Plaintiff raises issues of public trust in high visibility oil and gas lease case, but judge dismisses



By Cynthia Price
Legal News

High Volume Hydraulic Fracturing, commonly called fracking, has burst on the scene in Michigan rather rapidly as a controversial drilling practice.

It involves using large volumes of water, along with sand and chemicals, to create horizontal fissures in rock deep below the surface, which then release natural gas and oil reserves
Supporters say that  is a key piece in the plan to move the United States to energy independence, and point to the fact that horizontal fracturing has been conducted over the last 50 years in Michigan with very few accidents.

Opponents counter by noting that the technology is not the same as that used over those years, and refer to the experience of other states, such as Pennsylvania, where the practice has damaged both the environment and human health and safety. Even where these impacts are limited by regulation, anti-fracking activists say, the volume of water removed from other uses because it is potentially polluted with process chemicals is enormous.

Michigan has more regulations set in place to limit environmental impacts than most other states. As just one example, in Michigan the “flowback” water that comes back up the pipe must be disposed of in deep injection wells to keep it out of the ecosystem.

Even so, many local governments in Michigan have moved to place a moratorium on fracking, including Kent County’s Cannon Township, and in other states to ban it.

Indeed, a group called Ban Michigan Fracking is currently seeking signatures for a ballot initiative petition to place a permanent ban on fracking before Michigan voters in 2014.

But a recent high-profile Barry County Circuit Court case thought to be about fracking was really about issues that go beyond the specific practice.

Last year Steve Losher, a licensed residential builder, and a number of other Barry County residents became concerned upon finding out that the State Department of Natural Resources (DNR) had auctioned off leases for mineral rights in the Allegan State Game Area, Barry State Game Area, and Yankee Springs Park and Recreation Area adding up to  over 35,000 acres.

Losher and the others were not technical experts and were unsure what all this meant, but looking at trends in the state for increased fracking wells, formed Michigan Land Air Water Defense (MLAWD) to head off what they perceived as a threat to the environment and their way of life.

An eventual outcome was that MLAWD brought suit against the DNR for failing to consider potential environmental impacts before leasing. The original suit says, “MLAWD brings these claims to enforce the duty of Defendant Michigan Department of Natural Resources (DNR)  to consider likely effects on air, water, natural resources or the public trust and use and enjoyment of those resources, waters, and land with respect to” the game and recreation areas above.

The DNR, through the Michigan Attorney General’s office, filed a Motion for Summary Disposition, and Barry County Circuit Court Judge Amy McDowell heard the case July 29.

Assistant Attorney General Daniel Bock argued that the case was not ripe for judicial review. “As set forth in the briefs in this case,” he said, “the complaint and the alleged harm hinges on hypothetical events that ... are not likely to occur.”

The state’s brief reads, “Contrary to allegations made in the First Amended Complaint, the mere auction or lease of mineral rights does not cause any pollution, impairment, or destruction of natural resources.” The leases granted were categorized as non-development, which precludes doing anything with the land surface, so  Bock argued that if a lessee wanted to drill in the area, there would be many steps along the process to actual drilling where judicial review might be appropriate: the lessee would have to ask for a change in status, and then apply for a permit from the Department of Environmental Quality.

Regarding the public trust, the state brief says, “Contrary to the allegations in the Complaint, the public trust doctrine applies to public rights in navigable waters within the state. It provides that members of the public have the right to fish and navigate on navigable waters in Michigan. It does not apply to all lands owned by the state — in fact, it does not apply to any land owned by the state unless that land underlies navigable water or is adjacent to navigable water below the ordinary highwater mark.”

Jim Olson argued that the state’s ripeness claim  is based on an assumption that MLAWD’s case rests on a different aspect of the Michigan Environmental Protection Act (MEPA) than it does. “MEPA has two causes of action: fact-intensive trial and case on likely pollution or impairment under Section 1703(1), and case on breach of duty to conduct impact statement that considers potential effects and alternatives. Our claim is based on the second, and DNR’s argument on ripeness assumed it was the first.”

The response brief quotes a Supreme Court decision in Ray v. Mason County Drain Commissioner: “[T]he [M]EPA does more than give standing to the public and grant equitable powers to the Circuit Courts, it also imposes a duty on individuals and organizations both in the public and private sectors to prevent or minimize degradation of the environment which is caused or is likely to be caused by their activities.” The MLAWD attorneys further argue that the state must discharge the duty to consider effects and alternatives before entering into any action, such as leasing, that cannot be revoked, or else the claim will be irretrievably lost.

They also argued that it is remarkably easy to change the status of a non-development lease to one allowing development.

Regarding the public trust, Olson refers to 324.1701, which states actions may be brought for “the protection of the air, water, and other natural resources and the public trust in these resources from pollution, impairment, or destruction.” He argues that even if limited to navigable waters, the public trust implies the proactive responsibility to protect against any action that will damage them.

MLAWD asked that the state be required to do an Environmental Impact Statement on each site leased before offerin the mineral rights at auction. This is more stringent than the Environmental Assessment done by the federal Bureau of Land Management — which recently received over one million comments  from citizens and environmentalists on its proposed “Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands” rule.

At the time of the trial on the motion for summary disposition, Losher commented, “I was pleased with the hearing. The judge was very attentive, asked pertinent questions, and has certainly familiarized herself with the briefs. She allowed it go on half an hour later than scheduled. I was certainly pleased to see everyone who came out in the courtroom.” About 75 people attended.

However, Judge McDowell ruled in favor of the motion to dismiss, in agreement with the DNR’s position that the claim was not yet ripe. She added, “A lease granted in any other category than ‘nondevelopmental’ could arguably pose a risk of actual or imminent harm subject to the language of the MEPA and creating an issue ripe for review by the court.”

Judge McDowell said her ruling did not apply to the Allegan State Game Area, only to the state land in Barry County.

When asked if MLAWD would appeal, its attorney James Olson said, “MLAWD is looking at all options as to how to proceed with the case to address the broader issues concerning state leasing and lack of any cumulative analysis at the point of leasing... valued state lands... For the moment, the summary disposition decision in our view did not decide all issues and claims in the case, is not a final decision, and so no appeal is necessary or required at this point in time. The parties have requested a scheduling conference with Judge McDowell to sort out what still needs to be decided, clarified, and how to proceed from here.”

In addition to cumulative impact, Olson pointed to the issue of definition of “non-development,” which he says precludes only “drilling units” and not associated disturbances of the surface. He also would like to discuss how to proceed with claims concerning the Allegan State Game Area.


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