'Spoiler' prompts national review of BLM bidding process

A report by the Interior Department's inspector general says the Bureau of Land Management has taken some steps to prevent another spoiler like Timothy DeChristopher from disrupting an oil and gas lease auction, but more can be done.

Released Friday, the report said "bid walkers" or individuals or companies who default on winning bids account for less than 1 percent of monetary losses to the program and in the past five years, there have only been 35 who defaulted on 152 of the approximately 14,000 parcels sold.

And "bad faith bidders" like DeChristopher — who openly admitted he bid as a form of protest and had no intention of paying — are even more rare, with only two known cases in the last five years, according to the report.

Still, the report initiated in response to the December imbroglio found that because the BLM does not view bid walkers as a significant threat, there are few deterrents in place to limit their occurrence.

Prior to the Salt Lake City incident, the BLM, according to the report:

— Did not publicize there are criminal and civil penalties associated with fraudulent actions of a bidder

— Lacked a policy requiring verification of identification for lease bidders

— Did not have a formalized billing and collection process for bid walkers and state offices were inconsistent in efforts to collect unpaid money due on the day of the sale.

The Utah incident, however, prompted an internal assessment by the BLM of its auction process and controls. An instruction memorandum to be issued sometime this summer will implement a number of measures, including tracking of bid walkers and distribution of that information to BLM state officers prior to lease sales, as well as verification of identification for all bidders.

In its analysis, the inspector general's office looked at other federal and state lease auctions to determine other options that the BLM could adopt. Other programs require pre-registration, hold Internet auctions, or require bid deposits or pre-qualification of bidders. The Internet option is one being explored by the BLM, with the agency initiating a pilot program to test the viability of doing future auctions through that medium.

In the analysis, the inspector general noted that it is watching the outcome of the federal prosecution of DeChristopher, who is being tried on two felonies and risks a long prison term for his protest. A motion hearing is scheduled in the case next month.