The lawsuit alleges an illegal moratorium is in effect for shallow arctic waters even though they are not subject to the Interior Department's deepwater drilling suspension imposed after the BP oil spill in the Gulf of Mexico, The Hill newspaper reports.
The state filing comes in the wake of a decision by Interior Secretary Ken Salazar to suspend Shell Oil's request to drill exploratory wells in the Beaufort and Chukchi seas and to cancel four arctic lease sales.
Interior called the lawsuit baseless, saying there is no moratorium in Alaska and "therefore nothing to sue on," said spokeswoman Kendra Barkoff.
However, she said, Interior's "cautious approach" to offshore oil and gas development includes the arctic.
"We need additional information about spill risks and spill response capabilities, which is why Secretary Salazar has delayed Shell's request to drill in the Beaufort and Chukchi seas and canceled the remaining four lease sales in the arctic," Barkoff said.
Shell in 2008 spent $2.1 billion on the arctic leases in the Beaufort and Chukchi seas and had planned to drill at least three exploratory wells this summer.
Estimates by the U.S. Minerals Management Service (renamed the Bureau of Ocean Energy, Management, Regulation and Enforcement in June) show that the two arctic seas hold up to 19 billion barrels of oil and up to 74 trillion cubic feet of natural gas.
A Shell spokesman told the Houston Chronicle Alaska was "fully justified" in challenging the Interior Department's handling of arctic drilling.
"Unfortunately, our progress in Alaska has been severely compromised by unforeseen events that are not related to our specific program in the Alaska offshore," said Shell spokesman Kelly Op De Weegh, alluding to the BP oil spill.
"Our inability to drill is not only costly to Shell, but also to a state that is working hard to create jobs and find new oil supplies for the Trans Alaska Pipeline by promoting responsible offshore development," she said.
A report by WWF, "Not So Fast: U.S. Ill-Prepared for Arctic Offshore Development," states that Shell's proposed drill sites located up to 140 miles offshore in "hostile conditions" of extreme storms, gale-force winds, moving sea ice, darkness and subzero temperatures would "make it difficult, if not impossible to mount a robust response effort in the event of a major oil spill."