Osage Nation, The v. Wind Capital Group, LLC et al
Filing
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FINDINGS OF FACT AND CONCLUSIONS OF LAW by Judge Gregory K Frizzell (hbo, Dpty Clk)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
THE OSAGE NATION acting through the
OSAGE MINERALS COUNCIL,
Plaintiff,
v.
WIND CAPITAL GROUP, LLC,
a Delaware limited liability company;
OSAGE WIND, LLC, a Delaware limited
liability company; and
WC INVESTMENT MANAGEMENT, LLC,
fka WIND CAPITAL INVESTMENT
MANAGEMENT, LLC, aka/fka WIND
CAPITAL INVESTMENT GROUP, LLC,
a Missouri limited liability company,
Defendants.
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Case No. 11-CV-643-GKF-PJC
FINDINGS OF FACT AND CONCLUSIONS OF LAW
On December 14 and 15, 2011, this matter came before the Court for non-jury trial on
plaintiff’s claims for declaratory and injunctive relief. Having heard the evidence, the Court
enters the following findings of fact and conclusions of law.
Findings of Fact
1.
Plaintiff, The Osage Nation, is a federally recognized Indian tribe (referred to
herein as “Plaintiff” or “the Tribe”). In this case the Tribe is acting through its Minerals Council,
an independent agency within the Osage Nation established by Article XV of the Osage Nation
Constitution. The Osage Minerals Council manages the Osage Mineral Estate.
2.
In 1906, the U.S. Government severed the mineral estate from the surface of
Osage County, retaining the Osage Mineral Estate in tribal trust ownership. The Bureau of
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Indian Affairs handles the U.S. Government’s trust duties, in part through the Osage Agency in
Pawhuska, Oklahoma. The U.S. Government, however, is not a party to this proceeding.
3.
Defendants Wind Capital Group, L.L.C. and Osage Wind, L.L.C. (collectively
“Defendants” or “Osage Wind”) are the developers of a wind energy project in Osage County
(“Wind Farm”). Construction of the Wind Farm had been planned to begin in November, 2011.
4.
At the conclusion of the Tribe’s evidence, defendant WC Investment
Management, L.L.C. moved for judgment as a matter of law pursuant to Fed. R. Civ. P. 50(a).
The court granted the motion without objection.
Facts Relevant to the Merits of the Interference Claims1
5.
The Wind Farm has leased approximately 8,500 acres northeast of the town of
Burbank, Oklahoma from a total of seven surface owners for the purpose of constructing a wind
energy facility.
6.
The Wind Farm facilities will consist of 94 turbines, underground collection lines
running between turbines and to a substation, one overhead transmission line, two permanent
meteorological towers, and a network of access roads. After construction, the estimated surface
footprint of the Wind Farm facilities, including the surface of the ground above where the
collection lines will be installed, is less than 1.5% of the 8,500 or so acres the Wind Farm has
under lease. The area of the planned Wind Farm is depicted on Defendants’ Exhibit 1.
7.
Each turbine will be mounted on a tower at a height of 265 feet above the surface
and will have three attached blades, with the tip of each blade extending approximately 165 feet
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As noted below in the Conclusions of Law, to prevail on its request for a permanent injunction, the Tribe must
prove (1) success on the merits; (2) irreparable harm; (3) the harm to the Tribe outweighs the harm the injunction
would cause the defendants; and (4) the injunction would not adversely affect the public interest. The findings of
fact are organized in conformity with the four requirements.
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from the center of the turbine. The turbine will rotate 360 degrees around the tower. The lowest
clearance of the tip of the blade from the surface will be 100 feet and will occur when the blade
is parallel with the supporting tower.
8.
The turbine foundations will be made from reinforced concrete, with each
foundation initially being 16 feet in diameter down to four feet below the surface, then
expanding in a conical shape with a maximum diameter of 50 feet, to a depth of 10 feet.
9.
The turbines will be arranged by circuits, with an underground collection line
buried four feet below ground running from turbine to turbine and then to a substation within the
project boundary.
From the substation, the electricity will then be transported to an
interconnection facility via a 138kV overhead transmission line approximately 1.8 miles long.
KAMO Electric Cooperative will construct and own the interconnection facility, which will
connect to KAMO’s already existing overhead transmission line. This line currently crosses the
Wind Farm area and will continue to exist regardless of whether the Wind Farm is built.
10.
The estimated time of construction for the Wind Farm is 9 to 12 months.
11.
The land in the Wind Farm area is largely unoccupied, as shown in the photos of
the area admitted into evidence. (Def. Ex. 3). The land is currently used for grazing livestock,
with some existing oil and gas production facilities. Two highways (U.S. Highway 60 and State
Highway 18) and two existing overhead electric transmission lines run through parts of the
planned Wind Farm. (Def. Ex. 1).
12.
The Tribe has leased its mineral interests within the Wind Farm area to Spyglass
Energy Group, L.L.C., LINN Energy, L.L.C., Chaparral Energy, L.L.C., and Orion Exploration,
L.L.C. The area lies just east of the town of Burbank, Oklahoma. The area was once the site of
significant oil and gas activity following discovery of oil in 1920 from the Burbank sand. The
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area has recently seen increased drilling activity targeting the Mississippian formation. The
Mississippian has recently become economical to explore because of relatively high oil prices
combined with improvements in horizontal drilling technology and hydraulic fracturing
(“fracking”).
13.
The Tribe’s claims are generally predicated on the allegation the Wind Farm will
unlawfully interfere with its rights to develop the Osage Mineral Estate. As more specifically set
forth below, the Court finds that Plaintiff’s evidence fails to establish either of the following
propositions: first, under federal law, that the Wind Farm will interfere with the Tribe’s right to
use so much of the surface of the land within the Osage Mineral Estate as may be reasonable for
oil and gas development; or second, under state law, that the Wind Farm will unlawfully
interfere with the Tribe’s right to make reasonable use of the surface estate, including the right of
ingress and egress therefor, for the purpose of exploring, severing, capturing and producing the
oil and gas.
14.
The Tribe presented no evidence relating to actual or potential conflict with the
operations of lessees Spyglass Energy, Linn Energy or Chaparral Energy.
15.
Lessee Orion Exploration (“Orion”) has had drilling rights to 19,680 acres for
more than three years, but has not yet drilled a well within the area of the proposed Wind Farm.
Less than 2,500 acres subject to Orion’s leasehold rights overlap with the Wind Farm.
16.
The Court heard evidence of Orion’s plans for future oil and gas development in
the area. Orion recently extended its leases pursuant to a Lease Acquisition and Exploration
Agreement (the “Concession Agreement”). (Def. Ex. 14). In November, 2011, Orion put the
Concession Agreement into effect by paying approximately $3 million to the Tribe. Under the
Concession Agreement, Orion must drill the following horizontal Mississippian oil and gas wells
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within the 19,680 acre Concession Area in order to maintain its leases: five wells before
November 4, 2012, six additional wells before November 4, 2013, and seven additional wells
before November 4, 2014. Orion is not required to drill within the boundaries of the Wind Farm
in order to fulfill its obligations under the Concession Agreement.
17.
During the construction phase of the Wind Farm, Orion plans to drill one (1) of its
five (5) initial horizontal Mississippian wells in the Southwest Quarter of Section 24 of
Township 26 North, Range 5 East (SW/4 T26N R5E). The well is to be the third of the five
initial wells to be drilled during the first year. The testimony before the court was that the target
location of that well is in the western one-third of that quarter section, an area west of the
location identified for Defendant’s turbine # 95. The Tribe has not proven that any Wind Farm
components, including turbine # 95, will be constructed in locational proximity to this planned
horizontal well. In addition, the Tribe has not proven that the drilling of the horizontal well will
occur during Defendant’s construction activities relating to turbine # 95. Mr. John Brown, Jr.,
Orion’s Operation Manager, testified that it takes about two weeks to prepare the site for drilling,
then 26 days from spudding the well to its completion, followed by about two weeks of
dismantling.
18.
Orion has placed tentative well locations within the Wind Farm area on a map,
but acknowledges that the final well locations have not been selected, and will not be selected,
for some time. As to the location of infrastructure, Orion’s John Brown testified that until drill
sites are chosen, location of necessary infrastructure cannot be determined. Because of the
tentative nature of the well locations identified by Orion, the Court finds that the testimony of the
Orion witnesses is insufficient to establish a conflict between the Wind Farm’s planned surface
use and Orion’s planned future operations.
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19.
Plaintiff’s expert Michael Root did not establish that Wind Farm construction or
operation would interfere with oil and gas mineral development. His opinion—that the Wind
Farm will be detrimental to oil and gas exploration and development and will leave the oil and
gas operator without reasonable use of the surface—is not supported by the evidence. The
primary conflict predicted by the Tribe, through Mr. Root, is the potential for conflicts during
Wind Farm construction. According to Mr. Root, a conflict would arise if a lessee attempts to
drill a well at the same time and in the same area as turbine construction. Mr. Root‘s testimony
with respect to alleged interference was speculative as to whether the lessee and the Defendants
will be in the same place at the same time during construction. He admitted that, even then, they
might be able to stagger and co-ordinate their work. He stated that, following construction and
during operation and maintenance of the Wind Farm, there “would be an impact,” but “it would
not be as great as during construction.” When asked whether maintenance and operation of the
Wind Farm would unreasonably interfere with the development of the Mineral Estate, he stated
“it might, possibly.” The court finds Mr. Root’s testimony speculative and insufficient to
establish that the Wind Farm will interfere with development of the Osage Mineral Estate. This
court is not persuaded that, following construction of the Wind Farm, continuing operations and
maintenance will unreasonably interfere with the proposed oil and gas drilling program and/or
oil and gas operations by Plaintiff’s lessees.
20.
The Tribe alleged in its Complaint and its arguments that the Wind Farm would
impede oil and gas development because of “cancelled leases, inability to attract future lessees,
and the inability to benefit fully from the mineral estate through the use of new technologies.”
However, the head of the Osage Minerals Council, Mr. Galen Crum, conceded that no lessee has
threatened to cancel its leases because of the Wind Farm. Further, the evidence also shows that
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Orion’s Concession Agreement was not finalized until after the Wind Farm was publicly
announced. There was no evidence that Orion attempted to negotiate reduced bonus payments
because of the Wind Farm.
21.
The court finds no evidence that the Wind Farm’s surface use would prevent
reasonable access to, and use of, the surface estate by oil and gas lessees. However, in the event
an actual conflict occurs, the court finds that it can and should be resolved by the parties in
accordance with their respective obligations under federal and state law. In the event a situation
arises in which the defendants cannot accommodate an oil and gas lessee’s request, the oil and
gas industry has the ability, as defendant’s expert John Campbell McBeath testified, to work
around conflicts by modest adjustments in the form of directional drilling or moving the oil and
gas wells slightly. Orion’s Operations Manager, Mr. Brown, testified that he still doesn’t know
there’s going to be a problem, and that he finds he “can usually work around most things.” If a
modest adjustment proves to be impossible, the lessee may seek redress of the specific dispute in
a court of appropriate jurisdiction.
22.
Each permanent turbine site will be 70 feet by 70 feet. During construction, there
will also be a 40 foot by 80 foot temporary pad from which the turbine will be erected. Access
to the turbine construction site can be staged from any direction—including the direction
opposite the well site. A drilling rig would need roughly 100 feet from the edge of a drilling site
to the wellhead, and from there drilling activities can typically be staged from any direction. In
the event the location of a particular drill site is closer than these distances allow, a modest
adjustment to the drilling schedule or location may solve the conflict.
23.
The Court also finds that if a well location is selected within close proximity to a
turbine center, or directly on a Wind Farm road or transmission line, Orion or other mineral
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lessees will likely be able to make modest adjustments to the well location. With the types of
wells to be drilled, the currently available drilling technology, and the nature of the geological
formations being targeted, a modest adjustment to provide the necessary setback from a turbine,
or to move off a road or underground transmission line, could likely be reasonably accomplished
by the mineral lessees. The Court finds that such adjustments are well within the capabilities of
the mineral lessees and that such adjustments are routinely made in the oil and gas industry. In
the event an actual, non-speculative, conflict develops that prevents a lessee from obtaining
reasonable access to the surface estate, the law provides recourse.
24.
The Court further finds that the economics of the planned drilling program
indicate that Orion will likely make necessary adjustments rather than forego development.
Using information from Orion, the testimony of both expert witnesses support a finding that the
wells are sufficiently promising that the additional expense associated with adjusting the location
will not be prohibitive.
25.
As to the oil and gas infrastructure such as flow lines, water lines, and tank
batteries, the Court finds that any impact from the Wind Farm will be minimal. To the extent
such infrastructure is buried, it will be at different depths than the underground collection lines.
Orion can readily bore under Wind Farm roads if needed. And if a desired flow line or water
line happens to intersect a turbine location, only a minor adjustment is necessary to
circumnavigate the 16 foot diameter of the foundation at the four foot subsurface level. Further,
Mr. McBeath testified, and this court finds, that the surface impediments in the area, even with
the additional Wind Farm facilities, are fewer than what oil and gas companies normally
encounter in their operations. Mr. McBeath stated, and this court finds, that laying subsurface
lines in and around the Wind Farm’s collector lines will not present a significant obstacle to the
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lessees. Mr. McBeath also presented maps showing that wind farms and oil and gas operations
can and do co-exist in close proximity to each other, including in Oklahoma. The Court finds
this testimony to be credible.
26.
Defendant’s expert testified, and this court finds, that the mud pulse system using
a pressure wave to send data from downhole tools to the surface is not affected by magnetics or
electrical interference, and should not be a factor impeding Plaintiffs’ lessees from developing
the Osage Mineral Estate.
Facts Relevant to Irreparable Harm
27.
The Tribe leases its right to explore and develop the minerals to oil and gas
companies in exchange for upfront bonus payments and royalty payments when oil and gas is
actually produced and sold. The Tribe’s royalty interest is not burdened by any costs associated
with oil and gas exploration or development. In other words, if a lessee incurs additional
expense because of the Wind Farm, that expense will not be passed on to the Tribe.
28.
The Tribe’s interest can be harmed by the presence of the Wind Farm if the Wind
Farm decreases the overall recovery of oil and gas from the mineral estate.
29.
The evidence at trial was insufficient to prove that the Wind Farm will result in
decreased recovery of oil and gas from the mineral estate. The Plaintiff did not establish that the
planned wells cannot be drilled in their most desirable location. Even if a selected well location
is unavailable due to the construction or location of a Wind Farm component, the court finds that
modest adjustments will not materially affect the recovery of oil and gas from the Osage Mineral
Estate.
30.
The evidence at trial was insufficient to prove that any wells will not be drilled
because of the Wind Farm. The reserve calculations and revenue estimates presented at trial
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predict the planned wells to be so profitable that the Wind Farm is unlikely to diminish a lessee’s
interest and enthusiasm for drilling.
31.
The Tribe has failed to prove that the Wind Farm will unreasonably interfere with
plaintiff’s right to make reasonable use of the surface estate. Nor did the Tribe prove that the
Wind Farm will unreasonably hinder its right to use so much of the surface as may be reasonable
for oil and gas operations and marketing.
Facts Relevant to the Balance of Harms
32.
The evidence at trial was insufficient to prove that the Tribe will be harmed by
construction and/or operation of the Wind Farm. At this time, the alleged conflict between the
Wind Farm and plaintiff’s rights to develop the Osage Mineral Estate is speculative.
33.
An injunction prohibiting the construction of the Wind Farm will cause the
following harms to Osage Wind: (a) it will lose approximately $40 million in expenses paid to
date, including deposits for turbines and other equipment; (b) it will remain contractually
obligated for more than $150 million of equipment purchases and construction contract penalties;
and (c) it will lose the opportunity to make more than $30 million in estimated future profits.
Facts Relevant to the Public Interest
34.
The Wind Farm project is expected to employ approximately 250 construction
employees and 10-12 permanent employees. The State of Oklahoma would lose the economic
benefit of those jobs if the Wind Farm is enjoined.
35.
The Wind Farm is projected to generate $20 million dollars in local tax revenues
over 20 years, including $1.5 million for Shidler schools during the first few years of the project.
Those benefits would be lost if the Wind Farm is enjoined.
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36.
An injunction would harm the surface owners who have leased their property to
Osage Wind. Under those leases, the surface owners would be entitled to receive lease payments
over the 20-year life of the Wind Farm.
37.
The Wind Farm is projected to generate enough electricity to power 50,000
homes. This renewable, relatively stable energy source would be lost if the Wind Farm is
enjoined.
Conclusions of Law
STANDARD FOR PERMANENT INJUNCTION
1.
“A party requesting a permanent injunction bears the burden of showing: (1)
actual success on the merits; (2) irreparable harm unless the injunction is issued; (3) the
threatened injury outweighs the harm that the injunction may cause the opposing party; and (4)
the injunction, if issued, will not adversely affect the public interest.” Fisher v. Oklahoma
Health Care Authority, 335 F.3d 1175, 1180 (10th Cir. 2003). A permanent injunction may not
issue if Plaintiff fails to satisfy any of the four factors. Fisher, 335 F.3d at 1180.
2.
The Plaintiff has not carried its burden to satisfy any of the four factors and is,
therefore, not entitled to injunctive relief as further discussed below. And because Plaintiff has
not carried its burden on the merits of its underlying claim for interference with its rights to
develop the mineral estate, it is not entitled to declaratory relief.
PLAINTIFF’S CLAIMS DO NOT SUCCEED ON THEIR MERITS
The Wind Farm Does Not Violate 25 CFR § 226.19
3.
For its first claim, Plaintiff claims the Wind Farm will violate 25 C.F.R. § 226.19.
The regulations contained in 25 CFR §§ 226.1 – 226.43 were promulgated pursuant to the Osage
Allotment Act (‘the Act’), which Congress enacted in 1906. The Act severed ownership of the
mineral estate in Osage County from ownership of the surface estate, establishing a subsurface
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mineral estate trust to be held by the United States, on behalf of the Osage Tribe. See 34 Stat.
539; Quarles v. U.S., ex rel Bureau of Indian Affairs, 372 F.3d 1169 (10th Cir. 2004).
4.
Section 226.19 provides in pertinent part:
(a) Lessee or his/her authorized representative shall have the right to use so much
of the surface of the land within the Osage Mineral Estate as may be reasonable
for operations and marketing. This includes but is not limited to the right to lay
and maintain pipelines, electric lines, pull rods, other appliances necessary for
operations and marketing, and the right-of-way for ingress and egress to any point
of operations. If Lessee and surface owner are unable to agree as to the routing of
pipelines, electric lines, etc., said routing shall be set by the Superintendent. The
right to use water for lease operations is established by § 226.24. Lessee shall
conduct his/her operations in a workmanlike manner, commit no waste and allow
none to be committed upon the land, nor permit any unavoidable nuisance to be
maintained on the premises under his/her control.
(b) Before commencing a drilling operation, Lessee shall pay or tender to the
surface owner commencement money in the amount of $25 per seismic shot hole
and commencement money in the amount of $300 for each well, after which
Lessee shall be entitled to immediate possession of the drilling site.
Commencement money will not be required for the redrilling of a well which was
originally drilled under the currently lease. A drilling site shall be held to the
minimum area essential for operations and shall not exceed one and one-half acres
in area unless authorized by the Superintendent. Commencement money shall be a
credit toward the settlement of the total damages. Acceptance of commencement
money by the surface owner does not affect his/her right to compensation for
damages as described in § 226.20, occasioned by the drilling and completion of
the well for which it was paid. Since actual damage to the surface from operations
cannot necessarily be ascertained prior to the completion of a well as a
serviceable well or dry hole, a damage settlement covering the drilling operation
need not be made until after completion of drilling operations.
25 CFR § 226.19.
5.
Published decisions applying § 226.19 typically involve circumstances where a
landowner has taken some action to prevent the lessee from accessing its existing oil and gas
facilities, and do not involve attempts to enjoin a specific use of the surface estate. See, e.g.,
Glenn v. Fox, 853 P.2d 779 (Okla. Civ. App. 1993) (enjoining landowner from blocking
designated route of ingress); Appleton v. Kennedy, 268 F. Supp. 22 (N.D. Okla. 1967) (enjoining
landowner from preventing lessee from laying pipeline); cf. Bell v. Phillips Petroleum Co., 641
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P.2d 1115 (Okla. 1982) (landowner unsuccessfully challenged necessity of laying new pipeline
on his land).
6.
Unlike Fox and Appleton, this is not a case where the surface owner’s lessee is
unreasonably interfering with the mineral estate’s lessee’s reasonable use of the surface.
Plaintiff did not demonstrate any interference of the kind that has been historically enjoined by
courts.
7.
Plaintiff did not present evidence of legally cognizable conflict between any
mineral lessee’s planned surface use and the Wind Farm’s planned facilities. Plaintiff presented
one mineral lessees’ plans for future drillsites and construction of related infrastructure that may
occur within the boundaries of the Wind Farm. The Court concludes that if any actual and/or
legally cognizable conflict should arise, and if the conflict cannot be resolved by reasonable
accommodations, the mineral lessee may file suit in a court of appropriate jurisdiction. See
Plaintiff’s Exhibit 2, page 2, ¶ 7.
8.
Plaintiff failed to establish an existing or threatened violation of Section 226.19
because it did not prove that the Wind Farm would deprive its lessees from having reasonable
use of so much of the surface as may be reasonable for their oil and gas operations and
marketing.
The Wind Farm Does Not Violate Oklahoma Law
9.
Plaintiff’s second claim for relief asserts that the Wind Farm facilities will
unreasonably interfere with construction, operation, and maintenance of the flow lines and
transmission lines necessary for marketing natural gas in violation of Oklahoma common law.
Complaint (Dkt. # 2), ¶¶ 35-38.
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10.
It is well settled in Oklahoma that the surface estate is servient to the dominant
mineral estate. Dulaney v. Okla. State Department of Health, 868 P.2d 676, 680 (Okla. 1993).
Oklahoma’s Exploration Rights Act of 2011 provides that “the lessee of a wind or solar energy
agreement or the wind energy developer shall not unreasonably interfere with the mineral
owner’s right to make reasonable use of the surface estate, including the right of ingress and
egress therefor, for the purpose of exploring, severing, capturing and producing the minerals.”
OKLA. STAT. tit. 52, § 803(B). Section 803(F) states “[i]t is the intent of this act to confirm the
mineral owner’s historical right to make reasonable use of the surface estate, including the right
of ingress and egress therefor, for the purpose of exploring, severing, capturing and producing
the minerals, and nothing in this act is intended to expand or diminish those historical rights.
Further, nothing in this act shall amend or modify the surface damages statutes or be interpreted
to grant, expand or diminish any person’s rights therein.” As yet, there are no published cases
interpreting or applying this act. The act did not ban wind farms on lands subject to oil and gas
leases. The act does not appear to grant the mineral estate any greater rights than those existing
under common law.
11.
Although the mineral estate is the dominant estate under Oklahoma law, a
mineral owner’s right to use the surface is limited to what is reasonably necessary for the
operation and development of the mineral lease. Roye Realty Developing Inc. v. Watson, 791
P.2d 821, 824 (Okla. Ct. App. 1990). Moreover, “the right of an oil and gas lessee to reasonably
necessary surface use must be exercised with due regard to the right of the owner of the surface.”
Thompson v. Andover Oil Co., 691 P.2d 77, 82 (Okla. Ct. App. 1984).
12.
In Gulf Pipeline Co. v. Pawnee Tulsa Petroleum Co., 127 P. 252 (Okla. 1912), the
plaintiff pipeline company purchased a small tract of land subject to an oil and gas lease held by
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Pawnee Tulsa Petroleum Company. The pipeline company built a pumping station on its land.
The defendant offered to sell its oil and gas lease to the pipeline company “at a price much
beyond its real value,” but the company refused. The defendant then “stood on their naked right
to drill where they pleased,” within a few feet of a manifold pit designed to permit the escape of
explosive gases incident to the transportation of oil. The pipeline company obtained a temporary
injunction to stop the drilling, which the district court later dissolved. Reversing the district
court, the Oklahoma Supreme Court noted there were other places in the 80-acre oil and gas
lease where the well could be drilled “with safety to the property of the plaintiffs and their
employees, and with full protection to the rights of the defendants to take oil and gas from their
mining lease.” Id. at 253. The court explained:
Having the right to drill anywhere, and the right to occupy the surface not being
conveyed to them, but reserved to the owners, it follows that they must exercise
their right to drill with due regard to the rights of the owners of the surface, and
that where they can fully enjoy their own rights without injury to others they
should not be allowed, out of the spirit of wantonness or of blackmail, to
jeopardize the property and the lives of others exercising an equal right.
Id. at 253-54.
13.
Recognizing the limited nature of the mineral lessee’s rights to use the surface,
the Oklahoma Supreme Court recently explained that:
[t]he common-law right of access for drilling and production operations is limited
not only to the extent it is reasonably necessary but also as provided in the
Oklahoma Surface Damages Act. . . . a lessee does not have a common-law right
to access an oil or gas well at any specific point of entry regardless of the desires
of the surface owner.
Lierly v. Tidewater Petroleum Co., 139 P.3d 897, 903 (Okla. 2006) (internal citations omitted,
emphasis in original).2
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Lierly involved the issue of whether an oil and gas lessee who seeks an injunction against the surface owner for
interfering with the lessee’s entry upon the land at a specific location may be liable for damages for malicious
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14.
The Court concludes that, in general, the Wind Farm’s planned surface use is
lawful and reasonable. Its facilities will take up less than 1.5% of the surface of the 8,500 acres
in the Wind Farm lease. The underground infrastructure of collection lines and the access roads
are typical of the type of surface restrictions mineral lessees regularly encounter. The Tribe has
not shown this court the presence of a specific impediment that unreasonably interferes with its
use of the surface for oil and gas operations and marketing. The mere possibility that a dispute
might arise in the future is insufficient to merit an injunction of the Wind Farm’s construction
and operation.
15.
The Tribe may not enjoin the construction of surface uses which do not interfere
with its right to make reasonable use of the surface estate for the purpose of exploring, capturing
and producing the oil and gas. The Court concludes that Plaintiff is not entitled to an injunction
against the Wind Farm under federal or state law.
16.
The Court concludes that Plaintiff has not shown any actual, substantial injury or
threatened injury that, under Oklahoma law, would justify an injunction.
NO IRREPARABLE HARM
17.
The law requires that, in order to obtain an injunction, the Tribe must demonstrate
it would be irreparably harmed without an injunction.
18.
The Court concludes the Tribe has failed to establish irreparable harm. Much of
Plaintiff’s case is built upon speculative concern that unreasonable interference may occur.
19.
At most, the Tribe has demonstrated the possibility of some additional expense to
its lessees resulting from Wind Farm construction and operation (e.g. drilling additional feet in a
Mississippian well due to adjustment of the drill site). However, as set forth in the findings,
prosecution. That issue is not present here. However, the concept of reasonable necessity discussed in Lierly is
applicable in this case.
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above, any such additional expense would impact the mineral lessee, not the Tribe, which holds a
non-cost bearing interest.
20.
“If the injury complained of may be compensated by an award of monetary
damages, then an adequate remedy at law exists and no irreparable harm may be found as a
matter of law.” Paradise Distributors, Inc. v. Evansville Brewing Co., Inc., 906 F. Supp. 619,
622 (N.D. Okla. 1995) (emphasis in original) (citations omitted). Even if the Plaintiff had
demonstrated injury, it is an injury that could be remedied by an award of money damages. In
fact, both Plaintiff’s and Defendants’ experts presented calculations of the amount of royalties
projected to be generated by an expected well in the area. Based upon this evidence, the Court
concludes that, had the Tribe established an injury, the injury could be compensated by an award
of monetary damages.
21.
In Sunray Oil Co. v. Cortez Oil Co., 112 P.2d 792 (Okla. 1941), Sunray obtained
a license from the surface owner to use an abandoned oil and gas well in order to dispose of salt
water produced from other wells in the vicinity. Cortez Oil, being concerned that the salt water
might force oil and gas from the land, obtained an injunction prohibiting use of the injection
well. The Oklahoma Supreme Court vacated the injunction, stating that an injunction may not
issue to protect a right that might never arise or where the alleged damage is merely nominal,
theoretical, or speculative, and that, as a general rule, a complainant must establish an actual
substantial injury. Id. at 795. “It is not sufficient ground for injunction that the injurious acts
may possibly be committed or that injury may possibly result from the acts sought to be
prevented; but there must be at least a reasonable probability that the injury will be done if no
injunction is granted, and not a mere fear or apprehension of same.” Id. at 796, quoting Simons
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v. Fahnestock, 78 P.2d 388 (Okla. 1938). The court concludes that Plaintiff has not carried its
burden to establish a reasonable probability that harm will be done if no injunction is granted.
THE THREATENED INJURY DOES NOT OUTWEIGH THE HARM
THE INJUNCTION WOULD CAUSE THE OPPOSING PARTY
22.
On the basis of its Findings of Facts Nos. 32 and 33, the court concludes Plaintiff
has failed to show that its claim of threatened injury, which is speculative and hypothetical,
outweighs the injunction’s certain harm to Defendants.
AN INJUNCTION AGAINST THE WIND FARM WOULD
ADVERSELY AFFECT THE PUBLIC INTEREST
23.
“Congress has articulated the public policy that our nation should incorporate
clean energy as a necessary part of America’s future and it is essential to securing our nation’s
energy independence and decreasing green house emissions.” Western Watersheds Project v.
Bureau of Land Management, 774 F. Supp. 2d 1089, 1103 (D. Nev. 2011) (denying preliminary
injunction against wind farm project in part because it would be adverse to public interest). The
injunction requested by the Plaintiff would be adverse to this stated public policy.
24.
Defendants presented evidence of economic benefits that the Wind Farm will
provide the State of Oklahoma, including the addition of 10 to 12 permanent jobs in an area of
high unemployment. These economic benefits would be lost if the project is enjoined.
25.
The Oklahoma Legislature recently issued the following findings in support of
wind energy development, but striking a balance between the development of wind energy
resources and the right of mineral estate owners to make reasonable use of the surface estate:
1.
Oklahoma’s wind energy resources are an important asset for the continued
economic growth of the state and for the provision of clean and renewable power
to both the people of the state and the nation as a whole;
2.
Promotion of the development of wind energy resources is important to the
economic growth of the state;
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3.
The prudent development of wind energy resources requires addressing the
relationship of the needs of wind energy developers with those of the mineral
estate owners who have the historical right to make reasonable use of the surface
estate, including the right of ingress and egress therefor, for the purpose of
exploring, severing, capturing and producing the minerals as reflected in the
Exploration Rights Act of 2011, . . .
Okla. Stat. tit. 17 § 160.12; see also Okla. Stat. tit. 17 § 801.4 (establishing a goal that fifteen
percent (15%) of all installed electricity generation within the State of Oklahoma by the year
2015 be generated from renewable energy sources)
26.
Being mindful of the Congressional and Legislative goals in support of renewable
energy resources while balancing the rights of mineral estate owners, this court concludes that an
injunction against the Wind Farm would adversely affect the public interest.
In short, plaintiff has not met its burden on its claims for declaratory and injunctive relief
under either federal or state law. Plaintiff did not prove that the Wind Farm will unreasonably
interfere with plaintiff’s right to make reasonable use of the surface estate, nor did it prove that
the Wind Farm will unreasonably hinder the right to use so much of the surface as may be
reasonable for oil and gas operations and marketing. Plaintiff also failed to prove that it would
be irreparably harmed unless an order enjoining construction and operation of the Wind Farm is
granted; that the threatened injury to the Tribe outweighs the harm the injunction may cause the
defendants; and that the injunction, if issued, would not adversely affect the public interest.
Accordingly, The Osage Nation’s request for declaratory relief and a permanent injunction
barring Defendants from constructing a wind farm in Osage County, Oklahoma, is denied and
the action shall be dismissed on the merits by separate Judgment entered contemporaneously
herewith.
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DATED this 20th day of December, 2011.
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