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A Legal Gusher

Millions without a turn of the drill bit

January 1, 1996 | By Keith Schneider
Great Lakes Bulletin News Service

On April 27, 1987, Gordon E. Guyer, the director of the Department of Natural Resources made a decision that thrilled conservationists. He signed an order barring a Traverse City energy company, Miller Brothers Oil Corp., from constructing five drilling platforms in the Nordhouse Dunes wilderness, the largest protected stretch of natural dunes in the Great Lakes basin.

Eight years later, on October 25, 1995, Court of Claims Judge Peter Houk responded with a decision that thrilled industrialists: In a case brought by Miller Brothers, Judge Houk ruled that the drilling ban was unconstitutional and directed the state to pay the oil company and a group of mineral owners $120 million.

If one word links both decisions, it is excess. Miller Brothers has argued with some merit for nearly a decade that it had prepared a sensitive drilling plan that would not have produced lasting scars in the Nordhouse Dunes and that Mr. Guyer’s order was unreasonable.

The Sierra Club and other environmental groups, meanwhile, argue more persuasively that Judge Houk’s response is a considerably greater disservice. Not only has a state court affixed an astonishing price tag to the ban, the ruling means that the public could now be forced to pay wealthy industrialists to obey environmental restrictions.

Indeed, like a gale gathering force, the precedent set in the Nordhouse Dunes case is now pounding a revered American ideal: the notion that in some instances the right of the community to safeguard land is paramount over individual needs. At risk are not only the beautiful wild spaces in the Grand Traverse region and across the rest of Michigan, but also community land use decisions made under local zoning.

Property rights groups assert that such a change has been long overdue. They say land use rules, even those set by communities, have become too complex and too intrusive. In the spring of 1995, officials in Bear Lake Township in Manistee County ignored the protests of many residents and erased much of their zoning ordinance because it was seen as inhibiting the rights of farmers to build strip malls in the corn fields

The Nordhouse Dunes case is itself being cited by property owners and the state environmental officials as justification for allowing a golf course to be built on Leelanau County wetlands, and drilling natural gas wells in Antrim County’s Jordan Valley State Forest, one of the great unsullied stretches of timberland left in the lower peninsula.

"It’s a collision of where the line should be drawn between the community and the individual," said James M. Olson, an environmental lawyer in Traverse City who has filed a lawsuit to appeal Judge Houk’s ruling to the state Supreme Court. "The Nordhouse Dunes decision moves the line towards individual rights, regardless of the impact on the community."

Nordhouse Dunes just north of Ludington is a 3,500-acre stretch of wind-blown sand, quiet wetlands, and serene forests along six miles of undeveloped Lake Michigan shore. In April 1987, a year after Miller Brothers submitted a plan to the DNR for drilling privately owned oil reserves beneath the dunes, Gordon Guyer said no.Studies by the state determined that oil development would harm the region’s distinctive natural character.

Miller Brothers and the mineral owners sued. Both groups said that the ban on drilling was a seizure or "taking" of private property, and that under the Fifth Amendment of the Constitutition they were entitled to "just compensation."

The legal theory underlying the case was developed at the University of Chicago in the mid-1980s and has been deployed with increasing success by property owners seeking to overturn environmental restrictions. With the exception of a $250 million "takings" lawsuit involving a Federal ban on strip mining coal in Wyoming, no other example of the legal strategy has been as costly or as potentially damaging to the ideal of resource protection as the Nordhouse Dunes case.

Without executing a single turn of the drill, Miller Brothers and the mineral owners appear ready to rake in millions in taxpayer dollars from a legal gusher. Nobody but environmentalists are fighting the gambit. In November, even the Legislature, after initially balking, approved a deal negotiated by Governor Engler to pay $59.5 million to Miller Brothers and $36.2 million more to the mineral owners. Lawmakers said it was an effort to lower the price tag.

What has not yet occurred, though, is a thorough review by the Michigan Supreme Court. Unless Jim Olson is successful in appealing the case to the state’s highest court, the abiding public interest in enforcing laws to safeguard communities and the environment is truly threatened. Paying off influential companies to do what ordinary citizens expect of themselves every day — obeying the law — is bad policy, bad government, and a craven injustice.

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