A federal appeals court on Thursday blocked Royal Dutch Shell from drilling oil wells off Alaska’s North Slope after finding that the Interior Department had failed to conduct an environmental study before issuing the company’s drilling permit.
In a long-awaited ruling, the court said that the Minerals Management Service, the federal agency in charge of offshore leasing, had violated the 1970 National Environmental Policy Act by failing to take a “hard look” at the impact that offshore drilling would have on bowhead whales in the Beaufort Sea as well as indigenous communities on the North Slope.
The decision canceled Shell’s permit to drill at a prospect called Sivulliq, about 16 miles off northern Alaska, and ordered the agency to begin the process from scratch.
“There remain substantial questions as to whether Shell’s plan may cause significant harm to the people and wildlife of the Beaufort Sea region,” the United States Court of Appeals for the Ninth Circuit, in San Francisco, said in its ruling. One judge, Carlos T. Bea, on the three-judge panel dissented.
Environmental groups, including the Alaska Wilderness League, as well as the North Slope Borough, which represents the indigenous Inupiat people, had sued to stop Shell from drilling, claiming that the company’s plans to send icebreakers, drill ships and vessels to conduct seismic surveys might harm bowheads. The whales migrate through the Beaufort Sea twice a year and are the basis of the Inupiat community’s subsistence culture.
The decision is a costly setback for Shell, which had waged a vigorous campaign to expand offshore exploration in Alaska. The company recently spent $2.1 billion to acquire leases in the Chukchi Sea, after spending $84 million to buy leases in the Beaufort Sea. The company said it would review its options.
“We believe the M.M.S. did a thorough job and that Shell has met or exceeded requirements for responsible Arctic exploration,” the company said in a statement. “Shell is committed to operating safely and responsibly and will continue to comply with all regulatory requirements.”
The oil industry had been looking at the case as a test on how to tap the Arctic’s hydrocarbon potential, and offset declines from the onshore Prudhoe Bay oil field. It comes at a time of renewed public debate in the country about opening other offshore tracts for exploration.
Charles Clusen, the director of the Alaska project at the Natural Resources Defense Council, one of the plaintiffs in the case, said the ruling left it to the next administration to decide how offshore drilling would be conducted in the nation’s Arctic region.
“This is really a signal that Shell’s plan was simply too much, too fast, and too shoddy,” Mr. Clusen said. “By this decision, the court has opened the door to a new administration to take a whole new approach, and hopefully a more precautionary approach, to America’s Arctic and make sure we don’t lose endangered species.”In a statement, the Minerals Management Service said it was disappointed by the ruling and defended its environmental review process.