Federal Register / Vol. 77, No. 36 / Thursday, February 23, 2012 / Notices 10775 

1For purposes of this Complaint, we define the 

Ragged Mountain Area as covering roughly a region 

encompassed by the Townships 10S through 12S 

and Ranges 89W through 91W, as designated by the 

Public Land Survey System, comprising portions of 

Delta, Gunnison, Mesa and Pitkin Counties. 

under CERCLA section 107(a) as well as 

damages for injury to, destruction of, or 

loss of natural resources related to the 

Sulphur Bank Site and the costs of any 

natural resource damage assessments 

under CERCLA section 107(a)(4)(c). 

Finally, the Consent Decree resolves 

counterclaims against the United States 

brought by BMC and Bradley Trust in 

the Sulphur Bank case and by BMC in 

the Stibnite Mine case. 

Financial information provided by the 

Settling Defendants indicated an 

inability to pay. However, pursuant to 

the proposed Consent Decree, the 

United States will receive a payment of 

$505,000 from BMC’s insurer, a 

percentage of future insurance 

recoveries and future income, and the 

proceeds from the future sale of parcels 

of land. In addition, Defendant Bradley 

Trust will transfer property to the Elem 

Tribe. In exchange, the proposed 

Consent Decree provides Bradley Trust 

with a covenant not to sue and 

contribution protection for the Sulphur 

Bank Site, and provides BMC with a 

covenant not to sue and contribution 

protection for the Sulphur Bank Site, 

the Stibnite Mine Site, and five 

additional mining sites: the Mt. Diablo 

Mercury Mine in Contra Costa County, 

California; the Springfield Scheelite 

Mine in Valley County, Idaho; the IMA 

Mine in Lemhi County, Idaho; the Bretz 

Mine in Malheur County, Oregon; and 

the Opalite Mine in Malheur County, 

Oregon. Finally, settling federal 

agencies will pay $7.2 million for EPA’s 

response costs at the Sulphur Bank Site 

and will receive a covenant not to sue 

and contribution protection for the 

Sulphur Bank Site and the Stibnite 

Mine Site. 

The Department of Justice will 

receive, for a period of thirty (30) days 

from the date of this publication, 

comments relating to the Consent 

Decree. Comments should be addressed 

to the Assistant Attorney General, 

Environment and Natural Resources 

Division, and either emailed to 

pubcomment-ees.enrd@usdoj.gov or 

mailed to P.O. Box 7611, U.S. 

Department of Justice, Washington, DC 

20044–7611, and should refer to United 

States v. Bradley Mining Company, et 

al., D.J. Ref. 90–11–3–07593. 

The Consent Decree may be examined 

at U.S. EPA Region IX at 75 Hawthorne 

Street, San Francisco, California 94105. 

During the public comment period, the 

Consent Decree may also be examined 

on the following Department of Justice 

Web site: http://www.usdoj.gov/enrd/ 

Consent_Decrees.html. A copy of the 

Consent Decree may also be obtained by 

mail from the Consent Decree Library, 

P.O. Box 7611, U.S. Department of 

Justice, Washington, DC 20044–7611 or 

by faxing or emailing a request to 

‘‘Consent Decree Copy’’ 

(EESCDCopy.ENRD@usdoj.gov), fax no. 

(202) 514–0097, phone confirmation 

number (202) 514–5271. In requesting a 

copy from the Consent Decree Library, 

please enclose a check in the amount of 

$17.75 (without appendices) or $32.50 

(with appendices) (25 cents per page 

reproduction cost) payable to the U.S. 

Treasury or, if by email or fax, forward 

a check in that amount to the Consent 

Decree Library at the stated address. 

Henry Friedman, 

Assistant Chief, Environmental Enforcement 

Section, Environment and Natural Resources 

Division. 

[FR Doc. 2012–4114 Filed 2–22–12; 8:45 am] 

BILLING CODE 4410–15–P 

DEPARTMENT OF JUSTICE 

Antitrust Division 

United States v. SG Interests I LTD., et 

al.; Proposed Final Judgment and 

Competitive Impact Statement 

Notice is hereby given pursuant to the 

Antitrust Procedures and Penalties Act, 

15 U.S.C. 16(b)–(h), that a proposed 

Final Judgment, Stipulation and 

Competitive Impact Statement have 

been filed with the United States 

District Court for the District of 

Colorado in United States of America v. 

SG Interests I, Ltd. et al., Civil Action 

No. 12–CV–00395–RPM–MEH. On 

February 15, 2012, the United States 

filed a civil antitrust Complaint alleging 

that the SG Interests I Ltd. and SG 

Interests VII Ltd. (SGI) and Gunnison 

Energy Corporation (GEC) agreed to 

jointly bid for natural gas leases in the 

Ragged Mountain Area of Western 

Colorado, which were auctioned by the 

United States Department of the 

Interior’s Bureau of Land Management 

in February and May 2005, thereby 

violating Section 1 of the Sherman Act, 

15 U.S.C. 1. The proposed Final 

Judgment, filed the same day as the 

Complaint, requires SGI and GEC to 

each pay $275,000 to the United States 

to settle the antitrust action and a 

related qui tam case also filed in United 

States District Court for the District of 

Colorado, United States of America ex 

rel. Anthony B. Gale v. Gunnison Energy 

Corporation, Civil Action No. 09–CV– 

02471–RBJ–KLM. 

Copies of the Complaint, proposed 

Final Judgment and Competitive Impact 

Statement are available for inspection at 

the Department of Justice, Antitrust 

Division, Antitrust Documents Group, 

450 Fifth Street NW., Suite 1010, 

Washington, DC 20530 (telephone: 202– 

514–2481), on the Department of 

Justice’s Web site at http:// 

www.usdoj.gov/atr, and at the Office of 

the Clerk of the United States District 

Court for the District of Colorado. 

Copies of these materials may be 

obtained from the Antitrust Division 

upon request and payment of the 

copying fee set by Department of Justice 

regulations. 

Public comment is invited within 60 

days of the date of this notice. Such 

comments, and responses thereto, will 

be published in the Federal Register 

and filed with the Court. Comments 

should be directed to William H. 

Stallings, Chief, Transportation, Energy 

and Agriculture Section, Antitrust 

Division, Department of Justice, 450 

Fifth Street NW., Suite 8000, 

Washington, DC 20530, (telephone: 

202–514–9323). 

Patricia A. Brink, 

Director of Civil Enforcement. 

IN THE UNITED STATES DISTRICT 

COURT FOR THE DISTRICT OF 

COLORADO 

Civil Action No. No. 12–cv–00395–RPM– 

MEH 

UNITED STATES OF AMERICA, U.S. 

Department of Justice, Antitrust Division, 450 

5th Street NW., Suite 8000, Washington, DC 

20530, Plaintiff, v. SG INTERESTS I, LTD., 

SG INTERESTS VII, LTD., 2 Houston Center, 

909 Fannin, Suite 2600, Houston, TX 77010, 

and GUNNISON ENERGY CORPORATION, 

1801 Broadway, Suite 1200, Denver, CO 

80202, Defendants. 

COMPLAINT 

The United States of America, acting under 

the direction of the Attorney General of the 

United States, brings this civil antitrust 

action under Section 4 of the Sherman Act, 

as amended, 15 U.S.C. 4, and Section 4A of 

the Clayton Act, as amended, 15 U.S.C. 15a, 

to obtain equitable and legal remedies against 

Defendants Gunnison Energy Corporation 

(‘‘GEC’’), and SG Interests I, Ltd. and SG 

Interests VII, Ltd. (collectively, ‘‘SGI’’) for 

their violation of Section 1 of the Sherman 

Act, as amended, 15 U.S.C. 1. 

Prior to 2005, GEC and SGI were separately 

engaged in exploration and development of 

natural gas resources in the Ragged Mountain 

Area (or ‘‘RMA’’) of Western Colorado.1

Recognizing that they would be the primary 

competitors to acquire three natural gas 

leases for exploration and development on 

federal lands in the RMA that were to be 

auctioned by the Bureau of Land 

Management (‘‘BLM’’) in February 2005, GEC 

and SGI executed a Memorandum of 

Understanding (the ‘‘MOU’’) on the eve of the 

mstockstill on DSK4VPTVN1PROD with NOTICES

10776 Federal Register / Vol. 77, No. 36 / Thursday, February 23, 2012 / Notices 

auction pursuant to which they agreed not to 

compete for the leases. Instead, under the 

MOU, SGI would bid at the auction and, if 

they won, assign a fifty percent interest in the 

acquired leases to GEC. The parties extended 

the MOU to include a fourth lease auctioned 

by the BLM in May 2005. As a result of the 

MOU, the United States received 

substantially less revenue from the sale of 

leases than it would have had SGI and GEC 

competed at the auctions. 

I. DEFENDANTS 

1. SG Interests I, Ltd. and SG Interests VII, 

Ltd. are Texas limited partnerships with their 

headquarters in Houston, Texas. The 

managing partner of both of the limited 

partnerships is Gordy Oil Company, a Texas 

corporation. SGI was formed for the purpose 

of developing natural gas resources in the 

Ragged Mountain Area. SGI holds, in whole 

or in part, interests in federal leases on 

approximately 40,000 acres within the 

Ragged Mountain Area. It also owns, in 

whole or in part, interests in and is the 

operator for natural gas pipelines in the 

Ragged Mountain Area. 

2. GEC is a Delaware corporation with its 

principal place of business in Denver, 

Colorado. GEC holds, in whole or in part, 

interests in federal leases on approximately 

52,000 acres within the Ragged Mountain 

Area. It also owns, in whole or in part, 

interests in and is the operator for natural gas 

pipelines in the Ragged Mountain Area. 

II. JURISDICTION AND VENUE 

3. The United States files this Complaint 

under Section 4 of the Sherman Act, 15 

U.S.C. 4, and Section 4A of the Clayton Act, 

15 U.S.C. 15a, seeking equitable relief and 

damages from Defendants’ violation of 

Section 1 of the Sherman Act, 15 U.S.C. 1. 

4. The Court has jurisdiction over this 

matter pursuant to 15 U.S.C. 4 and 15a and 

28 U.S.C. 1331 and 1337. 

5. Defendants waive any objection to venue 

and personal jurisdiction in this judicial 

district for the purpose of this Complaint. 

6. SGI’s and GEC’s activities are in the flow 

of and substantially affect interstate 

commerce. 

III. FEDERAL OIL AND GAS LEASE 

AUCTIONS 

7. The BLM manages natural resources on 

federal lands, including rights to subsurface 

oil and natural gas. The BLM sells onshore 

oil and gas leases to private parties, granting 

leaseholders the exclusive right to explore 

and develop oil and gas deposits on their 

leases. The initial term of a BLM onshore oil 

and gas lease is ten years. 

8. Private parties, such as oil and gas 

companies, typically acquire onshore oil and 

gas leases on federal lands at auctions which 

each regional BLM office conducts as often 

as quarterly. Auctions are conducted orally 

and openly, with each lease starting at a 

minimum bid of two dollars per acre. 

Bidding on a lease ends when no other 

person attending the auction bids a higher 

price than the then outstanding offer. In 

addition to the amount of the bid, the 

winning bidder must make annual rental 

payments during the life of the lease and, if 

development is successful, pay a 12.5 percent 

royalty on the value of production from the 

leases. Revenues from BLM leases flow to the 

United States Treasury. 

9. At the conclusion of the auction, each 

successful bidder must submit a lease bid 

form, which constitutes a legally binding 

lease offer for the amount of the winning bid. 

By signing the form, the bidder also certifies 

that it is qualified to bid and did not engage 

in collusion. 

10. In advance of each auction, each 

regional BLM office publishes a Notice of 

Competitive Lease Sale identifying the lease 

parcels to be offered at the quarterly auction. 

Private parties may nominate lands for BLM 

to consider offering at auction by submitting 

an ‘‘expression of interest.’’ 

IV. THE UNLAWFUL AGREEMENT 

11. In 2001, SGI and GEC began 

independently acquiring and developing gas 

leases in the Ragged Mountain Area. Prior to 

2003, their activities generally focused on 

different parts of the Ragged Mountain Area, 

with SGI acquiring leases on the eastern side 

of the area (which is now designated by BLM 

as the Bull Mountain Unit Area) while GEC 

acquired leases along the southern boundary. 

However, over the course of 2003 and 2004, 

their interests began to overlap as each 

sought pipelines and leases held by BDS 

International, LLC and affiliated entities 

(collectively, ‘‘BDS’’) and as the BLM leased 

additional parcels. 

12. Conflicting efforts by SGI and GEC to 

acquire assets held by BDS resulted in 

litigation between Defendants in 2004. In 

September 2004, SGI submitted expressions 

of interest to the BLM for additional lands 

within the Ragged Mountain Area, including 

parcels adjacent to leases held by GEC. 

13. In October 2004, GEC and SGI met to 

discuss the prospect of settling the litigation 

and entering into a collaboration to develop 

the Ragged Mountain Area. The potential 

collaboration contemplated joint acquisition 

of the BDS assets, improvements to the 

existing BDS pipelines, and joint 

development of new pipelines to serve the 

area. These discussions, however, quickly 

foundered. 

14. On or about December 23, 2004, the 

BLM announced a Notice of Competitive 

Lease Sale that included three tracts in the 

Ragged Mountain Area, COC068350 

(comprising 320 acres), COC068351 

(comprising 1280 acres) and COC068352 

(comprising 1404 acres). The three leases 

covered areas contained in SGI’s September 

2004 expression of interest. The auction was 

set to occur on February 10, 2005. 

15. Both SGI and GEC were independently 

interested in certain of the tracts that would 

be auctioned and both likely would have 

bid—and bid against each other—at the 

February auction. On or about February 2, 

2005, SGI and GEC embarked on discussions 

to forestall competing against one another for 

the three BLM leases to be auctioned. These 

discussions resulted in the drafting of the 

written MOU by attorneys for SGI and GEC 

that was executed by the parties on February 

8, 2005, just two days before the February 10, 

2005 auction. 

16. Under the MOU, only SGI would bid 

at the auction for the three leases in the 

Ragged Mountain Area offered by the BLM at 

the February auction. SGI and GEC would 

jointly set a maximum price for SGI to bid 

for the three leases. If SGI successfully 

acquired the leases, it would assign a fifty 

percent interest to GEC at cost. 

17. At the February auction, SGI bid for 

and obtained the three BLM leases covered 

by the MOU. GEC attended the auction, but, 

honoring the terms of the MOU, did not bid. 

SGI obtained COC068350, COC068351 and 

COC068352 for $72 per acre, $30 per acre 

and $22 per acre, respectively. 

18. On or about May 10, 2005, SGI and 

GEC amended the MOU to include an 

additional lease, COC068490 (comprising 643 

acres), in the Ragged Mountain Area set to be 

auctioned by the BLM on May 12, 2005. The 

parties agreed to bid as high as $300 per acre 

for this parcel. Though the defendants had 

recommenced their discussions regarding 

litigation settlement and a development 

collaboration in March 2005, they had not yet 

been able to reach terms of an agreement. 

19. On May 12, 2005, SGI bid for and 

obtained COC068490 pursuant to the terms of 

the MOU. Again, GEC attended the auction 

but did not bid. SGI won the lease with a bid 

of only $2 per acre. 

20. The MOU was not part of a 

procompetitive or efficiency enhancing 

collaboration. The defendants did not reach 

an agreement to engage in a broad 

collaboration to jointly acquire and develop 

leases and pipelines in the Ragged Mountain 

Area until the summer of 2005. The MOU 

was not ancillary to the latter agreement. 

21. As a result of the MOU, the United 

States, through the BLM, received less 

revenue that it would have received had SGI 

and GEC competed for leases in the Ragged 

Mountain Area at the February and May 2005 

auctions. Pursuant to the MOU, SGI and GEC 

successfully avoided bidding against one 

another for leases covering approximately 

3650 acres. If SGI and GEC had bid against 

each other, the winner would have paid BLM 

a higher price. 

V. VIOLATION ALLEGED 

22. The United States hereby incorporates 

paragraphs 1 through 21. 

23. The MOU between SGI and GEC 

unreasonably restrained competition for the 

acquisition of BLM leases in violation of 

Section 1 of the Sherman Act, 15 U.S.C. § 1. 

24. The United States was injured as a 

result of the unlawful agreement in that it 

received lower bid payments for leases at the 

BLM’s February and May 2005 auctions than 

it would have absent the illegal agreement. 

VI. PRAYER FOR RELIEF 

Wherefore, Plaintiff prays: 

25. That the Court adjudge and decree that 

the MOU constitutes an illegal restraint of 

trade in violation of Section 1 of the Sherman 

Act; 

26. That the Court award Plaintiff treble 

damages for the losses it incurred as a result 

of Defendants’ conduct; 

27. That Plaintiff shall have such other 

relief, including equitable monetary relief, as 

the nature of this case may require and is just 

and proper to prevent the recurrence of the 

alleged violation and to dissipate the 

anticompetitive effects of the violation; and 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 77, No. 36 / Thursday, February 23, 2012 / Notices 10777 

2For purposes of this case, we define the Ragged 

Mountain Area as covering roughly a region 

encompassed by the Townships 10S thru 12S and 

Ranges 89W thru 91W, as designated by the Public 

Land Survey System, comprising portions of Delta, 

Gunnison, Mesa and Pitkin Counties. 

28. That Plaintiff recover the costs of this 

action. 

DATED: February 15, 2012. 

Respectfully submitted, 

FOR PLAINTIFF UNITED STATES 

s/Sharis A. Pozen 

Sharis A. Pozen, 

Acting Assistant Attorney General. 

s/Leslie C. Overton 

Leslie C. Overton, 

Deputy Assistant Attorney General. 

s/Patricia A. Brink 

Patricia A. Brink, 

Director of Civil Enforcement. 

s/William H. Stallings 

William H. Stallings, 

Chief, Transportation, Energy & Agriculture 

Section. 

s/Kathleen S. O’Neill 

Kathleen S. O’Neill, 

Assistant Chief, Transportation, Energy & 

Agriculture Section. 

s/Sarah L. Wagner 

Sarah L. Wagner, 

J. Richard Doidge, 

J. Chandra Mazumdar. 

U.S. Department of Justice, Antitrust 

Division, Transportation, Energy & 

Agriculture Section, 450 Fifth Street NW, 

Suite 8000, Washington, DC 20530. 

Telephone: (202) 305–8915. 

FAX: (202) 616–2441. 

E-mail: sarah.wagner@usdoj.gov. 

Attorneys for Plaintiff United States. 

CERTIFICATE OF SERVICE 

I hereby certify that on February 15, 

2012, I mailed or served a copy of the 

Complaint by certified mail to the 

following: 

L. Poe Leggette, 

Fulbright & Jaworksi, LLP, 

Republic Plaza, 370 Seventeenth Street, 

Suite 2150, Denver, CO 80202. 

Telephone: (303) 801–2700. 

FAX: (303) 801–2777. 

Email: pleggette@fulbright.com. 

Attorney for Defendants SG Interests I, 

Ltd. and SG Interests VII, Ltd. 

Timothy R. Beyer, 

Brownstein Hyatt Farber Schreck, LLP, 

410 Seventeenth Street, Suite 2200, 

Denver, CO 80202. 

Telephone: (303) 223–1116. 

FAX: (303) 223–0916. 

Email: tbeyer@bhfs.com. 

Attorney for Defendant Gunnison 

Energy Corporation. 

s/Sarah L. Wagner llllllllllll

Sarah L. Wagner, 

U.S. Department of Justice, Antitrust 

Division, Transportation, Energy & 

Agriculture Section, 450 Fifth Street NW., 

Suite 8000, Washington, DC 20530. 

Telephone: (202) 305–8915. 

FAX: (202) 616–2441. 

Email: sarah.wagner@usdoj.gov. 

Attorney for Plaintiff United States. 

IN THE UNITED STATES DISTRICT 

COURT FOR THE DISTRICT OF 

COLORADO 

Civil Action No. 12–cv–00395–RPM–MEH 

UNITED STATES OF AMERICA, Plaintiff, 

v. SG INTERESTS I, LTD., SG INTERESTS 

VII, LTD., and GUNNISON ENERGY 

CORPORATION, Defendants. 

COMPETITIVE IMPACT STATEMENT 

Plaintiff United States of America 

(‘‘United States’’), pursuant to Section 

2(b) of the Antitrust Procedures and 

Penalties Act (‘‘APPA’’ or ‘‘Tunney 

Act’’), 15 U.S.C. 16(b)–(h), files this 

Competitive Impact Statement relating 

to the proposed Final Judgment 

submitted for entry in this civil antitrust 

proceeding. 

I. NATURE AND PURPOSE OF THE 

PROCEEDING 

On February 15, 2012, the United 

States filed a civil antitrust complaint 

against Defendant Gunnison Energy 

Corporation (‘‘GEC’’) and Defendants SG 

Interests I, Ltd. and SG Interests VII, 

Ltd. (‘‘SGI’’) alleging that GEC and SGI 

violated Section 1 of the Sherman Act, 

15 U.S.C. 1. 

Prior to 2005, GEC and SGI were 

separately engaged in exploration and 

development of natural gas resources in 

the Ragged Mountain Area (or ‘‘RMA’’) 

of Western Colorado.2 Recognizing that 

they would be the primary competitors 

to acquire three natural gas leases for 

exploration and development on federal 

lands in the RMA that were to be 

auctioned by the Bureau of Land 

Management (‘‘BLM’’) in February 2005, 

GEC and SGI executed a Memorandum 

of Understanding (the ‘‘MOU’’) on the 

eve of the auction pursuant to which 

they agreed not to compete for the 

leases. Instead, under the MOU, SGI 

would bid at the auction and then 

assign a fifty percent interest in the 

acquired leases to GEC. The parties 

extended the MOU to include a fourth 

lease auctioned by the BLM in May 

2005. As a result of the MOU, the 

United States received substantially less 

revenue from the sale of leases than it 

would have had SGI and GEC competed 

at the auctions. 

At the same time the Complaint was 

filed, the United States also filed an 

agreed-upon proposed Final Judgment 

that would remedy the violation by 

having SGI and GEC each pay damages 

of $275,000 to the United States. The 

United States and Defendants have 

stipulated that the proposed Final 

Judgment may be entered after 

compliance with the APPA. Entry of the 

proposed Final Judgment would 

terminate this action, except that the 

Court would retain jurisdiction to 

construe, modify, or enforce the 

provisions of the proposed Final 

Judgment and to punish violations 

thereof. 

II. DESCRIPTION OF THE EVENTS 

GIVING RISE TO THE ALLEGED 

VIOLATION 

A. Defendants 

SG Interests I, Ltd. and SG Interests 

VII, Ltd. are Texas limited partnerships 

with their headquarters in Houston, 

Texas. The managing partner both of the 

limited partnerships is Gordy Oil 

Company, a Texas corporation. SGI was 

formed for the purpose of developing 

natural gas resources in the Ragged 

Mountain Area. SGI holds, in whole or 

in part, interests in federal leases on 

approximately 40,000 acres within the 

Ragged Mountain Area. It also owns, in 

whole or in part, interests in and is the 

operator for natural gas pipelines in the 

Ragged Mountain Area. 

GEC is a Delaware corporation with 

its principal place of business in 

Denver, Colorado. GEC holds, in whole 

or in part, interests in federal leases on 

approximately 52,000 acres within the 

Ragged Mountain Area. It also owns, in 

whole or in part, interests in and is the 

operator for natural gas pipelines in the 

Ragged Mountain Area. 

B. Oil and Gas Interests on Federal 

Lands 

The federal government owns 

hundreds of millions of acres of land in 

the United States. The BLM manages 

natural resources on federal lands, 

including rights to subsurface oil and 

natural gas. The BLM sells onshore oil 

and gas leases to private parties, 

granting leaseholders the exclusive right 

to explore and develop oil and gas 

deposits found on their leased land. The 

initial term of a BLM onshore oil and 

gas lease is ten years. 

Private parties, such as oil and gas 

companies, typically acquire onshore oil 

and gas leases on federal lands at 

auctions which each regional BLM 

office conducts as often as quarterly. In 

advance of each auction, the regional 

BLM office publishes a Notice of 

Competitive Lease Sale identifying the 

lease parcels to be offered at the 

quarterly auction. Private parties may 

nominate lands for BLM to consider 

offering at auction by submitting an 

‘‘expression of interest.’’ Auctions are 

conducted orally and openly, with each 

mstockstill on DSK4VPTVN1PROD with NOTICES

10778 Federal Register / Vol. 77, No. 36 / Thursday, February 23, 2012 / Notices 

3The proposed Final Judgment does not preclude 

the United States from bringing an action against 

GEC or SGI for any antitrust claims arising from 

their acquisition and operation of the Ragged 

Mountain pipeline, as agreed in the Stipulation at 

paragraph 4. 

lease starting at a minimum bid of two 

dollars per acre. Bidding on a lease ends 

when no other person attending the 

auction bids a higher price than the then 

outstanding offer. In addition to the 

amount of the bid, the winning bidder 

must make annual rental payments 

during the life of the lease and, if 

development is successful, pay a royalty 

on the value of production from the 

leases. Revenues from BLM leases flow 

to the United States Treasury. 

At the conclusion of an auction, each 

successful bidder must submit a lease 

bid form, which constitutes a legally 

binding lease offer for the amount of the 

winning bid. By signing the form, the 

bidder also certifies that it is qualified 

to bid and that the bid was ‘‘arrived at 

independently’’ and ‘‘tendered without 

collusion with any other bidder for the 

purpose of restricting competition.’’ 

A lease grants the leaseholder the 

exclusive right for ten years to drill for, 

extract, remove and dispose of the oil 

and gas on the leased land. A lessee may 

assign a lease, or a portion of a lease, to 

another party with approval from the 

BLM. Oil and natural gas leases expire 

at the end of their ten-year term, but 

may be extended for as long as the lease 

has at least one well capable of 

producing oil or natural gas. 

C. The Alleged Violation 

In 2001, SGI and GEC began 

independently acquiring and 

developing gas leases in the Ragged 

Mountain Area. Prior to 2003, their 

activities generally focused on different 

parts of the Ragged Mountain Area, with 

SGI acquiring leases on the eastern side 

of the area (which BLM has designated 

as the Bull Mountain Unit Area) while 

GEC acquired leases along the southern 

boundary. However, over the course of 

2003 and 2004, their interests began to 

overlap as each sought pipelines and 

leases held by BDS International, LLC 

and affiliated entities (collectively, 

‘‘BDS’’) and as the BLM leased 

additional parcels. Conflicting efforts by 

SGI and GEC to acquire assets held by 

BDS resulted in litigation between 

Defendants in 2004. 

In September 2004, SGI submitted 

expressions of interest to the BLM for 

additional lands within the Ragged 

Mountain Area, including parcels 

adjacent to leases held by GEC. 

In October 2004, GEC and SGI met to 

discuss the prospect of settling the 

litigation and entering into a 

collaboration to develop the Ragged 

Mountain Area. The potential 

collaboration contemplated joint 

acquisition of the BDS assets, 

improvements to the existing BDS 

pipelines, and joint development of new 

pipelines to serve the area. These 

discussions, however, quickly 

foundered. 

On or about December 23, 2004, BLM 

announced a Notice of Competitive 

Lease Sale that included three tracts in 

the Ragged Mountain Area, COC068350 

(comprising 320 acres), COC068351 

(comprising 1280 acres) and COC068352 

(comprising 1404 acres). The three 

leases covered areas contained in SGI’s 

September 2004 expression of interest. 

The auction was set to occur on 

February 10, 2005. 

Both SGI and GEC were 

independently interested in certain of 

the tracts that would be auctioned and 

both likely would have bid—and bid 

against each other—at the February 

auction. On or about February 2, 2005, 

SGI and GEC embarked on discussions 

to forestall competing against one 

another for the three BLM leases to be 

auctioned. These discussions resulted in 

the drafting of the written MOU by 

attorneys for SGI and GEC that was 

executed by the parties on February 8, 

2005, just two days before the February 

10, 2005 auction. The MOU was not part 

of a procompetitive or efficiency 

enhancing collaboration. The 

Defendants did not reach an agreement 

to engage in a broad collaboration to 

jointly acquire and develop leases and 

pipelines in the Ragged Mountain Area 

until the summer of 2005. The MOU 

was not ancillary to the latter 

agreement. 

Under the MOU, only SGI would bid 

at the auction for the three leases in the 

Ragged Mountain Area offered by the 

BLM at the February auction. SGI and 

GEC would jointly set a maximum price 

for SGI to bid for the three leases. If SGI 

successfully acquired the leases, it 

would assign a fifty percent interest to 

GEC at cost. 

At the February auction, SGI bid for 

and obtained the three BLM leases 

covered by the MOU. GEC attended the 

auction, but, honoring the terms of the 

MOU, did not bid. SGI obtained 

COC068350, COC068351 and 

COC068352 for $72 per acre, $30 per 

acre and $22 per acre, respectively. 

On or about May 10, 2005, SGI and 

GEC amended the MOU to include an 

additional lease, COC068490 

(comprising 643 acres), in the Ragged 

Mountain Area set to be auctioned by 

the BLM on May 12, 2005. The parties 

agreed to bid as high as $300 per acre 

for this parcel. Though the Defendants 

had recommenced their discussions 

regarding litigation settlement and a 

development collaboration in March 

2005, they had not yet been able to 

reach terms of an agreement. 

On May 12, 2005, SGI bid for and 

obtained COC068490 pursuant to the 

terms of the MOU. Again, GEC attended 

the auction but did not bid. SGI won the 

lease with a bid of only $2 per acre. 

As a result of the MOU, the United 

States, through the BLM, received less 

revenue that it would have received had 

SGI and GEC competed for leases in the 

Ragged Mountain Area at the February 

and May 2005 auctions. Pursuant to the 

MOU, SGI and GEC successfully 

avoided bidding against one another for 

leases covering approximately 3650 

acres. If SGI and GEC had bid against 

each other, the winner would have paid 

BLM a higher price. 

III. EXPLANATION OF THE 

PROPOSED FINAL JUDGMENT 

The proposed Final Judgment relates 

to a qui tam action captioned United 

States ex rel. Anthony B. Gale v. 

Gunnison Energy Corporation, et al., 

Civil Action No. 09–cv–02471–RBJ– 

KLM (D. Colo.), and settlements with 

the United States Attorney’s Office for 

the District of Colorado. Both this action 

and the qui tam action arise from 

common facts related to BLM auctions 

in February 2005 and May 2005 and the 

anticompetitive MOU. 

For violations of Section 1 of the 

Sherman Act, the United States may 

seek equitable relief, including equitable 

monetary remedies. See United States v. 

KeySpan Corp., 763 F. Supp. 2d 633, 

638–641 (S.D.N.Y. 2011). Further, where 

the United States is an injured party by 

a Section 1 violation, it may seek 

damages. 15 U.S.C. 15a. 

The proposed Final Judgment requires 

GEC and SGI to each pay $275,000, for 

a total of $550,000, to the United States 

within 10 days of entry of the Final 

Judgment pursuant to instructions 

provided by the United States Attorney 

for the District of Colorado. These 

payments will satisfy claims that the 

United States has against GEC and SGI 

under Section 1 of the Sherman Act, as 

alleged in this action, and the False 

Claims Act, as set forth in the separate 

agreements reached between GEC and 

SGI and the United States Attorney’s 

Office for the District of Colorado 

(which are Attachments 1 and 2 to the 

proposed Final Judgment).3

As a result of the unlawful agreement 

in restraint of trade between GEC and 

SGI, the BLM received lower bid 

payments. The payment of damages to 

the United States reflects the likely 

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4 In 2005, GEC and SGI paid bids totaling 

approximately $94,000 for the four leases they 

acquired pursuant to the MOU, resulting in an 

average per acre price of approximately $25. By 

paying an additional $550,000, GEC and SGI will 

have been required to pay approximately $175 per 

acre, seven times its initial bid amount. 

5United States v. Bechtel Corp., 648 F.2d 660, 

666 (9th Cir. 1981) (‘‘The balancing of competing 

social and political interests affected by a proposed 

antitrust consent decree must be left, in the first 

instance, to the discretion of the Attorney 

General.’’). See generally Microsoft, 56 F.3d at 1461 

(discussing whether ‘‘the remedies [obtained in the 

decree are] so inconsonant with the allegations 

charged as to fall outside of the ‘reaches of the 

public interest’ ’’). 

6 Microsoft, 56 F.3d at 1461 (noting the need for 

courts to be ‘‘deferential to the government’s 

predictions as to the effect of the proposed 

remedies’’); United States v. Archer-DanielsMidland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) 

(noting that the court should grant due respect to 

the United States’ prediction as to the effect of 

Continued 

additional bid revenue that the BLM 

would have received had SGI and GEC 

acted as independent competitors at the 

February and May 2005 auctions. 

Requiring GEC and SGI to pay damages 

in these circumstances will protect the 

public interest by deterring them and 

other parties from entering into similar 

anticompetitive agreements in the 

future.4

IV. REMEDIES AVAILABLE TO 

POTENTIAL PRIVATE LITIGANTS 

Section 4 of the Clayton Act, 15 

U.S.C. 15, provides that any person who 

has been injured as a result of conduct 

prohibited by the antitrust laws may 

bring suit in federal court to recover 

three times the damages the person has 

suffered, as well as costs and reasonable 

attorneys’ fees. Entry of the proposed 

Final Judgment will neither impair nor 

assist the bringing of any private 

antitrust damage action. Under the 

provisions of Section 5(a) of the Clayton 

Act, 15 U.S.C. 16(a), the proposed Final 

Judgment has no prima facie effect in 

any subsequent private lawsuit that may 

be brought against Defendants. 

V. PROCEDURES AVAILABLE FOR 

MODIFICATION OF THE PROPOSED 

FINAL JUDGMENT 

The United States and Defendants 

have stipulated that the proposed Final 

Judgment may be entered by the Court 

after compliance with the provisions of 

the APPA, provided that the United 

States has not withdrawn its consent. 

The APPA conditions entry upon the 

Court’s determination that the proposed 

Final Judgment is in the public interest. 

The APPA provides a period of at 

least sixty (60) days preceding the 

effective date of the proposed Final 

Judgment within which any person may 

submit to the United States written 

comments regarding the proposed Final 

Judgment. Any person who wishes to 

comment should do so within sixty (60) 

days of the date of publication of this 

Competitive Impact Statement in the 

Federal Register, or the last date of 

publication in a newspaper of the 

summary of this Competitive Impact 

Statement, whichever is later. All 

comments received during this period 

will be considered by the United States 

Department of Justice, which remains 

free to withdraw its consent to the 

proposed Final Judgment at any time 

prior to the Court’s entry of judgment. 

The comments and the response of the 

United States will be filed with the 

Court and published in the Federal 

Register. 

Written comments should be 

submitted to: William H. Stallings, 

Chief, Transportation, Energy and 

Agriculture Section, Antitrust Division, 

United States Department of Justice, 450 

Fifth Street NW., Suite 8000, 

Washington, DC 20530. 

The proposed Final Judgment provides 

that the Court retains jurisdiction over 

this action, and the parties may apply to 

the Court for any order necessary or 

appropriate for the modification, 

interpretation, or enforcement of the 

Final Judgment. 

VI. ALTERNATIVES TO THE 

PROPOSED FINAL JUDGMENT 

The United States considered, as an 

alternative to the proposed Final 

Judgment, a full trial on the merits 

against Defendants. The United States is 

satisfied, however, that the relief 

contained in the proposed Final 

Judgment remedies the violation of the 

Sherman Act alleged in the Complaint. 

Thus, the proposed Final Judgment 

would achieve all or substantially all of 

the relief the United States would have 

obtained through litigation, but avoids 

the time, expense, and uncertainty of a 

full trial on the merits of the Complaint. 

VII. STANDARD OF REVIEW UNDER 

THE APPA FOR THE PROPOSED 

FINAL JUDGMENT 

The Clayton Act, as amended by the 

APPA, requires that proposed consent 

judgments in antitrust cases brought by 

the United States be subject to a sixtyday comment period, after which the 

court shall determine whether entry of 

the proposed Final Judgment ‘‘is in the 

public interest.’’ 15 U.S.C. 16(e)(1). In 

making that determination, the court is 

directed to consider: 

(A) the competitive impact of such 

judgment, including termination of 

alleged violations, provisions for 

enforcement and modification, duration 

of relief sought, anticipated effects of 

alternative remedies actually 

considered, whether its terms are 

ambiguous, and any other competitive 

considerations bearing upon the 

adequacy of such judgment that the 

court deems necessary to a 

determination of whether the consent 

judgment is in the public interest; and 

(B) the impact of entry of such 

judgment upon competition in the 

relevant market or markets, upon the 

public generally and individuals 

alleging specific injury from the 

violations set forth in the complaint 

including consideration of the public 

benefit, if any, to be derived from a 

determination of the issues at trial. 

15 U.S.C. 16(e)(1)(A) & (B); see generally 

KeySpan Corp., 763 F. Supp. 2d at 637– 

38 (discussing Tunney Act standards); 

United States v. SBC Commc’ns, Inc., 

489 F. Supp. 2d 1 (D.D.C. 2007) 

(assessing standards for public interest 

determination). In considering these 

statutory factors, the court’s inquiry is 

necessarily a limited one as the United 

States is entitled to ‘‘broad discretion to 

settle with the Defendant within the 

reaches of the public interest.’’ United 

States v. Microsoft Corp., 56 F.3d 1448, 

1461 (D.C. Cir. 1995). 

Under the APPA a court considers, 

among other things, the relationship 

between the remedy secured and the 

specific allegations set forth in the 

United States’ complaint, whether the 

decree is sufficiently clear, whether 

enforcement mechanisms are sufficient, 

and whether the decree may positively 

harm third parties. See Microsoft, 56 

F.3d at 1458–62. With respect to the 

adequacy of the relief secured by the 

decree, the court’s function is ‘‘not to 

determine whether the proposed 

[d]ecree results in the balance of rights 

and liabilities that is the one that will 

best serve society, but only to ensure 

that the resulting settlement is within 

the reaches of the public interest.’’ 

KeySpan, 763 F. Supp. 2d at 637 

(quoting United States v. Alex Brown & 

Sons, Inc., 963 F. Supp. 235, 238 

(S.D.N.Y. 1997) (internal quotations 

omitted)). In making this determination, 

‘‘[t]he [c]ourt is not permitted to reject 

the proposed remedies merely because 

the court believes other remedies are 

preferable. [Rather], the relevant inquiry 

is whether there is a factual foundation 

for the government’s decision such that 

its conclusions regarding the proposed 

settlement are reasonable.’’ Id. at 637–38 

(quoting United States v. AbitibiConsolidated Inc., 584 F. Supp. 2d 162, 

165 (D.D.C. 2008)).5 The government’s 

predictions about the efficacy of its 

remedies are entitled to deference.6

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proposed remedies, its perception of the market 

structure, and its views of the nature of the case). 

7See United States v. Enova Corp., 107 F. Supp. 

2d 10, 17 (D.D.C. 2000) (noting that the ‘‘Tunney 

Act expressly allows the court to make its public 

interest determination on the basis of the 

competitive impact statement and response to 

comments alone’’). 

Courts have greater flexibility in 

approving proposed consent decrees 

than in crafting their own decrees 

following a finding of liability in a 

litigated matter. ‘‘[A] proposed decree 

must be approved even if it falls short 

of the remedy the court would impose 

on its own, as long as it falls within the 

range of acceptability or is ‘within the 

reaches of public interest.’ ’’ United 

States v. Am. Tel. & Tel. Co., 552 F. 

Supp. 131, 151 (D.D.C. 1982) (citations 

omitted) (quoting United States v. 

Gillette Co., 406 F. Supp. 713, 716 (D. 

Mass. 1975)), aff’d sub nom. Maryland 

v. United States, 460 U.S. 1001 (1983); 

see also United States v. Alcan 

Aluminum Ltd., 605 F. Supp. 619, 622 

(W.D. Ky. 1985) (approving the consent 

decree even though the court would 

have imposed a greater remedy). To 

meet this standard, the United States 

‘‘need only provide a factual basis for 

concluding that the settlements are 

reasonably adequate remedies for the 

alleged harms.’’ SBC Commc’ns, 489 F. 

Supp. 2d at 17. 

Moreover, the court’s role under the 

APPA is limited to reviewing the 

remedy in relationship to the violations 

that the United States has alleged in its 

Complaint, and does not authorize the 

court to ‘‘construct [its] own 

hypothetical case and then evaluate the 

decree against that case.’’ Microsoft, 56 

F.3d at 1459; KeySpan, 763 F. Supp. 2d 

at 638 (‘‘A court must limit its review 

to the issues in the complaint * * *.’’). 

Because the ‘‘court’s authority to review 

the decree depends entirely on the 

government’s exercising its 

prosecutorial discretion by bringing a 

case in the first place,’’ it follows that 

‘‘the court is only authorized to review 

the decree itself,’’ and not to ‘‘effectively 

redraft the complaint’’ to inquire into 

other matters that the United States did 

not pursue. Microsoft, 56 F.3d at 1459– 

60. 

In its 2004 amendments, Congress 

made clear its intent to preserve the 

practical benefits of utilizing consent 

decrees in antitrust enforcement, adding 

the unambiguous instruction that 

‘‘[n]othing in this section shall be 

construed to require the court to 

conduct an evidentiary hearing or to 

require the court to permit anyone to 

intervene.’’ 15 U.S.C. 16(e)(2). This 

language effectuates what Congress 

intended when it enacted the Tunney 

Act in 1974, as Senator Tunney 

explained: ‘‘[t]he court is nowhere 

compelled to go to trial or to engage in 

extended proceedings which might have 

the effect of vitiating the benefits of 

prompt and less costly settlement 

through the consent decree process.’’ 

119 Cong. Rec. 24,598 (1973) (statement 

of Senator Tunney). Rather, the 

procedure for the public interest 

determination is left to the discretion of 

the court, with the recognition that the 

court’s ‘‘scope of review remains 

sharply proscribed by precedent and the 

nature of Tunney Act proceedings.’’ 

SBC Commc’ns, 489 F. Supp. 2d at 11.7

VIII. DETERMINATIVE DOCUMENTS 

In formulating the term of the 

proposed Final Judgment that requires 

GEC and SGI to each pay $275,000 to 

the United States in satisfaction of 

claims that the United States has against 

each Defendant under this antitrust 

cause of action and the False Claims 

Act, the United States considered two 

documents to be determinative 

documents within the meaning of the 

APPA: (1) the Settlement Agreement 

dated December 9, 2011 between the 

United States Attorney’s Office for the 

District of Colorado, SGI, and Anthony 

Gale. This agreement settled False 

Claims Act claims between the United 

States, SGI, and Anthony Gale in Civil 

Action 09–cv–02471–RBJ–KLM (D. 

Colo.). A copy of this document is 

attached hereto as Attachment 1. (2) The 

Settlement Agreement dated February 

14, 2012 between the United States 

Attorney’s Office for the District of 

Colorado, GEC, and Anthony Gale. This 

agreement settled False Claims Act 

claims between the United States, GEC, 

and Anthony Gale in Civil Action 09– 

cv–02471–RBJ–KLM (D. Colo.). A copy 

of this document is attached hereto as 

Attachment 2. 

Dated: February 15, 2012 

Respectfully submitted, 

s/Sarah L. Wagner/ lllllllllll

Sarah L. Wagner, 

U.S. Department of Justice, Antitrust 

Division, Transportation, Energy & 

Agriculture Section, 450 Fifth Street NW., 

Suite 8000, Washington, DC 20530. 

Telephone: (202) 305–8915. 

FAX: (202) 616–2441. 

Email: sarah.wagner@usdoj.gov. 

Attorney for Plaintiff United States. 

CERTIFICATE OF SERVICE 

I hereby certify that on February 15, 

2012, I electronically filed the foregoing 

with the Clerk of Court using the CM/ 

ECF system which will send notification 

of such filing to the following email 

addresses: L. Poe Leggette, 

pleggette@fulbright.com; Timothy R. 

Beyer, tbeyer@bhfs.com. 

s/Sarah L. Wagner/ lllllllllll

Sarah L. Wagner, 

U.S. Department of Justice, Antitrust 

Division, Transportation, Energy & 

Agriculture Section, 450 Fifth Street NW., 

Suite 8000, Washington, DC 20530. 

Telephone: (202) 305–8915. 

FAX: (202) 616–2441. 

Email: sarah.wagner@usdoj.gov. 

Attorney for Plaintiff United States. 

IN THE UNITED STATES DISTRICT 

COURT FOR THE DISTRICT OF 

COLORADO 

Civil Action No. 12–cv–00395–RPM–MEH 

UNITED STATES OF AMERICA, Plaintiff, 

v. SG INTERESTS I, LTD., SG INTERESTS 

VII, LTD., and GUNNISON ENERGY 

CORPORATION, Defendants. 

FINAL JUDGMENT 

Whereas Plaintiff, United States of 

America, filed its Complaint alleging 

that Defendants Gunnison Energy 

Corporation (‘‘GEC’’) and SG Interests I, 

Ltd. and SG Interests VII, Ltd. 

(collectively ‘‘SGI’’) violated Section 1 

of the Sherman Act, 15 U.S.C. 1, and 

Plaintiff and Defendants, through their 

respective attorneys, have consented to 

the entry of this Final Judgment without 

trial or final adjudication of any issue of 

fact or law, for settlement purposes 

only, and without this Final Judgment 

constituting any evidence against or an 

admission by GEC or SGI with respect 

to any allegation contained in the 

Complaint. 

Now, therefore, before the taking of 

any testimony and without trial or final 

adjudication of any issue of fact or law 

herein, and upon consent of the parties 

hereto, it is hereby ordered, adjudged, 

and decreed: 

I. JURISDICTION 

This Court has jurisdiction of the 

subject matter of this action and each of 

the parties consenting hereto. The 

Complaint states a claim upon which 

relief may be granted to the United 

States against GEC and SGI under 

Section 1 of the Sherman Act, 15 U.S.C. 

§ 1. 

II. APPLICABILITY 

This Final Judgment applies to GEC 

and SGI and to all other persons in 

active concert or participation with any 

of them who have received actual notice 

of this Final Judgment by personal 

service or otherwise. 

III. PAYMENT 

GEC and SGI shall each pay to the 

United States within ten (10) days of the 

entry of this Final Judgment the amount 

of two hundred seventy-five thousand 

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Federal Register / Vol. 77, No. 36 / Thursday, February 23, 2012 / Notices 10781 

dollars ($275,000), as set forth in the 

settlement agreements attached hereto 

as Attachments 1 and 2, to satisfy claims 

that the United States has against each 

defendant under both the False Claims 

Act and the Sherman Act. No additional 

payments are called for under this Final 

Judgment. 

IV. RETENTION OF JURISDICTION 

This Court retains jurisdiction to 

enable any of the parties to this Final 

Judgment to apply to this Court at any 

time for further orders and directions as 

may be necessary or appropriate to carry 

out or construe this Final Judgment, to 

modify or terminate any of its 

provisions, to enforce compliance, and 

to punish violations of its provisions. 

V. PUBLIC INTEREST 

DETERMINATION 

Entry of this Final Judgment is in the 

public interest. The parties have 

complied with the requirements of the 

Antitrust Procedures and Penalties Act, 

15 U.S.C. 16, including making copies 

available to the public of this Final 

Judgment, the Competitive Impact 

Statement, and any comments thereon 

and Plaintiff’s responses to comments. 

Based upon the record before the Court, 

which includes the Competitive Impact 

Statement and any comments and 

response to comments filed with the 

Court, entry of this Final Judgment is in 

the public interest. 

DATED: llllllllllllllll

lllllllllllllllllllll

UNITED STATES DISTRICT JUDGE 

[FR Doc. 2012–4246 Filed 2–22–12; 8:45 am] 

BILLING CODE 4410–11–P 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

Proposed Extension of Information 

Collection Request Submitted for 

Public Comment; Affordable Care Act 

Internal Claims and Appeals and 

External Review Procedures for NonGrandfathered Plans 

AGENCY: Employee Benefits Security 

Administration, Department of Labor. 

ACTION: Notice. 

SUMMARY: The Department of Labor (the 

Department), in accordance with the 

Paperwork Reduction Act of 1995 (PRA 

95) (44 U.S.C. 3506(c)(2)(A)), provides 

the general public and Federal agencies 

with an opportunity to comment on 

proposed and continuing collections of 

information. This helps the Department 

assess the impact of its information 

collection requirements and minimize 

the reporting burden on the public and 

helps the public understand the 

Department’s information collection 

requirements and provide the requested 

data in the desired format. Currently, 

the Employee Benefits Security 

Administration (EBSA) is soliciting 

comments on the revision of the 

information collection provisions of its 

interim final rule at 29 CFR Part 

2590.715–2719, Internal Claims and 

Appeals and External Review Processes 

for Non-grandfathered Plans, that was 

published in the Federal Register on 

June 24, 2011 (76 FR 37208). A copy of 

the information collection request (ICR) 

may be obtained by contacting the office 

listed in the ADDRESSES section of this 

notice. 

DATES: Written comments must be 

submitted to the office shown in the 

Addresses section on or before April 23, 

2012. 

ADDRESSES: Direct all written comments 

regarding the information collection 

request and burden estimates to G. 

Christopher Cosby, Office of Policy and 

Research, Employee Benefits Security 

Administration, U.S. Department of 

Labor, 200 Constitution Avenue NW., 

Room N–5647, Washington, DC 20210. 

Telephone: (202) 693–8410; Fax: (202) 

219–4745. These are not toll-free 

numbers. Comments may also be 

submitted electronically to the 

following Internet email address: 

ebsa.opr@dol.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Patient Protection and Affordable 

Care Act, Public Law 111–148, (the 

Affordable Care Act) was enacted by 

President Obama on March 23, 2010. As 

part of the Act, Congress added Public 

Health Service Act (PHS Act) section 

2719, which provides rules relating to 

internal claims and appeals and external 

review processes. The Department, in 

conjunction with the Departments of the 

Treasury and Department of Health and 

Human Services (collectively, the 

Departments), issued interim final 

regulations on July 23, 2010 (75 FR 

43330), which set forth rules 

implementing PHS Act section 2719 for 

internal claims and appeals and external 

review processes. With respect to 

internal claims and appeals processes 

for group health coverage, PHS Act 

section 2719 and paragraph (b)(2)(i) of 

the interim final regulations provide 

that group health plans and health 

insurance issuers offering group health 

insurance coverage must comply with 

the internal claims and appeals 

processes set forth in 29 CFR 2560.503– 

1 (the DOL claims procedure regulation) 

and update such processes in 

accordance with standards established 

by the Secretary of Labor in paragraph 

(b)(2)(ii) of the regulations. 

Also, PHS Act section 2719 and the 

interim final regulations provide that 

group health plans and issuers offering 

group health insurance coverage must 

comply either with a State external 

review process or a Federal review 

process. The regulations provide a basis 

for determining when plans and issuers 

must comply with an applicable State 

external review process and when they 

must comply with the Federal external 

review process. 

The claims procedure regulation 

imposes information collection 

requirements as part of the reasonable 

procedures that an employee benefit 

plan must establish regarding the 

handling of a benefit claim. These 

requirements include third-party notice 

and disclosure requirements that the 

plan must satisfy by providing 

information to participants and 

beneficiaries of the plan. 

On June 24, 2011, the Department 

amended the interim final regulations. 

Two amendments revised the ICR. The 

first amendment provides that plans no 

longer are required to include diagnosis 

and treatment codes on notices of 

adverse benefit determination and final 

internal adverse benefit determination. 

Instead, they must notify claimants of 

the opportunity to receive the codes on 

request and plans and issuers must 

provide the codes upon request. The 

Departments expect that this change 

will lower costs, because plans and 

issuers no longer will have to provide 

the codes on the notices. Plans and 

issuers will incur a cost to establish 

procedures to receive, process, and mail 

the codes upon request. 

The second amendment also changes 

the method plans and issuers must use 

to determine who is eligible to receive 

a notice in a culturally and 

linguistically appropriate manner, and 

the information that must be provided 

to such persons. The previous rule was 

based on the number of employees at a 

firm. The new rule is based on whether 

a participant or beneficiary resides in a 

county where ten percent or more of the 

population residing in the county is 

literate only in the same non-English 

language. 

On December 15, 2011, the Office of 

Management and Budget (OMB) 

approved the amendments to the ICR 

under the emergency procedures for 

review and clearance in accordance 

with the Paperwork Reduction Act of 

1995 (Pub. L. 104–13, 44 U.S.C. Chapter 

35) and 5 CFR 1320.13 under OMB 

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