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May 2019

Vol. 24, No.18 Week of May 05, 2019

Interior suspends Beaufort Sea lease sale after court decision

Alan Bailey

Petroleum News

According to an April 25 report in the Wall Street Journal, the Department of the Interior has indefinitely suspended plans for a Beaufort Sea lease sale. The suspension follows a March 29 ruling by the federal District Court in Alaska that President Trump’s cancellation of President Obama’s withdrawal of Beaufort and Chukchi sea lands from oil and gas leasing was illegal. Interior Secretary David Bernhardt told the Wall Street Journal that the prospect of a lengthy appeal process over the District Court decision is disrupting the lease sale plans.

BOEM had been preparing an environmental impact statement for a lease sale this year, potentially spanning much of the Beaufort Sea planning area. The Department of the Interior has not published a statement regarding the lease sale situation following the District Court decision and has not responded to a request from Petroleum News for information.

President Obama announced the land withdrawal in December 2016. President Trump announced that he was cancelling the order in April 2017. A group of environmental organizations appealed Trump’s order in District Court.

2.8 million acres not withdrawn

Obama did not withdraw a 2.8 million acre strip of the Beaufort Sea with relatively high oil and gas potential, immediately north of the coastline, between Smith Bay and the western side of Camden Bay. This area that can still be leased includes the location of Hilcorp Alaska’s Liberty oil field development, the Nikaitchuq North leases operated by Eni US Operating Co. Inc., and prospects on the western side of Camden Bay, where Arctic Slope Regional Corp. Exploration operates some leases. And the land withdrawal only applied to the federal outer continental shelf, and not to state land under the nearshore waters of the Beaufort.

Shortly before making the Arctic offshore land withdrawal, Obama had withdrawn some lands in the northern Bering Sea. However, there were no land withdrawals in federal waters of Cook Inlet.

Obama carried out his withdrawal order under the terms of section 12(a) of the Outer Continental Shelf Lands Act, the act that provides the statutory framework for resource development on the outer continental shelf. Section 12(a) of the act states that “the president of the United States may, from time to time, withdraw from disposition any of the unleased lands of the outer continental shelf.”

No explicit statement on reversal

The wording of the act makes no explicit statement regarding the circumstances, if any, under which a land withdrawal may be reversed. However, District Court Judge Sharon Gleason ruled that the structure of the act supports a view that section 12(a) does not give a president the authority to revoke or modify a previous land withdrawal. In addition, Gleason ruled, if Congress had intended to allow a president to revoke a withdrawal, the act would have specifically stated this.

Thus, only an act of Congress can overturn Obama’s order, Gleason ruled.

- ALAN BAILEY






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