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December 18, 2012
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Federal judge scuttles lease anti-trust settlement

GLENWOOD SPRINGS, Colorado - An energy company executive expressed puzzlement over a federal judge's recent decision to throw out a financial settlement in an anti-trust case involving oil and gas claims in the North Fork Valley of the Gunnison River.

"It's certainly a strange situation," said Robbie Guinn, vice president of land for SG Interests (SGI) of Houston.

U.S. District Judge Richard P. Matsch last week rejected a proposed settlement between the U.S. Department of Justice, SGI and Gunnison Energy Corp. of Denver, in an anti-trust lawsuit regarding leases in the Ragged Mountain area.

The two companies were accused of collusion in bidding at a 2005 auction for federal leases in the Ragged Mountain area.

The companies allegedly agreed together that only SGI would bid on a package of four leases in the area, as a way of keeping the prices down, according to the government's case.

The two companies would later split the leases, and the reduced cost of acquiring them, according to the Justice Department's arguments as summarized by the judge, depriving the government of the full value of income from the leases.

Another 18 leases that went to SGI and GEC as part of the 2005 lease auction were not included in the anti-trust case.

The Justice Department's lawsuit stems from complaints submitted by Anthony Gale, named as a whistleblower, who also had been a past president of a rival company, Buccaneer Energy Corp. of Nevada.

The settlement, proposed by the Justice Department, would make up the difference between what the government believes the four leases are worth, and the $94,000 that SGI paid for them, according to the judge. The judge's decision did not reveal the Justice Department's estimate of the value of the claims, beyond stating that the settlement would make up for any lost revenues that resulted from the alleged collusion.

The companies would have been required to each pay $275,000, for a total of $550,000. A portion of the settlement would have gone to Gale and his attorney as a reward for their whistleblowing action.

A flood of negative comments were submitted regarding the settlement, from environmental organizations and individuals, according to Judge Matsch's decision.

Comments were critical of the dollar amount of the settlement, calling it a "slap on the wrist" for the two companies that does not adequately punish them for illegal acts.

Judge Matsch, in his decision, criticized Gunnison Energy for responding to these comments "in a manner that 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."

The judge also remarked on Gunnison Energy's "unrepentant arrogance" in its written submissions to the court, and concluded, "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."

The judge also was critical of the provision of the settlement proposal that would have reduced the government's share of the cash to $390,000, "given that $180,000 is to go to Anthony Gale and his attorney."

Guinn said he was barred from making any comments about Matsch's ruling, or about the anti-trust case, which remains before the courts.

Gunnison Energy President Brad Robinson declined to say much about the case.

"We're sorry the judge viewed our comments in the way that he did. That certainly was not our intention," Robinson said.

He said the company would continue working with Justice Department attorneys to find a way to resolve the anti-trust case, if, in fact, the department opts to keep the case alive.

"GE prides itself in trying to follow the letter of the law and the spirit of the law," Robinson said. He said the company believes it acted legally in the 2005 bidding.

"The Justice Department disagreed, and that's why we entered into the settlement," Robinson said.

jcolson@postindependent.com


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The Post Independent Updated Dec 18, 2012 01:30AM Published Dec 18, 2012 01:28AM Copyright 2012 The Post Independent. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.