MEMO: The Arctic National Wildlife Refuge

After a year of inaction by a deadlocked U.S. Senate, the battle over the Arctic National Wildlife Refuge continues as oil companies—amid record-high oil prices—turn their backs on the idea of drilling in one of the wildest places left in America, and global insurance companies stake out positions against underwriting any development in the calving grounds of Alaska’s Porcupine Caribou Herd.

Knik Arm Services, a tiny real estate and leasing company that was formed in 2020 and acquired one tract in the January 2021 lease sale that was hurriedly held before Donald Trump left the White House, just canceled its lease and requested a full refund from the federal government.

That move followed by two months the same action by Regenerate Alaska, a subsidiary of Australia’s 88 Energy and the only oil company to enter a bid in last year’s lease sale. Regenerate Alaska returned the single tract it bought, and was given a refund by the U.S. Department of the Interior.

Only the state of Alaska, through its corporation known as the Alaska Industrial Development and Export Authority – which had no capacity to drill for oil and gas – now holds leases from the 2021 sale.

Meanwhile, Chevron and Hillcorp, companies that spent tens of millions of dollars over decades to hold undeveloped leases on private lands within the refuge’s boundaries, terminated those leases and paid $10 million in compensation to the Kaktovik Iñupiat Corporation, which owns the affected lands. In other words, oil companies have recently paid as much to get out of the Arctic Refuge as the failed 2021 lease sale ultimately raised: a mere $9.7 million.

Banks and insurance companies are getting involved, too. The six largest banks in America and the five largest in Canada—as well as 18 other international banks--have all issued policies against financing drilling in the Arctic Refuge. Fourteen international insurance companies and U.S.-based AIG have stated they will not insure development projects in the refuge.

Those steps, however, do not mean this controversial issue has been set aside indefinitely. In fact, a provision in the 2017 Tax Cuts and Jobs Act, which opened the refuge to leasing, requires another lease sale in 2024. It is essential that Congress act to prevent that from happening.

We are providing this memo as an update on where things stand, and what lies ahead, in hopes that it will aid you in your reporting in the weeks and months ahead.

How We Got Here:

The Trump administration rushed to hold a legally dubious sale of leases on the refuge’s sensitive—and ecologically critical—coastal plain in hopes of securing tracts for the oil industry before President Biden’s inauguration.

On Jan. 6. 2021, the federal Bureau of Land Management held its first lease sale for tracts on the 1.5 million-acre coastal plain of the Arctic Refuge, and the results were dismal for supporters of drilling. Despite projections of raising $1.8 billion from two lease sales mandated by the 2017 Tax Cuts and Jobs Act, the sale attracted a mere $14.4 million in initial bids, most of which came from the Alaska Industrial Development and Export Authority, a state-owned corporation. Actual revenue raised by the lease sale now stands at $9,718,865, which is only 0.54 percent of the 2017 revenue projections.[1]

The state had authorized AIDEA to bid on the tracts at the urging of former governors Bill Walker and Frank Murkowski, who feared embarrassment for the state if no oil companies were to show up. And that’s pretty much what happened. Not a single major oil company showed interest, and only nine tracts were sold out of 22 offered. AIDEA took seven, while the remaining two went to Regenerate Alaska (a subsidiary of Australia’s 88 Energy) and to Knik Arm Services.

On the afternoon of Inauguration Day—while citing “alleged deficiencies underlying the program” and an inadequate environmental review—President Biden moved swiftly to impose a temporary moratorium on all oil and gas activity in the Arctic Refuge. Biden, who stated during his campaign that he intended to protect the refuge, directed the U.S. Department of the Interior to review the leasing program and analyze its potential environmental impacts. We are awaiting those findings

On June 1 of last year, the administration went a step further by announcing that it was suspending oil and gas leases from the Trump administration’s lease sale, and temporarily halting all activities related to developing the effected tracts of land. Secretary of the Interior Deb Haaland cited multiple legal deficiencies in an analysis prepared under the National Environmental Policy Act when the previous administration was haphazardly rushing to hold a lease sale. Haaland ordered “a new, comprehensive analysis of the potential environmental impacts of the oil and gas program.”

Meanwhile, bicameral legislation is pending in both houses of Congress that would protect the refuge by designating its coastal plain as wilderness under the National Wilderness Preservation System, while also safeguarding the subsistence rights of the Arctic’s Indigenous peoples. This legislation would repeal the leasing provision in the 2017 Tax Cuts and Jobs Act, which currently mandates another coastal plain lease sale by 2024.

Last year, a provision was included in federal budget legislation to repeal the Arctic Refuge portion of the 2017 tax legislation, but the bill stalled in the Senate. Another effort was made this year in the Build Back Better Act that was blocked by Sen. Joe Manchin. Congress must act to repeal this leasing mandate to prevent another lease sale. 

As efforts to protect the refuge move forward, it is hoped that Interior Secretary Deb Haaland and the rest of the Biden administration will take meaningful steps to do a better job than the previous administration of engaging tribes and Indigenous organizations of the region, so that their concerns will be heard and considered before decisions are made.

Corporate Campaign:

Opponents of drilling in the refuge—led by Indigenous organizations and including both regional and national conservation groups—have waged a major effort to encourage banks and insurance companies to take a stand for Indigenous rights and the world’s rapidly warming climate by speaking out against oil and gas development in the Arctic Refuge.

To date, every major bank in America—Morgan Stanley, Wells Fargo, Goldman Sachs, JPMorgan Chase, Bank of America and Citigroup—has publicly vowed to not finance new oil drilling in the Arctic Refuge because they recognize the urgency of our climate crisis and the need to shift future investments to alternative forms of energy.

Canada’s five largest banks have done the same, partially in support of Gwich’in communities in western Canada that depend heavily on the Porcupine Caribou Herd—which annually migrates to the coastal plain so that caribou cows can birth and nurse their calves—as a source of food.

More than 300 companies have spoken out against the drilling plans. International insurance companies, including Sompo, Axis Capital Holdings Ltd, France’s Axa SA and Swiss Re, have vowed to not insure such projects.

However, Boston-based Liberty Mutual—which announced in December 2020 that “As part of its ongoing commitment to environmental, social, and governance progress, Liberty Mutual Insurance ... has become a signatory of the United Nations-supported Principles for Responsible Investment,” has not only failed to take a stand against drilling in the refuge, it has refused to meet with Indigenous leaders despite multiple requests to engage in dialogue.

Worsening the Climate Crisis:

The Arctic is warming twice as fast as the rest of the world. Alaska’s remote coastal villages are eroding into the sea, infrastructure is in danger because permafrost is melting, and subsistence food sources are disappearing, thereby threatening the very existence of Alaska Native communities. It was against this backdrop that Senate Republicans hijacked the budget process in late 2017 by inserting into the controversial Tax Cuts and Jobs Act a provision to open the coastal plain to oil and gas leasing.

The federal Bureau of Land Management so far has failed to assess how expanding fossil fuel development could worsen the impacts of climate change already at the front door of Arctic communities. The Arctic Refuge is where we must take a stand to address climate change. The effects of this are national but, on a local level, Indigenous communities in the Arctic—particularly the Gwich’in—are faced with an existential threat to their villages and culture. They depend on the Porcupine Caribou Herd for the majority of their diet, but the herd migrates to the coastal plain each year to give birth and nurse calves. The footprint of development would be much larger than drilling proponents admit, and the herd could be displaced from its calving ground with potentially disastrous results.

On a national level, melting sea ice and glaciers are contributing to sea-level rise that threatens to inundate coastal cities in the Lower 48 and around the globe. Atmospheric disturbances caused by a warming Arctic cause wild swings in the jet stream, resulting in weather extremes across the Lower 48, including more dangerous fire seasons, excessive heat and cold spells, etc.

Americans need to understand that what is happening to Arctic communities is coming to their regions—rising sea levels, economic impacts, erosion of beaches and shorelines, etc. What happens in the Arctic does not stay in the Arctic.

The Crown Jewel of our National Refuge System:

At 19.3 million acres, the Arctic Refuge is America’s largest wildlife refuge and provides habitat for caribou, polar bear and migrating birds from across the globe, and a diverse range of wilderness lands. Its coastal plain—stretching north from the Brooks Range to the Arctic Ocean—provides vital denning habitat for endangered polar bears and is the calving ground of the Porcupine Caribou Herd, which contains more than 200,000 animals.

Alaska’s Indigenous Iñupiat and Gwich’in people have lived in the region for tens of thousands of years, and the Porcupine herd is a vital source of food and an integral part of Gwich’in culture on both sides of the U.S./Canada border. They consider Arctic Refuge drilling a threat to their survival and a matter of human rights.

Oil and gas drilling would have devastating impacts on this pristine and fragile ecosystem, caused by the massive infrastructure needed to extract and transport oil. Drilling the Arctic is risky, would fragment vital habitat, and chronic spills of oil and other toxic substances onto the fragile tundra would forever scar this now pristine landscape and disrupt its wildlife.

The Arctic Refuge is a national treasure, and we have a moral obligation to protect it.

After a lengthy scientific review that incorporated much public input, the U.S. Fish and Wildlife Service recommended in 2015 that most of the non-designated wilderness lands in the Arctic Refuge be designated wilderness. The agency received nearly a million public comments in support of this action, including from scientists, biologists and researchers. The Arctic Refuge is simply too wild to drill.

The Arctic Refuge was set aside for protection decades ago because of the critical ecological value it holds. Prior to 2017, it was always off limits to oil and gas development and it should be permanently protected.

This could be our last opportunity to save a vast, intact wilderness tract that is home to iconic species like polar bears, wolves and caribou. Generations of American voters have opposed drilling in the Arctic Refuge, and