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Law360 (June 19, 2020, 4:43 PM EDT) -- Alaska's congressional delegation has called on Federal Reserve Chairman Jerome Powell and other senior monetary officials to consider taking regulatory action against big banks that are "openly discriminating" against energy projects, which it says hurts Alaska Native communities.
Sens. Lisa Murkowski, Dan Sullivan and Rep. Don Young, all Republicans, said there's a "disturbing trend" of U.S. financial institutions appeasing environmental advocates who pressure them to stop investing in new oil and gas operations in the Arctic. The lack of investment will stymie economic recovery after the COVID-19 pandemic, the lawmakers say.
The Alaska lawmakers said that since November, five banks — Citigroup, Goldman Sachs, JPMorgan, Morgan Stanley and Wells Fargo — have adopted policies to stop financing new oil and gas projects in the Arctic, including a coastal portion of the Arctic National Wildlife Refuge in northeast Alaska, according to the letter sent to officials Tuesday.
A section of the 2017 GOP Tax Cuts and Jobs Act has opened the area to energy development.
"These overtly political policies, ostensibly based on 'reputational risk,' unfairly target potential oil and gas operations in Alaska that provide economic and social welfare benefits not just to Alaska and its residents, but particularly Alaska Native communities throughout the North Slope region where these projects would be developed," the lawmakers wrote.
Murkowski, Sullivan and Young pointed to a recent opinion piece by North Slope Borough Mayor Harry Brower Jr. that spoke to how oil production has helped improve his majority Inupiat community.
"Thanks to oil production, our children are no longer forced to live hundreds of miles away from their families simply to attend high school," he wrote. "We are able to eat our native foods, practice our native ceremonies and speak in our native tongues. Many of us now live near a cutting-edge medical clinic."
The Alaska delegation contend those benefits and others are threatened by the banks' policies.
"At best, these policies were enacted without due diligence or consultation with Alaska Native communities impacted by development in the Arctic," the delegation wrote. "However, we fear it isn't just negligence, but as Mayor Harry Brower put it, a 'condescending, subtly racist attitude that too often has been the hallmark of the way Westerners deal with indigenous people.'"
But there's no consensus over whether banks should be backing new oil and gas development in the region.
At the start of this year, Senate and House Democrats had pushed executives of top banks to forgo investments in new projects and follow Goldman Sachs, which had announced its policy in December. The Democrats warned that fossil fuel development in the Arctic National Wildlife Refuge would disrupt species and native people including the Gwich'in Nation.
Congressman Jared Huffman, D-Calif., who led a letter by House Democrats to banks in February, told Law360 on Friday that the Alaska lawmakers are "cheapening" civil rights and that the fossil fuel industry, and its "right to destroy the planet," is not a protected class.
"This is just a new level of desperation from fossil fuel interests that they're tying to masquerade as some kind of a civil rights movement, that they're trying to hold up some indigenous people as props while they run roughshod over most indigenous people," Huffman said.
The Gwich'in Steering Committee continues to push additional banks to prohibit funding oil and gas development in the refuge, according to a letter signed by more than 80 environmental organizations and shared on social media in late May.
"It is more important than ever that financial institutions and investors demonstrate their commitment to keeping our heritage instant," the steering committee wrote. "Drilling in the Arctic Refuge is short-sighted, risky and unnecessary — it will exacerbate global warming in an area that is already ground-zero for climate impacts and will cause irreversible destruction to a sacred landscape."
In addition to the Federal Reserve chairman, the Alaska delegation's letter this week also was addressed to Federal Reserve Vice Chairman Randal K. Quarles, Acting Comptroller of the Currency Brian P. Brooks and Chairwoman of the Federal Deposit Insurance Corporation Jelena McWilliams. It's a follow-up to a message they and Congress members sent to President Donald Trump over their concerns earlier this year, according to the lawmakers.
It asked monetary officials to take a look at how those communities are impacted and review whether the banks' policies violate any obligation under federal laws relevant to their agencies.
Representatives for the banks, Federal Reserve and FDIC could not immediately be reached Friday.
--Editing by Gemma Horowitz.
For a reprint of this article, please contact reprints@law360.com.
