Alaska Wilderness League v. Kempthorne

• Decision Date: 20 November 2008
• Docket Number: No. 07-71989.,No. 07-72183.,No. 07-71457.,07-71457.,07-71989.,07-72183.
• Citation: 548 F.3d 815
• Parties: ALASKA WILDERNESS LEAGUE; Natural Resources Defense Council, Inc.; Pacific Environment and Resources Center, Petitioners, v. Dirk KEMPTHORNE, et al., Respondent, Shell Offshore, Inc., Respondent-Intervenor. Resisting Environmental Destruction on Indigenous Lands, A Project of the Indigenous Environmental Network; Center for Biological Diversity and Sierra Club, Petitioners, v. Dirk Kempthorne, et al., Respondent, Shell Offshore, Inc., Respondent-Intervenor. North Slope Borough; Alaska Eskimo Whaling Commission, Petitioners, v. Dirk Kempthorne, et al., Respondent, Shell Offshore, Inc., Respondent-Intervenor.
• Court: U.S. Court of Appeals — Ninth Circuit

548 F.3d 815

ALASKA WILDERNESS LEAGUE; Natural Resources Defense Council, Inc.; Pacific Environment and Resources Center, Petitioners, v. Dirk KEMPTHORNE, et al., Respondent, Shell Offshore, Inc., Respondent-Intervenor.

Resisting Environmental Destruction on Indigenous Lands, A Project of the Indigenous Environmental Network; Center for Biological Diversity and Sierra Club, Petitioners, v. Dirk Kempthorne, et al., Respondent, Shell Offshore, Inc., Respondent-Intervenor.

North Slope Borough; Alaska Eskimo Whaling Commission, Petitioners, v. Dirk Kempthorne, et al., Respondent, Shell Offshore, Inc., Respondent-Intervenor.

No. 07-71457.

No. 07-71989.

No. 07-72183.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 4, 2007.

Filed November 20, 2008.

Christopher Winter, Crag Law Center, Portland, OR; Deirdre A. McDonnell, Earthjustice, Juneau, AL, for the petitioners.

David C. Shilton, United States Department of Justice, Washington, D.C., for the respondent.

Kyle W. Parker, Patton Boggs LLP, Anchorage, AL, for the respondent-intervenor.

On Petition for Review of a Decision of the Department of Interior. DOI No.2007-152.

Before: DOROTHY W. NELSON, STEPHEN REINHARDT, and CARLOS T. BEA, Circuit Judges.

Opinion by Judge D.W. Nelson; Dissent by Judge Bea

OPINION

D.W. NELSON, Senior Circuit Judge:

Petitioners are six organizations that support environmental conservation, indigenous communities, and wildlife populations of Northern Alaska. They challenge the Minerals Management Service's ("MMS") approval of an exploration plan submitted by Shell Offshore Inc. ("Shell"). Shell seeks to drill multiple offshore exploratory oil wells over a three-year period in the Alaskan Beaufort Sea.

Petitioners challenge the agency's action under the National Environmental Policy Act ("NEPA"), 42 U.S.C. §§ 4321-4347, and the Outer Continental Shelf Lands Act ("OCSLA"), 43 U.S.C. §§ 1331-56. Petitioners allege that MMS failed to take the requisite "hard look" at the impact of drilling on the people and wildlife of the Beaufort Sea region in violation of the standards set forth by NEPA, OCSLA, and their implementing regulations. Petitioners also argue that MMS erred by failing to prepare an environmental impact statement ("EIS") for the proposed exploration activities, because of the potential for significant harmful effects on the environment.

We have jurisdiction over all parties' claims as each petition for review was timely filed. We vacate the agency's approval of Shell's exploration plan, and remand so that MMS can conduct the "hard look" analysis required by NEPA.

FACTUAL AND PROCEDURAL BACKGROUND

I. Administrative Process

In April 2002, MMS issued a five-year plan establishing a lease sale schedule for the Outer Continental Shelf ("OCS") of the Gulf of Mexico and Alaska. The plan envisions offering three separate lease sales in the Beaufort Sea. In February 2003, MMS prepared a detailed EIS to evaluate the overall impacts of the activities projected to occur pursuant to these lease sales ("multi-sale EIS"). The study analyzes the potential effects of oil exploration and production on the region's wildlife, environment, and subsistence activities. The multi-sale EIS assumes that drilling would begin in 2007, and would require a maximum of two drilling rigs, icebreakers, supply boats, and floating platforms in waters deeper than twenty meters. The multi-sale EIS also evaluates mitigation measures that were developed through the cooperation of federal agencies, the State of Alaska, and Native Alaskans. These measures include an extensive bowhead whale monitoring program and a conflict avoidance process designed to protect subsistence activities. The multi-sale EIS further notes: "Any proposed exploration or development plans that may result for any of the three OCS sales evaluated in this EIS, would require additional NEPA environmental analysis using site specific information."

In 2003, MMS held the first sale, Lease Sale 186, without conducting further NEPA analysis. The agency held two subsequent lease sales in July 2004 (Lease Sale 195), and August 2006 (Lease Sale 202), preparing a supplemental environmental assessment ("EA") for each one. Both of these EAs "tiered" to the multi-sale EIS. In the tiering process, the agency looks to see if the proposed activities are covered by the analysis in previous studies, whether additional mitigation measures are needed, and what level of NEPA evaluation is required. The leases at issue in this case were purchased in July 2004, under Lease Sale 195.

OCSLA requires that a lessee obtain approval of an exploration plan ("EP") before beginning exploratory drilling. 30 C.F.R. § 250.201. The EP must include a project-specific environmental impact analysis assessing the potential effects of the proposed exploration activities. 30 C.F.R. § 250.227. MMS reviews the EP, and the application is deemed "submitted" when it "fulfills requirements and is sufficiently accurate," and the applicant has "provided all needed additional information." 30 C.F.R. § 250.231(a). MMS then conducts its environmental review pursuant to NEPA, 30 C.F.R. § 250.232(c), and within thirty days issues a decision approving, disapproving, or requiring modifications to the EP. 30 C.F.R. § 250.233.

Shell's proposed drilling activities are the first to be considered for the Beaufort Sea in conjunction with these lease sales. In November 2006, Shell submitted the first version of its EP for the Beaufort Sea region. Shell's EP details its plan to drill up to twelve exploratory wells on twelve lease tracts in the Beaufort Sea over the next three years. The lease blocks are grouped into five "prospects" and stretch from the Colville River Delta eastward to the Canadian border. The Cornell Prospect is fifteen to twenty miles offshore of the Colville River Delta, north of the Inupiat Eskimo village of Nuiqsut. The Sivulliq Prospect is ten miles offshore in Camden Bay, between the villages of Nuiqsut and Kaktovik. The Olympia Prospect is located north of Kaktovik. The Fosters and Fireclaw Prospects are located farther east, between Kaktovik and the Canadian border.

In the first year of the plan, Shell aims to drill four wells within the Sivulliq Prospect in Camden Bay. In the following two years "Shell proposes to drill an undetermined number of wells on additional prospects ... depending on the [initial] drilling results." Throughout this project, Shell plans to use two drilling vessels, two icebreaking ships, various other supply boats, and up to six aircraft. All exploratory activities would occur between June and mid-November as the Beaufort Sea is frozen over for half of the year.

In December 2006, MMS issued its "Completeness Comments" on Shell's EP, indicating what information was still needed before the EP would be considered properly submitted. The agency asked Shell to clarify the specific drilling locations for which it was seeking approval. MMS also sought more information on the "potential impact of underwater noise," conflict avoidance mechanisms, and other mitigation measures that could ameliorate the deleterious effects of the exploratory drilling. The final version of Shell's EP was submitted on January 12, 2007. The application included Shell's Environmental Report and an oil spill contingency plan. No further detail was given identifying specific well locations for the 2008 and 2009 seasons. MMS determined the application was complete and began the approval process on January 17, 2007.

After receiving a completed EP, the agency has thirty days to approve, disapprove, or require modification of a plan. 43 U.S.C. § 1340(c)(1); 30 C.F.R. § 250.233. Throughout this time period, a number of agency experts expressed concern about the potentially significant impacts the drilling would have on bowhead whales, polar bears, and the Inupiat subsistence harvest.

Despite these concerns, MMS issued an eighty-seven page EA and a Finding of No Significant Impact ("FONSI") on February 15, 2007. The EA "tiers" to the prior environmental studies, pursuant to 40 C.F.R. § 1502.20. The EA states: "The level and types of activities proposed in the Shell EP are within the range of the activities described and evaluated in the Beaufort Sea multiple-sale EIS ... and updated in EA's [sic] for Sales 195 and 202." The agency concluded that the proposed activities "would not significantly affect the quality of the human environment" or "cause `undue or serious harm or damage to the human, marine, or coastal environment,' " in accordance with 40 C.F.R. § 1508.27. As a result of this finding, the agency did not prepare an EIS specific to this project.¹

On April 13, 2007, a group of Petitioners consisting of the Alaska Wilderness League, the National Resources Defense Council, and the Pacific Environment (collectively "AWL"), filed a Petition for Review with this court. Simultaneously, Petitioners representing the North Slope Borough and the Alaska Eskimo Whaling Commission (collectively "NSB") filed an optional administrative appeal from the agency's decision with the Interior Board of Land Appeals ("IBLA"). On May 4, 2007, the IBLA declined to exercise its jurisdiction and stayed the administrative proceedings pending the outcome of AWL's Petition for Review.

Shell filed a Motion to Intervene on May 14, 2007. On May 15, NSB filed an independent Petition for Review. On May 22, 2007, Resisting Environmental Destruction on Indigenous Lands ("REDOIL"), an organization representing a network of Native Alaskans, filed its Petition for Review and a Motion to Consolidate. This court consolidated the matter on July 2, 2007. On August 14, 2007, this court granted Petitioners' motion to stay, ordering the agency's decision inoperative until this matter could be considered on the merits.

II. Beaufort Sea Resources and Wildlife

The Alaskan Beaufort Sea is part of the Arctic Ocean, bordering Alaska's north...