Court Opinion

ID: 2750490
Source: CourtListenerOpinion
Date Created: 2014-11-12 18:00:59.894945+00
Date Added: 2024-06-11T10:17:36.895358
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

SHELL GULF OF MEXICO INC.; SHELL          No. 13-35835
OFFSHORE INC.,
               Plaintiffs-Appellees,        D.C. No.
                                         3:12-CV-00048-
                 v.                           RRB

CENTER FOR BIOLOGICAL
DIVERSITY, INC; REDOIL, INC.;               OPINION
ALASKA WILDERNESS LEAGUE;
NATURAL RESOURCES DEFENSE
COUNCIL, INC.; NORTHERN ALASKA
ENVIRONMENTAL CENTER; PACIFIC
ENVIRONMENT AND RESOURCES
CENTER; THE WILDERNESS SOCIETY;
OCEAN CONSERVANCY, INC.;
OCEANA, INC.; GREENPEACE, INC.;
SIERRA CLUB; NATIONAL AUDUBON
SOCIETY, INC.,
             Defendants-Appellants.

     Appeal from the United States District Court
               for the District of Alaska
   Ralph R. Beistline, Chief District Judge, Presiding

               Argued and Submitted
         August 13, 2014—Anchorage, Alaska

               Filed November 12, 2014
2   SHELL GULF OF MEX. V. CTR. FOR BIOLOGICAL DIV.

       Before: Jerome Farris, Dorothy W. Nelson, and
           Jacqueline H. Nguyen, Circuit Judges.

                 Opinion by Judge D.W. Nelson

                           SUMMARY*

                      Case or Controversy

    The panel reversed the district court’s order denying
environmental groups’ motion to dismiss, due to lack of a
case or controversy under Article III of the U.S. Constitution,
a Declaratory Judgment Act lawsuit filed by Shell Gulf of
Mexico, Inc., seeking a declaration that the federal Bureau of
Safety and Environmental Enforcement’s approval of two oil
spill response plans, required by the Oil Pollution Act, for
Alaska’s Beaufort and Chukchi Seas did not violate the
Administrative Procedure Act.

     The panel held that Shell’s lawsuit ran afoul of Article
III’s case or controversy requirement because Shell did not
have legal interests adverse to the Bureau under the
Administrative Procedure Act. The panel held that Shell may
not file suit solely to determine who would prevail in a
hypothetical suit between the environmental groups and the
Bureau.

  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
    SHELL GULF OF MEX. V. CTR. FOR BIOLOGICAL DIV.            3

                         COUNSEL

Michael E. Wall (argued) and Jennifer A. Sorenson, Natural
Resources Defense Council, San Francisco, California;
Steven A. Hirsch, Rachael E. Meny, and Justina Sessions,
Keker & Van Nest LLP, San Francisco, California; George E.
Hays, Law Office of George E. Hays, San Francisco,
California, for Defendants-Appellants.

Kyle W. Parker, Crowell & Moring LLP, Anchorage, Alaska;
Kathleen M. Sullivan (argued), William B. Adams, and David
S. Mader, Quinn Emanuel Urquhart & Sullivan LLP, New
York, New York, for Plaintiffs-Appellees.

                          OPINION

D.W. NELSON, Senior Circuit Judge:

   The Beaufort and Chukchi Seas lie on Alaska’s Arctic
coast. This area contains a bountiful ecosystem that supports
a wide array of life, but it is also rich in natural resources,
specifically, oil and gas. Shell Gulf of Mexico, Inc. and Shell
Offshore, Inc. (collectively Shell) have invested heavily in the
exploration and development of oil and gas resources in the
Beaufort and Chukchi Seas.

   To carry out its operations, Shell sought and obtained
approval from the Bureau of Safety and Environmental
Enforcement (the Bureau) of two oil spill response plans
required by the Oil Pollution Act. Shortly after obtaining
approval, Shell filed a lawsuit under the Declaratory
Judgment Act against several environmental organizations,
seeking a declaration that the Bureau’s approval did not
4   SHELL GULF OF MEX. V. CTR. FOR BIOLOGICAL DIV.

violate the Administrative Procedures Act (APA). Shell
claimed that it needed a swift determination of the legality of
the approval so it could conduct exploratory drilling without
worrying that the environmental groups would seek to
overturn the Bureau’s approval of the spill response plans.

    Shell’s lawsuit represents a novel litigation strategy,
whereby the beneficiary of agency action seeks to confirm its
lawfulness by suing those who it believes are likely to
challenge it. We must decide whether this strategy runs afoul
of Article III’s case or controversy requirement. We hold that
it does. Shell does not have legal interests adverse to the
Bureau under the APA, and it may not file suit solely to
determine who would prevail in a hypothetical suit between
the environmental groups and the Bureau. Consequently, we
lack jurisdiction.

                       I. Background

    Many environmental organizations and citizen activists,
including the defendants in this case, vehemently oppose
Shell’s Arctic oil and gas exploration activities. In addition
to making public statements condemning Shell’s plans,
several organizations have filed lawsuits challenging
regulatory approval of Shell’s activities. Some of these
organizations have proclaimed litigation to be a particularly
effective tool for achieving their goal of stopping oil and gas
exploration in the Arctic, and have stated their intentions to
continue resisting Shell’s plans in court.

    A recent Arctic drilling dispute concerns Shell’s
compliance with the Oil Pollution Act, 33 U.S.C. § 1321(j).
Under the Oil Pollution Act, Shell must file an oil spill
response plan with the Bureau and obtain the Bureau’s
    SHELL GULF OF MEX. V. CTR. FOR BIOLOGICAL DIV.                 5

approval for that plan prior to handling, storing, or
transporting oil. See id. § 1321(j)(5)(F). Shell filed oil spill
response plans with the Bureau for its operations in the
Beaufort and Chukchi Seas, which the Bureau approved.

     Weeks after obtaining the Bureau’s approval, Shell filed
a lawsuit against the environmental groups seeking a
declaration that the Bureau’s approval did not violate the
APA. In its complaint, Shell alleged that the environmental
groups were engaged in an ongoing campaign to prevent
Shell from drilling for oil in the Arctic, and that some of the
environmental groups had threatened to bring litigation
challenging the Bureau’s approval of the oil spill response
plans. Shell alleged that the environmental groups’ history of
opposing Shell’s activities through litigation, coupled with
their public criticism, made it virtually certain that they
would file litigation challenging the Bureau’s approval. Shell
asserted that it needed to accelerate resolution of the allegedly
inevitable challenge to the Bureau’s action in order to protect
its investments and conduct exploratory drilling without the
threat of judicial intervention.

    The environmental groups moved to dismiss Shell’s
complaint, arguing, inter alia, that Shell’s lawsuit did not
satisfy Article III’s case or controversy requirement. The
district court denied the motion to dismiss. Eventually, some,
but not all, of the environmental groups filed a lawsuit
challenging the Bureau’s approval of Shell’s oil spill response
plans. See Alaska Wilderness League v. Jewell, No. 13-
35866 (9th Cir. filed Sept. 17, 2013).1 This case was
consolidated with the case against the Bureau, and the district

    1
      Defendants Northern Alaska Environmental Center and The
Wilderness Society are not parties to the lawsuit against the Bureau.
6   SHELL GULF OF MEX. V. CTR. FOR BIOLOGICAL DIV.

court entered summary judgment against the environmental
groups. The environmental groups now appeal the district
court’s denial of their motion to dismiss.

                     II. Legal Standard

    We review the existence of subject matter jurisdiction
de novo. United States v. Peninsula Commc’ns, Inc.,
287 F.3d 832, 836 (9th Cir. 2002).

                        III. Discussion

    The Declaratory Judgment Act provides that “any court
of the United States . . . may declare the rights and other legal
relations of any interested party seeking such declaration.”
28 U.S.C. § 2201(a). This statute does not create new
substantive rights, but merely expands the remedies available
in federal courts. Countrywide Home Loans, Inc. v.
Mortgage Guar. Ins. Corp., 642 F.3d 849, 853 (9th Cir.
2011). Congress created this remedy, in part, to allow
potential defendants to file preemptive litigation to determine
whether they have any legal obligations to their potential
adversaries. Seattle Audubon Soc. v. Mosely, 80 F.3d 1401,
1405 (9th Cir. 1996). Filing a preemptive declaratory
judgment action benefits potential defendants by relieving
them “from the Damoclean threat of impending litigation
which a harassing adversary might brandish[.]” Hal Roach
Studios, Inc. v. Richard Feiner and Co., Inc., 896 F.2d 1542,
1555 (9th Cir. 1990) (quoting Societe de Conditionnement v.
Hunter Eng’g Co., 655 F.2d 938, 943 (9th Cir.1981)).

   While the Declaratory Judgment Act therefore created a
new procedural mechanism for removing the threat of
impending litigation, it did not expand the jurisdiction of
    SHELL GULF OF MEX. V. CTR. FOR BIOLOGICAL DIV.            7

federal courts. Skelly Oil Co. v. Phillips Petroleum Co.,
339 U.S. 667, 671 (1950). In particular, a federal court may
only grant a declaratory judgment in “controversies which are
such in the constitutional sense.” Aetna Life Ins. Co. of
Hartford, Conn. v. Haworth, 300 U.S. 227, 240 (1937). To
determine whether a declaratory judgment action presents a
justiciable case or controversy, courts consider “whether the
facts alleged, under all the circumstances, show that there is
a substantial controversy, between parties having adverse
legal interests, of sufficient immediacy and reality to warrant
the issuance of a declaratory judgment.” Md. Cas. Co. v.
Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941).

    Shell contends that this case is justiciable because the
parties have adverse legal interests and have been mired in a
substantial, real, and immediate controversy over the
lawfulness of its Arctic oil and gas explorations. Shell points
out that it brought this lawsuit to solve the precise problem
the Declaratory Judgment Act is meant to address. Shell
asserts that it needs a quick resolution of any challenge to the
Bureau’s approval before continuing its exploratory drilling,
and that in the absence of a preemptive lawsuit, it fears the
environmental groups would wait until the eve of the drilling
season to file litigation at the most inconvenient moment.
Shell further claims that adverse legal interests are present in
this case because Shell and the environmental groups have
opposing legal positions regarding the lawfulness of the
Bureau’s approval of Shell’s oil spill response plans, and
because Shell would suffer economic harm if the
environmental groups’ view prevailed in court.

   We need not address whether there is a substantial
controversy present in this case, because we hold that Shell
and the environmental groups do not have “adverse legal
8   SHELL GULF OF MEX. V. CTR. FOR BIOLOGICAL DIV.

interests.” Md. Cas. Co., 312 U.S. at 273. To determine
whether the parties to a declaratory judgment action have
adverse legal interests, we first identify the law underlying
the request for a declaratory judgment. Mylan Pharm., Inc.
v. Thompson, 268 F.3d 1323, 1330 (Fed. Cir. 2001); Collin
Cnty., Tex. v. Homeowners Ass’n for Values Essential to
Neighborhoods, (HAVEN), 915 F.2d 167, 171 (5th Cir. 1990)
(“A party’s legal interest must relate to an actual ‘claim
arising under federal law that another asserts against him[.]’”
(quoting Lowe v. Ingalls Shipbuilding, A Div. of Litton Sys.,
Inc., 723 F.2d 1173, 1179 (5th Cir.1984))). It is necessary to
first examine the underlying law because the Declaratory
Judgment Act only creates new remedies, and therefore, the
adverse legal interests required by Article III must be created
by the authority governing the asserted controversy between
the parties. When identifying the adverse legal interests
arising from the law underlying the request for declaratory
relief, courts examine both the persons who can assert rights
under that law and those who have obligations under it. See
Collin Cnty., 915 F.2d at 171 (“Since it is the underlying
cause of action of the defendant against the plaintiff that is
actually litigated in a declaratory judgment action, a party
bringing a declaratory judgment action must have been a
proper party had the defendant brought suit on the underlying
cause of action.”).

    The law underlying Shell’s request for a declaratory
judgment is the APA, and we therefore consider the rights
and obligations created by that law. The APA allows a
person “aggrieved” by agency action to seek judicial review.
5 U.S.C. § 702. Actions under the APA may be brought only
against federal agencies. City of Rohnert Park v. Harris,
601 F.2d 1040, 1048 (9th Cir. 1979). A claim under the APA
cannot be asserted against a private party. W. State Univ. of
    SHELL GULF OF MEX. V. CTR. FOR BIOLOGICAL DIV.            9

S. Cal. v. Am. Bar Ass’n, 301 F. Supp. 2d 1129, 1133 (C.D.
Cal. 2004). Thus, with respect to declaratory judgment
claims arising out of the APA, the relevant “adverse legal
interests” are held by a federal agency and a person aggrieved
by that agency’s action.

    Turning to the facts before us, it follows that the only
entities with adverse legal interests are the Bureau and the
environmental groups. The environmental groups were
“aggrieved” by the approval of Shell’s oil spill response
plans, and the Bureau is the federal agency responsible for
their approval. Since the APA therefore allows the
environmental groups to file suit against the Bureau, adverse
legal interests exist between those parties. Shell, by contrast,
does not have legal interests under the APA that are adverse
to either the Bureau or the environmental groups. Because its
plans were approved, Shell was not “aggrieved” by the
Bureau’s actions. Moreover, since Shell is not a federal
agency, it cannot possibly have any legal obligations under
the APA to the environmental groups. Put simply, the Bureau
lies at the center of the underlying controversy and is the
locus of the adverse legal interests created by the APA.
Without its participation, no case or controversy can exist.

    Indeed, since it is the Bureau, and not Shell, that can be
sued under the APA, it would be odd to conclude that a case
or controversy exists merely because Shell seeks to know
who would prevail if the environmental groups asserted an
APA claim against the Bureau. Were we to conclude that
jurisdiction exists, our holding would create several unusual
consequences, two of which are particularly noteworthy.
First, it would allow a district court to declare the Bureau’s
actions unlawful under the APA in a judgment that is not
binding on the Bureau itself. After all, the Bureau need not
10 SHELL GULF OF MEX. V. CTR. FOR BIOLOGICAL DIV.

participate in this lawsuit, and it would therefore not be
bound by any judgment. Taylor v. Sturgell, 553 U.S. 880,
884 (2008). Thus, a district court entertaining Shell’s lawsuit
would be potentially unable to enter a judgment resolving the
very question Shell seeks to litigate. Second, absent agency
intervention, such a lawsuit would allow the lawfulness of
agency action to be adjudicated without hearing the agency’s
own justification for its actions. We conclude, therefore, that
it would be unwise to exercise jurisdiction over a dispute
concerning agency action while potentially omitting the
critically important perspective of the agency itself.

     Shell emphasizes the sincerity of its legal disagreement
with the environmental groups and the substantial economic
effects it would suffer from a judgment against the Bureau,
but these alone do not create a justiciable case or controversy.
It is axiomatic that differing views of the law are not enough
to satisfy Article III. Hollingsworth v. Perry, 133 S. Ct.
2652, 2661 (2013) (“The presence of a disagreement,
however sharp and acrimonious it may be, is insufficient by
itself to meet Art. III’s requirements.” (quoting Diamond v.
Charles, 476 U.S. 54, 62 (1986))). Moreover, Shell’s
economic interest in the outcome of a lawsuit between the
Bureau and the environmental groups is not a legal interest
merely because it relates to a lawsuit. “A party’s legal
interest must relate to an actual claim arising under federal
law that another asserts against him.” Collin Cnty., 915 F.2d
at 171 (internal quotation marks omitted) (emphasis added).
Lawsuits affect a vast range of persons, and an Article III
case or controversy does not exist wherever an individual
possibly, probably, or even certainly affected by litigation
asks a federal court to resolve a legal question. Thus, it is not
enough for a declaratory judgment plaintiff to assert, as Shell
does here, a practical interest in the outcome of a lawsuit
     SHELL GULF OF MEX. V. CTR. FOR BIOLOGICAL DIV. 11

between other parties. Instead, Article III requires the
existence of adverse legal interests arising from a legal claim,
and that is absent from this case.

    The Fifth Circuit has also concluded that a practical
interest in the outcome of a lawsuit is not necessarily a legal
interest capable of satisfying the case or controversy
requirement. In Collin County v. HAVEN, HAVEN, a
homeowner’s organization, stated publicly that it intended to
file a lawsuit challenging the Federal Highway
Administration’s approval of an environmental impact
statement (EIS) drafted for a proposed state highway.
915 F.2d at 172. Fearing delay in the highway’s construction,
Collin County sued HAVEN under the Declaratory Judgment
Act, seeking a declaration that the EIS was sufficient as a
matter of law. The Fifth Circuit held that there was no
justiciable controversy because HAVEN “could not have
sued Collin County or any of the other plaintiffs over the
sufficiency of the EIS.” Id. at 171. The Fifth Circuit
acknowledged that the county had strong practical interests in
the completion of the highway, but reasoned Collin County
had no legal interests adverse to HAVEN because it faced “no
actual liability for any deficiency in the EIS.” Id. Like the
plaintiffs in Collin County, Shell merely has a practical
interest in the outcome of a lawsuit between the Bureau and
the environmental groups, and that is not enough to satisfy
the case or controversy requirement.2

 2
   Shell contends that Collin County is distinguishable because Shell was
able to intervene in the APA action that was eventually brought against
the Bureau, whereas the plaintiffs in Collin County had no right to
intervene. See Collin County, 915 F.2d at 171. In its discussion of
whether one of the plaintiffs could have been added to an affirmative suit
brought by HAVEN, however, the Fifth Circuit made clear that its
decision rested on the premise that the plaintiffs “could not have been
12 SHELL GULF OF MEX. V. CTR. FOR BIOLOGICAL DIV.

    Thus, because no adverse legal interests exist between the
environmental groups and Shell, this case is not justiciable,
and we therefore lack jurisdiction. We reverse and remand
for further proceedings consistent with this opinion.

    REVERSED AND REMANDED.

sued directly on account of any alleged deficiency in the final EIS.” Id.
Thus, the holding in Collin County did not rest on the plaintiffs’ inability
to intervene, but on the lack of any claim against them.