Posts by Shawn Regan

Just hours before Tim DeChristopher made false bids in a BLM oil and gas lease auction, he took a final exam at the University of Utah. One of the test questions asked whether the sale prices at the auction would reflect the real value of the leases if the only bidders were from oil and gas companies.

The question got DeChristopher thinking as he went to protest the eleventh hour auction in the final weeks of the Bush administration. When asked if he was there to bid, DeChristopher said yes. He became Bidder 70 and went on to win 14 parcels comprised of 22,500 acres for $1.8 million. His bogus bidding caused auction’s results to be canceled by the incoming Obama administration.

But the incident and the exam question raise an important, but largely neglected, question in the saga of Tim DeChristopher: Who should be able to bid for leases on federal land?

Yesterday, a federal jury found DeChristopher guilty of disrupting a federal auction and making false statements on federal forms. DeChristopher and his supporters framed his defense in terms of ending an “illegitimate” auction and fighting climate change. Little has been said, however, about whether environmental groups ought to be able to participate in an open lease auction.

Under current federal leasing rules, leases cannot be held by environmental groups for non-consumptive use. In other words, even if Tim DeChristopher had the money, current rules require leaseholders to develop their parcels, precluding any environmental group from holding them for recreational use or habitat protection. Politically powerful oil, timber, and grazing interests have kept the bidding process free of competition from environmentalists and, in many cases, below market value.

Could environmental groups afford to compete? Consider some of the allotments DeChristopher won. One of the first was a parcel near Moab for $2.25 per acre, or $500 total. Another was reportedly for $77. Others were much higher, reaching as much as $170 per acre. Less than a month after the auction, DeChristopher received more than $100,000 in donations. This was enough to cover the initial down payment on the leases. But the BLM would not accept it.

As I described in PERC Reports last year, open lease auctions have the potential to reduce much of the acrimony surrounding energy leasing on public lands. It would force bidders to consider the tradeoffs associated with other land uses and gives environmental groups an alternative to lobbying, litigation, and political jockeying to preserve important swaths of federal land. In effect, open auctions would lower the transaction costs of cooperation between environmentalists and oil companies—two groups that are almost perpetually at odds with one another.