Jan. 9 (Bloomberg) -- Tim DeChristopher, a 27-year-old economics student, went into a federal government auction last month with a bidding paddle and an idea.

Seeking to disrupt an auction for drilling on more than 150,000 acres of federal land in Utah, he wound up bidding on and winning more than $1.7 million in leases. Companies at the auction included Kerr-McGee, a subsidiary of Anadarko Petroleum Corp., the second-largest independent U.S. oil producer.

Almost a month after the Dec. 19 auction in Salt Lake City, DeChristopher, who attends the University of Utah, is collecting online donations to pay for the leases. He said today he has the initial $45,000 payment and believes that raising the total $1.7 million cost is “feasible.”

“My legal team and I are now prepared to make the first payment,” he said in a written statement today. “We value this land and the climate more than oil companies value the oil in those rocks, so we should be able to demonstrate that in any future auction.”

The tactic is an escalation of the fight between environmentalists and the Bush administration over the expansion of energy development of western lands. The Utah sale has been challenged in court by environmental groups that say it violates prohibitions against leasing areas close to national parks.

DeChristopher’s action may tie up the Utah sale until President-elect Barack Obama takes office and can consider blocking it, said Stephen Block of the Southern Utah Wilderness Alliance.

Still, the tactic is not likely to be repeated often because of the costs of securing the leases, he said.

“It is somewhat of a gimmick,” Block said. “But it may end up with positive results.”

Quarterly Lease Sale

The Bureau of Land Management held the auction as part of its quarterly lease sale for energy production rights.

DeChristopher said in an interview this week that although he initially joined a protest outside, “I decided that this was such a fraudulent auction and such a threat to our future I needed to take stronger action than just holding a sign.”

While he may spend time in jail for his actions, DeChristopher said he is “very encouraged” by the donations he received to make the initial lease payments. “All that support has kind of shown me there is a lot more going on here than just my little action,” he said.

DeChristopher won 13 leases for 22,500 acres of land near Moab, 15 percent of the total acreage sold in the lease auction. He is under investigation by the U.S. Attorney’s Office in Salt Lake City for causing a disruption that temporarily halted the auction.

Kathleen Sgamma, director of government relations for the Independent Petroleum Association of Mountain States, which represents independent oil and gas producers in the region, said DeChristopher has already defaulted on the leases because he failed to pay for them within 10 days of the auction, said

Not Typical Bidder

“It was immediately apparent that he was not a typical bidder,” said Sgamma, who was at the auction.

DeChristopher says the leases are still valid, citing advice from a legal team that includes former BLM Director Patrick Shea.

“We are waiting for confirmation from the BLM and U.S. Attorney’s office that they will accept the payment,” DeChristopher said in a statement. “It is unclear to me how the BLM or the new administration will proceed in my case.”

He said he would bid on the leases again if payment is refused, and they are offered in the next auction.

Mary Wilson, spokeswoman for the BLM in Utah, declined to comment on the status of the leases.

The auction itself garnered $7.47 million in high bids, with leases for 90 percent of the 164,000 acres offered sold, according to the Bureau of Land Management.

Under Investigation

The incident at the auction is under investigation, Melodie Rydalch, spokeswoman for the U.S. Attorney’s Office in Salt Lake City, said in a telephone interview. She declined further comment.

“We’re hoping that the U.S. Attorney’s Office prosecutes to the fullest extent of the law,” said Sgamma. “He was fraudulently representing himself by bidding. You don’t want to see this happen in the future and disrupt future lease sales.”

Two companies, Pacer Energy Acquisitions LLC and Land Professionals Inc., took BLM up on its options of retracting offers for parcels DeChristopher bid on. One of the retracted bids was for $10,000 and the other for $63,000.

The sale has been attacked by environmental groups because some of the area is near national parks, including Dinosaur National Monument and Canyonlands National Park. Democratic Representatives Brian Baird of Washington, Rush Holt of New Jersey and Maurice Hinchey of New York have expressed opposition, as has actor Robert Redford.

To contact the reporter on this story: Tina Seeley in Washington at tseeley@bloomberg.net.

Last Updated: January 9, 2009 14:28 EST