Michigan Land Use Institute

MLUI / Articles from 1995 to 2012 / Rationale for Reviving the Hydrocarbon Development Plan Approach

Rationale for Reviving the Hydrocarbon Development Plan Approach

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- Lack of State Oversight -

The explosive growth of the Antrim development has overwhelmed state authorities charged with overseeing the industry. Even as the Engler Administration was investing millions of dollars in subsidizing the development, it also was downsizing state government. In 1992 alone, more than 2,000 wells were permitted by the Geological Survey Division, the agency responsible for regulating oil and gas development. During a public meeting in Manistee County in 1995, Hal Fitch, now the chief of the GSD, candidly assessed the situation. "Basically, it was kind of pandemonium out there for awhile," he said.

• Under the Engler Administration, the Geological Survey Division underwent one of the sharpest drops in personnel of all the state's agencies. In 1988, when the Antrim development was starting, the Division had 128 employees. In 1995, when the GSD was transferred from the DNR to the new Department of Environmental Quality, it had 63 employees.

• In 1995 a state review found that the GSD had met just 18% of planned well site inspections, and 48% of the planned inspections for production facilities.

•The review also found that the Division was meeting 100% of its goals for reviewing drilling applications. In 1995, 1,523 applications came before the GSD, and more than 95% were approved.

How was it that a decade after rising to the occasion to set a model land use policy fit for the 21st century, Michigan then sunk to a level of management neglect that more closely resembled the cut-and-run lumber era of the 19th century? The answer lies with a vastly changed political climate, an important difference in energy industry leadership, a state environmental community diverted by other issues, and media indifference.

Different Political Era

- The Swing to the Right -

In 1990, Michigan elected a governor, John Engler, who believed government should have only a limited role in regulating business. Mr. Engler also opposed environmental regulations that he considered too complicated and costly for business. Moreover, he was intent on transforming the state's nationally-recognized stewardship policies into an economic development program for industry.

Gov. Engler executed this strategy flawlessly, and without much political opposition. Early in his first term he issued an executive order that raised barriers to public involvement by eliminating several key citizen advisory boards and drastically diminishing the authority of the Natural Resources Commission. He then weakened the DNR by appointing in 1991 an ineffective leader, and demoralized the agency with extensive budget and staff cuts.

Gov. Engler's efforts on behalf of the oil and gas industry are well-documented:

•The DNR's Geological Survey Division has lost one-third of its staff since the governor entered office in 1991. This was the very same period when the number of gas wells being drilled in the Antrim Shale formation reached record levels.

• Furthermore, although he had campaigned on a free-market message, Gov. Engler's administration actively began to subsidize Antrim development. In 1993, oil and gas industry executives and senior DNR staff members privately negotiated an agreement that allowed energy companies to deduct millions of dollars a year in production costs before paying state royalties. The agreement, which cost Michigan residents more than $5 million a year, was established without the knowledge of the NRC, the Legislature, or the public.

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Record of Geological Survey Division Goals in 1995

of well site inspections met

of production facility inspections met

of reviews of drilling applications met;

of applications approved
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