ConocoPhillips sues Biden administration over new restrictions in Alaska petroleum reserve

Alaska’s largest oil company on Friday sued the Interior Department over the agency’s new rules to sharply limit exploration and drilling in the National Petroleum Reserve-Alaska, an Indiana-sized area originally set aside for oil development that conservation groups have sought to protect.

The North Slope Borough, the regional government that receives revenues from oil and gas activity in the reserve, also sued the agency on Friday over the new rules.

Both entities make their case in part by citing a recent landmark U.S. Supreme Court ruling that is expected to limit the authority of federal agencies after the decision struck down the so-called Chevron deference. Under the doctrine, federal courts for more than four decades had deferred to an agency’s interpretation of ambiguous laws.

In its 45-page filing, ConocoPhillips argues that the Bureau of Land Management’s new rules, finalized in April, essentially create a wilderness area in the 23-million-acre reserve. That’s in opposition to Congress’ intentions that the reserve be used primarily to produce oil to meet national energy needs, the oil company argues

In its filing, the North Slope Borough argues that the Bureau of Land Management did not property consult with the borough or prepare an environmental impact statement before the rules were finalized. It also did not conduct an economic analysis spelling out the impacts to the borough, the borough argues.

The lawsuits are the third brought against the new rules in recent days.

Voice of the Arctic Iñupiat, a coalition of groups from the North Slope region where the reserve is located, sued the Bureau of Land Management over the rules late last month. The group includes the North Slope Borough and the Arctic Slope Regional Corp., the largest Alaska Native corporation.

A spokesperson with the Interior Department said in an email the agency has no comment on the filings. The agency has not yet filed a counter-argument in the cases, court records show.

The cases were filed in U.S. District Court in Anchorage.

Conservation groups have praised the new environmental protections, saying they will help address climate change impacts by reducing the use of fossil fuels, and will support subsistence hunters and wildlife such as caribou, polar bears and migratory birds. President Joe Biden said in April said the protections honor “the culture, history, and enduring wisdom of Alaska Natives.”

ConocoPhillips in recent years has begun to crack open commercial oil production on the reserve’s eastern edge and expanded its leases there amid prominent new oil discoveries in the region. The Biden administration last year approved the company’s giant Willow oil project in the reserve, angering conservation groups.

The petroleum reserve was created a century ago as a potential oil warehouse for U.S. Navy ships after World War I. Congress around 1980 “re-purposed” it to achieve a broader use beyond the military, allowing drilling by private companies to meet the nation’s needs during the energy crisis at the time, according to the company’s lawsuit.

ConocoPhillips owns 156 leases in the petroleum reserve, including 82 leases in Special Areas, the filing says.

“The Rules create substantial uncertainty” for existing leases, the oil company’s filing argues.

“The Rules include numerous new provisions that elevate resource preservation over energy production and effectively turn the Petroleum Reserve into a de facto wilderness area in which development is outright prohibited, presumed to be prohibited, or subject to delay or denial at BLM’s whim,” the lawsuit says.

The rules limit future oil and gas leasing on 13 million acres in the reserve encompassed by five “special areas” that provide valuable wildlife habitat, such as the Teshekpuk Lake region, an important refuge for migratory waterfowl.

“Among other changes, BLM created a presumption against any petroleum-related activities in ‘Special Areas,’ which currently comprise more than half of the Petroleum Reserve,” the filing argues.

Outside the Special Areas, the agency “granted itself unfettered discretion to delay or deny any oil and gas activities for any reason BLM sees fit, including on the basis of undefined ‘uncertainty,’ " the filing says.

The North Slope Borough and ConocoPhillips argue separately that the new law violates the Administrative Procedure Act, among other laws.

When an agency’s action’s do not follow the law, among other missteps, courts have responsibility under the Administrative Procedure Act “to decide whether the law means what the agency says,” the oil company says, citing langue used in the recent U.S. Supreme Court ruling.

The borough argues that the rules violate “the plain language of Congress” in the Naval Petroleum Reserves Production Act of 1976. The act calls for exploration in the special areas to be balanced with protection of the land, the borough says. But the agency rules presume that development there will be barred unless specific information shows that there will be “no or minimal adverse effects on significant resource values,” the borough argues.

The agency’s interpretation of the act is “afforded no deference in this instance,” the borough argues, citing the recent U.S. Supreme Court decision.

The ConocoPhillips case has been assigned to Sharon Gleason, chief judge for the U.S. District Court in Alaska.

The North Slope Borough case has been signed H. Russel Holland, a senior judge with the U.S. District Court in Anchorage.