Conservation groups call for vigorous prosecution in collusion case that could have cost Michigan $200 million
ANN ARBOR, LANSING --- Criminal charges against two oil companies are appropriate and should be pursued vigorously, key Michigan conservation groups said today. Attorney General Bill Schuette has charged Encana Oil and Gas USA and Chesapeake Energy Corporation with collusion. They are alleged to have conspired to hold bid prices down in an October 2010 auction of oil and gas leases.
The groups also called on Schuette and other appropriate state officials to immediately suspend leasing, drilling, and permitting by both companies in Michigan until the issue is resolved. Encana has submitted permit applications to drill for oil and gas, which could permanently contaminate hundreds of millions of gallons of Michigan water.
The maximum $1 million fine associated with the charges is pocket change compared to what the alleged deal cost the state of Michigan. The collusion would have shortchanged the Natural Resources Trust Fund, which supports the acquisition and development of public land in Michigan with revenue from oil and gas leases on state land.
“Attorney General Schuette is on the right track by filing criminal charges, but all of the evidence leads us to believe that Encana and Chesapeake Energy cut a deal that left Michiganders, and our public land, short by hundreds of millions of dollars,” said Patty Birkholz, former State Senator and current West Michigan Director for Michigan LCV. “If found guilty, letting both companies off the hook with menial fines would send the message that repercussions for criminal activities can just be factored into the cost of doing business in Michigan. We simply cannot afford to do that.”
“If Encana and Chesapeake cannot be trusted to play by the rules, they should not be permitted to continue to lease land or drill for oil and gas in Michigan while this issue is being adjudicated,” said Tom Baird, President of Anglers of the Au Sable, a Grayling-area conservation organization. “These companies have access to our prized public land and our invaluable clean water supply. No entity facing criminal charges, with a stack of evidence mounted against them, should be allowed to continue to profit off of extracting Michigan’s natural resources.”
Schuette’s decision comes more than a year after a Reuters News Agency special report [http://www.reuters.com/article/2012/06/25/us-chesapeake-land-deals-idUSBRE85O0EI20120625] detailed email exchanges with strong indicators of bid-rigging between the two oil and gas companies. According to Reuters, the State of Michigan may have been cheated out of more than $200 million. Bids by Chesapeake Energy and Encana dropped from the May 2010 auction average of $1,413 per acre down to $46 per acre at the October 2010 auction with total revenues dropping from $178 million to just $9.7 million, even though the number of acres sold more than doubled.
The Michigan Environmental Council called for the voiding of the rigged bids, should the companies be found guilty.
“If the courts find that these companies colluded in the bidding process, the state should immediately move to void the contracts in question,” said James Clift, policy director with the council. “Michiganders deserve to receive the maximum value for any assets of the state which are sold or leased. That amount can only by established through and fair and open bid process.”
Michigan LCV called for fines to be raised in order to recover the amount lost by the state due to collusion, with the addition of a penalty that discourages oil and gas companies from conspiring.
“If the Attorney General’s office is truly determined to prosecute aggressively, both companies must be held fully accountable,” Birkholz said. “Emails show that they willingly discussed price points and acreage prior to the land auction. They should pay more than peanuts for settling the case out of court or if they are found guilty.”
Revenue from state-held public auctions of oil and gas leases goes into Michigan’s Natural Resources Trust Fund. This is an effective way to reinvest dollars in the protection of the natural resources from which extraction industries draw. Since 1976, about $965 million has come out of the Natural Resources Trust Fund to acquire and develop state parks and trails. Almost 2,000 projects in nearly every county in Michigan have been completed since the Natural Resources Trust Fund’s inception. The Milliken State Park --- a 31-acre stretch of trails, trees, and wetlands along Detroit’s riverfront --- is just one example of Natural Resources Trust Fund dollars at work. Currently, the Michigan DNR is appropriating Natural Resources Trust Fund dollars to link trails across the state into one continuous 924-mile stretch that would connect Belle Isle in Detroit to the Wisconsin border in the Upper Peninsula.
If Encana and Chesapeake are found guilty of collusion, rightfully recovering the amount lost by the Natural Resources Trust Fund could fill upwards of two-thirds of the Natural Resources Trust Fund’s coffers, due to its current cap of $500 million. Directing fines from Encana and Chesapeake’s alleged criminal activity back toward the improvement of Michigan’s public, natural areas for all citizens to enjoy would be a certain step toward justice being served.
Michigan League of Conservation Voters (Michigan LCV) is the leading non-partisan political voice for Michigan’s land, air, and water. Visit us online at: http://www.michiganlcv.org
Application For Youth Camp Scholarship Due March 31st
Oil - Gas - Holy Waters
DNR Director Creagh Joins Anglers in saying “No Surface Development” On Holy Water
After meeting with Anglers President Bruce Pegler and First Vice President Tom Baird and receiving hundreds of emails from concerned anglers and lovers of the Au Sable from around the state, DNR Director Keith Creagh has decided there will be no oil and gas exploration along the “holy waters” corridor anytime soon.
The announcement came at a Dec. 12 meeting of the Natural Resources Commission. Anglers of the AuSable thanks Director Creagh for reversing the department’s initial plan to allow development in several parcels near the river, and changing them to “non-development” status. Not only have the leases been set as “non-development,” the director is modifying them to remove language allowing reclassification of surface use without public notice and a new lease process.
Anglers, our fellow fishing and environmental friends, local businesses plus hundreds of concerned citizens can finally exhale, for now.
“Michigan has special places that deserve careful attention and thoughtful protection,” Creagh said. “The Au Sable River is one of those places. A nondevelopment lease lets us protect an area’s valuable surface features. This, in turn, protects Michigan citizens against the loss of revenue if publicly owned minerals are removed without a lease in place.”
In late October, the Michigan Department of Natural Resources auctioned nearly 2,800 acres east of Grayling for potential oil and gas development, much of it smack in the middle of one of the world’s most beloved trout streams. We urged the DNR not to do this. The Department did it anyway.
At the December 12 NRC Meeting, DNR Director Keith Creagh announced he would:
• Not enter the leases as originally auctioned.
• Modify the affected leases along the Holy Water to “non-development” status.
• Further tighten the leases to specifically prohibit any reclassification for the full five-year lease period. Any such reclassification, if requested by the oil and gas lease holders, would require public notice and a new auction – which Anglers would naturally oppose.
• Pledged, based on this recent controversy, to assign a DNR taskforce, with stakeholder input including Anglers representatives, to identify “special places” akin to the Holy Waters, where mineral leases and future oil and gas development will be off-limits in the future.
“This is a huge win for Anglers of the Au Sable,” president Bruce Pregler said. “Only through intense yet rational public input from hundreds of Anglers members and our friends in the conservation community were we able to convince the DNR to make this change. In fact, during the meeting today the director said he was getting an email every four minutes.”
“Thanks to all who took the time to explain to the DNR why the Au Sable is so special and why there was no way any of us would stand by while land was cleared for oil and gas wells in the Holy Water,” Pregler said.
Baird also said special thanks go to DNR Director Creagh. “Keith really listened to us,” Baird said. “It took guts to make this change – and vision to pledge to identify other special places where these kinds of controversies should be avoided in the future.”
When the lease news broke in October, Anglers went to work. The proposed leasing plan did not bode well for current or future residents of this historic stretch of the Au Sable. We asked again that the DNR reconsider the action. The Department initially declined our request.
That meant it was time to roll up our sleeves and do the heavy lifting necessary to help Director Creagh better understand these issues. This was nothing new for us, and we quickly were joined by our usual allies: the Michigan Environmental Council, Michigan League of Conservation Voters, Sierra Club, Au Sable Big Water Preservation Association, North Branch Foundation, Au Sable River Watershed Committee, and Michigan Trout Unlimited. Several local business and government leaders assisted in this effort at well. We had not seen that spirit here since the dark days of the Mason Tract crisis.
Given the short time window and enormity of the task it was an extraordinary show of solidarity by all. We are grateful for the support.
In the final analysis Director Creagh made the right decision. The “Holy Water” is safe for now thanks to Creagh’s willingness to listen.
More work needs to be done to responsibly obtain these resources, but this is a victory worth savoring. Thank you to all who helped us to secure it.
- Bruce Pregler, President and Tom Baird, First Vice President
Tess Nelkie is presented the “Riverkeeper Award” for 2013
Periodically, the Anglers of the Au Sable will honor an individual for their tireless effort and exceptional work on Angler projects. The highest award given by the Anglers is the “Riverkeeper” award. Past winners of this award include environmental icon Rusty Gates and George Griffith, a founding member of Trout Unlimited.
In September 2013, the Anglers of the Au Sable presented the Riverkeeper award to Tess Nelkie for her outstanding work with high school students of our community and college students. Tess has been on the Angler’s Board of Directors since 1992. And for over 21 years, she has chaired the “Au Sable Words Writing Contest”, which is offered to local Michigan high school students. The students submit stories and poetry which is judged by committee with the winners being published in our quarterly magazine. The Anglers dedicate an entire issue to this writing contest in the “Riverwatch”. Tess also administers the Anglers college scholarship award project. Every year the Anglers give a $1,000.00 scholarship to students majoring in Fisheries & Wildlife at Michigan State University and Lake Superior State University. These scholarships assist students in achieving their dream of obtaining a degree and finding employment working to preserve, manage and improve Michigan’s wild places.
Anglers of the Au Sable, thank Tess for her passion and commitment to Anglers’ projects. Tess’s continuous and outstanding work with high school and college students ensures that our future stewards of the environment possess the knowledge and respect for all things natural. Congratulations Tess, you are most deserving of this prestigious award.
- Bruce M. Pregler - President of Anglers of the Au Sable
Anglers of the Au Sable on NPR - 5 November 2013
Click to listen
RUSTY GATES INDUCTED INTO THE FLY FISHING HALL OF FAME
Our founding president, Rusty Gates, has been inducted into the Catskill Fly Fishing Hall of Fame.
Since 1985 there have been only 70 inductees. Among the criteria for membership in the Hall of Fame is the requirement that the inductee “must have made substantial contributions to the sport of fly fishing on a national or international basis….”
Rusty joins luminaries such as Ray Bergman, Stan Bogdan, Ernest Schwiebert (whom he once guided on the Au Sable), Gem Skues, Helen Shaw, Frederick Halford, and many other of the most significant contributors to the sport.
Alan Diodore, Director
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ANGLERS CONTINUE TO SUPPORT STUDENTS STUDYING FISHERIES AND WILDLIFE
On Good Friday, March 29, 2013, Anglers of the Au Sable awarded its annual scholarship to a worthy college student studying in the field of fisheries and wildlife. This year, the Anglers of the Au Sable awarded its scholarship to Joseph Parzych a senior at Michigan State University majoring in Fisheries and Wildlife. Joe will receive his degree from MSU this spring. In the fall he is headed to Washington State University to pursue a master’s degree in Environmental Sciences.
While at Michigan State University, Joe maintained a cumulative GPA of 3.95. Despite all the effort put into his studies, Joe finds time to fish on the Tittabawusee River. He is also and avid hunter pursuing small and large game. Joe’s long term goal is to become a project manager for an environmental consulting firm working on stream restoration and dam removal with a focus on restoration of salmon and trout spawning grounds. Sounds like Michigan could use a person with such skills. Anglers will continue to award scholarships. We believe in supporting the young people as they will be recreating and/or managing our watershed in the future. Yes, it was a Good Friday. Shown in the pictures is Joe receiving the award at the Kellogg Center on Michigan State’s campus. Also pictured are Joe and his proud parents Judy and Randy Paryzych. A special thank you goes out to Director Tess Nelkie who administers the awarding of the Anglers’ scholarship.
- Bruce Pregler - President
The Au Sable lost the best friend it ever had. Calvin “Rusty” Gates Jr., "Da Gator" to his legion of acquaintances, passed away on 19 December 2009. Things in this beautiful valley will never be the same.
Once in a lifetime there is someone that touches your life in so many ways. Rusty Gates was one of those people. His spirit and tenacity had an affect on everyone involved in environmental causes, from hikers to hunters to the many of us who came here to cast a fly far and fine. He was a fighter and it was the good fight that he chose to engage; catch and release on the Holy Waters, National Guard noise pollution on the North Branch, oil wells on the South Branch, and toxic chemicals on the Big Water. Da Gator led the way. A tap on the shoulder, a glance from those blue/grey eyes, a short conversation; that was usually all it took. We set to our tasks with a brio, partly from the cause, partly not to let him down.
He had all the connections and could accomplish more in a phone call than anyone else could do in six months of work. Where would we be without him these last 20 plus years?
A man of character and courage, he brought both, as well as his wry sense of humor, to his final battle. In the end, only his body gave out, Rusty’s spirit remained indomitable.
Rusty Gates has left us as a leader, but left a legacy as big as the river. The vigilance that he began will go on!
John Russell of Great Lakes Images is the official photographer for Anglers of the Au Sable. Our sincerest thanks to all that have contributed pictures. With this note we acknowledge each and every one of you and appreciate your contribution.
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