Court rules against Shell in Arctic drilling case

NOVEMBER 14, 2014 — The Natural Resources Development Council (NRDC) reports that the U.S. Court of Appeals for the Ninth Circuit has rejected a Shell Gulf of Mexico Inc. and Shell Offshore Inc. lawsuit that sought to prevent environmental groups from challenging its oil drilling plans in the Arctic. The appeals court dismissed the case on the grounds that it violated the U.S. Constitution.

Shell's suit against NRDC and other groups asked the court to preemptively validate the federal Bureau of Environmental Safety and Enforcement's approval of the company's Arctic oil spill plans against any future legal challenge. However, the court held that Shell does not have legal standing to block legal complaints against the plan, in part because it is not a federal agency. Any lawsuit challenging the plan would have to be filed against the agency, and not against Shell.

Following is a statement from Chuck Clusen, NRDC Director of National Parks and Alaska Projects:

"Shell was attempting to quash dissent and circumvent due process. It didn't work – our legal system prevailed.

"As multiple accidents have already shown, Shell's drilling plans in the Arctic are severely flawed. Shell is not equipped to handle offshore drilling in some of the world's most treacherous waters, and we'll continue to do all we can to stop them from endangering the precious wildlife and local fishing economies that they're putting at risk."

According to NRDC, the court rejected Shell's "novel litigation strategy, whereby the beneficiary of agency action seeks to confirm its lawfulness by suing those who it believes are likely to challenge it." The court held that it would be "odd" to adjudicate the validity of the oil spill plans without the federal agency present, because the judgment would not be binding on the agency, and the agency would not have a chance to give its own justifications for its actions. Shell's "practical interest" in the validity of the spill plans did not give the company the legal right to sue NRDC and other citizen groups to preempt hypothetical future lawsuits against the federal agency.

The introduction to the court's opinion states:

"The Beaufort and Chukchi Seas lie on Alaska's Arctic coast. This area contains a bountiful ecosystem that supports a wide array of life, but it is also rich in natural resources, specifically, oil and gas. Shell Gulf of Mexico, Inc. and Shell Offshore, Inc. (collectively Shell) have invested heavily in the exploration and development of oil and gas resources in the Beaufort and Chukchi Seas.

"To carry out its operations, Shell sought and obtained approval from the Bureau of Safety and Environmental Enforcement (the Bureau) of two oil spill response plans required by the Oil Pollution Act. Shortly after obtaining approval, Shell filed a lawsuit under the Declaratory Judgment Act against several environmental organizations, seeking a declaration that the Bureau's approval did not violate the Administrative Procedures Act (APA). Shell claimed that it needed a swift determination of the legality of the approval so it could conduct exploratory drilling without worrying that the environmental groups would seek to overturn the Bureau's approval of the spill response plans.

"Shell's lawsuit represents a novel litigation strategy, whereby the beneficiary of agency action seeks to confirm its lawfulness by suing those who it believes are likely to challenge it. We must decide whether this strategy runs afoul of Article III's case or controversy requirement. We hold that it does. Shell does not have legal interests adverse to the Bureau under the APA, and it may not file suit solely to determine who would prevail in a hypothetical suit between the environmental groups and the Bureau. Consequently, we lack jurisdiction."

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