How Michigan turned $1 billion in oil and gas revenue into conservation

It was 1976, and debate over whether to drill for oil in Michigan's Pigeon River Country State Forest had escalated into what Bob Garner describes as "a raging battle."

Shell Oil Company had discovered oil in the area in 1970, and Michigan’s elected officials, Department of Natural Resources (DNR) staff, and residents were divided on whether to issue drilling permits in the forest. The state had already auctioned off mineral rights in the forest but then hesitated to issue drilling permits.

“It was a difficult sell because the real rabid environmentalists, although I consider myself one, were so afraid that if we passed that, that would mean we would start drilling in the Pigeon River Country,” Garner recalls. “That was a whole separate issue. It may have brought forth the idea, but the idea was to take all our revenues to the state and engage them into the trust fund, rather than just being a Pigeon River issue."

Ford Lake, Ypsilanti. Photo by Doug Coombe.

The solution that Garner and a handful of other conservation-minded movers and shakers came up with remains in place today: the Michigan Natural Resources Trust Fund (MNRTF). It’s fairly simple: The state places oil, gas, and mineral lease and royalty payments into the fund, and the proceeds are used to acquire and develop public recreational lands. As of September 2019, MNRTF had disbursed a total of nearly $1.2 billion to projects spanning every Michigan county since its inception in 1976.

"We are damn surprised that 44 years later it's still a major factor," Garner, then an aide to Michigan Sen. Kerry Kammer says. "... We can't believe that that amount of money got away for so long without the forces of evil glomming onto it."

Early days

Don Inman, a cofounder of MNRTF and former deputy director of the DNR, had the spark of the idea for MNRTF while working on environmental impact mitigation studies at the University of Georgia in the early 1970s.

"When a pipeline would cross a river, we would get them to put gravel in for stabilizing the bottoms and banks," he says. "So the concept of mitigation was on my mind when I came to [the DNR]. ... As we thought more and more about it, I thought, 'Well, why don't we try to get some funds from the profits from oil and gas from state minerals?'"

Leaders on both sides of the issue began to coalesce around that solution, notably Tom Washington, then-executive director of the Michigan United Conservation Clubs, and Frank Mortl, executive director of the Michigan Oil and Gas Association. Kammer and Garner hunted and fished with Washington, and the men set about drafting and introducing legislation to establish a trust fund.

Saugatuck Dunes State Park. Photo by Doug Coombe.

"There was kind of a kinship there," Garner says. "At that time, your environmental leaders came from hunting and fishing because they understood what clean water and clean air meant."

Garner says there was a "tremendous argument" when the plan was introduced in the Senate in February 1976, with opposition from both pro- and anti-environmentalist legislators. Ultimately, the bill passed and was signed into law by Michigan Gov. William Milliken just five months later.

Public Act 204 of 1976 established the Kammer Recreational Trust Fund, which was capped at $100 million. One-third of the fund's earnings each year could be used for the acquisition of public lands. Once passed, Inman notes that the fund gained broad popularity – including among oil and gas industry representatives.

"It gave them a shine too," he says. "Here they were providing dollars through their development of oil and gas revenues for recreational land."

Uniting voters

Only eight years later, Michigan voters would significantly expand the fund's power and enshrine it in the state's constitution. In its early years, the legislature borrowed from the fund multiple times to balance general fund deficits. So in 1984, Proposal B was placed on the ballot. The proposal limited the fund's use to public outdoor recreation projects, but also allowed it to be used for developing recreational facilities in addition to acquiring land.

The proposal also increased the fund's cap to $200 million while directing $20 million of its annual revenue to the Michigan Strategic Fund, used to promote economic development. It also formally established the fund's current name, the Michigan Natural Resources Trust Fund.

Grand Traverse Lighthouse, Leelanau State Park. Photo by Doug Coombe

Voters approved the proposal by a two-to-one margin, and they've continued to support expansion and protection of MNRTF over the years. In 1994, they passed Proposal P, which amended the constitution again, increasing the fund's cap to $400 million. Proposal P also reversed Proposal B's provision for MNRTF revenue to be redirected to the Michigan Strategic Fund, instead providing for $10 million in annual MNRTF revenues to be directed to the newly created State Park Endowment Fund (SPEF). The fund supports operations, administration, and capital costs within Michigan’s state park system.

In 2002, voters again raised MNRTF's cap, this time to $500 million. The fund reached that cap in 2011 and began distributing additional funds to the SPEF.

Garner says voters approved Proposal B so soon after the Kammer Recreational Trust Fund's creation because "it had already achieved pretty good things." He says MNRTF has successfully united policymakers and voters on both sides of the aisle over the years because "liberals and conservatives, when it comes to conservation, aren't that far apart anyway."

Helen Taylor, Michigan state director for The Nature Conservancy, has helped facilitate numerous MNRTF projects since 1999. She says outdoor recreation is "in the DNA of people in Michigan."

"People feel so deeply about the land and water of Michigan that that's a common-ground issue," Taylor says.

Signature projects

It's impossible to adequately summarize the massive portfolio of projects MNRTF has funded, but several signature projects stand out. Among them is the fund's acquisition, mostly in two purchases totaling $12.5 million in 2001 and 2002, of the tip of the Keweenaw Peninsula on Lake Superior. Garner notes that "there'd be a lot less access to the Great Lakes" in general without the fund, a point proven out by projects like the fund's $10.5 million acquisition of the 173-acre Saugatuck Harbor Natural Area in 2011.

The fund has also invested heavily in urban areas, notably in Wayne County where MNRTF has awarded more grant dollars – nearly $99 million – than any other county. The county was the recipient of MNRTF's single largest grant: $20 million for the acquisition of William G. Milliken State Park and Harbor, Michigan's first urban park. The MNRTF has been instrumental in funding continued development along the Detroit River.

Mt. Elliott Park, Detroit. Photo by Doug Coombe.

In addition to the sheer volume of land the fund has protected and developed for recreation, Taylor says MNRTF has also been successful in bringing local land conservancies, municipalities, and other community stakeholders together to work collaboratively on public land issues.

"What I like is what it draws out of people," she says. "... [It] is a facilitator of a shared vision for a community. By just existing, it fosters collaboration that enables a community to define who it wants to be and maintain that identity. That's powerful."

Future priorities

MNRTF's board continues to update its funding priorities based on Michiganders' changing needs and interests. Jon Mayes, MNRTF program manager, outlines four of the fund's current priorities. Among them are projects that create or connect trails. Great Lakes access also continues to be a priority for the fund, especially eliminating large gaps in public access to the water. Mayes says projects in urban areas have also been particularly important to the fund for the past five to six years.

"It's all about having recreation where the people are," he says.

The fund is also pursuing a hunting access initiative, which promotes the acquisition of parcels that would create hunting opportunities of 500 acres or more. That priority is driven by a decline in the sale of hunting and fishing licenses in the state, which in turn negatively affects funding for state recreation programs.

"If we get more hunting opportunity near where the population centers are in Southern Michigan ... that might arrest some of the slide in hunter numbers that we've seen in the last decade or two," Mayes says.

Over its 44 years in existence, MNRTF has been undeniably effective. Few other public lands and recreation funding programs have so thoroughly stood the test of time. Garner compares the fund to the federal Duck Stamp program, which has raised roughly the same amount of revenue over 86 years for wetland conservation nationwide that MNRTF has raised for Michigan in just over half that time. The fund was the first of its kind and Garner, Inman, and Taylor all say it remains peerless at a national level.

Whitefish Point. Photo by Doug Coombe.

This November, Michiganders will once again have the opportunity to decide on how that money is spent. The Michigan Use of State and Local Park Funds Amendment (2020), which requires a change to the State Constitution, will appear on the November 3rd ballot. The measure would enable MNRTF dollars to be used for renovation and maintenance of assets like trails, fishing piers, interpretive centers, campgrounds, and more. It would also remove the $500 million cap on the MNRTF, allowing dollars to flow back into the MNRTF once the SPEF reached $800 million in principal.

The net effect will mean the fund will grow faster and more grant dollars will be available for both acquisition and development. An analysis by the House Fiscal Agency showed that if the proposal had been in effect during the 2017-2018 grant cycle, all development proposals would have been funded.

Garner says he's puzzled by the fact that the model hasn't caught on more in other states.

"I'm trying to figure out where there's a downside," he says. "We know where every dime of the trust fund was spent. You can see where every dime is and you can see it and you can go touch it."