October 27, 2000 — Since 1999, The Public i has attempted to obtain information about the bidding process in the sale of the Elk Hills oil reserve, which was sold for $3.65 billion in 1997 to Occidental Petroleum Corp. The Center for Public Integrity filed an administrative appeal of the Department of Energy’s refusal to release the information under the Freedom of Information Act. The transaction was the largest government land sale in U.S. history.
Last January 5, the same date that it released its in-depth report on the 2000 presidential campaign, The Buying of the President 2000 (Avon Books), the Center for Public Integrity submitted a Freedom of Information Act (FOIA) request to the Department of Energy. The Center sought a list of names and bid amounts of the unsuccessful bidders on Elk Hills, formally known as Naval Petroleum Reserve No. 1 (NPR-1).
That was not the first time the Center had sought the information.
In the spring of 1999, DOE officials told the Center that such information could not be released for “proprietary business reasons,” with Tony Como, the official in charge of the information, blaming DOE’s lawyers for being tight-fisted. Thinking that a FOIA request would force the department to release this information, the Center asked for “the names of entities that placed bids on NPR-1, any portion thereof, and the amounts of all bids.” In fact, in preparing The Buying of the President 2000 just months before, Center writers had requested and obtained, with relative ease, the names and bid amounts of the losers in a lease auction of oil tracts in Alaska’s National Petroleum Reserve from the Department of Interior.
“I was in charge of procurement policy at DOT [Department of Transportation], FAA [the old Federal Aviation Agency] and the U.S. Railway Association, and never refused information — under FOIA or directly — and I don’t see this ‘proprietary’ junk,” said Alan Dean, a fellow with the National Academy of Public Administration who collectively held those procurement positions from 1959 to 1979. Dean was co-project director of a 1994 NAPA report to Congress on restructuring Elk Hills, which recommended that it become a government corporation. “In the bid, they [the oil companies] didn’t have to convey company strategy, just a price and over what period of time they would pay.”
But for 10 months, DOE’s Office of Fossil Energy has blocked the Center’s request, to the point of fighting the department’s own Office of Hearings and Appeals order that it release the information requested by the Center.
Although it submitted its original FOIA request on January 5, and although the law requires that FOIA requests be processed within 20 business days, the Center did not receive a response from DOE until April 10. In that response, DOE denied the Center’s request for losing bid names and amounts, citing a FOIA provision exempting from disclosure “trade secrets and commercial or financial information obtained from a person and privileged or confidential.” DOE considered the information “confidential” because, it claimed, its release could give a valuable advantage to the bidders’ competitors in the future, as well as discourage companies from bidding in future government auctions.
Contending that DOE’s basis for denying the Center’s request was mistaken and inadequate, the Center filed an appeal on April 17 to the Office of Hearings and Appeals. The Center argued that the information was not commercially sensitive, especially 2 1/2 years after the auction, and that the public’s interest in examining the largest privatization ever should prevail.
A month later, the Center’s position was supported. The appeals office produced a “Decision and Order“ that upheld the Center’s central arguments and ordered DOE’s Office of Fossil Energy to “release all or part of the withheld information or provide a new justification for any continued withholdings.”
Although the Center agreed to a delay in the Office of Fossil Energy’s response to the order until June 30, 2000, the Center did not receive a response from Fossil Energy until August 4, some five weeks later than DOE had promised. The August 4 letter, 12 pages long, was essentially a rehash of what the Office of Fossil Energy had argued, and lost on, before. But in an apparent response to the hearing and appeals office’s suggestions, additional details were added.
For instance, the Office of Fossil Energy theorized that the primary factors considered by companies in developing their bid amounts include “reserve estimates, future cash flow price projections, and risk factors associated with the reserves. Release of the offerors’ names and offer amounts would provide significant insight into these elements, and could be used against a competitor in a subsequent asset sale or elsewhere in the competitive market.” The letter did not explain how this insight could be derived from a single dollar figure.
The Center, believing that DOE had not provided any “new justification” for withholding the information, filed a second appeal on September 21. In that appeal, it argued that Fossil Energy had still not supported its decision and, for the first time, pointed to the Interior Department’s oil lease auctions as demonstrating that release of comparable information has not harmed the bidding companies.
A decision on the second appeal is expected at any time and is to be posted on the website of the Office of Hearings and Appeals.