Groups oppose gas bid-rigging settlement

Five Western Slope environmental groups are protesting as too lenient the proposed settlement the U.S. Department of Justice has reached with two natural gas companies accused of illegally rigging bids on federal oil and gas leases.

The organizations — Citizens for a Healthy Community, High Country Citizens’ Alliance, NFRIA-WSERC Conservation Center, Western Colorado Congress and Wilderness Workshop — filed a formal letter last week asking federal prosecutors to invalidate the leases, impose higher penalties on Gunnison Energy Corp. and SG Interests and investigate 18 other leases they allege the companies obtained through collusion.

The Department of Justice in February announced a civil antitrust complaint against and settlement with Gunnison Energy and SG Interests in which the companies would pay $550,000 in fines for agreeing that only SG Interests would bid at Bureau of Land Management auctions but then assign an interest in the leases to Gunnison Energy. The goverment alleged that collusion occurred over four leases covering 3,650 acres in the Ragged Mountain area in Gunnison and Delta counties.

The Department of Justice arrived at the $550,000 figure by estimating how much revenue the government lost on the leases because of Gunnison Energy and SG Interests not competing.

Environmentalists say because the settlement represents how much money the government lost, it amounts to no penalty at all.

“This fine is nothing more than a wrist slap, and would serve as an incentive for such behavior moving forward rather than any sort of disincentive,” Peter Hart, staff attorney for the Wilderness Workshop, said in a statement. “And it calls into question just how serious (the Department of Justice) is about clamping down on bid rigging, which we believe may be a systemic problem.”

The conservation groups noted the difference between the civil penalty against Gunnison Energy and SG Interests and the criminal prosecution and 10-year sentence it sought against environmental activist Tim DeChristopher for falsely bidding on gas leases at a 2008 sale. DeChristopher is serving two years in federal prison while his lawyers appeal.

A U.S. District Court Judge in Denver will finalize the settlement after the public comment period ends Tuesday.

Neither company admits any wrongdoing in the settlement, and Brad Robinson, president of Gunnison Energy, has said the agreement between the two firms was the result of attempting to enter into a legal, joint bidding arrangement. He said Gunnison Energy agreed to the settlement because the federal government had more resources to legally fight the issue.


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The charge is the result of a former GEC vice president who turned whistle blower.

My personal opinion is:
If leases are obtained under collusion or other illegal activity, they should be immediately null and void. Then administrative procedure should impose fines and/or jail for perpetrators and impose a ban from those companies being eligible for the bid process x number of years.
This would send a clear message that it is a privilege to have government lands available for mineral development, but if you abuse the system, you forfeit your privilege, ill-gotten gains, and pay a penalty.

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