Opinion ID: 891708
Heading Depth: 3
Heading Rank: 4

Heading: Lack of Competition

Text: {76} During oral argument the Attorney General compared the challenged land exchanges to the sale of a tailor-made suit; he questioned whether any true competition could take place when an auctioned product was custom-made for only one particular customer. The metaphor is a good one, if incomplete. More precisely, each transaction is better thought of as an exchange of tailor-made suits, in which the auctioned suit is custom-made for the buyer, suits are the preferred currency, and the winning suit is custom-made for the seller. No one else has such a suit, or as a practical matter, can find one. Competition is surely in jeopardy when the bidding party also holds the one and only suit custom-made for the seller. {77} The uncontested facts demonstrate, more clearly than an exchange of custom-made suits, that the land exchange procedure applied in each of the four challenged exchanges lacked competition. First, each applicant (a neighboring landowner) contacted the State Land Office to specify land desired in exchange for specific land held by the State Land Office. This first step in the exchange procedure allowed the applicant the opportunity to craft the land available for sale to his own interests. While this step of the process, alone, may not have precluded competition entirely, it contributed to the lack of competition when combined with the next steps. {78} The State Land Office then appraised the exchange proposal for the land's value and its ability to ameliorate management and access issues. If interested in the applicant's proposal, the State Land Office then began working with the applicants to plan a sale that satisfactorily met the interests of both partiesthe applicant and the State Land Office. This second step of the exchange process allowed the applicants an extended time period, compared to the notice for any other parties, to design their bids through back and forth communication over a substantial period of time. These communications and adjustments occurred long before other potential bidders were notified that the Land Commissioner would be exchanging land. {79} Even the Land Commissioner describes this process as a negotiation with each private land owner. In the case of the Stanley Ranch exchange, the initial evaluation by the Land Commissioner found substantial changes would need to be made in order to proceed with the consideration of any exchange. State Land Office staff then spent many months discussing an exchange that would meet legal requirements and be beneficial to the trust. The Stanley Ranch negotiations took two years before the Land Office announced an auction. The UU Bar Ranch negotiation took over a year and a half, and the CS Ranch and Galloway exchange negotiations had been going on for over a year and a half before the Attorney General filed its Writ of Mandamus early in 2010. {80} Based on the foregoing process, by the time an auction was announced by the Land Commissioner at the tail end of the process, one applicant already knew that its previously proposed and negotiated exchange was mutually agreeable. In contrast, all other potential bidders were permitted only ten weeks between announcement of the sale and an opportunity to participate in the sale. During those ten weeks other potential bidders had to (1) ascertain the desirability of the lands offered by the State Land Office, (2) determine the risk/reward of spending the time and money to appraise their lands when another bid already existed that was acceptable to the State, (3) appraise their exchange land, and (4) construct a competitive bid of greater value than the lands offered, either independently or in cooperation with others. {81} All the while, other potential bidders would know that the Land Commissioner did not have to accept their bids, even if superior in price and ability to performbecause, as we shall see in the discussion below, the Land Commissioner's criteria for selecting the winning bids were not objective, nor were they focused on the highest and best bid. Even if competing bids were theoretically possible in the face of the advantages to the bidding landowner and disadvantages to other bidders, the process was designed such that other bidders would not likely succeed. The foregoing procedure made competition the essential element of an auctionimprobable rather than fundamental.