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Regulation Nation: Shell Ready to Move on Alaska Wells -- If Alphabet Soup of Challenges Would End

An estimated 27 billion barrels of oil are sitting just off the northern coast of Alaska in waters controlled by the United States, but despite spending more than five years and $4 billion, Shell Oil Company still can't get to it. 

The company was planning to announce this week plans to move ahead with drilling three test wells in the Beaufort and Chukchi Seas next summer, but it's still lacking several permits and a roadmap of how to get them.

Shell doesn't blame strict environmental protections. The company's beef is with a seemingly endless web of legal appeals and challenges available to drilling opponents. 

"We're not disputing any of the high standards we're being asked to work with," said Pete Slaiby, vice president of Shell Alaska. "What's concerning to us is the fact that there's not any real certainty in how these processes will be met."

The Environmental Protection Agency granted an air permit in September, but the permit is still in legal limbo because it's been challenged a second time by Earthjustice and other environmental groups -- despite the fact the closest village to the proposed drilling is 70 miles away and has a population of 245. An EPA board now must weigh in again.

 "The majority of them are not thinking about America," said Alaska's lone congressman, Don Young, a Republican. "They're thinking about their own little agenda." 

Young said if Alaska's resources were tapped, the U.S. would not have to buy $400 billion worth of oil each year from overseas and consumers would not have to pay nearly $4 a gallon at the pump.

Young has introduced legislation that would strip away every federal environmental regulation and force the agencies to get Congress to reauthorize them. Environmental groups say it would be a disaster.

Earl Kingik is an Alaska Native from Point Hope, a small village near the Chukchi Sea. He says offshore drilling regulations are not strong enough, and points to the BP spill in the Gulf of Mexico as evidence. 

"The fishermen lost everything," Kingik said. "I don't want to lose everything up north. We've been living like this for thousands of years."

In addition to still needing an air permit from the EPA, Shell has to clear nine other government hurdles before it can drill. The list is an alphabet soup of federal agencies and red tape.

The Bureau of Ocean Energy, Management, Regulation and Enforcement (BOERME) has to sign off on Shell's Exploration Plan. It gave conditional approval in August but needs to wait for Shell to clear other bureaucratic hurdles before granting final approval. The bureau also is considering the company's Oil Response Plan and Application for Permit to Drill.

The U.S. Coast Guard has yet to approve Shell's Safety/Security Zone application. The National Marine Fisheries Service (NMFS) must issue Incidental Harassment Authorization, which would allow for the incidental killing of whales and seals.

The U.S. Fish and Wildlife Service (USFWS) has yet to issue a letter of authorization for the incidental take of protected polar bears and Pacific walrus. The U.S. Army Corps of Engineers still must approve the Oil and Gas Structure, Nationwide permit.

And the EPA is still considering Shell's Discharge Authorization and Vessel General Permit. Most of the permits have been approved by the various agencies, but they have been challenged in court, which leads to uncertainty.

Shell officials say they can move forward with some of the permits tied up in court battles, but the EPA air permit must be in hand before they can proceed. Pete Slaiby is confident the company will succeed this time.

The decision rests with the EPA's Environmental Appeals Board, a panel that hears challenges when permits are issued. In March, a three judge panel rejected Shell's air permit ruling its calculations for how much pollution would be produced by the drilling rigs were wrong.

Environmental Appeals Board members are appointed by the EPA Secretary Lisa Jackson. All three judges on the Shell case are registered Democrats and one, Kathie Stein, was an activist attorney for the powerful Environmental Defense Fund.

Dan Springer joined Fox News Channel (FNC) in August 2001 as a Seattle-based correspondent.