Alaska Sues Over Lost Revenues from Biden Canceling Arctic Oil Leases

The state in a lawsuit filed on Tuesday in the U.S. Court of Federal Claims said the cancellation of the leases issued during Republican former President Donald Trump’s administration cost it hundreds of millions if not billions of dollars.

“This about-face by the federal government opposes the direction given by Congress and deprives Alaska of our natural resource rights,” Alaska Governor Mike Dunleavy, a Republican, said in a statement.

The U.S. Department of Interior, which canceled the leases, declined to comment.

It is the state’s latest lawsuit over the cancellations, which fulfilled a pledge by Biden, a Democrat, to protect the 19.6 million-acre (7.9 million-hectare) Arctic National Wildlife Refuge (ANWR) for species like polar bears and caribou.

Drilling in ANWR, the largest national wildlife refuge, had been off-limits for decades and the subject of fierce political fights between environmentalists and Alaska’s political leaders, who have long supported development in its coastal plain.

Alaska lawmakers in 2017 secured that opportunity through a provision included in a Trump-backed tax cut bill. In the final days of Trump’s administration, it issued nine, 10-year leases for drilling in ANWR.

Under Biden, two entities that won leases withdrew from their holdings in 2022. In September, the U.S. Department of Interior canceled the remaining seven leases, which had been issued to the Alaska Industrial Development and Export Authority.

The state agency in October filed a separate lawsuit which remains pending before a federal judge in Anchorage that argues the administration’s decision violates a clear Congressional mandate in the 2017 tax bill to open up ANWR to drilling.

The state in Tuesday’s new lawsuit focused on the financial impacts of the Biden administration’s actions on Alaska and sought to “compel the United States to face the logical and legal consequences of its policy decision.”

It said that under the Tax Cuts and Jobs Act of 2017, it was entitled to a royalty of 8.335% of the revenues generated through production of oil and gas under the leases.

The state said the lease cancellations also deprived Alaska of expected revenue derived from corporate income taxes and local taxes stemming from the oil and gas construction activities.

That would have produced billions of dollars in revenue that the state said would benefit the education, health and well-being of residents of Alaska, whose state budgeting is heavily reliant on oil production.

The case is the State of Alaska v. United States, U.S. Court of Federal Claims, No. 1:24-cv-01017.

For Alaska: Mark Champoux of Davis Graham & Stubbs and Ronald Opsahl of the Alaska Department of Law