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Judge, attorney hammer away at Interior Secretary Ken Salazar's decision to pull Utah oil leases

Published: Wednesday, July 21 2010 9:49 p.m. MDT

SALT LAKE CITY — A federal judge on Wednesday grilled an attorney defending Interior Secretary Ken Salazar's decision to pull 77 oil and gas leases that were successfully bid on at a Salt Lake City auction in 2008, asking repeatedly how the federal government can get around the language of the law that said the leases should have gone through.

"You are fast and loose with the terms 'offer' and 'acceptance,' " Judge Dee Benson said during the questioning of Department of Justice attorney Tyler Welti.

"You keep telling me your conclusions, but tell me why … tell me how you get around the plain language?" Benson asked.

The federal judge did not issue a decision in the hearing, but he indicated at its conclusion that he would rule quickly on the issue.

That "plain language" is the key component of the statute governing such sales and leases. It says that, once parcels are offered at auction, the government shall award the bid to the highest qualified bidder and shall issue the lease.

Welti had argued that Salazar continued to have discretion to pull the leases even though money had changed hands, because the leases had yet to be physically issued with an official signature.

In a suit brought by the impacted Utah counties of Uintah, Duchesne and Carbon and joined by three oil and gas companies, attorney Robert Thompson said there was nothing in the statute or corresponding regulations that support Salazar's February 2009 decision.

"There are no regulations covering this unprecedented decision," he said. "It says (the federal government) has the right to withdraw the leases prior to the sale, not whenever (they) decide to. … Shall means shall, and may means may."

In an action that drew howls of outrage from oil companies and state and federal policymakers in Utah, Salazar withdrew 77 parcels that had been put out to bid at the Bureau of Land Management's auction in Salt Lake City.

Some of the parcels remain under review. Eight were subsequently deemed inappropriate because of purported environmental impacts, and dozens of others were allowed to go forward.

Benson, too, wondered aloud at Welti's insistence that, after an auction in which parcels are offered, bids are accepted and a "winner" is announced, the government could then change its mind.

"(The agency) says we are going to announce a sale, you guys call it a sale. You don't call it an invitation to entertain offers," Benson said. "You use the word 'won' and 'winning bid.' "

Thompson also stressed that, as winning bidders, the oil and gas companies are contractually bound to the federal government to follow through on the transaction or risk consequences.

"If I change my mind, I have to pay legal damages," he said. "They are saying this is a one-way contract, that somehow the United States can opt out, but I, as a bidder, can't. I have difficulty following that."

Salazar has defended his actions by asserting that the parcels were offered as a result of a rushed, midnight decision by the Bush administration to approve the BLM's resource management plans prior to a new administration taking the helm. A subsequent lawsuit brought by environmental groups resulted in another federal judge issuing a restraining order on the issuance of the leases, pending the airing of legal arguments.

Salazar has said concern over the inadequacy of environmental reviews led him to halt the process until the parcels could be more thoroughly examined for potential impacts caused by oil or gas operations.

But Thompson also pointed out that if the process was flawed, it's contradictory that some leases have been allowed to go forward.

"If there is something terribly, terribly wrong, and I am not saying there is, then what is good for the goose is good for the gander. … Either the leases are all good or they are all bad," Thompson said. "If there is something wrong with the nine leases that were pulled, then there is something wrong with the 39," that were allowed to go forward.

A subsequent report on an internal investigation by the Interior Department's Office of Inspector General said it found no evidence to support assertions that "undue" pressure was exerted to push the auction through.

It did, however, note that a lack of coordination from the BLM with the National Park Service gave the "perception" that the auction was rushed.

e-mail: amyjoi@desnews.com

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