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Arctic Refuge drilling permission tucked into tax bill: What’s at stake

The move has gotten little attention because of the other huge issues involved in the tax bill.

A polar bear keeps close to her young along the Beaufort Sea coast in Arctic National Wildlife Refuge.
Susanne Miller/US Fish and Wildlife Service

Tucked into the Senate version of the mammoth tax bill is a longstanding Republican priority that has been unable to win approval on its own: authorization for oil and gas exploration in part of Alaska’s 19-million-acre Arctic National Wildlife Refuge.

In 1995, President Clinton vetoed a budget that would have permitted drilling. In 2005, a filibuster by Democrats stopped it. This year, if Republicans in Congress can agree on a final version of the tax bill and ram it through both Houses, it probably will be included. There is little doubt President Trump would sign it into law.

That doesn’t mean, though, that drilling is likely to start anytime soon. The immediate future is more likely to be dominated by lawsuits and the economics of the global petroleum market. Longer term, if Democrats can retake Congress or the presidency, the action may well be limited or reversed.

Here’s the background, and what’s at stake:

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The area in northeast Alaska was set aside in 1960, shortly after Alaska became a state, and assumed its current status 20 years later. Congress designated 1.5 million acres on the coastal plain, holding an estimated 12 billion barrels of oil, for possible drilling if future lawmakers authorized it. That’s what is at issue now.

This National Geographic piece provides a look at some of the wildlife that depends on the country’s largest such refuge. This report in the Atlantic does a good job of illustrating different points of view in Alaska’s native communities.

Production down in Alaska

Many Alaskan officials are in favor of drilling. Not only does it provide jobs, but the state budget is heavily dependent on taxes and fees paid by oil companies. And production has been declining sharply. Alaska once accounted for a quarter of U.S. production; now, it’s well below 10 percent. As a result, the state budget has been in trouble.

It’s telling that the language instructing the Interior Department to offer drilling leases was written by Sen. Lisa Murkowski, an Alaska Republican. She was one of the holdouts who helped scuttle the repeal of the Affordable Care Act this summer. Including the authorization for drilling is widely seen as a way of keeping her on board with the tax bill. Politico quotes the Congressional Budget Office as estimating the leases will bring in a billion dollars over the next decade.

Most congressional Democrats oppose the move, on both policy grounds and the method Republicans are using to achieve it. The move has gotten little attention because of the other huge issues involved in the tax bill. Democrats are powerless to stop it, since the legislation is structured in such a way that can be approved by the Republican majorities in both Houses.

Environmental groups are adamantly opposed.

The Audubon Society asked seven wildlife scientists why – their answers are here. The following is from John Schoen, formerly of the Alaska Department of Fish and Game, and Audubon Alaska:

A compressed space

The coastal plain is a very narrow belt of land compared to Prudhoe Bay and the area to the west. … The compression of habitat on the east side near the Canadian border, which is where the Arctic Refuge is — you get caribou, you get migratory birds, you have grizzly bears and wolves and polar bears. If you overlay that narrow band of land with oil development, infrastructure of airfields and gravel roads and pipelines and pump stations, there really isn’t any place for the animals to go.

Here is what’s likely to happen:

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Environmental issues in general, and the Arctic National Wildlife Refuge in particular are no strangers to litigation. It’s unlikely that congressional authorization will open a clear legal path to drilling.

The Hill, a publication that specializes in covering Congress, does a good job here in laying out the obstacles. Lawsuits are likely every step of the way. The National Environmental Policy Act requires a review of actions by the federal government.

“So we have the ability to slow it down, and then we have [to] win some elections,” said Sen. Brian Schatz, a Hawaii Democrat.

Oil companies will factor in the cost of ligitation. The amount of oil available and the cost of getting at it in an era of relatively low prices are other big factors.

The Hill quotes Pavel Molchanov, a researcher at Raymond James, as expressing doubt they’ll be keen on drilling in the Arctic reserve. Some might bid on leases in case prices go up in the future.

‘Virtually no interest in the industry to drill’

“As a practical matter, there is virtually no interest in the industry to drill in ANWR,” he said. “There is little interest in the industry in investing in Alaska generally, but particularly ANWR.”

Joel K. Bourne, Jr., writing in National Geographic in 2015, raised questions about the amount of oil available in the refuge. Other estimates in Alaska have been revised downward, he said, and he quoted sources as saying the only test well drilled in the refuge came up dry.

In any case, he added, the Arctic National Wildlife Refuge is relatively small potatoes. The far bigger reserves are off shore.