Good afternoon. I am Keith Schneider, Program Director of the Michigan Land Use Institute. I am here to urge the Commission to reject the Department of Natural Resources staff proposal on leasing Great Lakes bottomlands. The DNR staff plan is outside of the scientific mainstream and fails to implement the key recommendations of the Michigan Environmental Science Board. The proposal also is outside of the mainstream of public opinion, running counter to the wishes of the U.S. House and Senate, as well as leading gubernatorial candidates and state officials from both sides of the aisle.

About the Institute
The Michigan Land Use Institute, based in Benzonia, is an independent, nonprofit environmental policy, research, and advocacy organization founded in 1995. Since then, more than 2,200 Michigan households, businesses, and organizations have joined in support of the Institute's mission to establish an approach to economic development that strengthens communities, enhances opportunity, and protects Michigan's unmatched natural resources. The Institute’s goal is to help Michigan avoid the patterns of development that cause pollution, loss of community, rising costs to individuals and governments, and a deteriorating quality of life.

Institute Expertise in State Energy Policy
Few organizations have more carefully evaluated the state’s oversight of energy development than the Michigan Land Use Institute. In 1998, the state legislature approved, and Governor John Engler signed, five new statutes to strengthen the state’s management of the energy industry. The new legislation was the result, in large part, of the Institute’s statewide project to investigate lapses in state management, organize more than 30 local governments and organizations, and assist lawmakers in developing workable reforms.

In 1997, as part of that statewide energy reform project, the Institute participated with the Michigan Environmental Science Board to develop a strategy to minimize environmental damage caused by directional drilling beneath the Great Lakes.

Our view then, as now, is that state policies, both current and proposed, fail to adequately address the public health and environmental risks around the wellheads on shore. The Institute proposed a comprehensive hydrocarbon development planning process that would enable the oil industry to tap energy reserves while providing paramount safety to people and the environment. Our proposal included restrictions on new industrial infrastructure, comprehensive planning involving both local and state government officials, and greater public health protection for Michigan citizens. We presented our recommendations to this body and the Legislature over four years ago. We also presented it to the Michigan Environmental Science Board, an expert panel appointed by Governor John Engler to advise him on the risks associated with directional drilling beneath the Great Lakes.

In the fall of 1997, after months of review, the Science Board issued its recommendations. Except for its failure to address the human health risks associated with exposure to hydrogen sulfide, the Science Board’s findings closely mirrored the Institute’s recommendations.

The Science Board specifically recommended that the state undertake these steps prior to any new Great Lakes leasing or energy development:

1. Involve the public in evaluating the risks and in deciding whether any development should occur.
   "While technology and science can certainly help to lessen the impacts and even resolve several of the conflicts that may appear, most of these types of issues will require comprehensive environmental planning, communication between all stakeholders, and compromise in order to be resolved." [page 5]
   "[T]he Great Lakes’ aquatic and shoreline environments [will be] better protected if the lease agreement required an aggressive environmental impact assessment and stakeholder participation prior to the lease sale." [page 5]
2. Prohibit new infrastructure and limit oil and gas development to areas where existing infrastructure already exists.
   "In order to afford the greatest environmental protection, the Panel recommends that lease sales should specifically prohibit the construction of any new infrastructures and limit oil and gas development to areas where existing infrastructures (pipelines, transmission lines and roads) are already available." [page 7]
3. Develop a Comprehensive Coastal Energy Development Plan prior to any new leasing or energy development.
   "The Panel recommends that comprehensive coastal zone environmental inventories be compiled for both Lake Michigan and Lake Huron in order to clearly identify and evaluate, at a minimum, areas that are already impacted with oil and gas development, areas where leases could not be issued for future development (e.g., due to non-resolvable environmental constraints) and areas where directional drilling development leases could be allowed provided that such development could be documented as to cause only minimal and mitigable environmental impacts and conflicts to the shoreline. The existing DNR/MRIS system supplemented with local land use plans could be used as a basis to identify the above areas. Given the great complexity of the Lake Huron and Lake Michigan shorelines and the need to afford the greatest environmental protection, such coastal zone evaluations should be considered a prerequisite before leasing of any of the Great Lakes’ bottomlands." [page 6]

DNR Staff Proposal Falls Short of the Science Board Recommendations
On August 20, 2001, the staff of the Department of Natural Resources formally proposed new requirements for leasing state-owned minerals, including those located beneath the Great Lakes. The Institute evaluated the proposal and concluded that it represents an improvement from current policy. Of particular note was the staff’s recommendation to bar drilling — by issuing non-development leases — in ecologically sensitive and environmentally unique areas including sand dunes, wetlands, on steep slopes, in highly erodible regions, and in habitat needed by endangered species.

However, the Institute also found that the staff proposal does not come close to meeting the recommendations of the Michigan Environmental Science Board. In fact, the staff recommendations specifically avoid the Science Board’s three central recommendations:

1. Involving the public directly in planning and approving coastal energy development.
   The closest the DNR staff proposal comes to inviting the public to participate in coastal energy development is to provide citizens with notice at least 30 days prior to a lease auction, and to hold a public meeting to allow residents to comment and to share information. The staff proposal also calls for state officials to meet with township officials to inform local governments of any proposed sale of Great Lakes bottomland leases. In no way do these steps provide a direct role for citizens or local government officials to help decide where coastal energy development is appropriate and where it is not.
2. Limiting coastal energy development only to those areas with existing infrastructure.
   The DNR staff proposal completely avoids the Science Board’s recommendation to limit coastal energy development to areas with existing infrastructure. Instead the staff proposal calls on the state to inventory existing infrastructure and determine whether suitable drilling sites exist within reach of that infrastructure.
3. Preparing coastal energy development plans prior to any new leasing or directional drilling beneath the Great Lakes.
   The DNR staff proposal sidesteps the Science Board’s recommendation to prepare coastal energy development plans prior to any new leasing or drilling. Instead, the staff proposal calls on the state to prepare an inventory of existing infrastructure, unique and sensitive environmental features, and determine locations where new wells are "allowed."

A fourth significant omission in the DNR staff proposal is its silence on the public health risks posed by hydrogen sulfide (H2S). Oil and gas from the Niagaran formation contains considerable concentrations of H2S. Moreover, citizens living in and near Manistee, where much of the new coastal development may occur, have experienced a number of significant and worrisome incidences involving exposure to H2S in recent years. In August 1996, for instance, 11 people in the Parkdale section of Manistee were transported to the hospital after being exposed to a deliberate release of natural gas containing 900 parts per million of H2S.

As a result of the failure to adhere to the sound recommendations of the Michigan Environmental Science Board, the Institute calls on the Natural Resource Commission to reject the DNR staff leasing proposal as scientifically inadequate. By deliberately skirting, avoiding, and ignoring the Science Board’s carefully considered central recommendations, the DNR has done the principle of sound science a grave disservice.

If the DNR staff proposal becomes state policy, then this Commission reached an indefensible conclusion that the meager increase in energy supplies and the interests of the oil industry outweigh the substantial environmental, public health, and economic risks to communities along the Great Lakes shoreline.

The Institute urges the Commission not to reach that conclusion and to oppose the staff recommendation. We are not the only ones calling for such action.

After months of analysis, Republican Lieutenant Governor Dick Posthumus said he opposes Great Lakes shoreline drilling because the environmental risks outweigh the benefits. Four of the seven Republican members of Michigan’s Congressional delegation voted in June to block Great Lakes drilling. All of the leading Democratic candidates for governor oppose directional drilling beneath the lakes. And a strong majority of Michigan residents oppose new energy development along the Great Lakes shoreline.

I conclude by noting that the Michigan Environmental Science Board recommended three clear, technically sound steps to reduce the risk of energy development along the Great Lakes coast. Unless such requirements are put in place, said the Science Board, leasing must not occur. The Michigan Land Use Institute agrees.