President Barack Obama on Tuesday moved to indefinitely block drilling in vast swaths of U.S. waters.
The president had been expected to take the action by invoking a
provision in a 1953 law that governs offshore leases, as CNBC previously
reported.
The law allows a president to withdraw any currently
unleased lands in the Outer Continental Shelf from future lease sales.
There is no provision in the law that allows the executive's successor
to repeal the decision, so President-elect Donald Trump would not be able to easily brush aside the action.
Trump has vowed to open more federal land to oil and natural gas
production in a bid to boost U.S. output. Obama on Tuesday said he would
designate "the bulk of our Arctic water and certain areas in the
Atlantic Ocean as indefinitely off limits to future oil and gas leasing,
though the prospects for drilling in the affected areas in the near
future were already questionable.
U.S. Outer Continental Shelf
The lands covered include the bulk of the Beaufort and Chukchi seas in the Arctic and 31 underwater canyons in the Atlantic.
Canada
also imposed a five-year ban on all oil and gas drilling licensing in
the Canadian Arctic. The moratorium will be reviewed every five years.
"These actions, and Canada's parallel actions, protect a sensitive and
unique ecosystem that is unlike any other region on earth," Obama said
in a statement.
"They reflect the scientific assessment
that, even with the high safety standards that both our countries have
put in place, the risks of an oil spill in this region are significant
and our ability to clean up from a spill in the region's harsh
conditions is limited."
The action potentially tees up a battle
that touches on hot-button issues: environmental protection, energy
independence, climate change, and the scope of executive power.
Like other efforts by the Obama administration to advance environmental
protection through executive action, it could also be challenged in the
courts. It could get tied up there throughout much of Trump's four-year
term.
The Republican-controlled Congress could also try to change the law.
The provision, contained in the 1953 Outer Continental Shelf Lands Act,
has been invoked in the past to set aside smaller portions of the Outer
Continental Shelf, such as coral reefs or natural habitats. Presidents
George H.W. Bush and Bill Clinton used the provision to block drilling in much of the Outer Continental Shelf, but for limited periods.
The Obama administration's action marks the broadest use of the statute
ever because it would be far-reaching in terms of the lands it would
protect and come without an expiration date.
Provision 12(a) of
the law states, "The President of the United States may, from time to
time, withdraw from disposition any of the unleased lands of the outer
Continental Shelf."
Momentum to use the provision has been
building this year. In May, a coalition of environmental groups
circulated a fact sheet that highlighted the authority provided under
12(a).
In September, Democratic Congress members Frank Pallone, Jr. and Jared Huffman sent a letter to Obama urging him to exercise that authority.
The letter was signed by 74 lawmakers, almost all Democrats, and
contained quotes from representatives from some of the groups that
produced the fact sheet in May.
Environmentalists say drilling
in the Arctic and Atlantic puts the waters at immediate risk, for oil
and gas that would not come online for years, after a transition to
cleaner energy sources could be under way.
"The Arctic Ocean is
ground zero for the impacts of climate change, and any oil production
there would be decades away and inconsistent with addressing climate
change before it is too late," the League of Conservation Voters said in
a statement after the announcement.
The White House echoed
that sentiment on Tuesday, saying, "it would take decades to fully
develop the production infrastructure necessary for any large-scale oil
and gas leasing production in the region — at a time when we need to
continue to move decisively away from fossil fuels.
Industry
groups acknowledge that offshore projects come with long lead times, but
they say deepwater oil will be critical for meeting the country's
future energy needs.
"Our national security depends on our
ability to produce oil and natural gas here in the United States," Erik
Milito, upstream director at the American Petroleum Institute, said in a
statement. "This proposal would take us in the wrong direction just as
we have become world leader in production and refining of oil and
natural gas and in reduction of carbon emissions."
API said it believes Obama's action can be overturned and said it looked forward to working with the Trump administration.
To be sure, any drilling in the affected waters already faced significant challenges in the coming years.
Energy companies have pulled out of Alaska's Arctic waters, where
conditions can be perilous and weather conditions allow drillers to
operate for only a few months of the year. In light of more than two
years of weak oil prices, drillers could not justify the costs and risks
of exploration there.
Last month, the Bureau of Ocean Energy
Management did not include any blocks in the Atlantic, Arctic or Pacific
in the latest five-year plan to lease offshore land controlled by the
government. Trump could scrap that plan and develop a new auction
schedule for the 2017 to 2022 period, but it typically takes two to
three years to put together a new program.
Drilling in the
Atlantic has also faced challenges from a number of other sources,
including coastal states that could be affected by a spill, as well as
the Pentagon, which said drilling in the Atlantic could disrupt naval
exercises.
The federal government spent $1.5 billion to
compensate drillers whose offshore leases were canceled due to local and
state opposition in North Carolina, Florida, California and Alaska,
according to a 2012 Congressional Budget Office review.
Fifty-nine percent of voters surveyed in September said they would
support blocking leasing in the Arctic and Atlantic, according to a
study from Hart Research Associates that was paid for by the NRDC and
the League of Conservation Voters. The survey polled 1,103 registered
voters by phone and had a margin of error plus or minus 2.9 percentage
points.
In response, the pro-drilling Arctic Energy Center
conducted a survey of 511 Alaskans that found 76 percent supported
drilling in Arctic waters. The margin of error was plus or minus 4.4
percentage points. Alaskans receive a cash disbursement from the state
every year that is underwritten by oil revenues.
In
his statement, Obama said significant production in the Arctic will not
occur in the current low oil price environment, citing the Department
of the Inerior analysis. He said Arctic communities must focus on
economic diversification.
— CNBC's Eamon Javers contributed reporting to this story.
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