Federal agency proposes rule aimed at blocking banks from not financing Arctic drilling

The federal government on Friday released a proposed rule aimed at limiting large banks from pulling their financing from Arctic oil and gas projects, after several banks announced policies that prohibit or limit their investment in such projects, including in the Arctic National Wildlife Refuge.

However, some experts and activists said the rule’s impact, if it is finalized, could be muted if banks can show that opting to not finance Arctic oil projects is a financial decision, not a political one.

The head of the Office of the Comptroller of the Currency, an independent bureau under the Treasury Department, said on Friday that the banking system’s capital and services must be accessible to everyone on equal terms.

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Banks can decline to support individual projects or customers based on reviews of their risk, said Brian Brooks, acting comptroller of the bureau. But they cannot take sweeping policy approaches that affect only certain sectors in what is part of a “creeping politicization” of the banking industry, he said.

Since late last year, five of the nation’s largest banks — Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo — have announced that they will pull back from supporting Arctic oil and gas projects.

The policies followed pressure from conservation groups concerned about climate change. Also, BlackRock, the world’s largest asset manager, urged companies early this year to emphasize steps they are taking to combat global warming.


The proposed rule is consistent with the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act, and could lead to enforcement actions for banks violating it, it says.

The proposal follows a letter in June from Alaska Republican Sens. Dan Sullivan and Lisa Murkowski, with Alaska Republican Rep. Don Young, to the head of the Federal Reserve, the comptroller of the currency and the chair of the Federal Deposit Insurance Corp., according to the proposed rule.

The letter said the financial institutions’ policies might be discriminating against Alaska Natives who rely on the oil and gas industry for their livelihoods.

Brooks on Friday said the comptroller’s office did not analyze whether discrimination against Alaska Natives or other groups was an outcome of the banks’ policies, though he said it affects Alaska Natives and other people who work with the North Slope oil industry.

“I’ll leave it to others to assess the second-order effect,” he said.

The letter led the comptroller’s office to look into the banks’ oil and gas policies in the Arctic, the proposed rule says. In doing that, the agency also found that large banks had also stopped providing lending and other financial services in other sectors, such as in coal mining and firearms manufacturing, Brooks said.

Sullivan said in an interview on Friday that the proposed rule is critical to protect Alaska’s economic interests.

“This trend of big banks blackballing Alaska investment is dangerous to Alaska’s economic future,” he said. “So I’m ringing alarm bells.”

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Sullivan said he’d like to see the rule finalized before Jan. 20, when there’s a “distinct possibility” that Trump will no longer be president. (Like many of his Republican colleagues, Sullivan has not publicly acknowledged Democratic President-elect Joe Biden as the winner of the 2020 election.)

Daniel Stipano, who served as the office of the comptroller’s deputy chief counsel for about 15 years until 2016, said the office has the authority to issue such regulations.

If the rule is finalized, it can be challenged in the courts, he said.

Graham Steele, a former adviser with the Federal Reserve Bank in San Francisco and former Senate Democratic staffer, said he believes the new rule, if finalized, will largely present a paperwork “inconvenience” for large banks.

The institutions will have to further describe why new individual oil and gas projects in the Arctic are unsound, he said. They likely already considered individual projects, for the most part, before they announced their broad policies, he said.

“I don’t see this as much of a game changer,” he said.

Ben Cushing, a member of the Sierra Club’s effort to promote divestment for Arctic oil and gas projects, said the rule doesn’t change the fact that Arctic drilling is a risky investment.

“Contrary to the claims of oil-backed politicians, banks don’t want to finance more drilling in the Arctic not because of some vast liberal conspiracy, but because it’s bad business,” Cushing said.

Brooks said the proposed rule includes a 45-day comment period ending on Jan. 4.

Alex DeMarban

Alex DeMarban is a longtime Alaska journalist who covers business, the oil and gas industries and general assignments. Reach him at 907-257-4317 or