Federal land manager pulls plug on Utah tar sand lease because of conflict of interest

Bureau of Land Management contractor has been buying mineral leases for years.

(Courtesy photo by Taylor McKinnon, Center for Biological Diversity/EcoFlight) The Bureau of Land Management proposed leasing 2,100 acres on Asphalt Ridge, pictured here in Utah’s Uinta Basin southwest of Vernal, for tar sands extraction. On Dec. 11, however, the agency suspended its approval process after learning that the project’s applicant is a BLM contract employee.

Vern Jones is a Utah landman, a professional who secures rights to federal minerals on behalf of himself and others in the oil and gas business.

But for years Jones has also worked as a contract employee inside the Bureau of Land Management’s Utah state office. This long-time arrangement is getting fresh scrutiny as federal regulations bar BLM employees from acquiring an interest in minerals overseen by the agency.

Jones’ purchase of federal oil and gas leases, including two covering 4,205 acres in Iron County at a recent auction, didn’t seem to bother anybody at the BLM for at least a decade. That changed suddenly Friday, when the agency’s new Utah state director, Greg Sheehan, suspended a near-completed analysis of a tar sands lease Jones had applied for years ago while the bureau looks “into potential conflicts related to the project,” according to BLM spokeswoman Rachel Wootton.

Contacted Monday by phone, Jones declined to comment beyond saying, “That sounds awfully exciting but I think I’ll pass.”

Environmentalists had alerted the BLM to Jones’ potential conflicts of interest in 2010, according to correspondence obtained by The Salt Lake Tribune. The Southern Utah Wilderness Alliance had argued federal law prohibited Jones from acquiring leases, but the BLM swept those concerns aside, claiming the prohibition didn’t apply to independent contractors.

So Jones continued working in the state office, where he was assigned a phone extension and held his own key card giving him access to secure parts of the BLM’s Salt Lake City headquarters, all the while buying leases under administrations headed by both Republican and Democratic presidents.

“SUWA has been concerned for a long time that having Vern Jones both working at BLM as a contractor at the same time he was promoting his own and other industry interests was like having the fox guarding the henhouse,” said Steve Bloch, SUWA’s legal director. “It never felt right that Jones would have unfettered access to federal files regarding leasing and at the same time be able to turn that information around to his advantage.”

According to BLM documents, a Centerville firm called Jones Lease Service in 2009 applied to lease 2,100 acres on Asphalt Ridge, a long escarpment southwest of Vernal that holds vast deposits of a gummy hydrocarbon called bitumen, better known as tar sands.

That application triggered a review under the National Environmental Policy Act that has so far cost taxpayers $264,000.

Most of the Asphalt Ridge tars sands deposits are owned by the state and are already under lease to energy developers struggling to find ways to profitably extract the bitumen and transform it into liquid crude oil.

While the documents don’t name Vern Jones, he is the principal behind Jones Lease Service, which filed the application on behalf of another firm called Ocean Enterprise Group. According to Utah business filings, that company’s registered agent is James Kohler, who had previously served as the BLM’s Utah solid minerals branch chief who oversaw federal tar sands and oil shale deposits in Utah.

The application targeted six noncontiguous parcels intermixed with the state trust holdings and abutting an existing mine and processing plant. The BLM released a draft environmental assessment on the proposal back in 2013, but nothing came of it, probably because oil prices tanked in 2014 and tar sands projects elsewhere were mired in controversy over this type of development’s potential environmental and climate impacts.

Then last week, the BLM suddenly released an updated assessment, signaling an intent to authorize the tar sands lease just as the industry-friendly Trump administration exits the White House. But then just as suddenly, the BLM announced Friday it was suspending the analysis and would no longer accept public comment.

That announcement came the day after The Salt Lake Tribune contacted the BLM with questions about the appropriateness of leasing publicly owned hydrocarbons to someone who works in the very office that oversees mineral leases.

The agency’s explanations did not get into specifics, but it is clear officials now have concerns about how Jones’ arrangement with the BLM looks. Sheehan, a former state wildlife official new to the BLM, did not know about Jones’s dual employment before the Tribune’s inquiry.

“The Bureau of Land Management is committed to upholding high ethical standards,” Wootton said. “We are looking into this situation.”

Sheehan’s move all but kills the proposed tar sands lease for the foreseeable future since President-elect Joe Biden has indicated he will end new oil and gas leases on federal lands.

It marks the second time Sheehan, a former Utah state wildlife official, has blocked a fully-developed leasing proposal since taking over the BLM state office four months ago. Hardly a month before the BLM’s September auction, he cancelled the sale of leases on 87,000 acres near Canyonlands and Arches national park because of the importance of these lands to Moab’s outdoor tourism industry.

“We’re gratified that BLM, even at this late date, is willing to pull back this tar sands proposal and investigate both that and Jones’ other activities,” Bloch said.

SUWA first became aware of Jones’ dual role back in 2010 when it discovered his name associated with dozens of leases and lease proposals, according to Bloch. In one instance, Jones had filed an interest in a parcel near the White River. The lease had not been issued, but the unresolved nomination frustrated SUWA’s efforts to convince the BLM to prioritize that area’s natural values in its land-use decisions.

“The White River lease is a microcosm of a larger issue about how BLM is willing to go seemingly to the ends of the earth to allow lease nominations to hang around,” Bloch said. “Having Jones as nominator in that instance really exacerbated the problem because he’s the guy who BLM had doing the checks, running the traplines internally to line up those lands for leasing.

At the time, BLM’s Utah office referred SUWA’s concerns to the national office in Washington, D.C. SUWA attorney David Garbett filed a complaint with a BLM’s ethics lawyer named Markci Metcalf.

Federal law prohibits BLM employees “from directly or indirectly purchasing or becoming interested in the purchase of any of the public land,” Garbett wrote in a March 2010 email. And the federal government’s ethics standards bar executive branch employees from using their official roles for personal gain or the private gains of someone they are affiliated with. They are also barred from engaging in outside employment that could conflict with their official duties.

The SUWA complaint alleged Jones’ dual role violated these provisions

“Mr. Jones’ oil and gas leases, as well as those leases held by business he has contracted with or represented, are an interest in federal lands prohibited by statute,” Garbett wrote. “Mr. Jones’s violations of this provision necessitate that he no longer remain in the BLM’s employ.”

SUWA went farther, insisting that BLM should terminate all leases issued to Jones and to companies he represented.

But in a one-sentence response, Metcalf said these ethics rules don’t apply to Jones because he is a contractor, not an employee of the BLM.

Accordingly, BLM neither canceled the leases nor fired Jones, who went on to seek the tar sands leases and most recently participate in the BLM’s Dec. 9 auction, which was a quiet affair held online where not much sold.

Jones was the only bidder on two parcels, both located in Iron County, which he bought for the minimum bid of $2 an acre. So for just $15,000 in bids and fees Jones acquired the exclusive right to drill these lands for 10 years.