Appeals court cancels offshore drilling program

WASHINGTON — A federal appeals court ruled Friday that the Bush administration did not properly study the environmental impact of expanding oil and gas drilling off the Alaska coast and canceled a program to find new reserves.

A three-judge panel in Washington found that the Bush-era Interior Department failed to consider the effect on the environment and marine life before it began the process in August 2005 to expand an oil and gas leasing program in the Beaufort, Bering, and Chukchi seas.

The appeals court ordered the department, now run by President Barack Obama's appointee Ken Salazar, to analyze the areas to determine environmental risks and potential damage before moving ahead with the program.

The seas are home to wildlife including polar bears, whales, seals, walruses and seabirds. The lawsuit was brought by three environmental groups that want to protect the ecosystem and the Native Village of Point Hope, Alaska, a tribe that lives off the wildlife on the Chukchi Sea coast.

The decision comes at a time when oil and gas producers are finding it increasingly difficult to find new reserves and boost production at home and abroad. Output from the biggest U.S. oil companies has largely been in decline in the past few years.

Even though most people recognize the names of the giant multinationals — Exxon Mobil, Shell, BP and others — they control less than 10 percent of the world's oil reserves. Most proven reserves — about 80 percent — are held by national, state-run companies like those in Venezuela and Saudi Arabia.

The American Petroleum Institute, the industry's trade association which joined the lawsuit to defend the program, said Friday it's reviewing the implications of the court's decision.

"It would be a disservice to all Americans — and a devastating blow to the economy — if this decision were to delay further the development of vital oil and natural gas resources," the organization said in a statement. "Development in federal waters off the nation's coast provides thousands of well-paying jobs, government revenues and the fuel needed to run America's cars and factories, heat our homes and the feedstock needed to make the materials we use every day."

The Interior Department did not comment other than to say it was reviewing the decision. The department had already delayed the leasing program by five years to complete environmental studies.