*This article originally appeared in the Fall 2020 edition of Michigan Out-of-Doors
By Chris Lamphere
Of all the public policy ideas that have ever been proposed in the state of Michigan, it’s safe to say that few rival the scope and significance of the Natural Resources Trust Fund.
“It will go down in Michigan history,” said Department of Natural Resources Director Daniel Eichinger. “It’s one of the best ideas our state’s ever generated. It’s a totally novel concept that is elegant and brilliant.”
Since its legislative inception in 1976, the trust fund has contributed nearly $2 billion toward land purchases and recreational development projects throughout Michigan.
Perusing the laundry list of investments made by the trust fund, it’s easy to forget where the money comes from and how it came to be used for acquiring, improving and protecting lands for public use.
The idea of setting up a trust fund to capture revenue generated through oil, gas and mineral activities on state lands was envisioned as an answer to a contentious question that raged in the 1970s and still rages today: how do we mitigate the damage that exploitation of natural resources inevitably causes to the environment?
Consolidating ownership of large swaths of land has a tremendous impact in terms of expanding public accessibility, improving recreational opportunities and managing the ecological continuity of the land, Eichinger said.
“Opportunities to secure these types of acquisitions don’t come up very often,” Eichinger said. “If we didn’t have the trust fund — and having it available at a moment’s notice to jump on opportunities — what would be required to pull something like that off? Hundreds of large and small areas wouldn’t necessarily be available to the public like they are today.”
In November, voters will be asked to approve some changes to the trust fund that will ensure its viability into the foreseeable future.
In 1996, $600,000 was granted by the Michigan Natural Resources Trust Fund Board to acquire frontage property near the Tahquamenon Falls River.
History of the trust fund
As former DNR Deputy Director Don Inman tells it, in 1970, they were between a rock and a hard place.
Shell Oil Company announced they had discovered a promising oil deposit beneath environmentally-sensitive (and beautiful) land within the Pigeon River Country State Forest in northern lower Michigan.
Since the state had already leased the mineral rights to the company before the deposit was found, if they denied drilling out of concern about the impact it would have on the environment, they would have been taken to court and probably would have lost, Inman said.
On the other hand, if they agreed to allow oil extraction without conditions, they likely would have faced severe backlash from environmental groups.
“We started scratching our heads,” said Inman, who at the time worked in the Office of Environmental Review as a wildlife biologist but was tasked with brainstorming solutions to the impasse with Jack Bails, assistant to then-Gov. William Milliken.
As author Dave Dempsey describes in his seminal book Ruin and Recovery: “Since the task force concluded that even the limited drilling the DNR was willing to accept would have unavoidable, harmful effects on the forest, Inman turned his thoughts to the idea of what might mitigate the damage … He suggested to Bails that the estimated $200 million in state revenue that would be derived from drilling in the forest should be deposited in a separate fund earmarked for the purchase of other recreational lands in the area for public benefit. As Bails put it, the idea was to ‘take the assets of oil, and turn them into assets of land.’”
Inman said his goal was to imagine a process by which any damage done by oil, gas or mineral exploration would be overshadowed by the benefits created through consolidating wild lands and preserving them for future generations.
“These lands are like a treasure, like money in the bank,” Inman said. “Large chunks of (forested) property are extremely important for producing fish and game. They also pick up a lot of carbon, kind of like the rain forest.”
The idea of diverting oil, gas and mineral revenues back to state lands quickly picked up steam and was supported by then-Michigan United Conservation Clubs Executive Director Tom Washington, along with others who worked tirelessly to get the measure approved by the legislature.
Bob Garner, who at the time was assistant to state Sen. Kerry Kammer, collaborated extensively with William (Bill) Rustem from the governor’s office to navigate the political obstacles that stood in the way of the trust fund being adopted.
“I heard about the idea in 1975 from Tom Washington,” Garner said. “Those were some good years. It seemed like there was a keen interest in protecting our natural resources. I just feel lucky to have been a part of something like this. It’s just about as important a piece of legislation that’s ever worked its way through the system. I’m still amazed by it, even having been involved myself.”
The Michigan Natural Resources Trust Fund Board allocated more than $600,000 to aid in the development of the Rose Lake Shooting Range in Bath, MI.
Although the Michigan legislature in 1976 approved the bill that established the trust fund, its future at that point was far from secure.
Inman recalls that there were several attempts by legislators to access the money that was captured by the trust fund to be used for other purposes.
To protect the funds from the ever-shifting winds of politics, a proposal was placed on the 1984 ballot to make the trust fund part of the state constitution. A majority of Michigan voters passed the proposal, along with subsequent proposals asking for the cap on the trust fund to be raised from $5 million to $500 million.
Rustem said he isn’t at all surprised that the majority of voters supported the trust fund in multiple elections.
“People in Michigan care about their natural resources,” Rustem said. “They have a unique affinity for public lands.”
Dempsey put it this way in Ruin and Recovery: “The decade-long fight had consumed millions of dollars, made enemies out of former friends, and failed to stop the drilling … But the struggle had resulted in a permanent trust fund to protect important lands for public use and sharply restricted drilling of the forest under terms Bails and Inman later regarded proudly as a model … nobody had won a clear victory — but neither had the forest suffered a clear loss.”
Impact of the trust fund
Documenting the full impact that the trust fund has had on Michigan communities, residents and visitors since 1976 is a monumental task that no single magazine article (or book, for that matter) could hope to accomplish.
Over the years, the trust fund has allocated between hundreds of thousands and tens of millions of dollars toward projects in every single Michigan county; total investments as of September 2019 were $1,193,527,823.
“Literally hundreds of projects across the state,” Rustem said. “The trust fund has bought many of the gems that we enjoy today.”
Garner said he’s particularly impressed by the projects along the shorelines of the Great Lakes, such as the Arcadia/Green Point Dunes in Manistee and Benzie counties.
“Those were acres that were way too sensitive to be developed,” Garner said. “The face of Michigan would look very different today if not for the trust fund.”
The Michigan Natural Resources Trust Fund Board allocated almost $2.7 million to help with the acquisition of the Arcadia/Green Point Dunes Conservation Easement.
Rich Bowman, Director of Working Lands at The Nature Conservancy, said the trust fund is an ingenious idea due in part to where the money comes from.
Bowman said if the state were to simply allocate the revenue they receive from leasing oil, gas and mineral rights to companies, they quickly would run out of money because there are sometimes long stretches of time when these types of activities don’t happen.
“We really don’t know what’s in the ground or what it’s worth,” Bowman said. “There are years when it isn’t being extracted.”
Putting the money in a trust fund and only using the interest it generates, however, ensures an indefinite source of revenue.
Bowman acts as a liaison between the trust fund board of advisors and municipalities interested in purchasing or developing land for public benefit.
In many cases, Bowman said the trust fund monies are leveraged by small cities and townships that want to expand their public park areas.
For instance, in 2018, Bowman was involved in the acquisition of the Sargent Sands property within Ludington State Park — a project that involved fundraising by the local municipality to match the amount that was contributed by the trust fund.
In other cases, Bowman said the trust fund money has been used to develop easements on privately owned land.
One of the largest projects of this kind occurred in 2005, when an easement was placed on 248,000 acres spanning several Upper Peninsula counties.
Bowman said the state was initially outbid by a forest products company to purchase the land but they were able to come to an agreement that allowed the land to remain open to the public for hunting, trail usage and other recreational activities.
“I love projects like that,” Bowman said. “There are so many things we have today that we wouldn’t have if the trust fund didn’t exist.”
Inman said if one wanted to get an idea how the state would look if the trust fund didn’t exist, all they would have to do is look at a plat map from the 1950s and 1960s showing all the disjointed and broken up properties throughout the state.
Trotter said that the impact the MNRTF has had on freshwater quality shouldn’t be lost either.
“Large tracts of undeveloped lands are necessary for wildlife habitat and outdoor recreation, but they are also critical for fresh, clean, healthy drinking water for Michiganders,” Trotter said. “Many of these sites act as the kidneys for our freshwater lakes and streams, protecting our source waters and aquatic habitats and filtering out unwanted contaminants naturally.”
Changing the trust fund
Come November, the people of Michigan will be asked to decide on a couple of proposed changes to the Natural Resources Trust Fund.
While not nearly as sensational as the national political drama that will undoubtedly be on the minds of many Americans as they file into their respective polling places, the trust fund proposal could have fateful implications for the state — pass or fail.
MUCC Executive Director Amy Trotter said the proposed constitutional amendment, which was unanimously approved by state lawmakers in 2018 to be placed on the 2020 ballot, proposes two primary changes to the trust fund.
In 2011, the Michigan Natural Resources Trust Fund allocated almost $2 million to help with the expansion and acquisition of land at Motz Park in Clinton County. Some of that land is now managed as pheasant and pollinator habitat.
First, it would completely eliminate the cap on the amount of money that can be collected by the trust fund, and second, it would provide more flexibility for how the money in the trust fund can be spent.
Let’s consider the flexibility portion of the proposal first.
As it currently stands, 75% of annual trust fund spending must be done on land acquisitions, with only 25% permitted for recreational development projects.
Trotter said the amendment proposes to change those percentages to 25% for land acquisition, 25% for development and 50% for “flex” spending on either one.
The proposed change also makes it clear that redevelopment and renovation projects fall under recreational development; as it currently stands, those types of investments are “gray areas at best,” Trotter said.
“I think that flexibility is important,” said Rustem, who serves on the Natural Resources Trust Fund board of advisors. “If you don’t provide access opportunities (in the form of recreational development), there is less use for the land.”
“The need for acquisition is not that great,” said Garner. “But people do need funding for the facilities. It’s probably time to change (the spending percentages).”
Bowman said the demand among Michigan municipalities for recreational funding far exceeds the amount the trust fund is able to invest each year.
“Even though we’re in the land protection business, public access is crucial to building public support,” Bowman said.
Although no trust fund dollars have gone directly to Porcupine Mountains State Park development, an abundance of the trails that run through and connect this 65,000-acre piece of wilderness in Ontonagon and Gogebic counties have benefited from Michigan Natural Resources Trust Fund grants.
While changing the spending percentages is a move that supporters believe is a big step in the right direction, removing the trust fund cap could have even greater consequences.
When the trust fund reached its $500 million corpus cap in 2011, money from oil, gas and mineral leases started flowing into the State Park Endowment Fund.
Once the State Park Endowment Fund reaches its cap of $800 million — something that Trotter said should happen within the next 30 years (assuming no long-term funding effects from the COVID-19 pandemic) — the money will then be diverted to the state’s general fund.
Removing the cap will ensure that this money remains devoted to conservation efforts for years to come, Trotter said.
“By removing the cap, the people of Michigan would be saying we want this money to go toward the protection of natural resources,” Bowman said. “This would make the trust fund last forever … a pretty amazing legacy to leave our descendants.”
A third, relatively minor change included in the proposal is to require the State Park Endowment Fund to spend at least 20% per year on capital projects, Trotter said.
At this time, Trotter said the majority of expenditures made by the endowment fund relate to day-to-day maintenance at state parks and very little goes to park infrastructure.