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Definitions
Key Terms
Mineral Rights
Oil and gas are property, and owning them is called a mineral right. An owner can develop his rights by
leasing to an energy company, and typically receives a royalty based on the volume produced.
Severed Rights
Michigan law allows a landowner to retain control of the underlying minerals when selling the surface
property.The buyer of the surface then is known as a "severed rights owner." In such cases, which are very
common, the owner of the mineral rights has the authority to develop them, while a private citizen who is a
severed rights owner has essentially no control.
In cases where the state owns the surface land but not the underlying minerals, as in some parcels in the
Jordan Valley, it has more authority than a private citizen to determine whether or not drilling will occur. It
exerts this authority by requiring oil and gas developers to gain separate DNR land use permits, in addition to
the DEQ drilling permits, to run pipelines, build roads, and install the wells and processing facilities.
State Laws That Affect Oil and Gas Development
Note:In 1994 the Legislature consolidated all of Michigan's environmental and natural resource protection
statutes into one law, Public Act 451, known as the Michigan Natural Resources and Environmental Protection
Act.
Michigan Environmental Protection Act (PA451)
Part 17
Enacted in 1970, MEPAprotects the air, water, and other natural resources from pollution, impairment, or
destruction. It does so by allowing citizens to file suit and gain temporary or permanent court injunctions
against industries, government agencies, or individuals that harm natural resources. The law provides citizens
with the authority to secure a court order barring any "conduct which has, or which is likely to have, the effect
of pollutiing, impairing or destroying the air, water or other natural resources or the public trust."
Michigan Oil and Gas Act (PA451)
Part 615, Section 319.1
"It is accordingly the declared policy of the state to protect the interests of its citizens and land owners from
unwarranted waste of gas and oil and foster the development of the industry along the most favorable
conditions and with a view to the ultimate recovery of the maximum production of these natural products. To
that end this act is to be construed liberally in order to that effect may be given to sound policies of
conservation and the prevention of waste and exploitation. " (emphasis added).
Part 615, Section 319.2
"Waste in addition to its ordinary meaning includes:
'Underground waste' - 1) the inefficient, excessive, or improper use or dissipation of the reservoir energy,
including gas energy and water drive, of any pool, and the locating, spacing, drilling, equipping, operating, or
producing of any well or wells in a manner to reduce or tend to reduce the total quantity of oil or gas
ultimately recoverable from any pool, and 2) unreasonable damage to underground fresh or mineral waters,
natural brines, or other mineral deposits from operations for the discovery, development, and production and
handling of oil or gas.
'Surface waste' - 1) the unnecessary or excessive surface loss or destruction without beneficial use...2) the
unnecessary damage to or destruction of the surface, soils, animal, fish or aquatic life or property, or other
environmental values from or by oil and gas operations."
Part 615, Section 319.4
"It shall be unlawful for any person to commit waste in the exploration for or in the development, production,
or handling or use of oil or gas; or in the handling thereof."
Natural River Act (PA451)- Part 305
Enacted in 1970, the law provides the state with the authority to "designate a river, or a portion thereof, as a
natural river area for the purpose of preserving and enhancing its value for water conservation, its free
flowing condition and its fish, wildlife, boating, scenic, aesthetic, flood plain, ecologic, historic and
recreational values and uses."
Under the law the DNR, working with citizens and local governments, can set restrictions on home
building, logging, brush cutting, and other uses of land in a maximum 400-foot wide corridor on each bank of
a designated river. Oil and gas drilling is prohibited within those corridors. There are 14 designated natural
rivers in Michigan.
Michigan Constitution - Article 4, Section 52
"The conservation and development of the natural resources of the state are hereby declared to be of
paramount concern in the interest of health, safety, and general welfare of the people. The legislature shall
provide for the protection of the air, water, and other natural resources of the state from pollution, impairment,
or destruction."
Michigan Oil Co. vs. Natural Resources Commission (1979)
"For purposes of the Oil Conservation Act [an earlier name for the Oil and Gas Act], ordinary use of the term
'waste' refers not only to waste of oil and gas, but includes any spoliation or destruction of the land, including
flora and fauna, (emphasis added) by one lawfully in possession to the prejudice of the estate or interest of
another.
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