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Engler Administration Proposes Largest-Ever Sale of Public Forest Land to Private Developers

1,850-Acre Sale Raises Serious Questions about Propriety, Legality

March 8, 2000 | By Keith Schneider
Great Lakes Bulletin News Service

Presented to the Natural Resources Commission on March 8, 2000

With nearly 4 million acres of forest under civic ownership, Michigan has the largest public domain of any state east of the Mississippi River. This wild legacy is the foundation of a $3 billion recreation and tourism economy, a $9 billion timber products industry, and a priceless outdoor heritage and culture.

In 1995, during a series of well-attended state Senate hearings in northern Michigan, the consistent message from citizens was that public lands were an immensely valuable asset and the public domain should be expanded not reduced. This view of the value of public lands, by the way, also is strongly held across the country. In the 1998 election, citizens approved more than 70 percent of the state and local ballot measures to protect and increase the amount of publicly-owned and protected forest and open space.

The Michigan Land Use Institute opposes the sale of 1,850 acres of publicly-owned state forest near Grayling for purposes of private development. We are convinced that this proposed sale is not in the public interest, violates key provisions of the controlling legal authorities governing the management of public lands, and serves only to advance the narrow economic goals of a limited number of private businesses.

The proposed sale, if approved, would not only be the largest transfer of public lands for private purposes in state history, it also would initiate a dramatic shift in the state’s policy and strategy for managing the public domain.

Heretofore, the state has viewed its responsibility in managing public lands as simultaneously advancing conservation goals and wise use of public resources. The proposed sale would transform the Department of Natural Resources into the role of realtor and land developer for private interests. Yet the governing legislation and rules that form the basis of the Department’s policy for managing public lands do not authorize or foresee the DNR or the Natural Resources Commission adopting this new role. Such an abrupt departure in policy and approach merits a full public and legislative debate.

Since 1921, Michigan has managed public lands to promote wildlife, recreation, protection of natural ecosystems, and to develop minerals, timber, and fisheries. Under its governing statutes, the DNR has the authority to buy and dispose of lands. The process generally began with a formal request from a land owner to trade public land for parcels of equal or greater value.

DNR officials found that some transactions proved cumbersome because they were often complicated by three-way trades, especially for parcels of an acre or less. In 1989, at the DNR’s request, the Legislature provided some flexibility. It established the Land Exchange Facilitation Fund. The pace of the sales is governed by a $500,000 cap on the amount the fund can hold at any time. Proceeds are used to buy state land, and deals can only take place if the fund contains less than $500,000. By virtue of its design, the Facilitation Fund principally enabled the DNR to quicken sales of small parcels. The Institute’s review of the legislative history clearly shows that lawmakers and the DNR intended the Land Exchange Facilitation Fund to improve the efficiency of land transactions involving very small parcels of land.

The Department, however, is now is seeking to use the Facilitation Fund to sell much larger parcels to private interests. This new Department goal appears to be in conflict with Gov. John Engler’s pledge last year in the State of the State address to "make sure that Michigan’s rich legacy of natural beauty and well-managed resources is preserved for future generations." Plainly, selling large parcels of public lands for private purposes does not preserve Michigan’s rich legacy of natural beauty for future generations.

We urge the Natural Resources Commission and DNR Director K.L. Cool to reconsider the proposed sale and delay any decision pending a more thorough legislative and public review. It is not nearly enough to hold a poorly publicized and sparsely attended public meeting about this issue in Roscommon County and consider that ample citizen review. We are convinced that Michigan’s citizens have the desire and the right to learn much more about this proposed sale, and its significant implications for public land management in northern Michigan. We also are convinced that the vast majority of state citizens, once they are informed, would vigorously oppose transferring large blocks of state forest to private developers without much clearer criteria and guidelines than currently exist.

The responsibility of the Natural Resources Commission and the Department is to manage public lands for the benefit of all citizens, not a select few. In our view, the proposed sale departs from that responsibility and in doing so violates the governing authorities for managing state lands.

The Institute’s general counsel, Jim Olson, analyzed the Department’s governing legal authorities and found none authorize the sale of large blocks of public land to private interests without much clearer criteria and environmental review.

Michigan Constitution 1963, Art. 10, Sec. 5 (return to top of page)
The Michigan Constitution mandates that the legislature has supervisory control over, and certain mandatory obligations toward the management of some 4.3 million acres of state-owned lands:

The legislature shall have general supervisory jurisdiction over all state-owned lands useful for forest reserves, game areas and recreational purposes; shall require annual reports as to such lands from all departments having supervision or control thereof; and shall be general law provide for the sale, lease or other disposition of such lands.

According to the record of the 1961-62 constitutional convention, this provision was adopted to require the legislature to "keep these resources continually in mind" in order to fulfill the following mandates: (1)"earmark certain lands as a primary state forest reserve" for recreational needs; (2) require "annual reports" to keep the legislature informed of the nature, extent and value of such land in the exercise of its supervisory jurisdiction; and (3) make regulations and pass laws "as are necessary to preserve this valuable resource for the interest of the public." *

In summary, Art. 10, Sec. 5 embodies a declared policy to protect and conserve state lands inherent in the people themselves, a mandate to require annual reports to the legislature from all state departments having control of state lands, and to mandate by a general comprehensive law that provides for the management, sale, or disposal of state lands consistent with this policy.

Michigan Constitution, Art. 4, Sec. 52 (return to top of page)
In addition to Art 10, Sec. 5, the Michigan Constitution, in Art. 4, Sec. 52, declares that its natural resources, including state-owned lands, are of "paramount public concern." Further, the provision mandates the legislature to pass laws to protect the air, water, and natural resources from pollution, impairment, or destruction:

The conservation and development of the natural resources of the state are hereby declared to be of a paramount public concern in the interest of the 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 and destruction.

The legislature responded to this constitutional mandate with the enactment of the Michigan Environmental Protection Act of 1979, now Part 17 of NREPA, MCL 324.1701 et. seq; MSA 13A.1701 et. seq. The MEPA has been interpreted by the Supreme Court to impose a duty on agencies to prevent and minimize environmental degradation, Ray v Mason County Drain Comm ., 393 Mich 294, 224 NW2d 883 (1975). It has also been interpreted to require agencies to consider and determine the likely environmental effects of, and the feasible and prudent alternatives to, proposed governmental actions or approvals. State Highway Comm. v Vanderkloot, 393 Mich 159, 220 NW2d 416 (1974). And the mandate, in Art. 4, Sec. 52, that "the legislature shall provide for the protection of air, water and other natural resources ... from pollution, impairment, or destruction has been ruled to be "self-executing," has been held to be "self-executing." Id. This means, the legislature could be judicially enforced by a citizen to adopt laws that protect the environment, which it did when it passed the MEPA.

The Vanderkloot ruling that "the legislature shall provide" in Art 4, Sec. 52 means the legislature must pass a law like the MEPA also applies to "the legislature shall ... provide for the sale, lease, or other disposition of such lanes" in Art 10, Sec. 5. The mandate to pass a public lands law and policy in Art 10, Sec. 5 is self-executing. Similarly, the mandate "shall require annual reports" on the nature and extent of public lands is specific in its charge, and likewise self-executing.

However, to date, the legislature has not passed a law requiring annual reports on the status and nature of public lands to inform it in the exercise of its supervisory duty in passing proper laws to protect and conserve state land for the interests of the public, or, for that matter, to carefully regulate the sale or disposition of state-owned lands. In effect, until such laws have been carefully debated and formulated, the sale of state-owned by an agency, like the Department of Natural Resources, would violate Art 10, Sec. 5 of the Michigan Constitution. This law mandates that the legislature be kept informed before it makes decisions concerning this valuable public resource, and the means of doing so, through annual reports, is specified.

Constitutional Requirements and the Proposed Sale of Public Lands (return to top of page)
Art. 10, Sec. 5 and Art 4, Sec. 52, when read together, lead to the conclusion that the management and sale of public lands cannot happen in a vacuum of self-interest or single purpose. Rather, a sale of public lands must be supervised by the legislature, provided for by law, and must protect and conserve state-owned lands valuable for forest reserves, wildlife, and recreation Moreover, any proposed sale must be consistent with the paramount concern for the protection of natural resources mandated by Art 4, Sec. 52 and the duties imposed by the MEPA. Simply put, this means that a proposed sale of state land cannot occur until it is in compliance with these constitutional provisions and the laws adopted pursuant to them.

In short, before a sale of public lands, particularly designated state forest lands, can be approved, the mandates of Art 10, Sec. 5 and Art 4, Sec. 52 must be met:
The legislature must pass a law requiring annual reports on the extent and nature of state-owned lands.
Agencies must file an annual report.
The legislature must adopt a comprehensive public lands policy law that takes into account the annual report and the duty to protect and conserve forest lands for wildlife and recreation.
The Department of Natural Resources and Natural Resources Commission must carefully consider and determine likely environmental effects and the feasible and prudent alternatives to a proposed sale and the conduct authorized or reasonably resulting from such sale.

State Land and Natural Resources Laws (return to top of page)
In addition to these constitutional requirements, the Natural Resource Commission and Department of Natural Resources are charged by statute to "protect and conserve" state-owned lands within its jurisdiction. MCL 324.504. These lands are primarily state forests and parklands, and the Commission and Department must adopt rules that "preserve such lands from molestation, spoilation, destruction or any other improper use or occupancy." MCL 324.502, 504.

The Pigeon River oil development controversy, which ended up in the Michigan Supreme Court in the late 1970s, illustrates the failure to live up to the constitutional duties, described above, and these statutory charges. There the state unwittingly leased thousands of acres of state forests without adequate consideration or information concerning the nature or value of the lands that would be impacted by oil and gas development. After the oil land gas development rights had been leased, the Department realized the impact would be devastating to Pigeon River forest, so put into place under its property power a system to protect the forest and consider actual hydrocarbon development plans. In what the Court of appeals called a "blunder," the court upheld the authority of the Department and Commission to rectify the premature leasing of the oil and gas rights through creating zones in the forest to protect against waste or impairment of the natural resources and environmental degradation. Michigan Oil v Natural Resources Comm’n, 71 Mich App 667, 249 NW2d 135 (1978); see also Environmental Action Council v Natural Resources Comm’n , 4045 Mich 741, 275 NW2d 538 (1979) (prohibiting, under the MEPA, oil and gas drilling because of the likely impairment of the Pigeon River’s elk heard and critical habitat). The Court of Appeals noted:

... The term "blunder" is not too strong a word to describe the DNR’s 1968 decision to offer, at public auction, oil and gas leases covering some _ million acres of state-owned land in the northern Lower Peninsula. Mich Oil, at 674.

The Court of Appeals concluded that, "the Commission has the authority and duty to regulate lands under its control ..." Id at 683, and affirmed the Department’s and Commission’s correction of its mistake: "... we see nothing wrong with a public agency, entrusted with preserving valuable resources belonging to the people of the state of Michigan, having once jeopardized those resources, taking all necessary and proper steps to rectify previous errors so as to benefit the public." Id. In reaching this result, the Court ruled on the nature of the duty of the Commission toward state lands, describing the "state lands and resources placed in its control and held by it as a public trust." Id at 688-89.

The Department and Commission hold state forest lands subject to a public trust. As such, the land must never be disposed of absent some critical public purpose, consistent with the trust purposes in protecting the state lands, and absent a consideration and finding, similar to that under the MEPA discussed above, that the wildlife, habitat, natural resources of the forest, and the use of the forest for recreation by the public, will not be significantly impaired or destroyed. MCL 324; Michigan Oil, and Obrecht v National Gypsum , 361 Mich 399, 105 NW2d 143 (1960). Until the Department and Commission have made the following findings, a sale of public lands would violate their legal duties under the cited statute and the public trust in state lands. A trustee cannot not dispose of the body, or even part of, a trust unless it accounts to the beneficiaries to justify its actions.

Similarly, the Commission cannot approve a sale of 1,850 acres, the largest proposed sale of public lands in the state’s history, without fully accounting to the public (including pubic purpose, likely environmental effects and alternatives analyses) in accordance with its legal and ethical obligations arising under these laws and the public trust.

For example, how can an MOA authorizing the sale of public lands occur before the likely impacts and alternatives are known. In effect, the approval of the MOA will deprive the Commission of ever considering alternatives that do not involve the sale of the public lands in question, including the impacts associated with the proposed private use or conduct.

Constitutional Restriction on Appropriation of Property for Private or Local Purpose (return to top of page)
One way to account to the public in the proposed sale or disposition of state lands for a private or local purpose, is to require a two-thirds vote of the legislature under Art 4, Sec. 30 of the Michigan Constitution. While this does not satisfy the question of impairment or degradation of natural resources or the environment under Art 4, Sec. 52, the MEPA, the Commission’s statutes and rules, or the public trust, it would at least account for and broaden the satisfaction of the public purpose limitation.

The assent of two-thirds of the member elected to and serving in each house of the legislature shall be required from the appropriation of money or property for a local or private purpose.

Clearly, the sale of state lands is an appropriation of property. There can be little doubt that the sale of 1,850 acres of state forest lands into private hands for a private purpose does not qualify as a public purpose under the statutes or public trust law. How better to assure a statewide consent to the disposal of state-owned lands than through a two-thirds vote of the legislature, subject, of course, to compliance with natural resource laws and regulations. A two-thirds vote brings a higher level of supervision and assurance of a statewide purpose.

An argument might be raised that the payment of fair market value for the property assures that it is not an appropriation. First, this does not address the private purpose issue. Second, even if it did, there is an appropriation when all of the constitutionally recognized values in the state lands and environment are taken into account. The natural resource and recreational value of the state-owned lands to the public, by use and years of public ownership and management, must be accounted for. Absent this, there is essentially a subsidy flowing to the private purchaser. Thus, it only makes sense that a two-thirds vote is required under Art. 4, Sec. 30.

Accordingly, even if Art. 10, Sec. 5, Art. 4, Sec. 52 and the MEPA, the statutes and regulations of the Commission, and the public trust doctrine are complied with, the proposed sale of 1,850 acres of state forest land cannot be legally transacted and closed unless and until the legislature has authorized the same by a two-thirds vote under the Constitution.

Authority of the Land Exchange Facilitation Fund Act ("LEFFA") (return to top of page)
This Act was passed to clarify state authority to exchange and sell state-owned lands. The statute presupposes that all other constitutional and statutory or common law requirements, as discussed above, have been met.

Sec. 2131(1)(b) That the sale is not otherwise restricted by law.

Based on the legal restrictions and requirements discussed above, the proposed sale is "otherwise restricted by law."

Further, the sale of land under the LEFFA involves land that has been "dedicated for public use" for not less than 5 years before its sale and is "not needed by the department." MCL 324.2131(1)(d)(i). Moreover, the LEFFA, by its terms, applies to state-owned land under the control of the Department and that has been dedicated to a public use, MCL 324.2130(1), and it must be determined to be surplus. Id.

The LEFFA presents several other serious legal questions:
If the land is "dedicated to public use," then it is in the nature of public trust land under the Michigan Oil decision. As such, the sale cannot be authorized until it has been determined it would be for a valid public forest land purpose, and would not impair the lands being sold, in addition to those remaining.
If the land is "dedicated," is it then a state land reserve under Art. 10, Sec. 5, and, therefore, not subject to sale?
Does LEFFA constitute the kind of general law to be passed by the legislature under Art. 10, Sec. 5? LEFFA does not address a comprehensive public land policy, and is not based on a review of annual reports required by Art 10, Sec. 5.
LEFFA does not, by its terms, include the necessary environmental and other impact or alternative review criteria as required by MEPA or public trust law. In this event, MEPA must be construed as supplemental, MCL 324.1706. That being the case, the MEPA duties regarding consideration and determination of likely effects and alternatives apply.

Until the above questions or matters have been answered or met, the MOA or any proposed sale cannot be approved.

The Memorandum of Understanding (return to top of page)
The Department has proposed that the Commission approve a Memorandum of Understanding ("MOA") for the sale of the 1,850 acres. The MOA puts into play the sale of public or state-owned lands. The approval of the Commission of the MOA, in effect, would give approval to the sale and private purpose and project to be accommodated by the sale. The Commission cannot authorize or put into motion future actions that are in violation of the constitutional provisions, statutes, and public trust law discussed above.

The Department and Commission must conduct the careful environmental impact and alternative analysis imposed by the MEPA and public trust law.

The MOA cannot be approved until the impact on protection and conservation of state forest lands has been fully considered and determined.

The MOA cannot be approved until the legislature has been required and been provided by the annual reports mandated by Art. 10, Sec. 5. The supervision of the transaction, and any final decision, must be considered by the legislature under Art 10, Sec. 5. The LEFF Act is not a general public lands law as contemplated and required for the sale and disposition of state-owned lands under Art 10, Sec. 5.

An MOA should not be considered until the basic underlying appropriation of property has been approved by a two-thirds vote of the legislature under Art. 4, Sec. 30.

*Knapp, Mich. Constitutional Convention, Official Record, 1961-62, at 2825-2826, 2909. "It has become apparent that it is in the public interest to emphasize the ascendant interest of the people in state recreational and forest lands ..." Comm. Rep. At 2826. A debate occured over the necessity of a statement of purpose to "conserve and protect" state lands for "the benefit of all people," but it was turned down as surplusage; that is, this is a "statement of principles already inherent in the people." Id. At 2827.

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