canceling the leases.

Limiting Damage

Jon Katchen, partner at Holland & Hart LLP in Anchorage, said the law requires acreage included in the January sale to have the highest potential for hydrocarbon discovery. The BLM’s decision says the land in the sale includes the highest-potential acres, but challengers could question the bureau’s decision to avoid including more acres with high oil discovery potential, he said.

The bureau is also restricting seismic exploration—an important early step in locating oil—possibly foreclosing opportunities for companies to explore within the refuge, he said.

“The Biden administration is getting this out the door before the end of its term precisely so it can limit the damage and still satisfy the 2017 law,” said Deborah Sivas, director of the Environmental Law Clinic at Stanford Law School. “I fully expect that the new administration will take action to expand the lease sale to fulfill the president elect’s campaign promise of ‘drill, baby, drill.’”

However, Biden’s lease sale, if it stands, disarms any Trump administration argument that it must lease the refuge to satisfy the tax law, she said.

The first Trump administration originally planned to open the refuge to oil drillers. Environmental groups challenged Trump’s environmental review of the plan for insufficiently considering drilling’s impact.

Biden’s new review more thoroughly analyzes drilling’s effect on wilderness, endangered species, and Alaska Native subsistence needs, correcting the earlier review’s legal errors, said Pat Parenteau, an emeritus environmental law professor at Vermont Law School.

It will be difficult for Trump to revisit or challenge this lease sale once it’s complete in the final days of the Biden administration, Parenteau said.

The second Trump administration could choose to hold another lease sale, he said.

All eyes are going to be on what companies bid for the leases in January. Leases sold in a 2021 auction for the refuge during the final days of the first Trump administration were forfeited, relinquished, or canceled by the Biden administration.

“Last time around, there was little interest by private oil companies primarily, I think, because it is so remote and expensive relative to other production in the lower 48,” Sivas said.

“With so much drilling going on in other states and the Gulf, my guess is that the interest in Alaska by private companies may not be any greater at this point,” she said. “But that remains to be seen.”