The Wall Street Journal - 13.09.2019

THE WALL STREET JOURNAL. **** Friday, September 13, 2019 |A

“It’s the best option to com-

ply with the law—all of the

laws,” said Chad Padgett, state

director for Interior’s Bureau of

Land Management in Alaska.

“We’ve tried to strike a balance

between development and re-

source protection and that’s

what this option does.”

Completing the assessment

puts the administration on

course to offer the first leases

to oil companies by year’s end,

Mr. Padgett said.

Opponents have been skep-

tical of the rigor behind the

department’s scientific assess-

ment in part because it com-

pleted the review in less than

two years, much shorter than

typical for reviews of this

scope.

BP PLC announced last

month that it would exit Alaska

after six decades, the latest

blow to the state’s oil industry.

But Erik Milito of the Amer-

ican Petroleum Institute in-

sisted drilling was economi-

cally viable. “The potential for

safe and environmentally re-

sponsible energy development

in this area is incredibly large

and a key part of a long-term

vision for U.S. energy secu-

rity,” he said.

EPA Rolls Back

Clean-Water Rules

President Trump’s adminis-

tration has rescinded an

Obama-era policy that ex-

panded federal oversight and

the threat of steep fines for

polluting the country’s smaller

waterways, furthering his de-

regulatory efforts in the 14

months that remain before the

next election.

Environmental Protection

Agency Administrator Andrew

Wheeler on Thursday signed a

final rule that limits the scope

of federal clean-water regula-

tions in an effort to clear up

confusion for landowners whose

property sits near water sources

that feed into the country’s net-

work of major rivers.

The Obama administration

in 2015 had expanded federal

oversight upstream, it said, to

better protect wildlife and the

country’s drinking-water supply

from industrial runoff and pollu-

tion. Mr. Wheeler called that

expansion an overreach, saying

it grew to cover dry land in

some cases.

Farmers, property develop-

ers, chemical manufacturers

and oil-and-gas producers—

some of whom are key voter

groups for the 2020 election—

have voiced opposition to it,

with many saying it over-

reached by intruding on prop-

erty owners’ rights.

Court battles following the

Obama-era rule have led to

fractured rules across the coun-

try. Amid the legal challenges,

the regulation is in place only in

22 states, though the Trump

administration’s decision could

spark its own series of court

fights.

The rule finalized on Thurs-

day restores regulatory text

that existed before the 2015

rule. Property that is no longer

covered by the 1972 Clean Wa-

ter Act remains protected by

state rules. Major waterways,

such as most rivers and lakes,

were already under protection

of the Clean Water Act and still

will be after the rollback.

Critics of the reversal on

Thursday warned that it will

jeopardize citizens’ health and

generate environmental cleanup

costs paid for by taxpayers.

Rep. Grace Napolitano (D., Calif.)

called the move the “latest evi-

dence of the president’s utter

disregard and contempt for sci-

ence.”

—Katy Stech Ferek

and Timothy Puko

Senate in 2020.

“There are some places too

wild, too important, too unique

to be spoiled by oil-and-gas de-

velopment,” said Rep. Jared

Huffman, the California Demo-

crat who wrote the bill. “The

Arctic Refuge’s Coastal Plain is

one of those special places.”

Interior Department officials

said their findings suggest oil

drilling can happen in the

coastal plain at the northern

tip of the refuge without spoil-

ing the area. The plan they are

moving forward with would al-

low the industry to disturb the

earth for its drilling pads, pro-

cessing plants and roads on

just 0.01% of the refuge’s 19

million acres. Massive pipelines

that hover over the ground,

however, are largely not

counted toward that limit.

The plan will include a ban

on any activity along the

plain’s biggest rivers and in its

far northwestern corner to pro-

tect caribou calving grounds,

officials said. These “no surface

occupancy areas” will block all

development on more than

350,000 areas.

U.S. Fish and Wildlife Ser-

vice determinations may also

block off future areas in later

decisions on project permits,

officials said.

And for two months of the

year, all work will be banned in

an area that covers a little less

than half the plain.

Other options studied in the

assessment would have blocked

off double or almost triple the

amount of land.

U.S. NEWS

WASHINGTON—The Trump
administration said that oil
drilling in part of Alaska’s Arc-
tic National Wildlife Refuge
would have a negligible envi-
ronmental impact, clearing the
way for lease sales to oil com-
panies this year.
The finding by the U.S. De-
partment of Interior was
backed by Alaskan officials and
others who called it a critical
step in decades of work to
open the wildlife refuge to oil
interests.
“Forty years after Congress
selected the Arctic Coastal
Plain for potential energy de-
velopment, the Trump adminis-
tration is making good on that
decades-old potential,” Alaska
Gov. Mike Dunleavy said.
But environmentalists were
quick to react. The National
Resources Defense Council said
it planned to challenge the en-
vironmental assessment in
court hours after it released.
“We will indeed sue,” said
the NRDC’s Anne Hawke.
The refuge in Alaska’s
northeast corner is the coun-
try’s largest wildlife preserve
and may be the country’s larg-
est remaining pristine wilder-
ness. It is now closer to wide-
spread drilling than ever before
with President Trump and Re-
publicans in Congress pushing
to use their window of power
to give oil companies unprece-
dented access.
Thursday’s finalized envi-
ronmental impact statement
represents a setback to envi-
ronmentalists still trying to
fight a 2017 law that required
the government to open the
refuge for oil drilling.
Earlier Thursday, the Demo-
cratic-led House approved a
bill to repeal that mandate. It
has little chance to go further
this year, but opponents hope
they might fare better if Demo-
crats win the White House and

BYTIMOTHYPUKO

U.S. Clears a Path for Drilling in Arctic

Interior Department

sees negligible impact

on the environment in

Alaskan wildlife refuge

Alaska’s Arctic National Wildlife Refuge is the country’s largest wildlife preserve and, nearly devoid of roads, may be the country’s largest remaining pristine wilderness.

ART WOLFE/MINT IMAGES/ZUMA PRESS

over three decades through

close relationships with several

billionaire clients, including Mr.

Black, who has said he hired

Mr. Epstein for personal tax and

estate advice. Mr. Black, the

chief executive of Apollo Global

Management Inc., was one of

Mr. Epstein’s most prominent

Wall Street clients and was one

of a small number who had

connections with Mr. Epstein

after the guilty plea that were

documented in public records.

In the years following his

2008 guilty plea on state pros-

titution charges to resolve a

sex-trafficking investigation in

Florida, Mr. Epstein an-

nounced millions of dollars in

contributions through various

nonprofits. Some of the re-

ported donations never mate-

rialized, according to docu-

mentsreviewedbyTheWall

Street Journal and people fa-

miliar with the matter.

Gratitude America’s activity

could be of particular interest

to federal investigators because

transactions took place within

the past five years—within the

statute of limitations for fraud

charges—and because they in-

volved some of his closest as-

sociates. Two of his personal

lawyers were on the founda-

tion’s board, and his longtime

accountant served as president.

One of those lawyers, Darren

Indyke, was named co-executor

of Mr. Epstein’s estate in Virgin

Islands court.

Mr. Epstein was listed as

Gratitude America’s president

in the foundation’s 2012 incor-

poration records and in tax fil-

ings in several subsequent

years. Although his name

wasn’t listed on records in

later years, he maintained

control, according to people

familiar with the matter.

Despite Gratitude America’s

stated purpose, Mr. Epstein

tried to use it to make a contri-

bution to a nonprofit organiza-

tion in St. Thomas, one of the

U.S. Virgin Islands, in the hopes

it would resolve a fine he faced

from the Virgin Islands govern-

ment, according to records and

people familiar with the mat-

ter. If the payments were con-

sidered charitable donations,

Mr. Epstein could have enjoyed

a tax benefit.

Mr. Epstein had been cited

in 2016 for violations tied to

construction on Great St.

James, one of his two private

islands in the Virgin Islands.

Instead of Mr. Epstein sending

checks to the Virgin Islands

government, Gratitude Amer-

ica and another Epstein foun-

dation each wrote a $160,

check to a Virgin Islands non-

profit, the St. Thomas Histori-

cal Trust, according to re-

cords. The Gratitude America

check came from a Deutsche

Bank account, and both checks

were signed by Mr. Indyke, the

records show.

Representatives of the St.

Thomas Historical Trust said

they never received the checks

and weren’t aware of the

checks’ existence until media

reports this summer.

“The representatives of Mr.

Epstein would have liked the

settlements to include the

payments as charitable dona-

tions,” said the Virgin Islands

planning department spokes-

man, Jamal Nielsen. “However,

the department rejected the

offer. The settlement had to be

paid to the department.”

Mr. Indyke later signed a

check to the department, from

the other Epstein foundation,

to cover the fine, the records

show.

A person familiar with the

transactions said the checks to

the trust, which were issued at

the orders of Mr. Epstein,

stemmed from a misunder-

standing: The department had

called for some of the settle-

ment to go toward a local

preservation project, which

Mr. Epstein thought was han-

dled by the historical trust.

—Miriam Gottfried

contributed to this article.

When Jeffrey Epstein cre-
ated his Gratitude America
Ltd. foundation in 2012, the
nonprofit’s purpose was to
“support the expression of
gratitude for the ideals of
America,” according to incor-
poration records filed in the
U.S. Virgin Islands.
Instead, the money that
flowed through the nonprofit
followed an opaque path that
appears to be designed to gen-
erate tax benefits.
The charity was funded
with a $10 million gift in 2015
from financier Leon Black. The
gift was made through a lim-
ited-liability company con-
trolled by Mr. Black but didn’t
bear his name. Gratitude
America reported more than
$1.8 million in charitable con-
tributions in 2016 and 2017
combined, but some of the re-
cipients listed in the charity’s
filings said they never re-
ceived any money. A spokes-
woman for Mr. Black didn’t
provide a comment.
Gratitude America banked
through an account at Deutsche
Bank AG, where Mr. Epstein
was a customer in Deutsche
Bank’s Key Client Partners
group, which is reserved for
the bank’s wealthiest and often
most profitable customers, ac-
cording to people who were
close to the relationship.
Mr. Epstein died by suicide
last month in a Manhattan jail
cell while facing federal sex-
trafficking charges. Mr. Ep-
stein’s finances, including his
relationship with Deutsche
Bank, have come under scru-
tiny amid the federal investi-
gation, which is ongoing.
Deutsche Bank’s connection
to Gratitude America and Mr.
Epstein’s status at the bank
haven’t been previously re-
ported. The bank has said it is
closely examining any busi-
ness relationship with Mr. Ep-
stein and is cooperating with
all relevant authorities.
A lawyer for Mr. Epstein
declined to comment.
Mr. Epstein amassed a for-
tune of more than $500 million

BYREBECCADAVISO’BRIEN
ANDJENNYSTRASBURG

Epstein Used Deutsche Bank

Charity Account for Own Gain

Gratitude America

used Deutsche

Bank, where Epstein

had special status.

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