Drilling in the Arctic National Wildlife Refuge: Tax Cuts, Competing Interests, and the Existence Value of Pristine Wilderness

By Gabrielle Stephens*

The Arctic National Wildlife Refuge (ANWR) is a unique and sensitive wilderness area comprised of 19.64 million acres of land and water in northeastern Alaska.[i] This pristine sub-arctic landscape is home to 42 fish species, 37 land mammals, eight marine mammals, and more than 200 migratory and resident bird species, including Porcupine Caribou, polar bears, snowy owls, Alaskan moose and wolverines.[ii] This area is designated a critical habitat under the Endangered Species Act (16 U.S.C §§ 1531-1544) due to the polar bears that inhabit the region.[iii]  However, despite the ecological sensitivity of the region, ANWR has been subject to repeated efforts since the 1970s to drill into what the U.S. Geological Survey estimates to be 10.4 billion barrels of oil beneath the wilderness’ surface.[iv]

On December 20, 2017 President Trump signed the Republican’s tax overhaul bill, P.L. 115-97, into law.[v]  The bill provides for large tax cuts and is the most significant change to the tax code since the 1980s.[vi]  To pay for these tax cuts, P.L. 115-97 creates an oil and gas program on the coastal plain of the Arctic National Wildlife Refuge (ANWR), also known as area 1002, that is expected to produce $2 billion from drilling leases over the next decade.[vii]  The legislation calls for the sale of at least two leases over the next decade and mandates that each sale must contain at least 400,000 acres of land.  The program is to be administered by the DOI’s Bureau of Land Management (BLM).[viii]  The bill marks a major defeat for environmentalists and Democrats, who have been fighting to preserve this land from drilling since the 1970s.[ix]

Proponents of the bill argue that drilling in this area will reduce U.S. dependence on foreign oil, importing less from “hostile” countries like “Russia, Venezuela, and those in the Middle East.”[x]  Further, according the House Committee on Natural Resources, developing ANWR’s resources would be a large source of job creation in the region, generating up to 130,000 jobs and creating as much as $440 billion in government revenue over the life of the drilling.[xi]   In response to arguments that drilling will devastate the sensitive ecological composition of ANWR, supporters state that advancements in technology will provide for minimal environmental impact and allow energy production to occur safely.[xii]

However, opponents of drilling counter that these oil leases will not produce nearly the revenue that the House Committee on Natural Resources has predicted.  In fact, the Center for American Progress (CAP) projects that ANWR drilling would produce no more than $37.5 million for the treasury over the next decade.[xiii]  CAP states that the House Committee’s projections are based on “outdated resource estimates, ignore production costs, and fail to take into account market conditions.”[xiv]  If CAP is correct, the profits from drilling in ANWR will be entirely inadequate to pay for Trump’s tax cuts.  Further, opponents cite the risks of drilling in this sensitive area.  Drilling is a tricky endeavor that would cause “widespread and permanent damage” to the area, “destroying” the area’s natural beauty and “jeopardizing its wildlife and ecosystems.”[xv]

Despite the step toward drilling P.L. 115-97’s passage represents, this does not ensure drilling will occur.[xvi]  In fact, the fight to preserve this area from drilling is far from over.  Conservationists have promised to litigate every step on the long path to leasing ANWR’s land to oil companies.[xvii]  As Bernadette Demientieff, the executive director of the Gwich’in Steering Committee, states, “The fight has just begun — We will rise up and protect the Arctic Refuge and the Sacred Place Where Life Begins just as our ancestors have before us.”[xviii]

This vow likely means environmentalists will pursue lawsuits that challenge energy companies’ bids to complete seismic research, which maps underground formations where oil and gas may be located.[xix]  This research is an essential step in mandated environmental review, preventing the lease sale and issuing of drilling permits without its completion.[xx]

Even without these efforts to stop drilling in ANWR, authorities will have to comply with extensive environmental requirements embedded in multiple federal laws.[xxi]  This will lengthen the time before drilling can occur, and may even halt drilling altogether.  Further, although Congress is currently compelling lease sales in the refuge, a future president opposed to drilling could drastically lengthen the process required for lease sales or well permits, further slowing the drilling process.[xxii]

Drilling in the ANWR represents another crucial issue not easily monetized.  ANWR is one of the last remaining pristine lands in the U.S.  Its wild and spiritual nature cannot be quantified by a dollar amount and the simple idea of an extraordinarily primal area continues to capture the hearts and minds of Americans.  The economist John Krutilla captured this idea in his influential 1967 paper Conservation Reconsidered:

“When the existence of a grand scenic wonder or a unique and fragile ecosystem is involved, its preservation and continued availability are a significant part of the real income of many individuals. These would be the spiritual descendants of John Muir, the present members of the Sierra Club, the Wilderness Society, National Wildlife Federation, Audubon Society and others to whom the loss of a species or the disfigurement of a scenic area causes acute distress…”[xxiii]

John Kruitilla’s quote cuts to the heart of what environmental economists call “existence value.”  Existence value is the “non-use value that people place on simply knowing that something exists, even if they will never see it or use it.”[xxiv] The ANWR’s ruggedness and raw spirituality epitomize this concept.  While drilling in this area remains a distinct possibility, it must be remembered that the ANWR possesses a raw wildness, the intrinsic value of which cannot easily be replaced.

*Gabrielle Stephens is a Junior Editor on MJEAL. She can be reached via email at gabastep@umich.edu.

 


The views and opinions expressed in this blog are those of the authors only and do not reflect the official policy or position of the Michigan Journal of Environmental and Administrative Law or the University of Michigan.

[i] National Wildlife Refuge: A Refuge Journey, U.S. Fish & Wildlife Service (Apr. 10, 2013), https://www.fws.gov/refuge/arctic/journey.html.

[ii] Id.

[iii] Laura B. Comay et al., Arctic National Wildlife Refuge (ANWR): An Overview, Congressional Research Service 1, 1-3 (2018).

[iv] Ari Natter & Jennifer A. Dlouhy, Congress Is about to Allow Oil Drilling in Alaska’s Arctic Wildlife Refuge, Time (Dec. 20, 2017), http://time.com/5074312/alaska-anwr-oil-drilling-tax-bill/.

[v] Timothy Cama, Congress Votes to Open Alaska Refuge to Oil Drilling, The Hill  (Dec. 20, 2017), http://thehill.com/policy/energy-environment/365772-congress-votes-to-open-alaska-refuge-to-oil-drilling.

[vi] Id.

[vii] Michael Collins, Congress Moves to ‘Drill, Baby, Drill’ in Alaska’s ANWR. Here’s What You Should Know, The Hill  (Nov. 19, 2017), https://www.usatoday.com/story/news/politics/2017/11/19/congress-moves-drill-baby-drill-alaska-anwr-refuge-heres-what-you-should-know/874187001/.

[viii] Comay, supra note 3.

[ix] Ari Natter & Jennifer A. Dlouhy, Congress Is about to Allow Oil Drilling in Alaska’s Arctic Wildlife Refuge, Time (Dec. 20, 2017), http://time.com/5074312/alaska-anwr-oil-drilling-tax-bill/.

[x] Collins, supra note 7.

[xi] Id.

[xii] Id.

[xiii] Cama, supra note 5.

[xiv] Id.

[xv] Id.

[xvi] Comay, supra note 3.

[xvii] Id.

[xviii] Natter & Dlouhey, supra note 4.

[xix] Id.

[xx] Id.

[xxi] Comay, supra note 3.

[xxii] Natter & Dlouhey, supra note 4.

[xxiii] Matthew J. Kotchen & Nicholas E. Burger, Should we Drill in the Arctic National Wildlife Refuge? An Economic Perspective, 35 Energy Policy 4720, 4726 (2007).

[xxiv] Dennis M. King & Marisa J. Mazzatta, Valuation of Ecosystem Services, Ecosystem Valuation, (2000), http://www.ecosystemvaluation.org/1-02.htm.

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