After Moving Lease Sales Online, BLM Sees Increased Participation And Revenues, Addresses Security Concerns
Prior to the end of President Barack Obama’s time in the White House, his administration began a transition away from traditional auctions for oil and natural gas leases on public lands to online bidding. The results have attracted the attention of Cabinet-level staff under President Donald Trump and quieted protests against energy production on public lands.
Gone – at least for the remainder of 2017 – are the days of in-person bidding with raised paddles. Today, companies interested in operating on public lands click a mouse in e-Bay-style auctions.
“The online sales take advantage of automation and current industry practices and enable greater participation–not to mention the added benefit of interested members of the public being able to view the bidding via the internet,” according to Megan Crandall, a spokeswoman for the Bureau of Land Management. Crandall told Western Wire “they [online sales] are also more secure.”
The Bureau of Land Management was authorized by Congress in late 2015 to begin testing auction technology, but the benefits weren’t evident until environmental groups began protesting lease sales across the West.
The Bureau’s lease sales became center stage for the “Keep-It-In-The-Ground” movement organized to prevent production of oil and natural gas in the United States. Activists had exploited legacy, in-person auctions in 2015 and 2016 to stage protests with the express intent of disrupting, cancelling, or postponing the public lands lease sales.
In November 2015, protests in Lakewood, Colo, got out of hand and led to a police investigation. Protestors from a wide array of activist organizations opposing oil and gas development, including Food and Water Watch, WildEarth Guardians, and RainForest Action Network, blocked the entrance to the BLM office in Lakewood, Colorado. Environmental groups later claimed that an auctioneer hired by BLM to conduct the sale had struck a protester with his vehicle following the auction as the group chanted, “Keep it in the ground, keep it in the ground!”
The Lakewood Police Department investigated the alleged incident and said it appeared to have been “staged,” telling E&E News that they believed the protestor pretended to have been struck by the SUV. “It appeared to our people that this incident appeared to have been staged,” said Steve Davis, a spokesman for the Lakewood Police Department. Lakewood police said they had found no criminal wrongdoing and had closed the “open-and-shut” matter, as “there really never was a case.”
An arrest in 2016 followed a mock “die-in” and “human oil spill” that accompanied a rowdy BLM lease auction in Reno, Nevada, according to a report from ThisisReno. The intent was to disrupt the auction proceedings, forcing BLM to change plans in order to hold the required auction.
“We have our crowd that came up to bear witness and be a part of the auction, to interrupt the auction,” Ruth Breech, an activist with Rainforest Action Network, told ThisisReno.
Chris Rose, spokesman for the BLM in Nevada, said the agency had planned for potential disruptions from environmental activists based on previous protests in other states. At the time, he said his team “went to our plan B and moved the bidders and BLM staff to an alternative room and conducted the sale there. If, like in the past, if the protestors had come in and observed the sale and not been disruptive, we would’ve conducted the sale with public viewing.”
Similar disruptions occurred at other BLM lease auctions across the country and have been ongoing since at least 2008. Activists opposed to what they called a “climate auction” had to be forcibly removed from a 2016 BLM lease sale in Salt Lake City, Utah. The Center for Biological Diversity had claimed victory after a November 2015 BLM sale in Utah had been postponed, but the sale had been rescheduled for the following February.
Almost a decade earlier, in December 2008, an activist drove up bid prices by hundreds of thousands of dollars with phony bids and no intention to pay for the 13 parcels successfully won in an attempt to achieve “his goal of disrupting the auction.” Tim DeChristopher was convicted in 2011 on two felony counts of using bogus bids and sentenced to two years in prison.
“At the time I went in with a very direct action kind of mindset thinking that if I can cause enough delay, stop this action and keep oil in the ground, then that would be worth it,” DeChristopher said at the time of his sentencing.
“If we want to achieve our vision,” DeChristopher told supporters after his trial, “many more will have to join me.”
Members of the Utah congressional delegation asked the BLM to move forward with online bidding, in order to minimize disruptions and interference and allow the agency to hold its mandated quarterly auctions.
The protests drew attention from leadership at BLM appointed by President Obama. Director Neil Kornze reaffirmed the security threat and subsequent agency plans to postpone, cancel, or move planned auctions. Kornze equated activists and the “abnormal security situation” at BLM auctions to protests from armed militiamen, resulting in the agency being on “heightened alert.” Holding online auctions would be cheaper and make transactions more efficient, said Kornze.
BLM Utah’s Kent Hoffman agreed. “There’s been research done that shows the overall participation and bid amounts are enhanced through the internet process,” he said. “It is more efficient for us and probably for industry, too, to participate in an online auction,” said Hoffman.
“I think we can safely say that we have seen a decrease in truly disruptive activity,” Crandall told Western Wire. Crandall noted the difference between protestors expressing their first amendment rights and activists whose only intent was to prevent the BLM from conducting mandated sales.
“The disrupters, however, were a different story. So, while we do sometimes see protesters exercising their first amendment rights at state offices when we hold online sales, we have not seen the sale-halting type of disruptions that we sometimes saw in years past when sales were actually conducted onsite,” said Crandall.
Since moving away from in-person bidding, the Department of the Interior is “seeing an uptick in participation as more people can attend the lease sales online and perhaps increased revenues coming in,” according to Katharine MacGregor, Deputy Assistant Secretary for Land and Minerals Management, during recent testimony to Congress.
In June, BLM went through its latest round of lease sales, netting $8.3 million from leasing 128,484 acres in Wyoming, Montana, North Dakota, Utah, Nevada, New Mexico, Colorado and Arkansas.
Similarly, the newest online quarterly sale in Wyoming brought a higher number of bidders and overall price for acreage.
Early on activists opposed the agency’s move to online sales. A spokesman for Greenpeace USA said last July moving online indicates “industry pressure to take the auctions somewhere protests can’t find them.”
Activists charged the agency with evading the public in a letter to BLM’s Kornze by dozens of activist groups. According to the Grand Junction Sentinel last November, the groups said “The (Obama) administration has sought and is seeking to limit, hinder, and now outright criminalize climate speech and demonstration.”
Seeking to undermine the move to online transactions, environmental group WildEarth Guardians questioned the security of hosting leases sales electronically, claiming in-person bidding was safer. The group filed open-records requests from BLM under the Freedom of Information Act (FOIA) seeking material associated with BLM’s decision, according to E&E News.
An environmental ally in Congress opposed to oil and natural gas production on public lands asked the Government Accountability Office to investigate. Rep. Raúl Grijalva (D-Ariz.) cited concerns over hacking allegations into a server of the Democratic National Committee in a letter to GAO, adding Russians “could manipulate online lease sales to their own benefit and to the detriment of the American people.”
Western Energy Alliance president Kathleen Sgamma told E&E News that the GAO request appeared to be “politically motivated.”
Western Wire is a project of Western Energy Alliance.
Sgamma defended the online auction service provider, EnergyNet.com, saying its online sales for individual states were conducted “without security issues.”
EnergyNet, founded in 1999 and already the country’s largest oil and gas auction site, was given a five-year exclusive deal to manage the BLM auctions by the Obama administration. The company has also been tapped to handle state auctions across the West in Colorado, New Mexico, North Dakota, Texas, Utah, and Wyoming. A July 18 online open bid and online sealed bid by EnergyNet for the state land office of New Mexico netted more than $30 million, with 100 percent of lots sold.
The company’s Chief Executive Officer, William Britain, said the company was worried about protestors, even as the online format helps to screen out those who aren’t interested in drilling. “With the government work we are doing, we have a lot of protesters,” Britain told Bloomberg Businessweek. “You can’t be too careful these days.”
“Everyone should want it to be easier to buy federal leases,” Britain continued, “rather than just these little regional live auctions they’d been having.” EnergyNet’s efforts to pitch the BLM on holding online auctions, instead of the traditional, mandated in-person auctions, began in 2009.
EnergyNet deferred to the BLM for comment on government online lease auctions in an email to Western Wire.
Earlier this month, Interior Secretary Ryan Zinke’s reaffirmed the agency’s commitment to hold mandated oil and natural gas lease sales for federal lands each quarter that includes the transition to an online-only format for the remainder of 2017. Security concerns, combined with agency foot-dragging on permit approvals and environmental assessments.
Six months in as Secretary of the Interior, Zinke acknowledged in a conference call with reporters BLM had “not been a good partner” with the public and oil and gas industry in conducting efficient, streamlined sales and a stable permitting process. Zinke said the Department of the Interior and the BLM should “make sure the process reflects today’s environment, rather than last century’s.”
The BLM can “do it more efficiently electronically,” said Zinke. Using technology, the BLM could also better coordinate lease sales and the permitting process said Zinke.
Streamlining and holding regularly quarterly sales online is part of the agency’s new forward-looking attitude. “In addition to the 13 lease sales conducted to date, the BLM plans to hold 14 additional sales throughout 2017 using the new authority to conduct onshore oil and gas lease sales via internet-based bidding,” MagGregor said.
“We are going to do it right,” said Zinke.