You are correct in considering this to be a Statewide issue. It will ultimately be resolved by the Governor, Jeb Bush, and the Legislature of Florida. In some sense it is a National issue insofar as the United States Constitution will ultimately be invoked if the State of Florida continues to fight to the bitter end. I think this Case is much larger than the Michigan vs Miller Oil Case. For some newcomers, I will reprint the saga of Miller Oil below:
freep.com
Sellout on dunes? In fact it looks like best of a bad deal
When Michigan taxpayers were stuck with paying more than $90 million to preserve the Nordhouse Dunes, environmentalists and others said John Engler pulled a fast one
May 9, 1998
BY DAWSON BELL
Free Press Lansing Staff
The story of the Nordhouse Dunes has an easy plot line. It goes like this:
Site of publicly owned natural wonder is under attack by greedy oil developers. Developers, rebuffed by state officials, file suit. Anti-environmental governor abandons stewardship of the Lake Michigan coastline resource, negotiates secret deal to pay off developers -- who happen to be big political contributors. Environmental ruin follows.
It's easy. It appears to be widely believed.
It also is wrong.
The real story of the Nordhouse Dunes is not easy. It can't be told in a paragraph.
The single point of reference for both is Nov. 9, 1995.
That was the day the Michigan Legislature approved the payment of more than $90 million to settle claims to property (oil and mineral reserves) beneath the Nordhouse Dunes that had been taken by the state in 1987.
And it ended a court battle that began when state environmental regulators banned drilling at Nordhouse, a battle the state lost in every particular and at every turn for eight years. It represented a savings to taxpayers of at least $25 million.
It also, according to Michigan's most ardent enviro-activists, made Gov. John Engler an eco-criminal.
In their view, Engler's negotiation of the settlement was a betrayal of Michigan's heritage of environmental protection, a partisan sellout. Increasingly of late, they have recruited mainstream media and Engler's political opponents to the cause.
An investigative series on Southfield's WXYZ-TV (Channel 7) this year termed Nordhouse a "back-room deal" in which "the taxpayers got fleeced."
Under this theory, Engler cut a secret, sweetheart deal with his political cronies and rammed it through an unsuspecting, supine Legislature.
Democratic candidate for governor Geoffrey Fieger, interviewed by WXYZ, called Nordhouse an act of "monumental political corruption."
When he formally announced his candidacy last month, Fieger piled on.
"The governor has allowed millions of dollars to be stolen from the people," he said, on a phony lawsuit "about mineral and land rights in the Sleeping Bear Dunes, one of our ...economic and ecological gems."
Setting aside Fieger's confused geography (the Sleeping Bear Dunes are 55 miles north of Nordhouse), none of those conclusions is based on the evidence.
For instance:
The key decisions that led to the lawsuit were made in the 1980s by the administration of Gov. James Blanchard. They were made despite staff warnings that a blanket denial of drilling was illegal and unnecessary -- "a colossal boner," said one official.
The court rulings that unequivocally found the state had violated the Michigan Constitution and seized private property without compensation, and set its staggering value, were made almost exclusively by judges with past ties to the Democratic Party.
By 1995, Attorney General Frank Kelley, a Democrat, and his environmental assistants had decided the case was lost, and prolonging the fight could only make matters worse. He told lawmakers as much.
Far from being in the dark, the Legislature understood the deal it was being asked to endorse, and the political connections of those who would benefit from it. "Everybody knows the facts on this," House Democratic Leader Curtis Hertel, D-Detroit, said at the time.
But to really understand Nordhouse, you have to start long before the fall of 1995.
In the beginning
On the shoreline north of Ludington lies a piece of original Michigan, a breathtaking stretch of sand dune that rises from the lake and merges with pine and hardwood forest.
Lying hard by Ludington State Park, the dunes have long been recognized as special. And in 1987, Congress created the 3,450-acre Nordhouse Dunes Wilderness Area, the only official wilderness in the Lower Peninsula.
The dunes also lie atop potential oil reserves. That was known when the federal government bought the land and when it became a wilderness area.
On both occasions, the government explicitly acknowledged that mineral owners were entitled to access to the property.
In the early 1980s, Miller Bros., a west Michigan oil and gas development firm, leased the rights and conducted seismic testing that showed the presence of oil. The firm sought permission from the state to drill.
The Department of Natural Resources conducted a two-year environmental review and held hearings marked by overwhelming opposition.
By early 1987, the state was in a terrific political bind.
Environmentalists and much of the public regarded Nordhouse as the Holy Land and oil drilling as the work of greedy polluters. They wanted a blanket ban. The mineral owners were clear that they were entitled to their property rights.
The problem, said Jon Roethele, a retired DNR employee who supervised the environmental review, was that science couldn't support a blanket ban.
Some of the area -- especially the open dunes -- was uniquely valuable and fragile.
But other large sections, with inland second-growth timber laced by two-track roads, were not. And that, not the sand dunes, was where Miller Bros. proposed to drill.
Roethele said in a recent interview that a final report prepared for then-DNR Director Gordon Guyer suggested limited drilling could be accommodated.
The report went to Guyer and other top officials from the DNR and attorney general in a meeting April 22, 1987.
It was rejected.
Roethele said he spent that evening rewriting the conclusions to reflect the department's position -- no drilling anywhere in the Nordhouse Dunes Wilderness Area or a buffer zone around it.
"I said, 'Don't be foolish. This is a taking. They are going to file a lawsuit,' " Roethele recalled.
"It was the biggest, colossal boner the government could make."
On to court
Jack Bails, a former deputy DNR director to whom Roethele reported and upon whom Guyer relied in making his decision, said in a recent interview that he doesn't remember Roethele's warning.
But five months later, Miller Bros. notified the state it would sue if the ban wasn't lifted. It was not, and the lawsuit was assigned to Ingham County Judge Peter Houk, a former Democratic county prosecutor.
In rulings over the next three years, Houk found that the state confiscated the mineral rights through inverse condemnation (i.e. regulation). Relying on testimony from experts in a seven-week trial, he set damages at close to $90 million. In 1994, the state Court of Appeals -- a panel of three judges, two of whom had been Democrats -- unanimously affirmed most of Houk's findings. The Michigan Supreme Court declined the state's request to hear an appeal.
A year later, the state was before Houk again, arguing that the damage award was "manifestly unjust, wildly excessive." Houk rejected that claim, and ruled that Miller Bros. alone was entitled to $84.5 million. Other mineral-rights owners were owed $36.2 million.
The taxpayers of Michigan were on the hook for a minimum of $120 million, with interest piling up at more than $20,000 a day.
In September 1995, Engler, who had been watching the court battle for more than four years, began direct talks with C. John Miller, a longtime acquaintance he knew as a generous contributor to the state Republican Party.
For Engler, the politics were terrible. If he agreed to anything, it would be viewed (as it widely has been) as a sellout to rich Republicans. And there was little certainty he could save the state money anyway.
Mike Miller, John Miller's son and partner in the oil business, said: "We were always willing to listen. But you've got to remember, we were entering the fourth quarter ahead by 50 points."
Engler and John Miller agreed to settle the Miller Bros. claim for $60 million (with a $25,000-a-day penalty after Oct. 3). Engler took the deal to Kelley.
The alternative to settlement was a trek back through the courts.
"We were looking at a 3- to 5-year process," said Michael Leffler, chief of Kelley's environmental division. "The calculation of what the damages would be by then were pretty frightening.
"The overwhelming consensus was that we were not going to improve our position by continuing."
Kelley endorsed settling.
The proposal was presented to the Legislature on Sept. 25.
In the following weeks, House lawmakers engaged in long and furious debate. Twice they rejected the proposal by narrow margins.
Ultimately, the Legislature expanded the offer to more than $90 million to buy out the owners of the mineral rights as well. On Nov. 9, the House approved the settlement. It passed easily in the Senate.
Colorful, but . . .
Since then, environmental activists repeatedly have charged that the settlement was a payoff. Their theory: Engler and the GOP conspired to settle a winnable lawsuit in exchange for campaign contributions.
That contention is based largely on $200,000 the Millers and another well-heeled plaintiff, Grand Rapids businessman Peter Cook, gave the state GOP between 1992 and 1995.
WXYZ described the settlement as "a back-room deal between rich oil moguls and Gov. John Engler" in which the developers were "pumping a river of cash into the campaigns of Michigan lawmakers and walking away with millions."
The problem with that theory is that the deal was endorsed openly by Democrats who knew of the Millers' GOP contributions.
During the 1995 debate, opponents of the settlement delivered to each House member a full accounting of the Miller-Cook GOP contributions.
WXYZ did uncover about $8,000 that Rep. Michael Goschka, R-Brant, received from oil-connected contributors a year after the settlement. Goschka voted no on the deal twice, calling it too expensive, then yes on Nov. 9.
The day before, Goschka said, he had talked to John Miller's brother Jack about the history of the lawsuit and changed his mind.
Five other lawmakers, four of them Democrats, switched from no to yes votes Nov. 9.
In the end, 10 Republicans voted no. Thirteen Democrats, none of whom got oil money, voted yes.
Rep. Jack Horton, R-Lowell, voted for the settlement three times. In 1996, Cook gave $250 to a candidate who ran against Horton.
Underground contention
The other prong in the conspiracy theory of the settlement involves a report by state experts about the value of the oil and gas reserves.
The report, which pegged the value at a fraction of what was paid, was withheld from legislators, according to this theory. Had they known, they might have rejected the deal.
In 1997, the Sierra Club devoted much of its summer newsletter to a story darkly headlined "Did Gov. Engler withhold information that might have saved taxpayers $80 million?"
Was the report a critical component of the governor's "secret deal"?
The short answer is: No.
The analysis referred to was neither new in September 1995, nor relevant to the Legislature.
The DNR and the attorney general hired Gustavson Associates of Boulder, Colo., after having been routed in the earlier trial before Judge Houk.
In 1991, experts for Miller Bros. had presented a sophisticated theoretical model of the value of the Nordhouse oil. The original state expert relied on a hypothetical method that he testified had never been used. Houk rejected it conclusively, and accepted the Miller valuation.
When geologist and engineer John Gustavson later reviewed the case, he established a value that was substantially lower -- at least 10 times.
Gustavson's work was completed by the spring of 1995. He testified before Houk in April.
"We tried 15 different ways to put new value evidence in," state attorney Leffler said. "And the court wouldn't let us do it."
A final version of Gustavson's report was delivered to the attorney general Sept. 23 -- two days before Engler submitted his proposal to the Legislature.
The environmentalists believe that Gustavson's estimates suggest the case could have been won on appeal. But, in 1995, the appeals court already had adopted Houk's ruling on value.
The question wasn't who was right, but whether a court would listen.
"We can't appeal a case based on evidence the court won't admit," Leffler said recently. "However persuasive it is, it didn't matter."
Nor was it critical to the Legislature in the fall of 1995. Virtually no one involved, Engler included, defended the size of the proposed payment.
"Most of us thought that the settlement was outrageous and that the Millers were excessively greedy," said Rep. Bill Bobier, R-Hesperia, whose district includes the Nordhouse area. "But to say that we didn't know what we were doing is complete horseshit.
"Our experts got their butts whipped in court in the first place. And when we got better experts it was too late. It was like asking the court for a fourth strike."
For the environmentalists, however, when the question is protection of a natural resource, you're never out.
From the beginning, the allegations of political payoffs and suppressed documents were weapons in a wider war.
Opponents of the Nordhouse settlement still believe the courts were wrong to find that the drilling ban was unconstitutional, and think it is scandalous that the taxpayers of Michigan had to pay for it.
Worse yet, they view the case as a dark cloud hanging over environmental protection generally.
As Channel 7 reporter Shellee Smith put it: "People who watched that settlement are now lining up to sue the state."
Smith cited a pair of lawsuits. One -- involving a blocked development in Oakland County -- was filed seven years before Nordhouse was settled. The other -- filed by the owners of a peat mining operation in the Thumb -- is based on an agreement the state signed to permit mining in 1958.
Each poses serious questions about the state's authority to protect natural resources. But those questions were posed long before Nordhouse.
There is no line at the courthouse door. State officials said the number of lawsuits alleging an unconstitutional confiscation of private property filed since 1995 has been at roughly the same, very low, level it's been for years.
Nor is it clear that Michigan's environmental regulators have retired from the field.
In fact, significant new regulations -- most of them in response to prolific drilling of Antrim gas wells -- have been enacted for development of gas and oil wells in the 1990s. More are pending in the Legislature.
Assistant Attorney General Peter Manning said there is a relatively simple reason why most regulations are legally defensible. They've been around for a while. A property owner has a harder time proving loss from regulation if the rule was in place when the property was obtained.
But there's another reason why the lawsuits are not epidemic -- they can cost a small fortune.
Robert Bunting, attorney for the developers in the Oakland County case, said: "There are probably not 100 people in the state that have enough money to litigate a claim. You're fighting an opponent who has unlimited resources and doesn't care how long it takes."
With the Nordhouse Dunes, it took eight years to exhaust the government. The environmentalists believe the state should have appealed again to the state Supreme Court.
But the environmentalists "simply don't know what they're talking about," state attorney Leffler said.
"It's real easy for people who weren't party to it and don't have to pay for it to go back and nitpick the record. But they're wrong."
Ultimate values
"There are few enough places in the state where you can stand on the crest of a knife-edge dune, follow the skittery tracks of small unknown creatures through the sand ...or watch the water ripple out like silk to some seamless joining with a liquid blue sky."
Those words, appearing in the Free Press, described the Nordhouse Dunes in 1984.
They ring true now. Nordhouse is a special place. Perhaps so special that no incursion is justified. So special it should, for the public good, be protected at all cost.
But if the value of such a place is so great, should the public not pay for it?
These are close questions, argued persuasively and passionately from both sides all over the country.
Sometimes they are decided one way in court, and another in the court of public opinion. They are almost never simple stories.
Dawson Bell can be reached at 1-313-222-6609, or by E-mail at dbell@det-freepress.com
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