Judge rejects oil, gas lease bid collusion settlement

Judge rejects oil, gas lease bid collusion settlement by Dennis Webb, December 14, 2012, The Daily Sentinel
Citing the “unrepentant arrogance” of one of the defendant companies, a federal judge has rejected a proposed settlement involving alleged collusion by two energy firms in bidding on federal oil and gas leases in Gunnison and Delta counties. Senior Judge Richard Matsch this week issued his ruling in U.S. District Court in Colorado in a case involving Gunnison Energy and SG Interests. Matsch cited a filing by Gunnison Energy that he said “demonstrates that this defendant considers this antitrust action to be meritless and the settlement to be nothing more than a payment to be rid of this nuisance.” 

“.. It is not in the public interest to approve a final judgment that permits a defendant to leave its civil action in such a smirking, self-righteous attitude,” Matsch ruled. The two companies had agreed to pay $275,000 apiece to settle allegations involving four leases covering 3,650 acres in the Ragged Mountain area. Under the agreement, involving the Department of Justice’s first-ever challenge of an anticompetitive bidding agreement for mineral rights leases, neither company admitted wrongdoing. The Justice Department said the companies agreed in 2005 to have only SG Interests bid at a Bureau of Land Management lease auction, but then assign an interest in them to Gunnison Energy. It said that resulted in less bidding revenue than if the two companies had bid competitively. Gunnison Energy has contended it had entered in a legal, joint bidding arrangement common in the industry and encouraged under the Mineral Leasing Act.

Judge Rejects SG Interest & Gunnison Energy Corporation (GEC) Antitrust Settlement by Citizens for a Healthy Community
A US District Judge in Colorado denied a proposed settlement between the Antitrust Division of the Department of Justice and Gunnison Energy Corporation and SG Interests.  The settlement would have been the culmination of a complaint brought by the Department of Justice that charged Gunnison Energy Corporation and SG Interests with collusion in bidding for federal mineral leases offered by the Bureau of Land Management. “We are please that the Court rejected this sweetheart deal for Gunnison Energy and SG Interests,” CHC Director Jim Ramey said. ”The Department of Justice needs to crack down on these companies for the very serious allegations of defrauding taxpayers and the federal government, not just let them off the hook with a slap on the wrist. These companies need to be held to a higher standard when doing business on America’s public lands.”

CHC coordinated a letter in April from numerous conservation groups urging the Department of Justice and the courts to reconsider the proposed settlement because it was no more than a slap on the wrist for the flagrant violation shown by the two companies for the public’s trust. In denying the $550,000 settlement, the judge seemed to agree and wrote that “There is no basis for saying that the approval of these settlements would act as a deterrence to these defendants and others in the industry.” The judge described GEC’s response to public comments about the proposed settlement as demonstrating “unrepentant arrogance” and went on to state that “it is not in the public interest to approve a final judgment that permits a defendant to leave its civil action in such a smirking, self-righteous attitude.” Thanks to the many North Fork Valley citizens who wrote comments and applied pressure to the Department of Justice. Read the Court’s ruling here.

Judge Pans DOJ Deal In Natural Gas Antitrust Suit by Nathan Halem, December 13, 2012,  Law360
A federal judge on Thursday rejected the U.S. government’s proposed $550,000 settlement with Gunnison Energy Corp. and SG Interests Ltd. in a case alleging the companies illegally agreed not to compete in bidding for natural gas leases on government land, saying the deal clearly wouldn’t deter future violations. The U.S. Department of Justice had touted the agreement as a suitable resolution to its first challenge to an anti-competitive bidding agreement for mineral rights leases, but U.S. District Judge Richard P. Matsch sided with numerous public comments…

Case Title United States of America v. SG Interests I, Ltd. et al
Court Colorado
Nature of Suit Anti-Trust
Case Number 1:12-cv-00395
Judge Richard P. Matsch
Date Filed February 15, 2012

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