The move helps put some finishing touches on Obama's environmental legacy while also testing President-elect Donald Trump's promise to unleash the nation's untapped energy reserves.
The White House announced the actions in conjunction with the government of Canadian Prime Minister Justin Trudeau, which also placed a moratorium on new oil and gas leasing in its Arctic waters, subject to periodic review.
Obama is making use of an arcane provision in a 1953 law to ban offshore leases in the waters permanently. The statute says that "the president of the United States may, from time to time, withdraw from disposition any of the unleased lands of the outer Continental Shelf."
Environmental groups hope the ban, despite relying on executive powers, will be difficult for future presidents to reverse. The White House said it's confident the president's directive will withstand legal challenge and said the language of the statute provides no authority for subsequent presidents to "unwithdraw" waters from future lease sales.
The Atlantic waters placed off limits to new oil and gas leasing are 31 canyons stretching off the coast of New England south to Virginia.
The administration cited environmental concerns to justify the moratorium. The president also issued a statement noting the minimal level of fuel production occurring in the Arctic. Obama said just 0.1 percent of offshore crude production came from the Arctic in 2015, and at current oil prices, significant production would not occur in future decades.
"That's why looking forward, we must continue to focus on economic empowerment for Arctic communities beyond this one sector," Obama said.
Still, industry officials objected to Obama's proclamation, calling it "last minute political rhetoric."
"Instead of building on our nation's position as a global energy leader, today's unilateral mandate could put America back on a path of energy dependence for decades to come," said Dan Naatz of the Independent Petroleum Association of America.
In issuing a permanent ban, Obama appears to be trying to tie the hands of his successor. Trump has vowed a domestic energy revolution and is filling his Cabinet with nominees deeply opposed to Obama's environmental and climate change actions.
Environmental groups were calling for a permanent ban even before the presidential election, but Trump's victory has provided greater urgency for them and for businesses that rely on tourism and fishing. Trump has said he intends to use all available fuel reserves for energy self-sufficiency - and that it's time to open up offshore drilling.
This decision will help protect existing lucrative coastal tourism and fishing businesses from offshore drilling, which promises smaller, short-lived returns and threatens coastal livelihoods," said Jacqueline Savitz, a senior vice president at the advocacy group, Oceana. "The people of the Atlantic coast refused to allow their way of life to be compromised and we commend their hard work making their voices heard in Washington."
National Ocean Industries Association President Randall Luthi called Obama's move "short sighted" and perhaps unlawful.
"Such an expansive withdrawal, particularly when argued as being 'permanent', is clearly inconsistent with the Outer Continental Shelf Land Act's steadfast declaration that '... the Outer Continental Shelf is a vital national resource reserve held by the Federal Government for the public, which should be made available for expeditious and orderly development, subject to environmental safeguards, in a manner which is consistent with the maintenance of competition and other national needs ...' "Luthi said.
"We are hopeful that the incoming Trump administration can repair some of the damage done to the offshore energy industry and America's energy security over the past eight years by putting policies in place that increase, rather than decrease, access to federal offshore areas," Luthi added.
The Associated Press contributed to this report.
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