US Chamber of Commerce may sue Obama administration over Arctic drilling ban

President Barack Obama views Bear Glacier on a boat tour of Kenai Fjords National Park in Seward, Alaska September 1, 2015.
Jonathan Ernst | Reuters

The U.S. Chamber of Commerce could challenge President Barack Obama's move to put vast waters in the Arctic and elsewhere off-limits to oil and gas drilling, Christopher Guith, senior vice president of policy for the powerful pro-business group's Energy Institute, told CNBC.

"It is absolutely accurate to say we're considering it," he said Thursday.

However, legal action may not be necessary if congressional Republicans take up legislation to overturn Obama's action, Guith said. Spokesmen for Sen. Dan Sullivan and Rep. Don Young, both Alaska Republicans, said they are mulling such legislation, the Hill reported Thursday.

On Tuesday, President Obama withdrew the bulk of the U.S.-controlled Arctic Ocean and parts of the Atlantic from future lease sales to energy companies, citing his authority under the 1953 Outer Continental Shelf Lands Act.

U.S. Outer Continental Shelf

While momentum had been building for Obama to block drilling in the Arctic and Atlantic throughout the year, the timing and details of the action were not known until this week. Guith said he expects a more serious discussion about a response to begin once people return from the Christmas holiday.

"There's no rush right now. It's just trying to figure out sequentially what works best and what the bandwidth is," he said. "These sorts of decisions happen over long periods of time. It's more about getting the policy right than trying to rush to the courthouse."

This would not be new ground for the U.S. Chamber of Commerce. In September, the chamber, along with other business groups, filed a lawsuit challenging an Obama administration rule that granted overtime pay to more workers.

A way to kill the ban

Guith noted in an earlier interview that President-elect Donald Trump, a strident advocate of the energy industry, could find himself in the curious position of defending his predecessor's drilling ban if a state or lobbying group throws down a legal challenge.

"I'd be surprised if the state of Alaska or an industry group didn't," he told CNBC on Wednesday.

If that happened, the incoming Trump administration would be the defendant in the case, meaning it would essentially be responsible for defending the previous administration's action, Guith explained.

It is highly unlikely that Trump, who campaigned on boosting oil and gas output on federal lands, would put up much of a spirited fight. Instead, the White House would be much more likely to settle with the plaintiff, Guith explained.

That would essentially kill the offshore drilling ban — except there's another twist: If Trump agrees to settle, environmental groups could step in and petition to intervene on the part of the government, taking the opportunity to argue the case for why Obama's action should stand.

Battle on the Alaska frontier

Alaska is seen as a potential plaintiff because it has been trying to reverse a decadeslong decline in oil production there, and offshore drilling could help do that over the long term. A number of drillers have pulled out of the Arctic because exploration there is too expensive and risky in light of two years of low oil prices.

The office of Alaska's attorney general did not immediately respond to a request for comment.

In an email, Kara Moriarty, president and CEO of the Alaska Oil and Gas Association, said, "I'm not aware of any final decision about next steps by the state, Alaska Native organizations or industry, but with over 76 percent of Alaskans supporting oil and gas development in the Arctic, I think it is safe to say we are all exploring our options following the President's decision."

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 revenue.

More than a dozen states have sued the Obama administration over other attempts to regulate methane emissions from the oil and gas industry.