A federal appeals court Thursday removed a legal challenge standing in the way of Shell Oil Co.’s plans to drill three exploratory wells off Alaska’s coast this summer.

The three-judge panel of the U.S. Court of Appeals for the Ninth Circuit rejected three lawsuits brought by environmental and Native Alaska groups that challenged various aspects of the Minerals Management Service’s (MMS) approval of Shell’s exploratory drilling plans in the Chukchi and Beaufort seas (see Daily GPI, Sept. 3, 2009; March 10, 2009).

The expedited five-page ruling followed oral arguments earlier this month in Portland, OR (U.S. Court of Appeals for the Ninth Circuit, Nos. 09-73942, 09-73944,10-70166, 10-70368).

The circuit court determined that MMS met its obligations to consider the potential threat to wildlife and the risk for disaster before it approved subsidiaries Shell Offshore Inc.’s and Shell Gulf of Mexico Inc.’s Arctic Ocean project.

Shell Oil, a unit of Royal Dutch Shell plc, wants to drill three exploratory wells in the Chukchi Sea and two in the Beaufort Sea using the 514-foot drilling ship Frontier Discoverer. Groups challenged the drilling effect on endangered bowhead whales, such as a possible interruption of feeding patterns, and whether Shell had made adequate plans to deal with an emergency, such as a major spill. The lawsuits were filed before the massive oil spill in the Gulf of Mexico.

In its arguments before the court, Shell attorney Kathleen Sullivan argued that the company had spent at least $3.5 billion on Alaska operations and had waited years to recover its investment. She said Shell’s Chukchi exploration plan concluded that a large oil spill, such as a release from a blowout, would be rare. MMS had agreed and said the probability of a large spill during exploration was “insignificant.”

The decision was rendered by Chief Judge Alex Kozinski and Circuit Judges Carlos Bea and Sandra Segal Ikuta.

“We have carefully reviewed the thousands of pages of record and considered each of the alleged deficiencies in context,” they wrote. “Under our deferential standard of review, we conclude that, as to both exploration plans, the MMS has met its obligations under [the National Environmental Policy Act] to take a ‘hard look at the consequences of its actions,’ to ‘base its decision on a consideration of the relevant factors,’ and to ‘provide a convincing statement of reasons to explain why a project’s impacts are insignificant.’

“Based on our thorough review of the record, we also conclude that the MMS’s decision to approve Shell’s exploration plans under [Outer Continental Shelf Lands Act] was ‘supported by substantial evidence on the record considered as a whole.’ In addition, because petitioners failed to prove that the MMS ‘relied on factors Congress did not intend it to consider, entirely failed to consider an important aspect of the problem, or offered an explanation that runs counter to the evidence before [the MMS] or is so implausible that it could not be ascribed to a difference in view or product of agency expertise,’ we conclude that the MMS did not act arbitrarily or capriciously.”

In response, plaintiff Center for Biological Diversity said, “The court was evaluating a decision made before the disaster in the Gulf of Mexico happened. We believe that the new issues this incident has brought to light offer even more evidence that Shell must not proceed with plans for exploratory drilling in the Arctic’s Chukchi and Beaufort Seas this summer.”

The plaintiffs also include Alaska Wilderness League, Alaska Eskimo Whaling Commission, Defenders of Wildlife, Earthjustice, Inupiat Community of the North Slope, Native Village of Point Hope, Ocean Conservancy, Oceana, Pacific Environment and Sierra Club.

“With 48 days to go before Shell is slated to move forward, we will continue to press our request to the Obama administration to reevaluate its approval of the Shell drilling plans in light of the Gulf spill and to suspend drilling that we knew was risky even before the massive failure in the Gulf once again exposed that drilling is indeed a dirty and dangerous business,” the Center for Biological Diversity stated. “With limited capacity to respond to potential spills and icy, harsh conditions, the Arctic is no place to take our next drilling gamble, especially when there are still so many unknowns — in the Arctic and in the Gulf.”

The Interior Department has temporarily halted all new offshore drilling pending a review that will be delivered to President Obama (see Daily GPI, May 12). Asked how that might affect the Beaufort and Chukchi this summer, Interior Secretary Ken Salazar said it would depend in part on what the review finds.

“We will have more to say about that in the days ahead,” Salazar told reporters.

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