Judge rejects settlement, cites ‘smirking’ attitude

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.

Documents indicate that Anthony Gale, who originally challenged the bidding agreement through a whistleblower lawsuit, was to receive $160,000 of the settlement amount, including $50,000 for legal fees. Gale was a former Gunnison Energy official, and the company says he negotiated and signed the agreement under which the leases were acquired. He later became president of Buccaneer Energy Corp., which has sued Gunnison Energy and SG Interests over allegedly excluding it from access to a pipeline system they own in the area.

Numerous individuals, environmental groups and others had objected to the proposed agreement. Matsch agreed with the argument of some that the settlement was inadequate to be a deterrent — especially, he wrote, as Gunnison Energy considers joint bidding to be common to the industry.

Some said the agreement was far too lenient compared to the treatment of Tim DeChristopher, an environmental activist who is serving two years in prison for successfully bidding on leases in Utah with no intention of paying for them.

Some also called for the leases in question to be revoked, and for the companies to be barred for a time from participating in future auctions.


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