Submitted via Regulations.gov and Certified Mail, Return Receipt Requested

Department of the Interior

Bureau of Ocean Energy Management, Regulation and Enforcement

Attention: Regulations and Standards Branch (RSB)

381 Elden Street, MS-4024

Herndon, Virginia 20170-4817

April 10, 2011

Re: Shell Gulf of Mexico Inc.

Supplemental Exploration Plan S-7044

Dear Sirs:

On March 31, 2011, the Bureau of Ocean Energy Management, Regulation and

Enforcement (―BOEMRE‖) deemed submitted a supplemental exploration plan submitted by

Shell Gulf of Mexico Inc. (plan control number S-7044) covering five new wells, one sidetrack

well, and four existing wells located at Mississippi Canyon blocks 348, 391, and 392 and

indicated that it will prepare a site-specific environmental assessment (―SEA‖) for the proposed

project. This letter provides comments by the Southern Environmental Law Center, Defenders

of Wildlife, the Natural Resources Defense Council, and the Center for Biological Diversity on

that plan as well as on any amendments, modifications, or revisions thereto. We believe that the

approval of this Exploration Plan is illegal pursuant to the National Environmental Policy Act

(―NEPA‖), the Endangered Species Act (―ESA‖), the Marine Mammal Protection Act

(―MMPA‖), the Magnusen-Stevens Fishery Conservation and Management Act (―MSA‖), the

Oil Pollution Act (―OPA‖) and the Outer Continental Shelf Lands Act (―OCSLA‖) and also

disregards recent advice issued by the Council on Environmental Quality (―CEQ‖) regarding the

permitting of Gulf drilling in the wake of the Deepwater Horizon disaster.

I. Background

A. The Deepwater Horizon Incident and Resulting Environmental Damage

On April 20, 2010, the Deepwater Horizon offshore drilling rig exploded and caught fire,

causing the deaths of 11 workers and resulting in an oil geyser that spilled millions of gallons of

oil into the Gulf of Mexico. The Deepwater Horizon sank two days after the explosion, and the

well it was drilling spewed oil without abatement until BP capped it on July 15, 2010. The Flow

Rate Technical Group, a group of scientists from federal agencies and academic institutions,

estimated that the Deepwater Horizon well spilled 4.9 million barrels of oil into the Gulf of

Mexico before the well was capped on July 15, 2010. See Campbell Robertson & Clifford

Krauss, Gulf Spill Is the Largest of Its Kind, Scientists Say, N.Y. Times, Aug. 3, 2010, at A14.

The spill has resulted in roughly 580 miles of oiled shoreline. See Campbell Robertson &

John Collins Rudolf, Spill Cleanup Proceeds Amid Mistrust, N.Y. Times, Nov. 3, 2010, at A14.

Scientists have also reported large plumes of oil below the sea‘s surface which have been

confirmed to have originated from the Deepwater Horizon well. Researchers from the National

Institute for Undersea Science and Technology discovered oil plumes as big as ten miles long,

three miles wide, and 300 feet thick. See Justin Gillis, Giant Plumes of Oil Forming Under the

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Gulf, N.Y. Times, May 16, 2010, at A1. Scientists from Woods Hole Oceanographic Institution

documented an undersea oil plume 22 miles long and 700 feet thick. See Woods Hole

Oceanographic Inst., WHOI Scientists Map and Confirm Origin of Large, Underwater

Hydrocarbon Plume in Gulf, Aug. 19, 2010,

http://www.whoi.edu/dwhresponse/page.do?pid=43720&tid=282&cid=79926. Scientists have

confirmed that the undersea oil plumes originated from the Deepwater Horizon well. Id.

It has been nearly a year since the oil spill was contained, but still there is pervasive

uncertainty concerning its root causes. As noted by BOEMRE Director Michael R. Bromwich in

a report to the Secretary of Interior on October 1, 2010,

Several environmental reviews and investigations seeking to identify the root

causes of the Deepwater Horizon accident are ongoing and have not yet issued

findings . . . . Substantial investigative work remains to be done and, therefore,

significant factual information and insights relating to the Macondo blowout and

Deepwater Horizon explosion will be available in the future.

Memorandum from Michael R. Bromwich to Secretary of the Interior Kenneth Salazar, Report

regarding the current suspension of certain offshore permitting and drilling activities on the

Outer Continental Shelf (Oct. 1, 2010), at 7, available at

http://www.doi.gov/news/pressreleases/loader.cfm?csModule=security/getfile&PageID=64703.

On May 22, 2010, President Obama established the National Commission on the BP

Deepwater Horizon Oil Spill and Offshore Drilling (hereafter ―the Commission‖) as an

independent, nonpartisan entity charged with providing a thorough analysis of the causes of the

disaster, an assessment of the oil industry‘s ability to respond to spills, and recommended

reforms for making offshore drilling safer. See Weekly Address: President Obama Establishes

Bipartisan National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling,

May 22, 2010, http://www.whitehouse.gov/the-press-office/weekly-address-president-obama-

establishes-bipartisan-national-commission-bp-deepwa. The Commission issued its final report

on January 11, 2011, in which it reached numerous conclusions and offered several

recommendations regarding offshore oil activities in the Gulf of Mexico. See Nat‘l Comm‘n on

the BP Deepwater Horizon Oil Spill & Offshore Drilling, Deepwater: The Gulf Oil Disaster and

the Future of Offshore Drilling: Report to the President, available at

http://www.oilspillcommission.gov/sites/default/files/documents/DEEPWATER_ReporttothePre

sident_FINAL.pdf.

In its final report, the Commission found that, in order to ensure the safety of offshore

energy exploration and production, regulatory oversight of offshore drilling activities would

require reforms beyond those already initiated since the Deepwater Horizon oil spill. The report

noted that the breakdown of the government‘s environmental review process for OCS activities

was ―systemic,‖ requiring significant revision. Id. at 260. The Commission made the following

recommendations, among others:

To assure human safety and environmental protection, regulatory oversight of leasing,

energy exploration, and production requires reform in both the structure of regulatory

oversight and related internal decisionmaking processes to ensure political autonomy,

technical expertise, and full consideration of environmental protection concerns.

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Because regulatory oversight alone will not be sufficient to ensure adequate safety, the oil

and gas industry will need to take its own, unilateral steps to increase safety throughout

the industry, including self-policing mechanisms that support governmental enforcement.

The technology, laws and regulations, and practices for containing, responding to, and

cleaning up spills lag behind the real world risks associated with deepwater drilling into

large, high-pressure reservoirs of oil and gas located far offshore and thousands of feet

below the ocean‘s surface. Government must close the existing gap and industry must

support rather than resist that effort.

Scientific understanding of environmental conditions in sensitive environments in deep

Gulf waters, along the region‘s coastal habitats, and in other areas proposed for drilling,

such as the Arctic, is inadequate. The same is true of the human and natural impacts of

oil spills.

The government must revise and strengthen NEPA policies to improve environmental

analyses, transparency and consistency and create a new oil spill analysis and planning

process.

In addition, a fundamental reorganization of the former Minerals Management Service is

needed. Congress should create an independent agency within the Department of Interior

with enforcement authority to oversee offshore drilling safety.

See generally id. Neither these recommendations, nor any of the Commission‘s other findings,

have been adopted by Shell, BOEMRE or the Department of the Interior. As a result, necessary

and fundamental reforms have not been applied to the Shell project.

In response to the spill, BOEMRE commissioned Det Norske Veritas to write a technical

report explaining why the blowout preventer (―BOP‖) – the device intended to be the last, fail-

safe defense against a well blowout – on the Deepwater Horizon drilling vessel failed to operate

properly. On March 20, 2011, Det Norske Veritas released its final report (―BOP Report‖). The

report concluded that the BOP had failed because the pressure of the escaping oil and gas

buckled the drill pipe and pushed it off-center so that the jaws of the BOP‘s shear rams, which

are supposed to cut and seal the drill pipe, jammed and could not close. See BOP Report at 4-5,

available at http://www.deepwaterinvestigation.com/go/doc/3043/1047291/. In our view, this is

a fundamental design defect in the design of the Cameron-style blowout preventers, which are

widely used in deepwater exploration. We now know that there is a critical failure mode in these

devices which has not been designed against and that blowout preventers are not fail-safe. This

problem is not mentioned, much less analyzed, in the Shell EP, or in the environmental

assessment BOEMRE created for a different Shell EP, which was approved after the release of

the report.

B. Endangered and Threatened Species in the Gulf of Mexico

The Gulf of Mexico is home to several endangered and threatened species, including at

least five species of whale (blue, fin, sei, humpback, and sperm), five types of sea turtles (green,

hawksbill, leatherback, Kemp‘s ridley, and loggerhead), four kinds of beach mice (Alabama,

Choctawhatchee, St. Andrew, and Perdido Key); four species of marine birds (piping plover,

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whooping crane, bald eagle, and brown pelican), two species of fish (gulf sturgeons and

smalltooth sawfish), two species of coral (elkhorn and staghorn), and West Indian manatees.

Critical habitat has been designated for four of these species – the Gulf sturgeon, the smalltooth

sawfish, and elkhorn and staghorn coral. See NOAA, Endangered and Threatened Species and

Critical Habitats under the Jurisdiction of the NOAA Fisheries Service: Gulf of Mexico,

http://sero.nmfs.noaa.gov/pr/endangered_species/specieslist/PDF2010/Gulf_of_Mexico.pdf. In

addition, the United States Fish and Wildlife Service (―FWS‖) has identified at least 38

endangered or threatened species that it believes could potentially be impacted by an oil spill in

the Gulf. See FWS, Wildlife Threatened on the Gulf Coast,

http://www.fws.gov/home/dhoilspill/pdfs/NewWildlifeOfGulf.pdf.

Even now, nearly a year after the Deepwater Horizon oil spill, significant impacts on

endangered and threatened species are still being uncovered. Injured or dead animals are

continually being discovered. See Gulf Sea Turtle Deaths Up, Joining Dolphin Trend, MSNBC,

Mar. 30, 2011, http://www.msnbc.msn.com/id/42322119/ns/us_news-environment/. Recent

studies even suggest that the reported numbers of deceased whales, dolphins, and sea turtles are

vastly lower than that the actual number of those animals that perished as a result of the spill.

See id.; Rob Williams et al., Underestimating the Damage: Interpreting Cetacean Carcass

Recoveries in the Context of the Deepwater Horizon/BP Incident, 4 Conservation Letters

(forthcoming), available at http://onlinelibrary.wiley.com/doi/10.1111/j.1755-

263X.2011.00168.x/pdf.

In addition, there is no indication that either Shell or BOEMRE has consulted with

NOAA or the FWS, as required under the MMPA, ESA and MSA, with respect to this

exploration plan.

C. Governing NEPA Analyses of the Risks in Gulf Drilling

a. Multisale EIS

In April of 2007, the Minerals Management Service (―MMS‖), the predecessor agency to

BOEMRE, issued its final environmental impact statement (―Multisale EIS‖) for eleven lease

sales in the Gulf of Mexico, including Lease Sale 206, which covers the Deepwater Horizon site,

in the Central Gulf of Mexico. In the Multisale EIS, MMS downplayed all of the risks from

offshore drilling.

Among the Multisale EIS‘s conclusions are the following:

- An oil spill would only ―result in sublethal impacts (e.g., decreased health, reproductive

fitness, and longevity; and increased vulnerability to disease) to marine mammals.‖

Multisale EIS at 2-37 to 2-38.

- ―In most foreseeable cases, exposure to hydrocarbons persisting in the sea following the

dispersal of an oil slick will result in sublethal impacts (e.g., decreased health,

reproductive fitness, and longevity; and increased vulnerability to disease) to sea turtles.‖

Id. at 2-38.

- ―The majority of effects … on endangered/threatened and nonendangered/nonthreatened

coastal and marine birds are expected to be sublethal.‖ Id. at 2-39.

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- ―The likelihood of spill occurrence and subsequent contact with, or impact to, Gulf

sturgeon and/or designated critical habitat is extremely low.‖ Id. at 2-40.

- The effects of an oil spill on fish populations and the commercial fishing industry would

be ―negligible and indistinguishable from variations due to natural causes‖ and ―any

affected commercial fishing activity would recover within 6 months.‖ Id.

MMS estimated that over the 40-year life span of the eleven proposed lease sales, the

total amount of oil spilled in the offshore waters of the Central Planning area, which includes the

Deepwater Horizon site, would be 5,500 to 26,500 barrels of oil. See id. at 4-241. The

maximum amount estimated – 26,500 barrels – is slightly over 1 million gallons, about 0.5% of

the current estimate of oil spilled at the Deepwater Horizon site.

b. MMS’s Environmental Assessment on Lease Sale 206

In October of 2007, MMS issued an Environmental Assessment (―EA‖) and a Finding of

No New Significant Impact for Lease Sale 206 in the Central Planning Area of the Western Gulf

of Mexico. Lease Sale 206 encompasses the Deepwater Horizon site. MMS explained that it

had fully analyzed the impacts of all Gulf of Mexico lease sales, including Lease Sale 206, in the

Multisale EIS and that no further site-specific review was necessary. See Lease Sale 206 EA at

1. According to MMS, ―[b]ecause the Multisale EIS examined the environmental impacts of a

sale similar in size, nature, and potential level of development as proposed lease sale 206, the EA

tiers off of the Multisale EIS and incorporates much of the material by reference.‖ Id. at ii,

Finding of No New Significant Impact. MMS concluded that ―no new significant impacts were

identified for proposed Lease Sale 206 that were not already assessed in the Multisale EIS, nor is

it necessary to change the conclusions of the kinds, levels, or locations of impacts described in

that document.‖ Id. These analyses and conclusions are similar, if not identical, to those made

in the environmental assessments for other lease sales under the Multisale EIS, including the

ones involving the areas for which Shell submitted the EP at issue here.

D. Endangered Species Act Consultations

On June 29, 2007, the National Marine Fisheries Service (―NMFS‖) issued its Biological

Opinion on the effects of MMS‘s 2007-2012 Five-Year Outer Continental Shelf Oil and Gas

Leasing Program in the Central and Western Planning Areas of the Gulf of Mexico (the ―BO‖).

See NOAA, NMFS, Southeast Regional Office, Protected Resources Division, Endangered

Species Act-Section 7 Biological Opinion, F/SER32:KPB (June 29, 2007). NMFS determined

that over the 40-year lifetime of the proposed leases, including the lease tract where the

Deepwater Horizon rig was drilling, numerous endangered and threatened species would be

taken as the result of exposure to a major oil spill. NMFS never authorized the anticipated takes

resulting from a major oil spill because ―those takings that would result from an unlawful

activity (i.e., oil spills) are not specified in this Incidental Take Statement and have no protective

coverage under section 7(o)(2) of the ESA.‖ Id. at 101.

NMFS premised its analysis on the assumption that ―[w]ith new technological advances

and oil spill prevention and response plans, a major oil spill in the [Gulf of Mexico] would not

likely be as large as Ixtoc I,‖ a 1979 oil spill that resulted in an estimated 140 million gallons

being spilled into the Gulf. Id. at 78. Accordingly, NMFS used ―one-half estimates of the

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approximate maximum spill area from Ixtoc I to estimate potential impacts from a major oil

spill‖ on endangered and threatened species in the Gulf.‖ Id. The amount of oil released from

the Deepwater Horizon well exceeded the amount of oil released in the Ixtoc I spill by more than

70 million gallons.

MMS engaged in informal consultation with the FWS on the aforementioned Five-Year

leasing program for the Gulf. This consultation concluded with the FWS‘s September 14, 2007

written concurrence with MMS‘s determination that its actions would not likely adversely affect

any listed species or critical habitat. See Lease Sale 206 EA at 67.

E. Shell’s Exploration Plan

Shell has submitted a supplemental exploration plan (―EP‖) proposing to drill six new

wells, including one sidetrack, in Mississippi Canyon blocks 348, 391, and 392 along with four

existing wells in those blocks. In this EP, Shell calculated the worst case discharge scenario for

the proposed well it deemed to have the highest flow potential, the C well at the Mississippi

Canyon 391 block. See Shell EP at 2j. According to Shell, the worst case discharge for that well

alone is a 128-day spill involving a total volume of 45 million barrels of oil – a figure that dwarfs

the 4.9 million barrels spilled in the Deepwater Horizon spill – and an initial discharge rate of

405,000 bbl/day, less than a sixth of the projected initial discharge rate for this well. See id.

There are no calculations about the worst case discharges for any of the other wells discussed in

the plan.

Shell‘s EP also notes that the containment of the spill will be aided by equipment and

assistance from the Marine Well Containment Company (―MWCC‖). It is unclear, though,

whether the MWCC is a viable response option at present. According to Shell, the MWCC is

expected to have ―key components of containment equipment‖ available by January 2011. See

id. However, BOEMRE has indicated in a site-specific EA for a different Shell well that the

MWCC is not yet fully operational and is believed to be able to contain at most 60,000 bbl/day at

present. See EA for Shell EP S-7445 at A-11. Shell also asserts that the MWCC would be able

to begin responding to a spill within days. See Shell EP at 2j. However, the system has never

been tested by BOEMRE and, as Shell admits, would not be fully operational for weeks at best.

See id.

II. The Administration’s Actions Since the Spill

A. CEQ Review

In response to the oil spill, CEQ issued a report in August of 2010, reviewing MMS‘s

NEPA policies. See Council on Envtl. Quality, Report Regarding the Minerals Management

Service‘s National Environmental Policy Act Policies, Practices, and Procedures as They Relate

to Outer Continental Shelf Oil and Gas Exploration and Development, August 16, 2010,

available at http://www.whitehouse.gov/sites/default/files/microsites/ceq/20100816-ceq-mms-

ocs-nepa.pdf (―CEQ Report‖). In the report, CEQ stated that NEPA requires a thorough and

meaningful consideration of environmental impacts and mandates public participation in this

process:

NEPA was designed to ensure the consideration of environmental impacts as part

of the Federal Government‘s decisionmaking. As President Obama proclaimed

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upon NEPA‘s 40th Anniversary on January 1, 2010, ―NEPA elevated the role of

environmental considerations in proposed Federal agency actions, and it remains

the cornerstone of our Nation‘s modern environmental protections.‖ NEPA was

designed to impart transparency and accountability in Federal decisionmaking. …

As explained below, MMS conducted numerous levels of extensive

environmental reviews, relying upon the ―tiering‖ process—a process generally

sanctioned in the governing regulations for NEPA, in which prior reviews are

incorporated into subsequent, site-specific analyses—to consider the

environmental impacts of its OCSLA permitting decisions. This process was not

transparent, however, and has led to confusion and concern about whether

environmental impacts were sufficiently evaluated and disclosed. It is essential

to ensure that information from one level of review is effectively carried forward

to—and reflected in—subsequent reviews, that the agencies independently tests

[sic] assumptions, and that there is appropriate evaluation of site-specific

environmental impacts. As a result of this transparent integration and

incorporation by reference, decisionmakers and the public will fully understand

the environmental consequences of the agency‘s decisions.

CEQ Report at 3 (emphasis added).

According to the CEQ Report, BOEMRE ―has committed to using the following CEQ

recommendations as guideposts as it continues its reform and reorganization activities‖:

- Perform careful and comprehensive NEPA review of individual deepwater

exploration, operation, development, production, and decommissioning activities,

including site-specific information where appropriate.

- Ensure that NEPA analyses fully inform and align with substantive decisions at

all relevant decision points; that subsequent analyses accurately reflect and carry

forward relevant underlying data; and that those analyses will be fully available

to the public.

- Ensure that NEPA documents provide decisionmakers with a robust analysis of

reasonably foreseeable impacts, including an analysis of reasonably foreseeable

impacts associated with low probability catastrophic spills for oil and gas

activities on the Outer Continental Shelf.

- Consider supplementing existing NEPA practices, procedures, and analyses to

reflect changed assumptions and environmental conditions, due to circumstances

surrounding the BP Oil Spill.

Id. at 4-5 (emphasis added).

B. Reinitiation Letters

On July 30, 2010, in response to the Deepwater Horizon disaster, BOEMRE requested

that NMFS and FWS reinitiate consultation under Section 7(a) of the ESA on the effects of the

Five Year Outer Continental Shelf Oil and Gas Leasing Program (2007-2012) in the Central and

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Western Planning Areas of the Gulf of Mexico. See Reinitiation Letters of July 30, 2010.

BOEMRE explicitly stated that

the DWH incident and the resulting oil spill necessitate this reinitiation action. . . .

[W]e acknowledge that the spill volumes and scenarios used in the analysis for

the existing NMFS BO need to be readdressed given the ―rare event‖ of a spill

exceeding 420,000 gallons as referenced in the current NMFS BO has occurred

and that affects [sic] to and the status of some listed species or designated critical

habitats may have been altered as a result of the DWH incident and therefore

require further consideration.

Id. NMFS responded to this letter on September 24, 2010, agreeing that reinitiation was

warranted. In this response, NMFS explicitly noted that

As our response and impact analysis . . . [regarding the spill] continues, it is a

good time for [BOEMRE] to evaluate the impacts to endangered and threatened

species, and designated critical habitat from the oil, as well as for any potential

future spills. We have begun synthesizing data from the spill, and it is clear that

we have underestimated the size, frequency, and impacts associated with a

catastrophic spill under the 2007-2012 lease sale program. The size and duration

of the MC 252 spill were greater than anticipated, and the effects on listed species

have exceeded our projections. Due to the takes of sea turtles from the oil, a new

effects analysis and jeopardy analysis for listed species will need to be completed.

. . .

The previous environmental impact statement did not estimate the size of a

catastrophic spill and NMFS relied on historical data and other assumptions to

estimate the potential size and impacts of such a spill on listed species. In light of

the ongoing investigations surrounding the MC 252, we believe these assumptions

did not sufficiently address the potential risks of a spill of this magnitude

occurring and the risks posed to listed species and their habitats.

The risk of oil spills, oil and gas industry response activities, and the potential

impacts on protected resources should be comprehensively analyzed and the

potential effects to listed species and critical habitat re-evaluated.

NMFS, Response to Reinitiation Letter, at 2.

C. Intent to Supplement EIS

On November 10, 2010, BOEMRE issued a notice of intent to prepare a supplemental

environmental impact statement (―SEIS‖) for Western Planning Area Lease Sales 218 and 222 in

the 2007-2010 5-Year OCS Program. See 75 Fed. Reg. 69,122 (Nov. 10, 2010). Among other

things, this SEIS will supplement the multisale EIS for the area where the Deepwater Horizon oil

spill occurred. The notice of intent stated the following rationale for supplementing the current

EIS:

A SEIS is deemed appropriate to supplement the NEPA documents cited above

for these lease sales in order to consider new circumstances and information

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arising, among other things, from the Deepwater Horizon blowout and spill. The

SEIS analysis will focus on updating the baseline conditions and potential

environmental effects of oil and natural gas leasing, exploration, development,

and production in the WPA and CPA.

Id.

D. New EAs

On October 12, 2010, BOEMRE issued an Environmental Assessment analyzing the

potential impact of lifting a suspension of drilling operations in the Gulf that involved the use of

a subsea blowout preventer or a blowout preventer on a floating drilling facility (―Suspension

EA‖). In this document, BOEMRE admitted that ―[b]aseline environmental conditions in the

Gulf of Mexico have been substantially affected from the impacts of the Deepwater Horizon oil

spill‖ and that it was unsure about the extent of that harm. Suspension EA at 10. In particular,

BOEMRE noted that

Consensus information on the magnitudes of these impacts, the length of time

needed for baseline conditions to be restored to conditions existing prior to the

Deepwater Horizon spill, and the magnitude of impacts that would be expected if

another catastrophic spill occurred while baseline conditions are still recovering

from the Deepwater Horizon is largely unavailable at this time although progress

is underway toward answering these questions.

Id.

BOEMRE also noted that ―[a] catastrophic spill has the potential to cause significant

impacts to marine and coastal biological habitats and resources in the Gulf of Mexico, as well as

direct impacts to individual organisms.‖ Id. at 20. It described how the Deepwater Horizon spill

had both identified a number of risks from offshore drilling and called into question some of

BOEMRE‘s prior assumptions about the potential risks:

- [T]he Deepwater Horizon spill has demonstrated that a high-volume,

extended-duration spill resulting from a blowout has the potential to result in

impacts that could affect the long-term population status of biological

resources over extended areas, as detailed below. . . .

- Marine mammals have been observed swimming in oil after spills.

Therefore, it cannot be assumed they would avoid the impacted area. The

oil could harm marine mammals through several ways, including, but not

limited to, the breathing of fumes from the oil (and possibly dispersants),

persistence on their skin, and the consumption of oiled food sources. . . .

- Sea Turtles: The majority of sea turtles impacted by the Deepwater Horizon

event have been Kemp‘s ridleys, listed as endangered under the Endangered

Species Act (ESA). Shoreline oiling and efforts may affect future population

levels and reproduction.

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- Coastal Habitats: During the spill, over 500 miles of shoreline were impacted,

varying from light to moderate to heaving oiling. The majority of the Gulf

coast is sensitive shoreline types (i.e., sheltered tidal flats; vegetated low

banks; salt/brackish-water marshes; freshwater marshes/swamps; scrub-shrub

wetlands) that tend to accumulate oil and are difficult to clean, causing oil to

persist in coastal and estuarine areas. Loss of vegetation could lead to erosion

and permanent land loss.

- Coastal and Marine Birds: The Gulf coastal habitats are essential to the

annual cycles of many species of breeding, wintering and migrating

waterfowl, wading birds, shorebirds, and songbirds. The spill and response

activities could interfere with migration. The worst impacts to oiled birds, or

those which have ingested oil with their prey, would be if the oil spill occurs

during the nesting season. An oil spill could result in the loss of entire

colonies of breeding birds on barrier islands surrounded by oil, along with

the loss of all eggs and nestlings.

- Fisheries: A catastrophic spill has the potential to cause the loss of a year

class (fish in a stock born in the same year), affecting future stock

populations. . . .

- With the oiling over 500 miles of shoreline, it is foreseeable that an entire

critical habitat for a species with a relatively small critical habitat could

have been completely oiled. For example, the endangered Alabama beach

mouse (Peromyscus polionotus ammobates) only has 1,211 acres of frontal

dunes covering just ten miles of shoreline designated as critical habitat.

Id. at 11-12 (emphasis added and footnotes omitted). In addition, BOEMRE acknowledged that

exploratory drilling, regardless of the depth, poses a greater risk of a catastrophic oil spill than

does development drilling since it involves ―drill[ing] into formations for which there is limited

knowledge of the wellbore parameters.‖ Id. at 34.

This sense of uncertainty about the potential risks to the Gulf from exploratory drilling

was echoed in another EA, which BOEMRE issued in September 2010 in conjunction with its

publication the following month of an Interim Final Rule implementing increased drilling safety

measures for the Gulf (―Safety EA‖). The Safety EA noted that it was reasonable to think that

the measures would likely improve well control reliability but that BOEMRE could not

determine the degree of improvement at that time. See Safety EA at 7. In the Safety EA,

BOEMRE also reiterated the Suspension EA‘s findings regarding the risks from an oil spill. See

id. at 14-16.

Despite BOEMRE‘s acknowledgement that it could not predict the actual benefits from

the Interim Final Rule and other safety measures, it nevertheless concluded in the Suspension EA

that ―the occurrence of potential effects from oil spills has been effectively reduced by these

improvements.‖ Suspension EA at 23. BOEMRE also conceded, though, that ―a catastrophic

spill with relatively large-scale and long-duration effects is still a possibility‖ even taking into

account the new safety regulations. Id. It likewise found that, were such a spill to occur, ―the

effects would be significant.‖ Id.

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E. The Administration’s Ongoing Approvals

Despite the Administration‘s pervasive uncertainty about the environmental impacts that

have arisen in light of the Deepwater Horizon oil spill, BOEMRE continues to accept and

approve EPs, development and production plans (―DOCDs‖), and applications for permission to

drill (―APDs‖) in the Gulf of Mexico. Even several weeks after the oil spill began, MMS had

approved over twenty exploration plans for drilling in the Gulf, apparently without initiating

consultation regarding possible effects on endangered species. See Marian Wang, After Spill,

More Gulf Drilling Plans Get Environmental Exemptions, ProPublica (May 11, 2010). Not only

were the plans approved without ESA consultation, but MMS also exempted all of these

exploration plans from having to conduct a more stringent environmental review, opting instead

to grant them categorical exclusions. See id.

Notably, the requirements for both NEPA and ESA review include fairly low thresholds

triggering analysis requirements. Categorical exclusions (―CEs‖) may be applied only for

actions that ―do not individually or cumulatively have a significant effect on the human

environment‖ and for which no ―extraordinary circumstances‖ apply. 40 C.F.R. § 1508.4. ESA

consultation must be initiated whenever a federal action or approval ―may affect‖ ESA listed

threatened or endangered species. Id. § 1402.14(a).

Offshore drilling is an inherently risky business. It is difficult to identify any OCS

activities that can legally proceed without NEPA or ESA analysis, given that even in the absence

of a catastrophic oil spill, there are significant impacts associated with normal drilling operations

(including noise, air, and water pollution, as well as seismic disturbance and increased vessel and

air traffic). We understand that Director Bromwich is currently reviewing the use of CEs

associated with offshore drilling activities, and has ordered the suspension of CEs for activities

involving subsea BOPs and surface BOPs on floating facilities that require an APD. See

Memorandum from Michael R. Bromwich to Walter Cruickshack, Deputy Director of BOEM,

Use of Categorical Exclusions in Gulf of Mexico Region (Aug. 16, 2010), available at

http://www.doi.gov/news/pressreleases/loader.cfm?csModule=security/getfile&PageID=42011.

However, we believe that the use of CEs on any offshore drilling activity is illegal and should be

suspended until the completion of NEPA-compliant review.

In addition, we object to BOEMRE‘s approval of new exploration and development plans

in deepwater without undergoing thorough NEPA and ESA analyses. BOEMRE may not rely on

earlier Programmatic EIS, deepwater EA, or lease sale NEPA documents in reviewing Shell‘s EP

due to the significantly changed circumstances brought about by the Deepwater Horizon oil spill.

Nor may the agency rely on the earlier 5-year leasing program Biological Opinion. The

Deepwater Horizon oil spill rendered each of these analyses woefully inadequate, as BOEMRE

recently acknowledged in its Notice of Intent to prepare a supplemental EIS for its 2007-2012 5-

year leasing program in the Gulf of Mexico. See 75 Fed. Reg. 69,122 (Nov. 10, 2010) and in its

July 30, 2010 request that NMFS and FWS reinitiate consultation regarding the effects of

offshore drilling activities on threatened and endangered species in the Gulf. We also object to

the Administration‘s use of a Site-Specific EA, such as the one issued for Shell Offshore Inc.‘s

Exploration Plan No. S-7445. This document, which is tiered to outdated and inadequate

analyses, in no way satisfies the government‘s duties under NEPA. The Deepwater Horizon oil

spill not only altered the baseline conditions for the Gulf of Mexico offshore marine and coastal

12

environments, it also dramatically altered assumptions regarding both the risk and the likely

environmental consequences of a major blowout and oil spill.

In summary, we believe that BOEMRE‘s approvals of drilling activities since the

Deepwater Horizon oil spill, whether or not they were approved using a categorical exclusion,

are illegal, including but not limited to the following:

Operator Name Plan Control # Type Approval Date Water Depth

Shell Offshore Inc. APD #10099 New Well 3/30/11 3073 ft.

Shell Offshore Inc. 7445 Supp. EP 3/21/11 2721 ft.

Marathon Oil 5136 Revised EP 3/24/11 3287 ft.

BHP Billiton 5128 Revised EP 3/18/11 4300 ft.

Taylor Energy 7427 Supp. EP 8/24/10 440 ft.

Phoenix Exploration 7403 Supp. EP 9/29/10 67 ft.

Eni US Operating Co. 9521 Initial DOCD 7/30/10 2805 ft.

Such activities, especially those conducted in deepwater, present significant risks of

environmental harm, as witnessed by the Deepwater Horizon blowout and spill. As noted by

Former Senator Bob Graham:

In the past five years, the share of the Gulf‘s production from ultra-deep wells –

wells deeper than 5,000 feet – climbed from 1% to 32%. But ultra-deepwater

drilling creates special risks, including that which appears to be the primary cause

of the Deepwater Horizon tragedy – an uncontrolled blow-out. These risks were

there to be seen but were largely unprepared for or ignored by government and

industry . . . . It is clear that the move to deepwater represents an enormous

change in U.S. energy exploration. Unfortunately, our government and industry

did not undergo a similar transformation in its regulatory and safety focus. We

need such a shift now and today we will be hearing information to guide our

thinking about what it should look like.

Remarks of Former Sen. Bob Graham, Aug. 25, 2010 Meeting of Commission, available at

http://www.oilspillcommission.gov/document/bob-graham-opening-remarks. Similar concerns

over deepwater drilling are also expressed in the CEQ Report:

As oil exploration and production moves further offshore, with an increasing

number of [wells] drilled in deeper waters with more complex technologies and

concomitant risk, [BOEMRE] recognizes that the basis for a categorical

exclusion for these deepwater activities needs to be reexamined in light of the

increasing number of deepwater wells drilled over time.

CEQ Report at 30.

However, the significant individual and cumulative risks of offshore exploration and

development are not limited to deepwater drilling. Both the 1979 Ixtoc I blowout in Mexico and

the 2009 Montara blowout in Australia took place in shallow water, and the adverse

environmental impacts of normal drilling activities apply to both deepwater and shallow water

activities.

13

In light of these risks, it is crucial that BOEMRE suspend approval of oil drilling

activities until it has completed consultation and has conducted a full supplementation of the

outdated EIS to ensure full consideration of environmental risks involved with deepwater drilling

in the Gulf.

III. Legal Violations Resulting from the Issuance of EPs While the SEIS Is Being

Prepared and Consultation Is Ongoing

A. National Environmental Policy Act

Congress enacted NEPA to ―promote efforts which will prevent or eliminate damages to

the environment . . . .‖ 42 U.S.C. § 4321. To achieve this goal, NEPA requires federal agencies

to fully consider and disclose the environmental consequences of an agency action before

proceeding with that action. See id. § 4332(2)(C); 40 C.F.R. §§ 1501.2, 1502.5. Agencies‘

evaluation of environmental consequences must be based on scientific information that is both

―[a]ccurate‖ and of ―high quality.‖ 40 C.F.R. § 1500.1(b). In addition, federal agencies must

notify the public of proposed projects and allow the public the chance to comment on the

environmental impacts of their actions. See id. § 1506.6.

The cornerstone of NEPA is the EIS. An EIS is required for all ―major Federal actions

significantly affecting the quality of the human environment.‖ 42 U.S.C. § 4332(2)(C); 40

C.F.R. § 1501.4. The EIS must provide a ―full and fair discussion of significant environmental

impacts and . . . inform decisionmakers and the public of the reasonable alternatives which

would avoid or minimize adverse impacts or enhance the quality of the human environment.‖ 40

C.F.R. § 1502.1.

An agency must prepare a SEIS when ―[t]here are significant new circumstances or

information relevant to environmental concerns and bearing on the proposed action or its

impacts.‖ Id. § 1502.9(c)(1)(ii). ―The standard for determining when an SEIS is required is

essentially the same as the standard for determining when an EIS is required.‖ Sierra Club v.

U.S. Army Corps of Eng’rs, 295 F.3d 1209, 1215-16 (11th Cir. 2002) (quotation marks and

citation omitted). A SEIS is necessary if there are changes in the project since the original EIS

that ―will have a ‗significant‘ impact on the environment that has not previously been covered by

the [original] EIS.‖ Id. at 1216 (quotation marks and citation omitted). The agency must ―take a

‗hard look‘ at the new information to assess whether supplementation is necessary.‖ Norton v. S.

Utah Wilderness Alliance, 542 U.S. 55, 72-73 (2004). Whether new circumstances are

significant depends on a number of factors, including ―[t]he degree to which the proposed action

affects public health or safety,‖ ―[t]he degree to which the possible effects on the human

environment are highly uncertain or involve unique or unknown risks,‖ and ―[t]he degree to

which the action … may cause loss or destruction of significant scientific, cultural, or historical

resources.‖ Id. § 1508.27(b).

NEPA regulations do not allow an agency to ―commit resources prejudicing selection of

alternatives before making a final decision . . . .‖ Id. § 1502.2(f). As a result, while an agency is

in the process of preparing a SEIS to evaluate the impacts of a proposed action, it may not take

any ―action concerning the proposal . . . which would . . . [h]ave an adverse environmental

impact . . . or [l]imit the choice of reasonable alternatives.‖ Id. § 1506.1(a).

14

As BOEMRE and the Administration have admitted, in light of the incident at the

Deepwater Horizon, the conclusions of the Multisale EIS are no longer valid. For example, the

Multisale EIS predicted that over the 40-year life span of the eleven proposed lease sales, the

total amount of oil spilled in the offshore waters of the Central Planning area, which includes the

Deepwater Horizon site, would be a maximum of 26,500 barrels, slightly over one million

gallons and about 0.5% of the oil presently estimated to have been spilled in connection with the

Deepwater Horizon incident. See Multisale EIS at 4-241. Similarly, the Multisale EIS also

estimated that the impacts on fish, marine mammals, turtles, and other marine life would be

―sublethal‖ and ―negligible.‖ Id. at 2-37 to 2-40.

The Deepwater Horizon spill thus represents ―new circumstances or information relevant

to environmental concerns‖ that trigger BOEMRE‘s duty to prepare a supplemental Multisale

EIS. 40 C.F.R. § 1502.9(c)(1)(ii). Until that SEIS is prepared, moreover, BOEMRE is forbidden

from making an irretrievable commitment of resources or foreclosing alternatives under that

SEIS. Id. §§ 1502.2(f), 1506.1(a). Approving an EP or DOCD prior to the completion of the

SEIS that BOEMRE has undertaken would constitute just such an irretrievable commitment and

thus constitute a violation of NEPA and its implementing regulations. Furthermore, to the extent

that BOEMRE seeks to rely on an post-Deepwater Horizon EA and a finding of no significant

impact (―FONSI‖) for this plan, that EA and FONSI tier off of documents that are out-of-date,

incomplete, and inaccurate. In the absence of an adequate SEIS, therefore, BOEMRE has not

fulfilled its duty under NEPA and thus should not approve this plan until that SEIS is complete.

Moreover, a FONSI would be entirely unwarranted for the Shell EP, as it has a worst case

discharge scenario for just one of its ten proposed wells that is almost ten times the amount

spilled in the Deepwater Horizon incident as well as no currently available tested method for

containing such a spill. Furthermore, we believe that the issues the BOP Report exhaustively

details regarding the adequacy of currently-used BOPs must be addressed in any NEPA analysis

and present sufficient risk to preclude a FONSI for this EP.

In addressing an agency‘s duty to supplement an EIS, the Supreme Court has ruled that if

there remains ―‗major Federal action‘ to occur, and if the new information is sufficient to show

that the remaining action will ‗affect the quality of the human environment‘ in a significant

manner or to a significant extent not already considered, a supplemental EIS must be prepared.‖

Marsh v. Or. Natural Res. Council, 490 U.S. 360, 371 (1989). The Court noted that NEPA‘s

purpose is to ensure that the agency ―will not act on incomplete information, only to regret its

decision after it is too late to correct.‖ Id.

Where an agency has begun the process of supplementing an inadequate or outdated EIS,

courts have found that ongoing activities that an agency attempts to tier to the old EIS violate

NEPA. See Sierra Nev. Forest Prot. Campaign v. Tippin, 2006 U.S. Dist. LEXIS 57832 at *66

(E.D. Cal. Aug. 16, 2006) (enjoining further activity until a SEIS is completed based on a finding

that ―[t]he environment is a vital constituent public interest that must be recognized and

protected by federal law even in the face of adverse economic consequence‖); Portland Audubon

Soc’y v. Lujan, 795 F. Supp. 1489, 1509 (D. Or. 1992) (finding that the continued sale of timber

in north spotted owl habitat under an outdated Timber Management Plan without a SEIS

examining impacts of timber sales on the owls violates NEPA and is ―directly contrary to‖

NEPA‘s purpose). Similarly, BOEMRE‘s approval of this EP, prior to completion of a SEIS,

would improperly tier the Shell EP to an admittedly inadequate EIS, in violation of NEPA.

15

B. Endangered Species Act

Congress enacted the ESA, in part, to provide a ―means whereby the ecosystems upon

which endangered species and threatened species depend may be conserved . . . [and] a program

for the conservation of such endangered species and threatened species.‖ 16 U.S.C. § 1531(b).

Principal responsibilities for implementing the requirements of the ESA have been delegated to

the FWS, an agency within the Department of the Interior, and to NMFS, an agency within the

Department of Commerce. FWS is primarily responsible for implementing the ESA for

terrestrial species and a limited number of marine mammals, and NMFS is primarily responsible

for implementing the ESA for most other marine species. See id. § 1532(15); 50 C.F.R.

§ 402.01.

Section 7(a)(2) of the ESA, 16 U.S.C. § 1536(a)(2), provides that ―[e]ach Federal agency

shall, in consultation with and with the assistance of [NMFS and FWS], insure that any action

authorized, funded, or carried out by such agency . . . is not likely to jeopardize the continued

existence of any endangered species or threatened species or result in the destruction or adverse

modification‖ of those species‘ designated ―critical habitat.‖ 16 U.S.C. § 1536(a)(2); 50 C.F.R.

Part 400. Agency actions subject to this requirement include licenses, contracts, and leases. See

50 C.F.R. § 402.02.

Action agencies must engage in formal consultation with NMFS or FWS whenever their

actions ―may affect‖ a listed species. 16 U.S.C. § 1536(a)(2); 50 C.F.R. § 402.14(a). Formal

consultation is required if an agency action may result in ―[a]ny possible effect [to listed species

or critical habitat], whether beneficial, benign, adverse, or of an undetermined character . . . .‖

51 Fed. Reg. 19,926, 19,949 (June 3, 1986). If, on the other hand, the action agency concludes

that the action is not likely to have an adverse effect and NMFS or FWS concurs in writing with

that determination, then consultation with that agency may proceed informally. See 50 C.F.R.

§ 402.12(k)(1).

Formal consultation concludes with the issuance of a NMFS/FWS biological opinion

(―BiOp‖), which includes an assessment of the effects of the action on listed species and critical

habitat and a conclusion as to whether the agency action is likely to jeopardize a listed species or

destroy or adversely modify a critical habitat for that species. See 16 U.S.C. § 1536(b)(3)(A); 50

C.F.R. § 402.14(h)(3). If jeopardy or adverse modification is not likely to occur, the BiOp must

include an ―incidental take statement‖ (―ITS‖) covering any potential take of listed species likely

to occur as a consequence of the action. See 16 U.S.C. § 1536(b)(4), (o); 50 C.F.R. § 402.14(i).

Take of any endangered or threatened species in the absence of an ITS is prohibited under ESA

§ 9 and its implementing regulations. See 16 U.S.C. § 1538(a)(1)(C), (g).

An agency‘s duty to insure against jeopardy or adverse modification continues after the

completion of section 7 consultation. The action agency must provide periodic progress reports

to NMFS and FWS covering impacts on and take of listed species as specified in the ITS. See 50

C.F.R. § 402.14(i)(3). Moreover, this duty to ensure against jeopardy is ongoing: the action

agency must immediately reinitiate consultation with NMFS and/or FWS if ―the amount or

extent of taking specified in the incidental take statement is exceeded‖ or if ―new information

reveals effects of the action that may affect listed species or critical habitat in a manner or to an

extent not previously considered.‖ Id.

16

While formal consultation is underway, both the federal agency and the applicant are

barred from making any irretrievable commitment of resources with respect to the agency action

at issue. See 16 U.S.C. § 1536(d). Specifically, after initiation of 7(a)(2) consultation, the

Federal agency and the permit or license applicant ―shall not make any irreversible or

irretrievable commitment of resources with respect to the agency action which has the effect of

foreclosing the formulation or implementation of any reasonable and prudent alternative

measures which would not violate subsection (a)(2).‖ Id.

As noted previously, on July 30, 2010, BOEMRE requested that NMFS and FWS

reinitiate consultation under Section 7(a) of the ESA in response to the Deepwater Horizon oil

spill. See Reinitiation Letters of July 30, 2010. BOEMRE explicitly stated that the ―[e]ffects to

and the status of some listed species or designated habitats may have been altered as a result of

the [oil spill] and therefore require further consideration.‖ Id. (emphasis added).

Here, BOEMRE‘s decision to approve this exploration plan will constitute ―agency

action‖ under the ESA. See 50 C.F.R. § 402.02. In light of the current and expected effects of

the Deepwater Horizon oil spill, there is little doubt that this action ―may affect‖ endangered or

threatened species and critical habitat, including, but not limited to, gulf sturgeon, sea turtles, and

sperm whales. In fact, BOEMRE admitted as much in its Reinitiation Letters. See Reinitiation

Letters of July 30, 2010. Based on prior consultations, it is plain that that MMS, NMFS, and

FWS failed to even ponder, much less analyze in any meaningful way, a spill of this magnitude

and its likely impacts on listed species and critical habitat. Given that MMS entirely dismissed

the threat posed by such a spill, an assumption now sadly shown to be grossly optimistic, its

approval of this plan prior to completion of its formal consultation with NMFS and FWS

constitutes a failure to ensure against jeopardy, in violation of section 7. In addition,

BOEMRE‘s approval of this plan will constitute an irretrievable commitment of resources by the

agency and/or the permit applicant which will have the effect of foreclosing reasonable

alternatives that will allow compliance with subsection 7(a)(2), in violation of 16 U.S.C.

§ 1536(d).

C. Marine Mammal Protection Act

The MMPA was adopted more than thirty years ago to ameliorate the consequences of

human impacts on marine mammals. Its goal is to protect and promote the growth of marine

mammal populations ―to the greatest extent feasible commensurate with sound policies of

resource management‖ and to ―maintain the health and stability of the marine ecosystem.‖ 16

U.S.C. § 1361(6). A careful approach to management was necessary given the vulnerable status

of many of these populations (a substantial percentage of which remain endangered or depleted)

as well as the difficulty of measuring the impacts of human activities on marine mammals in the

wild. Id. § 1361(l), (3). ―[I]t seems elementary common sense,‖ the House Committee on

Merchant Marine and Fisheries observed in sending the bill to the floor, ―that legislation should

be adopted to require that we act conservatively—that no steps should be taken regarding these

animals that might prove to be adverse or even irreversible in their effects until more is known.

As far as could be done, we have endeavored to build such a conservative bias into the

[MMPA].‖ Report of the House Committee on Merchant Marines and Fisheries, reprinted in

1972 U.S. Code Cong. & Admin. News 4148.

17

The heart of the MMPA is its so-called ―take‖ prohibition, a moratorium on the

harassing, hunting, and killing of marine mammals by any private or public party. See 16 U.S.C.

§§ 1371 (take prohibition); 1362(13) (defining take). Under the law, NMFS (or the FWS) may

grant exceptions to the take prohibition, on application from a government agency or third party,

for small numbers of marine mammals, provided it determines, using the best available scientific

evidence, that such take would have only a negligible impact on marine mammal populations

and stocks. There are two types of general exemptions available through the MMPA for

activities that incidentally take marine mammals: five-year permits and one-year incidental

harassment authorizations. Regardless of which process is used, NMFS must prescribe

―methods‖ and ―means of effecting the least practicable impact‖ on protected species as well as

―requirements pertaining to the monitoring and reporting of such taking.‖ Id.

§ 1371(a)(5)(A)(ii), (D)(vi).

BOEMRE is violating the MMPA by failing to obtain the necessary authorization from

NMFS for the taking of marine mammals in connection with the Shell project. The MMPA

prohibits, in most circumstances, the ―take‖ of a marine mammal without a permit from the

Secretary of Commerce. See 16 U.S.C. § 1371(a); 50 C.F.R. § 216.107. The term ―take‖ is

defined broadly to include acts of harassment, which are in turn defined to include acts of

―torment‖ or ―annoyance‖ that have the potential to injure a marine mammal or marine mammal

stock in the wild or have the potential to ―disturb‖ them ―by causing disruption of behavioral

patterns, including, but not limited to, migration, breathing, breeding, feeding, or sheltering.‖ 16

U.S.C. § 1362(18). There is no doubt that seismic surveys, drilling, and other noise-generating

activities in the Gulf of Mexico OCS harass marine mammals. For example, BOEMRE wrote in

its Programmatic Environmental Assessment for Geological and Geophysical Exploration for

Mineral Resources on the Gulf of Mexico Outer Continental Shelf that ―[l]iteral interpretation of

the MMPA and the definitions of harassment suggest that there may be a technical violation of

the law if sperm whales (a listed species) realize injurious auditory effects…or changes in

behavior (e.g., avoidance behavior, moving away from a seismic noise source) from exposure to

G&G surveys.‖ Final Programmatic EA (July 2004) at B-16.

Furthermore, NMFS has quantified substantial numbers of marine mammal take in

authorizing and proposing to authorize both seismic exploration and drilling activities in Alaska.

29 species of marine mammal species occur in the Gulf, seven of which are endangered. See

Multisale EIS at 3-34. While BOEMRE applied to NMFS for authorization to take marine

mammals incidental to conducting seismic surveys in 2002, that authorization has never been

granted. In addition, BOEMRE has not applied to NMFS for authorization to take marine

mammals incidental to the Shell EP application. Thus, BOEMRE will violate the MMPA if it

approves the Shell EP application without first obtaining authorization from NMFS for the

incidental take that will result.

D. Magnuson-Stevens Fishery Conservation and Management Act

When amending the MSA in 1996, Congress noted that one of the greatest long-term

threats ―to the viability of commercial and recreational fisheries is the continuing loss of marine,

estuarine, and other aquatic habitats. Habitat considerations should receive increased attention

for the conservation and management of fishery resources of the United States.‖ 16 U.S.C.

§ 1801(a)(9). Thus, one of the purposes of the MSA is to ―promote the protection of essential

18

fish habitat in the review of projects conducted under Federal permits, licenses, or other

authorities that affect or have the potential to affect such habitat.‖ Id. § 1801(b)(7).

In order to fulfill the substantive purposes of the MSA‘s protections for essential fish

habitat, federal agencies are required to engage in consultation with NMFS ―with respect to any

action authorized, funded, or undertaken, or proposed to be authorized, funded, or undertaken, by

such agency that may adversely affect any essential fish habitat.‖ Id. § 1855(b)(2). Likewise,

NMFS has a mandatory duty to recommend ―measures that can be taken by [an] agency to

conserve‖ essential fish habitat whenever NMFS receives information that an action authorized,

funded, or undertaken, or proposed to be authorized, funded, or undertaken, by any State or

Federal agency would adversely affect any essential fish habitat. Id. § 1855(b)(4)(A).

The EFH regulations (50 C.F.R. §§ 600.905–600.930) outline the process for federal

agencies, NMFS, and the fishery management councils to satisfy the EFH consultation

requirement under section 305(b) of the MSA. As part of the EFH consultation process, when an

agency action may adversely impact EFH, the regulations require federal action agencies to

prepare a written EFH assessment describing the effects of that action on EFH. See 50 C.F.R.

§ 600.920(e)(1). All EFH assessments must include the contents stated in 50 C.F.R.

§ 600.920(e)(3), however they may be incorporated into documents prepared for other purposes

(such as NEPA documents). Id. § 600.920(f). BOEMRE has a duty to engage in essential fish

habitat consultation prior to approving Shell‘s exploration plan. Furthermore, as NMFS noted in

its response to the Reinitiation Letter, BOEMRE is required to reinitiate consultation under the

MSA if it substantially modifies its plans in a way that may adversely affect EFH. See NMFS,

Response to Reinitiation Letter, at 3. Accordingly, BOEMRE must take prudent measures to

conserve fisheries resources and essential fish habitat in the Gulf of Mexico.

E. Oil Pollution Act

The Oil Pollution Act of 1990 was passed in response to the Exxon Valdez accident.

Among other things, it requires companies to address procurement, logistical, and deployment

challenges related to spill response. See 30 C.F.R. § 254.23 (operator must describe emergency

response action plan procedures it expects to follow in the event of a spill or a substantial threat

of a spill); id. § 254.24 (requiring inventory of spill-response materials, supplies, services,

equipment, and response vessels available locally and regionally). It requires plans for

―ensur[ing] that containment and recovery equipment as well as response personnel are

mobilized and deployed at the spill site.‖ Id. § 254.23(g)(5); see also id. § 254.26 (requiring

detailed discussion of worst case discharge scenario, including response in ―adverse weather

conditions‖ and ―description of the response equipment that you will use‖ that must include ―the

types, location(s) and owner, quantity, and capabilities of the equipment‖ and estimates of the

time needed for procurement and deployment of equipment and personnel).

The response to the BP disaster in the Gulf of Mexico and the Commission Report leave

little doubt that the oil and gas industry has failed to meet requirements under OPA for planning

and preparing an adequate response to a major spill that could result from certain OCS activities.

Shell fails to acknowledge that there is no proven means of effectively cleaning up spilled oil

resulting from a major catastrophe like the BP disaster. Its containment plan is no better than

BP‘s until the Marine Well Containment Company‘s containment system is fully competed,

tested and operating – whenever that occurs. This is not consistent with OPA.

19

F. Outer Continental Shelf Lands Act

Pursuant to OCSLA, 43 U.S.C. § 1331 et seq., the Secretary of the Interior sells leases to

develop oil and gas deposits in the Outer Continental Shelf (―OCS‖). Oil and gas exploration in

the OCS is governed by a five-step process: (1) the Secretary‘s promulgation of a five-year

leasing program, 43 U.S.C. § 1344; (2) lease sales, 43 U.S.C. § 1337; (3) exploration, 43 U.S.C.

§ 1340; (4) development and production, 43 U.S.C. § 1351; and (5) sale of recovered oil and gas,

43 U.S.C. § 1353.

Before a lease holder may commence exploratory drilling, it must submit an EP to

BOEMRE for approval. See id. § 1340(c)(1). The Secretary may allow exploration to proceed

only if he finds that the lessee‘s plan ―will not be unduly harmful to aquatic life in the area, result

in pollution, create hazardous or unsafe conditions, unreasonably interfere with other uses of the

area, or disturb any site, structure, or object of historical or architectural significance.‖ Id.

§ 1340(g)(3). BOEMRE reviews the EP, and the application is deemed ―submitted‖ when it

―fulfills requirements and is sufficiently accurate,‖ and the applicant has ―provided all needed

additional information.‖ 30 C.F.R. § 250.231(a). BOEMRE then acts to approve, disapprove, or

modify an EP within 30 days of when it was deemed submitted to the agency. Id. § 250.233.

The Deepwater Horizon incident shows that the activities proposed in the plan will create

hazardous or unsafe conditions and may well be unduly harmful to aquatic life in the area, result

in pollution, and unreasonably interfere with other uses of the area. Unless and until a SEIS is

completed, the Secretary cannot make a finding that those harms will not occur. See Vill. of

False Pass v. Clark, 733 F.2d 605, 614 (9th Cir. 1984) (noting that NEPA review applies to all

stages of the OCSLA five-step process and that the Secretary may suspend a lease or EP if

environmental conditions warrant it). Moreover, BOEMRE cannot rely on its regulations to

insist that it must grant EPs within 30 days of when such applications are received. As noted

above, the agency has discretion as to when to deem an EP officially ―submitted.‖ Plans must

―fulfill[] requirements‖, be ―sufficiently accurate‖, and provide ―all needed additional

information‖ before they are deemed submitted. 30 C.F.R. § 250.231(a). BOEMRE thus has

the discretion to delay granting EPs beyond thirty days where, as here, the information necessary

to make a thorough and accurate NEPA determination has not yet been obtained. Accordingly,

the Shell EP described above should not be allowed to proceed, and approval of that EP by

BOEMRE or the Secretary would be in clear violation of their duties under OCSLA.

IV. CONCLUSION

Thank you for your consideration of these comments, and for the opportunity to

participate in this administrative process. Please feel free to contact us with any comments or

questions.