Press Release

State Granted Intervention in OCS Lease Sale Litigation

July 14, 2009

Anchorage, Alaska A U.S. District Court judge has granted the motion by the State of Alaska to intervene in a case in which the Native Village of Point Hope seeks to rescind dozens of leases issued by the federal government under an off-shore oil and gas lease sale conducted for federal waters in the Chukchi Sea.

When the state's motion was filed last month, Attorney General Dan Sullivan underscored the need "to vigilantly safeguard and defend Alaska's interests, particularly as they relate to economic opportunities for Alaskans and the balance of state and federal rights and responsibilities."

Sullivan said that the state's intervention is "necessary to protect the state's interests, which are extensive and cannot be adequately represented by the other parties in this proceeding."

The plaintiffs contend that the decision by the U.S. Mineral Management Service to conduct the lease sale for the Outer Continental Shelf, along with the environmental impact statement underlying that action, violated federal law, including the Endangered Species Act. The lawsuit seeks to void all of the leases issued in the sale. If successful, this lawsuit could significantly undermine OCS development and Alaska's economic opportunities.

In moving to intervene, Attorney General Sullivan noted the change in the federal administration this year: "Although the state hopes its interests will continue to be aligned with those of the federal defendants, in an abundance of caution, the state must act to ensure its interests are protected until such time that the new federal administration's policy positions are fully articulated."

The memorandum to the court describes the state's significant interests in the litigation, observing that the oil and gas industry is the largest part of the private employment sector in Alaska and provides 90 percent of the general fund revenue for state government. "If these activities are curtailed," the state notes, "Alaska will be harmed by the loss of property tax revenues, employment, and income to local communities."

Rescission of the leases would curtail not only substantial expenditures necessary to identify desirable tracts in federal Arctic waters but also would have a chilling effect on industry's willingness to participate in future lease sales off Alaska's coast and adversely impact development of adjacent state land, according to a statement by Kevin Banks, Acting Director of the Department of Natural Resources' Oil and Gas Division.

Banks also noted that oil from the Chukchi Sea could lower the unit cost for all oil if shipped through the TransAlaska Pipeline System, thus increasing state royalties and taxes from development on state lands. Eliminating this potential would frustrate the state's goal of realizing the constitutional imperative for maximizing resources for the benefit of all Alaskans, he said.

For further information please contact Steve DeVries at (907) 269-5100.

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