The Environment Report
11:35 am
Thu August 7, 2014

Michigan township seeks "franchise agreements" with oil and gas drillers

A drilling operation. The state doesn't allow townships to regulate oil and gas drilling. Edwards Township doesn't have any active drilling at the moment, but township officials hope to use a sort of franchise agreement to work around state rules for future drilling.
Credit Photo courtesy of the Bureau of Land Management

One Michigan township wants to make special deals with oil and gas drillers. 

State law does not allow townships to regulate oil and gas drilling. But with all the controversy around fracking, some wish they could.  One township in northern lower Michigan is trying to work around that rule and have a voice.  

There are no active oil or gas wells in Edwards Township, a farming community near West Branch. However, there are some old wells that are capped off.

Township supervisor Lou Winter got a phone call recently from some neighbors who were worried the pipes were leaking. That was not the case, but Winter wasn’t proud that he knew almost nothing about the wells.

"I mean, people call you; they want an answer. I got elected to serve the people. If I can help them, I'm going to help them," said Winter.

Plan could give officials more information

If Edwards Township moves forward with a new plan, Winter will know a lot more about any wells drilled in the future.

There could be a few, since oil and gas companies have leased the rights to drill on most of the land here, including property owned by township officials.

"He leased. I leased. Carl leased," said Winter, pointing to his colleagues in the room. He adds that when leases were signed, people started wondering what rules were in place to protect the township, especially its water.

"In this area, there’s a lot of trout streams, lakes, [and] they're really clean."

It’s the state’s job to protect those trout streams from oil and gas development. And state law prohibits townships from making rules to do the same. But Edwards Township has drafted what’s called a franchise agreement.

It’s like a business deal. If you want to use township roads for any kind of oil and gas development, you need to agree to do a few things. Such as: Let the township know where you’ll drill and when, and clean up any messes you make and fix roads that get damaged.

"But if there was a spill, then you've got an independent authority to make sure the right thing happens and the cleanup is effective." – Chris Grobbel, Edwards Township planning consultant

The township’s planning consultant, Chris Grobbel, told the planning commission a lot of the agreement is just about knowing what’s going on.

"And having a handle on what’s being hauled up and down the roads and what the risks are... knowing what's going on, that information flow. But if there was a spill, then you've got an independent authority to make sure the right thing happens and the cleanup is effective." 

Litigation over cleanups

It’s ultimately the state’s job to make sure an oil or gas spill is cleaned up effectively. And no commissioner accused the state of not doing its job.

But Grobbel is currently involved in litigation against the state on these issues. He told commissioners Michigan’s track record is less than perfect. He referred to a processing plant near Gaylord that had more than 60 spills over 30 years.

"Thirty years that cleanup [took] and it knocked out three residential wells before the homeowners sued Shell Oil to get it cleaned up." said Grobbel. The homeowners did not sue the state, and state officials say many of those spills were small and the cleanup has been ongoing.

Agreement could lead to lawsuit from industry

However, Edwards Township could end up in a lawsuit. Should the township board approve the franchise agreement, the next question is whether oil and gas companies will sign it or challenge it in court.

Nobody from the Michigan Oil and Gas Association returned a call seeking comment.

Kurt Schindler works for the Michigan State University extension service. He says the oil and gas industry has generally been able to ward off attempts by townships to get involved in their business.

"They are very effective in getting their message to the Michigan Legislature and defending the law as currently written," said Schindler. 

He notes that interest in fracking in recent years has driven lots of phone calls to his office from township officials asking what they can do.

Edwards Township might try to answer that question next week. The township board is set to give final approval to the franchise agreement Monday night.

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