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State Seeks to Intervene in OCS Lease Sale Litigation

Anchorage, Alaska -- The State of Alaska has moved to intervene in a federal court 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.

Just hours after being sworn into office, Attorney General Dan Sullivan said, “One of my highest priorities as Alaska’s attorney general is 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. This case entails both such interests.”

“The ultimate outcome of this case will likely have enormous economic consequences – either positive or negative – for the state of Alaska and our citizens,” Governor Palin said.

Sullivan added 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 conceivably could set back development of the OCS for decades.

The case was filed in January 2008. The plaintiffs have filed for summary judgment, and responses from the federal government and from intervening parties Conoco Phillips and Shell are due July 17.

In the pleadings filed by Attorney General Sullivan, the state argues that its intervention is now important because of 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 generalfund 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 effecton industry’s willingness to participate in future lease sales off Alaska’s coast and adversely impact development of adjacent stateland, 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 Trans Alaska Pipeline System, thus increasing state royalties andtaxes 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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