9th Cir. Won't Rehear Suit Over Shell's Arctic Drilling Plans

The Ninth Circuit has declined to reconsider, either in panel or en banc, environmentalists' challenge to Shell's arctic drilling plans. When government regulators approved Shell's spill response plan -- the plan meant to keep a drilling accident from becoming the next Exxon Valdez or Gulf oil spill -- they did so without formal environmental review under the Endangered Species Act or National Environmental Policy Act. That led environmental groups to sue, a suit they lost in June and which the Ninth has now refused to rehear. That refusal, however, garnered a strong dissent from three circuit judges who argued that the court had undermined the strength of the environmental laws and created an incentive for agencies to abandon their role as overseers.

No Need for Environmental Review, It's Just an Oil Spill

For years, Royal Dutch Shell and other oil companies have sought to drill for oil in the Arctic Ocean. The Chukchi and Beaufort Seas, on the west and northern coasts of Alaska, are thought to hold millions of gallons of oil beneath them. In July, Shell got closer to drilling in those seas that than any other company, when the Interior Department's Bureau of Safety and Environmental Enforcement approved the company's spill response plan. BSEE's approval came without a formal consultation under the Endangered Species Act or preparation of an environmental impact statement under the National Environmental Policy Act. Both the ESA and NEPA require environmental review when federal agencies engage in projects with potential impacts on endangered species or the environment. But those reviews are only required when the agency has some discretion in the action. When environmental groups sued, BSEE argued and the Ninth Circuit eventually agreed that the agency had no choice but to approve the plan. It was not a discretionary action that required review.

Judges Dissent From Rehearing Denial

Low oil prices and public pressure have since moved Shell to abandon its Arctic drilling plans. But drilling or not, the Ninth Circuit case still stands as damaging (for environmentalists) precedent. Those groups, including the Alaska Wilderness League, Greenpeace, and the Sierra Club, petitioned for rehearing by the three judge panel or en banc, both of which the Ninth declined. However, that decision was not unanimous. Judge Ronald M. Gould dissented from the denial of rehearing en banc, joined by Judges William A. Fletcher and Connie Callahan. According to the dissenters, the majority granted too much deference to BSEE's interpretation of its regulations, finding ambiguity and nondiscretionary duties where there was none. That decision "lead to an unprecedented and unwise constraining of the powers of the ESA and NEPA," Judge Gould writes. Further, it "encourages federal agencies to abrogate their oversight by deciding that a statute's requirements limit their discretion," allowing them to ignore environmental review. While Shell's drilling is off the table right now, they could always go back. The environmental groups' recourse is a bit more limited; it's the Supreme Court or nowhere, now. There's no word yet if they are planning to petition the High Court for cert. Related Resources:

• Approval of Oil-Spill Plan for Alaska Left Intact (Courthouse News Service)
• Alaska Sues DOI Over Oil and Gas Plans (FindLaw's U.S. Ninth Circuit Blog)
• Ninth Circuit Halts Oil-for-Food Contracts Lawsuit (FindLaw's U.S. Ninth Circuit Blog)
• 9th Cir. Rejects Challenge to Reno Highway Expansion (FindLaw's U.S. Ninth Circuit Blog)