Yesterday a coalition of Alaska Native and environmental groups won against Arctic oil drilling in a Court of Appeals in the US. The Court ruled that the US government sold leases in the Chukchi Sea in 2008 illegally. Here’s a quick review of the history of the case and what the decision might mean.
What happened in 2008?
The US government sold rights to a portion of its Chukchi Sea resources for oil drilling. Seven companies took part in the sale, with Shell being the biggest bidder: the company bid more than $10 million on several leases that received no other bids, and ended up spending $2.1bn on its portion of the leases on sale, making Shell more invested in US Arctic drilling than any other company.
Eighteen Alaska Native and conservation organizations challenged the government decision to hold the lease sale. They argued that the government decision to hold Lease Sale 193 was arbitrary because the underlying environmental analysis was illegal. Steve Oomittuk, Point Hope City Mayor, said:
The people of TIKIGAQ [traditional name for the people of Point Hope] have hunted and depended on the animals that migrate through the Chukchi Sea for thousands of years. This is our garden, our identity, our livelihood. Without it we would not be who we are today. Even at this present day and time the animals from these waters shelter, clothe, and feed us. We would be greatly impacted if anything happened to our ocean and the animals that migrate through the Chukchi Sea. We oppose any activity that will endanger our way of life and the animals that we greatly depend on.
The plaintiffs won this first case, and the district court required the government to prepare a supplemental environmental analysis. During the two years the analysis was being prepared, no drilling was allowed in the Chukchi Sea.
What just happened?
In the current court case, the coalition of Native and environmental groups challenged the supplemental environmental analysis that the government had prepared. Yesterday the court of appeals ruled in favour of the plaintiffs. According to the summary of the ruling, in the panel’s opinion the government
took account of incomplete or unavailable information. The panel held … that the reliance in the final Environmental Impact Statement on a one million barrel estimate of total economically recoverable oil was arbitrary and capricious.
The court did not decide on what it would compel the government to do now, relegating that decision back to the district court.
It’s possible that the district court proceedings will take several months. The court may order another environmental assessment to be prepared and for no drilling to take place while that happens, or, less likely, it may void the leases altogether. In any case, the ongoing litigation is likely to mean another delay for Shell’s plans to drill.
Shell’s board will have to face a lot of questions internally and with shareholders. Why did the company go ahead and boldly announce drilling plans for 2014 if it knew that an ongoing court case could freeze or void their licenses? Why are they spending billions of dollars in Arctic exploration – a very risky prospect – while profits plunge? And who’s responsible for these decisions?