[Federal Register Volume 77, Number 36 (Thursday, February 23, 2012)]
[Notices]
[Pages 10775-10781]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-4246]


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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

[[Page 10776]]

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.
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    \1\ For 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.
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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. Sec.  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

[[Page 10777]]

    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: <a href="/cdn-cgi/l/email-protection#d8abb9aab9b0f6afb9bfb6bdaa98adabbcb7b2f6bfb7ae"><span class="__cf_email__" data-cfemail="7f0c1e0d1e1751081e18111a0d3f0a0c1b101551181009">[email protected]</span></a>.

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: <a href="/cdn-cgi/l/email-protection#3f4f535a58585a4b4b5a7f594a535d4d5658574b115c5052"><span class="__cf_email__" data-cfemail="c8b8a4adafafadbcbcad88aebda4aabaa1afa0bce6aba7a5">[email protected]</span></a>.

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: <a href="/cdn-cgi/l/email-protection#2c584e4955495e6c4e444a5f024f4341"><span class="__cf_email__" data-cfemail="2f5b4d4a564a5d6f4d47495c014c4042">[email protected]</span></a>.

Attorney for Defendant Gunnison Energy Corporation.

s/Sarah L. Wagner------------------------------------------------------
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: <a href="/cdn-cgi/l/email-protection#7a091b081b12540d1b1d141f083a0f091e1510541d150c"><span class="__cf_email__" data-cfemail="76051704171e5801171118130436030512191c58111900">[email protected]</span></a>.
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.
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    \2\ For 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.
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    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

[[Page 10778]]

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\
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    \3\ The 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.
---------------------------------------------------------------------------

    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

[[Page 10779]]

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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

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 sixty-day 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. Abitibi-
Consolidated 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\
---------------------------------------------------------------------------

    \5\ United 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-Daniels-Midland 
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 proposed remedies, its perception of the market structure, 
and its views of the nature of the case).

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[[Page 10780]]

    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\
---------------------------------------------------------------------------

    \7\ See 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'').
---------------------------------------------------------------------------

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/-----------------------------------------------------
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: <a href="/cdn-cgi/l/email-protection#2e5d4f5c4f4600594f49404b5c6e5b5d4a414400494158"><span class="__cf_email__" data-cfemail="097a687b6861277e686e676c7b497c7a6d6663276e667f">[email protected]</span></a>.

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, <a href="/cdn-cgi/l/email-protection#d4a4b8b1b3b3b1a0a0b194b2a1b8b6a6bdb3bca0fab7bbb9"><span class="__cf_email__" data-cfemail="b5c5d9d0d2d2d0c1c1d0f5d3c0d9d7c7dcd2ddc19bd6dad8">[email protected]</span></a>; Timothy R. Beyer, 
<a href="/cdn-cgi/l/email-protection#becadcdbc7dbccfedcd6d8cd90ddd1d3"><span class="__cf_email__" data-cfemail="196d7b7c607c6b597b717f6a377a7674">[email protected]</span></a>.

s/Sarah L. Wagner/-----------------------------------------------------
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: <a href="/cdn-cgi/l/email-protection#62110310030a4c1503050c0710221711060d084c050d14"><span class="__cf_email__" data-cfemail="67140615060f4910060009021527121403080d49000811">[email protected]</span></a>.

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. Sec.  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

[[Page 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:-----------------------------------------------------------------

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UNITED STATES DISTRICT JUDGE

[FR Doc. 2012-4246 Filed 2-22-12; 8:45 am]
BILLING CODE 4410-11-P


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