Appeals court ruling could delay further U.S. Arctic drilling

Alaskan coastal drilling by oil companies including ConocoPhillips and Royal Dutch Shell may be delayed further after a U.S. court revived a challenge by conservation groups claiming the government violated existing laws in opening 29.4 million acres on the continental shelf to energy exploration.

Sierra Club and other organizations sued the government after the $2.6 billion sale of development leases for the Chukchi Sea off the northwest coast of Alaska in 2008, saying the amount of oil from the leases was far higher than the 1 billion barrels the U.S. Interior Department had estimated in an environmental review.

The U.S. Court of Appeals in San Francisco said Wednesday that the estimate was “chosen arbitrarily” and meant that the Interior Department “based its decision on inadequate information about the amount of oil to be produced pursuant to the lease sale.” The decision reverses a judge’s 2012 ruling dismissing the lawsuit.

“The agency is going to have to revise or supplement its analysis of the lease sale,” Erik Grafe, an Earthjustice attorney who argued the case, said in a phone interview.  “We think the agency shouldn’t allow any drilling on this basis.”

A spokeswoman said the Interior Department would not comment on pending litigation.

Shell conducted preliminary drilling in the area in 2012, and has said it hopes to return this summer. A Shell spokesman said the company was reviewing Wednesday’s court opinion.

The conservation groups said in their complaint that the decision by the George W. Bush administration to open the Chukchi Sea to oil and gas exploration violated the U.S. National Environmental Policy Act.

The federal government, saying that the Bureau of Ocean Energy Management already had analyzed the environmental impact at the behest of a federal judge in Alaska, contended that supplemental environmental impact statements had adequately addressed the impact of drilling on whales and other species as well as the generation of greenhouse gases.

ConocoPhillips and Shell joined the case on the side of the government.