Oil and Gas Lawyer Blog
Last December a federal court in Oklahoma issued an order in a long-continuing suit between the United States and the Osage Nation, as plaintiffs, and Enel Green Power North America. United States v. Osage Wind, LLC, et al., No. 4:14-cv-00704-JCG-JFJ (US Dist. Ct. N.D. Okla., Dec. 20, 2023) Enel’s subsidiary operates a wind farm on 8,400 acres of land in Osage County, with 84 wind turbines. The Osage Nation and the US government are seeking to enjoin Enel from operating its wind farm. The court’s order holds that the plaintiffs are entitled to an injunction requiring Enel to remove its wind turbines.
The Osage have a fascinating history, most recently made famous by the book Killers of the Flower Moon by David Gran, and the 2023 release of the movie by the same name starring Leonardo DiCaprio.
In the early 19th century the Osage controlled a huge area between the Missouri and Red Rivers, the Ozarks to the east, and the foothills of the Wichita Mountains to the south. The US government first required the tribe to move to a reservation in southeastern Kansas, containing some 325,000 acres of land. In 1870 Congress passed and the tribe ratified the Drum Creek Treaty, providing that the Osage Nation’s land in Kansas be sold and the proceeds paid to the Osage Nation. The Osage received $1.25 an acre for the land, which they used to purchase their present-day reservation in Oklahoma, now the county of Osage, some 1,470,000 acres. The surface estate of those lands was later “allotted” to individual tribe members, some 640 acres each, and most of those lands were later sold. But the mineral estate in the tribal lands remained with the Osage Nation, managed by the Bureau of Indian Affairs.
The BIA leased the Osage land for oil and gas exploration in 1896, and large oil deposits were subsequently discovered. In 1898 Congress created the Osage Tribal Council to manage its affairs. Members of the tribe received “headrights” entitling them to a share of royalties from the oil and gas production, and the tribe became rich. In 1923 alone, the Osage headrights owners received some $30 million in royalties. The resulting wealth led to the exploitation of tribal members in what became known as the Reign of Terror in Osage County in the 1920’s, in which some 60 Osage were killed and most murders remain unsolved, as documented in Killers of the Flower Moon.
In 1999 the Osage Nation sued the United States for mismanaging its mineral estate and trust funds, and in February 2011 the Court of Federal Claims awarded the Osage $330.7 million in damages in partial compensation; the claims were later settled for $380 million. Today the tribe has about 16,000 members.
Which brings us to United States v. Osage Wind. How can the Osage, owners of only the mineral estate under the Enel wind farm, manage to obtain an injunction requiring Enel to remove its wind towers?
The first part of the answer lies in the federal definition of “minerals” as including sand, gravel, pumice, granite, building stone, limestone, clay and silt. When Enel erected its wind towers it excavated holes to accommodate cement foundations; excavated rock was crushed and used as backfill for the cement foundations. In an earlier iteration of the ensuing litigation over the wind farm, the Tenth Circuit Court of Appeals ruled that construction of the wind farm constituted mining and required a lease under applicable US law. United States v. Osage Wind, LLC, 871 F.3d 1078 (2017). Despite that ruling, Enel never acquired a mining lease. The case was returned to the trial court to determine what remedies the US and Osage Minerals Council were entitled to obtain.
The plaintiffs sought damages and a permanent injunction. It its December order the trial court held that plaintiffs were entitled to both and concluded that trial should take place to determine the appropriate amount of damages to be awarded. The central issue was whether, even though the wind towers had been constructed years before, the operator’s continued use of the mined rock as support for its towers constituted “mining” under federal law and was therefore a “continuing trespass.” The court concluded that, based on the Tenth Circuit’s opinion, use of the rock for tower support was within the statute’s definition of “mining” and therefore requires the operator to have a mining lease, failing which the operator is guilty of a continuing trespass. Despite the fact that removal of the towers and the resulting loss of revenue would result in millions of dollars in losses, the court concluded that continued operation of the wind farm would result in irreparable harm and that the harm suffered by the Osage as a result of the continuing trespass outweighed those monetary losses. The court’s conclusion was heavily influenced by the unexplained failure of Enel to obtain a mining lease, despite the Tenth Circuit’s 2017 ruling that it must do so.