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Shell's Arctic Offshore Exploration Clears Another Legal Hurdle

Royal Dutch Shell plc's exploratory drilling plans offshore Alaska survived another legal challenge on Thursday after an appeals court upheld federal approval of oil spill response plans.

A coalition of conservation groups has been attempting to prevent Shell from drilling offshore by focusing on approval of two oil spill response plans. The plans, crafted by Shell and required before moving forward, were approved by the Interior Department's Bureau of Safety and Environmental Enforcement (BSEE).

The Sierra Club, National Audubon Society, Natural Resources Defense Council and other plaintiffs contend that BSEE should have rejected the response plans for Alaska leases acquired by Shell in 2005, 2007 and 2008 because of new information that should require additional environmental reviews. The case is Alaska Wilderness League et al v. Jewell et al, U.S. Court of Appeals for the Ninth Circuit [13-35866].

The three-judge appeals panel, in a split decision, affirmed an August 2013 ruling by U.S. District Court Chief Judge Ralph Beistline of Alaska. Justice Jacqueline H. Nguyen, writing for the panel, said BSEE had acted lawfully in approving spill response plans and was "not arbitrary, capricious or otherwise not in accordance with law..." Concerning the plaintiffs' contention that BSEE should have engaged in Endangered Species Act (ESA) consultation before approving the plans, overseen by Interior's Fish and Wildlife Service, Nguyen wrote that the approval did not trigger a requirement for interagency consultation.

Nguyen and Judge Dorothy W. Nelson also rejected a contention that BSEE had violated the National Environmental Policy Act (NEPA). by failing to prepare an environmental impact statement before approving the plans, concluding that it had to approve any plan that met the statutory requirements of the Clean Water Act.

Judge D.W. Nelson dissented in part. He concurred with the two justices that BSEE did not act arbitrarily or capriciously in approving the plans. However, he held that BSEE was required to engage in ESA consultation and was required to conduct analysis under NEPA.

A Shell spokesman said the decision was welcome news. The company expects to receive the remaining permits necessary "to commence exploration activities offshore Alaska in the weeks to come."

Interior's Bureau of Ocean Energy Management in May gave conditional approval to Shell to drill up to six wells in the Chukchi (see Daily GPI, May 11). Plans to explore in Alaska's offshore have been a financial and legal struggle. Shell filed plans to explore the Chukchi in May 2009 after gaining some leases in a 2008 auction, but it submitted a revised exploration plan earlier this year after Interior upheld the disputed lease sale (see Daily GPI, March 31). Shell has spent billions to date on its Alaska program, which so far has yet to yield any commercial production (see Daily GPI, April 10).

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