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January 22, 2014 --- Vol. 20, No. 06January 2014

9th Circuit court upholds appeal against Chukchi Sea lease sale

The U.S. Court of Appeals has found that the environmental impact statement, or EIS, for the 2008 federal oil and gas lease sale for the Chukchi Sea outer continental shelf is flawed; the court has remanded the document back to the federal District Court for Alaska for further action. The absence of a legally valid EIS renders the lease sale itself invalid unless, presumably, the deficiency in the environmental document is corrected.

In a majority opinion, a panel of 9th Circuit judges ruled that the Department of the Interior had inappropriately used an estimate of 1 billion barrels of economically recoverable oil in assessing the potential environmental impacts of the lease sale. This estimate of recoverable oil was “arbitrary and capricious” the judges said.

Shell, ConocoPhillips, Statoil and other companies bought leases in the sale and Interior received $2.6 billion in bonus bids. Shell has started exploration drilling in its leases and hopes to continue with that drilling, perhaps as soon as the summer of 2014.

A finding that the lease sale was invalid presumably raises question marks over the legal status of the leases.

The appeal against the EIS, launched by the Native Village of Point Hope, the Inupiat Community of the Arctic Slope and 12 environmental organizations in the District Court for Alaska, dates back to 2008. Initially the District Court upheld the appeal. But after Interior made some changes to the EIS, as mandated by the court, the court accepted the document. The appellees subsequent elevated the case to the 9th Circuit in April 2012. The 9th Circuit has now made its ruling in the case.

—Alan Bailey

See story in Jan. 26 issue, available online at 11 a.m. Friday, Jan. 24 at www.PetroleumNews.com

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