MCLUC Reporter, Winter 1996

MILFORD — Twenty five years ago in Milford Township, an oil well could be drilled in the back of a farm field and the biggest concern was whether it would strike oil. Today, Milford Township has changed: what once was open farmland now is likely to be a subdivision. Oil and gas companies are faced with increasing public outcry from residents of these new homes, who don’t think the wells make good neighbors.

As the farm land of Oakland County is sold to developers at record prices, once rural townships like Milford have become a prime target for real estate developers. Escaping the congestion of Detroit and Lansing and their existing suburbs, urban refugees are drawn to western Oakland County and neighboring Livingston County for their rural charm and open space. When confronted with oil companies in search of underground riches, these citizens have organized impassioned battles to keep out the wells.

In the last few years, campaigns against oil or gas wells have occurred in communities such as Brighton, Novi, Northville, and Hartland, which are located along the I-96 highway. The most recent uprising is in Milford and Commerce townships in western Oakland County (See related article on page 12).

Community opposition varies from place to place, but the argument against the wells typically includes a fear of lowered property values, noise nuisances, increased truck traffic, dangers of hydrogen sulfide gas, road damage, water contamination, and air pollution. The overriding message of the subdivision activists is: oil and gas wells are industrial development, and industry doesn’t belong in residential areas.

Any attempt at local control of oil and gas development will face staunch opposition from the industry. Said Richard Moritz, manager of the land and legal department for Wolverine Oil and Gas, "If townships had authority, we would no longer have drilling and exploration in Michigan."

A study by the Michigan Society of Planning Officials projects a remarkable demographic shift for Oakland and Livingston counties. By the year 2020, each of these counties will have more than 10,000 new housing units. Oakland County will see a 33% population increase, and Livingston County will grow by 82%.

Bruce Waldo, a geologist for the Department of Environmental Quality who reviews the well permits for Oakland County, wonders where this competition for land is headed. "There are so many residents in Oakland County, it’s hard to find a place to drill," he told a local newspaper.

Mr. Moritz of Wolverine says the competition for drill sites is tough. "There’s a big land rush in west Oakland, and the few tracts that are left are owned by big land developers," he said. "I think the door is closing rapidly."

The energy industry seems ready to continue its search for more oil and gas. Between January 1 and November 30, 1995, seven new wells were drilled and eight new wells permitted in Oakland County. In the same time span, Livingston County saw seven new wells, and permits were granted for another eight. Once these wells are completed and on line, Oakland County will have 35 operating wells and Livingston County will have 63.

A survey by the Michigan Oil and Gas News shows more suburban-area wells on the way, with oil and gas companies reporting an increased interest in both southeast and south-central regions of the state for 1996.

The playing field for oil and gas development in southeast Michigan has changed, but the rules of the game have stayed the same. Public Act 61, the law that oversees oil and gas development, was written in 1939, and received one modest updating in the 1950s.

Public Act 61 exempts oil and gas wells from township and county authority. Rep. Gerald Law, (R-Plymouth), has drafted legislation that would give townships and counties authority to enforce local ordinances over wells.

According to the DEQ, under Public Act 61, there are no regulations for noise from processing stations, and no restrictions on the hours or routes of truck traffic to service the well sites; the minimum setback distance from neighboring houses is 75 feet; and when granting permits to drill, the law does not require the DEQ to consider the population density or evaluate whether the proposed well site is compatible with surrounding land uses.

Aware that the law does not address many of the concerns of local residents, DEQ staff say they work with the oil and gas companies to solve the problems voluntarily. According to Elmore Elztroth, Shiawasee District Geologist, the Geological Survey Division staff, "does have the option for making recommendations, based on factors outside the rules, if it’s just not a good site." Mr. Elztroth added, however, that such recommendations are not common.

Residents facing oil wells in their neighborhoods say that a loosely organized, voluntary compliance system is not sufficient. They have called upon their state representatives to enact legislation that would make the well permitting process more responsive to local land use plans.

Message to the White House and Congress: Want a billion dollars to help balance the federal budget? Look in the nest of corporate welfare that Washington lays out for oil and gas producers.

There, along with the depletion allowances and exploration subsidies, federal budget balancers will discover a $1 billion-a-year tax credit for natural gas producers that long ago outlived its usefulness, and now is just a big juicy giveaway.

This federal gift to the energy industry already has cost taxpayers $4.4 billion since it was enacted in 1980. It will cost another $5.5 billion before it expires at the end of 2002, according to estimates by the U.S. Treasury Department.

Administered by the Internal Revenue Service, the Section 29 "Unconventional Fuels" tax credit is one of the most generous, and perhaps most senselessly expensive and environmentally damaging, energy programs ever devised.

A product of the 1973 Arab oil embargo and the perceived "energy crisis" that followed, the credit was enacted by Congress in 1980 as part of the Crude Oil Windfall Profits Tax Act. At the time, the nation had endured several hard winters when natural gas supplies were tight and prices were high.

Congress sought to address the problem by offering a generous incentive in the form of a tax credit, which is skimmed like cream off the top of income taxes. Exploration companies willing to drill in specific "unconventional" energy-bearing formations around the country — such as the coal methane beds of northern Alabama, Colorado, New Mexico, and Wyoming; the tight sands of eastern Texas; and the gas-bearing shales of Appalachia and northern Michigan.

The intent of the credit was to invent technology for tapping these gas-saturated but dense geological formations. In the 1980 tax year, the program offered drillers 52¢ per thousand cubic feet of gas produced, meaning that for a well, producing 100,000 cubic feet a day, investors could deduct $18,928 a year from the amount of tax due.

Each well drilled in a defined reserve before December 31, 1992, became eligible for the credit. The Department of Energy estimated that 50,000 to 70,000 wells were drilled across the country to qualify. The tax credit was indexed for inflation, and now is worth $1.02 per thousand cubic feet of gas produced, or $37,200 annually for a well that produces 100,000 cubic feet daily.

As a technology promotion program, the Section 29 credit worked quickly and well. By the early 1990s, engineers had figured out how to drill, fracture, pump, and process large quantities of gas from previously "hard to tap" reserves.

• About 2,500 wells were drilled in northwestern New Mexico’s San Juan basin, producing 700 billion cubic feet of natural gas annually, or 3.5% of the national supply.

• Wyoming, Colorado, and Alabama each year combine to produce 200 billion cubic feet more.

• In Michigan, the tax credit caused a natural gas rush — more than 4,500 wells that qualified for the credit have been installed in the Antrim Shale layer lying beneath the heavily forested counties of the northern lower peninsula. Of the state’s natural gas production — now 250 billion cubic feet a year and rising — 65% comes from Antrim Shale wells. Michigan is the nation’s 12th-largest producer of natural gas, and ascending in the rankings.

In all, about 5.5% of the nation’s natural gas is produced from wells eligible for the credit, or slightly more than 1 trillion cubic feet of gas a year.

On the plus side, the credit encouraged new exploration and drilling techniques that improved the nation’s energy supply picture. Even after eligibility expired, companies nevertheless continued probing for natural gas in unconventional reserves. According to the Oil and Gas Journal, a monthly magazine that covers the industry, three of every five new natural gas wells in the United States last year were drilled in the unconventional sources.

The problem with the program is two-fold. First, the tax write-offs do not expire until December 31, 2002. The second is that the ingenuity of the engineers far exceeded expectations. Eligible wells are vastly more productive than Congress initially envisioned.

In effect, Congress designed a tax program of extraordinary largesse, an open-ended subsidy with long payout times and no cap on costs. What was initially seen for a 22-year period as a $500 million to $1 billion program has ballooned into a $10 billion program, according to Hudson Milner, a specialist at the Treasury Department.

Who are some of the players getting this huge tax break? Utilities like Consumers Power and MichCon, the two largest natural gas sellers in Michigan; and Belden & Blake, an Ohio-based company that operates more natural gas wells in the eastern United States than any other company.

Just last year, Michigan’s largest producer of Antrim Shale gas, Terra Energy, was sold for $63.6 million, the largest private energy company sale in the state’s history. Of the more than 1,400 wells drilled by Terra Energy in Michigan, roughly 800 qualified for the Section 29 tax credit.

There’s more. By linking deductions to production, the Section 29 credit encouraged far more drilling than was necessary to tap the reserves — as many as two out of every three wells installed in Michigan’s Antrim formation exist primarily to benefit from the subsidy.

The result? The Section 29 tax credit is among the most damaging land use policies enacted by Congress in the last two decades. Wells drilled to qualify for the credit needed roads, pipelines, pumping stations, processing plants, and purifying facilities to move the gas from the ground to the market. The credit encouraged the construction of a sprawling industrial manufacturing infrastructure that chewed up desert lands in the Southwest, and eroded hillsides in the East and South.

In eastern Colorado, the drilling of more than 3,000 new wells in the early 1990s caused a protest among farmers so fierce that the Colorado Oil and Gas Conservation Commission established new policies for notifying landowners about drilling before it occurs. The Commission also has proposed requiring larger bonds for plugging and cleanup when production ends.

Alabama citizens have battled to prevent streams and rivers from being harmed by erosion from access roads and pipelines.

No state, though, has been affected by Section 29-driven drilling more than Michigan. Installing the Antrim Shale gas fields in the last decade turned 500,000 acres of magnificent woodlands into an ugly and noisy maze of muddy access roads, deep pipeline trenches, and clear-cut drilling sites. Not since Michigan’s white pine forests were cut to the ground a century ago has the government sanctioned such wanton degradation of natural resources.

Millions of acres of the nation’s most beautiful rural landscape have been deformed by over-building of natural gas developments. And while there are reasonable arguments for natural gas burning more cleanly than oil or coal, at this end of the pipeline the environmental costs are grave.

There is no justification for continuing to require taxpayers to finance this wasteful gift to the richest among us. The United States is awash in natural gas. Prices have tumbled to the lowest levels in history, in part because of the productivity of thousands of Section 29 wells. In an era when every penny counts, it’s time for President Clinton and House Speaker Newt Gingrich to save a billion dollars a year. Ax the credit.

MILFORD — Peter and Pat Karr recently built their dream home in Oakland County’s Milford Township near Kensington Metropark, a 10,000-acre natural area that is part of the county park system. They thought their close proximity to the park would assure them a tranquil country life.

What they did not know was that park authorities, the energy industry, and neighboring mineral owners would team up to drill an oil well at the entrance to their cul-de-sac, and because of state law, there was nothing the Karrs could do to prevent it.

"We were looking for something quiet and peaceful," said Mr. Karr. "We thought we were being protected by local zoning to keep this way of life. This whole thing came as complete shock. If this was a McDonald’s, people wouldn’t allow it."

About 10 miles east, in Commerce Township, residents along Richardson Road have mounted an intensified campaign against another oil well. Joan Seamster, a homeowner in a subdivision near the proposed well, organized 600 neighbors to oppose the drilling.

"Oil and gas drilling in Commerce Township would be treading on an ecological situation that is out of balance already," said Ms. Seamster. "The political reality is that oil and gas runs this state. It’s very apparent that the government doesn’t care."

After the Karrs moved into their new cedar home, they learned that the Huron Clinton Metropolitan Authority, owners of Kensington Metropark, pays for park maintenance partly from $600,000 in annual royalties from four active oil wells in the park. They also learned the Metropolitan Authority and several mineral owners had signed leases with Wolverine Gas and Oil to drill a new well at the entrance to their road. The well is to be drilled at an angle to reach the expected oil reserves under park property a quarter mile way.

Mr. Karr fears the new well will lower the value of his home and harm the quality of his family’s life. He turned to his township for answers, and learned that local officials are powerless. Mr. Karr then organized 50 neighbors, and pleaded with Wolverine and the park authority to move the well to park land.

"If the Huron Clinton Metropolitan Authority wants to get in the oil business, in fairness and in the best interest of local residents, please do it on your own lands," Mr. Karr said in a letter to the park authority.

The residents also petitioned the Department of Environmental Quality to revoke the permit because it was too close to a wetland, and, they argued, posed a hazard to air and water quality.

Park officials offered to relocate the well, but refused to consider moving any of the processing equipment. Wolverine then refused to move the well.

"It’s a property rights issue," contends Richard Moritz, a Wolverine executive, who argued that the possibility of environmental contamination is remote.

Ms. Seamster raised such a fuss about the well near her Commerce Township home that R. Thomas Segall, the former chief of the Geological Survey Division, came out to meet with residents. Mr. Segall stood by his recommendation to allow the drilling.

Ms. Seamster said she is resigned to the drilling now, and plans to keep a watchful eye on the well. Mr. Karr, meanwhile,

realizes that he and his neighbors have no recourse. "All we can do is pray for a dry hole," he said. ~H.V.

LANSING — The Department of Natural Resources has canceled its April auction of 133,000 acres of state-owned mineral rights for oil and gas development. The action came after continuing questions about an agreement that allows the industry to write off its operating costs for Antrim gas production before paying state royalties. It was the second such cancellation since the deal was disclosed last summer.

The deal between state regulators and the oil and gas industry also is attracting intensifying scrutiny from policy makers:

• During the January Natural Resources Commission hearing, Commissioners turned aside the recommendations made by the DNR committee reviewing post production cost deductions, most of which suggested minor modifications, and supported more substantive actions. Commissioner David Holli, for instance, suggested removing all artificial pricing mechanisms now incorporated in state leases, and allowing the market to set prices. Commissioner Jerry Bartnik explored the option of eliminating the deductions altogether.

• During a hearing of the House Appropriations Subcommittee on Natural Resources held in early February, Chairman Bill Bobier, (R-Hesperia), proposed a joint study of the agreement by four state agencies.

• At the same hearing, C. Edwin Meadows, DNR Deputy Director, proposed hiring an independent consultant to "audit the whole business from soup to nuts," while conservation groups insisted that reviews be open for public hearings and comment.

• Rep. Allen Lowe, (R-Grayling), has gained a commitment from the DNR to hold a separate public hearing in Grayling on April 10.

• And the Northeast Michigan Council of Governments, which represents planning agencies in eight counties, has approved a resolution calling for "immediate recision" of the post production agreement.

The heightened interest follows stinging criticism of the agreement by Larry DeVuyst, chairman of the Natural Resources Commission. In a letter to the Attorney General in January, Mr. DeVuyst asked for guidance in determining whether oil and gas companies are breaking the law by using the agreement to reduce their royalty payments to private mineral owners by millions of dollars.

Attorney General Frank Kelly recently turned down the request, saying it was his "long standing policy" not to render formal opinions on issues in pending litigation.

Mr. DeVuyst said in his letter that such deductions have "the appearance of potential consumer fraud."

"We request review of the entire post production cost issue," said Mr. DeVuyst, "not just as it affects the State of Michigan and its revenues, but also on behalf of thousands of individual citizens who are complaining to the NRC about how it is now being applied against them."

Post production costs currently are defined under the agreement as nearly all of the operating expenses associated with producing Antrim Shale gas. (For more details, see the Summer & Autumn 1995 issues of the MCLUC Reporter).

A DNR audit found that the deductions cost the state more than $4 million a year in lost royalty payments, and more than $10 million since the agreement was signed on November 10, 1993.

According to evidence gathered by the NRC and the DNR, the agreement was reached without the knowledge of the DNR director, the Natural Resources Commission, the Legislature, or the public.

Martin Lagina, chairman of the Michigan Oil and Gas Association, said in an interview that deducting post production costs was "a legitimate contract provision in state leases, and is being handled properly."

Mr. Lagina said that approximately 40% of the deductions are processing and transportation costs paid to other companies to get the gas to market. Producers have no control over these costs, he said, and the leaseholder, in this case the state of Michigan, must bear its share of the expense in order to find the highest price for the gas.

The remaining deductions for getting the gas to market are the processing and transportation charges controlled by the producing company. Most of these deductions, Mr. Lagina said, expire after seven years under terms of the November 10, 1993, agreement.

"If post production costs are not allowed in their entirety," said Mr. Lagina, "companies will have no incentive to seek the best price, and therefore royalties paid to the state will probably decline."

Public officials, property owners, and conservationists are calling the agreement too generous.

Among the opponents who testified at a Natural Resources Commission hearing in January was Scott Everett, Associate Legislative Counsel for the Michigan Farm Bureau, which is representing the interests of private leaseholders.

Mr. Everett told the commissioners that in an address to MOGA members the day after the agreement was signed, Rodney Stokes, head of the DNR Real Estate Division, emphasized that the agreement should not apply to private mineral holders, a fact confirmed by the DNR staff.

Mr. Everett then produced copies of letters from some of the state’s largest natural gas producers — NOMECO, Wolverine Gas and Oil Company, Antrim Gas Inc., Trendwell Oil Corporation, and HRF Exploration — notifying private mineral owners that the state agreement would be used to deduct production costs from private royalty payments.

"In the future your checkstub will show both the total sale price of the gas at the delivery point and a deduction for the intervening post production costs," said the letter sent to mineral owners by Sidney J. Jansma Jr., president of Wolverine Gas and Oil.

Clearly recognizing that the post production cost issue is damaging public opinion, MOGA published a letter in the Michigan Oil and Gas News sternly warning companies to stop using the state agreement to deduct costs from private royalties, and has scheduled a work session for its members.

Terra Energy has agreed to withdraw its permit applications to drill what would have been the first three wells within the Jordan Valley Management Area, a protected wilderness in northern Michigan’s Mackinaw State Forest.

The withdrawal was confirmed in a letter dated December 1, 1995, to the Michigan Energy Reform Coalition (MERC) from Martin Lagina, Consulting General Manager of CMS NOMECO, Terra Energy’s parent company. Mr. Lagina said in the letter that Terra has, "unilaterally and voluntarily agreed to withdraw our permit applications."

The withdrawal came just two weeks after a company spokesman told MCLUC that Terra was committed to drilling the wells. The Michigan Energy Reform Coalition then began a campaign to stop the drilling in the 22,000-acre wilderness. MERC sent a detailed letter to the Department of Natural Resources, the Department of Environmental Quality, and Terra Energy, urging a withdrawal from the Jordan Valley.

Terra’s decision to withdraw reportedly came after a phone call from Thomas Segall, former chief of the Geological Survey Division. Mr. Lagina told MERC that "overall impact on the environment of our activities and the concerns of local residents are significant in the decision making process."

Opponents of oil and gas development in the Jordan Valley, while pleased with Terra’s decision, point out that no oil and gas company has committed to abstaining from future drilling in the Jordan Valley.

MERC has appealed to Terra Energy and its parent companies to sponsor a formal industry-wide resolution to refrain from drilling within the boundaries of the Jordan Valley Management Area. In a January 9, 1996, letter to MERC, Mr. Lagina said that Terra is "considering" the request.

John Richter, Vice President of Friends of the Jordan River Watershed, a member of MERC, says the issue is by no means resolved. As long as there are "severed mineral rights" in the Jordan Valley Management Area, the situation could arise again, he said, because private owners can lease minerals beneath some surface property that is part of the State Forest. There are 39 such severed rights parcels within the wilderness area.

The public outcry to protect the Jordan Valley wilderness, which has no residential or industrial development, has not inspired the Department of Environmental Quality towards policy changes. "If it came up again, we would put it in the same respect," said Hal Fitch, acting chief of the Geological Survey Division, of future applications for drilling permits in the protected area. "We would have discussions with the industry to make sure they understand the issues, but there is no guarantee of what will happen in the future."

The Department of Natural Resources seems to be more serious about finding solutions. Bill O’Neill, the DNR area forest manager who has spoken out against drilling in the Jordan Valley, said that most of the almost 1,600 acres of private minerals in the wilderness are in wetland areas, and would not be permitted under Public Act 61 criteria.

There are however, 10 to 15 parcels that are on dry land that the DEQ would likely permit. Mr. O’Neill wants the state to consider buying the mineral rights for these key parcels. "Right now is the time to do it," said Mr. O’Neill, who thinks there is support from some upper level DNR officials, but was concerned that it may not last.

When asked about this proposal, C. Edwin Meadows, DNR deputy director, said he "certainly recognizes the desirability of acquiring those interests," and will be, "entering into internal discussions."

LANSING — The DEQ Geological Survey Division’s director of 15 years has been reassigned. R. Thomas Segall, who has spent his entire 30-year state government career with the GSD, now is in charge of the Underground Storage Tank Division, which is responsible for cleaning up leaking tanks.

The change was made by Russell Harding, Director of the Department of Environmental Quality. Three senior aides will rotate as GSD chief during the next five months, starting with Hal Fitch, supervising geologist in the Cadillac region.

Officials with the Department of Natural Resources, the former agency for the GSD, say that budget problems in the division strained relations between Mr. Harding and Mr. Segall.

The Geological Survey Division is financed by a 1% fee on oil and gas revenues in Michigan. Because of declining oil and gas market prices, the GSD budget has shrunk.

A decade ago, the GSD had 128 employees and a budget of nearly $6 million. In the last six years, though, as the GSD’s work load soared because of the Antrim gas development boom, Mr. Segall could not prevent his division from being steadily stripped of money and professionals.

Last summer, Mr. Segall was forced to furlough 20 employees, many of whom had worked for him for years. This year, the GSD has 63 employees and a budget of $4.4 million.

Five field inspectors now oversee the drilling and operation of 6,500 oil and gas wells in 15 northern Michigan counties.

The sharp reductions in staff and budget have led to several proposals to change how the division is financed. A special 10-member advisory committee to the GSD is meeting in Lansing to study the division’s budget, and propose alternative financing plans.

The committee, composed of state officials, industry executives, and GSD representatives, also includes Julie Stoneman, Land Programs Director of the Michigan Environmental Council and an active leader in the Michigan Energy Reform Coalition.

Throughout his long career, Mr. Segall was regarded as an advocate of the right of oil and gas companies to drill where they wanted, and was well-liked by industry executives. In late January, Mr. Segall was honored at a farewell reception in Lansing, held by his GSD colleagues, which was well-attended by Michigan Oil and Gas Association executives.

Mr. Segall also was capable of occasional surprising decisions that put the environment first. Last November, for instance, he made the telephone call that helped convince Terra Energy to withdraw three permit applications to drill in the Jordan Valley wilderness. (See article on this page).

Michigan’s township leaders are organizing to assert their authority to regulate oil and gas development. The campaign, aimed at the courts and the Legislature, is a response to the aggressive moves by the energy industry to install pipelines, compressor stations, and wells in residential neighborhoods.

In response, oil and gas industry leaders are filing their own lawsuits and deploying lobbyists to try and derail legislative proposals that would require producers to cooperate more with local governments.

Four pending House bills would give counties and townships the authority to regulate hours for operating drilling rigs and transporting oil and gas, and would significantly increase a township’s power to control exploration, drilling, and well operation. (See box on the next page).

On the legal front, two closely watched lawsuits are pending in Manistee County, from Pleasanton and Filer townships. Both test the authority of townships to regulate oil and gas installations, and could open the door to much greater local control. (See the Summer 1995 issue of the MCLUC Reporter for more details). Other litigation is under consideration by residents and township officials in Oakland and Alpena counties.

The Michigan Townships Association, which represents 1,242 townships and is one of Lansing’s most influential lobbying organizations, has placed oil and gas development among its top priorities.

In 1995, the MTA provided $5,000 to help finance Pleasanton Township’s lawsuit, and has indicated that it would invest more. In January 1996, the MTA adopted a resolution supporting legislation that would permit townships to regulate energy exploration and production.

1. Insufficient staff at the Geological Survey Division to "effectively monitor the operation of wells."

2. The inability of townships to have any say in reducing "noise, odors, fumes, and excessive traffic that impact on the quality of life for township residents."

3. Energy exploration and production "expedite the deterioration of the existing infrastructure and create an increased demand on public services without providing reimbursement."

John M. LaRose, executive director of the MTA, said in an interview, "We believe very strongly in local control, and we are not happy we lost local control way back in the 1930s when the oil and gas law was enacted."

He added, "It’s a sore point with our members. The frustration is that the local people have no power to do anything. The Geological Survey Division has total control, and when you have a problem, you call the agency. Then it’s the old story. They don’t have the people to help."

Martin Lagina, chairman of the Michigan Oil and Gas Association, said the industry will fight any effort to change the current status of the state Department of Environmental Quality as its sole regulator. "We are extracting a resource that doesn’t respect township boundaries," he said.

Mr. Lagina said that the highly technical nature of the industry requires regulatory expertise available only at the state level. "If Act 61 isn’t the strictest, it’s one of the strictest sets of regulations in any of the 50 states," said Mr. Lagina. "We think it would be a mistake to serve two masters."

Residents and township leaders counter that the state oil and gas law is not nearly rigorous enough in protecting land, water, wetlands, and communities. Local leaders also say they are seeking more control because the industry has bullied them, ignored their concerns, and completely disregarded substantive efforts to reach a compromise on how oil and gas fields are developed.

The failure of the Benzie-Manistee Oil and Gas Task Force is a case in point. The 18-member panel of citizens, business leaders, local and state officials, and industry executives met for 10 months in 1995. Funded with a $28,600 grant from the DNR, its purpose was to negotiate a voluntary set of principles about how to more sensitively develop Antrim Shale reserves in the two counties. The agreement would have been available as a model for other counties.

Once the task force convened, however, industry representatives refused to consider any changes in current practices. "It was apparent oil industry representatives’ purpose on the task force was to stonewall any attempt to reach consensus," said Kurt Schindler, Director of Planning in Manistee County and the organizer of the task force.

Cases in which local leaders are asserting their authority over oil and gas development are occurring in Manistee County, Oakland County (see article on page 12), and Alpena County. Although the specific issues in each case are different, all have a common root: the belief that oil and gas installations should be treated no differently than other industries that already are regulated by local governments.

Oil and gas production, though, is exempt from most of the rules that affect other industries. Under the 1939 oil and gas law, the Geological Survey Division is given exclusive authority to regulate the "drilling, completion, or operation of oil and gas wells." In 1943, when the Legislature approved the County Rural Zoning and Enabling Act and the Township Rural Zoning Act, lawmakers specifically preserved the state’s exclusive control over oil and gas wells.

Townships now are seeking recognition of their right to regulate compressor stations and other processing installations. In 1990, the State Supreme Court established a precedent in favor of local governments when it decided a case involving an oil processing plant in Lenawee County’s Addison Township. The court, by a vote of 6 to 1, said that the state’s exclusive jurisdiction "applies only to oil and gas wells, and does not extend to all aspects of the production process."

The Geological Survey Division last year issued a formal opinion opposing the court decision, and reasserting its authority. The Legislature now has taken up the issue.

Mr. LaRose of the Michigan Townships Association, analyzing the potential votes among members the of Legislature, said the time is right for substantive changes in how the oil and gas industry is regulated

In previous years, lawmakers from rural northern counties found themselves outnumbered in the Legislature, since oil and gas development was not perceived as affecting constituents

from urban areas. Now concern about current practices in the exploration and production of the state’s oil and gas is building in more heavily populated — and represented — downstate regions.

Lawmakers from the northern and the southern parts of the state are forming a coalition to support local control of oil and gas development. The result is that the issue has become much more visible in the Legislature, and for the first time since the battle over oil drilling in the Pigeon River Country in the 1970s, the leadership of the House and Senate is paying attention.

• Rep. Willis Bullard Jr., (R-Milford), and Rep. Gerald Law, (R-Plymouth), are co-sponsoring House Bill 4499, which would remove the ban in Public Act 61 that prevents townships from regulating oil and gas wells.

• Rep. Susan Munsell, (R-Brighton), and Rep. Dan Gustafson, (R-Williamston), have co-sponsored legislation, House Bill 4928, to remove the ban in Public Act 61 that prevents counties from regulating oil and gas wells.

• Rep. Law also has sponsored House Bill 4996, which would enable townships to set hours of operation for drilling oil and gas wells, and for transporting materials to and from oilfield installations. Reps. Munsell and Gustafson are sponsoring legislation, House Bill 4927, to enable counties to do the same thing.

P.S. Lovejoy, one of Michigan’s pioneer naturalists and the first director of what was to become the DNR’s wildlife division, called the area surrounding the Pigeon River in the northern tip of Michigan’s lower peninsula "The Big Wild." Lovejoy helped shape the Pigeon River Country, from a nucleus of cut-over and burnt timberlands and a few failed farms, into what was to become one of Michigan’s first state forests.

Our state forest system, together with large areas of federal land, give Michigan one of the greatest amounts of public land in the nation. Out of all this, what makes the Pigeon River Country so special?

One reason is that it is still the largest tract of wild-like country in the lower peninsula. Except for a small scattering of cabins here and there, these mostly along the boundaries, the forest consists of approximately 98,000 acres, or 155 squares miles, of northeastern Otsego County, a bit of northwestern Montmorency County, and a big hunk of southern Cheboygan County. It includes the major part of the watershed of three well-known trout streams; the Sturgeon River, the Black River, and of course, running right through the middle of the forest, the Pigeon River itself.

By far, the Pigeon River Country’s principal claim to fame is its elk. Once fairly common throughout most of the United States, the woodland variety of the wapiti, or what European settlers mistakenly called "elk", had been exterminated in the eastern and mid-western states well before the turn of the century.

Michigan’s efforts to restore the population of this magnificent North American relative of the European Red Deer began to bear fruit in the Pigeon River area as far back as the late 1920s. But the effort did not really show great success until the 1960s, only to suddenly plummet soon after, just when oil and gas developers began to cast longing eyes on what was the very heart of our elk range.

The Pigeon River Country Association was organized in the early 1970s, mostly by residents of Otsego County and by summer visitors to the Pigeon River Country who were alarmed by the sudden intrusion of oil and gas exploration and drilling in the area.

Joining with the West Michigan Environmental Action Council, our association and other allied interest groups took the matter before the courts. As a result of a state Circuit Court decision in 1976, followed four years later by a formal "consent order," the oil and gas industry and the DNR were directed to confine the drilling to certain segments of the forest, about one-third of the total area, these being mostly along its southern and eastern boundaries.

All the mineral leases were pooled and just one company, Shell Oil, was allowed to carry out the operation, in which new, more-demanding environmental precautions had to be taken.

In addition to the results of the lawsuit, a special petition made by the Pigeon River Country Association to the state Natural Resources Commission resulted in the formation of the Pigeon River Country State Forest as a separate DNR management unit. An Advisory Council, on which a member of our Association sits, also was established. The Advisory Council is charged with making recommendations to the DNR director concerning the implementation of a special 1973 Management Plan for the Pigeon River Country.

Under the management plan, providing a favorable habitat for elk is the primary objective. This is followed by concern for other wildlife species; recreational opportunities in a wild-like setting; for water quality and fishing; and only towards the end of the list, the responsible harvesting of timber and minerals. Last but not least, the plan again calls for the preservation of the area’s "wild character."

We of the Pigeon River Country Association are very proud of the role that our organization has played in preserving the Pigeon River Country from the kind of untrammeled development that has plagued so much other state-owned land. We want to see similar restrictions applied everywhere, both to state land and private holdings.

The Pigeon River Country Association is particularly concerned about the additional effect that the recent surge in Antrim Shale gas development already has made on certain parts of the forest. What happens to the Pigeon River Country State Forest when the "consent order" expires in 2001?

Although we never were fully in agreement with the compromises that were reached to allow any drilling in the Pigeon River Country State Forest, we want to lend our support and our experience to others who are concerned with keeping Michigan a premier place where people from across the nation can truly enjoy the great outdoors. We invite others to join us. For more information about the organization and its work, write: Pigeon River Country Association, P.O. Box 122, Gaylord, MI 49751.

Richard Kropf is president of the Pigeon River Country Association, which is a member of the Michigan Energy Reform Coalition.

On November 7, 1995, DNR director Michael Moore canceled a state mineral auction of almost 400,000 acres. He did so in response to the heavy public criticism over the state’s agreement to allow the industry to deduct so-called "post production costs" before paying state royalties. That deal has cost the state $10 million in lost royalty payments since it was allowed in November 1993.

Moore formed a special committee to review state leasing policy and make specific recommendations concerning post production costs. The committee was made up of two Natural Resources commissioners, two Natural Resources Trust Fund board members, and one representative from the attorney general’s office. The staff was from the DNR’s Real Estate Division — the very same department that allowed the deductions in the first place.

MCLUC’s attempts to increase public participation in the review process and broaden the scope of the review were rebuffed. Even though the post production cost agreement first was discovered by concerned citizens, there were no members of the public on the committee. The only chance for public testimony was at a scheduled Natural Resources Commission meeting, which was held after the committee had made its preliminary recommendations.

Committee members generated numerous hypothetical scenarios of different royalty rates combined with different deduction procedures to try to model the perfect policy. Their perspective was limited to just the financial transactions that affect the state government and the oil and gas industry. The committee overlooked a component that is equally important, if not more so: the local economies.

To accurately assess the economics of Antrim gas development, the state must include in its evaluation the mounting negative effects on the communities of northern Michigan.

MCLUC has collected convincing anecdotal evidence about the economic damage caused by large scale Antrim gas development across northern Michigan. The intensively industrialized Antrim gas fields in Otsego and Montmorency counties already have been significantly detrimental to the local economies, and may be threatening the long-term economic stability of the entire region.

MCLUC has heard from prospective property buyers in Manistee and Alcona counties who have shied away from a purchase after discovering that the area is targeted for drilling.

We have received calls and letters from homeowners who are unable to sell their property because of a nearby compressor station, and from outdoor recreationists who choose to hunt and fish in areas were they are not disturbed by the noise of wells and compressors.

What are the thousands of wells and hundreds of compressors in the forested regions of the North Woods doing to property values? What is the effect of this industrialization on the fragile rural economies that rely on a healthy environment to attract tourists? How much are local governments paying for upkeep of roads worn by truck traffic? These are legitimate, even urgent, questions that must be addressed by the government before re-opening state lands for oil and gas development.

The state is obliged to postpone future lease sales, carefully evaluate the matter of post production costs, and consider the local economies. Michigan’s countryside and public lands are supreme economic assets, more valuable than the minerals beneath the surface. The consequences of Antrim gas development must be quantified before the true economics of post production costs and state mineral policy can be determined.

The Michigan Energy Reform Coalition welcomes three new members: Springdale Township, the Michigan Environmental Trust Limited, and the Trout Unlimited State Council.

• Rural Springdale Township is located in northern Manistee County. It is lightly populated: half of the land is state forest, which has been targeted for Antrim gas development. There has been growing concern among residents and township leaders, aware of the over-drilled Antrim gas fields in rural Otsego and Montmorency counties. It was in Springdale Township, in February of 1994, that MCLUC was formed.

• The Michigan Environmental Trust Limited began in 1992 to address the escalating and unchecked spread of Antrim gas development. The group’s landmark case against the Department of Natural Resources resulted in a court order to end the trenching of streams to lay pipeline, and a state ruling to increase the minimum spacing among wells to 80 acres. METL plans to contest, when necessary, any variances to the stream crossing ruling, and will keep a close eye on Antrim development.

• Michigan’s state chapter of Trout Unlimited was formed on the banks of the AuSable River in 1959 to conserve, protect, and restore the state’s watersheds, which support wild trout and salmon. The TU State Council became involved with oil and gas issues when it joined METL’s lawsuit. Since then, TU has been very active in oil and gas issues, including participating with the Public Act 61 Rules Task Force, and monitoring the state’s leasing policy.

The Michigan Energy Reform Coalition is a statewide organization seeking to increase oversight of the oil and gas industry, reduce environmental damage from development, and increase economic returns for communities and landowners

MERC’s new members join Pleasanton and Filer townships in Manistee County; MCLUC; Anglers of the AuSable; Center for Wildland Conservation; Michigan Environmental Council; Citizens for alternatives to Chemical Contamination; Pigeon River Country Association; Friends of the Jordan River Watershed; and Tip of the Mitt Watershed Council

The Coalition now consists of ten citizens’ groups and three townships, and represents well over 100,000 residents. ~H.V.

LANSING — New rules to strengthen environmental safeguards for energy exploration and production in Michigan will not be implemented, since the Department of Environmental Quality missed a legislative deadline.

Hal Fitch, interim chief of the Geological Survey Division, said the rules package, formulated after two years of work by environmentalists, local governments and the oil and gas industry, had undergone changes over the last few months. He declined to specify what those changes were.

However, a senior official in the Geological Survey Division said that the delay was due to intense lobbying by the Michigan Oil and Gas Association. MOGA expressed reservations about some of the rules in private meetings with DEQ Director Russell J. Harding and Deputy Director W. Charles McIntosh.

The oil and gas industry did not like provisions for well testing requirements, and for a plan to increase the financial bond companies pay before drilling.

After learning of MOGA’s lobbying effort, the Michigan Energy Reform Coalition and several other citizens groups also sought a meeting on the rules with Mr. Harding and Mr. McIntosh, but were rebuffed.

In 1994, negotiators from local governments, the state, the oil and gas industry, and environmental groups proposed new rules that called for higher bonding requirements, phasing out waste pits, reducing noise from compressor stations, increasing set back requirements from environmentally sensitive areas, and strengthening environmental assessments.

The Department of Environmental Quality had until February 22, 1996, to complete public hearings, respond to comments, and send a final package to the Joint Committee on Administrative Rules.

Failing to meet that deadline means the rules package will be reopened for public comment, raising the possibility that the entire agreement could be weakened.

After the comment period, the rules will be subject to another round of review by the DEQ and the Governor’s Office before being submitted to the legislative committee on administrative rules.

It was possible, Mr. Fitch said, that the rules would be finalized and put into effect by the fall.

"Let me assure you that there has been no effort to halt or delay the promulgation process on behalf of any of the parties involved," said Mr. Fitch in a letter to the Michigan Energy Reform Coalition. "The department remains committed to the timely promulgation of the new rules, and we will make every effort to move forward quickly."

The failure by the DEQ to meet the deadline has attracted legislative concern. In testimony before the Natural Resources Commission in February, Rep. Bill Bobier, (R-Hesperia), chairman of the House Appropriations Subcommittee on Natural Resources, proposed holding up future state leasing sales until the package is ratified. The proposal is supported by several conservation groups, including MCLUC and MERC.

The fate of the rules package has been a focus of interest across northern Michigan, where Antrim development has scarred communities and the land. The Northeast Michigan Council of Governments, a Gaylord-based group that represents planning agencies from eight counties, unanimously approved a resolution last fall supporting swift passage of the rules package.

Members of the panel that negotiated the package, including Diane Rekowski, director of the Northeast Michigan Council of Governments, expressed frustration at the outcome. "The situation is this: the state still does not have any environmental rules for oil and gas development that they can really enforce," said Ms. Rekowski. "It seems to me that acting in good faith, the state should have followed through on its promise to get the package through."

Said Ann Baughman, a resource specialist with the Tip of the Mitt Watershed Council, "It’s a perfect example of another way the government is cutting out public involvement in management of the state’s natural resources. In this case, the oil and gas industry was pretty much invited to determine what works best for them."

For years, Michigan’s oil and gas industry has collected millions of federal dollars under the "Unconventional Fuels" income tax credit. (See related article on the front page). Now, under a plan backed by the Engler Administration, the state thinks it has figured out a way to get a piece of the action.

The state hopes to gain $6 million a year from the U.S. Treasury in a circuitous financial scheme. State royalties would be returned to the oil and gas industry; the industry would kick back to the state its resulting extra share of income tax credits. Both the state and the industry would profit from the deal, paid for by U.S. taxpayers.

The Engler Administration has proposed spending the money on cleaning up contaminated waste sites — this after successfully promoting legislation to let polluters off the hook. The Internal Revenue Service, which oversees the tax credit, may refuse to allow the proposal. Nevertheless, the Engler Administration and the Legislature are pushing ahead.

The proposal has been laid out in Senate Bills 784, 785, and 786, sponsored by Republican Senators Joanne G. Emmons, (Big Rapids); George A. McManus, Jr., (Traverse City); and Loren Bennett, (Canton).

The bills were approved by the Senate in December, and are on their way to the House Conservation Committee, chaired by Rep. Mick Middaugh, (R-Paw Paw). They are expected to be taken up by the committee at the end of February.

Some critics of the deal argue that all revenues from oil and gas royalties should go to the Natural Resources Trust Fund. An amendment to assign any federal money to the Trust Fund was defeated in the Michigan Senate by a vote of 18 to 17.

MCLUC contends that the "Section 29 Unconventional Fuels" tax credit program should be abolished. Neither the state nor the oil and gas industry should claim federal taxpayer dollars from a subsidy that only encourages over development of natural gas wells.

For more information, contact Senators Emmons (517-373-3760); McManus (517-373-1725); and Bennett (517-373-7350); or Rep. Middaugh (517-373-0839).

TRAVERSE CITY — Savoy Oil and Gas, the drilling company that two years ago developed Manistee County’s first Antrim Shale gas wells, has been sold to Hawkins Oil and Gas, Inc., of Tulsa, Oklahoma. The announced sale price was $29 million.

Savoy was formed by Thomas Pangborn and William Sperry in 1989. In 1994, shortly after leasing thousands of acres of mineral rights along Potter Road in Bear Lake Township, Savoy installed one of the most productive Antrim Shale gas projects in the state. Late last year, Savoy sold its Manistee operations to Ward Lake Energy for $10.3 million.

Savoy’s sale to Hawkins, which both companies described as a merger, is the fourth time in less than a year that Antrim producers have sold their interest to other energy companies. Last September, CMS Energy, the parent company of Consumers Power, paid $63.6 million for Terra Energy, the largest Antrim Shale gas producer.

Months earlier, Belden & Blake, an Ohio company, purchased Ward Lake Energy, the second-largest Antrim producer. Last fall, Lee’s Petroleum took control of some of Oil Investment Limited’s operations in Manistee County. The price Lee’s paid for O.I.L.’s wells and leases has not been publicly disclosed.

Improved technology and higher production per well accounts for much of the reason that Antrim drilling continues to lure interest among larger companies. Producers also are betting on a turnaround in prices after a ten-year free fall.

The other decisive factor is the help producers are getting from taxpayers. Generous federal and state energy subsidies are pouring an estimated $100 to $115 million a year into the pockets of investors and senior industry executives.

Financial experts who follow the energy credit markets in Michigan and nationally say the consolidation that has overtaken Antrim gas producers reflects several more trends:

1). Declining gas prices. As revenues decline, small companies are growing more interested in selling out to larger ones, like Hawkins, which are buying entire Antrim production units of 20 to 30 wells for considerably less than they cost to drill. Larger companies have the financial clout to wait for a turnaround in market prices.

2). Increasing exploration and drilling costs. Once installed, Antrim gas wells tend to be highly productive. But the increasing development costs favor larger companies, which have deeper pockets, over small ones.

3). Growing public concern about how the gas fields are being developed. As Antrim drillers explore in more populous regions of Michigan, challenges to their methods are increasing. This is proving worrisome to some investors, and making it more difficult for small companies to finance new projects. The larger companies, however, count on having the expertise and patience to solve the industry’s political problems.

4). The drilling success rate. The most important fact underlying all of Michigan’s Antrim gas industry is the astonishing drilling success. Ninety-eight percent of the wells drilled into the Antrim formation last year yielded marketable quantities of gas. Experts say that is the kind of sure bet that is prompting interest from out-of-state oil and gas companies.

The last issue of the MCLUC Reporter included a short questionnaire about noise from compression stations. We have received 25 responses so far, which show that the sensitivity to noise differs. For some people, it is a nuisance that should be muffled, while for others, it is a huge problem that evokes passionate loathing. Most of the respondents’ homes are between _ and 1_ miles from a compression station in Montmorency, Otsego, and Manistee counties.

If you haven’t done so already, please take a few minutes to fill it out the questionnaire on page 8 and return it to us. Here is a sampling of the responses so far:

"A dull roar; As if you had a Greyhound bus next to your window; Like a huge truck stop next to our open window!; Ranges from sound of distant diesel engines to a non-hearing but feeling throbbing inside your head; Motor, constant sound; Heavy engines; Low rumble; Low hum; Fans, motors; A continuous diesel engine running — very disturbing!; No compressor nearby, but a very loud pump motor is running on a gas well 600 to 700 feet from our house."

Can you hear compressors during recreational activities away from your home? If yes, describe.

"When cross-country skiing on state land; While hunting and fishing; Outside in the summertime, there are no still nights or mornings; While farming, we can hear the compressor from two miles away!; Sometimes when hiking in our fields; During deer hunting, berry picking, hiking, skiing, etc.; In the woods surrounding our home for cross-country skiing, trail walking, gardening, and thinking; Too noisy to hunt deer."

Have you contacted the gas company in an attempt to have the noise reduced? If yes, what was the response?

Most of the people who returned questionnaires answered "no" here. Those who answered "yes" said the gas company replies were on the order of, "There’s no law to make us stop, but we’ll see what we can do; We’re doing the best we can."

Do you believe that your property value has been affected by the noise? Explain.

"The serenity and quiet of an evening sunset or morning sunrise or afternoon siesta is not the same with a loud motor running. We live in the country for quiet and solitude."

"Wild acreage is now slashed with access roads — families and community are sharply divided and angry — home and lands are not open to personal choice."

"Our property has been on the market for over a year. At least one potential buyer gave gas development in general as the main reason for not buying."

"Our country road has been turned into an expressway, and too much woods cut down."

BENZONIA — Terra Energy in January launched a program to drill four exploratory Antrim gas wells in southern Benzie County’s Joyfield Township, along Joyfield and Demerly roads.

Six new drilling permits also were being sought in Manistee County. The number of Antrim gas wells and brine disposal wells that have been drilled, permitted or proposed in Manistee County now stands at 379, of which 12 are brine disposal wells. The breakdown by township for the 367 gas wells is as follows: Bear Lake (165), Pleasanton (85), Springdale (59), Maple Grove (16), Onekama (12), Brown (12), Manistee (11), Cleon (4), Stronach (2), and Norman (1).

In Benzie County, there are a total of 22 wells that have been drilled, permitted or proposed; 18 in Colfax Township and 4 in Joyfield Township.

Even as natural gas prices continued their decade-long free fall, 1995 turned out to be a banner year for Antrim Shale gas exploration and production in Michigan. Of the 1,523 drilling permits approved by the Department of Environmental Quality last year, 1,336 went to Antrim producers.

Of the 915 oil and gas wells that were drilled in Michigan in 1995, 783 were Antrim wells, with 34 more wells installed to dispose of brine.

Montmorency County continued to lead the list of most active counties, with 249 wells drilled, according to the Michigan Oil and Gas News. Alpena County came in second (190), followed by Antrim (125), Otsego (93), Oscoda (56), Manistee (50) and Ingham counties (34).

Antrim exploration and production now has swamped every other energy development activity in Michigan. Natural gas production in the state soared to more than 250 billion cubic feet in 1995, a 12% increase over 1994, according to the U.S. Department of Energy. In 1995, Michigan solidified its position as the nation’s 12th largest natural gas producer.

Surprisingly, the growth in Antrim development last year occurred even as the price at the market averaged $1.70 per thousand cubic feet, the lowest level ever.

Thus, despite producing twice as much natural gas in 1995 as in 1985, Michigan energy companies earned less than a third of the revenues: there was a $425 million in gross in 1995, compared with $1.4 billion earned a decade ago. Revenues in 1996 are expected to fall even further, perhaps to under $350 million.

Well Activity in Manistee County:

Township Location Name of Mineral Owner Gas Company Status

Bear Lake Section 1 State of Michigan Ward Lake Energy Application Pending

Bear Lake Section 19 Village of Onekama Savoy Oil and Gas Application Pending

Bear Lake Section 27 Meister Ward Lake Energy Application Pending

Pleasanton Section 23 State of Michigan Ward Lake Energy Application Pending

Pleasanton Section 24 State of Michigan Ward Lake Energy Application Pending

Pleasanton Section 26 State of Michigan Savoy Oil and Gas Application Pending

Several MCLUC members have called to tell us about leaking gas lines, blown seals, and spills at well sites. They have asked, for the benefit of our readers, that we publish the telephone number for the Department of Environmental Quality pollution emergency alerting system, which is: 1-800-292-4706. For non-emergency inquiries to the DEQ, call the environmental assistance center at: 1-800-662-9278.

My 93-year-old mother is loved universally by people of all ages, races, and economic conditions, for she accepts each person individually; she also is generous in her judgment of people. She delights in hearing new words, new interests, new interpretations of human behavior. People are interested in her tales of the past: in sum, my mother learns from others and they learn from her. It is a voyage of mutual discovery.

Can we translate this image of personal interactions to the social encounters we have in our towns and villages here in Northwestern Lower Michigan? As an optimist more often than the opposite, I believe we can transpose my personal observations to the community at large, and live and talk among one another with civility.

In particular, I like to continue my belief that those of us who are new to the area have as much to do with the development of this region as do those who have lived here, more or less, forever.

In 1994, I wrote to the Manistee County Pioneer Press lamenting comments by a person who seemed to believe the length of time one has been in the area was a primary measure for individual involvement concerning the development of the county or township where one lives. This was a specious argument, to be sure, and one I am told the speaker repudiated later. (At the time he spoke, I described his view as possessing "the tone of ancestral superiority.")

Knowledge and depth of interest, and commitment, should be factors we give credence to when speaking about the development of our delicate land. We should not abuse it, nor should we allow others to do so, either, and one’s length of time in the area has nothing to do with this. Indeed, as a nation built upon waves of immigrants, this notion is at best insipid, and perhaps noxious at worst.

The important concern we all share is, How shall we preserve the land and, at the same time, encourage development? Some people may view this in moral terms, and this is always fine; however, there are so many practical issues, especially about the oil and gas development, that all of us — moralist, realist, advocate, non advocate — can talk to one another and explore the problems.

We live together as a visible populace, and we want to live here, perhaps for different reasons, but for reasons that have, in great part, to do with the land and the space we have in our beautiful surroundings. As part of a growing community, none of us new to the area would dishonor traditions; rather, we wish to form a coalition among generations of inhabitants, the old and the new, as people in the United States have been doing for decades, century upon century.

"...Nature never did betray/the heart that loved her," said the poet William Wordsworth, and I cannot recount the times I’ve said that, to myself, and to others. I am a believer in the innate goodness of us all to love and respect what has come to us free — the earth, the sky, the water, the trees, the whole of nature — and all of us acknowledge this, even if some find it difficult to articulate the notion.

And, yes, each of us is unique, so I cannot claim to speak for everyone; yet, I posit the concept of an overall need to preserve our land. I believe the developers, the people who were born here, and those of us who are the newcomers, can discuss — indeed, must discuss — how the land shall be developed, and how it will look in the future, in an enlightened and open manner.

We, in our variety of ages, looks, viewpoints, length of time here, are the inheritors, here to pass the land to those who come after us. Shall we betray nature? I think not. I hope not. We are the community, arbitrary in one fashion but selective in another, here out of commitment and love, rooted in our own idiosyncratic ways but ultimately devoted to this lovely land we call Northwestern Lower Michigan.

We must join hands to preserve what we like most about the region, described best, perhaps, by our state motto: Si Quaeris Peninsulam Amoenam Circumspice ("If You Seek a Beautiful Peninsula, Look About You").

Margaret Perry is an author and MCLUC member from Springdale Township in Manistee County.

The Natural Resources Trust Fund was born of the controversy over oil exploration in the Pigeon River Country in the 1970s. Then as now, the issue of allowing resource extraction while protecting the environment and private property rights was hotly debated.

The badly outdated and one-sided laws that favor the industry provided no help to the public or private property owners, who had a vested interest in maintaining high quality natural resources. Unkind words, litigation, and legislation flew from all sides.

Into the center of this maelstrom came Tom Washington of the Michigan United Conservation Clubs, working in partnership with other environmental groups. Tom proposed that money earned by the state for extraction of non-renewable resources should be reinvested into preserving and maintaining a strong base of renewable resources and recreational land. This would provide for future needs, and ensure that the revenues did not disappear into general fund expenditures.

The idea met with overwhelming support. In 1976, the Michigan Natural Resources Trust Fund was created.

The legislation creating the Trust Fund called for state oil, gas, and mineral revenues to be deposited in a trust for purchasing valuable recreational and environmentally significant properties, and for improving existing recreational facilities. The purchases and improvements are made by both state and local units of government.

In addition, unlike the case with most public lands, the trust pays property taxes on its purchases to local governments. The trust was limited by a cap of $200 million, after which further revenues went to the state’s general fund.

It didn’t take long after the Trust Fund’s formation for legislators to try tapping it as a source for all sorts of unrelated projects. In all, there were five attempts to plunder the Trust Fund through 1994. One of them was successful, a diversion of $20 million a year into the "Michigan Strategic Fund," an economic development account used mainly for political pet projects.

The Engler Administration now is proposing to divert another $25 million per year from the Trust Fund to help pay for clean ups of contaminated waste sites. This follows action by the Governor and the Legislature that removed responsibility for environmental clean ups from those who caused the problems — the polluters.

A constitutional amendment redirecting oil and gas revenues from the Trust Fund may be attempted in the current legislative session, although it is likely this proposal will meet serious resistance.

Continued raids on Trust Fund not only are hypocritical: they also are ill-conceived, and should be rejected by Michigan residents. After all, we’ve been through it before.

The significance of the Trust Fund can not be overstated. The underlying reasons that formed it are more true today than ever. Fossil fuel resources are finite in nature, hence the term "non-renewable." Land-based resources are renewable. While the underground resources will run out in the not-too-distant future, the surface resources, with proper stewardship, will continue to provide for Michigan’s citizens in perpetuity.

It is true that oil and gas resources provide substantial benefits, both economic and social, to Michigan. They provide fuel, heat, power, lubricants, and comprise the base compounds for many items used in modern life. They provide jobs directly related to extraction and refining, and in all areas dependent upon or related to oil and gas production and use.

These benefits pale in comparison to the significance of surface resources. Life itself depends upon clean air, water, and an abundant food supply. Trees and vegetation keep the air clean, while rivers, lakes, and streams provide water and fish. Wetlands clean and recharge the water supply. Wildlife keeps the system in balance, and provides an important indicator of the health of the rest of the system.

Add these together, and the tangible significance of the Trust Fund is clear. It assures a level of integrity for the environment, provides a perpetual supply of renewable resources, and maintains a base for tourism and recreation, the state’s second-largest industry.

Not to be left out is an aspect of the Trust Fund that also touches on the American Dream, which is rooted in individualism and the existence of wide open spaces. Without vast tracts of public land available for physical and spiritual rejuvenation, the American Dream ceases to exist. The nature of the country would be forever changed.

In 1994, a measure to revitalize and provide for a stable source of independent funding for the state park system, called Proposal P, was overwhelmingly passed by Michigan voters. Though the park funding component was handled through formation of a separate trust, two of the most significant aspects of Proposal P were to raise the cap on the Natural Resources Trust Fund to $400 million, and provide constitutional protection for both funds.

Proposal P also reclaimed the $20 million diverted in 1994, returning $10 million to the Trust Fund, and sending the other $10 million to the Genevieve Gillete State Park Endowment Fund.

The integrity of the Trust Fund must be preserved. It is the foundation of a legacy that will be left long after the profits from oil and gas wells are gone.

Chris Bunch, a MCLUC member from Northport, is regional vice president and a member of the board of the Michigan United Conservation Clubs.

The MCLUC Reporter is published quarterly by the Michigan Communities Land Use Coalition, a project of the Michigan Land Use Institute

The Institute is a nonprofit educational and environmental policy research organization that is dedicated to fostering a new approach to development that respects the land, the communities that inhabit the land, and the inherent process of change. The Institute’s goal is to promote economic opportunity, while protecting the value of open land, and clean air and water.