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House Leaders Gird for Battle on Great Lakes Drilling

Confrontation with Michigan governor looms

September 21, 2001 | By Keith Schneider
Great Lakes Bulletin News Service

LANSING — Leaders of the Michigan House of Representatives, responding to overwhelming public support for banning energy development beneath Lake Michigan and Lake Huron, are drawing up new legislation to prohibit drilling along the Great Lakes coast, perhaps for as long as a decade.

The new bill, which is being shaped in part by Representative Rick Johnson, the Republican House Speaker, would maintain a moratorium on drilling beneath the Great Lakes that began in 1998. The proposed legislation is likely to be introduced within the next 30 days. It comes in the wake of the state Department of Natural Resources’ decision earlier this month to allow the energy industry to explore for oil and gas beneath the Great Lakes. That decision, although hailed by the oil industry, also was widely condemned by state and federal lawmakers in both parties, editorial boards, and thousands of citizens.

State representatives say the new bill will pass easily and would set up an intense confrontation within the ranks of the state’s conservative leadership. In June the Republican-controlled state Senate approved a measure on a party line vote to proceed with drilling beneath the Great Lakes, saying the risks were reasonable. Republican Governor John Engler also supports energy exploration beneath the Great Lakes because of the potential for new economic development.

"I was disappointed the decision was made to lift the ban on directional drilling under the Great Lakes," said Mr. Johnson. "Michigan’s Great Lakes are our crown jewels. They are the most unique set of freshwater lakes in the world. While the Michigan Environmental Science Board’s report indicated there was minimal risk involved, the economic benefits from directional drilling under the Great Lakes are even smaller. The correct decision would have been to maintain the current moratorium."

Political Leaders Object, DNR Responds
Mr. Johnson is the latest of Michigan’s prominent political leaders to oppose drilling beneath the Great Lakes. He joins Republican Lieutenant Governor Dick Posthumus, four of the seven Republicans and all of the Democrats in the Michigan Congressional delegation, as well as every Democratic candidate for governor, including Attorney General Jennifer Granholm, in battling Great Lakes energy development.

"Simply put, there is no compelling reason to expose the state to such risks," said Ms. Granholm in a September 12, 2001, letter to K.L. Cool, the director of the Department of Natural Resources. She called the agency’s plan to begin leasing state-owned minerals beneath the Great Lakes "unwise and inconsistent with the prudent exercise of your public trust responsibilities."

On September 14, 2001, Mr. Cool rejected that argument and formally decided to pursue new energy development along the Great Lakes shoreline. In a statement issued hours later, Mr. Cool asserted that developing new energy reserves beneath the Great Lakes would yield $100 million in state royalties and that new procedures would minimize environmental and public health risks. Mr. Cool also noted that since 1979, 13 wells have been drilled from shore to tap oil and gas reserves beneath Lake Michigan and Lake Huron. Seven are still operating.

"The DNR cares deeply about our public trust responsibilities," said Mr. Cool. "We listen and learn from the public and from science. We are the right entity to make this decision because we are professionally trained to do so. We are caring professionals who have carefully evaluated all of the factual information surrounding directional drilling under the Great Lakes."

An Ever More Visible Saga
The natural resource agency’s decision is the latest turn in an unfolding environmental, economic, and political drama that began four years ago and has grown to such intensity that it could help decide gubernatorial, Congressional, and state House and Senate elections in 2002. In recent public opinion polls, more than 60 percent of Michigan voters have said they oppose drilling beneath the Great Lakes.

In the spring of 1997 the DNR issued drilling leases to Newstar Energy, a Canadian company, for nearly 200 acres of state owned Lake Michigan bottomlands. That summer, the Department of Environmental Quality, which regulates energy development, issued Newstar a permit to drill for oil and natural gas beneath Lake Michigan from wells on the shore of Manistee County. (See theInstitute’s backgrounder on Great Lakes drilling-->Institute’s backgrounder on Great Lakes drilling.)

In October 1997, the Michigan Environmental Science Board, a panel of experts appointed by Gov. Engler, issued a seven-page report that found drilling from the shoreline beneath the Great Lakes posed a scant risk to the water from oil or gas leaks. The panel, however, also concluded that current state policy was not adequate to protect one of the world’s superb scenic coasts from the land use risks associated with new wells, roads, pipelines, and processing stations.

The panel members issued specific recommendations for improving the planning and oversight of hydrocarbon development from the shoreline. Mr. Engler publicly embraced the recommendation, but six months later, in April 1998, issued a moratorium on drilling to prevent the issue from influencing that year’s gubernatorial campaign and to give the DNR time to study new leasing procedures.

In February 2001 the DNR revived the controversy when it announced the agency was taking steps to lift the moratorium. The announcement prompted a flurry of political responses, especially in Washington. In June the U.S House of Representatives approved a bill sponsored by Michigan Democratic Representatives Bart Stupak and David Bonior to give the U.S. Army Corps of Engineers regulatory oversight of any Great Lakes drilling proposal. In July the U.S. Senate approved a separate measure sponsored by a bipartisan coalition of senators from Great Lakes states to ban drilling for at least two years while the National Academy of Sciences studied the risks. A compromise measure is being fashioned in Congress.

Science Board Recommendations Skirted
Meanwhile the DNR’s senior leaders sought to bolster their case by citing the Science Board’s report as evidence that drilling was safe. On August 20, 2001, after convening an interagency task force, the staff of the Department of Natural Resources formally proposed new requirements for leasing state-owned minerals beneath the Great Lakes.

The Michigan Land Use Institute evaluated the proposal and concluded that it represented an improvement from current policy. Of particular note was the staff’s recommendation to bar drilling — by issuing nondevelopment 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 did not come close to meeting the standards of the Michigan Environmental Science Board for exploring for oil and gas beneath the Great Lakes. In fact the DNR specifically avoided the Science Board’s three central recommendations:

  • 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, according to the Institute.

  • 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.

  • 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 could 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. (See the Institute’s special section on hydrogen sulfide-->Institute’s special section on hydrogen sulfide.)

"The Michigan Environmental Science Board recommended three clear, technically sound steps to reduce the risk of energy development along the Great Lakes coast," said Arlin Wasserman, the Institute’s policy director. "The Science Board said that until such requirements are put in place leasing must not occur. The Michigan Land Use Institute agrees."

See also Attorney General Jennifer Granholm's letter to K.L. Cool, Director of the Department of Natural Resources-->Attorney General Jennifer Granholm's letter to K.L. Cool, Director of the Department of Natural Resources

See also the Statement by K.L. Cool, DNR Director, on Great Lakes Drilling-->Statement by K.L. Cool, DNR Director, on Great Lakes Drilling

Keith Schneider is the Institute’s program director. He is a regular contributor to the Detroit Free Press, the Michigan Talk Radio Network, the Great Lakes Bulletin, and the New York Times. Reach him at keith@mlui.org.

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