Anti-trust settlement rejected by judge

In documents filed on Dec. 12, U.S. District Judge Richard P. Matsch has issued an order denying motion for entry of final judgment. This concerns the anti-trust lawsuit by the U.S. Department of Justice against Gunnison Energy Corporation, SG Interest I, LTD and SG Interests VII, LTD (SGI).

The Department of Justice alleged that the companies which do exploration and development of natural gas in the Ragged Mountain Area violated the Sherman Act by collusion in bidding on federal lands offered by the BLM for lease in April and May 2005.

The Justice Department said a Memorandum of Understanding dated Feb. 8, 2005 contained an agreement that SGI would submit bids as nominee for both companies. If the bid was successful, Gunnison Energy Corporation would receive 50 percent interest. Then the two would create a joint venture development plan.

The Department of Justice said leases were acquired at substantially lower value than if SGI and Gunnison Energy had competed during the lease auction. This was viewed as an "illegal restraint of trade in violation of Section 1 of the Sherman Act and that the government be awarded treble damages for the losses incurred as a result of the defendants' conduct."

The proposed final judgment would have required Gunnison Energy and SGI to each pay $275,000 for a total of $550,000 to the United States.

A period of public comment resulted in comments from many individuals who said the judgment was not enough and would not be a deterrent.

Some suggested the government should revoke the leases from the defendants. Many commented that the judgment was far less severe than previous judgments, such as the one against Tim DeChristopher, an environmental activist who bid and won on parcels totaling about $1.8 million and which he never intended to develop. He was criminally charged and sentenced to 24 months in prison, three years of supervised release and a $10,000 fine.

In the final judgment agreement neither Gunnison Energy nor SGI admitted to any guilt. The Justice Department made the decision to pursue this case as a civil action.

Judge Matsch found that Gunnison Energy Corporation "filed a statement responding to the public 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 unrepentant arrogance of this defendant is so self-evident that a copy of the statement is attached as Exhibit A. 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."

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