Let us bid!
By Shawn Regan, public affairs fellow at the Property and Environment Research Center (PERC) in Bozeman, Montana.
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?
Last Thursday, 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, it lowers the transaction costs of cooperation between environmentalists and oil companies—two groups that are almost perpetually at odds with one another.
Some states have experimented with allowing environmental groups to bid on state land leases (see PERC Reports for more information). Montana, Arizona, and New Mexico have each allowed nonprofits and private citizens to bid on state grazing allotments for alternative uses such as nature or recreational leases and other forms of land management. Last year, Idaho amended its rules to allow conservation groups to lease state trust lands following a ruling by a federal district court. Under the new rules, ranchers—who often pay as little as $250 annually to graze on a 400-acre parcel—will no longer be able to obtain below-market leases in no-competition bids. Participation by environmental groups is also expected to bring in additional revenue to the state.
On federal lease lands, environmentalists remain shut out of the bidding process. As a result, these groups have largely relied on the political system as a means to protect land. This approach has been somewhat effective, but the results ebb and flow with each passing administration. Open lease auctions provide a sensible and politically-feasible alternative to this politicized land management.
“There are enough of us who value the land and value the climate. We should protect this land,” DeChristopher said in 2009. “That’s the only way we can get the true market value for these leases – if all the people who value the land are involved in the auction.” Allowing all parties who value the land to participate in the bidding process should be a central message in the inspiring story of Tim DeChristopher.
To see what an energy leasing auction is like, check out this video.
Essays in the Range blog are not written by the High Country News. The authors are solely responsible for the content.
This blog post was originally posted at the PERColator blog, a project of the Property and Environment Research Center (PERC). PERC, a nonprofit located in Bozeman, MT, is dedicated to improving environmental quality through property rights and markets.
Photo illustration "We are all Bidder 70" courtesy Flickr user A Haynes.