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U.S. court strikes down Bush oil leasing plan

ANCHORAGE, Alaska, April 17 (Reuters) - An appeals court on Friday struck down the Bush administration’s five-year plan for offshore oil and gas leasing, saying it was put into effect without proper environmental review.

The U.S. Court of Appeals in Washington, D.C. ordered the Interior Department to rewrite the 2007-2012 plan, which was challenged by a coalition of environmental groups and Alaska Natives.

That entire leasing program, which includes several lease sales to be held as well as a 2008 sale in the Chukchi Sea that drew a record $2.66 billion in high bids, is vacated because its “environmental sensitivity rankings are irrational,” the ruling said.

Although the case disputes oil development in the Alaska outer continental shelf, the court’s ruling mandates a rewrite for the entire nation, said Peter Van Tuyn, an Anchorage attorney who represented an Inupiat Eskimo village and some of the environmentalists who objected to the plan.

Upcoming Alaska lease sales that were slated to be held between 2010 and 2012, including sales in the Beaufort and Chukchi Seas and North Aleutian Basin, “no longer exist,” Van Tuyn said. “There is no leasing schedule.”

It is unclear what will happen to the leases sold last year for exploration rights to the remote Chukchi. Shell RDSa.L was the major player in that lease sale, spending $2.1 billion to acquire leases. Shell and ConocoPhillips COP.N, which also acquired leases in the sale, have conducted seismic testing in the area and said they plan to start drilling in 2010.

Van Tuyn said he is doing further research to determine whether those leases are now voided.

“That’s an open question,” he said. “I think Interior should suspend them pending further analysis.”

The Chukchi sale was particularly controversial, and a legal challenge to it is still pending. The North Slope Borough, Alaska Eskimo Whaling Commission and other groups argued that there was too little consideration given to impacts to marine mammals and the icy environment, which is already vulnerable to accelerated climate change.

The American Petroleum Institute said in a statement it was reviewing the implications of Friday’s decision.

Alaska’s U.S. senators had mixed reactions to the ruling.

Senator Lisa Murkowski, a Republican, said she disagreed with the court’s conclusions.

“I am disappointed that the D.C. Circuit has issued this decision to vacate and remand the five year Outer Continental Shelf leasing program to the extent that this may now cause a further delay in the development of the oil and gas resources that America still requires to fuel its economy,” she said.

Senator Mark Begich, a Democrat, said that while he favors OCS development, the decision confirms that the Bush administration did not properly review environmental impacts.

“The court’s ruling today is a huge setback for Alaska and shows what happens when decisions are rushed. The actions of the Bush Administration have put Alaska’s oil and gas industry at risk,” Begich said.

Interior Secretary Ken Salazar has launched a review of outer continental shelf oil and gas development throughout the nation’s coastal areas. He has said he intends to have the department rewrite a draft 2010-2015 leasing program that was issued in the last days of the Bush administration. (Reporting by Yereth Rosen, editing by Timothy Gardner and Marguerita Choy)