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United States v. Osage Wind, LLC

United States Court of Appeals, Tenth Circuit

September 18, 2017


         Appeal from the United States District Court for the Northern District of Oklahoma (D.C. No. 4:14-CV-00704-JHP-TLW)

          Jeffrey S. Rasmussen (Rebecca Sher & Peter J. Breuer with him on the briefs), Fredericks Peebles & Morgan, LLP, Louisville, Colorado, for Appellant.

          Ryan A. Ray, Norman Wohlgemuth Chandler Jeter Barnett & Ray, P.C., Tulsa, Oklahoma (Lynn H. Slade & Sarah M. Stevenson, Modrall, Sperling, Roehl, Harris & Sisk, P.A., Albuquerque, New Mexico, with him on the brief), for Appellees.

          Before BRISCOE, EBEL, and PHILLIPS, Circuit Judges.

          EBEL, Circuit Judge.

         This case presents the question whether a large-scale excavation project- which involved the excavation, modification, and use of rock and soil during the installation of wind turbines-constituted "mining" under the pertinent federal regulations that address mineral development on Indian land. When an entity engages in "mining" of minerals owned by the Osage Nation, a federally approved lease must be obtained from the tribe. 25 C.F.R. § 214.7. The Bureau of Indian Affairs (BIA) has defined "mining" as the "science, technique, and business of mineral development[.]" 25 C.F.R. § 211.3. We hold that the term "mineral development" has a broad meaning. While it includes commercial mineral extractions and offsite relocations, which are not at issue here, it also encompasses action upon the extracted minerals for the purpose of exploiting the minerals themselves on site.

         The Osage Mineral Council (OMC), acting on behalf of the Osage Nation, appeals from the award of summary judgment to Defendant Osage Wind, LLC (Osage Wind), [1] arguing that Osage Wind engaged in "mining" without procuring a federally approved mineral lease. Appeal No. 15-5121. OMC also appeals from a separate order denying its motion to intervene below. Appeal No. 16-5022. Because we hold that OMC is a proper party to this appeal without having formally intervened in the district court, we DISMISS as moot Appeal No. 16-5022. On the merits, we hold that Osage Wind's extraction, sorting, crushing, and use of minerals as part of its excavation work constituted "mineral development, " thereby requiring a federally approved lease which Osage Wind failed to obtain. Accordingly, we REVERSE the award of summary judgment for Osage Wind in Appeal No. 15-5121, and REMAND for further proceedings consistent with this opinion.

         I. BACKGROUND

         A. Legal Background

         Congress established an Indian reservation for the Osage Nation in 1872, Act of June 5, 1872, ch. 310, 17 Stat. 228, and Oklahoma thereafter incorporated the Osage-occupied territory as Osage County, Okla. Const., art. XVII, § 8. In 1906, Congress severed the Osage mineral estate in Osage County from the surface estate. Act of June 28, 1906 (Osage Act), ch. 3572, 34 Stat. 539, §§ 2-3. The Osage Act parceled out the surface estate to individual tribe members-a distribution practice known as "allotment"-and made these allotted lands freely alienable. Id. § 2. The Act also ensured that the property owners could use the land for "farming, grazing, or any other purpose not otherwise" prohibited by the Osage Act. Id. § 7.

         The mineral estate beneath those lands, however, was not allotted to individual members of the tribe. Id. § 3. Rather, the mineral estate was reserved for the benefit of the Osage Nation. Id. The United States was established as legal trustee for the mineral estate while the Osage Nation retained beneficial ownership. See, e.g., Osage Nation v. Irby, 597 F.3d 1117, 1120 (10th Cir. 2010). The Act further empowered the Osage Nation to issue leases for "all oil, gas, and other minerals" in the reserved mineral estate. Osage Act, 34 Stat. 539, § 3. Those leases required the approval of the U.S. Department of Interior (DOI) and were subject to further regulation by DOI rulemaking. Id.

         The DOI promulgated several regulations pertinent to this case. First, 25 C.F.R. Part 211 governs the development of Indian mineral resources generally, and it provides the applicable definition of "mining" in this case:

Mining means 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; Provided, when sand, gravel, pumice, cinders, granite, building stone, limestone, clay or silt is the subject mineral, an enterprise is considered 'mining' only if the extraction of such a mineral exceeds 5, 000 cubic yards in any given year.

Id. § 211.3 (emphasis added). Because Part 211 applies broadly to all Indian lands, the parties agree that this definition governs mining activities conducted on the Osage Nation's reserved mineral estate.

         Second, 25 C.F.R. Parts 226 and 214 implement the Osage Allotment Act and thus apply specifically to the Osage mineral estate. While Part 226 regulates the leasing of oil and gas resources, Part 214 governs all other resources in the mineral estate, including solid mineral resources. At issue here is 25 C.F.R. § 214.7, which provides that "[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."[2] (emphasis added). Accordingly, if Osage Wind engaged in "mining" (as defined in § 211.3) of the Osage mineral estate, then it was required to secure a lease from Osage Nation with approval from the United States. The Osage Nation manages its mineral estate and enforces this lease requirement through OMC, which is the Appellant in this case.

         B. Factual Background

         In 2010, Osage Wind leased surface rights to approximately 8, 400 acres of private fee land in Osage County, Oklahoma, for the purpose of building a commercial wind farm-a facility that collects and stores wind-generated electricity. The planned wind-farm involved the installation of eighty-four wind turbines secured in the ground by reinforced concrete foundations, underground electrical lines running between the turbines and a substation, an overhead transmission line, meteorological towers, and access roads. These structures would occupy around 1.5 percent of the total acreage of leased surface land. In September 2011, OMC and the United States expressed concern that the planned project would interfere with oil and gas production by blocking access to the mineral estate.

         Acting on that concern, OMC filed a lawsuit in October 2011 to prevent Osage Wind from constructing the proposed wind farm. See Osage Nation ex rel. Osage Minerals Council v. Wind Capital Grp., LLC, No. 11-CV-643-GFK-PJC, 2011 WL 6371384 (N.D. Okla. Dec. 20, 2011) (unreported). In that case, OMC did not claim that Osage Wind's excavation of solid mineral resources required a federally approved lease under 25 C.F.R § 214.7. Instead, OMC alleged that the planned wind farm would unlawfully deprive OMC's oil-and-gas lessees of reasonable use of the surface estate. Wind Capital Grp., 2011 WL 6371384, at *2. This prior litigation hinged on a federal regulation 25 C.F.R § 226.19, which is not at issue here. Section 226.19 entitles OMC's oil-and-gas lessees to reasonable use of the surface land to support their underground oil-and-gas operations.[3] Id. OMC lost that case on the merits because there was no evidence that its own lessees were planning on using the surface estate in a manner that would conflict with Osage Wind's proposed use of the land. Wind Capital Grp., 2011 WL 6371384, at *8. OMC originally appealed but then dismissed its appeal.

         Nearly two years later, in October 2013, Osage Wind initiated site preparation and road construction, and by September 2014, excavation work for the planned wind turbines began. Each turbine required the support of a cement foundation measuring 10 feet deep and up to 60 feet in diameter. To accommodate these foundations, Osage Wind dug large holes in the ground. This process involved the extraction of soil, sand, and rock of varying sizes-all of which was of a common mineral variety, including limestone and dolomite. Rock pieces smaller than 3 feet were crushed into even smaller sizes and then, after each foundation was poured and cured, the crushed rocks were pushed back over the hole and compacted into the excavated site. Larger rock pieces were then positioned next to the holes from which they came.

         In November 2014, the United States-rather than OMC-filed suit to halt this excavation work on the basis that such sand, soil, and rock extraction by Osage Wind was "mining" under 25 C.F.R. § 211.3 and thus required a mineral lease under 25 C.F.R. § 214.7. After discovering that Osage Wind had completed excavation in late November 2014, the United States withdrew its request for an injunction and filed an amended complaint for damages based on the alleged unauthorized extraction of reserved minerals. On September 30, 2015, the district court awarded summary judgment to Osage Wind, concluding that the excavation work did not constitute "mining" under § 211.3, so Osage Wind's excavation work did not trigger the lease requirement of § 214.7. Importantly, at no time before the district court's final judgment did OMC become a formal party to the proceedings-instead it relied on the United States, as trustee for the mineral estate, to litigate the case on behalf of the tribe.

         After the summary judgment order, the United States had 60 days to appeal. See Fed. R. App. P. 4(a)(1)(B). OMC did not know whether the United States intended to appeal from the adverse judgment, and repeatedly sought clarification from the government about its appeal intentions. On the final day of the appeal deadline, OMC received a phone call from the United States communicating the government's intention not to appeal. OMC then scrambled to protect its interests. First, it filed a motion to intervene as a matter of right under Fed.R.Civ.P. 24(a). Next, minutes later, it filed a notice of appeal from the summary judgment order that was entered against the United States. Appeal No. 15-5121. On February 22, 2016, the district court denied the intervention motion for "lack of jurisdiction due to the pending [merits] appeal." JA 576. OMC then promptly appealed to our Court that decision denying its intervention motion. Appeal No. 16-5022.


         Before we reach the principal question in this case, we address two threshold issues. We first hold that OMC has adequately appealed the underlying merits decision, even though it did not formally join the proceedings below. As a result of that holding, there is no need to address whether OMC properly intervened in the district court. We then conclude that Osage Wind has not established its res judicata burden of showing that OMC could have raised the instant claim in its earlier 2011 lawsuit regarding oil-and-gas interference. Finally, on the merits, we determine that Osage Wind's excavation activities constituted "mining" under § 211.3, so a federally approved lease was required under § 214.7.

         A. Right to Appeal

         The instant action was initially brought by the United States as trustee for the Osage mineral estate. OMC was not a party to the proceeding below, yet it seeks to appeal. When the government informed OMC on the final day of the appeal deadline that it would not appeal, OMC acted quickly: it immediately submitted an intervention motion and then, minutes later, filed a notice of appeal from the underlying lawsuit. As a strictly procedural matter, because the district court did not rule on the intervention motion before OMC filed the appeal notice, OMC was not formally a party to this lawsuit when it appealed. It is black-letter law generally that "only parties to a lawsuit, or those that properly become parties, may appeal an adverse judgment." Marino v. Ortiz, 484 U.S. 301, 304 (1988) (per curiam). But there is ...

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