AIDEA keeps leases
 Click here to go to the full PDF version of this issue, with any maps, photos or other artwork that appears in
some of the articles.
Judge rules Interior lacks authority to revoke leases, court order required
Kristen Nelson Petroleum News
U.S. District Court Judge Sharon Gleason has ruled in favor of the Alaska Industrial Development and Export Authority in its suit against the U.S. Department of the Interior over the termination of seven leases which AIDEA won in the 2021 Arctic National Wildlife Refuge Coastal Plain lease sale mandated by the 2017 Tax Cuts and Jobs Act.
In her March 25 decision, Gleason vacated Interior's termination of the leases. She said Interior's error is serious and returning the leases would not be disruptive as Interior received no bids in January 2025 when it reoffered AIDEA's leases.
In a review of the portion of the Tax Act related to the Coastal Plain, Gleason said Interior was to act through the Bureau of Land Management to establish and administer a competitive oil and gas lease program, with at least two lease sales required within 10 years, the first by Dec. 22, 2021, and the second by Dec. 22, 2024, with each required to be at least 400,000 acres and include areas with the highest potential for oil and gas discoveries.
The act also required issuance of any necessary rights of way or easements across the Coastal Plain, with up to 2,000 acres of surface for production and support.
Congress also directed that management of the oil and gas program in the Coastal Plain would be done "in a manner similar to the administration of lease sales under the Naval Petroleum Reserves Production Act of 1976," which authorized a leasing and production program in what is now the National Petroleum Reserve-Alaska.
Environmental impact analysis BLM did an environmental impact analysis, issued a final environmental impact statement in September 2019 and a record of decision in August 2020, with bids invited Dec. 7, 2020, and the first lease sale held Jan. 6, 2021. AIDEA successfully bid on seven leases in the sale and on Jan. 13, 2021, the Department of the Interior, BLM and AIDEA executed the leases, which had 10-year extendable terms, and totaled 365,775 acres.
This activity occurred under President Donald Trump.
President Biden took office a week after Interior issued the leases and in Executive Order 13990 directed Interior to place a temporary moratorium on implementation of the Coastal Plain oil and gas leasing program and instructed the Secretary of Interior to conduct a comprehensive environmental impact analysis of the oil and gas program.
Interior Secretary Haaland issued a secretarial order June 1, 2021, instructing Interior and BLM officials to do a supplemental environmental review and temporarily halting all Interior activities related to the program.
Gleason upheld Interior's actions when AIDEA challenged the secretarial order and a later moratorium, citing the temporary nature of the moratorium and Interior's authority to issue leases and pause implementation to address legal errors.
On Sept. 6, 2023, Interior cancelled AIDEA's leases.
On Oct. 18, 2023, AIDEA sought an order vacating the cancellations.
Court order required Gleason concluded that Interior "was required to obtain a court order before cancelling AIDEA's leases."
AIDEA cited a regulation under the Naval Petroleum Reserves Production Act of 1976 for its assertion that a court order was required for Interior to cancel its leases. Defendants disagreed, citing the Tax Act.
One of the implementing regulations for the NPRPA provides that leases which are producing or known to have valuable oil or gas resources require a court order for cancellation.
AIDEA's leases are known to have valuable oil and gas resources, Gleason said, citing a U.S. Geological Survey estimate.
She said the Tax Act's instruction to Interior "is best interpreted to direct the Secretary to follow the NPRPA and its implementing regulations to administer the Coastal Plain leasing program broadly, and not solely as to the lease sales themselves," and the NPRPA regulations require judicial cancellation.
"Lastly," Gleason said, "because Congress directed DOI to apply the NPRPA regulation requiring lease cancellation by court order to the Coastal Plain program, it withdrew the Secretary's inherent authority to cancel leases that an agency has subsequently determined were invalid at inception."
Gleason vacated Interior's cancellation of AIDEA's leases and remanded the matter to the agency.
| 