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Obama prohibits drilling in most US Arctic waters

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  • Updated: December 22, 2016
  • Published December 20, 2016

WASHINGTON — President Barack Obama ordered the closure Tuesday of 125 million acres of the Arctic Ocean and its estimated 27 billion barrels of oil, indefinitely. The executive action bars new leases in the vast majority of U.S. Arctic offshore waters.

The Obama administration announcement, decried by Alaska's congressional delegation, came in conjunction with one from the Canadian government that it would bar future oil and gas licensing for all its offshore Arctic waters. The Canadian decision will be reviewed every five years.

There will be no such built-in review of the Obama decision, however, and officials said the incoming Trump administration won't be able to easily undo it. Obama used the authority granted to the president by the 1953 Outer Continental Shelf Land Act, to "withdraw" all of the Chukchi Sea and the majority of the Beaufort Sea from future oil and gas leasing.

The Obama administration is leaving a small, nearshore portion of the Beaufort available for oil production — about 2.8 million acres between Kaktovik and Utqiaġvik near current state-held production waters and onshore infrastructure of Prudhoe Bay.

Alaska's Republican Congressman Don Young used livid language in his response.

"Hell-bent on locking away our resources and suffocating our already weakened economy, President Obama is one step closer to solidifying his place next to Jimmy Carter as Alaska's worst nightmare," Young said in a statement Tuesday. Young called the decision, in the waning days of the administration, a "cowardly move by a lame-duck President."

"I've been adamant with this administration; Alaska is not and should not be used as the poster child for a pandering environmental agenda," Young said.

Sen. Lisa Murkowski, also a Republican, made similar remarks.

"The only thing more shocking than this reckless, shortsighted, last-minute gift to the extreme environmental agenda is that President Obama had the nerve to claim he is doing Alaska a favor," Murkowski said.

"Make no mistake — the president betrayed Alaskans today — especially those living in the Arctic — who were not consulted, and instead gave one final Christmas gift to coastal environmental elites," said Sen. Dan Sullivan, the third Republican in the delegation.

Sullivan denounced a lack of consultation with Alaskans, and said the move was "an affront to our representative democracy."

U.S. Sens. Dan Sullivan and Lisa Murkowski, R-Alaska, respond to the “dictate” from the Obama administration on Tuesday “that effectively takes all of the Chukchi Sea, and just about all of the Beaufort Sea, off limits for oil and gas production permanently.” (Bill Roth / Alaska Dispatch News)
U.S. Sens. Dan Sullivan and Lisa Murkowski, R-Alaska, respond to the “dictate” from the Obama administration on Tuesday “that effectively takes all of the Chukchi Sea, and just about all of the Beaufort Sea, off limits for oil and gas production permanently.” (Bill Roth / Alaska Dispatch News)

Whether Tuesday's decision can be easily undone by the incoming administration is a point of contention. White House officials said it's unlikely. Opponents said the wheels are already in motion to undo it.

Currently, the point is moot — there's not much going on in the Arctic.

"In 2015, just 0.1 percent of U.S. federal offshore crude production came from the Arctic and Department of Interior analysis shows that, at current oil prices, significant production in the Arctic will not occur," Obama said in a statement Tuesday. He noted it would take decades to have sufficient infrastructure to drill in the Arctic anyway.

Obama said that despite high oil drilling safety standards required by the U.S. and Canada, "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 administration noted there are many endangered and protected species in the area, including bowhead and fin whales, Pacific walrus, polar bear and others. While Arctic lands are "sparsely populated," the "Alaska Native communities of the North Slope depend largely on the natural environment, especially the marine environment, for food and materials," the Interior Department said.

Obama is using executive authority that allows him to "withdraw" sections of offshore waters from oil and gas leasing, exploration and development, for a specific period or indefinitely.

Incoming President-elect Donald Trump has vowed to undo much of Obama's regulatory agenda and pursue increased U.S. oil and gas production. But it's unclear whether and how he could undo this one, and even if he did, whether oil and gas production would soon change.

The moon is visible over ice offshore from a road a few miles northeast of Utqiagvik on Dec. 13. (Marc Lester / Alaska Dispatch News)
The moon is visible over ice offshore from a road a few miles northeast of Utqiagvik on Dec. 13. (Marc Lester / Alaska Dispatch News)

Murkowski said she's up for the challenge. "I cannot wait to work with the next administration to reverse this decision," she said in a statement Tuesday.

There's no provision in the law for a president to reverse a decision under the 1953 Act by a prior president, according to senior administration officials. White House officials said they expected the withdrawal "will stand the test of time."

But while there's no official route for the Trump White House to undo Obama's decision, Congress could pass legislation to change course, or give the president the right to do so.

Western Republican House members also expressed optimism about their chances for reversal. The law "allows a President to withdraw (outer continental shelf) areas from leasing consideration — it does not say that these withdrawals are permanent," several members said in a statement Tuesday with Young. "A permanent withdrawal would be entirely contrary to Congress' stated purpose in creating (the 1953 law), which was to make the OCS 'available for expeditious and orderly development.' "

Republicans in the Senate will face a steep uphill climb though, since they must get to 60 votes to overcome a filibuster and only have a 52-person majority. There are other legislative options to squeeze such efforts into larger legislation, but Alaska's delegation will face a long list of competing priorities.

In 2008, they said, President George W. Bush "used a simple memorandum to remove previous … withdrawal areas and open all OCS lands to leasing except marine sanctuaries. President Trump, once in office, can similarly rescind any areas withdrawn by President Obama with a simple memorandum," they argued.

The dispute could end up in court.

"This decision only strengthens our resolve — as a resources-oriented state — to overturn the heavy hand of government and empower our people and communities with new social and economic opportunities," Young said. "The groundwork is already being laid to overturn this terrible decision."

But the White House made the argument Tuesday there is no real risk of drilling taking place in the region for decades to come. According to Interior Department projections, it would still take decades to produce oil in the now-barred Arctic waters, even if oil prices were more than 200 percent above the current price.

The administration did leave the door open to nearshore oil and gas drilling in the Beaufort, which officials said has a higher potential for oil and gas drilling and is "adjacent to existing state oil and gas activity and infrastructure," according to a fact sheet released by the White House.

The move follows an announcement by the Interior Department last month that it no Arctic lease sales were included in its 2017-2022 plan. And earlier this month, the Obama administration closed more than 40,000 square miles of Bering Strait-area waters to future oil leases and directed the federal government to set up a system for increased input of Alaska Native people there.

Forty-three wells have been drilled in the Chukchi and Beaufort since 1979; only seven were for development, rather than exploration, according to the White House. Oil companies held 527 leases in those waters in February. By October, only 43 leases remained, and most are expected to expire next year.

Canada faces a similar dynamic in its offshore operations, according to a senior White House official. The administration also announced Obama will withdraw areas of the Atlantic Ocean from potential oil and gas leasing operations.

Existing leases, which amount to about 205,000 acres within the 128 million acres withdrawn Tuesday, won't be affected by the new action.

Oil and gas industry interests disagreed about how much work is actually going on in the Arctic, in terms of oil production.

"The administration has always justified a ban on Arctic development because of an alleged lack of local support or industry interest," said Lucas Frances, spokesperson for the Arctic Energy Center. "The Arctic Energy Center's research categorically shows that that is simply not true, with almost three-quarters of Native respondents supporting offshore energy. Taken with last week's news that sales of Beaufort Sea and North Slope leases generated $18 million, it is hard to avoid the conclusion that the Obama administration is playing politics with the future of Alaska."

"President Obama's puzzling actions fly in the face of what his own Energy Information Administration and international data analysts confirmed: the demand for oil and natural gas will continue to grow until 2040, if not beyond," said Dan Naatz, vice president with the Independent Petroleum Association of America.

White House officials also touted ongoing discussions with Alaska Gov. Bill Walker in their decision to keep nearshore waters out of the drilling ban.

But Walker wasn't happy with the announcement.

"This unprecedented move marginalizes the voices of those who call the Arctic home and have asked for responsible resource development to lower the cost of energy to heat houses and businesses," Walker said in a statement Tuesday.

"No one is more invested than Alaskans to ensure that the habitats within the Arctic are protected. To lock it up against any further exploration or development activity is akin to saying that the voices of activists who live in Lower 48 cities have a greater stake than those to whom the Arctic is our front yard and our backyard," Walker said.

Walker spoke to Interior Secretary Sally Jewell Tuesday morning, and said she "acknowledged that she and her team at the (Interior Department) took into consideration the requests that state Department of Natural Resources Commissioner Andy Mack and I made during multiple meetings with her in Washington, D.C., and in Fairbanks." That included highlighting "the areas of the Arctic most likely to provide revenue to the state," he said.

While those conversations were reflected in the administration's decision to keep nearshore waters out of the withdrawal, Walker said that wasn't much of a win, since those waters were already excluded from the most recent five-year lease plan.

Senior White House officials also said they have been in touch with Slope communities for "months" in the lead-up to the decision Tuesday, especially with an interest in learning about Native groups' subsistence needs.

Environmental groups were delighted with the decision.

Jamie Rappaport Clark, CEO of Defenders of Wildlife, called it a "visionary act by President Obama.

"And it marks the important recognition that we cannot achieve the nation's climate-change goals if we continue to expand oil and gas development into new, pristine environments like the Arctic and Atlantic Oceans," Clark said.

Quite a few Alaska Natives were happy with the decision too. Natives from Nuiqsut, Fort Yukon, Point Hope and Hooper Bay issued a statement thanking Obama for the move to protect Arctic waters for subsistence users.

Other Actions

The Obama administration and Canada, under Prime Minister Justin Trudeau, also announced efforts Tuesday to encourage "low impact" shipping in Arctic waters, which are increasingly considered an option for new shipping routes due to longer summers without ice.

The U.S. Coast Guard will lead a study to determine the best routes — and those that should be off-limits — in the Beaufort and Chukchi. And, joining state and Native groups, the Coast Guard will work on phasing out the use of heavy fuel oil in Arctic shipping, which pollutes more than ship fuels.

The Canadian Coast Guard is leading an effort to determine what infrastructure and emergency response services are necessary.

The announcement was cast by White House officials as a new step in an ongoing partnership between Obama and Trudeau. In March, the pair announced plans to work together on Arctic issues after Trudeau visited Washington, D.C.

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