Senate reconciliation must end leasing in America’s Arctic Refuge

Everyone knows America is living through a strange time but, to make things even stranger, some corporations and oil companies are taking steps to do what the U.S. Senate has so far failed to do: Protect the Arctic National Wildlife Refuge.

Since the passage of the 2017 Tax Cuts and Jobs Act, which for the first time opened the Arctic Refuge to oil and gas leasing — multiple insurance companies and America’s six largest banks have all adopted policies stating they will not fund or insure new oil drilling in the Arctic, or specifically in the 19.3 million-acre Arctic Refuge.

When the previous administration held a lease sale in January 2021, not a single major oil company entered a bid. The principal bidder was the state of Alaska, which apparently acted out of fear that the sale would be a bust. And a bust it was, ultimately attracting a mere $11.3 million of the $1.5 billion that drilling proponents said would be raised over two sales to offset tax cuts for the richest Americans.

The only oil company to enter a bid — Regenerate Alaska — initially acquired a single tract, but later returned it and got its money back. 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, recently terminated those leases and paid $10 million in compensation to the Kaktovik Iñupiat Corporation, which owns the affected lands.

In other words, two companies paid almost as much to abandon the region as was raised by the first lease sale.

Turns out, it’s bad business to attempt to drill in a remote, wild landscape that is treasured by the public, and of which little is known in terms of potential oil reserves. Not to mention the reputational risk of violating the human rights of Indigenous peoples whose survival depends on the clean air, pure water and abundant caribou of this isolated piece of northeastern Alaska.

What’s at stake is the 1.5-million-acre coastal plain that lies north of the Brooks Range and against the icy shore of the Arctic Ocean. As the calving ground of the Porcupine Caribou Herd, it is an important hunting area to the Iñupiat people and sacred to the Gwich’in who have sustained themselves for thousands of years on a diet that is largely dependent on caribou.

As a former director of ConocoPhillips and former administrator of the Environmental Protection Agency under President George H.W. Bush, I understand how major oil companies function and make decisions. They thrive only if they know how to assess risk, calculate returns on investment, and foresee market trends. As the world transitions from fossil fuels, they have little appetite for dicey investments that will result in years of litigation and a thorough bashing in the court of public opinion. Destroying one of the last great wild places in the nation while gambling on unknown oil reserves is not a path to success. Our political leaders need to accept this simple truth.

Let’s be clear: no major oil company demanded the Arctic Refuge be opened to development and again, none bid at the first lease auction authorized under the 2017 Tax act. I doubt any will fight removal of this law that essentially requires the ongoing opportunity to bid on leases that no major banks will finance.

Clearly the ongoing Arctic Refuge leasing instituted by the 2017 Tax act needs to be eliminated. What the market and company disinterest reveal, the law should now confirm. The Senate opened the Arctic Refuge to development via the budgeting process in 2017. Today, as this same budget reconciliation plays out in the Senate, it is imperative that it include a provision removing the leasing program for the Arctic Refuge, thus restoring protections to this wild and beautiful place. Additionally, the Biden administration should move to cancel the handful of oil and gas leases that were issued in the final days of the Trump Administration.

At the end of the day, leasing and drilling in the Arctic Refuge would simply be bad business. America deserves better than to risk having one of its last great wild places potentially destroyed for greed and short-term profits. The Arctic Refuge needs to be recognized as the special place it is, protected permanently like Yosemite and Grand Canyon.

William K. Reilly served as the administrator of the Environmental Protection Agency under President George H.W. Bush, was appointed by President Barack Obama co-chair of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling and served on the board of several Fortune 500 companies.