Alaska, Oil Companies Sue Department of Interior Over Petroleum Reserve Rule

Fish Creek through the National Petroleum Reserve-Alaska, managed by the Bureau of Land Management on Alaska's North Slope, on July 8, 2004. David W. Houseknecht/United States Geological Survey via AP

The recent implementation of a new rule governing national petroleum reserves in Alaska, which closes millions of acres to oil and gas extraction and bans infrastructure construction, has ignited a series of legal challenges.

In separate lawsuits last week, the state of Alaska, alongside major oil companies, moved to contest the rule issued by the U.S. Department of Interior’s Bureau of Land Management (BLM) for the management and administration of the National Petroleum Reserve in Alaska (NPR-A). The suits argue that the rules represent overreach and will have detrimental effects on energy development.

The NPR-A was established in 1923 by President Warren Harding to provide the U.S. Navy with a source of oil. Management of the reserve was passed from the Navy to the Department of the Interior in 1976, requiring “maximum protection” of fish, wildlife, and habitat during petroleum exploration.

Finalized in May and effective June 6, the BLM directive closes about 11 million acres of the 23.5 million-acre reserve to all oil and gas extraction while leaving about 11.8 million acres open to oil and gas leasing—on which oil and gas infrastructure is mostly banned.

“The State of Alaska wants federal agencies to follow the law,” Alaska Attorney General Treg Taylor said in a statement. “Rulemaking must allow input from various perspectives and be fair. These new rules circumvent the congressional mandate to develop and manage the NPR-A lands for oil and gas uses. This lawsuit seeks to prevent overreach by federal agencies that disregard Alaska’s rights.”

Mr. Taylor said that the state had previously sought to engage in the rulemaking process, which included the submission of “thoughtful comments” and a request for more time to prepare comments, but he said the rules were rushed through “to beat a potential change in congressional oversight.”

John Boyle, commissioner of Alaska’s Department of Natural Resources, said: “This National Petroleum Reserve rule is nothing more than a consolation prize to the radical environmentalist groups upset by the Willow decision. And the people of the State of Alaska are left to hold the bag and bear the terrible consequences.”

The New Rule

The goal of the new rule, titled “Management and Protection of the National Petroleum Reserve in Alaska,” was to revise the framework for managing surface resources and “Special Areas” within the NPR-A, emphasizing the protection of environmental values and subsistence activities.

In it, the BLM defines “special areas” as areas that are officially designated by statute or by presidential or secretarial order—where the BLM determines that the resources require special management and control measures for their protection.

However, in lawsuits, the plaintiffs state that the new definition of special areas conflicts with earlier ones, which define them as “the Utokok River, the Teshekpuk Lake areas and other areas within NPR—A identified by the Secretary as having significant subsistence, recreational, fish and wildlife or historical or scenic value.”

The agency highlighted key aspects of the 49-page rule in its executive summary, such as using the rule to enhance protection measures for designated special areas under the new definition, which covers significant portions of the NPR-A.

The agency also stated that the rule is meant to increase regulatory scrutiny on new oil and gas leasing and development activities, particularly within these newly defined special areas.

The BLM further stated that the rule allows greater discretionary power granted to the agency to impose “conditions, delays, or denials” on proposed oil and gas activities based on environmental and subsistence concerns.

State of Alaska Versus Department of the Interior

The state of Alaska filed its lawsuit against the BLM and the Department of the Interior on July 3, arguing that the new rule is beyond the power of the agency, that it is “arbitrary, capricious,“ and ”contrary to law,” and that it “must be set aside.”

The state’s complaint emphasizes that Congress established the NPR-A to facilitate oil production and enhance national energy independence and contends that the BLM is now contradicting this mandate by effectively precluding new oil exploration and production activities.

“The real-world consequences of this illegal power-grab are significant,“ Mr. Taylor stated in the suit. ”For the State of Alaska, the Rule will negatively impact the State’s economy through lost job opportunities and suppressed spending and development by private companies. It will also harm the State by decreasing the State’s revenues from oil and gas lease royalties and bonuses, which, through a variety of State spending programs, directly benefit Alaskans that reside in and near areas of resource production.”

Alaska is seeking declaratory and injunctive relief to prevent the rule’s implementation, arguing that it lacks statutory authority and was promulgated without proper notice and comment procedures.

The complaint further asserts: “BLM issued a new rule that dramatically alters management of the Petroleum Reserve to significantly curtail oil production there. The rule effectively precludes approval of any new oil exploration and production activities and sets aside over half of the Petroleum Reserve as de facto off limits for resource production.”

ConocoPhillips Alaska Versus Department of the Interior

ConocoPhillips Alaska, Inc., the state’s largest oil producer, also filed a lawsuit on July 5. The company also argues in its complaint that the rule contradicts Congress’s intent to prioritize petroleum production in the NPR-A and undermines the investment-backed expectations of leaseholders.

“In establishing the Petroleum Reserve, Congress required BLM to expeditiously foster petroleum production in the NPR-A, subject to reasonable mitigation measures, and plainly did not authorize BLM to promulgate sweeping regulations that thwart and prevent the production of petroleum throughout the NPR-A, as the Rules do,” the company stated in the suit.

The company further argues that the rule’s stringent protections for special areas and increased discretionary power for the BLM create significant uncertainty and barriers to development.

ConocoPhillips is seeking to have the rule vacated, also claiming that it’s arbitrary, capricious, and contrary to law.

North Slope Exploration Versus Department of the Interior

North Slope Exploration LLC, a major leaseholder in the NPR-A, also joined the legal fray on July 3 with a separate lawsuit. The company holds substantial federal oil and gas leases and argues that the new rule disrupts long-standing leasing programs and investment expectations.

It says that since 1999, the BLM had held lease sales in the Petroleum Reserve almost every year. However, the most recent one was in 2019. It says the current administration has held “zero” lease sales and has “announced no plans to do so.”

“BLM’s Petroleum Reserve leases were sold with the stated expectation that the leased lands could be developed for oil and gas production,” the complaint says, noting the rule would specifically affect existing leases such as its own.

North Slope specifically mentioned in its suit that the new definition of special areas “conflicts with the existing definition” and “purports to extend the ’maximum protection' provisions ... to all oil and gas activities in Special Areas of the Petroleum Reserve.” North Slope argues this creates problems for leaseholders such as itself.

“The rule’s stringent protections for Special Areas and increased discretionary power for BLM create significant uncertainty and barriers to development,” the company stated.

The company contends that the BLM failed to conduct adequate public consultations and environmental assessments before finalizing the rule.

“BLM’s assumption of new authority to designate and manage Special Areas contravenes Congressional intent and statutory limitations,” it stated.

The U.S. Department of the Interior stated on July 5 via email to The Epoch Times that it had “no response” to a request for comment on the lawsuits.