Nearly two months after a federal judge ruled that renewable energy developer Enel Green Power North America must deconstruct 48 onshore wind turbines after failing to secure mineral rights on northern Oklahoma lands from the Osage Nation, two attorneys of the energy sector say they would advise the unit of an Italian-based company to negotiate with the tribe.
Lawyers told ENR the case was full of “yellow flags” and stressed the importance of following the requirements that apply to such projects. Jeffrey Porter, chairman of Mintz Levin’s environmental law practice in Boston, says companies need to “assess the risk that you’re getting these approvals up front because that can contribute to the viability of projects.”
Enel successfully leased the surface rights for the project more than a decade ago but failed to obtain leases for underground land, which includes oil, natural gas and mineral rights, which were used for turbine foundations that they required an underground foundation 10 feet deep and 50 feet wide. , according to the tribe.
Enel has not said whether it plans to appeal the decision and has not responded to inquiries from ENR. The company has not explained why it failed to secure the right leases.
Pilar Thomas, a partner in Tucson-based Quarles and Brady’s energy, environment and natural resources practice group, says the case clearly shows the need for energy companies to understand split ownership. “Before this case, a lot of people thought we could use dirt. But you can’t just use dirt,” says Thomas, who also teaches Native American energy law at Arizona State University and the University of Arizona.
The legal term, he explained, is a divided estate where ownership rights over the land surface and subsoil are divided between two parties. In the Osage case, Enel, the fourth-largest US renewable energy developer, won the surface leases but failed to secure legal rights from the US Department of the Interior and the Rights Authority Osage Nation Minerals, both must approve underground mineral leases. she explained.
Thomas and Porter say they would be surprised if all 84 turbines were removed, as the federal district court in Tulsa ruled. The idea of the project being deconstructed seems to me “much less likely,” says Porter. He told Recharge that Judge Jennifer Choe-Groves’ ruling “has significantly increased the leverage of the Osage Nation in the negotiation, which in my view is inevitable.”
Thomas explains that remedial rules issued by federal courts are rarely overturned by higher courts. Cost estimates to deconstruct the 150 MW, 1,000-acre wind power facility are more than $300 million, which Thomas describes as “a lot of money.” He says that after the ruling, Enel cannot stay on lands with mineral leases.
Porter says it would be “premature” for Enel to file an appeal, explaining that it would focus only on deconstructing the turbines, at the behest of Choe-Groves. He questions whether an appeals court would consider such a small part of the case. “A more effective solution would be some kind of negotiation,” he says.
