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Arctic Ocean oil drilling opponents win appeal

January 22, 2014, 10:19 p.m

SEATTLE — The U.S. government violated the law when it opened millions of acres of the Arctic Ocean to offshore oil drilling, a federal appeals court ruled Wednesday, possibly delaying plans by companies such as Royal Dutch Shell to drill off the northwest coast of Alaska in the near future.

The U.S. 9th Circuit Court of Appeals in San Francisco ruled that the Interior Department did not properly evaluate the impact of oil development in the Chukchi Sea when it sold more than $2.6 billion in development leases in the environmentally sensitive area in 2008.

A coalition of environmental advocacy groups and Alaska Native organizations sued the federal government, arguing that the U.S. had offered an estimated 30 million acres of oil leases for sale without sufficient scientific information or analysis of potential effects on the region.

The groups also said that when the federal government analyzed the sale, it underestimated how much development could occur if companies discovered oil, a failure that “runs the risk of understating the impacts and the risks of catastrophic spills,” said Michael LeVine, Pacific senior counsel for Oceana, which is part of the coalition of plaintiffs.

On Wednesday, the appeals court sided with the groups that sued the federal Bureau of Ocean Energy Management and the Interior Department over Lease Sale 193. Federal officials estimated it would produce only 1 billion barrels of oil.

“Plaintiffs contend that the 1-billion-barrel estimate was chosen arbitrarily, and that [the bureau] did not provide adequate explanation for its selection,” the court said in its ruling. “We agree.”

The Bureau of Ocean Energy Management did not respond to calls for comment.

Just over 2 million acres of oil leases were purchased in 2008 out of the 30 million acres the government offered for sale.

Shell, the biggest player in the region, has spent nearly $5 billion preparing to drill in the Arctic. The company suspended its drilling efforts in 2013 after a disastrous 2012 season, during which a drilling rig ran aground, among other mishaps.

Shell, which joined the lawsuit on the side of the government, has submitted an exploration plan for federal approval for possible drilling this year. The company announced Friday that its fourth-quarter 2013 earnings would be lower than expected, in part because of “higher exploration expenses and lower volumes.”

Curtis Smith, a company spokesman, said in an email that Shell was still reviewing the court’s opinion.

By a 2-1 vote, the appeals court sent the case back to a federal court in Alaska. Oceana’s LeVine says it is unclear what will happen next.

“Were the government to fully and fairly evaluate the potential risks and benefits,” he said in a statement, “it would decide not to sell oil and gas leases in the Chukchi Sea at this time.”

Greenpeace officials also applauded the appeals court decision.

“Drilling for oil in the Chukchi Sea poses an enormous risk to the region’s people and wildlife,” Gustavo Ampugnani, the advocacy group’s Arctic campaign leader, said in a statement. “It locks us into a dangerous and dirty fossil fuel future, and it pushes us far closer to global climate catastrophe.”

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