SENATE BILL No. 1184

March 5, 2008, Introduced by Senators McMANUS, KUIPERS, KAHN and BARCIA and referred to the Committee on Energy Policy and Public Utilities.

A bill to amend 1994 PA 451, entitled

"Natural resources and environmental protection act,"

by amending section 502 (MCL 324.502), as amended by 2004 PA 587.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 502. (1) The commission may promulgate rules, not

inconsistent with law, governing its organization and procedure.

(2) The department may do 1 or more of the following:

(a) Promulgate and enforce reasonable rules concerning the use

and occupancy of lands and property under its control in accordance

with section 504.

(b) Provide and develop facilities for outdoor recreation.

proper administration of this part.

(d) Remove and dispose of forest products as required for the

protection, reforestation, and proper development and conservation

of the lands and property under the control of the department.

(e) Require the payment of a fee as provided by law for a

daily permit or other authorization that allows ~~the~~ a person to

hunt and take waterfowl on a public hunting area managed and

developed for waterfowl.

(3) Within 120 days after the effective date of the amendatory

act that added this subsection, the department shall provide to the

clean energy authority created under the clean energy authority act

an inventory of all contracts, including oil and gas leases, for

the taking of oil and gas from state owned lands. The inventory

shall include at least the following information for each contract

or lease granted by this state, as lessor:

(a) The date the lease was executed and the legal description

of the lands covered by the lease.

(b) The name and address of the current lessee.

(d) Whether the department considers the lease to be valid and

effective on the date of the inventory, and, if not, the date of

any abandonment, release, discharge, cancellation, or termination

of the lease as to the lands affected.

(e) The date of execution of any release or discharge of the

lease as to any portion or all of the lands covered thereby.

(4) The department shall enter into contracts, including oil

and gas leases, with the clean energy authority created under the

clean energy authority act for the taking of oil and gas from any

state owned lands identified by the authority. The authority shall

submit written applications to the department identifying state

owned lands the authority wishes to secure and develop, as lessee,

under oil and gas leases granted by the department, as lessor. Upon

receipt of each such application, the department shall enter into a

direct lease with the authority covering the state owned lands

identified in such application. Each such lease shall provide for a

primary term of 7 years and require the payment of a 1/6 royalty to

the department, as lessor. Money received under such a lease that

is attributable to the lessor's royalty share shall be transmitted

to the state treasurer to be deposited and credited in accordance

with the provisions of subsection (6). Notwithstanding the

provisions of subsection (6), a lease permitted under this section

shall be valid and effective when entered into by the department

and the authority and shall not require the approval of the state

administrative board. The department is not required to enter into

a direct lease with the authority covering any land that is in

production or is leased or permitted for drilling or production as

of the date of the authority's application.

(5) Not less than 180 days before offering to enter or

entering into a contract or lease for the taking of oil and gas

from state owned lands with any other person, through competitive

public auction or otherwise, the department shall give written

notice to the clean energy authority identifying the lands. If the

authority submits an application for a lease covering lands

identified by the department in the notice within 180 days from the

date of the notice, the department shall enter into a direct lease

with the authority covering the lands identified in the notice and

application.

(6) ~~(3)~~ Except as provided in subsection ~~(4)~~ (7), the

department may enter into contracts for the taking of coal, oil,

gas, and other mineral products from state owned lands, upon a

royalty basis or upon another basis, and upon the terms the

department considers just and equitable subject to section 502a.

This contract power includes authorization to enter into contracts

for the storage of gas or other mineral products or greenhouse gas

in or upon state owned lands, if the consent of the state agency

having jurisdiction and control of the state owned land is first

obtained. A contract permitted under this section for the taking of

coal, oil, gas, or metallic mineral products, or for the storage of

gas or other mineral products or greenhouse gas, other than a

contract with the clean energy authority under the clean energy

authority act, is not valid unless the contract is approved by the

state administrative board. Money received from a contract for the

storage of gas or other mineral products or greenhouse gas in or

upon state lands shall be transmitted to the state treasurer for

deposit in the general fund of the state to be used for the purpose

of defraying the expenses incurred in the administration of this

act and other purposes provided by law. Other money received from a

contract permitted under this subsection, except money received

from lands acquired with money from the former game and fish

protection fund or the game and fish protection account of the

Michigan conservation and recreation legacy fund provided for in

section 2010, shall be transmitted to the state treasurer for

deposit in the Michigan natural resources trust fund created in

section 35 of article IX of the state constitution of 1963 and

provided for in part 19 and the Michigan state parks endowment fund

created in section 35a of article IX of the state constitution of

1963 and section 74119. However, the money received from the

payment of service charges by a person using areas managed for

waterfowl shall be credited to the game and fish protection account

of the Michigan conservation and recreation legacy fund provided

for in section 2010 and used only for the purposes provided by law.

Money received from bonuses, rentals, delayed rentals, royalties,

and the direct sale of resources, including forest resources, from

lands acquired with money from the former game and fish protection

fund or the game and fish protection account of the Michigan

conservation and recreation legacy fund provided for in section

2010 shall be credited to the Michigan game and fish protection

trust fund established in section 41 of article IX of the state

constitution of 1963 and provided for in part 437, except as

otherwise provided by law.

(7) ~~(4)~~ The department shall not enter into a contract that

allows drilling operations beneath the lake bottomlands of the

Great Lakes, the connected bays or harbors of the Great Lakes, or

the connecting waterways as defined in section 32301, for the

exploration or production of oil or gas.

(8) ~~(5)~~ This section does not permit a contract for the taking

of gravel, sand, coal, oil, gas, or other metallic mineral products

that does not comply with applicable local ordinances and state