Federal Court Rules the Biden Administration Illegally Cancelled ANWR Lease Sales

In a late March decision, the U.S. District Court for the District of Alaska ruled that the Department of the Interior (DOI) acted unlawfully when it canceled oil and gas leases in the Arctic National Wildlife Refuge (ANWR) held by the Alaska Industrial Development and Export Authority (AIDEA).

The court emphasized that, under the Tax Cuts and Jobs Act of 2017, Congress required DOI to apply the lease cancellation procedures of the Naval Petroleum Reserves Production Act (NPRPA) to the ANWR leasing program. As a result, “because Congress directed DOI to apply the NPRPA regulation requiring lease cancellation by court order to the Coastal Plain program, it withdrew the Secretary’s inherent authority to cancel leases that an agency has subsequently determined were invalid at inception.”

The court held that DOI failed to adhere to this mandate, stating: “DOI’s error is serious: DOI cancelled AIDEA’s leases without following the congressionally-mandated procedure for doing so.” By unilaterally rescinding the leases without seeking a court order, DOI violated the law.  

Even Biden Administration Officials Questioned the Legal Authority for the Cancellation at the Time

The ruling is not surprising considering the vague and unconvincing reasons the Biden Administration gave for the lease sale cancellation. DOI argued that the initial lease sale failed to correctly interpret the Tax Cuts and Jobs Act, but didn’t provide any real detail as to why. That argument led to skepticism even within the Administration.

In 2023, budget officials from the Department of the Interior and the Office of Management and Budget (OMB) questioned the legal authority the Biden Administration used to cancel the 2021 oil and gas lease sale in ANWR. After the cancellation announcement, at least one official from DOI’s Office of Budget emailed the Bureau of Land Management with numerous questions about the legal authority and budgetary impacts, including some passed along from OMB. Remarkably, the official cast doubt on whether agency lawyers signed off on the cancellation.

Interior’s Actions Created a Chilling Effect on Investment

Along with illegally cancelling the lease sales, DOI’s actions may have pressured leaseholders into voluntarily relinquishing their rights. Following President Biden’s executive order in January 2021 instituting a moratorium on oil and gas leasing in the ANWR, DOI suspended leases and initiated a comprehensive environmental review. This indefinite “pause” in leasing created regulatory uncertainty, rendering the leases effectively unusable.

As a result, some companies, chose to cancel their leases and request refunds according to emails obtained by Americans for Prosperity Foundation (AFP Foundation) under the Freedom of Information Act. The Bureau of Land Management (BLM) stated it “has a well-established procedure to do this,” referencing the refund of the full bonus bid and first-year rentals, but only if lease holders relinquished their leases. However, DOI did not identify the procedure or authority for a refund, and AFP Foundation could not identify any statutory or regulatory authority explicitly permitting such refunds. This raises the possibility that DOI used taxpayer funds to incentivize companies to surrender their leases, potentially as a backdoor strategy to unwind the ANWR leasing program without facing direct legal challenges.

Then Interior Proclaimed a “Lack of Interest” After Chilling Investment

DOI highlighted the supposed lack of industry interest in the most recent ANWR lease sale in January 2025:

“The lack of interest from oil companies in development in the Arctic National Wildlife Refuge reflects what we and they have known all along – there are some places too special and sacred to put at risk with oil and gas drilling. This proposal was misguided in 2017, and it’s misguided now,” said Acting Deputy Secretary Laura Daniel-Davis.“The BLM has followed the law and held two lease sales that have exposed the false promises made in the Tax Act.”

However, this absence of participation appears to be a direct consequence of DOI and the Biden Administration’s own policies that have created an uncertain regulatory environment. The indefinite suspension of leases and duplicative environmental reviews have introduced significant uncertainty, deterring companies from investing in ANWR. And the notion that BLM “followed the law” was laughable at the time and just discredited in federal court.

The Biden Administration Illegally Cancelled the ANWR Lease Sale Because It Wanted To

The Biden Administration’s cancellation of the ANWR lease sale is a classic case of an out-of-control administrative state brute forcing its preferred policy outcome in open defiance of a bill passed by Congress and signed by the President. Although a federal court eventually corrected the problem, it did nothing to reduce the incentive for this to happen again. For a more permanent fix, policy makers need to rein in broadly worded statutes, like the National Environmental Policy Act, that agencies routinely rely on to abuse their authority.