A city hearing examiner cleared the way for Shell’s Polar Pioneer and other vessels to return to Terminal 5, ruling the city was not justified in demanding new land-use permits.

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Royal Dutch Shell has dropped plans to continue exploratory drilling off Alaska’s North Slope, but that doesn’t mean some of its fleet of two dozen vessels won’t return to Seattle.

A city hearing examiner cleared the way for that possibility Wednesday by ruling that using the Port of Seattle’s Terminal 5 to home-port the Polar Pioneer and its support vessels was a permissible cargo-terminal use.

Deputy Hearing Examiner Anne Watanabe said the city’s attempt to require a new land-use permit relied on “inaccurate and incomplete” characterizations of the work to be done.

Foss Maritime, which leased the terminal for two years to service Shell’s huge Polar Pioneer oil rig and related ships, said it is “awaiting decisions on which vessels will be returning to Puget Sound and where they will be moored.”

Shell spokesman Curtis Smith said in a statement the company is “now safely and methodically demobilizing” its fleet after the summer-drilling season in the Chukchi Sea. “How that will impact Seattle in terms of potential future asset staging has yet to be decided.”

The company announced Sunday it is abandoning the drilling effort in Alaska “for the foreseeable future,” citing the disappointing results of an initial well, the high costs of development and the “challenging and unpredictable federal regulatory environment in offshore Alaska.”

Seattle Mayor Ed Murray said he was disappointed in Wednesday’s ruling. But he added in a statement that “Now is the time for us to come together to collaborate on new projects to support the growth of maritime jobs while protecting our natural environment.”

Since January, when Foss announced its plan to lease part of Terminal 5 to Shell, environmentalists and Seattle officials had opposed using Seattle as a home base for Shell’s Arctic-drilling exploration.

The oil rig Polar Pioneer was moored in Seattle for a month and sparked multiple protests.

Murray said in May the Port needed a new land-use permit because the existing permit allowed only for cargo loading and unloading — not for maintaining and supplying oil-drilling rigs. Foss and the Port quickly appealed, and the questions of what is a cargo terminal and what is cargo have been debated ever since.

The examiner heard four days of testimony last month. During the first day of the hearing, city land-use planner supervisor Andrew McKim, the primary author of the department’s decision, was grilled for four hours.

The city, and a coalition of environmental groups that joined the case on the city’s side, argued that Foss’ activities at Terminal 5 did not meet the definition of a cargo terminal and a narrow definition of cargo, goods and containers.

The Port and Foss argued that restricting the use of the terminal according to the city’s rationale “would fundamentally change the operation of cargo terminals and cripple the Port of Seattle as a competitive commercial-cargo enterprise.”

Department of Planning and Development spokesman Bryan Stevens said the department will now retract the notice of violation issued for Terminal 5 in May, which could have fined the Port, Foss and Shell up to $500 a day if the Polar Pioneer or its support ship, the Aiviq, returned to the terminal.

The city considers the hearing examiner’s ruling final and will not appeal.

Earthjustice attorney Patti Goldman, who represents the coalition of environmental groups who joined the case on the city’s side, said she and her clients are still reviewing the ruling, but they are “seriously considering appealing.”

“We thought the city was right … home-porting a massive drill rig is not a use of a cargo terminal,” she said.

Foss, the Port and maritime companies had worried that the city’s ruling would amount to a closed-for-business sign as the Seattle and Tacoma ports are trying to strengthen their global competitiveness by forming The Northwest Seaport Alliance.

“The ruling is an encouraging sign that Seattle will continue to welcome the maritime industry,” Foss spokesman Paul Queary said in a statement.