Legal Strategy Taken by Shell Is Rarely Successful

Journal: The New York Times
March 4, 2012
By JOHN M. BRODER

WASHINGTON — The oil giant Shell filed suit in federal court in Alaska last week against a dozen environmental groups, employing a rare — and rarely successful — legal gambit in an effort to pre-empt anticipated legal challenges to its plans to begin exploration in the Arctic Ocean this summer.
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To Avoid Last-Minute Suit, Shell Asks U.S. Court to Rule (March 1, 2012)

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Was the unusual maneuver an act of bravado, even desperation, by a company fearful that it might be thwarted again in its efforts to begin drilling in the seabed off Alaska’s North Slope?

Or was it, as Shell contends, a mark of confidence that the company had finally put in place a plan that could satisfy all the legal, regulatory and environmental requirements to start exploiting one of the last great untapped oil and gas reservoirs in North America?

Marvin E. Odum, Shell’s president for the United States, said in an interview that he was “highly confident” that the company’s plan for preventing and responding to an oil spill would survive any legal scrutiny. He said the company had filed the suit in the hopes of speeding up the judicial review of the plan that will come if and when the environmental groups — who have challenged Shell at every step of the process — file suit.

Mr. Odum said the Obama administration had made clear that it would support the company’s plans to drill the first of six exploratory wells in the Chukchi Sea starting in July, once it has met all of the government’s requirements.

Because the window for ice-free drilling in the Arctic lasts at most three months, any delay could be fatal to Shell’s desire to begin work this summer. The company is moving personnel and equipment to the North Slope to prepare for the short season and will continue to invest in the project despite the legal uncertainty, Mr. Odum said.

“Having spent over $4 billion already,” he said, “we will continue to spend more money. That’s the risk we’re taking.”

The environmental groups who have spent years trying to block its drilling project say that the effects on native communities, air, water and wildlife are too great and that the company’s plans for responding to a blowout and spill are laughably weak.

While the groups have not announced their intention to go to court to challenge the company’s 450-page oil spill response plan, which was tentatively approved by the Interior Department two weeks ago, the company has every reason to think that they will.

“We just got the spill plan and are reviewing it,” said Whit Sheard, a lawyer for Oceana, one of the environmental groups named in the Shell lawsuit. “It’s based on technology that doesn’t exist and on faith that a spill won’t happen. What we’ve seen in the Gulf of Mexico and the North Sea, of course, is that spills do happen.”

Mr. Sheard said that Oceana and the other groups reserved the right to challenge the plan in court and would use every weapon at their disposal to ensure that drilling, if it ever takes place, is conducted in the safest possible way. He called Shell’s novel legal maneuver “frivolous.”

“It’s very unusual,” Mr. Sheard said. “I’d suggest it’s either desperate or abusive in terms of the American legal process. It’s not likely to prevail.”

There are few precedents to guide the court in deciding Shell’s suit, technically known as a complaint for declaratory relief, which essentially asks a judge to declare a lawsuit without merit before it is even filed.

In one 2002 case, Shields v. Norton, a Texas landowner sued the Interior Department and the Sierra Club, seeking to head off a challenge to his right to develop his property because it could violate the Endangered Species Act. The case was dismissed because no one had yet sued the landowner.

A judge also dismissed a second case, Westlands Water District v. Natural Resources Defense Council, in which a California water authority pre-emptively sued an environmental group, anticipating a legal challenge to a water allocation decision.

David M. Uhlmann, who was the head of the Justice Department’s environmental crimes section from 2000 to 2007 and is now a professor at the University of Michigan Law School, said that Shell was, understandably, trying to accelerate the judicial review so that its drilling plan would not be delayed at the last minute.

“It’s hard to fault them for wanting that review to come now rather than later,” Mr. Uhlmann said. “But it’s not clear they have a legal leg to stand on. The environmental groups have not sued them, and they haven’t decided whether they want to litigate over this particular aspect of the drilling plan.”

The company first bid on the leases in the Chukchi in 2007 and has encountered numerous problems, some of its own making, in getting the approval to drill.

“When projects like this are delayed, that’s half the battle for the environmental groups,” Mr. Uhlmann said. “Shell is trying to get to the courthouse faster, but that does not mean they will be successful, or should be successful.”

Mr. Odum of Shell said he was prepared for any outcome of this lawsuit, or any future litigation. “What I know is that we have very strong support from the federal government now that a strategic decision has been made,” he said. “I think this is the year we go out and determine whether significant resources exist in offshore Alaska.”