Shell seeks urgencyAsks court to accept BSEE proposal in Chukchi Sea lease sale appeal case Alan Bailey Petroleum News
In an April 2 filing submitted to the federal District Court in Alaska Shell said that it opposes any delay in resolving an appeal against the 2008 Chukchi Sea lease sale in which the company purchased leases. The company asked the court to accept an offer by the federal Bureau of Safety and Environmental Enforcement, or BSEE, to rework the environmental impact statement for the lease sale, to rectify issues identified by the U.S. Court of Appeals for the 9th Circuit.
In January, in a majority opinion, a panel of three 9th Circuit judges had upheld the appeal and had remanded the appeal to the Alaska District court. On March 17 District Court Judge Ralph Beistline told the parties in the case to submit a report by March 31, indicating how they wished to proceed with the case.
But, while BSEE and Shell subsequently submitted a proposal for a rework of the environmental impact statement, lawyers for plaintiffs in the appeal have asked for more time to consult with their clients over the contents of a report to the District Court. Shell says that a delay is unnecessary and could adversely impact plans to drill in the Chukchi Sea in 2015.
“Because the Arctic drilling season is so short, every day of it counts,” Shell told the court.
BSEE’s proposal would “provide the best approach for a thorough yet expeditious remand process that would preserve the possibility of a 2015 drilling season,” the company wrote.
Shell said that it had already lost the 2014 Chukchi Sea drilling season as a result of the appeal and that the company had begun planning for the 2015 season “in the event the agency (BSEE) re-affirms the sale.”
Majority opinion In their January opinion upholding the appeal against the lease sale, the 9th Circuit judges said that the Department of the Interior had inappropriately used an estimate of 1 billion barrels of economically recoverable oil in assessing the lease sale’s potential environmental impacts. The 1 billion barrel figure apparently represented the possible production from an initial Chukchi Sea development, based on assumptions that a field smaller than this would not be viable and that the probability of finding a field larger than this would be relatively low. But the 9th Circuit judges criticized what they said was the lack of an explanation of why production would be expected to stop with that first field, and a lack of consideration of how variations in oil prices might impact production economics.
In his March 17 order, Beistline asked the parties in the case to jointly submit a report on how they wanted to proceed with the case. In the event, however, BSEE and Shell submitted their own report containing the offer to rework the environmental impact statement, to address the deficiencies identified by the 9th Circuit court.
BSEE offered to file bimonthly status reports while it is reworking the environmental impact statement and said that it would notify the court and the other parties in the case when the rework is complete, and when the agency has made a new decision on holding the lease sale, based on the results of the revised environmental analysis. The question of the legal validity of the Chukchi Sea leases would presumably hinge on that new decision.
BSEE told the District Court that it was going to direct a suspension of drilling activities in Chukchi Sea leases until that revised decision has been made. However, the agency also asked the District Court to meantime sanction ancillary, non-drilling activities in the Chukchi Sea, and to allow the agency to process lease-related documents such as exploration plans.
Request by plaintiffs Lawyers for the plaintiffs, the Native Village of Point Hope, the Inupiat Community of the Arctic Slope and 12 environmental organizations, submitted their own District Court filing on March 31, saying that, although discussions with the defendants had given reason to anticipate that all parties in the case would ultimately be able to agree on the content of a joint report to the court, several items in the proposed report required the lawyers to conduct further consultation with their clients, the plaintiffs.
Saying that the request to the court filed by BSEE and Shell is premature, the lawyers asked for permission to continue conferring over a joint proposal, with a deadline of April 11 for submission of a joint report. If, at that time, there are remaining areas of disagreement between the plaintiffs and the defendants on how to proceed, the court can issue an order adjudicating over outstanding disputes, the lawyers said.
Shell, in its April 2 filing, said that BSEE’s proposal is straightforward, that the plaintiffs had been given ample time to consider it and that the plaintiffs’ proposal could delay resolution of “unspecified issues” into May.
Started January 2008 The appeal case dates back to the month before the lease sale in question was held, to January 2008, when the plaintiffs filed suit in the District Court, claiming that the U.S. Minerals Management Service, the now defunct federal agency that scheduled the lease sale, had violated the National Environmental Policy Act by preparing a deficient lease sale environmental impact statement. In July 2010 Beistline upheld the appeal on the grounds that, in its environmental analysis, the government had not considered the potential impacts of natural gas development in the Chukchi and had not adequately considered the relevance of missing environmental information for the lease sale region.
Beistline ordered the government to address the deficiencies in the environmental impact statement and meantime placed an injunction on exploration activities in Chukchi Sea leases. However, in August 2010 Beistline issued a revised order, clarifying that the injunction did not apply to certain types of ancillary activity such as seismic and geotechnical surveying.
Revised EIS In May 2011 the Department of the Interior published a revised version of its lease sale environmental impact statement: In addition to addressing the issues raised by the court, the agency voluntarily added a section to the document, assessing the potential impacts of a very large oil spill in the Chukchi Sea. And in August 2011, following a public review, the agency published a final version of the document — a new decision by the agency, affirming the validity of the lease sale, followed in October of that year.
Later that October the Alaska District Court lifted its injunction against Chukchi Sea lease related activities, thus opening the legal door for the exploration drilling program that Shell conducted in the Chukchi in the summer of 2012. And in February 2012 Beistline, saying that the Department of the Interior had now adequately complied with all applicable laws, dismissed an appeal against the revised environmental impact statement.
Having reached the end of the road in District Court, in April 2012 the plaintiffs elevated the appeal to the 9th Circuit Court. Silence then reigned in the court case until Jan. 22, 2013, when the 9th Circuit judges issued their opinion, upholding the appeal. And that opinion has led to the latest developments in the court case, with the District Court in Alaska requiring a new way forward to resolve the dispute.
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