A new rule by the US government under the Trump administration mandates that banks withholding investments in fossil-fuel backed businesses would face penalties unless they can provide valid reasons for not lending financial support to such projects.

This is the latest in a series of moves by the outgoing Trump administration to push through legislation that benefits corporates in big oil and coal businesses, and against the rising shift towards the Environment Social Governance or ESG considerations.

The Office of the Comptroller of the Currency, which has passed this rule, says that the banks are bound to offer their services, or not, based on a risk analysis paradigm rather than based on political considerations.

The rule has come after politicians from Alaska complained against the banks’ refusing to lend money for new gas and oil projects in the Arctic region citing harm to the environment.  The politicians say the local economy is suffering due to the abandonment of such projects.

Climate and environmental concerns have caught up with corporate responsibility and many banks and financial institutes have recently agreed to withdraw from lending to fossil-fuel based projects in the future.  Nearly two dozen banks have announced that they would not fund fossil fuel extraction in the Arctic refuge. And strict environmental reviews is another deterrent for such activities.

In the past 12 months, banks including Goldman Sachs, JPMorgan Chase, TD Bank and Deutsche Bank have said they will no longer finance new drilling projects in the region, according to the Sierra Club, an environmental advocacy group.

But the OCC has certain different views not eh subject. “It is one thing for a bank not to lend to oil companies because it lacks the expertise to value or manage the associated collateral rights,” the OCC said, reports the Financial Times. “It is another for a bank to make that decision because it believes the United States should abide by the standards set in an international climate treaty.”  The OCC said all “are entitled to fair access to financial services under the law”.  Its proposal applies to US and international banks with $100bn or more in assets.

The Bureau of Land Management recently initiated a formal process for “call for nominations”, for auctioning of land in the Arctic national wildlife refuge’s 1.5m-acre coastal plain region for oil drilling.

The call for nominations “brings us one step closer to [...] advancing this administration’s policy of energy independence”, said Chad Padgett, the BLM Alaska state director, in a statement.

The OCC’s proposal will also be open to public comment until January 4. That means there is time for it to be finalized before the inauguration of President-elect Joe Biden on January 20.

Additionally, the OCC chairman is acting in an interim capacity and will likely be nominated to the Senate for confirmation by Trump.

“There is a chance” that the OCC proposal could be finalized before Biden Takes Office, said Graham Steele, a former Senate banking committee aide who is now at the Stanford Graduate School of Business. “They are trying.”

The Labor Department of the outgoing administration last month adopted new rules regarding government retirement saving funds that restricted their investment in ESG -backed funds.

The rush for auctioning and pushing as much legislation as possible favoring fossil-fuel-based businesses is due to the new President’s commitment to stopping all auctioning of government lands for drilling purposes and his environment protection beliefs. If sales do occur before Biden takes office, ‘it would be challenging – but not impossible – for Biden to walk back leases issued’. “Even if leases are issued by the Trump administration, the Biden administration could seek to withdraw the leases if it concludes they were unlawfully issued or pose too great a threat to the environment,” said Erik Grafe, an attorney with the environmental law non-profit Earthjustice.

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