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Energy Reform Bills in Lansing

A status report

April 1, 1998 | By Hans Voss
Great Lakes Bulletin News Service

The Michigan Legislature is moving a package of 10 oil and gas reform bills closer to becoming law.

Analysts predict the bills have a good chance of reaching the Governor's desk by the end of the year. Representatives of the Michigan Energy Reform Coalition (MERC), a statewide coalition of 26 townships, conservation groups, and property owners associations, have testified in support of most of the proposals.

However industry lobbyists, who were surprisingly quiet when the bills were assigned last year to the House Forestry and Mineral Rights Committee, have been able to weaken some of them in the Senate.
The bills would:

• Establish new protections for environmentally sensitive state-owned lands.

• Provide protections for mineral owners who are considering signing an oil and gas lease.

• Increase the minimum distance between wells and residentially zoned areas.

• Establish mechanisms to reduce conflicts between mineral owners and surface owners.
Eight of the bills have passed the State House and have moved on to the Senate. Of these, seven have
passed out of Committee and are awaiting a vote on the Senate floor. Two other bills still are pending in the

The bills that have drawn the most controversy (HB 5261, HB 5262, and HB 4259) propose to restrict the amount of money the energy industry can deduct from royalty payments to property owners. Since 1993 the oil industry's practice of deducting "post production costs" (PPCs) before paying royalties has cost lease holders tens of millions of dollars.

MERC supports making such deductions illegal for all mineral leases. But oil industry lobbyists convinced bill sponsor Rep. Larry DeVuyst (R-Ithaca) to ban PPCs in future leases only. They also influenced the Senate Committee to reduce the fines for violating the new law, and to eliminate an important provision that would have required the industry to disclose detailed accounting statements to mineral owners.

The two bills that still are before the House Forestry and Mineral Rights Committee are expected to be voted on this spring. They are:

• HB 5627 (sponsored by Rep. Nancy Quarles, D-Southfield), which would prevent wells from being drilled
within 1,000 feet of residentially-zoned land in townships and cities with populations above 60,000.

• HB 5414 (sponsored by Rep. Liz Brater, D-Ann Arbor), which would require mineral owners to obtain a signed agreement from surface owners before a state drilling permit could be granted.

For a fact sheet that includes a summary of each of the 10 bills and contact information for key members of the House and Senate, call Hans Voss at the Institute, 231-882-4723.

Keeping Poison Gas Away From People ... An H2S Update

Since January 1997 the Great Lakes Bulletin has closely covered the trail of injuries caused by accidental and deliberate releases of hydrogen sulfide ( H2S) from natural gas wells in northern Michigan.

Hydrogen sulfide, a common byproduct of oil and gas drilling, is as toxic as cyanide. It can cause nervous system and respiratory disorders even at very low concentrations.

Citizens and local government leaders have organized an increasingly influential campaign to end the siting of H2S-containing wells, pipelines, and processing plants in populated areas. They reached a breakthroughlast December, when the Michigan Department of Environmental Quality announced new measures to establish a public safety program for H2S. Since then:

• In February, senior DEQ officials met in Lansing with the Michigan Public Service Commission and representatives of the Manistee County-based Health and Human Safety ( H2S) Committee, the AmericanLung Association, the Mason County-based Advocates for Intelligent Responsible Environment (AIRE), and the Michigan Land Use Institute.

During the meeting the DEQ acknowledged the ineffectiveness of the current state program, and suggested establishing a new public exposure limit for H2S. To help determine the limit, the DEQ asked the Institute toprovide a summary of medical studies on H2S that have been conducted in other natural gas-producing regions of the United States. Additional DEQ meetings involving the citizens will be held this spring and summer.

• The Manistee County Board of Commissioners is debating a resolution that would place a moratorium on permitting new facilities and wells that contain H2S until the state's public health program is put into effect.

• Manistee County's Filer Township is developing a new ordinance that is designed to prevent injuries or illnesses from releases of H2S from gas and oilfield installations. The ordinance will require companies to show, through a rigorous technical analysis, that building and operating those sites will not put citizens at risk.

CONTACTS: Hal Fitch, DEQ Geological Survey Division, 517-334-6923; Arlin Wasserman at the Institute, 231-271-3683; Jim Olson, Attorney for Filer Township, 231-946-0044.

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