Native Village of Point Hope, et al v. Ken Salazar, et al

Filing

FILED OPINION (ALEX KOZINSKI, CARLOS T. BEA and SANDRA S. IKUTA) DENIED. Judge: SSI Authoring. FILED AND ENTERED JUDGMENT. [8192953] [11-72891, 11-72943]

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 1 of 27

FILED
FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

NATIVE VILLAGE OF POINT HOPE;
ALASKA WILDERNESS LEAGUE;
CENTER FOR BIOLOGICAL
DIVERSITY; DEFENDERS OF
WILDLIFE; NATURAL RESOURCES
DEFENSE COUNCIL; NATIONAL
AUDUBON SOCIETY, INC.;
NORTHERN ALASKA
ENVIRONMENTAL CENTER;
OCEANA; PACIFIC ENVIRONMENT;
RESISTING ENVIRONMENTAL
DESTRUCTION ON INDIGENOUS
LANDS, REDOIL; SIERRA CLUB; THE
WILDERNESS SOCIETY, INC.;
GREENPEACE, INC.,
Petitioners,
v.
KENNETH LEE SALAZAR, Secretary of
the Interior; BUREAU OF OCEAN
ENERGY MANAGEMENT,
REGULATION AND ENFORCEMENT,
Respondents,
STATE OF ALASKA; SHELL
OFFSHORE,
Respondents-Intervenors.

No. 11-72891

OPINION

MAY 25 2012
MOLLY C. DWYER, CLERK
U .S. C O U R T OF APPE ALS

Case: 11-72891

05/25/2012

ID: 8192953

INUPIAT COMMUNITY OF THE
ARCTIC SLOPE,

DktEntry: 92

Page: 2 of 27

No. 11-72943

Petitioner,
v.
KENNETH LEE SALAZAR, Secretary of
the Interior; BUREAU OF OCEAN
ENERGY MANAGEMENT,
REGULATION AND ENFORCEMENT,
Respondents,
STATE OF ALASKA; SHELL
OFFSHORE INC.,
Respondents-Intervenors.

On Petition for Review of a Final Agency Action
Bureau of Ocean Energy Management
Argued and Submitted May 15, 2012
Pasadena, California
Before: KOZINSKI, Chief Judge, BEA and IKUTA, Circuit Judges.
Opinion by Judge IKUTA, Circuit Judge:
In these expedited petitions for review, we consider the allegations of Native
Village of Point Hope et al. and Inupiat Community of the Arctic Slope
(collectively, “petitioners”) that the Bureau of Ocean Energy Management

-2-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 3 of 27

(BOEM) failed to discharge its obligations under the Outer Continental Shelf
Lands Act (OCSLA) in approving Shell Offshore Inc.’s plan for exploratory oil
drilling in the Beaufort Sea. We have jurisdiction pursuant to 43 U.S.C. § 1349(c),
and we deny the petitions.1
I
This case is the latest chapter in a long-running saga beginning back in April
2002, when the Minerals Management Service (MMS)2 established a five-year
lease sale schedule for the outer continental shelf of Alaska. Alaska Wilderness

1

In a separate memorandum disposition filed concurrently with this opinion,
we deny expedited petitions challenging BOEM’s decision to approve an
exploration plan for Shell Gulf of Mexico Inc. to drill for oil in the Arctic Ocean’s
Chukchi Sea. Because of the expedited nature of this case, no motions to stay the
mandate will be granted. Petitions for rehearing and rehearing en banc may be
filed with respect to this opinion.
2

In May 2010, the Secretary of the Interior separated and reassigned the
responsibilities of the former Minerals Management Service (MMS) to three
separate divisions: the Bureau of Ocean Energy Management (BOEM), the Bureau
of Safety and Environmental Enforcement (BSEE), and the Office of Natural
Resources Revenue. DOI Secretarial Order No. 3299, sec. 8 (May 19, 2010).
While the formal reorganization was underway, the Bureau of Ocean Energy
Management, Regulation and Enforcement (BOEMRE), rather than MMS,
functioned as the umbrella organization for the now-separated divisions. DOI
Secretarial Order No. 3302 (June 18, 2010) (changing the name of MMS to
BOEMRE). Although the Secretary’s reorganization plan was not fully
implemented until October 2011, see 76 Fed. Reg. 64,432 (Oct. 18, 2011), after the
date of approval of Shell’s exploration plan at issue here, we follow the parties’
lead by referring to the regulatory divisions within BOEMRE as BOEM and BSEE
throughout this opinion.
-3-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 4 of 27

League v. Kempthorne, 548 F.3d 815, 817–18 (9th Cir 2008), vacated, 559 F.3d
916 (9th Cir. 2009), dismissed as moot sub nom. Alaska Wilderness League v.
Salazar, 571 F.3d 859 (9th Cir. 2009). Indeed, this is the third time the
government has appeared before us to defend its approval of Shell’s exploration
plan against challenges by many of these same petitioners. We begin by describing
the legal framework and factual background for these challenges.
A
In enacting the Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C.
§§ 1331–1356a, Congress authorized the Secretary of the Interior to lease portions
of the outer continental shelf to qualified bidders for the purpose of exploring and
developing its oil and gas reserves. Under OCSLA, the Secretary begins by
holding a lease sale to identify qualified bidders. Id. §§ 1337, 1344(a). Becoming
the successful bidder in a lease-sale auction is merely the first step. Before
undertaking exploration activities in the leased area, the winning bidder must
obtain the Secretary’s approval of an exploration plan, id. § 1340(c)(1), and obtain
many other permits and approvals.3 If, after completing such exploration activities,

3

The required permits include inter alia an approval of an oil spill response
plan under the Clean Water Act, 33 U.S.C. § 1321, a National Pollutant Discharge
and Elimination System (NPDES) permit under the Clean Water Act, id. § 1342, a
dredge-and-fill permit under the Clean Water Act, id. § 1344, an air quality permit
(continued...)
-4-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 5 of 27

the leaseholder concludes there is potential for developing oil and gas reserves on
the leased area, the leaseholder must obtain approval of a development and
production plan, id. § 1351(a)(1), as well as obtaining a new round of permits and
approvals before pursuing development of the leased area.
Only the exploration plan stage and the leaseholder’s obligations under
OCSLA are at issue here. In general, the applicable regulations require the
leaseholder to submit specified information about its proposed exploration plan.
30 C.F.R. § 550.211–228. Within thirty days of the leaseholder’s submission or
last modification of the exploration plan, the Secretary “shall approve” the plan if it
is consistent with OCSLA, its implementing regulations, and the applicable lease,
43 U.S.C. § 1340(c)(1), unless the Secretary determines that the proposed activity
“would probably cause serious harm or damage to life . . . , to property, to any
mineral . . . , to the national security or defense, or to the marine, coastal, or human
environment,” id. § 1334(a)(2)(A)(i), and that “such proposed activity cannot be
modified to avoid such condition,” id. § 1340(c)(1); see also 30 C.F.R. § 550.233.
While OCSLA focuses on development of the outer continental shelf, the
Clean Water Act § 311, as amended by the Oil Pollution Act of 1990, focuses on

3

(...continued)
under the Clean Air Act, 42 U.S.C. § 7661a, a permit to drill, 43 U.S.C. § 1340, 30
C.F.R. § 250.1617, and a range of state approvals.
-5-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 6 of 27

the prevention of and response to oil spills. See 33 U.S.C. § 1321. Among other
things, § 311 requires a leaseholder to submit an oil spill response plan, which is “a
plan for responding, to the maximum extent practicable, to a worst case discharge,
and to a substantial threat of such a discharge, of oil or a hazardous substance.” Id.
§ 1321(j)(5)(A)(i). Offshore facilities “may not handle, store, or transport oil
unless” the leaseholder’s oil spill response plan “has been approved by the
President” and the “facility is operating in compliance with the plan.” Id.
§ 1321(j)(5)(F)(i)–(ii).
At the time Shell began its leasing and exploration efforts, MMS was in
charge of conducting lease sales, reviewing exploration plans under OCSLA, and
approving oil spill response plans under § 311 of the Clean Water Act. Following
the Deepwater Horizon oil spill in the Gulf of Mexico in early 2010, the Secretary
divided MMS’s responsibilities among three new regulatory entities in order to
separate the “three distinct and conflicting missions” of (1) promoting resource
development, (2) enforcing safety regulations, and (3) maximizing revenues from
offshore operations. Press Release, U.S. Dep’t of the Interior, Salazar Divides
MMS’s Three Conflicting Missions (May 19, 2010), available at
http://www.doi.gov/news/pressreleases/Salazar-Divides-MMSs-Three-ConflictingMissions.cfm; see also 76 Fed. Reg. 64,432; DOI Secretarial Order No. 3299. In
-6-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 7 of 27

the reorganization, the Secretary made BOEM responsible for managing the
development of offshore resources, including approving a leaseholder’s
exploration plan under OCSLA and conducting an environmental analysis of that
plan under the National Environmental Policy Act (NEPA). See 76 Fed. Reg. at
64,432. The Secretary made the Bureau of Safety and Environmental Enforcement
(BSEE) responsible for enforcement of safety and environmental functions,
including the oil spill response plan requirements in 30 C.F.R. pt. 254. See 76 Fed.
Reg. at 64,448.4 As the regulatory process now stands, BOEM and BSEE are
independent entities with separate responsibilities.
B
Although a winning bidder in the Beaufort Sea lease sale in 2003, Shell has
yet to commence exploration activities. In November 2006, Shell submitted an
exploration plan for the Beaufort Sea region. Alaska Wilderness League, 548 F.3d
at 818. MMS approved Shell’s exploration plan in February 2007. Id. at 821.
Some of the petitioners here, along with other groups, challenged MMS’s approval,
and a panel of this court issued a stay pending review, thereby preventing
exploration in 2007 and 2008. See id. at 819–20. On November 20, 2008, the panel

4

The Office of Natural Resource Revenue was made responsible for revenue
collection.
-7-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 8 of 27

vacated and remanded MMS’s approval. See id. at 835. After Shell filed a petition
for rehearing en banc, we issued an order vacating and withdrawing the panel
opinion. See Alaska Wilderness League, 559 F.3d at 916. Shortly thereafter, Shell
withdrew its exploration plan, and in 2009 we granted Shell’s motion to dismiss the
petitions as moot. See Alaska Wilderness League, 571 F.3d at 859. In June 2009,
Shell submitted a new exploration plan that proposed drilling at the Sivulliq and
Torpedo prospects in the Beaufort Sea. MMS approved that plan, and in May 2010
we denied expedited petitions challenging that approval. See Native Vill. of Point
Hope v. Salazar, 378 F. App’x 747, 748 (9th Cir. 2010) (mem.). Drilling did not
commence, however, because soon after the approval the federal government
suspended all drilling exploration activities in the Arctic in response to the
Deepwater Horizon oil spill. U.S. Dep’t of the Interior, Decision Memorandum
Regarding the Suspension of Certain Offshore Permitting and Drilling Activities on
the Outer Continental Shelf, July 12, 2010, at 1, available at
http://www.doi.gov/deepwaterhorizon/upload/Salazar-Bromwich-July-12-Final.pdf.
In May 2011, after the Secretary lifted the moratorium on drilling, Shell
submitted a revised exploration plan to BOEM and a revised oil spill response plan

-8-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 9 of 27

to BSEE.5 In the revised exploration plan, Shell proposed drilling two wells at its
Sivulliq prospect and two wells at its Torpedo prospect in the Beaufort Sea during
the July 10 to October 31 drilling season. On August 3, 2011, after conducting a
NEPA review of the drilling activities contemplated in the revised exploration plan,
BOEM issued a Finding of No Significant Impact. The agency concluded “that no
substantial questions remain regarding potentially significant impacts and that no
potentially significant impacts are expected to occur as a result of the proposed
activities.” Petitioners do not challenge these conclusions. On August 4, 2011,
BOEM approved Shell’s revised exploration plans subject to eleven conditions.
Conditions 8 and 9 require Shell to make certain technical demonstrations
concerning its oil spill response capabilities to BSEE before beginning exploratory

5

Among other things, Shell’s revisions responded to two Notices to Lessees
issued by the Secretary of the Interior in 2010 after the Deepwater Horizon
incident. One notice required leaseholders to include additional information in the
worst case discharge scenarios of their exploration plans and development plans,
see NTL No. 2010-N06 (June 18, 2010). The other informed leaseholders that
BSEE would evaluate “whether each operator has submitted adequate information
demonstrating that it has access to and can deploy containment resources that
would be adequate to promptly respond to a blowout or other loss of well control,”
see NTL No. 2010-N10 (Nov. 8, 2010).
-9-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 10 of 27

drilling operations. BSEE approved Shell’s revised oil spill response plan on
March 28, 2012.6
In these expedited petitions, petitioners challenge BOEM’s approval of
Shell’s revised exploration plan. Petitioners claim that BOEM erred in approving
the plan for three reasons. First, they claim that Shell’s revised exploration plan did
not meet the informational standards set by OCSLA and the regulations, because
(1) it failed to reference an approved oil spill response plan as required by 30 C.F.R.
§ 550.219(a) and (2) did not contain an adequate description of Shell’s well-capping
stack and containment system as required by 30 C.F.R. § 550.213(d).7 Second, they
claim that BOEM erred by failing to reconcile conflicting evidence regarding the
feasibility of well-capping technology and the amount of time it takes to drill a
relief well in the event of a well blowout and oil spill. Finally, they claim that
BOEM erred by approving the revised exploration plan subject to conditions.
II

6

We take judicial notice of this approval. See Interstate Nat’l Gas Co. v. S.
Cal. Gas Co., 209 F.2d 380, 385 (9th Cir. 1954). We also grant the parties’
motions for judicial notice of briefs filed in Native Village of Point Hope, 378 F.
App’x at 747.
7

Shell’s proposed well-capping stack and containment system involves
“subsea devices used on the top of the well” that will either seal the well or divert
the flow from the well to a surface vessel with a containment system equipped for
separation and disposal of hydrocarbons.
-10-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 11 of 27

BOEM’s decision “to approve, require modification of, or disapprove any
exploration plan” is “subject to judicial review only in a United States court of
appeals for a circuit in which an affected State is located.” 43 U.S.C. § 1349(c)(2).
The reviewing court “shall consider the matter under review solely on the record
made before the Secretary,” and BOEM’s findings, “if supported by substantial
evidence on the record considered as a whole, shall be conclusive.” Id.
§ 1349(c)(6). In addition to the standard of review established by OCSLA,
BOEM’s approval of an exploration plan is a final agency action subject to review
under § 706 of the Administrative Procedure Act (APA). Under this standard, we
may set aside BOEM’s approval only if it is “arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A).
Review under the arbitrary and capricious standard is deferential. We will not
vacate an agency’s decision unless it has “relied on factors Congress did not intend
it to consider, entirely failed to consider an important aspect of the problem, or
offered an explanation [for that decision] that runs counter to the evidence before
the agency or is so implausible that it could not be ascribed to a difference in view
or the product of agency expertise.” Lands Council v. McNair, 537 F.3d 981, 987
(9th Cir. 2008) (en banc) (internal quotation marks omitted) (quoting Earth Island
Inst. v. U.S. Forest Serv., 442 F.3d 1147, 1157 (9th Cir. 2006), overruled on other
-11-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 12 of 27

grounds as recognized by Am. Trucking Ass’ns v. City of L.A., 559 F.3d 1046, 1052
(9th Cir. 2009)). We have emphasized that deference to the agency’s decisions “is
especially warranted when ‘reviewing the agency’s technical analysis and
judgments, based on an evaluation of complex scientific data within the agency’s
technical expertise.’” Ctr. for Biological Diversity v. Kempthorne, 588 F.3d 701,
707 (9th Cir. 2009) (quoting Envtl. Def. Ctr., Inc. v. EPA, 344 F.3d 832, 869 (9th
Cir. 2003)).
While OCSLA gives appellate courts jurisdiction over challenges to BOEM’s
approval of an exploration plan, BSEE’s decisions regarding oil spill prevention,
response, and liability are committed to a separate review process in the district
court. See 33 U.S.C. § 1321(n). We have interpreted § 1321(n) as a grant of
exclusive original jurisdiction to the district court to review an oil spill response
plan. Edwardsen v. U.S. Dep’t of the Interior, 268 F.3d 781, 790–91 (9th Cir.
2001) (“OCSLA regulations, the special review statute contained in OPA, and the
overall regulatory regime created by OPA all make it clear that jurisdiction lies in
the district court for actions challenging approval of a spill response plan or
modifications to such a plan.”).
III

-12-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 13 of 27

We begin by considering petitioners’ claim that BOEM erred in approving
Shell’s exploration plan because the plan did not include all the information
required under OCSLA and the implementing regulations. Petitioners point to two
alleged errors: first that the exploration plan did not meet the requirements for
informing BOEM about its oil spill response plan, and second that the exploration
plan’s discussion of its proposed well-capping stack and containment system was
incomplete. We discuss each issue in turn.
A
Petitioners first claim that BOEM’s approval of Shell’s exploration plan was
arbitrary and capricious because the plan failed to comply with the regulatory
requirement that an exploration plan include a “[r]eference” to an approved regional
oil spill response plan, as well as “a comparison of the appropriate worst case
discharge scenario in [the applicant’s] approved regional [oil spill response plan]
with the worst case discharge scenario that could result from [the applicant’s]
proposed exploration activities.” 30 C.F.R. § 550.219(a)(2), (iv).8

8

Section 550.219 provides:

The following information regarding potential spills of oil (see
definition under 30 CFR 254.6) and hazardous substances (see
definition under 40 CFR part 116) as applicable, must accompany
your EP:
(continued...)
-13-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 14 of 27

In response to this requirement, Shell’s exploration plan stated, “Shell’s
Beaufort Sea Regional Exploration [Spill Plan] was unconditionally approved on 11
March 2010 and is a fundamental component for the planned exploration drilling
program. The latest revision . . . has been submitted to [BSEE] as a separate
document.” The exploration plan then compared the worst case scenario for its
8

(...continued)
(a) Oil spill response planning. The material required under paragraph
(a)(1) or (a)(2) of this section:
(1) An Oil Spill Response Plan (OSRP) for the facilities you will use
to conduct your exploration activities prepared according to the
requirements of 30 CFR part 254, subpart B; or
(2) Reference to your approved regional OSRP (see 30 CFR 254.3) to
include:
(i) A discussion of your regional OSRP;
(ii) The location of your primary oil spill equipment base and
staging area;
(iii) The name(s) of your oil spill removal organization(s) for
both equipment and personnel;
(iv) The calculated volume of your worst case discharge
scenario (see 30 CFR 254.26(a)), and a comparison of the
appropriate worst case discharge scenario in your approved
regional OSRP with the worst case discharge scenario that
could result from your proposed exploration activities; and
(v) A description of the worst case discharge scenario that could
result from your proposed exploration activities (see 30 CFR
254.26(b), (c), (d), and (e)).

Shell did not attach a copy of a facility-specific oil spill response plan to its
exploration plan under 30 C.F.R. § 550.219(a)(1). It therefore must satisfy the
alternate requirements of § 550.219(a)(2).
-14-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 15 of 27

exploration activities to the worst case scenario in the revised oil spill response plan
submitted to BSEE. While the exploration plan “reference[d]” the approved 2010
spill plan, it did not make worst case discharge comparisons based on that spill plan
as required by 30 C.F.R. § 550.219(a)(2)(iv). Rather, the exploration plan’s worst
case discharge comparisons were based on the estimated discharge in the revised
spill plan, which was still undergoing review.
Nevertheless, BSEE’s approval of the revised spill response plan on March
28, 2012, renders petitioners’ challenge to this inconsistency in the exploration plan
moot. “The basic question in determining mootness is whether there is a present
controversy as to which effective relief can be granted.” Nw. Envtl. Def. Ctr. v.
Gordon, 849 F.2d 1241, 1244 (9th Cir. 1988). We have held that challenges to
prior biological opinions for river hydropower system operations became moot
upon issuance of superseding biological opinions because we could no longer grant
effective relief as to the now non-operative biological opinions. See Am. Rivers v.
Nat’l Marine Fisheries Serv., 126 F.3d 1118, 1124 (9th Cir. 1997); Idaho Dep’t of
Fish & Game v. Nat’l Marine Fisheries Serv., 56 F.3d 1071, 1074–75 (9th Cir.
1995). We are faced with a similar situation: Shell’s revised spill plan was
approved in 2012, and therefore Shell’s exploration plan now references and makes
the required worst case discharge scenario comparison to an approved spill plan.
-15-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 16 of 27

The informational requirements of 30 C.F.R. § 550.219(a)(2) are satisfied, and there
is no relief we can now provide petitioners to redress their concerns.
We also reject petitioners’ argument (which is, in any event, waived because
it was raised for the first time at oral argument) that Shell amended its oil spill
response plan after submitting it to BSEE, and that therefore the spill plan approved
by BSEE included different oil spill trajectories, equipment, fleet size, and
techniques than did the spill plan discussed in the exploration plan. Given that
petitioners conceded at oral argument that Shell’s amendments to the approved
2012 spill plan did not change the worst case discharge numbers discussed in the
exploration plan, these differences are not relevant, and therefore this argument also
fails.
In light of BSEE’s approval of Shell’s revised plan in March 2012, we
dismiss petitioners’ claim as moot.
B
We next consider petitioners’ assertion that BOEM erred in approving Shell’s
exploration plan because the plan included a well-capping stack and containment
system as part of its proposed response to oil spills, but did not provide all the
information required under the OCSLA regulations. Specifically, 30 C.F.R.
§ 550.213(d) requires an exploration plan to include “[a] description and discussion
-16-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 17 of 27

of any new or unusual technology (see definition under § 550.200) you will use to
carry out your proposed exploration activities.” 9 The regulations define “new or
unusual technology” to include equipment or procedures that “[h]ave not been used
previously or extensively in a BOEM OCS Region,” “[h]ave not been used
previously under the anticipated operating conditions,” or “[h]ave operating
characteristics that are outside the performance parameters established by this part.”
30 C.F.R. § 550.200. Neither OCSLA nor its implementing regulations define the
term “description and discussion” or explain the level of specificity necessary to
satisfy the regulation’s requirement to provide “general information,” see id.
§ 550.213(d), thus leaving it to BOEM to determine whether the information
provided is sufficient. See 43 U.S.C. § 1340(c)(1); Lands Council, 537 F.3d at
1000.

9

Section 550.213(d) provides:

The following general information must accompany your EP: . . .
(d) New or unusual technology. A description and discussion of any
new or unusual technology (see definition under § 550.200) you will
use to carry out your proposed exploration activities. In the public
information copies of your EP, you may exclude any proprietary
information from this description. In that case, include a brief
discussion of the general subject matter of the omitted information. If
you will not use any new or unusual technology to carry out your
proposed exploration activities, include a statement so indicating.
-17-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 18 of 27

We agree that the well-capping stack and containment system described in
Shell’s exploration plan meets the definition of new and unusual technology
because the system has never been used in BOEM’s Alaska region or in Arctic
drilling conditions. See 30 C.F.R. § 550.200. Nevertheless, we reject petitioners’
argument that BOEM was arbitrary and capricious in approving the plan, because
BOEM could reasonably conclude that the exploration plan provided an adequate
description and discussion of the technology. The exploration plan’s sevenparagraph explanation of the well-capping stack and containment system included a
description of the design (blowout preventer equipped with spacer spools and rams
for pumping kill weight fluid into the well, with all equipment designed for
conditions found in the Arctic), proposed location (warm-stored aboard a
designated vessel in Alaska), and planned implementation of the technology. Given
the deference we owe BOEM’s interpretation of its own regulations, we cannot say
that BOEM acted arbitrarily or capriciously in concluding that this description and
discussion satisfied the informational requirements of 30 C.F.R. § 550.213(d). See
Auer v. Robbins, 519 U.S. 452, 461 (1997) (an agency’s interpretation of its own
regulations is “controlling unless ‘plainly erroneous or inconsistent with the

-18-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 19 of 27

regulation’” (quoting Robertson v. Methow Valley Citizens Council, 490 U.S. 332,
359 (1989))).10
IV
We next turn to petitioners’ argument that BOEM erred in approving the
exploration plan because the agency did not explain how it reconciled
inconsistencies in Shell’s 2011 plan regarding the feasibility of the proposed wellcapping stack and containment system and the time for drilling a relief well.
A
Petitioners first argue that BOEM erred in not explaining how it reconciled
Shell’s statements in its pre-2011 oil spill response plans that “proven technology
is not available” for well capping and “well capping would not be an effective
10

To the extent petitioners are making the more substantive argument that
BOEM erred by failing to analyze the technical feasibility of the well-capping
stack and containment system, their argument fails. BOEM’s review does not
extend to such issues, which are considered by BSEE when reviewing and
approving Shell’s oil spill response plan, see 30 C.F.R. part 254, and application
for permit to drill, id. § 250.417. See Edwardsen, 268 F.3d at 790 (declining to
review the substantive adequacy of an oil spill response plan because jurisdiction
for such review resides in the district court in the first instance). For the same
reason, we reject petitioners’ contention that BOEM’s approval of the exploration
plan contravenes 30 C.F.R. § 250.107(c), which requires use of the best available
and safest technology (BAST). BSEE, not BOEM, is tasked with ensuring BAST
compliance, and we lack jurisdiction to review BSEE’s technical analyses. See 76
Fed. Reg. at 64,435 (stating that 30 C.F.R. § 250.107 “establishes the expectations
for operators to protect health, safety, and the environment, [and] these
responsibilities fall under the authority of BSEE”).
-19-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 20 of 27

option for regaining well control while operating from a moored vessel,” with its
statement in the 2011 exploration plan that “subsea capping equipment and
containment capabilities . . . would be implemented if all other kick control methods
fail.” We disagree.
First, there is no statutory or regulatory requirement that BOEM include a
statement identifying and reconciling inconsistent positions taken by a permit
applicant. Nor does BOEM’s failure to do so make its approval of the exploration
plan arbitrary and capricious under the APA. While an agency must present an
adequate explanation for a decision that contradicts the agency’s previous decision,
see, e.g., Humane Soc’y v. Locke, 626 F.3d 1040, 1058 (9th Cir. 2010), BOEM did
not adopt Shell’s past statements, and therefore the agency is not taking an
inconsistent position. Rather, it is Shell, not BOEM, that reassessed the feasibility
of a well-capping stack and containment system in light of new information, namely
that “[w]ell capping techniques have improved, especially since [their] frequent
application during the Iraq-Kuwait conflict in the early 1990s, and the recent
Macondo [Deepwater Horizon oil spill] incident.” Because OCSLA requires
industries to adopt the best available and safest technology, 30 C.F.R. § 250.107(c);
H.R. Rep. No. 95-590, at 97 (1977), reprinted in 1978 U.S.C.C.A.N. 1450, which

-20-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 21 of 27

would include technological advances, Shell’s reassessment is consistent with the
regulatory scheme.
More important, BOEM’s failure to expressly address Shell’s changed
position on well-capping technology does not cast doubt on BOEM’s decision that
the activities in the exploration plan will not “probably cause serious harm or
damage to life (including fish and other aquatic life), to property, . . . or to the
marine, coastal, or human environment.” See 43 U.S.C. §§ 1334(a)(2)(A)(i),
1340(c)(1); see also 30 C.F.R. §§ 550.202, 550.233. First, the well-capping stack
and containment system challenged by petitioners is not the sole means identified in
the exploration plan for responding to a well blowout and oil spill. Rather, Shell
has several response tools at its disposal, including surface control options and
relief well capabilities. As BOEM reasonably concluded, “Shell’s proposed
subsurface collection system will be an added tool for responding to a potential well
control incident where fluids flow and will increase response preparedness, but is
not necessary or required to comply with” the regulations. Second, BOEM’s
conclusion that well-capping technology is now feasible in the Arctic is supported
by substantial evidence in the record. See 43 U.S.C. § 1349(c)(6). BOEM found
that “[s]ubsea containment technology has been successfully used in the past,”
including by Shell at the NaKika and Mars sites and by British Petroleum during
-21-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 22 of 27

the Deepwater Horizon spill, and that “most major components for such a system
are available and have been field tested.” Whether well-capping technology is now
feasible in the Arctic is a technical issue that lies squarely within the agency’s
scientific expertise and, therefore, is accorded great deference by a reviewing court.
See Ctr. for Biological Diversity, 588 F.3d at 707; see also Lands Council, 537 F.3d
at 993 (“[Courts] are not free to impose on the agency [their] own notion of which
procedures are best or most likely to further some vague, undefined public good.
Nor may [courts] impose procedural requirements not explicitly enumerated in the
pertinent statutes.” (internal citations, alterations, and quotation marks omitted)).
Accordingly, we conclude that the inconsistency in Shell’s prior statements does
not invalidate BOEM’s approval of Shell’s current exploration plan.
B
We apply similar reasoning to petitioners’ contention that BOEM acted
arbitrarily and capriciously when it approved the exploration plan without
reconciling evidence in the record that runs contrary to Shell’s estimate of the time
necessary to drill a relief well. Petitioners argue that Shell’s estimate for the time it
will take to drill the planned production wells is far longer than its estimate for the
time it will take to drill an emergency relief well, and they further argue that Shell

-22-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 23 of 27

“failed to provide the agency any rational explanation for why it expects to drill a
relief well so much faster.” 11
We reject petitioners’ contention that BOEM acted arbitrarily by failing to
state on the record how it reconciled these different estimates. As noted above,
there is no requirement that BOEM do so. Moreover, BOEM’s decision to rely on
Shell’s time estimate for drilling relief wells was “supported by substantial evidence
on the record considered as a whole” and is therefore “conclusive.” 43 U.S.C.
§ 1349(c)(6). The well control plan submitted as a part of Shell’s exploration plan
explained that it would take a shorter time to drill relief wells than to drill
exploratory wells because “[r]elief well drilling is rapid,” relief wells “intercept a
deep blowout at some point above the total vertical depth,” which saves time, and in
an emergency situation “all available resources are quickly accessed and funneled
into drilling the relief well and killing the blowout as quickly as possible.”
BOEM’s conclusion that Shell provided a realistic estimate of the time it would
take to drill a relief well is a technical issue that lies squarely within the agency’s

11

Specifically, Shell estimated that it would take 44 days to drill the planned
wells at its Torpedo prospect but only 25 days to drill an emergency well at the
Torpedo site, and that it would take 34 days to drill the planned wells at its Sivulliq
prospect, but only 20 days to drill a relief well at the site.
-23-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 24 of 27

scientific expertise and is therefore entitled to “great deference.” Ctr. for Biological
Diversity, 588 F.3d at 712.
V
Finally, we consider petitioners’ argument that BOEM acted arbitrarily by
approving Shell’s exploration plan on the condition that Shell provide additional
information about the “procedures for deployment, installation[,] and operation of
the system under anticipated environmental conditions.” This argument likewise
fails. As noted above, BOEM must approve an exploration plan that is consistent
with OCSLA and its implementing regulations unless the proposed activity will
“probably cause serious harm or damage to life (including fish and other aquatic
life), to property, . . . or to the marine, coastal, or human environment.” 43 U.S.C.
§§ 1334(a)(2)(A)(i), 1340(c)(1); see also 30 C.F.R. § 550.233. BOEM takes the
position that after approving a plan, it may still “require [the applicant] to meet
certain conditions, including those to provide monitoring information.” 30 C.F.R.
§ 550.233(b)(1).12 According to BOEM, its approval here followed this path:

12

Section 550.233(b)(1) provides that within thirty days of the exploration
plan’s submission or last modification,
the Regional Supervisor will take one of the following actions:
The regional supervisor will (1) approve your EP, [i]f [i]t complies
(continued...)
-24-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 25 of 27

BOEM concluded that Shell’s exploration plan complied with applicable
requirements and would not cause serious harm or damage to the environment, but
nevertheless required Shell to provide further documentation of its well-capping
stack and containment system, as well as to meet certain additional conditions. This
interpretation by BOEM of its own regulations is controlling unless plainly
erroneous or inconsistent with the regulation. Auer, 519 U.S. at 461. Further, the
conditions at issue here, which require Shell to seek additional authorizations before
commencing drilling, are consistent with the statutory scheme’s requirement that a
leaseholder with an approved exploration plan obtain a permit to drill and other
approvals that “conform to the activities described in detail in [the] approved
[exploration plan]” before conducting exploration activities. 30 C.F.R. § 550.281;
see also 43 U.S.C. § 1340(d). For these reasons, petitioners’ argument that BOEM
impermissibly conditioned its approval is without merit.
VI

12

(...continued)
with all the applicable requirements, [a]nd then [t]he Regional
Supervisor will notify you in writing of the decision and may require
you to meet certain conditions, including those to provide monitoring
information.
(ellipses omitted).
-25-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 26 of 27

The Secretary’s recent division of MMS’s responsibilities between BSEE and
BOEM makes it clear that BOEM’s duty here is limited. Within the thirty days
provided by statute, BOEM had to determine whether Shell’s exploration plan
complied with OCSLA’s requirements and would not “probably cause serious harm
or damage” to life, property or the human, marine, or coastal environment. 43
U.S.C. §§ 1334(a)(2)(A)(i), 1340(c)(1); see also 30 C.F.R. §§ 550.202, 550.233.
Here, BOEM’s decision that Shell’s exploration plan complied with OCSLA’s
requirements is entitled to deference and is supported by the record as a whole. We
deny the expedited petitions.13
DENIED.

13

Because we deny the expedited petitions, we do not reach petitioner’s
argument regarding whether a proper remedy for a deficiency is vacatur or remand.
-26-

Case: 11-72891

05/25/2012

ID: 8192953

DktEntry: 92

Page: 27 of 27

Counsel
Holly A. Harris (argued), Earthjustice, Juneau, AK; Christopher Winter, Crag Law
Center, Portland, OR, for petitioners Native Village of Point Hope, et al. and Inupiat
Community of the Arctic Slope.
David C. Shilton (argued), U.S. Department of Justice, Washington, D.C., for
respondent Ken Salazar, Secretary of the Interior, and Bureau of Ocean
Management.
Kathleen M. Sullivan (argued), Quinn Emanuel Urquhart & Sullivan, LLP, New
York, NY; Kyle W. Parker, Crowell & Moring LLP, Anchorage, AK, for
respondent-intervenor Shell Offshore Inc., et al.
Rebecca Kruse, State of Alaska Department of Law, Anchorage, AK, for
respondent-intervenor the State of Alaska.

-27-