Bogus bidder: I've got the lease money

January 9, 2009, 9:29 pm
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The money's in the bank for Tim DeChristopher, who said Friday he has reached his goal of amassing $45,000 to make his down payment on oil and gas drilling leases he won at a federal auction three weeks ago.

The University of Utah student - who on Dec. 19 deliberately bid, with no intention of paying, $1.8 million for 13 parcels on 22,000 acres near Arches and Canyonlands national parks - raised the money by his self-imposed deadline.

Most of the donations were $10 or $20 from "thousands" of people, DeChristopher said in a statement. "I deeply appreciate the generosity of all those who have contributed."

DeChristopher believes the $45,000 will be enough to pay his immediate obligation to the U.S. Bureau of Land Management and fend off drilling on the scenic region at least until President-elect Barack Obama takes office Jan. 20 and new officials are in charge.

But industry insiders who also took part in the BLM lease sale in Salt Lake City scoff at the ploy, saying that because DeChristopher missed the agency's deadline, his bids should be rejected, and he shouldn't be allowed to buy them even if his supporters come up with all $1.8 million.

The BLM explains that DeChristopher's money is too little, too late. Spokeswoman Mary Wilson said he was liable for a minimum of $81,238.50 on auction day with the nearly $1.8 million due no later than Jan. 6.

But DeChristopher said his lawyers -- former national BLM boss Pat Shea and noted Salt Lake City defense attorney Ron Yengich -- counsel that because what happened at the auction was unprecedented, "there's still a chance we can make the first payment."

DeChristopher, 27, acknowledges he intended to disrupt the auction with what he calls an act of civil disobedience. The U.S. attorney's office is weighing whether to take the case to a grand jury for possible felony charges.

"I understood the consequences of my actions before I took them," DeChristopher said in an interview.

While many environmentalists salute DeChristopher's defiance, some industry representatives want his head.

BLM officials "should make sure they prosecute to the fullest extent of the law," said Kathleen Sgamma, an official with the Independent Petroleum Association of Mountain States. "It seems that would put a damper on any future fraudulent bidding."

Vern Jones, of Salt Lake City-based Jones Land Services, an independent agent who bid on behalf of nine oil and gas companies in four states at the auction, said he is suspicious of DeChristopher's fundraising.

"When he didn't pay on the day of the sale, he didn't have a prayer of getting the leases," Jones said. "When he's telling everyone, 'If you send me money, you can save me,' that's just crap. He's scamming people."

The fundraising is legal, DeChristopher insists. A nonprofit group, the Center for Water Advocacy in Moab, is handling the donations.

"I tried to make it clear there's a defense fund and a lease-purchase fund," DeChristopher said. "The lease-purchase fund is reserved for buying the leases. If the BLM refuses payment, or my land is put up for auction again, the $45,000 will be used for bidding again on that land in whatever new option it is put up for."

If the land isn't put up for auction, "I intend to contact the donors and get their feedback on whether the money should be returned, put into my defense fund or put into [another] project or philanthropic effort," he said. "People have given me that trust. I certainly don't want to take advantage of that."

Since the auction, questions have arisen about the BLM's procedures. Should the agency have required bidders to post a bond or otherwise prove their ability to pay for their bids? Was the BLM somehow lax when it allowed DeChristopher to register and receive bidding paddle No. 70? Should the agency tighten up its auctions by requiring proof of ability to pay?

To Jones, an industry insider for 35 years, the answers are no, no and no. "The BLM has done everything it could have done and should have done," he said.

The rules the agency posted in its announcement for the auction said bids were legally binding commitments with money due on sale day. All balances, which include several BLM administrative fees, were due Jan. 6.

"If you do not pay in full by this date, you lose the right to the lease and all money due on the day of the sale. If you forfeit a parcel, we may offer it at a later sale," the notice said.

DeChristopher signed a bidder registration form that said it is a crime under federal law to "knowingly and willfully make any false, fictitious or fraudulent statements" and cited the maximum federal penalties for the crime: five years in prison, a fine, or both.

Jones said he never has had to post a bond or otherwise certify he could pay for his bids. Likening his job to that of a real-estate agent, he said he shouldn't be expected to shell out for bids he makes on his clients' behalf.

But Shea, who oversaw the BLM during the Clinton administration, said the agency has required more proof from bidders in the past. "When we were administering oil and gas leases," he said, "there was a bond requirement and a cash-certification commitment."

In addition, Shea said, the BLM has allowed some bidders to run lines of credit or otherwise has acknowledged financial liquidity without requiring bidders to pay on auction day.

"Those who know how to game the system get an economic advantage. Someone who is a bit naive but full of integrity can get tripped up," Shea said. "The [BLM] handbook is not the definitive statement on the statutesand restrictions on oil and gas leases. "

As it happened, the BLM suspended its own rules for the Dec. 19 auction when it allowed bidders who thought DeChristopher's actions overinflated their bids to withdraw them. Two bidders pulled back on two parcels; the combined value of those bids was $73,000, Wilson said.

DeChristopher said he would urge more people to buy leases and retire them. "There are enough of us who value the land and value the climate. We should protect this environment," he said. "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."

Jones and other industry insiders said they had no problem with people legitimately buying leases they intended to keep undeveloped.

"If they're willing to spend the money, that's their option," Jones said. "I just don't think it's fair for someone to go in and destroy the system."

phenetz@sltrib.com

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Citation

Waters, J. (2009). Bogus bidder: I've got the lease money. Retrieved from http://www.bidder70.org/view/news/136627

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