By Simon Davis-Cohen
On November 17, 2016, a Colorado environmental activist named Pete Kolbenschlag used Facebook to leave a comment on a local newspaper article, the kind of thing more than a billion people do every day.
However, most people don’t get sued for libel over their Facebook comments. (Although some do.)
The Post Independent story that Kolbenschlag commented on was about oil and gas extraction on federal lands near his home, in western Colorado’s North Fork Valley. It announced that the Obama administration’s Bureau of Land Management was canceling all oil and gas leases on the iconic Thompson Divide, a large, rugged swath of Forest Service land.
In retaliation, the article reported, a Texas-based oil and gas company called SG Interests (SGI), which owned 18 leases in the Thompson Divide area, was planning legal action against the federal government. The decision to cancel Thompson Divide leases was one of Obama’s last while in office.
SGI claimed it had obtained documents that “clearly show” that the decision to cancel the leases “was a predetermined political decision from the Obama administration taking orders from environmental groups.”
Kolbenschlag, who has opposed drilling in the region and engaged in environmental advocacy for some 20 years, responded to SGI’s allegations by posting the following comment:
“While SGI alleges “collusion” let us recall that it, SGI, was actually fined for colluding (with GEC) to rig bid prices and rip off American taxpayers. Yes, these two companies owned by billionaires thought it appropriate to pad their portfolios at the expense of you and I and every other hard-working American.”
Shortly thereafter, SGI sued Kolbenschlag for libel (which generally refers to defamatory written statements).
SGI Investigation and Settlement
Kolbenschlag’s comment was in reference to a settlement SGI and Gunnison Energy Company (GEC), another oil and gas firm active on federal lands in the region, signed with the U.S. Department of Justice in 2012.
According to court documents filed by SGI, the settlement followed a two-year investigation into a Memorandum of Understanding (MOU) between the two oil and gas companies in which “SGI would bid on certain federal oil and gas leases … and … SGI would assign GEC a 50 percent interest in any leases for which it was the successful bidder.” In other words, rather than compete in the bidding process, SGI would do the bidding, and then give GEC half of the mineral rights.
According to these court documents, the Justice Department’s two-year investigation led it to determine “that SGI’s and GEC’s agreement to bid jointly pursuant to the MOU constituted a per se violation of Section 1 of the Sherman [Antitrust] Act.”
The original settlement “required” the companies to pay $550,000 for “antitrust and False Claims Act violations.” It was the first time the federal government challenged an “anticompetitive bidding agreement for mineral rights leases.” That settlement, however, was later rejected by a federal judge, who approved a new settlement of $1 million and did not require the companies to admit to wrongdoing.
Libel or Retaliation?
SGI argues that Kolbenschlag’s statement that the company was fined for colluding with GEC is libelous because it is “contrary to the true facts, and reasonable persons … reading … the statement would be likely to think significantly less favorably about [SGI] than they would if they knew the true facts.”
The company argues that it was never convicted of or admitted to wrongdoing, and the settlement agreement did not require it. SGI further argues that it was not “fined,” but rather agreed to pay the government money to settle the case.
Moreover, SGI claims that “agreements such as the ones entered into between SGI and GEC are common place in the oil and gas industry.” And therefore, presumably, there’s nothing wrong with what they did.
Kolbenschlag’s attorney not only argues that his client’s comment was “substantially true” in the eyes of ordinary readers, but also that SGI’s lawsuit against him is in retaliation against his environmental activism. In legal briefs, his attorney writes that “this lawsuit is SGI’s transparent and blatant effort to punish Mr. Kolbenschlag for his public speech and advocacy that are not to SGI’s liking.”
For example, Kolbenschlag was part of a group called Citizens for a Healthy Community that focused on BLM rulemaking related to hydraulic fracturing (fracking) on federal lands. “SGI is misusing the judicial system as the means to silence its critics,” claimed Kolbenschlag’s attorney.
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