LANSING, Mich.— Sen. Jeff Irwin (D-Ann Arbor) has introduced Senate Bill 634, a bill that increases the “surveillance fee” cap on oil and gas production from 1% to 2%.
The Michigan Oil and Gas Program under the Department of Environment, Great Lakes, and Energy is tasked with ensuring that the approximately 60,000 oil and gas wells comply with state regulations by inspecting the wells, reviewing permit applications and monitoring production. The program has been primarily funded by a “surveillance fee” on oil and gas production, which is currently capped at 1%.
“Michigan taxpayers shouldn’t be subsidizing oil and gas companies. My bill will restore this fund to its original, self-sustaining design,” Sen. Irwin said. “This will free up $4 million dollars every year to be used on other budget priorities like schools, roads, or mental health. This change also allows the Michigan Oil and Gas Program to focus on protecting public health, safety, and the environment without having to ask the taxpayers every year for a bailout.”
The program used to be self-sustaining. As oil prices began to drop in 2014, the program quickly spent down its reserves, leaving it with a significant operating deficit. In 2017, the legislature began authorizing the transfer of $4 million from the general fund each year to cover the program’s deficit. While the program has seen a decline in permit applications, the capping of abandoned wells has meant that the workload has largely remained the same.
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