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Vol. 16, No. 10 Week of March 06, 2011
Providing coverage of Alaska and northern Canada's oil and gas industry

Court rejects Beaufort sale BIF; judge wants BIF for each phase

On Feb. 22 Alaska Superior Court Judge Peter Ashman upheld an appeal against the Alaska Department of Natural Resources’ best interest finding for the state’s areawide oil and gas lease sale program for state waters of the Beaufort Sea. DNR issued the BIF in November 2009, to cover annual lease sales through to 2018 — the state reviews and, if necessary, revises the BIF before each lease sale.

However, Judge Ashman has now remanded the BIF to DNR for revision.

Resisting Environmental Destruction on Indigenous Lands, or REDOIL; the Gwich’in Steering Committee; the Alaska Wilderness League; the Center for Biological Diversity; and the Northern Alaska Environmental Center launched the appeal in January 2010, after DNR had denied a petition to reconsider the issuance of the BIF.

Phased approach

At the core of the appeal is the state’s phased approach to overseeing oil and gas development on its lands. Essentially, the state takes a broad view of assessing the potential environmental and social impacts of oil and gas development prior to scheduling lease sales. Then, as industrial activities move through the phases of exploration, field development and field production, the activities receive increasingly detailed environmental scrutiny, as more becomes known about what the activities involve.

Under Alaska statutes DNR only has to prepare a BIF for the lease sale phase, with the state administration relying on various permitting requirements to evaluate and oversee the environmental impacts of subsequent phases of the oil and gas development life cycle.

But, by not re-evaluating the cumulative impacts of development through new BIFs, as more information becomes known about proposed industrial activities, the single, lease-sale-related BIF approach contravenes article eight of the Alaska constitution, the article of the constitution that sets policy for the development of state lands, the appellants argued. The state’s phased approach does not adequately consider the cumulative environmental impacts of oil and gas development, the appellants said.

Article eight of the constitution says, among other things, that “no disposals or leases of state lands, or interests therein, shall be made without prior public notice and other safeguards of the public interest as may be prescribed by law.”

Land disposal actions

Citing previous case law relating to this issue, Judge Ashman agreed that DNR’s approach is unconstitutional, saying that DNR should view each phase of the development life cycle as a distinct land disposal action requiring its own best interest finding, to protect the public interest by formally considering public input on what is proposed in the phase.

“For the foregoing reasons this court reverses the final decision of the commissioner denying reconsideration (of the BIF),” Judge Ashman wrote in his Feb. 22 ruling. “The decision in this case is remanded to the commissioner (of DNR), who is directed to revise the decision to conform to this court’s ruling to require a written best interest finding at each phase of the subject project.”

Kevin Banks, director of Alaska’s Division of Oil and Gas, told Petroleum News March 2 that the state is still evaluating its options in response to the court decision. The state’s overall objective is to have a planning and permitting system that leads to predictable and timely decision making, Banks said.

The next Beaufort Sea areawide lease sale is currently scheduled for October.

—Alan Bailey



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