Nos and UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

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1 Case: /31/2012 ID: DktEntry: 28 Page: 1 of 79 Nos and UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT NATIVE VILLAGE OF POINT HOPE, ALASKA WILDERNESS LEAGUE, CENTER FOR BIOLOGICAL DIVERSITY, DEFENDERS OF WILDLIFE, GREENPEACE, INC., NATIONAL AUDUBON SOCIETY, NATURAL RESOURCES DEFENSE COUNCIL, NORTHERN ALASKA ENVIRONMENTAL CENTER, OCEANA, PACIFIC ENVIRONMENT, RESISTING ENVIRONMENTAL DESTRUCTION ON INDIGENOUS LANDS, SIERRA CLUB, and THE WILDERNESS SOCIETY, INUPIAT COMMUNITY OF THE ARCTIC SLOPE, v. Petitioners, KEN SALAZAR, Secretary of the Interior, and BUREAU OF OCEAN ENERGY MANAGEMENT, Respondents, SHELL OFFSHORE INC., and STATE OF ALASKA, Respondents-Intervenors. ON CONSOLIDATED PETITIONS FOR REVIEW OF DECISIONS OF DEPARTMENT OF THE INTERIOR PURSUANT TO 43 U.S.C. 1349(c) BRIEF OF RESPONDENTS OF COUNSEL: SUSAN CASON Attorney-Adviser Office of the Solicitor U.S. Department of the Interior 1849 C Street NW Washington, D.C IGNACIA S. MORENO Assistant Attorney General JOHN E. ARBAB DAVID C. SHILTON Attorneys, United States Department of Justice Environment & Natural Resources Division P.O. Box 23795, L Enfant Station Washington, D.C (202)

2 Case: /31/2012 ID: DktEntry: 28 Page: 2 of 79 TABLE OF CONTENTS PAGE JURISDICTION... 1 STATEMENT OF ISSUES... 2 STATEMENT OF THE CASE... 2 A. Nature of the Case... 2 B. Statutory and Regulatory Background The OCSLA OCSLA Regulations Governing EPs The Oil Pollution Act and Oil Spill Response Plan Regulations STATEMENT OF FACTS Shell s EP BOEM s Review and Approval of the EP STANDARD OF REVIEW SUMMARY OF ARGUMENT ARGUMENT I. THE EP COMPLIED WITH THE REQUIREMENTS OF 30 C.F.R (a) BY REFERRING TO SHELL S APPROVED REGIONAL OIL SPILL RESPONSE PLAN AND BY PROVIDING ADEQUATE INFORMATION REGARDING SHELL S PLANS FOR RESPONDING TO AN OIL SPILL... 22

3 Case: /31/2012 ID: DktEntry: 28 Page: 3 of 79 II. BOEM WAS NOT REQUIRED TO OBTAIN ADDITIONAL INFORMATION ON SHELL S PROPOSED SUBSEA OIL CONTAINMENT SYSTEM BEFORE APPROVING THE EP A. The EP Was Not Required To Contain Additional Information Regarding Shell s Subsea Containment Plans B. This Court Rejected Petitioners Argument That BOEM Cannot Conditionally Approve an EP in NVPH I, And The Argument Is Meritless In Any Event III. IV. SHELL COMPLIED WITH THE REQUIREMENTS OF 30 C.F.R (g) TO INCLUDE IN THE EP GENERAL INFORMATION ABOUT A WORST CASE BLOWOUT SCENARIO AND AN ESTIMATE OF TIME NEEDED TO DRILL A RELIEF WELL.. 42 IN THE EVENT OF A REMAND, BOEM S DECISION SHOULD NOT BE VACATED CONCLUSION STATEMENT OF RELATED CASES CERTIFICATION OF COMPLIANCE WITH FED. R. APP. P. 32(a)(7) CERTIFICATE OF SERVICE STATUTORY AND REGULATORY ADDENDUM ii

4 Case: /31/2012 ID: DktEntry: 28 Page: 4 of 79 CASES: TABLE OF AUTHORITIES Auer v. Robbins, 519 U.S. 452 (1997)... 16,21,26 Chevron, U.S.A., Inc. v. Natural Res. Defense Council, Inc., 467 U.S. 837 (1984) Clark v. Bear Stearns & Co., Inc., 966 F.2d 1318 (9th Cir. 1992)... 38,39 Edlund v. Massanari, 253 F.3d 1152 (9th Cir. 2001) Edwardsen v. U.S. Dept. of the Interior, 268 F.3d 781 (9th Cir. 2001)...5,11,19-21,29,30,34,43 Envtl. Def. Ctr., Inc. v. EPA, 344 F.3d 832 (9th Cir. 2003)... 17,46,47 Geier v. American Honda Motor Co., 529 U.S. 861 (2000) Greenwood v. F.A.A., 28 F.3d 971 (9th Cir. 1994) Home Builders Ass'n of Northern Cal. v. U.S. Fish and Wildlife Service, 616 F.3d 983 (9th Cir. 2010) Lands Council v. McNair, 537 F.3d 981 (9th Cir. 2008) (en banc) Native Village of Point Hope v. Salazar, 378 Fed. Appx. 747, 2010 WL (9th Cir. 2010)... 4,38 Sec'y of the Interior v. California, 464 U.S. 312 (1984)... 7 iii

5 Case: /31/2012 ID: DktEntry: 28 Page: 5 of 79 Wickland Oil Terminals v. Asarco, 792 F.2d 887 (9th Cir. 1986) STATUTES: Oil Pollution Act 33 U.S.C. 1321(j)(5) U.S.C. 1321(j)(5)(A)(i) U.S.C. 1321(j)(5)(F) U.S.C. 1321(j)(5)(F)(i)-(ii) U.S.C. 1321(j)(5)(G) U.S.C. 1321(n)... 10,11, U.S.C. 2701(33) Outer Continental Shelf Lands Act 43 U.S.C. 1332(3) U.S.C. 1334(a) U.S.C. 1334(a)(2)(A)(i)... 7,19 43 U.S.C U.S.C. 1340(c)... 1,7,40 43 U.S.C. 1340(c)(1)... 19,38 43 U.S.C. 1340(c)(3) U.S.C. 1340(c)(3)(c) U.S.C. 1340(d)... 7,40 43 U.S.C. 1344(b)(3) U.S.C. 1347(b)... 34,35 43 U.S.C. 1349(c)... 1,6,8,11,43 43 U.S.C. 1349(c)(2) U.S.C. 1349(c)(6)... 13,16,25, U.S.C RULES and REGULATIONS: 30 C.F.R (c)... 16,35 30 C.F.R iv

6 Case: /31/2012 ID: DktEntry: 28 Page: 6 of C.F.R C.F.R ,40 30 C.F.R C.F.R (b) C.F.R (c)(2) C.F.R. Part ,29,36,37 30 C.F.R (a) C.F.R C.F.R (a) C.F.R (b) C.F.R (c) C.F.R (b) C.F.R ,43 30 C.F.R (g)... 2,19,42,44 30 C.F.R. Part C.F.R ,12,20 30 C.F.R ,20 30 C.F.R (c)... 18,31,32 30 C.F.R ,32,33,41,42 v

7 Case: /31/2012 ID: DktEntry: 28 Page: 7 of C.F.R (d)... 2,18,33 30 C.F.R (g)... 2,41,43,47 30 C.F.R ,30 30 C.F.R (a)... 2,16,22,25,26,29 30 C.F.R (a)(1) C.F.R (a)(2)... 17,29 30 C.F.R (a)(2)(i) - (v) C.F.R (a)(2)(iv) C.F.R C.F.R (c) C.F.R C.F.R (c) C.F.R (b)(1) C.F.R C.F.R (a)(2) C.F.R Fed. Reg. 61,051 (2010) Fed. Reg. 64,432, 64,439 (2011)... 1,9 76 Fed. Reg. 64, vi

8 Case: /31/2012 ID: DktEntry: 28 Page: 8 of 79 OTHER: Executive Order No. 12,777, 56 Fed. Reg. 54,757, 54,767 (Oct. 22, 1991)... 10,11 H.R. Conf. Rep. No (1990) S. Rep. No (1989) H.R. Rep. No , 95 th Cong., 2d Sess., reprinted in 1978 U.S. Code Cong. & Admin. News 1450, 1460, vii

9 Case: /31/2012 ID: DktEntry: 28 Page: 9 of 79 JURISDICTION The courts of appeals have original jurisdiction pursuant to Section 23(c) of the Outer Continental Shelf Lands Act ( OCSLA ), 43 U.S.C. 1349(c), to review the approval by the Secretary of the Interior of exploration plans ( EPs ) submitted pursuant to Section 11(c) of the OCSLA, 43 U.S.C. 1340(c). The Secretary has delegated authority to approve EPs to the appropriate Regional Supervisor of the Bureau of Ocean Energy Management ( BOEM ). 1/ The petitions in this case challenge the August 4, 2011, conditional approval by BOEM Regional Supervisor Jeff Walker of a revised EP submitted by Shell Offshore, Inc. ( Shell ). See Petitioners Excerpts of Record ( ER ) / BOEM is the successor agency to the Minerals Management Service ( MMS ), to whom this authority was originally delegated. See 75 Fed. Reg. 61,051 (2010). The agency was renamed the Bureau of Ocean Energy Management, Regulation and Enforcement ( BOEMRE ) by Secretarial Order No (June 18, 2010). That was the agency name when it approved the EP at issue here on August 4, In October 2011, the agency was again reorganized consistent with recommendations to separate resource management and safety enforcement functions. See 76 Fed. Reg. 64,432 (2011). That reorganization created a new Bureau of Ocean Energy Management ( BOEM ), with responsibility over managing the development of offshore resources in an environmentally and economically responsible way, including the approval of EPs. See 76 Fed. Reg. 64,438, Table B, Subpart B. The reorganization also created a new Bureau of Safety and Environmental Enforcement ( BSEE ), with responsibility for enforcing safety and environmental regulations. For the sake of simplicity, we will generally refer to the relevant agencies by their current names. 1

10 Case: /31/2012 ID: DktEntry: 28 Page: 10 of 79 Petitioners filed timely petitions for review of that approval decision; this Court has jurisdiction pursuant to 43 U.S.C. 1349(c). STATEMENT OF ISSUES 1. Did Department of the Interior regulations at 30 C.F.R (a) permit BOEM to approve an EP that referenced an approved Regional Oil Spill Response Plan prepared pursuant to the Oil Pollution Act, when Shell had proposed revisions to that Plan? 2. Did regulations at 30 C.F.R (d) and (c) require BOEM to obtain additional information regarding Shell s plans for a well capping and containment system before BOEM could conditionally approve Shell s EP? 3. Did Shell s EP satisfy the requirements of 30 C.F.R (g) to include general information about a worst case blowout scenario and an estimate of the time it would take to drill a relief well? STATEMENT OF THE CASE A. Nature of the Case. These petitions for review challenge an August 4, 2011, decision by BOEM to conditionally approve Shell s revised EP for exploratory drilling on its leases in Camden Bay, an area of the Beaufort Sea off northern Alaska. ER1. The Native Village of Point Hope, joined by twelve environmental groups, filed a petition on 2

11 Case: /31/2012 ID: DktEntry: 28 Page: 11 of 79 September 29, 2011; the Inupiat Community of the Arctic Slope filed a petition on October 3, On October 7, 2011, Shell moved to intervene. Shell and respondents sought designation of this case as a comeback case pursuant to Ninth Circuit General Order On October 18, 2011, the Court granted Shell s request for intervention, and the panel that ruled on the petitions in Native Village of Point Hope, et al. v. Salazar, Nos , , , (9 th Cir. 2010) ( NVPH I ) (Chief Judge Kozinski, and Circuit Judges Bea and Ikuta) accepted jurisdiction over these petitions. On November 18, 2011, the Court consolidated the petitions and granted intervention to the State of Alaska. The EP at issue here is a revised version of one of the EPs considered in NVPH I. 2/ Shell first submitted its Camden Bay EP in May ER219. That EP contemplated a single season of operations in 2010 using the M/V Discoverer to drill exploration wells at two sites known as the Sivulliq and Torpedo prospects. Id. The approvals of that Camden Bay EP and Shell s Chukchi Sea EP were challenged in NVPH I by a group of petitioners nearly identical to those who appear as 2/ Petitioners in NVPH I also challenged the approval of Shell s EP proposing exploratory drilling operations in 2010 on leases in the Chukchi Sea. In 2011, Shell submitted a Revised EP proposing exploratory drilling operations in the Chukchi Sea beginning in 2012; that EP was conditionally approved by BOEM on December 16, See (last checked 1/31/2012). 3

12 Case: /31/2012 ID: DktEntry: 28 Page: 12 of 79 petitioners here. 3/ On May 13, 2010, after expedited hearing, this Court issued an unpublished memorandum decision rejecting all challenges to the approval of the two EPs. See Native Village of Point Hope v. Salazar, 378 Fed. Appx. 747, 2010 WL (9 th Cir. 2010). Exploratory drilling pursuant to the EPs challenged in NVPH I did not occur. Shell submitted a revised Camden Bay EP to BOEM in May 2011, and this EP was deemed submitted (complete) on July 5, See SER137 and EA at 1, SER32. 4/ Under the revised EP, Shell proposes to drill four exploration wells during successive July-October open-water-drilling seasons, starting in 2012 and continuing in following open-water seasons until completion of the four-well plan. Two wells would be drilled on each of two prospects, Sivulliq and Torpedo (the same Beaufort Sea prospects as were involved in the 2009 EP challenged in NVPH I). The drilling operations would be conducted using the Mobile Offshore Drilling Unit Kulluk; alternatively, drilling operations could be conducted using the M/V Discoverer. These exploratory operations are subject to a host of new safety 3/ Petitioner Greenpeace, Inc. was not involved in NVPH I; the Ocean Conservancy and Alaska Eskimo Whaling Commission were petitioners in NVPH I, but are not petitioners here. 4/ Relevant portions of Shell s Revised EP and BOEM s Environmental Assessment ( EA ) are reproduced in the Respondents Joint Supplemental Excerpts of Record ( SER ). See SER 26 et seq. (EA) and 140 et seq. (EP). 4

13 Case: /31/2012 ID: DktEntry: 28 Page: 13 of 79 requirements imposed as a result of the Deepwater Horizon incident that occurred in See EA at , SER Petitioners challenge to BOEM s approval of Shell s revised EP focuses on BOEM s review of Shell s plans to deal with a possible blowout and oil spill. Petitioners question whether certain proposed revisions to Shell s Oil Spill Response Plan ( OSRP ) had to be approved before BOEM could approve Shell s EP, whether Shell adequately described its plans for a subsea containment system, and whether information submitted by Shell regarding a worst-case discharge scenario and plans for the drilling of a relief well was sufficient. Petitioners do not challenge the extensive Environmental Assessment ( EA ) prepared by BOEM pursuant to the National Environmental Policy Act ( NEPA ), or BOEM s conclusion that an oil spill from a well control incident resulting in pollution is a very unlikely event[]. EA at A-5 (SER122); see also EA at 26 (SER57) (noting extremely low likelihood of a large oil-spill occurring during exploration ). As we show below, petitioners fundamentally mistake the role of EP approval as it relates to oil spill response issues. Petitioners wrongly assume, for instance, that all oil spill response issues must be resolved before BOEM can approve an EP. In fact, oil spill response issues are resolved through a separate process under the Oil Pollution Act, and the agency s resolution of those issues 5

14 Case: /31/2012 ID: DktEntry: 28 Page: 14 of 79 cannot be challenged in this case. See Edwardsen v. U.S. Dept. of the Interior, 268 F.3d 781, (9 th Cir. 2001) ( Edwardsen ) (holding that claims challenging adequacy of spill response plans can only be brought in district court, and cannot be included in a petition for review challenge to approval of a plan under OCSLA, 43 U.S.C. 1349(c)). Below, we describe the statutes and regulations governing EP approval and oil spill response planning, and then describe how BOEM and Shell complied with those provisions in connection with BOEM s approval of the 2011 revised EP, which is the only matter over which this Court has jurisdiction pursuant to 43 U.S.C. 1349(c). B. Statutory and Regulatory Background 1. The OCSLA. The OCSLA was first enacted in 1953 to clarify federal jurisdiction over offshore oil leasing rights, and was substantially amended in 1978 with the goal of reducing United States dependence on foreign oil. See H.R. Rep. No , 95 th Cong., 2nd Sess., reprinted in 1978 U.S. Code Cong. & Admin. News 1450, 1460, The 1978 amendments established a national policy of making the outer continental shelf available for expeditious and orderly development, subject to environmental safeguards, in a manner which is consistent with the maintenance of 6

15 Case: /31/2012 ID: DktEntry: 28 Page: 15 of 79 competition and other national needs. 43 U.S.C. 1332(3). The 1978 amendments prescribed a four-stage process for oil and gas development, with review at each stage. See Sec y of the Interior v. California, 464 U.S. 312 (1984). During the first stage, the Secretary prepares a Five-Year OCS Oil and Gas Lease-Sale Schedule, and a programmatic environmental impact statement ( EIS ) is completed. 43 U.S.C. 1344(b)(3). At the second stage, the Secretary conducts lease sales of tracts on the OCS. Among other things, the Secretary prepares an EIS for the area under consideration for leasing. The highest qualified bidders obtain leases which entitle them to conduct limited preliminary activities such as geophysical surveys. See 30 C.F.R This case involves the third stage of the OCSLA process: exploration. Prior to engaging in any exploratory drilling, a lessee must submit an EP for review and approval. 43 U.S.C. 1340(c). The statute requires that [t]he Secretary shall approve such plan, as submitted or modified, within thirty days of its submission. Id. 1340(c)(1). The Secretary must disapprove the plan if he finds that any activity under the plan would result in serious harm or damage to the marine, coastal, or human environment. Id., see also 43 U.S.C. 1334(a)(2)(A)(i). Approval of its EP does not permit the lessee to proceed with exploratory drilling. Before drilling a well, the lessee must first obtain approval of an 7

16 Case: /31/2012 ID: DktEntry: 28 Page: 16 of 79 Application for Permit to Drill ( APD ). 43 U.S.C. 1340(d); 30 C.F.R APDs are reviewed and approved by BSEE. See supra at n.1. The regulations governing APDs require technically detailed descriptions of items such as well design criteria, casing and cementing procedures, and blow-out prevention systems. 30 C.F.R Among other requirements for obtaining a permit, an operator planning to use a Mobile Offshore Drilling Unit in a frontier area such as Alaska must have in place a contingency plan that addresses design and operating limitations of the drilling unit, which identifies actions necessary to maintain safety and prevent damage to the environment, including actions taken in response to severe weather or ice. 30 C.F.R (c)(2). 5/ 2. OCSLA Regulations Governing EPs. The OCSLA directs the Secretary of the Interior to promulgate regulations to carry out the provisions of the statute. 43 U.S.C. 1334(a). The Secretary has promulgated regulations implementing the statutory requirements regarding EPs. Requirements governing the content of EPs currently are found at 30 C.F.R. 5/ The fourth stage of the OCSLA process, development, is reached only if a lessee makes a commercially viable discovery. A lessee must submit a detailed development and production plan ( DPP ), 43 U.S.C. 1351, which is approved in a process similar to that applicable to EPs, and that approval is similarly subject to direct review in the courts of appeals pursuant to 43 U.S.C. 1349(c). As with the exploration stage, actual drilling under a DPP must be preceded by BSEE s approval of an APD. 30 C.F.R (b). 8

17 Case: /31/2012 ID: DktEntry: 28 Page: 17 of Procedures for processing EPs are described at 30 C.F.R / Under those procedures, within 15 days of receiving a proposed EP, BOEM must determine if the applicant has provided all needed information and whether the information is accurate. 30 C.F.R If the information is found to be sufficient, or if any information deficits are cured by the applicant, the EP is then deemed submitted. Id (c). Once the EP is deemed submitted, the 30-day statutory clock begins to run. During the review period, BOEM determines whether the EP meets the regulatory criteria, and prepares environmental documentation under NEPA. 30 C.F.R (c). The criteria that a submitted EP must meet to be approved are defined at 30 C.F.R , as follows: Your EP * * * must demonstrate that you have planned and are prepared to conduct the proposed activities in a manner that: (a) Conforms to the Outer Continental Shelf Lands Act as amended (Act), applicable implementing regulations, lease provisions and stipulations, and other Federal laws; (b) Is safe; (c) Conforms to sound conservation practices and protects the rights of the lessor; 6/ At the time Shell s EP was approved, these regulations were codified at 30 C.F.R As part of the agency reorganization that created BOEM and BSEE (see supra at n.1), these provisions were moved to 30 C.F.R. Part 550, effective October 1, See 76 Fed. Reg. 64,432, 64,439 (2011). 9

18 Case: /31/2012 ID: DktEntry: 28 Page: 18 of 79 (d) Does not unreasonably interfere with other uses of the OCS, including those involved with National security or defense; and (e) Does not cause undue or serious harm or damage to the human, marine, or coastal environment. 3. The Oil Pollution Act and Oil Spill Response Plan Regulations. Congress passed the Oil Pollution Act ( OPA ) in the wake of the Exxon Valdez oil spill. See, e.g., S. Rep. No , 101 st Cong., 1 st Sess. at 2-3 (1989); H.R. Conf. Rep. No at 7 (1990). While the OPA is principally administered by the Coast Guard, 33 U.S.C. 2701(33); Exec. Order No. 12,777, 56 Fed. Reg. 54,757, 54,767 (1991), provisions requiring spill response plans for offshore facilities are administered by the Department of the Interior. See infra at 11. The OPA provides for prompt federally-coordinated responses to oil spills in navigable waters of the United States and for compensation of spill victims. It also requires issuance of regulations requiring owners and operators of offshore facilities to prepare and submit a plan for responding, to the maximum extent practicable, to a worst case discharge, and to a substantial threat of such a discharge, of oil * * *. 33 U.S.C. 1321(j)(5)(A)(i). The OPA provides that offshore facilities may not handle, store, or transport oil unless the owner or operator s plan has been approved by the President and the * * * facility is operating in compliance 10

19 Case: /31/2012 ID: DktEntry: 28 Page: 19 of 79 with the plan. 33 U.S.C. 1321(j)(5)(F)(i)-(ii). The OPA confers jurisdiction upon the district court over any actions * * * arising under this section, see 33 U.S.C. 1321(n), which includes the provisions requiring the owner or operator of a oil production facility to prepare and obtain approval of a spill response plan, 33 U.S.C. 1321(j)(5). See Edwardsen, supra, 268 F.3d at (claims challenging adequacy of spill response plans must be brought in district court, not as part of petition for review challenge under OCSLA, 43 U.S.C. 1349(c)). By Executive Order No. 12,777, 56 Fed. Reg. 54,757 (Oct. 18, 1991), the President delegated authority to the Secretary of the Interior to carry out the functions of Section 1321(j)(5) regarding offshore facilities and pipelines, including the promulgation of regulations governing the obligation to prepare and submit response plans, and the review and approval of response plans for these facilities. Those regulations are found at 30 C.F.R. Part 254. They require, inter alia, that the owner or operator of an offshore facility must submit a spill-response plan to BSEE for approval, and that the plan must demonstrate that you can respond quickly and effectively whenever oil is discharged from your facility. 30 C.F.R (a). 7/ 7/ We will generally refer to the plans required by 30 C.F.R. Part 254 as oil spill response plans, or OSRPs. Shell s OSRP is frequently referred to in the record as its Oil Discharge Prevention and Contingency Plan, or ODPCP, in part because Shell s OSRP also served the purpose of complying with then-applicable 11

20 Case: /31/2012 ID: DktEntry: 28 Page: 20 of 79 STATEMENT OF FACTS As the previous discussion indicates, the issues relevant to BOEM s approval of an EP center on the applicant s proposed activities and whether the applicant has planned and is prepared to conduct those exploratory activities in manner that is safe, does not interfere with other uses of the OCS, does not cause undue or serious harm or damage to the human, marine, or coastal environment, and complies with applicable regulations and lease requirements. 30 C.F.R BOEM here prepared an extensive, 238-page EA pursuant to NEPA in order to address issues regarding potential impacts of Shell s proposed activities on the marine, coastal and human environment, as well as on other uses of the OCS like subsistence hunting and fishing. The EA is tiered 8/ to more comprehensive NEPA analyses, including a 2002 Five Year Program EIS and 2003 multi-sale EIS for the Beaufort Sea. See EA at 3-4 (SER34-35). Among other things, the EA considers oil spill probabilities and consequences and the implication of the Deepwater Horizon oil spill for drilling in the Beaufort Sea. (SER67-94). It also discusses and refers the reader to State of Alaska regulatory requirements that used those terms. 8/ When preparing EAs or other NEPA document, agencies are encouraged by Council on Environmental Quality regulations to tier to prior NEPA documents to eliminate repetitive discussions of the same issues and to focus on the actual issues ripe for decision at each level of environmental review. 40 C.F.R

21 Case: /31/2012 ID: DktEntry: 28 Page: 21 of 79 appropriate additional analysis of the techniques of oil spill containment and clean-up and the effectiveness of each, particularly in Arctic conditions (SER70, 76-78, 92-94). Petitioners choose to ignore the EA and BOEM s analysis therein of issues relating to the very low likelihood of oil spills. See EA at A-1 - A-19 (SER ). Their Statement of Facts instead cites an array of sources dealing generally with the issue of oil spill response, in particular recommendations of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling regarding needed changes to oil spill response plans. Br As indicated above and discussed in more detail infra at 19-21, questions regarding the legal adequacy of Shell s oil spill response plan under the OPA are beyond the scope of this case. In the following sections we briefly set forth facts that are relevant to the decision at issue here: BOEM s conditional approval of Shell s plans for exploratory drilling at Sivulliq and Torpedo. 1. Shell s EP. In May 2011, Shell submitted its revised EP proposing to conduct drilling to evaluate the oil and gas resource potential on leases in the Camden Bay area of the Beaufort Sea. The EP was deemed submitted (i.e. complete) on July 5, SER137. The EP includes detailed information on the nature of Shell s planned 13

22 Case: /31/2012 ID: DktEntry: 28 Page: 22 of 79 exploratory activities (see Table of Contents at i - vi, SER141-46) and their expected impacts. It covers a wide variety of topics, including Shell s oil spill response planning at Sections 8 and 9. SER The EP attaches a number of appendices, including a comprehensive Environmental Impact Assessment (Appendix F), a Critical Operations and Curtailment Plan (Appendix J), an Ice Management Plan (Appendix K), and a Well Control Plan (Appendix L), and also attaches applications Shell has filed for various authorizations Shell will need to carry out its planned drilling. BOEM notified interested parties of the availability of the EP, and accepted comments which it analyzed before making a final decision. See SER BOEM s Review and Approval of the EP. BOEM undertook an extensive review of Shell s EP, based on the information provided by Shell as well as other data, including the agency s earlier NEPA documents and material provided by federal and state agencies. See EA at , SER BOEM prepared an EA and on the basis of that analysis was able to conclude that Shell s planned activities would not result in significant effects to the environment. SER

23 Case: /31/2012 ID: DktEntry: 28 Page: 23 of 79 On August 4, 2011, the BOEM Regional Supervisor approved Shell s revised EP, subject to a number of conditions. ER1-3. Among others conditions, no drilling activities can be conducted without: an approved Application for Permit to Drill from BSEE; appropriate authorizations from the National Marine Fisheries Service and the U.S. Fish and Wildlife Service permitting incidental harassment of protected wildlife; required Clean Air Act permits; documentation of sufficient mitigation and monitoring to prevent unreasonable conflicts with subsistence activities; an approved site-specific bowhead whale monitoring program; confirmation of final staging location and schedule for mobilizing the designated relief well rig, a demonstration that it meets all applicable requirements and that response times for commencement and completion of a relief well are consistent with the approved EP, as well as confirmation that relief well equipment and supplies are available; and documentation that Shell s subsea well capping and containment system is designed for projected worst case discharge conditions and documentation of 15

24 Case: /31/2012 ID: DktEntry: 28 Page: 24 of 79 procedures for deployment, installation and operation under anticipated environmental conditions, including presence of sea ice. ER1-3. STANDARD OF REVIEW Under section 23(c)(6) of the OCSLA, 43 U.S.C. 1349(c)(6), review of BOEM s action in approving an EP shall be solely on the record made before the Secretary. The findings of the Secretary shall be conclusive if supported by substantial evidence on the record considered as a whole * * *. Id. Petitioners challenges to approval of the EP in this case are largely based on their interpretation of BOEM regulations governing EP approval, and in major respects petitioners reading of these regulations differs from BOEM s own interpretation. See NVPH Br. at (alleging violation of 30 C.F.R (a)), (alleging violation of 30 C.F.R (d), , and (c), and (alleging violation of 30 C.F.R (g)). An agency s interpretation of its own regulations is controlling unless plainly erroneous or inconsistent with the regulation. Auer v. Robbins, 519 U.S. 452, 461 (1997); see also Home Builders Ass n of Northern Cal. v. U.S. Fish and Wildlife Service, 616 F.3d 983, 991 (9 th Cir. 2010). The Supreme Court has described this standard as deferential, Auer, 519 U.S. at 461, and deference is particularly appropriate where 16

25 Case: /31/2012 ID: DktEntry: 28 Page: 25 of 79 the subject matter is technical and the relevant background complex. See Geier v. American Honda Motor Co., 529 U.S. 861, 883 (2000). See also Wickland Oil Terminals v. Asarco, 792 F.2d 887, (9 th Cir. 1986) ( [w]e must accord very great deference to an agency s interpretation of its regulations ). A reviewing Court will also treat an agency s decision with great deference * * * [where] we are reviewing the agency s technical analysis and judgments, based on an evaluation of complex scientific data within the agency s technical expertise. Envtl. Def. Ctr., Inc. v. EPA, 344 F.3d 832, 869 (9 th Cir. 2003). SUMMARY OF ARGUMENT 1. Shell s EP contained all information required by 30 C.F.R (a)(2). The EP properly referred to Shell s regional OSRP, approved in March 2010, and provided information regarding its oil spill equipment base and staging area, its oil spill removal contractor, and the calculated volume of its worst case discharge ( WCD ) scenario with a comparison to the WCD scenario in the regional OSRP. As Edwardsen makes clear, so long as the required information regarding oil spill response is contained in the EP, as it plainly was here, this Court should affirm without reaching questions regarding the substantive adequacy of the OSRP itself. 17

26 Case: /31/2012 ID: DktEntry: 28 Page: 26 of 79 The Court should reject petitioners argument that there was no approved regional OSRP for the EP to reference. Shell s submission of required revisions to its WCD scenario did not change the status of its regional OSRP to unapproved. The language of the regulations, the scheme of the Oil Pollution Act, and the consistent agency interpretation all refute petitioners claim that a proposed revision of an OSRP must be approved before an EP can refer to it. 2. In reviewing the EP, BOEM properly considered Shell s commitment to have in place a subsea containment system for responding to an oil spill, and properly conditioned EP approval on Shell providing additional information demonstrating its ability to deploy such a system. The EP s description of this system plainly met the requirements of 30 C.F.R (c). BOEM s finding that subsea containment systems are not new and unusual technology pursuant to 30 C.F.R (d) was supported by substantial evidence. But even if that provision applied, there was adequate information in Shell s EP to satisfy the regulation s requirement for a description and discussion of new and unusual technology. Petitioners contention that BOEM lacks authority under the OCSLA to conditionally approve an EP was rejected by this Court in NVPH I, and in any event is plainly inconsistent with the statute and applicable regulations. 18

27 Case: /31/2012 ID: DktEntry: 28 Page: 27 of The EP also satisfied the regulations requirement for general information to include, inter alia, a WCD scenario and an [e]stimate [of] the time it would take to drill a relief well. 30 C.F.R & (g). The EP contains detailed information on these subjects, which BOEM thoroughly reviewed in the EA. Petitioners attempts to have this Court review the substantive adequacy of Shell s OSRP, and in particular its plans for drilling a relief well to respond to a possible blowout, should be rejected as contrary to Edwardsen. ARGUMENT Petitioners mount a narrow challenge to BOEM s approval of Shell s EP. They do not contend that BOEM should have found that any activity under Shell s plan would result in serious harm or damage to the marine, coastal, or human environment, which is the statutory criterion for disapproval. See 43 U.S.C. 1340(c)(1) and 1334(a)(2)(A)(i). Nor do they contend that activities proposed by Shell are not safe, do not conform[] to sound conservation practices or that they unreasonably interfere with other uses of the OCS, which are relevant regulatory criteria for EP approval. 9/ See 30 C.F.R / Claims not made in an opening brief are waived. See Greenwood v. F.A.A., 28 F.3d 971, 977 (9 th Cir. 1994) ( [w]e review only issues which are argued specifically and distinctly in a party s opening brief ). 19

28 Case: /31/2012 ID: DktEntry: 28 Page: 28 of 79 Instead petitioners rest their case on BOEM regulations that require EPs to include certain information regarding a possible worst case oil discharge and the applicant s spill response plan for dealing with such a discharge, specifically 30 C.F.R & The issues that petitioners may properly raise regarding compliance with these regulations are narrower than petitioners assume, however. In Edwardsen, 268 F.3d at , this Court made clear that petitioners cannot use regulations requiring that exploration or development plans under the OCSLA be accompanied by certain information regarding oil spill response as a springboard to obtain review of the substantive adequacy of oil spill response plans themselves. Edwardsen involved a similar petition for review under 43 U.S.C. 1349(c)(2) that challenged the approval of a Development and Production Plan ( DPP ) in an area of the Beaufort Sea. This Court made clear that its jurisdiction under 43 U.S.C. 1349(c)(2) does not extend to issues regarding the adequacy of an oil spill response plan, but only to whether a DPP contains all required elements. The DPP regulations, like the EP regulations, include a requirement that a DPP be 20

29 Case: /31/2012 ID: DktEntry: 28 Page: 29 of 79 accompan[ied] by a [r]eference to your approved regional OSRP. 10/ 30 C.F.R (a)(2). 11/ The Court stated: Therefore, BPXA s DPP had to be accompanied by no more than a reference to the spill response plan that the MMS approved in June * * * In determining whether the MMS complied with its regulations in approving the DPP, we ask whether that requirement was satisfied. It was. 268 F.3d at 790. So too here, the question before this Court is whether Shell s EP satisfied the requirements of BOEM s regulations, such as the requirement that the EP be accompanied by reference to an approved regional spill response plan. Claims relating to the adequacy of the OSRP itself cannot be brought in an OCSLA petition for review proceeding, since the OPA has its own special jurisdictional provision directing such challenges to district courts. Id. at , citing 33 U.S.C. 1321(n). Finally, if there is any ambiguity regarding what the BOEM regulations require in an EP, the agency s interpretation must control unless plainly erroneous or inconsistent with the regulation. Auer, supra, 519 U.S. at 461, and see discussion supra at Petitioners rely on interpretations of BOEM s 10/ The regulations governing DPPs and EPs are very similar as to the sorts of information required. Compare 30 C.F.R (governing contents of EPs) with 30 C.F.R (governing contents of DPPs). 11/ At the time of Edwarsen, this regulation was codified at 30 C.F.R

30 Case: /31/2012 ID: DktEntry: 28 Page: 30 of 79 regulations that are radically different from BOEM s, yet fail to show that BOEM s interpretations plainly conflict with the language of the regulations. As we show below, Shell s EP complied with BOEM s regulations governing EPs by providing all required information regarding Shell s plans for responding to the unlikely event of a worst case oil spill. Accordingly, the petition should be denied. I THE EP COMPLIED WITH THE REQUIREMENTS OF 30 C.F.R (a) BY REFERRING TO SHELL S APPROVED REGIONAL OIL SPILL RESPONSE PLAN AND BY PROVIDING ADEQUATE INFORMATION REGARDING SHELL S PLANS FOR RESPONDING TO AN OIL SPILL Petitioners first contend (Br ) that BOEM violated its regulation that specifies the information EPs must contain regarding the operator s oil spill response plans. That regulation at 30 C.F.R (a) states that, [t]he following information regarding potential spills of oil * * * must accompany your EP: either [a]n Oil Spill Response Plan (OSRP) for the facilities you will use to conduct your exploration activities, or: (2) Reference to your approved regional OSRP (see 30 CFR 254.3) to include: (i) A discussion of your regional OSRP; (ii) The location of your primary oil spill equipment base and staging area; 22

31 Case: /31/2012 ID: DktEntry: 28 Page: 31 of 79 (iii) The name(s) of your oil spill removal organization(s) for both equipment and personnel; (iv) The calculated volume of your worst case discharge scenario (see 30 CFR (a)), and a comparison of the appropriate worst case discharge scenario in your approved regional OSRP with the worst case discharge scenario that could result from your proposed exploration activities; and (v) A description of the worst case discharge scenario that could result from your proposed exploration activities (see 30 CFR (b), (c), (d), and (e)). Shell chose to comply by referring to an approved regional OSRP and by including the information specified at 30 C.F.R (a)(2)(i) - (v). In its EP at page 8-1, Shell refers to its Beaufort Sea Regional Exploration ODPCP, which it notes was unconditionally approved on 11 March SER176; see also ER535a (approval letter). 12/ The EP goes on to explain that BOEMRE has revised and increased the requirements for WCD [worst case discharge] scenario calculations through NTL No N06. It further explains that Shell has in response to this new requirement submitted a revision to its regional OSRP to address this increase in the WCD volume. SER176. That revision is currently pending approval by 12/ As noted supra at 11 n.7, Shell refers to its regional OSRP as an ODPCP. 23

32 Case: /31/2012 ID: DktEntry: 28 Page: 32 of 79 BSEE. See EA at 8, 26, SER39, / The information in the proposed revisions regarding Shell s plans was available to and relied upon by BOEM in reviewing Shell s EP. EA at 8, , SER39, Shell s EP, which provided up-to-date information on Shell s oil response plans including details of the proposed revision, complied with the information requirements of 30 C.F.R (a)(2)(i - v). The EP describes Shell s primary oil spill equipment base and staging area as consisting of several oil spill response vessels (barges, skimmers, tugs) that will be stationed near the planned exploratory drilling (exact proximity depending on ice conditions) to ensure timely response to any spill event. EP at 8-1, SER176. Shell describes its spill removal contractor (Alaska Clean Seas) and how the contractor will work with Shell s own response assets. Id. The EP provides [t]he calculated volume of your worst case discharge scenario, as required by 30 C.F.R (a)(2)(iv). The EP at 8-2 notes that [o]f the four wells, Torpedo H has the highest calculated WCD at 9,468 bbl/day. See also EP at 2-5, table 2.g-1 (providing for each of the four planned wells the calculated WCD volumes). SER177. The EP goes on to explain that the WCD utilized in Shell s proposed revisions to its OSRP for planning purposes is larger, amounting to 16,000 13/ The agency solicited public comment on Shell s revised spill response plan at the same time that it sought comment on Shell s EP. AR413, SER

33 Case: /31/2012 ID: DktEntry: 28 Page: 33 of 79 barrels/day for the Torpedo H well. That planning-based WCD yields a total WCD for a 30-day blowout (as required by the OSRP regulations at 30 C.F.R (b)) of 480,000 barrels. EP at 8-2, SER177. The EP points out that Shell s response plans, which are based on that higher planning rate, will be adequate to deal with any spill from this project. See SER ( Shell s OSR fleet capacity for recovered liquids is more than sufficient to cover the unlikely WCD event ); see also EP at 2-5, SER174. This information was more than sufficient to permit BOEM to determine that Shell s EP met the statutory and regulatory criteria for approval. BOEM s analysis of the EP information regarding Shell s oil spill response plans is set out in the EA at 26 & SER57, BOEM found that: Despite the extremely low likelihood of a large oil-spill occurring during exploration, Shell has designed its response program for a regional capability of responding to a range of spill volumes that increase from small operational spills up to and including a Worst Case Discharge (WCD) scenario from an exploration well blowout, as required under 30 CFR Shell s program is based on a WCD scenario that meets the response planning requirements of the State of Alaska and Federal oil-spill-planning regulations. SER57; see also SER92 & 94 ( Shell has the equipment and resources to contain and clean up the worst case discharge volume calculated for the Torpedo H exploratory well without a subsea containment system ). Petitioners do not claim 25

34 Case: /31/2012 ID: DktEntry: 28 Page: 34 of 79 that BOEM s findings regarding the adequacy of the information provided pursuant to 30 C.F.R (a) were unsupported by substantial evidence. Hence, those conclusions must be taken as conclusive. 43 U.S.C. 1349(c)(6) (findings of the Secretary shall be conclusive if supported by substantial evidence on the record considered as a whole ). Instead, petitioners contend that BOEM is misinterpreting its own regulation to allow its EP review to include information included in a proposed revision to an approved OSRP. In petitioners view, 30 C.F.R (a) requires that any revisions to a regional OSRP must have been approved before an EP can rely on them in reviewing a proposed EP. See Br. 35. However, BOEM s interpretation that it may rely on submitted revisions to an OSRP when reviewing an EP is not plainly erroneous or inconsistent with the regulation. Auer, 519 U.S. at 461. The language of 30 C.F.R (a) simply requires that among the information that must accompany your EP is either an OSRP for the particular facility or [r]eference to your approved regional OSRP, to include the information about spill response plans and worst case discharges discussed supra at Shell has an approved regional OSRP there is no dispute that the Beaufort Sea Regional OSRP was approved in March ER535a. That approved OSRP was 26

35 Case: /31/2012 ID: DktEntry: 28 Page: 35 of 79 reference[d] in the EP, as required by 30 C.F.R (a), and the specific information described in that regulation was plainly provided to BOEM. Petitioners refer (Br ) to a New Beaufort Sea Spill Plan and an Old Beaufort Sea Spill Plan, apparently to suggest that the new plan replaced the old one. But the record never uses these terms, and nothing in the record indicates that the revisions submitted by Shell in any way affected the March 2010 approval of Shell s regional OSRP. Nor is there anything in the applicable statute or regulations indicating that the submission of proposed revisions to an approved OSRP vacates the prior approval or prevents reliance on the regional OSRP in reviewing an EP. The OPA at 33 U.S.C. 1321(j)(5)(F) requires that an offshore facility that is required to have an OSRP may not handle, store, or transport oil unless (i) * * * the plan has been approved * * *, and (ii) the vessel or facility is operating in compliance with the plan. This statutory language in no way suggests that approval of an OSRP must precede EP approval, which occurs well before any operations would take place. As explained supra at 7-8, there is another regulatory step approval of an APD that will take place before Shell would be allowed to commence any operations. See also discussion infra at Hence, there is no statutory basis 27

36 Case: /31/2012 ID: DktEntry: 28 Page: 36 of 79 for petitioners argument that any OSRP revision must be approved before an EP can rely on it. Nor is there any support for petitioner s interpretation in applicable regulations. The regulations pertaining to the approval of OSRPs and revisions are found at 30 C.F.R They provide that [y]ou must submit, and BSEE must approve, a response plan that covers each facility located seaward of the coast line before you may use that facility. 30 C.F.R (a)(emphasis added). There is no equivalent regulatory requirement that BSEE must approve a response plan or revision thereto before BOEM can approve an EP. Moreover, the regulation governing approval of OSRPs indicates that in appropriate circumstances operators may even commence operations while initial OSRPs or revisions thereto are pending approval. 30 C.F.R (b) provides that, you may operate your facility after you submit your plan while BSEE reviews it for approval, if a certification is provided indicating capability to respond, to the maximum extent practicable, to a worst case discharge. 14/ Similarly, 30 C.F.R (c) provides that: (c) If you have a plan that BSEE already approved, you are not required to immediately rewrite the plan to comply with this part. You must, however, submit the information this regulation 14/ This regulation is grounded on a provision of the OPA that expressly provides for certification pending approval of an OSRP. See 33 U.S.C. 1321(j)(5)(G). 28

37 Case: /31/2012 ID: DktEntry: 28 Page: 37 of 79 requires when submitting your first plan revision (see ) after the effective date of this rule. The Regional Supervisor may extend this deadline upon request. These provisions make clear that mere submission of a revision to an approved OSRP does not turn that OSRP into an unapproved plan, even after an operator has commenced operations. It follows, a fortiori, that Shell s submission of proposed revisions to its approved regional OSRP did not make that an unapproved plan for purposes of BOEM s review of Shell s EP, well before any operations could commence. 15/ Petitioners contend (Br. 38, n.19) that the spill plan approved in 2010 is plainly inadequate for Shell s proposed drilling, relying on the fact that this plan was approved before the Deepwater Horizon oil spill. However, questions regarding the adequacy of an approved spill plans are beyond the jurisdiction of this Court. Edwardsen, 268 F.3d at In any event, BOEM here based its approval of the EP on its review of the approved OSRP as supplemented by the 15/ While Shell chose to satisfy 30 C.F.R (a) by including in its EP [r]eference to [its] approved regional OSRP as contemplated in (a)(2), it could have instead submitted with its EP [a]n Oil Spill Response Plan (OSRP) for the facilities you will use to conduct your exploration activities prepared according to the requirements of 30 CFR part 254, subpart B, as contemplated in 30 C.F.R (a)(1). There is no requirement in the regulation that such a facility-specific OSRP be approved at the time of EP approval. This further undercuts petitioners argument that BSEE approval of any OSRP revision is somehow essential at the time BOEM approves an EP. 29

38 Case: /31/2012 ID: DktEntry: 28 Page: 38 of 79 proposed revisions that respond to new post-deepwater Horizon requirements. See EA at , SER Petitioners express concern that BSEE, upon review of the revisions to the OSRP, may decide that Shell is not equipped to respond to a late season spill in the frozen Arctic. Br. 39. This Court lacks jurisdiction over BSEE s future determinations regarding adequacy of the OSRP as revised, not only because jurisdiction over OSRP approvals lies in district court, but also because BSEE has not completed that process, rendering such issues unripe. In any event, the approval of the EP is not a commitment to allow drilling no matter what may happen in later review processes, including the review that will take place when Shell applies to BSEE for an APD for a particular well. As Edwardsen instructs, 268 F.3d at 790, the only question over which this Court has jurisdiction is whether Shell s EP was accompanied by reference to an approved regional OSRP and by the specific information listed in 30 C.F.R It was, and hence the petition must be denied. 30