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Enel refuses to settle or negotiate damages with Osage Minerals Council

Minerals Council is demanding at least $100 million in damages and ejectment of wind turbines

The Osage Minerals Council’s efforts to settle the long-moldering lawsuit aimed at removing the Italian wind farm from the prairie near Burbank have hit a wall.

The OMC and the United States accused the second largest utility company in the world of intentionally dragging its feet in an apparent effort to squeeze as much profit from the development as possible before it faces an adverse judgment in U.S. District Court.

According to the U.S. Attorney’s office in Tulsa, Enel S.p.A. and its subsidiaries that built and own the Osage Wind farm misled the United States and the OMC for nearly a year by acting as if they were willing to settle when in fact, they were utterly unwilling to raise their settlement offer from an undisclosed “sum-certain” it had proposed in January of 2024.

Enel never mentioned its offer was final until a settlement meeting almost 10 months later, according to the court filings.

A status report filed Sept. 27 says the United States and OMC were supposed to have met for that settlement conference two days earlier, on Sept. 25, but that Enel – except for its North American general counsel, who is not even listed as an attorney of record in the case – failed to attend in person despite promises that it would send three of its topmost executives from Rome to Tulsa.

Enel initially tried to “pivot” and move the meeting to New York City, Boston or Dallas – “anywhere but Tulsa or Pawhuska,” according to the status report filed in court by Assistant United States Attorneys Cathryn D. McClanahan and Nolan Fields.

None of Enel’s 15 lawyers of record, the report added, showed up for the settlement conference – not even those with offices three blocks away from the meeting site.

OMC demand: At least $100 million

During a week-long bench trial that unfolded over seven days in May and July, Enel pegged the damages from its use of minerals to buttress turbines at Osage Wind at $68,993. The OMC’s expert pinned the loss of mineral royalties much higher, at $31.1 million over 25 years for limestone, shale and clay Enel took from the land without obtaining a lease or permit from the OMC – minerals it continues to exploit in turbine bases.

The OMC expert extrapolated those damages by speculating that had an OMC lease been hammered out, it would have been similar to that Enel negotiated for the surface use of 8,400 acres that is largely owned by the Kane family – including the Chief Justice of the Oklahoma Supreme Court, M. John Kane.

Enel choked on the demand, which it claims came out of the blue at the September meeting. According to Enel, the OMC is seeking a “nine-figure settlement” – at least $100 million – that Enel described in court documents as a “non-starter,” “exorbitant,” “untethered from economic reality,” and “unmoored from the damages claim” that was put forth during the bench trial on damages.

At the conclusion of the damages trial in July, the parties decided to try to settle rather than go through what promised to be a long and expensive slog of inevitable appeals and argument.

Money is no salve for affront to tribal sovereignty

Before the trial, which was limited to damages, Judge Jennifer Choe-Groves of the U.S. Court of International Trade, sitting by special assignment on the wind case, had already granted a permanent injunction in favor of the Minerals Council regarding the “ejectment” or removal of the turbines that are currently towering above the prairie.

Choe-Groves ruled, to Enel’s dismay, that Enel was committing a continuing trespass on the Osage Mineral Estate by using mined limestone and other materials that it had crushed to use as permanent backfill and support for the turbines.

In a more mundane commercial dispute, Choe-Groves noted that money might be sufficient to heal the financial wounds suffered, but because the behemoth company undermined Osage tribal sovereignty, money is no salve.

“Defendants were advised by the Bureau of Indian Affairs and the Osage Minerals Council on multiple occasions that the wind farm required a lease related to the mineral estate,” Choe-Groves wrote in her order filed Dec. 20, 2023.

Yet even after the 10th Circuit Court of Appeals issued a decision that Enel needed a lease; the Italian company has made no effort to obtain one.

“On the record before the Court, it is clear that the defendants are actively avoiding the leasing requirement,” Choe-Groves wrote. “Permitting such behavior would create the prospect for future interference with the Osage Mineral Council’s authority by Defendants or others wishing to develop the mineral estate. The Court concludes that Defendants’ past and continued refusal to obtain a lease constitutes interference with the sovereignty of the Osage Nation and is sufficient to constitute irreparable injury.”

The case, she added, is one of “infringement on the self-governance of Indian lands” in which Enel repeatedly ignored opportunities to procure a lease.

Enel: Lawyers said no lease was needed

Enel has maintained that it was relying on the advice of its lawyers at the Modral Sperling firm in Albuquerque, but the U.S. has suggested that Enel withheld facts from those lawyers, including that it had to resort to explosives to blast turbine bases because its pre-construction tests failed to reveal how rocky and impenetrable Osage County land can be. It was not until workers dropped the “first bucket” into the ground that the reality known to virtually any Osage County resident became evident to the developer: There’s a lot of rock.

Enel has argued that not only will it have to bear the huge expense of removing the turbines, perhaps by blasting again, but that the Woodland and Shidler school districts will lose tax revenue, 10 jobs paying about $33 an hour would be lost, income would be pinched for the surface owners and power for 50,000 households (in Missouri) would cease to be produced if the turbines are removed.

Choe-Groves was unmoved: “Even if negative effects were to result, including the significant monetary impact of hundreds of millions of dollars, such effects would not negate the public interest in private entities abiding by the law and respecting government sovereignty and the decisions of the courts.”

During the damages trial, she made a similar comment, lamenting that Enel failed to deal with the lease issue “at the beginning” instead of letting more than a decade pass.

“While we tried to [persuade Enel to get a permit], Your Honor, they don’t have the right to be too big to fail,” Assistant U.S. Attorney Fields said.”  So … they made business decisions, which case law shows that once they make those decisions, they have to lie in the bed that they made.”

“And while it might be an unsavory financial prospect for the defendants, that’s of no consequence to the United States or the OMC, which has had its regulations ignored and has had its sovereignty passed over.”

After some back and forth with the judge, Fields added: “They can abate this continuing trespass in two ways. They can either remove the structures – what they stole and the turbines and ancillary structures that are currently still invading – or they can get a lease …

“It’s a 25-year (surface) lease for the wind turbines in their initial run and so the longer this gets drawn out in court, the longer they don’t have to pay the OMC for the minerals that they stole and are continuing to use to this day.

“It’s like a stall tactic.”

Fields acknowledged that Enel faces a “terrifying corporate prospect” of having to tear out the turbines and default on several contracts.

“That’s not the problem of the Unites States or the OMC,” Fields averred. “It’s the fact that the defendants have to live with their business decision.”

‘Time for adjudication is ripe’

The United States filed the status report in late September saying that negotiations had broken down and that the matter was “ripe for adjudication.”

So far, no schedule for turbine removal has been set, nor has Choe-Groves set a date for her determination of the damages since negotiations have failed.

The status report by the United States says that Enel was gung-ho about the meeting and said three of its top executives, Global General Counsel Francesco Puntillo, Alberto De Paoli, the head of the “Rest of World” Global Unit, and Salvatore Bernabei, Global Head of Enel Green Power and Thermal Generation – would travel to Tulsa to attend.

A few days before the meeting, Enel tried to “pivot” and move the meeting to New York City, Boston or Dallas – “anywhere but Tulsa or Pawhuska,” according to the status report.

Enel has often complained that the OMC is utterly unwilling to negotiate but at the conclusion of the damages trial, Enel paid lip service to wanting to settle and work with the OMC. Enel has new leadership, its lawyers noted, so perhaps something could be worked out.

At the damages trial in May, the OMC’s lawyer, Jeffrey Rasmussen of Colorado, reminded Enel that the OMC was not willing to settle for the amount that had been offered in January, four months before the trial began.

“Little did anyone know – except Enel – that it ‘will never go’ above the amount it had already offered … in January 2024,” the report says.

When Assistant U.S. Attorney McClanahan asked Puntillo – who appeared via video a few days after pleading he had COVID – to confirm that Enel “would never” increase its offer, he repeated that the utility giant was adamant.

McClanahan had but one question: “What are we doing here?”

The report concludes: “Enel executives had no answer. The meeting ended abruptly.”

Author

  • Louise Red Corn

    Title: Freelance Author
    Twitter: @louiseredcorn
    Languages: English, Italian, rusty but revivable Russian

    Louise Red Corn has been a news reporter for 34 years and a photographer for even longer. She grew up in Northern California, the youngest child of two lawyers, her father a Pearl Harbor survivor who later became a state judge and her mother a San Francisco native who taught law at the University of California at Davis.

    After graduating from the U.C. Berkley with a degree in Slavic Languages and Literatures with no small amount of coursework in Microbiology, she moved to Rome, Italy, where she worked as a photographer and wordsmith for the United Nation’s International Fund for Agricultural Development, specializing in the French-speaking countries of Africa.

    When the radioactive cloud from Chernobyl parked over Rome in 1986, she escaped to New York City to work for the international editions of Time Magazine. She left Time for Knight-Ridder newspapers in Biloxi, Miss., Detroit and Lexington, Ky., During nearly 20 years with Knight-Ridder, she was a stringer (freelancer) for The New York Times, The Wall Street Journal and Parade Magazine.

    In 2004, she married Raymond Red Corn and moved to Oklahoma, where she worked for the Tulsa World before she bought the weekly newspaper in Barnsdall and turned a tired newspaper into the award-winning Bigheart Times, which she sold in 2018. She hired on at the Osage News in early 2022.

    Throughout her career she has won dozens of state, national and international journalism awards.

    Red Corn is comfortable reporting on nearly any topic, the more complex the better, but her first love is covering courts and legal issues. Her proudest accomplishment was helping to exonerate a Tennessee man facing the death penalty after he was wrongfully charged with capital murder in Kentucky, a state he had never visited.

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Louise Red Corn
Louise Red Cornhttps://osagenews.org
Title: Freelance Author
Twitter: @louiseredcorn
Languages: English, Italian, rusty but revivable Russian

Louise Red Corn has been a news reporter for 34 years and a photographer for even longer. She grew up in Northern California, the youngest child of two lawyers, her father a Pearl Harbor survivor who later became a state judge and her mother a San Francisco native who taught law at the University of California at Davis.

After graduating from the U.C. Berkley with a degree in Slavic Languages and Literatures with no small amount of coursework in Microbiology, she moved to Rome, Italy, where she worked as a photographer and wordsmith for the United Nation’s International Fund for Agricultural Development, specializing in the French-speaking countries of Africa.

When the radioactive cloud from Chernobyl parked over Rome in 1986, she escaped to New York City to work for the international editions of Time Magazine. She left Time for Knight-Ridder newspapers in Biloxi, Miss., Detroit and Lexington, Ky., During nearly 20 years with Knight-Ridder, she was a stringer (freelancer) for The New York Times, The Wall Street Journal and Parade Magazine.

In 2004, she married Raymond Red Corn and moved to Oklahoma, where she worked for the Tulsa World before she bought the weekly newspaper in Barnsdall and turned a tired newspaper into the award-winning Bigheart Times, which she sold in 2018. She hired on at the Osage News in early 2022.

Throughout her career she has won dozens of state, national and international journalism awards.

Red Corn is comfortable reporting on nearly any topic, the more complex the better, but her first love is covering courts and legal issues. Her proudest accomplishment was helping to exonerate a Tennessee man facing the death penalty after he was wrongfully charged with capital murder in Kentucky, a state he had never visited.

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