Michigan Crude Oil and Petroleum Act 16 of 1929 amended in April, 2014: Part 2

The amended act includes pre-empting local jurisdictions from restricting carbon dioxide pipelines for enhanced recovery of hydrocarbons.

Part 1 of this series discussed carbon sequestration and enhanced recovery of hydrocarbons as it relates to the act. President Obama’s Climate Action plan deals with methods to reduce carbon in the atmosphere. Amended Act 16 also deals with methods to reduce carbon in the atmosphere. This Michigan State University Extension news article discusses the four separate acts that each contributed to the final Act 16.

Act 82 (House bill 4885) reduced the severance tax from 5 percent for gas and 6.6 percent for oil to 4 percent for oil and gas produced from a carbon dioxide secondary or enhanced recovery project.

Act 83 (House Bill 5254) adds the use of public highways and condemnation of private property to transport carbon dioxide substances by pipeline. It also lays out the procedures a company must follow with the landowner if any type of crude oil or CO2 pipeline is being considered, which are:

  1. A person who is conducting survey work for a proposed pipeline shall notify all affected property owners in writing before a survey crew enters the owner’s property.
  2. An offer for an easement shall include:
    1. Anticipated physical impact of pipeline construction on landowner’s property
    2. Written assurance any drainage tile damaged or removed will be repaired or replaced.
    3. Written assurance that topsoil that is disturbed is properly separated and replaced.
    4. The method the property was appraised.
    5. For property used to produce crops, an estimate of the value of the loss of productivity based on the historic yield of the site before construction of pipeline. The property owner shall provide historic crop yield values upon request.
    6. Payment will be made for all damages incurred after construction of the pipeline.
    7. The landowner has rights under the uniform condemnation procedures act.

Act 84 authorizes the condemnation of property by eminent domain and the use of highways to acquire necessary rights of way for transport of crude oil, petroleum or carbon dioxide substances.

Act 85 pre-empts local governments from restricting pipelines in their jurisdiction. It also states: “…operators of private trunk or gathering lines or other methods of conveying those products are not subject to this act if the nature and extent of their business is private and no public interest is involved in the conduct of the business.”

The next installment will discuss the practical applications of the act and the options for a property owner when considering an offer to locate a pipeline on their property.

Other articles in this series:

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