Oklahoma Bar Journal
United States v. Osage Wind: An Example of How an Indian Tribe's Unique Status Governs Appeal Rights and Statutory Construction
By William R. Norman and Zachary T. Stuart
In January 2019, the U.S. Supreme Court denied a request to review the 10th Circuit’s decision in United States v. Osage Wind, LLC.1 The decision held that the Osage Minerals Council (OMC), acting on behalf of the Osage Nation (Osage or tribe), had a right to appeal an earlier decision where, though it was not party and had not intervened, it maintained a unique interest to appeal.2
The case highlights the special relationship between the United States and tribes generally, as well as tribes’ right to pursue their interests when the United States fails to do so. The 10th Circuit’s decision also clarified the meaning of “mining” under the Bureau of Indian Affairs’ (BIA) regulations and, with it, the circumstances in which entities need to obtain a mineral lease from the secretary of the interior before performing construction above a mineral estate held in trust with the
United States. In doing so, the 10th Circuit invoked an Indian canon of construction – “ambiguity in laws designed to favor Indians ought ‘to be liberally construed’ in the Indian’s favor.”3 Here, it was the excavation of almost 30,000 cubic feet of material for each wind turbine of a wind farm that fell within the federal regulations’ definition of mining.4
This article first summarizes the inception of the underlying dispute in which the Osage Nation sought to protect its interest, beginning in 2011, to prevent construction of a wind farm by Osage Wind LLC, a wind energy company unaffiliated with the Osage Nation or OMC. Next, the article addresses the United States’ suit on behalf of the Osage Nation and the federal government’s later refusal to appeal the lower decision on the Osage Nation’s behalf. Finally, the article addresses the 10th Circuit’s analysis on whether the tribe, an unnamed party, could appeal on its own behalf, as well as the invocation of a longstanding Indian canon of construction that ultimately tilted the court’s hand in favor of the tribe.
THE OSAGE MINERAL ESTATE
In 1872, the Osage Nation bought its reservation, which coincides with present-day Osage County.5 Petroleum development proceeded slowly in the 1890s, but by 1903, 40 wells had been completed on the reservation.6 In 1906, Congress passed the Osage Act, severing the tribe’s mineral estate from the surface estate.7 While the surface estate was allotted, or divided up among individuals, the mineral estate – the “underground reservation” – was held in trust with the United States for the benefit of the Osage.8 Today, under the Osage Nation’s 2006 Constitution, the OMC manages the Osage mineral estate.9
THE OSAGE NATION MOVES TO PROTECT ITS INTERESTS
OMC and Osage Wind first butted heads in 2011 in Osage Nation v. Wind Capital Group.10 Osage Wind leased over 8,000 acres in Osage County from seven surface owners to construct a wind farm.11 Between 80 and 100 turbines were planned for the wind farm, as well as a substation, an overhead transmission line, two meteorological towers and access roads – an estimated footprint of between 100 and 200 acres within the leased acreage.12 OMC then sought to prevent the construction under both federal and state law.13 The basis of OMC’s causes of action was that the proposed wind farm would interfere with OMC’s use of the surface estate for oil and gas development.14 The tribe had leased its mineral interests to multiple energy and exploration companies.15 Oil was originally discovered in the area in 1920, but increases in oil prices and improvements in drilling technology had recently piqued energy companies’ interests.16
As part of its effort though, the tribe presented insufficient evidence relating to conflict between its lessees and Osage Wind.17 After pointing out that structures would take up less than 1.5% of the leased acreage, the court found insufficient evidence to support OMC’s claim that the energy and exploration lessees’ use of the surface estate would be interrupted by Osage Wind’s construction of the windmills.18 Accordingly, the district court denied the Osage Nation’s requests for declaratory and injunctive relief.19 Within two years, Osage Wind had begun site preparation and excavation for the windmill foundations.20
THE UNITED STATES STEPS IN – AND BACKS OUT
In late 2013, the United States stepped in on Osage Nation’s behalf as its trustee and sued to stop Osage Wind’s construction of the windmills.21 The basis for the United States’ complaint was that Osage Wind’s excavation work constituted “mining” under 25 C.F.R. §211.3 and, therefore, required a mineral lease approved by the secretary of the interior under 25 C.F.R. §214.7.22 Section 214.7 provides that “No mining or work of any nature will be permitted upon any tract of land until a lease covering such tract shall have been approved by the Secretary of the Interior and delivered to the lessee.”23 Under §211.3, mining essentially means “the science, technique, and business of mineral development.”24
As part of the construction, Osage Wind had done more than just pour concrete foundations for its structures. The foundation for each turbine required a 10-foot deep and 50-to-60-foot wide hole be dug to pour a concrete foundation.25 For each turbine, this required the removal of between 20,000 and 30,000 cubic feet of soil, sand and rock.26 Rocks smaller than 3 feet were crushed and pushed back into the hole.27 Larger rock pieces were set aside.28 The United States argued that the extraction, sorting, crushing and use of the minerals constituted mining under the regulation, as such activity involved the science, technique and business of mineral development.29
The district court disagreed, however, with the federal government’s interpretation, stating that the definition of “mining” does not encompass the activities of an entity that incidentally encounters minerals with surface construction activities.30 The district court then granted summary judgment to Osage Wind.31
Sixty days later, on the final day for the United States to file an appeal, it notified the Osage Nation of its intent not to pursue an appeal of the district court’s dismissal.32
OSAGE ACTS SWIFTLY TO APPEAL
Upon receiving word of the United States’ decision, OMC immediately moved to intervene, as a matter of right, and then filed its own notice of appeal.33 After almost three months of briefing on the motion to intervene, the district court denied the motion by minute order, stating that it lacked jurisdiction “due to [OMC’s] pending appeal.”34 The court was referring to the notice of appeal OMC filed only moments after its motion to intervene.35 Thus, in addition to its appeal of the merits, OMC appealed the denial of the motion to intervene.36
The sequence of events left the 10th Circuit to decide a threshold issue – could OMC appeal the decision of the district court even though it had not been a party at the district court level? The court chose to avoid the issue of the motion to intervene altogether by addressing whether OMC had a “unique interest” that would allow it to appeal without having been a named party.
In 1988, the United States Supreme Court held that “only parties to a lawsuit, or those that properly become parties, may appeal an adverse judgment.”37 In 2002, the Supreme Court clarified in a case involving an appeal by a non-named class member that it had “never … restricted the right to appeal to named parties to the litigation.”38 Later in 2002, the 10th Circuit quoted that same language in Plain v. Murphy Family Farms, holding that children, who were not named parties, could appeal the apportionment of damages in their deceased father’s wrongful death action.39 The 10th Circuit concluded that the children had a sufficient unique interest that would allow them to appeal, similar to that of the Supreme Court’s non-named class member.40
Utilizing the foregoing principles in its appellate briefing, OMC asserted the unique interest argument, which Osage Wind mostly ignored, choosing only to address that line of argument in a footnote.41 For the 10th Circuit, though, that was the threshold issue in deciding the appeal from the district court’s denial of the motion to intervene and the merits appeal.42
10TH CIRCUIT FINDS OMC MAINTAINS A UNIQUE INTEREST
In considering the question of whether OMC could properly invoke and sustain the appeal, having not been a party below, the 10th Circuit ultimately found multiple reasons for concluding that OMC had a unique interest in the litigation. First and foremost, the tribe was the beneficial owner of the mineral estate that was the subject of the appeal.43 Although OMC did not move to intervene until the day of the deadline to appeal, up to that point the United States had been representing OMC’s interest as trustee for the mineral estate.44
Second, the 10th Circuit noted that the interests of the United States and OMC were not shared in their entirety.45 Previously, in Southern Utah Wilderness Alliance v. Kempthorne, the court held that certain oil and gas companies did not have a unique interest to appeal from an order declaring that the Bureau of Land Management (BLM) violated procedural regulations in issuing leases to those same companies, effectively freezing the companies’ lease interests.46 The case had originally been brought by an environmental advocacy group against BLM – like OMC here, the companies there were not parties in the lower court proceeding.47
In Kempthorne, however, both the companies and BLM held a shared interest in seeking appeal: whether the federally issued leases were valid.48 OMC had a larger, exclusive interest in appealing separate and apart from the United States. The Osage Nation holds all but legal title to the mineral estate, “and the United States,” as the 10th Circuit stated, “is involved merely as a trustee.”49 However, perhaps this relationship should have required the United States to appeal or, in the very least, required the United States as trustee to inform the beneficiary prior to the appeal deadline that it was not going to appeal. Finally, as to the unique interest question, the 10th Circuit cited the fact that the environmental advocacy group was seeking vindication of a public right, as a basis for distinguishing Kempthorne.50 In Kempthorne, the public advocacy group had sought vindication of a public right – compliance with procedural regulations as to oil and gas leasing on public lands.51 Here, however, OMC sought vindication of a private right – management of its, and only its, mineral estate.52
In holding that OMC had a unique interest in the case entitling it to appeal, the 10th Circuit found OMC’s failed intervention at the district court level irrelevant.53 The 10th Circuit, therefore, dismissed as moot OMC’s appeal from the denial of its motion to intervene, finding instead that OMC had established that it maintained a unique interest in the appeal sufficient to sustain it for consideration of the merits.54 Having resolved OMC’s authority to bring the appeal, the 10th Circuit turned to Osage Wind’s res judicata argument.55
OSAGE WIND’S RES JUDICATA CLAIM
Osage Wind alleged that OMC’s claims were precluded by the doctrine of res judicata from being reviewed on appeal, even if OMC was a proper appellant due to its unique interest.56 According to Osage Wind, OMC could have, and should have, pursued the claim when it first brought suit in 2011.57 The 10th Circuit disagreed, however, finding that Osage Wind failed to meet its burden to show the claims reasonably could have been brought previously.58 More specifically, the court found plausible, and essentially uncontested by Osage Wind, that the current claims would not have been ripe for judicial review in 2011 – nearly three years before the turbine excavation work began.59 The procedural issues having been dealt with, the 10th Circuit turned to the merits.60
The ultimate issue on the merits before the court was whether Osage Wind’s activities constituted “mining” under 25 C.F.R. §214.7.61 If so, Osage Wind needed a lease approved by the secretary of the interior to conduct such activities.62 Section 214.7 specifically sets out “[n]o mining or work of any nature will be permitted upon any tract of land until a lease covering such tract shall have been approved by the Secretary of the Interior and delivered to the lessee.”63
First, the 10th Circuit noted that its analysis did not depend on deference to agency materials presented by OMC – an informal policy of the BIA and an instruction memorandum by the BLM. OMC had argued agency materials of the BIA and the BLM required a lease.64 The BIA had taken a position, even if an informal one, that a “Sandy Soil Lease” is required for surface roadwork that disrupts the mineral estate.65 The record, itself, provided that a contractor for the Oklahoma Department of Transportation had requested such a lease for highway construction. The court, assuming the lease was required, did not grant the BIA’s position Skidmore deference, which holds that deference is required for an informal agency opinion only to the extent that it is thoroughly considered and well-reasoned, or otherwise manifests qualities that gives it the power to persuade.66 The court found the Sandy Soil Lease requirement – on its own – lacked the power to persuade, given the lack of information in the record justifying the need for the lease.67
The BLM guidance OMC proffered was also unavailing. In the preamble to 43 C.F.R. §3601.71, the BLM explained that “’a contract or permit’ is required when a surface-estate owner engaged in more than ‘minimal personal use of federally reserved materials … .’”68 Further guidance by BLM on this regulation noted that any use of materials in a construction project, including building foundations, also constitutes mineral use.69 Nevertheless, the 10th Circuit rejected this notion out-of-hand because the regulation itself – 25 C.F.R. §3601.71 – dealt with activities on “public lands,” which specifically excludes “lands held for the benefit of Indians.”70
The 10th Circuit then plowed its way into the textual analysis of the “mining” definition, first addressing the district court’s view, which it found to be too restrictive.71 Under §211.3, mining is defined as “the science, technique, and business of mineral development including, but not limited to: opencast work, underground work, and in-situ leaching directed to severance and treatment of minerals.”72 The district court had contended that “mineral development” necessarily required some commercialization of the minerals – equating “mineral development” with developing minerals for commercial purposes.73 In making this determination, the court relied on the examples provided in the definition: opencast work, underground work and in-situ leaching.74 “Each term,” the court concluded, “refers to a specific method of extracting minerals for commercial purposes.”75 The court reached this conclusion citing the canon of statutory construction that “other terms that would fall within the scope of ‘including but not limited to’ must be of the same character.”76 In turn, because the minerals were not being commercially developed, the enterprise was not “mining.”
In contrast, the 10th Circuit prefaced its textual analysis by recognizing the “long-established principle that ambiguity in laws designed to favor the Indians ought ‘to be liberally construed’ in the Indians’ favor.”77 The ambiguity in the mining definition lay in the meaning of “mineral development.” “Neither the regulation nor the Osage Act clarify the outer limits of what it means to ‘develop’ minerals in this context.”78 Although noting that Osage Wind’s definitional boundary of commercialization of minerals might be reasonable, “the Indian canon of interpretation,” the court stated, “tilts our hand toward a construction more favorable to Osage Nation.”79
Ironically, just as the examples assisted the district court in its interpretation, they were also of some assistance to the 10th Circuit in excavating the meaning of mining. The 10th Circuit though, focused on the clause after the examples: “opencast work, underground work, and in-situ leaching directed to severance and treatment of minerals.”80 For the 10th Circuit, the examples meant that “mining” not only included the narrow “commercial mineral development category,” but also activities “directed to the severance and treatment of minerals.”81
Noting that merely disrupting minerals would not trigger the mining definition, the 10th Circuit stated that “the problem here is that Osage Wind did not merely dig holes in the ground – it went further.”82 Osage Wind sorted, crushed and exploited the rocks as structural support for each wind turbine. Ultimately, Osage Wind “acted upon the minerals by altering their natural size and shape in order to take advantage of them for a structure purpose – stabilization of the turbines – and developed the removed rock in such a way that would accomplish that goal.”83 “This,” the 10th Circuit held, “constitutes ‘mining’ as defined by § 211.3.”84 Reversing the district court’s order granting summary judgment, the 10th Circuit remanded for further proceedings.85
In March 2018, Osage Wind filed its petition for a writ of certiorari with the Supreme Court, arguing first that OMC, a nonparty, should not have been allowed to appeal, and second, that the 10th Circuit improperly invoked the Indian canon of construction.86 Osage Wind based its petition on OMC “completely sit[ting] out” during the trial court proceedings, and the 10th Circuit resolving the definitional ambiguity in a way that harmed the surface estate owners.87 The United States filed its brief siding with OMC and, on Jan. 7, 2019, the Supreme Court denied the petition for a writ of certiorari.88
As governmental institutions predating the U.S. Constitution and the establishment of the various states, Indian tribes occupy a special and unique position in the law and the courts. The impact of their sovereign status on federal jurisprudence, including appeal rights and statutory construction, is on full display in United States v. Osage Wind, LLC.
ABOUT THE AUTHORS
William R. Norman Jr. is a partner with the law firm Hobbs, Straus, Dean & Walker LLP. For the past 25 years, his practice has been focused on promoting and defending tribal rights for Indian tribes/Alaskan Natives and tribal organizations. Prior to joining the law firm, he served as a clerk for the United States Court of Appeals for the 3rd Circuit.
Zachary T. Stuart is an associate attorney with the law firm Hobbs, Straus, Dean & Walker LLP. He is a 2015 graduate of the OU College of Law and previously served as an assistant district attorney in Tulsa County.
1. Osage Wind, LLC v. Osage Minerals Council, 139 S. Ct. 884 (Jan. 7, 2019) (mem.).
2. United States v. Osage Wind, LLC, 817 F.3d 1078 (2017), cert. denied sub nom. Osage Wind, LLC v. Osage Minerals Council, 139 S. Ct. 884 (Jan. 17, 2019) (mem).
3. Id. at 1090.
4. See id. at 1083 (“Each turbine required the support of a cement foundation measuring 10 feet deep and up to 60 feet in diameter.”); United States v. Osage Wind, 2015 WL 5775378, at *1 (N.D. Okla. 2015) (“The turbine foundations are made from concrete, with each foundation measuring approximately 10 feet deep and between 50 and 60 feet in diameter.”).
5. Cohen’s Handbook of Federal Indian Law §4.07, at 303 n.132 (Nell Jessup Newton ed., 2012).
6. Corey Bone, “Osage Oil,” The Encyclopedia of Oklahoma History and Culture, www.okhistory.org/publications/enc/entry.php?entry=OS006.
7. Act of June 28, 1906, 34 Stat. 539.
8. Id.; Bone, supra.
9. Osage Nation Constitution art. XV, §4.
10. See Osage Nation ex rel. Osage Minerals Council v. Wind Capital Group, LLC, 2011 WL 6371384 (N.D. Okla. 2011).
11. Id. at *2.
18. Id. at 9.
19. Id. at 11.
20. United States v. Osage Wind, LLC, 871 F.3d 1078, 1083 (10th Cir. 2017).
21. United States v. Osage Wind, LLC, 2015 WL 5775378 *3 (N.D. Okla. 2015).
22. Id. at *5.
23. 25 C.F.R. §214.7.
24. 25 C.F.R. §211.3.
25. United States v. Osage Wind, LLC, 2015 WL 5775378 at *1 (N.D. Okla. 2015).
26. See id. at *1 (“The turbine foundations are made from concrete, with each foundation measuring approximately 10 feet deep and between 50 and 60 feet in diameter.”); United States v. Osage Wind, LLC, 871 F.3d at 1081 (“Each turbine required the support of a cement foundation measuring 10 feet deep and up to 60 feet in diameter.”).
29. Id. at *6.
30. Id. at *9-*10.
31. Id. at 10.
32. United States v. Osage Wind, LLC, 871 F.3d 1078, 1084 (10th Cir. 2017).
33. United States v. Osage Wind, LLC, 871 F.3d 1078, 1084 (10th Cir. 2017).
34. See Motion to Intervene, United States v. Osage Wind, LLC, 2015 WL 5775378 (N.D. Okla. 2015) (No. 14-CV-704-JHP-TLW), ECF No. 46; Minute Order, United States v. Osage Wind, LLC, 2015 WL 5775378 (N.D. Okla. 2015) (No. 14-CV-704-JHP-TLW), ECF No. 69.
35. See Notice of Appeal, United States v. Osage Wind, LLC, 2015 WL 5775378 (N.D. Okla. 2015) (No. 14-CV-704-JHP-TLW), ECF No. 49.
36. Notice of Appeal, United States v. Osage Wind, LLC, 2015 WL 5775378 (N.D. Okla. 2015) (No. 14-CV-704-JHP-TLW), ECF No. 72.
37. Marino v. Ortiz, 484 U.S. 301, 304 (1988) (per curiam).
38. Devlin v. Scardelletti, 536 U.S. 1, 14 (2002) (emphasis added).
39. Plain v. Murphy Family Farms, 296 F.3d 975, 979 (10th Cir. 2002).
40. United States v. Osage Wind, LLC, 817 F.3d 1078, 1085 (10th Cir. 2017).
41. Compare Appellant’s Opening Brief for Appellant at 18-19 with Brief of the Appellees at 17 n.7.
42. 10th Cir. at 1084.
43. 10th Cir. 1086.
44. 10th Cir. 1085.
45. See 10th Cir. 1086.
46. 10th Cir. at 1086 (citing Kempthorne).
58. Id. at 1087.
61. Id. at 1081.
62. Id. at 1082.
63. 25 C.F.R. 214.7. The 10th Circuit confined its analysis to the meaning of “mining” and not to the additional “work of any nature” language in the lease regulation. The court noted that OMC had, perhaps unintentionally, simply argued that the work constituted “mining.” The United States brought up the work-of-any-nature language with the lower court, but there, the district court had concluded the language to be inextricably tied to the commercial definition of “mining.” As OMC did not argue the “work of any nature” language, the 10th Circuit declined to address it.
64. Id. at 1088.
71. Id. at 1089.
72. 25 C.F.R. §211.3.
73. 2015 *6.
77. 10th Cir. 1090.
79. Id. at 1091.
80. Id. at 1090-91.
81. Id. at 1091.
83. Id. at 1091-92.
84. Id. at 1092.
85. Id. at 1093.
86. Petition for cert.
88. Osage Wind, LLC v. Osage Minerals Council, 139 S. Ct. 884 (Jan. 7, 2019) (mem.)
Originally published in the Oklahoma Bar Journal -- OBJ 90 pg. 28 (November 2019)