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March 2013: Ninth Circuit Victory for Shell in Arctic Drilling Case

March 2013

Quinn Emanuel recently obtained the third of three consecutive wins in the U.S. Court of Appeals for the Ninth Circuit for Shell Oil and its subsidiaries in Shell’s $4 billion effort to explore for oil and gas resources in the Arctic waters off the Alaskan coast. While earlier firm wins upheld federal government approvals of Shell’s exploration plans for the drilling (Native Vill. of Point Hope v. Salazar, 378 Fed. App’x 747 (9th Cir. 2010); Native Vill. of Point Hope v. Salazar, 680 F.3d 1123 (9th Cir. 2012), the latest victory In REDOIL v. EPA, No. 12-70518, upheld air permits the Environmental Protection Agency and the Environmental Appeals Board (EAB) had approved for Shell’s operation of the Noble Discoverer drillship against environmental groups’ challenge under the Clean Air Act.

The Ninth Circuit’s unanimous published opinion, authored by Judge McKeown and joined by Judges Hawkins and Bea, held that Shell need not apply “best available control technology” to support vessels that run back and forth to the drillship so long as it applied that technology to the drillship itself while tethered to the ocean floor. In clarifying statutory provisions at issue that were previously ambiguous, this holding made new Ninth Circuit law by ruling that EAB proceedings are “formal adjudications” entitled to Chevron deference. The court held further that the drillship was not subject to “ambient air” rules within a safety zone established by the Coast Guard around its operations, finding it reasonable to treat such a safety zone as the equivalent of a “fence” at sea designed to keep members of the public generally away from any emissions.

Quinn Emanuel’s successful defense of the Clean Air Act permit approvals removes a significant obstacle to future exploration activities, which is especially important given the years and resources that Shell has invested in its exploration of the Alaskan Outer Continental Shelf.