Back in 2013, when TradeWind Energy was hammering out an agreement to buy the Osage Wind project that was destined to become a cash-cow subsidiary of Italian energy giant Enel, a peculiar provision was in the contract:
“For the avoidance of doubt, no Native American tribe, nation, entity, body, organization, governmental or other authority, or any agency, division, ministry, instrumentality or authority thereof, shall be considered a ‘Governmental Authority’ for any purpose hereunder.”
That’s a lot of nouns to ensure that the Osage Nation’s sovereignty was disregarded, but that is exactly what Enel and its subsidiaries wanted to do, say the United States and the Osage Minerals Council in pleadings in a federal legal tussle that began in 2014.
That lawsuit centers on Enel Green Power North America, its underlings and its predecessors illegally invading the Osage Mineral Estate by mining limestone and other rock without a required permit or lease, then using the crushed rock for turbine foundations and other purposes.
The case has had a rollercoaster of a ride: The United States – and thus the Osage Nation – lost in the U.S. District Court for Northern Oklahoma back in 2015, then wrestled out a win in the 10th Circuit U.S. Court of Appeals in 2017, and effectively won again in 2019, when the U.S. Supreme Court refused to hear an appeal from the wind company.
Since then, mediation has failed, lawyers have been hired and lawyers have left, new judges took on the case, a few hearings have been held (telephonically thanks to a global pandemic), the Minerals Council was allowed to intervene after a last minute – literally – motion and all parties involved have filed dueling motions for summary judgment and attempted to disqualify the other side’s expert witnesses.
On July 28, the lead attorney for the Minerals Council, Wilson Pipestem and his colleagues, withdrew from the case for reasons that are unclear: OMC chairman Everett Waller declined to comment on the matter when contacted on July 31. Mary Kathryn Nagle, who wrote most of the motions, withdrew from the case earlier, in March. She did not answer a call and her voicemail was full, but she is no longer listed as an attorney on Pipestem Law’s website.
In February, Chief U.S. District Court Judge Gregory Frizzell, who had been presiding over the case since it was kicked back down the ladder by the 10th Circuit, assigned it to Jennifer Choe-Groves, a judge who ordinarily sits on the U.S. Court of International Trade in New York City.
Many hoped a new judge would get the case off high center, and it appears that might be poised to happen: On July 19, Choe-Groves issued a one-page order informing all litigants to appear in person in U.S. District Court in Tulsa on Sept. 20 for oral argument on pending motions, all of which have been stewing on a back burner for at least two years.
Still seeking to scrub the prairie of the turbines
Most of those motions are for summary judgment: The United States and the Minerals Council are asking not only for monetary damages but more importantly for “ejectment” – the removal of the 84 industrial turbines from the prairie, a punishment that Enel claims would cost the company nearly $260 million (which, according to one court filing, is about 10 percent less than the $237 million that the Osage Wind facility had already paid to investors by 2021 – including $230 million it has paid to its parent company, Enel).
For the Osage Nation and the United States, the crux of the damages Enel wreaked upon the mineral estate has little to do with the value of the rock, but instead centers heavily on tribal sovereignty that they say Enel flagrantly disregarded.
If anyone can thumb their nose at federal law, then atone for it as Enel suggests merely by paying the value of what they took – in this case, gravel – then Osage authority over its own mineral estate is undermined, says the Minerals Council’s motion for summary judgment.
“Defendants’ unlawful mining of the Osage Mineral Estate threatens to obliterate the OMC’s sovereign right to determine how, when and IF an entity mines the estate at all …
“Defendants’ trespass not only unlawfully seizes tribal assets, it threatens the ability of the OMC to function as a government and enforce Osage laws.”
The Minerals Council was, from the outset, adamantly opposed to the wind facility being built, and back as far as 2010 appeared highly unlikely to ever approve anything to do with it. It had filed a previous lawsuit to prevent construction based on the argument that the turbines would prevent full access to the oil below the surface, but that case failed.
Enel argued, unsuccessfully, that the Minerals Council should have raised the issue of mining rock in that lawsuit, but federal judges disagreed, noting that the issue wasn’t ripe: No one, allegedly, even the wind developers themselves, had known that rock would be mined to buttress the turbines until 2014. The United States filed suit within two months of it becoming apparent that’s what was occurring – shortly after Robin Phillips, the superintendent of the Bureau of Indian Affairs’ Osage Agency at the time – sent developers a letter demanding that they halt construction and obtain a “sandy soil permit.” Phillips sent the letter about 10 days after Principal Chief Geoffrey Standing Bear alerted her to the rock crushers operating on the prairie building site.
The Phillips’ letter was roundly ignored, the United States says: In fact, it appeared to onlookers at the time that in response the pace of construction was accelerated.
Enel disputes those statements and says it did, in fact, stop work for one day at the construction site – and ceased crushing rock for a week while it sought legal advice. When it got the green light, it resumed crushing rock.
Enel: Nation can’t get its rocks back
Enel is also seeking summary judgment. It insists that the turbines on the land do not rise to “continuing trespass.”
“The conduct that caused the injury – crushing rock – is not ongoing and ended once and for all nearly seven years ago,” Enel’s summary judgment motion says. “Nor is it abatable now. Once pieces of rock were run through the rock crusher, no manner of abatement could restore them to their original size or shape.”
Any harm to the mineral estate, it adds, can be compensated with money.
“Indeed, the United States has proffered an expert who testified as to the alleged value to the OMC of the minerals ‘mined,’ down to the penny – $247,979.42,” the motion says. “… Requests for injunctions must be narrowly tailored to remedy the actual harm shown; not wholly unmoored from that harm and capable only of exacting extreme punishment.”
Enel’s expert witness tallied the damages at an even lower price tag: $68,993.
Enel: Sovereignty claim is a ‘shopworn theory’
Enel is also completely dismissive of arguments that Osage sovereignty was harmed by its use of the rock.
“The OMC’s overheated assertion that the Defendants ‘threaten to obliterate the OMC’s sovereign right to determine how, when and IF an entity mines the estate’ is another shopworn theory that it suffered irreparable harm when deprived of the asserted right to ‘say no,’” Enel’s attorney Ryan Ray wrote in a response.
“The OMC protests too much when it complains ‘[t]he OMC and Osage Nation are not commercial entities’ and ‘do not have to participate in the market at all.’”
Ray cites Minerals Council chairman Everett Waller’s own statements during a deposition, in which he described the Osage Nation as “the fossil fuel tribe” and added, “This is a business. We’re in the oil business.”
Acting on legal advice?
Enel and its predecessors also claim they acted in “good faith,” relying upon the advice of its lawyers at Modrall Sperling, a New Mexico law firm that specializes in Native American law. If the good faith argument is successful, Enel argues that it cannot be held liable for damages.
The United States picks at this argument by Enel, noting that Enel failed to inform Modrall of the extent of their excavating and ignoring Modrall’s explicit warning that the lease with the landowners gave the wind project cover only as “long as it does not gain any benefit from that soil.”
“It is strikingly apparent that the memo missed the mark by not evidencing any understanding of the nature and extent of Defendant’s excavation and usage of the minerals,” the United States’ attorney, Cathryn McClanahan, says in the motion for summary judgment. “Defendants were well aware the memo missed the mark but ‘relied’ on it anyway.”
In addition, the memo predated Enel’s plans to crush rock at the site, McClanahan notes: The Modrall memo was dated Oct. 13, 2013, and zero mention was ever made of crushing rock onsite until a full year later. In fact, Enel/Tradewind was adamant that it would not crush rock on site until Oct. 21, 2014, when it sent “a detailed legal analysis” to the United States mentioning rock crushing as a means of excavation. Just six weeks earlier, an email between executives on Sept. 2, 2014, revealed Enel was singing a different tune: “Enel/Tradewind does not want any crushing on site due to mineral right issues.”
Enel shot back that it disputes these claims. A 2013 scope of work documented “contemplate rock crushing,” it says in court filings. A layman just might not have noticed, however, because by Enel’s own words the document said that some turbine sites might be excavated for “more competent rock” using “special excavation equipment such as a hoe ram or equivalent” and “additional special handling of the excavated rock.” (A hoe ram is a sharp-tipped hydraulic hammer used to demolish rock and concrete surfaces.)
Damages: Opposing sides are worlds apart
Both the United States and the Osage Minerals Council are seeking damages that they view as commensurate with Enel’s poor behavior. The U.S. expert, a forensic accountant named Steven Hazel, estimated damages at almost $26 million based not on the amount of rock Enel used but on the lifetime value of the six leases the wind facility has with surface owners, who are mostly members of the Kane family, including M. John Kane, the current chief justice of the Oklahoma Supreme Court. (At the time the leases were executed, he was the district judge for Osage County.)
Enel characterized the Hazel estimate as absurd, but Hazel defended it when he was deposed, and told Enel lead attorney Ray that Ray was missing the point.
“They [Enel/Osage Wind] have to get a lease,” Hazel told Ray. “So they have to negotiate a lease with the Osage Nation to basically get this wind farm in place. My understanding the Osage Nation would have said ‘no.’ ‘Absolutely no’ is what they would have said …
“They don’t want a wind farm there. I don’t know how to get that through to you. So now you’re negotiating with a party that doesn’t want to do what you’re doing. How do you think that negotiation is going to go?”
The U.S. and OMC say that Enel/Osage Wind clearly knew the Osage Nation wasn’t going to approve any lease, and therefore decided to flex its multinational muscles and take a risk by forging ahead without the proper permit.
McClanahan, the United States’ attorney, chastened Enel for its haughtiness: “Beyond the definition itself, Defendants’ irreparable damage has been consistently demonstrated in their cavalier approach to the Project. With warning aplenty, Defendants went ahead with their plans, mined the OME, fought this litigation tooth and nail (sparing no expense regarding attorneys’ fees), and now expect the Court to award a pittance – if anything – for their transgressions.
“If successful, their actions embolden other bad actors to emulate their systematic avoidance of negotiating with the Osage Nation and disincentivize recognition of applicable federal regulations.”