Shell Gulf of Mexico, Inc. and Shell Offshore, Inc. (Shell) are pioneering a new method of protecting legal interests regarding controversial federal environmental approvals through the use of the Declaratory Judgment Act. To date, Shell has filed two separate suits in the United States District Court in Alaska against a number of Environmental Non-Governmental Organizations (NGOs) under the Declaratory Judgment Act in relation to Shell’s efforts to drill for oil in the Chukchi and Beaufort Seas pursuant to leases obtained from the United States in 2007.
The first of these suits, Shell Gulf of Mexico, Inc. v. Center for Biological Diversity, No. 3:12-cv-0048-RRB, seeks a declaratory judgment from the court that the approval of Shell’s oil spill response plans by Department of Interior’s Bureau of Safety and Environmental Enforcement (BSEE) was lawful under the Administrative Procedure Act (APA) and in accordance with the relevant provisions of the Outer Continental Shelf Lands Act and the Oil Pollution Act. The second of these suits, Shell Gulf of Mexico, Inc. v. Center for Biological Diversity, No. 3:12-cv-0096-RRB, seeks a declaratory judgment from the court that the approvals of the Chukchi and Beaufort Seas Incidental Harassment Authorizations (IHA) by the Department of Commerce and the National Oceanic and Atmospheric Administration’s National Marine Fisheries Service (NMFS) was lawful under the APA and complied with the Marine Mammal Protection Act and the National Environmental Policy Act.
The NGOs sought to dismiss both of Shell’s complaints, arguing that Shell lacked standing, that Shell’s claims were not justiciable, and that Shell’s request for relief was tantamount to asking the court for an advisory opinion. The court rejected both of the NGO’s motions to dismiss, finding that Shell had standing, that Shell’s claims were ripe, and that a ruling by the court would not constitute an advisory opinion — on July 19, 2012, the NGOs filed a motion to certify the district court’s order for appeal to the US Court of Appeals for the Ninth Circuit; the district court has yet to rule on this motion. Key to the court’s rulings was the fact that the NGOs had openly opposed Shell’s activities and had threatened to sue to prevent Shell from operating in the Arctic.
The court’s rulings may validate a new approach to affirming federal agency decisions. The Declaratory Judgment Act can serve as a useful tool in helping to secure rights obtained as a result of a federal agency action where opposition parties have indicated publically or through a prior pattern or practice that they are substantially certain to challenge a federal authorization. Additionally, it can also benefit companies’ attempt to control the uncertainty surrounding a project where a company has made substantial investments and opposition groups have threatened to challenge the project. This is particularly important with energy projects, renewable or conventional alike, where a substantial investment is required and uncertainty negatively impacts the financial community’s willingness to invest.
Christopher H. Marraro is a partner and Peter C. Whitfield is an associate in the Washington, D.C., office of McKenna Long and Aldridge LLP.