Oil companies appeal yanked drilling leases

Natural-gas producer Rob Bayless said he winced when new Interior Secretary Ken Salazar called the drilling parcels that his company won at a Utah auction a rushed midnight giveaway by the former Bush administration.

The federal bureaucracy that leases public land for energy development never does anything last-minute, said Bayless, executive manager for Denver-based Robert L. Bayless LLC, who bid $34,000 on two parcels that were taken away because of Salazar's decision.

"It was not, 'Hey, it's midnight, let's have a lease sale and nobody will notice,'" said Bayless, who has joined a dozen other high bidders in appealing Salazar's decision to scrap 77 of the leases sold in December.

Salazar said the oil-and-gas parcels were too close to Arches and Canyonlands national parks and artifact-rich Nine Mile Canyon and shouldn't have been sold by the Bureau of Land Management, an agency of his department. He said he was not ruling out putting the parcels up for auction later after a deliberate review.

"We thought our parcels were valuable enough to lease them" for exploration, Bayless said. "That's the way auctions are supposed to work. Doggone, the Department of the Interior should adhere to its own rules."

The bidders, including Denver-based Bill Barrett Corp., filed their appeal at the Interior Board of Land Appeals, but Salazar's office said the secretary's decision cannot be appealed to that board and has filed a motion to dismiss the complaint.

The bidders should instead take their complaints to federal court, Salazar spokesman Frank Quimby said.

"We have received numerous letters, more than 700 in favor of Salazar's decision, and a few opposing his decision," Quimby said.

Bret Sumner, the bidders' Denver attorney, said he's fighting to keep the case at the Interior Board of Land Appeals.

"The companies are taking a measured, thoughtful approach to this business matter, focusing on protecting their legal rights and the broader issue of ensuring regulatory certainty for current and future BLM lease sales," Sumner said.

Daniel Gunnell, managing partner of Twilight Resources LLC of Orem, is another aggrieved bidder.

"We are angry," said Gunnell, who lost 19 parcels through Twilight and another company he controls, Par Five Exploration.

"We won more acreage than any company at the sale — and lost more than anyone after the sale," he said.

The auction was already being contested in federal court by environmental groups, who won a court stay on the sale of some parcels.

"Every indication was that this was a rush job," said Stephen Bloch, a staff attorney for the Southern Utah Wilderness Alliance, one of the groups challenging the December auction.

Bloch said the BLM rushed out new long-term management plans that made the sale of the sensitive parcels possible. He called it a "sprint to the finish" for the outgoing Bush administration.

"We think the new secretary's decision was right on, to take a time-out and acknowledge this sale was a rush job that relied on a fatally flawed analysis," he said.