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Date: 11-21-2008

Case Style: Alaska Wilderness League, et al. v. Dirk Kempthorne, et al.

Case Number: 07-71457

Judge: D.W. Nelson

Court: United States Court of Appeals for the Ninth Circuit on appeal from the District of Alaska, Anchorage

Plaintiff's Attorney: Christopher Winter, Crag Law Center, Portland, Oregon; Deirdre A. McDonnell, Earthjustice, Juneau, Alaska, for the petitioners.

Defendant's Attorney: David C. Shilton, United States Department of Justice, Washington, D.C., for the respondent.

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

Description: 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 multisale 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.

1MMS’s approval of the EP was subject to many conditions. Shell had to: (1) obtain a determination from the State of Alaska that its operations were consistent with the Alaska Coastal Management Plan; (2) take measures to avoid conflicts with subsistence harvests; and (3) get approval of its project from both the National Marine Fisheries Service and the Fish and Wildlife Service. The State of Alaska approved Shell’s plan on June 19, 2007. Shell reached a conflict avoidance agreement with local whaling captains on July 24, 2007. On July 31, 2007, the Fish and Wildlife Service issued its Letter of Authorization. The National Marine Fisheries Service approved the project on October 25, 2007.

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 shore. It stretches from Point Barrow and the Chukchi Sea in the west, to the Canadian border in the east. The Beaufort Sea is home to a wide range of fish, mammal, and bird species. The Western Arctic stock of bowhead whales lives within the Beaufort region. Bowhead whales are designated as an endangered species under 50 C.F.R. § 17.11(h). These creatures may live over 100 years and do not reach sexual maturity until fifteen to twenty years. Once they attain maturity, they reproduce roughly every three years.

The Western Arctic group migrates twice annually. In the spring, they move eastward from the Bering Strait, through the Alaskan Beaufort Sea, and into summer feeding grounds in the Canadian Beaufort Sea. Most calves are born in the Chukchi Sea prior to entering the Beaufort. During September and October, the whales reverse course and head back to the Bering Strait. The whales spend considerable time feeding in the Alaskan Beaufort during both phases of their migratory pattern.

Bowhead whales are sensitive to noise in the marine environment.

The noise generated by icebreakers and drillships has the potential to cause serious consequences for bowhead whales. The impacts of a specific project would vary depending on the placement, quantity, and quality of vessels operating at each site. High levels of underwater noise can cause temporary or permanent hearing damage. Even low levels of noise can affect the biological functions and behavioral patterns of marine mammals. In particular, increased noise can cause avoidance behaviors that displace migratory routes.

Females traveling with young calves may be especially susceptible to harm, as disturbances could separate a dependent from its caregiver.

The Inupiat Eskimos reside on the north coast of Alaska and have long relied upon the resources of the Beaufort Sea and its environs for subsistence. Eight different villages are scattered along the coast. As noted by the multi-sale EIS: [T]his close relationship between the spirit of a people, their social organization, and the cultural value of subsistence hunting may be unparalleled when compared with other areas in America where energy development is taking place. The Inupiat’s continuing strong dependence on subsistence foods, particularly marine mammals and caribou, creates a unique set of potential effects from onshore and offshore oil exploration and development on the social and cultural system.

Subsistence activities are an important component of the Inupiat’s long-term health, as this diet and lifestyle protects against degenerative health risks. Further, as the multi-sale EIS states, “[s]ubsistence activities are assigned the highest cultural values by the Inupiat and provide a sense of identity in addition to being an important economic pursuit.”

Bowhead whales are an important subsistence resource for the Inupiat. The harvest of bowhead whales is regulated by the International Whaling Commission, which sets guidelines on the number of whales that can be taken for subsistence purposes. The whale hunt is a dangerous and arduous process for Inupiat whalers, but it produces large amounts of meat consumed by Inupiat communities. Shell’s proposed activities take place in and adjacent to the subsistence bowhead whale hunting grounds for the villagers of both Nuiqsut and Kaktovik. As a result, there is the potential that Shell’s activities may disrupt the Inupiat whaling activities.

STANDARDS OF REVIEW

Review of claims under NEPA and OCSLA are governed by the Administrative Procedure Act, 5 U.S.C. § 706 (“APA”). Klamath-Siskiyou Wildlands Ctr. v. Bureau of Land Mgmt., 387 F.3d 989, 992 (9th Cir. 2004). “The agency’s actions, findings, and conclusions will be set aside if they are ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’ ” Id. (quoting 5 U.S.C. § 706(2)(A)). Our review under the APA is “narrow but searching and careful.” Gifford Pinchot Task Force v. U.S. Fish & Wildlife Serv., 378 F.3d 1059, 1065 (9th Cir. 2004) (internal quotation marks omitted). OCSLA further states that an agency’s findings, “if supported by substantial evidence on the record considered as a whole, shall be conclusive.” 43 U.S.C. § 1349(c)(6).

We review a decision to forego preparation of an environmental impact statement under the arbitrary and capricious standard. Nat’l Parks & Conservation Ass’n v. Babbitt, 241 F.3d 722, 730 (9th Cir. 2001). We look to whether the agency has: (1) taken a “hard look” at the potential impact of its actions; (2) considered all of the relevant factors in its decision; and (3) provided an adequate statement of reasons to explain why a project’s impacts are insignificant. Id. We will not substitute our judgment for that of the agency, but must “engage in a substantial inquiry” and a “thorough, probing, in-depth review.” Native Ecosystems Council v. U.S. Forest Serv., 418 F.3d 953, 960 (9th Cir. 2005) (quoting Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415-16 (1971)).

DISCUSSION

I. Jurisdiction over NSB and REDOIL’s Petitions for Review

[1] This court has jurisdiction over all claims before us. Respondents unsuccessfully argue that NSB and REDOIL’s petitions should be dismissed as untimely. OCSLA’s jurisdictional provision provides that a petition for review must be filed with the court within sixty days of any contested action. 43 U.S.C. § 1349(c)(3). Respondents assert that the “action” at issue here is MMS’s approval of Shell’s EP on February 15, 2007. Under this logic, the sixty-day time limit expired on April 16, 2007, and jurisdiction would therefore be barred over the petitions filed by NSB on May 15, 2007, and REDOIL on May 22, 2007.

[2] However, since NSB and REDOIL utilized the administrative appeal process, the sixty-day deadline did not begin to run on February 15, 2007. NSB and REDOIL filed an optional appeal of the agency’s decision with the IBLA on April 13, 2007, pursuant to 30 C.F.R. § 290.2. This optional appeal was filed within the sixty-day timeline established by 30 C.F.R. § 290.3. On May 4, 2007, the IBLA declined to exercise its jurisdiction and stayed further proceedings pending the outcome of AWL’s petition, already filed in this court. The statute of limitations was tolled during the administrative appeal process, and the sixty-day period to file a petition for review began to run after the IBLA issued its decision on May 4.2 See ICC v. Bhd. of Locomotive Eng’rs, 482 U.S. 270, 284-

2The IBLA’s May 4, 2007, decision “suspended” the administrative proceedings in light of the fact that the IBLA would lose jurisdiction over the appeals when the administrative record was filed with this Court as part of AWL’s petition for review. See 43 U.S.C. § 1349(c)(7); see also id. § 1349(c)(5) (“The Secretary shall file in the appropriate court the record . . . .”) (emphasis added). The IBLA suspended the proceedings because, at the time of its decision, it did not know whether the adminis- 85 (1987) (holding that a timely petition for administrative review stops the running of the statute of limitations). By filing on May 15 and May 22, the organizations petitioned for review well within the statutory time period.3

[3] Respondents’ argument that tolling does not apply in this context is unavailing. For purposes of judicial review, the filing of an optional administrative appeal renders MMS’s February 15, 2007 decision non-final. See Acura of Bellevue v. Reich, 90 F.3d 1403, 1407 (9th Cir. 1996) (“We hold that exercise of an optional appeal to a Department ALJ renders the initial Administrator’s decision nonfinal for purposes of judicial review under the APA.”). The statute of limitations was tolled while the administrative appeal was pending. See, e.g., Bhd. of Locomotive Eng’rs, 482 U.S. at 284-85.

Respondents assert that the Supreme Court’s decision in Stone v. INS, 514 U.S. 386 (1995), limits the availability of tolling in this context. To the contrary, Stone in fact reiterates the strength of the “conventional tolling rule” during administrative appeals. 514 U.S. at 391-92, 398. That case dealt with trative record had already been filed by MMS or when it would be filed. Thus, it lacked the information necessary to dismiss the appeals for lack of jurisdiction. Nonetheless, the IBLA’s May 4, 2007, decision was “final” because it effectively terminated the appeals: the IBLA could not reopen the appeals after the filing of the administrative record divested the IBLA of jurisdiction because, under § 1349(c)(7), the decision issued by this Court would be “final.”

3The dissent ignores Brotherhood of Locomotive Engineers in suggesting that the sixty-day time limit ran during the period between the Secretary’s decision and the filing of the administrative appeals and that NSB and REDOIL thus had only three days to file their petitions for review upon completion of the IBLA proceedings. Under Brotherhood of Locomotive Engineers, the statutory time limit does not begin to run until the administrative appeal is terminated. See 482 U.S. at 276 (considering only whether the petition for administrative review was filed “within the period prescribed by” the agency’s rules).

a very specific jurisdictional provision in the Immigration and Nationality Act (“INA”). The statute stated: [W]henever a petitioner seeks review of an order under this section, any review sought with respect to a motion to reopen or reconsider such an order shall be consolidated with the review of the order.

8 U.S.C. § 1105a(a)(6) (1988) (current version at 8 U.S.C. § 1252(b)(6) (2005)). The Court examined the statutory language and the legislative history to conclude that the “statute is best understood as reflecting an intent on the part of Congress that deportation orders are to be reviewed in a timely fashion after issuance, irrespective of the later filing of a motion to reopen or reconsider.” Stone, 514 U.S. at 394. The Court deviated from the general tolling principle because of specific indications from Congress that it intended such a result. Id. at 393 (“Congress chose to depart from the ordinary judicial treatment of agency orders under reconsideration”); see also id. at 398 (this provision “is best understood as reflecting [Congress’s] expectation that in the particular context of INS deportation orders the normal tolling rule will not apply.”).

The jurisdictional statute in OCSLA is not analogous to the INA statute at issue in Stone. The statute in Stone directly addressed the relationship between judicial review and agency reconsideration. See 8 U.S.C. § 1105a(a)(6) (1988). OCSLA’s jurisdictional provision uses standard language that does not suggest any intent to diverge from general tolling principles.

See 43 U.S.C. § 1349. The statute generically states that petitions for review must be filed “within sixty days after the date of such action.” Id. § 1349(c)(3). There is no indication here that Congress intended to depart from established tolling principles.

Additionally, permitting tolling does not frustrate the prompt implementation of MMS action. The regulations provide that the agency’s decisions remain in effect during an administrative appeal, unless a stay is granted. 30 C.F.R. § 290.7(a). MMS decisions can therefore have immediate effect, unless a reviewing body has legitimate reason to grant a stay.

[4] The dissent erroneously argues that 43 U.S.C. § 1349(c) prohibits any internal administrative appeal of the Secretary’s decision to approve an exploration plan. However, that section prohibits only other forms of judicial review and is silent as to administrative review. Sections (c)(1) through (c)(3) by their own terms apply only to “judicial review,” and sections (c)(5) through (c)(7) establish rules for that judicial review.

The only possible basis for the dissent’s conclusion is section (c)(4), which provides that “[a]ny action of the Secretary specified in paragraph (1) or (2) shall only be subject to review pursuant to the provisions of this subsection, and shall be excluded from citizen suits which are permitted pursuant to subsection (a) of this section.” Id. Notably, the latter half of § 1349(c)(4), like the remainder of § 1349(c), is concerned exclusively with judicial review. In this statutory context, it is clear that, just like every other provision of § 1349(c), the “review” covered by the first half of § 1349(c)(4) is judicial review: Section 1349(c)(4) simply preempts other statutory avenues for judicial review, such as the Administrative Procedure Act. Because § 1349(c) is silent as to the availability or timing of administrative review, general principles of administrative tolling, as exemplified in Brotherhood of Locomotive Engineers, apply, and the sixty-day deadline did not begin to run until the IBLA issued its decision on May 4, 2007.

[5] NSB and REDOIL did not relinquish their opportunity for judicial review by opting to file an administrative appeal first. The statute of limitations was tolled during the appeal process, and petitions for review were filed well within sixty days after the IBLA issued its order. Accordingly, we have jurisdiction over all parties.

II. Compliance With NEPA “Hard Look” Review

A. Statutory Background

OCSLA provides for a four-stage process for oil and gas development, with NEPA review at each stage. See Sec’y of the Interior v. California, 464 U.S. 312, 337 (1984) (delineating the “four distinct statutory stages to developing an offshore well,” each requiring “separate regulatory review”). The process involves: (1) preparation of a lease-sale schedule; (2) lease sales; (3) exploration of the lease-sale area; and (4) development and production. Id. The continuing review process allows an agency to adjust its analysis to make sure energy production activities are conducted in an environmentally sound manner. The case before us involves exploration, the third stage of the process. At this phase, a lessee submits an EP for review and approval. 43 U.S.C. § 1340(c). The agency has thirty days to review the EP. Id. § 1340(c)(1). The agency must disapprove the plan if it would result in “serious harm or damage” to the marine, coastal, or human environment. See 43 U.S.C. § 1334(a)(2)(A)(i).

As noted by the Supreme Court, “NEPA declares a broad national commitment to protecting and promoting environmental quality.” Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 348 (1989). NEPA ensures that an agency “will have available, and will carefully consider, detailed information concerning significant environmental impacts; it also guarantees that the relevant information will be made available to the larger audience that may also play a role in both the decisionmaking process and the implementation of that decision.” Id. at 349.

NEPA requires that, “to the fullest extent possible,” all federal agencies shall prepare an EIS when considering proposed activities “significantly affecting the quality of the human environment.” 42 U.S.C. § 4332; Robertson, 490 U.S. at 348; see also Blue Mountains Biodiversity Project v. Blackwood, 161 F.3d 1208, 1212 (9th Cir. 1998) (threshold question in NEPA challenge is “whether a proposed project will ‘significantly affect’ the environment, thereby triggering the requirement for an EIS” (quoting 42 U.S.C. § 4332(2)(C)). An agency may first prepare a less exhaustive EA to determine whether an EIS is necessary. 40 C.F.R. § 1508.9; Nat’l Parks & Conservation Ass’n v. Babbitt, 241 F.3d 722, 730 (9th Cir. 2001). An EA is a “concise public document” that “[b]riefly provide[s] sufficient evidence and analysis for determining whether to prepare an [EIS] or a [FONSI].” 40 C.F.R. § 1508.9(a). “Because the very important decision whether to prepare an EIS is based solely on the EA, the EA is fundamental to the decision-making process.” Metcalf v. Daley, 214 F.3d 1135, 1143 (9th Cir. 2000). An EA is sufficient if it provides enough “evidence and analysis for determining whether to prepare an [EIS] or a [FONSI].” Anderson v. Evans, 371 F.3d 475, 488 (9th Cir. 2004). Federal regulations encourage agencies to tier their environmental analyses in order to streamline and focus the review process. 40 C.F.R. § 1502.20 (“Whenever a broad [EIS] has been prepared . . . the subsequent statement or environmental assessment need only summarize the issues discussed in the broader statement and incorporate discussions from the broader statement by reference and shall concentrate on the issues specific to the subsequent action.”).

[6] “[A]n EIS must be prepared if ‘substantial questions are raised as to whether a project . . . may cause significant degradation of some human environmental factor.’ ” Idaho Sporting Congress v. Thomas, 137 F.3d 1146, 1149 (9th Cir. 1998) (quoting Greenpeace Action v. Franklin, 14 F.3d 1324, 1332 (9th Cir. 1992)). If an agency finds an EIS is not required and issues a FONSI, it must provide a “convincing statement of reasons” to explain its decision. Blue Mountains, 161 F.3d at 1212; see also 40 C.F.R. §§ 1501.4(e), 1508.13. An agency cannot rely on mere “conclusory assertions that an activity will have only an insignificant impact on the environment.”

Ocean Advocates v. U.S. Army Corps of Eng’rs, 402 F.3d 846, 864 (9th Cir. 2005). Rather, the agency must demonstrate that it took the requisite “hard look” at the potential environmental impacts of a project, thereby justifying its action. Blue Mountains, 161 F.3d at 1212; Ocean Advocates, 402 F.3d at 864; Kern v. U.S. Bureau of Land Mgmt., 284 F.3d 1062, 1066-67 (9th Cir. 2002).

To provide guidance on how NEPA should be applied, the Council on Environmental Quality promulgated regulations explaining what factors an agency must consider in determining if a project’s potential effects are “significant.” See 40 C.F.R. § 1508.27. This requires “considerations of both context and intensity.” Id. Context refers to the location and interests that would be affected by the proposed action. Id. § 1508.27(a). Intensity refers to “the severity of the impact.” Id. § 1508.27(b). In considering intensity, an agency should consider up to ten factors that shed light on the “significance” of a project. Id. Those factors include: the effect on public health and safety; the unique characteristics of the geographic area; the degree to which the effects on the quality of the human environment are likely to be highly controversial; the degree to which the possible effects are highly uncertain or involve unknown risks; and the possible impacts on an endangered or threatened species. Id. §§ 1508.27(b)(2), (3), (4), (5), (7).

B. Sufficiency of MMS’s Environmental Analysis

MMS has not provided a convincing statement of reasons explaining why Shell’s exploratory drilling plans at these specific sites would have an insignificant impact on bowhead whales and Inupiat subsistence activities. As a result, we are unpersuaded that MMS took the requisite “hard look” at the environmental impact of this project. There remain substantial questions as to whether Shell’s plan may cause significant harm to the people and wildlife of the Beaufort Sea region.

Respondents’ primary response is that, through the tiering process, the agency sufficiently analyzed all possible environ- mental impacts of this project. The EA is “tiered” to the multi-sale EIS and the EAs for Lease Sales 195 and 202 pursuant to 40 C.F.R. § 1502.20. According to Respondents, any analysis that is allegedly missing from the EA is adequately covered in those previous documents. Respondents point out that OCSLA only allows thirty days to approve an EP, see 43 U.S.C. § 1340(c)(1), and argue that this short statutory deadline encourages a streamlined review process. The agency may not, however, hide behind the cloak of its generalized multi-sale EIS. NEPA applies to all stages of the OCSLA cycle. Vill. of False Pass v. Clark, 733 F.2d 605, 614 (9th Cir. 1984). When the agency is tasked with assessing the environmental impacts of a particular exploration plan, it has a duty to take a hard look at the consequences of drilling in specific sites. As the agency itself noted in the multi-sale EIS, “[a]ny proposed exploration or development plans that may result for [the area] evaluated in this EIS, would require additional NEPA environmental analysis using site specific information.” MMS’s environmental analysis is inadequate because it fails to consider the impacts this specific project will have on bowhead whales and Inupiat subsistence activities.

1. Impacts on Bowhead Whales

MMS’s EA fails to take a hard look at whether Shell’s exploratory drilling program would have a “significant” effect on bowhead whales, an endangered species. See 40 C.F.R. § 1508.27(b)(9) (agency should consider “degree to which the action may adversely affect an endangered or threatened species”). The EA lacks sufficient analysis on the consequences of underwater noise and its impact on bowheads’ migratory routes. Although the presence of some negative effects does not mandate a finding of significant impact, the agency must “consider the degree of adverse effect on a species.” Env’t Protection Info. Center (EPIC) v. U.S. Forest Serv., 451 F.3d 1005, 1010-11 (9th Cir. 2006); see also Native Ecosystems Council, 428 F.3d at 1240-41 (any mention of an adverse impact does not necessarily compel an EIS, but an agency should not use a “soft touch or brush-off of negative effects”).

[7] The major shortcoming of the agency’s environmental analysis is that it does not assess the impacts that would be felt by the bowhead whale population from a project in the migratory route that involves two drillships and two icebreakers. The multi-sale EIS envisions “[a] maximum of two drilling rigs” would be used during this time, and the EA “assumed that two drilling rigs with icebreaker support might operate during any year.” However, aside from nominally mentioning the possible extent of this project, the studies relied upon by the agency do not actually assess the potential significance of underwater noise from a drilling operation of this scope.

[8] The multi-sale EIS discusses, in a general sense, the impact of noise on bowhead whales, citing a number of studies that have been conducted on the topic. However, that document contains no studies that analyze the effects of noise from a project with two drillships and two icebreakers. The studies assessing the effect of noise in other situations suggest that bowheads respond to drilling noise by altering their migration speed and swimming direction to avoid closely approaching the noise sources. In discussing icebreaker noise, the multi-sale EIS states, “[e]ffects of an actual icebreaker on migrating bowheads, especially mothers and calves, could be biologically significant.” Moreover, studies cited in the multisale EIS use varying methodologies and come to inconclusive results. Many of these reports use noise simulations, but there is limited data on how bowheads would respond in an uncontrolled setting. The reports state: “There are no observations of bowhead reactions to icebreakers breaking ice,” and “playback results may somewhat understate the differences between truly undisturbed whales versus those exposed to playbacks.” The generalized information contained in the multi-sale EIS does not adequately demonstrate that the agency has taken a hard look at the effects of Shell’s project on bowhead whales. After making the observation that noise could cause significant biological effects, there is not additional information that supports why any specific project would not cause real harm to whale populations. In particular, it is not evident from the multi-sale EIS that a project using the type of equipment proposed by Shell would not have a significant impact on bowhead whales.

The EA does not cure this infirmity. The EA gives only a brief description of the level of noise the individual drillships in Shell’s proposal could make, but does not examine the combined effect of all vessels operating simultaneously. The agency’s analysis relies in large part on a biological opinion (“BiOp”) prepared by the National Marine Fisheries Service (“NMFS”) in 2006. MMS asserts that the BiOp “covers the proposed Shell operations” because it assumed a situation where two drilling rigs with icebreaker support would operate in an area covering up to twelve wells. But there is no indication that the BiOp in fact relies on studies involving two drillships and two icebreakers. The BiOp acknowledges that the “potential total adverse effects of long-term added noise, disturbance, and related avoidance of feeding and resting habitat . . . are unknown.” In addition, “[t]here has been no documented evidence that noise from previous OCS operations has served as a barrier to migration,” but “[c]oncentrations of loud noise and disturbance activities during the open water period have the potential to cause large numbers of bowheads to avoid using areas for resting and feeding for long periods of time . . . while the noise producing activities continue.” This analysis indicates that there are serious concerns and uncertainties about the manner in which the endangered bowhead population would respond to Shell’s three year exploratory drilling plan. Despite these concerns, the BiOp goes on to allege that “bowhead whales exposed to noise-producing activities . . . most likely would experience temporary, nonlethal effects.” It comes to the conclusion that “such exploratory drilling would not jeopardize the population.” This determination is not supported by the BiOp’s contrary assertions that noise could cause serious adverse effects.

MMS realizes the distinguishing characteristics between Shell’s specific proposal and the scope of prior studies, but does not then engage in any additional analysis. The agency admits in the EA that, “in the past, operations with one drill ship and associated icebreakers have displaced the migration slightly, and no whales were sighted between the operations and shore, but it is unknown what the increased level of effect of two proposed drillships and associated icebreakers and other attendant vessels would be.” In MMS’s own review of a 1993 monitoring study, the agency notes that the report “detected behavioral changes in bowheads around drillship operations near Camden Bay.” MMS goes on to state:

With regards to the MMS significance criteria, there is no evidence that the offshore displacement . . . persisted for more than a generation (about 17 years). So, the level of effect of a drillship in Camden Bay is probably not significant by MMS NEPA standards. However, the same type of displacement to the east of Kaktovik where whales frequently feed would affect growth and could have a more serious biological effect. Also, even though there isn’t a significant biological effect from in Camden Bay operations, there could be a significant sociocultural effect if the bowheads do not migrate back into the shoreward portion of the migration corridor as they approach Cross Island.

Notably, the EA also states that the “effect on bowheads is likely to be greater than for [the 1993 activities] because of Shell’s proposal to use two drillships, two large icebreakers, and several associated vessels.” Although the agency mentions the possibility for increased impacts on bowhead whales and the human populations who depend on them, it fails to take a hard look at whether a proposal of this magnitude will have significant impacts on this endangered species.

The agency’s attempt to rely upon a monitoring program as a mitigation measure is similarly ill-founded. This section of the EA ends with a discussion of “Stipulation No. 4” which requires that Shell conduct a site-specific whale monitoring program during its drilling operations. Instead of insisting on alternative mitigation measures or conducting a full EIS at this time, MMS states it “has the authority to modify approved operations to ensure that significant biological populations or habitats deserving protection are not subject to a threat of serious, irreparable, or immediate harm.”

[9] Federal regulations define “mitigation” as a way to avoid, minimize, rectify, or compensate for the impact of a potentially harmful action. 40 C.F.R. §§ 1508.20(a)-(e). An agency can rely upon mitigation measures in determining whether an environmental impact is significant. See Nat’l Parks & Conservation Ass’n, 241 F.3d at 734. In order to be effective, a mitigation measure must be supported by analytical data demonstrating why it will “constitute an adequate buffer against the negative impacts that may result from the authorized activity.” Id. A mitigation measure must render potential impacts “so minor as to not warrant an EIS.” Id. The proposed monitoring program fails this test, as it could detect impacts only after they have occurred. MMS’s statement that it would reserve the authority to modify approved operations does not provide enough protection under this standard. A court must be able to review, in advance, how specific measures will bring projects into compliance with environmental standards. See id. at 733 (“The Parks Service proposes to increase the risk of harm to the environment and then perform its studies. . . . This approach has the process exactly backwards.”). Monitoring may serve to confirm the appropriateness of a mitigation measure, but that does not make it an adequate mitigation measure in itself. See EPIC, 451 F.3d at 1015-16.


[10] After considering the gaps in the multi-sale EIS and the EA, we conclude that the agency failed to take a “hard look” under NEPA because it did not provide a well-reasoned analysis of site-specific impacts to the endangered bowhead whale population. The tiered OCSLA process allows general analysis at the lease-sale stage, but the agency must then consider site-specific impacts before approving an individual exploration plan. See Pit River Tribe v. U.S. Forest Serv., 469 F.3d 768, 784 (9th Cir. 2006) (holding that agency could not rely on “vague prior programmatic statements,” but needed to consider “site-specific impacts” when a “critical decision has been made to act” on a lease sale); Vill. of False Pass v. Watt, 565 F. Supp. 1123, 1135 (D. Alaska 1983) (“[A] purpose of OCSLA is to permit an expedient resolution of preliminary matters in the development of oil lands while preserving administrative and judicial review for future times when potential threats to the environment are readily visualized and evaluated.”).

As the agency itself notes in the multi-sale EIS, the tiered approach “builds on the premise that as both the agencies and companies involved move from general planning, to leasing, to exploration . . . the specificity of the information improves. The accompanying environmental analysis that flows from each stage also is more specific with respect to location, timing, and magnitude.” The EA contains the names of Shell’s drilling vessels (the Kulluk and the Frontier Discoverer) and icebreakers (the Kapitan Dranitzyn and the Vladimire Ignatyuk), and mentions the other vessels Shell intends to use. However, merely noting the details of Shell’s EP does not demonstrate that the effects of this plan were actually analyzed.

The results of the studies in the multi-sale EIS and EA were inconclusive. The agency may not rely on past studies on the general impact of noise on bowhead whales to justify its failure to conduct a particularized assessment here. This is especially true when past studies acknowledged that noise levels may, in certain circumstances, cause significant disturbances to whales. Additionally, MMS’s analysis should take a closer look at the locations of Shell’s individual wells in relationship to the migratory patterns of the bowhead whales.

[11] In sum, MMS abrogated its NEPA duties because neither the EA nor the documents it tiers to considers the specific parameters and potential dangers of Shell’s project. There is substantial uncertainty about how various levels of noise would affect whales and their migratory patterns. See 40 C.F.R. §§ 1508.27(b)(5), (9) (in its review, agency should consider degree to which possible effects to the environment are highly uncertain, as well as how action may adversely affect an endangered species). Furthermore, the proposed mitigation measure does not save the plan because it is not clear that a monitoring program will ameliorate potentially serious negative impacts. See Nat’l Parks & Conservation Ass’n, 241 F.3d at 734.

2. Impacts on Inupiat Subsistence Activities

i. Bowhead Whale Harvest

[12] MMS also failed to take a “hard look” at the effects Shell’s project would have on the Inupiat’s subsistence uses of bowhead whales. The agency’s review should consider how the proposal affects public health or safety, and the degree to which its impact on the human environment is unknown or highly controversial. 40 C.F.R. §§ 1508.27(b)(2), (4), (5). MMS defines a “significant” effect on a sociocultural system as: “A chronic disruption of sociocultural systems that occurs for a period of 2-5 years, with a tendency toward the displacement of existing social patterns.”

[13] As discussed above, MMS did not adequately evaluate the consequences of drilling in these specific locations on bowhead whale populations. That same analysis applies to the effect the drilling plan will have on the bowhead whale harvest and the important role this tradition plays in Inupiat culture. MMS’s failure to consider the parameters of Shell’s plan results in an inadequate analysis of the impacts of this proposal on communities that rely on bowhead whales for subsistence.

The EA itself notes that even if underwater noise does not cause a significant biological effect for the whales themselves, “there could be a significant sociocultural effect if the bowheads do not migrate back” into the “migration corridor.”

MMS acknowledges this possibility, but then comes to the inexplicable conclusion that this project can proceed without other modifications. The agency further states that “ideally, drilling and high resolution seismic activity would not deflect whales until . . . whalers had harvested whales,” but does not give any rationale explaining why it expects this ideal scenario will occur. The EA itself admits that “it is unknown what the increased level of effect of two proposed drillships and associated icebreakers and other attendant vessels would be.”

[14] Without examining the possible level of disruption to the Inupiat harvest of bowhead whales, MMS offers only “conclusory assertions” that impacts will not be significant. See Ocean Advocates, 402 F.3d at 864-66 (holding that Army Corps of Engineers failed to take “hard look” where its assessment included only conclusory assertions and did not discuss contrary evidence). Accordingly, Petitioners correctly posit that the agency must conduct greater analysis of how Shell’s activities in these particular locations, using two drillships and two icebreakers, will affect the Inupiat’s reliance on the bowhead harvest.

MMS asserts that any threat to the Inupiat’s subsistence whaling would be minimized through a conflict avoidance agreement. Again, the deficiencies in the agency’s analysis are not cured through its proposed mitigation measure. In order to rely on mitigation to obviate further analysis, the measure must be identified and its effectiveness analyzed. Nat’l Parks & Conservation Ass’n, 241 F.3d at 733-36 (holding EIS must be prepared where monitoring and mitigation measures were uncertain). Additionally, “[m]itigation must be discussed in sufficient detail to ensure that environmental consequences have been fairly evaluated.” Neighbors of Cuddy Mountain v. U.S. Forest Serv., 137 F.3d 1372, 1380 (9th Cir. 1998) (internal quotation marks and citation omitted). The agency must provide analytic data on the efficacy of a proposed measure, and the court must decide whether it “will render such impacts so minor as to not warrant an EIS.” Nat’l Parks & Conservation Ass’n, 241 F.3d at 734.

[15] The conflict avoidance agreement process is too vague and uncertain as a mitigation measure to justify the agency’s decision not to engage in further analysis. Conflict avoidance agreements come about through a voluntary process and are renegotiated every year. The agency is not party to the process, and any agreement made is not legally binding. The EA itself notes that without an agreement, there are serious questions about whether the project would have significant impacts on Inupiat communities. The agency states: “Without such conflict avoidance measures in place, significant impacts to the subsistence resources and hunts for bowhead whales, seals, and polar bears could occur.” It goes on to say: “Only a carefully constructed and monitored [conflict avoidance agreement] could produce some remedy to disturbances to bowhead whales and the subsistence hunt.” The language used by MMS reveals the real risks this project poses to the bowhead population and Inupiat communities. An annual voluntary re-negotiation process does not sufficiently mitigate the concerns raised by Petitioners and acknowledged by the agency.

[16] Simply because conflict avoidance agreements have been used effectively in the past does not mean that an agency can rely on them to cure inadequacies in the environmental assessment.4 MMS abdicates its responsibility for analyzing 4Before drilling operations were stayed by this court in August 2007, Shell and the local whaling captains negotiated a year-long agreement that would have deferred drilling operations until after completion of the Nuiqsut whale hunt.

the effects on subsistence whaling by leaving it up to the parties to come up with their own agreement, outside of the NEPA review process. MMS does provide that, if the parties fail to reach an agreement, MMS may re-examine the situation and make a “final determination on the adequacy of the measures taken to prevent unreasonable conflicts with subsistence harvests.” However, this provision is not sufficient to meet the agency’s obligations. There is still no analytical data that shows how the process would reduce the impact to whaling below the level of significance. See Nat’l Parks & Conservation Ass’n, 241 F.3d at 734 (citing Idaho Sporting Congress, 137 F.3d at 1151). By relying on the uncertain outcome of the conflict avoidance agreement process, the agency deprives this court of its ability to review whether the measure is sufficiently protective. In sum, the agency is not relieved of its responsibility to conduct more specific analysis on how this project will affect the Inupiat harvest of bowhead whales.

ii. Other Subsistence Activities

Shell’s activities will also affect other Inupiat subsistence resources, such as beluga whales, caribou, and fish. Petitioners urge the agency to take a closer look at the impacts of exploration because of the proximity of the proposed activities to the Inupiat hunting and fishing grounds. The EA’s comments focus almost entirely on the subsistence use of bowhead whales. It notes only in one sentence that “helicopter and aircraft supply flights have the potential to disturb caribou movements and alter the subsistence hunt.” The multi-sale EIS takes a cursory glance at these other animal populations, stating that drilling activities “could affect the availability of” beluga whales to subsistence hunters. The study further acknowledges that flight activity may disturb caribou populations.

5

5In a separate agreement, Shell has agreed to keep helicopter traffic above 1,500 feet to minimize any interference with the caribou hunt.

The biggest gap in the agency’s multi-sale EIS and EA is the lack of both information and analysis examining the impacts this project will have on fish populations. In analyzing fish populations, the EA acknowledges: “Given scientific uncertainty surrounding how several important fish species would react to varying levels of drilling program noise, we believe it possible there will be more than a minimal level of effect on some species.” MMS acknowledges that it “cannot concur” with Shell’s assurances that its activities “may have minimal to no impact on fish.” The agency goes on to state: The MMS also cannot concur that the effects on all fish species would be ‘short term’ or that these potential effects are insignificant, nor would they be limited to the ‘. . . localized displacement of fish . . .’, because they could persist for up to five months each year for three consecutive years and they could occur during critical times in the life cycle of important fish species.

The MMS remains concerned that the potential adverse effects described for several fish species will occur to an unknown degree, however none are expected to exceed the level that would require three generations to recover (the threshold for a significant effect).

After this lengthy discussion on concerns and gaps in the data, the EA’s abrupt conclusion that any potential effects will be insignificant is unsubstantiated. This is the type of “conclusory assertion” that is disfavored by this court because the agency has not provided any scientific data that justifies this position. See Ocean Advocates, 402 F.3d at 864.

The EA notes that it does not have the data to examine the full effect of underwater noise on fish movement. When information necessary to determine the effects is readily available or easily gathered, the law requires that an agency gather such information. See Nat’l Parks & Conservation Ass’n, 241 F.3d at 733 (stating agency’s “lack of knowledge does not excuse the preparation of an EIS; rather it requires the [agency] to do the necessary work to obtain it.”). Here, MMS has not shown that this information is unattainable. If data on the impacts of fish is not readily available, then the agency must give a more complete explanation of how, in light of those gaps, it still believes this project would not cause a significant impact on fish and the communities that consume them.

The EA ultimately concludes that Inupiat communities may suffer cultural consequences from drilling activities, but does not state whether these effects will be “significant.” Instead, the EA relies on mitigation measures in the hopes that they would ameliorate any harm done: “Required mitigation, monitoring, and conflict avoidance measures . . . would serve collectively to mitigate disturbance effects on Native lifestyles and subsistence practices and likely would mitigate any consequent impacts on sociocultural systems.” As discussed above, these mitigation measures do not go far enough to rectify the potential that Shell’s project will cause substantial harm to Inupiat communities on Alaska’s northern shore.

[17] In sum, MMS failed to take a “hard look” at the impacts this plan will have on Inupiat subsistence activities.

The agency notes the gaps in its data and the potential for serious consequences, but then comes to the unsubstantiated conclusion that any impacts will be insignificant. The agency’s broad assertions are not supported by the record. See EPIC, 451 F.3d at 1009 (agency must consider all relevant factors and provide a convincing statement of reasons to justify its decision). Accordingly, MMS should create either a revised environmental analysis or, as necessary, an environmental impact statement, taking a closer look at how Shell’s drilling in these specific sites will affect Inupiat subsistence activities.

3. Impacts of Potential Crude Oil Spills

[18] Despite any other insufficiencies, MMS’s environmental analysis does adequately examine the impacts of a potential crude oil spill. The EA states, “[f]or purposes of this EA analysis, no crude oil spills are assumed from exploration activities. This assumption is based on the low rate of exploratory drilling blowouts per well drilled and the history of exploration spills on the Arctic OCS . . . .” Petitioners contend that this assumption is erroneous, and the agency must consider the likelihood of a spill in relationship to the harm such an event would cause. This argument is unavailing. The agency’s assessment makes the proper inquiry into the risk of an oil spill, and no further analysis is required in relationship to this exploration plan.

In the process of NEPA review, an agency should consider the “degree to which the possible effects on the human environment are highly uncertain or involve unique or unknown risks.” 40 C.F.R. § 1508.27(b)(5). NEPA does not require consideration of risks that are “merely speculative” or “infinitesimal.” No GWEN Alliance v. Aldridge, 855 F.2d 1380, 1386 (9th Cir. 1988); Ground Zero Ctr. for Non-Violent Action v. U.S. Dep’t of the Navy, 383 F.3d 1082, 1090 (9th Cir. 2004). An agency should assess the likelihood of a particular risk along with the consequences of such an accident. See City of New York v. U.S. Dep’t of Transp., 715 F.2d 732, 746 (9th Cir. 1983) (“It is only the risk of accident that might render the proposed action environmentally significant. That circumstance obliges the agency to undertake risk assessment: an estimate of both the consequences that might occur and the probability of their occurrence.”).

Despite its initial assumption that an oil spill will not occur, the EA includes discussion of the effects of a potential spill on the Inupiat subsistence harvest and a variety of animal species.

The EA also incorporates the multi-sale EIS’s extensive discussion of a potential spill. The multi-sale EIS recognizes that “[a] very large oil spill is an issue of concern to everyone.

. . . A very large oil spill is a low-probability event with the potential for very high effects.” The EIS analyzes data from spills around the world, since very large spills in U.S. waters have been extremely rare. The document further considers the potential effects of “small” and “large” oil spills in the Beaufort Sea region. Appended to the multi-sale EIS is a lengthy document entitled “The Information, Models and Assumptions

We Use to Analyze the Effects of Oil Spills in this EIS.” This report includes information on the history and behavior of spilled oil. In evaluating the risks of an oil spill, the agency has, over time, conducted extensive studies on the likelihood of oil spills in the Beaufort Sea. These include the 2002 and 2006 Bercha Reports on the “Alternative Oil Spill Occurrence Estimators and their Variability for the Beaufort and Chukchi Seas.” The analysis of oil spill risks was updated in the EAs for both Lease Sale 195 and Lease Sale 202. There is no indication that the agency erred in relying on these documents in its review of this specific project.

Petitioners argue that extensive discussion of spills in MMS’s prior analyses and the requirement that an oil response plan be prepared is evidence that an oil spill is a reasonably foreseeable event. Under their logic, the EA should therefore have included analysis on the possibility of such a spill. Petitioners support this contention by citing to cases where an agency was required to consider even remote risks that could cause great harm. See, e.g., San Luis Obispo Mothers for Peace v. Nuclear Regulatory Comm’n, 449 F.3d 1016, 1030-31 (9th Cir. 2006) (holding that agency was unreasonable in categorically dismissing the possibility of a terrorist attack as “too remote and highly speculative” to warrant NEPA consideration). Petitioners also point out that, even if an oil spill is unlikely, the consequences could be great. Petitioners contend that the EA’s blanket “assumption” failed to adequately consider the relationship between the risk and the consequences of an oil spill.

Petitioners’ position on this issue is flawed. The EA properly tiers to the lengthy discussion of the risk and impacts of oil spills in the multi-sale EIS. This case may be distinguished from San Luis Obispo Mothers for Peace because here, the agency does not claim it has no obligation to consider this risk, but only that it has sufficiently done so in previous studies. There is no evidence that anything about this particular project requires separate analysis on oil spills. No special risk creates the need for additional evaluation of factors that were not already considered in MMS’s prior studies.

Although the language in the EA may not have been ideal, MMS’s “assumption” that there would not be an oil spill was supplemented with comprehensive studies on the likelihood and impact of such an event. Accordingly, the agency did not act arbitrarily and capriciously in its assessment of the potential effects of an oil spill from this project.

C. Necessity of a Revised EA or an EIS

MMS has violated NEPA by failing to take a “hard look” at the impacts of Shell’s proposal on bowhead whales and Inupiat subsistence activities. MMS has not provided a convincing statement of reasons to justify its decision not to complete an EIS. See Blue Mountains, 161 F.3d at 1211.

Moreover, several of the regulatory significance criteria are triggered here. See 40 C.F.R. § 1508.27; Sierra Club v. U.S. Forest Serv., 843 F.2d 1190, 1193 (9th Cir. 1988) (holding that an agency’s decision not to prepare an EIS was “unreasonable” because record demonstrated that four of the regulatory factors were implicated). Shell’s project is located in an increasingly fragile ecosystem and near the Arctic National Wildlife Refuge, an “ecologically critical area” under 40 C.F.R. § 1508.27(b)(3). The contentious nature of the agency’s internal communication during the review process demonstrates the controversy surrounding the project. See id. § 1508.27(b)(4); see also Native Ecosystems Council, 428 F.3d at 1240 (noting that a project is highly controversial if there is a substantial dispute about the effect of an action). As discussed above, the impact of activities at these particular sites poses an unknown risk to bowhead whales and Inupiat subsistence activities. See id. § 1508.27(5). The project could also have a serious effect on an endangered species: bowhead whales. See id. § 1508.27(b)(9). Finally, there is the potential for cumulatively significant impacts as the project continues through exploration and into the production phase, and the region continues to develop. See id. § 1508.27(b)(7). [19] In light of the potential for serious impacts on bowhead whales and Inupiat subsistence activities, the agency erred by not undertaking a more careful analysis before issuing a FONSI. Due to the inadequacies in this particular EA, there is uncertainty over whether the proposed project may have a significant impact. Accordingly we remand to the agency to either prepare a revised EA or, as necessary, an EIS.

The statutory scheme does not preclude a finding that an EIS may be appropriate in these circumstances. MMS argues that the strict timelines in OCSLA indicate that an EIS is not a feasible option at the exploration stage. The agency only has thirty days to approve or disapprove of an exploration plan. 43 U.S.C. § 1340(c)(1). Respondents argue that thirty days is not enough time to generate a full EIS. However, in passing OCSLA, Congress specifically provided that it did not alter an agency’s obligations under NEPA. See 43 U.S.C. § 1866(a); see also 30 C.F.R. § 250.232(c) (“The [agency] will evaluate the environmental impacts of the activities described in your proposed EP and prepare environmental documentation under [NEPA].”). This court has recognized that “NEPA may require an environmental impact statement at each stage: leasing, exploration, and production and development.” Vill. of False Pass v. Clark, 733 F.2d at 614.

The agency may be correct that it is difficult for an agency to conduct a full EIS in only thirty days, but its argument that OCSLA precludes such a result is unconvincing. There is flexibility built into the regulatory scheme so that the agency can perform its full duties under NEPA. The thirty-day clock begins to run only when an exploration plan is deemed complete. 30 C.F.R. § 250.233(a). If the agency is able to identify gaps before that point, then it can request that information be added before the proposal is finalized. See 30 C.F.R. § 250.231(b). Additionally, at the end of the thirty-day review period, the agency may opt to require modifications to an EP if there are concerns that it does not comport with environmental standards. 30 C.F.R. § 250.233(b). These options give the agency additional time to consider a plan and compile an environmental impact statement, if necessary. To say simply that the agency only has thirty days to complete a full EIS is misleading. Here, since the agency’s decision to issue a FONSI without considering the environmental impacts to bowhead whales and subsistence resources was in error, MMS should prepare either a more thorough environmental analysis or an EIS, as necessary, examining the consequences of drilling at these specific locations. See Metcalf v. Daley, 214 F.3d 1135, 1146 (9th Cir. 2000).

III. MMS’s Compliance With OCSLA

[20] The agency’s approval of this project also violated OCSLA. OCSLA’s implementing regulations require that, when evaluating exploration plans, an agency should consider information about “proposed well location and spacing.” 30 C.F.R. § 250.203. Exploration plans must be “project specific” and describe the “resources, conditions, and activities” that could be affected. 30 C.F.R. § 250.227. In particular, an EP must include “[a] map showing the surface location and water depth of each proposed well and the locations of all associated drilling unit anchors.” 30 C.F.R. § 250.211(b).

Shell submitted the locations of the 2007 drilling sites, but did not specify where it wished to drill in 2008 and 2009. Shell noted that future drilling locations will depend on what is found in the first Sivulliq exploration. Without specific infor- mation about future well locations, the agency cannot meet its obligation to “review and approve proposed well location and spacing” in accord with 30 C.F.R. § 250.203. As a result, the agency erred by approving an EP for 2007-2009 without knowing where Shell would be drilling for the last two years. The agency is not saved by regulations that allow MMS to consider the impacts of drilling at subsequent locations when the company requests permits for those specific sites. See 30 C.F.R. §§ 250.410-250.418. These regulations stipulate that to obtain approval for a well, the applicant must have “[i]nclude[d] the well in [its] approved Exploration Plan.” 30 C.F.R. § 250.410(b). The wells for 2008 and 2009 were not included in Shell’s EP. The permit regulations are not an adequate mechanism enabling the agency to check Shell’s actions at a later date. MMS also points to 30 C.F.R. § 250.201(c), which enables the agency to relax certain informational requirements when:

(1) Sufficient applicable information or analysis is readily available to MMS;

(2) Other coastal or marine resources are not present or affected;

(3) Other factors such as technological advances affect information needs; or

(4) Information is not necessary or required for a State to determine consistency with their CZMA Plan.

It is not clear how any of these sections would apply here. To the contrary, having specific information about well locations is critical to the agency’s ability to analyze the project’s environmental effects. MMS acted in contravention of the regulations by approving Shell’s three-year plan without determining the locations of the wells that would be drilled in that period. In order to comply with the regulations, the agency needs to consider the location of the proposed wells before it can approve the project for all three years.

* * *

http://www.ca9.uscourts.gov/ca9/newopinions.nsf /4C4B054BAEBFD8DF882575060080C710/$file/0771457.pdf?openelement

Outcome: [21] For the foregoing reasons, we VACATE the agency’s approval of Shell’s exploration plan and REMAND for the agency to prepare a revised EA or, as necessary, an EIS. Shell’s motion to lift the stay is DENIED as moot. VACATED AND REMANDED.

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