Drilling in the Great Lakes: Background and Issues

Drilling in the Great Lakes:
Background and Issues
November 11, 2008
Pervaze A. Sheikh, Coordinator,
Marc Humphries, and Jonathan L. Ramseur
Resources, Science, and Industry Division
Adam Vann
American Law Division



Drilling in the Great Lakes: Background and Issues
Summary
Drilling for oil and gas in or under the Great Lakes has generated interest among
Great Lakes stakeholders, states, and Congress. Some opposed to drilling are
concerned about the potential environmental, economic, and public health
consequences. They contend that drilling will raise the risks of oil spills, hazardous
gas leaks, and pollution that may harm lakeside residents and the Great Lakes
ecosystem. Proponents of oil and gas drilling contend that drilling will increase local
and regional tax revenues and employment, increase domestic energy production, and
not be an environmental problem because of new technologies that lower the risks
of oil spills and other accidents.
Issuing federal or state permits for new drilling operations under the U.S.
portions of the Great Lakes was banned in the Energy Policy Act of 2005 (P.L. 109-
58, §386). Specifically, the provision enacts a permanent ban on the issuance of
federal or state permits for new directional, slant, or offshore drilling in or under the
Great Lakes. Congress had enacted a temporary ban on any new federal and state
permits for drilling under the Great Lakes in 2001 (P.L. 107-66; Title V, §503) and
extended it to 2007. This temporary ban was in addition to several state bans on
drilling in or under the Great Lakes. In contrast to U.S. law, Canadian law permits
onshore gas and oil drilling under the Great Lakes, and offshore gas drilling in the
Great Lakes.
Some contend that the decision of whether to ban drilling is a state
responsibility. The states have the authority to regulate the use of Great Lakes
resources within their territory and have instituted a variety of approaches for dealing
with oil and gas drilling. Yet Congress has broad authority to regulate both the
navigable waters and oil and gas development. Some critics of federal action to
prohibit drilling say that while Congress may have the authority to regulate or ban oil
and gas drilling in or under the Great Lakes, such action might also constitute a
“taking” of property for which just compensation would be required.
This report provides background information on historical and current drilling
practices in the Great Lakes, and statistics on oil and natural gas production, where
data are available. It describes state laws regarding drilling in the Great Lakes and
analyzes the environmental, socioeconomic, and legal aspects of drilling in or under
the Great Lakes.



Contents
In troduction ......................................................1
The Great Lakes Basin..........................................2
Physical Characteristics of the Ecosystem.......................3
Oil and Gas Production in the Great Lakes..............................4
Oil and Gas Resources..........................................5
Potential Consequences of Drilling....................................8
Economic Consequences........................................8
Environmental Consequences....................................9
Potential Ecosystem Effects..................................9
Directional Drilling.......................................11
Oil Spills in the Great Lakes....................................12
Legal Issues Associated with Drilling in the Great Lakes..................14
State Control................................................14
Existing State Regulation.......................................15
Legal Implications of a Federal Drilling Ban........................17
Conclusion ......................................................21
List of Figures
Figure 1. The Great Lakes Basin......................................3
Figure 2. Diagram of Directional Drilling..............................12
List of Tables
Table 1. Production of Oil and Natural Gas in the U.S. Great Lakes
(All Wells in Michigan).........................................6
Table 2. Great Lakes Oil and Gas Estimated Undiscovered Resources.........6
Table 3. Summary of Estimated Undiscovered Mean Values of Great Lakes Oil
and Gas Resource Allocations by Lake (Areas Under U.S. Portions of
Great Lakes)..................................................7
Table 4. Summary of Estimated Undiscovered Mean Values of Great Lakes Oil
and Gas Resource Allocations by State (Areas Under U.S. Portions of
Great Lakes)..................................................7



Drilling in the Great Lakes:
Background and Issues
Introduction
The debate over how to regulate offshore oil and gas drilling in the United
States has generated public and congressional interest. Much discussion has centered
on existing and potential drilling operations along the Outer Continental Shelf. The
debate has also reached specific regions within the United States, including the Great
Lakes. The question of whether to allow oil and gas drilling under the Great Lakes
has been contested within states bordering the Great Lakes and in Congress. Some
opposed to drilling under the Great Lakes are concerned about the potential
environmental, economic, and public health consequences of drilling. They contend
that drilling will raise the risks of oil spills, hazardous gas leaks, and pollution that
may harm lakeside residents and the Great Lakes ecosystem. Proponents of drilling
contend that the risks of oil spills and other accidents are extremely low due to new
technologies, that drilling would not be environmentally harmful, and that it would
lead to the generation of revenues, additional employment, and expanded domestic
energy supplies.
Obtaining permits for drilling under the Great Lakes has largely been banned by
various state and federal laws. A Great Lakes-wide ban may have initially been
driven by the signing of a “statement of principle against oil drilling in the Great
Lakes” by eight Great Lakes governors in 1985.1 All states viewed this non-binding
agreement as prohibiting drilling for natural gas and oil in the lakes and, with the
exception of Michigan, as prohibiting directional drilling.2 Various states have
enacted permanent or temporary bans against drilling.
The federal government became involved in banning drilling in the Great Lakes
when the Congress enacted a temporary ban on the federal and state issuance of
permits for drilling under the Great Lakes in 2001 (P.L. 107-66; Title V, §503),
extended it in 20033, and then again through 2007.4 Some also proposed a permanent
ban against drilling in or under the Great Lakes. A permanent ban on issuing federal


1 A “Statement of Principle Against Oil Drilling in the Great Lakes” was signed by the
governors of Michigan, Wisconsin, Pennsylvania, Minnesota, Indiana, Ohio, Illinois, and
New York and states, “We collectively state our opposition to oil drilling in the waters of
the Great Lakes or their connecting channels.”
2 Directional drilling is the process of drilling a slant or curved well to reach a target not
directly beneath the drill site. Directional wells are often drilled to reach an oil or gas
reservoir where drilling directly overhead cannot be done, such as beneath a shipping lane
in the ocean.
3 Section 505 of the Consolidated Appropriations Resolution of 2003, P.L. 108-7.
4 Section 504 of the Consolidated Appropriations Act of 2005, P.L. 108-447.

or state permits for new directional, slant, or offshore drilling in or under the Great
Lakes was included in the Energy Policy Act of 2005 (P.L. 109-58). Section 386
specifically states that “no federal or state permit or lease shall be issued for new oil
and gas slant, directional, or offshore drilling in or under one or more of the Great
Lakes.”5
The U.S. ban on drilling in the Great Lakes has generated controversy. Some
contend that the decision of whether to drill in the Great Lakes should be made by
each state bordering the lakes. They view a federal ban on drilling in the Great Lakes
as a violation of states’ rights and suggest that a federal ban constitutes a “taking.”6
Some proponents of the ban contend that state laws are not uniform in permanently
banning drilling in the lakes. Indeed, as described later in this report, some Great
Lakes states have enacted permanent bans on providing new oil and gas drilling
permits in state waters, other states have no bans, and some are considering
permanent bans in pending legislation.
Offshore and directional drilling for gas under the Canadian Great Lakes is
allowed by the Canadian government and by Ontario, the only province that borders
the Great Lakes. Directional drilling for oil is allowed under the Canadian Great
Lakes; however, offshore drilling for oil is prohibited. Canadian directional drilling
operations are not known to have gone under U.S. waters of the Great Lakes.
This report provides background information on the history of drilling in the
Great Lakes, current production statistics (where available) for U.S. and Canadian
wells, and a summary of some environmental and economic issues related to drilling.
A review of state laws regarding drilling in the Great Lakes and a discussion of state
drilling laws and the implications of a federal ban on drilling also are given.
The Great Lakes Basin
The Great Lakes basin is shared by eight U.S. states (Illinois, Indiana, Michigan,
Minnesota, New York, Ohio, Pennsylvania, and Wisconsin) and two Canadian
provinces (Ontario and Quebec). The basin is generally considered to be composed
of the Great Lakes, connecting channels, tributaries, and groundwater that drain
through the international section of the St. Lawrence River. (See Figure 1.) The
Great Lakes watershed contains the largest volume of fresh surface water in the
world and covers approximately 300,000 square miles. The Great Lakes themselves
contain an estimated six quadrillion gallons of water. This constitutes nearly 90%
of the surface freshwater supplies of the United States and 20% of the surface7
freshwater supplies of the world. The Great Lakes region plays a role in the daily
lives of millions of people and the economies of two nations. The Great Lakes states


5 This law does not prohibit drilling under the Great Lakes if appropriate permits have
already been obtained or possibly if permits for existing operations are submitted for
renewal.
6 U.S. Constitution, Fifth Amendment (stating “nor shall private property be taken for public
use, without just compensation”).
7 The Great Lakes Information Network, Great Lakes Commission, Overview, available at
[http://www.great-lakes.net/lakes/#overview], accessed October 14, 2008.

and Canadian provinces are home to more than one-tenth of the population of the
United States and one-quarter of the population of Canada. An estimated 40 million
people rely on the Great Lakes Basin to provide jobs, drinking water, and recreation,
among other things.8
Figure 1. The Great Lakes Basin


Physical Characteristics of the Ecosystem. Since the Great Lakes cover
a wide area, physical characteristics such as topography, soils, and climate vary
considerably. Characteristics of water flow also vary across the lakes. Water levels
in the Great Lakes vary according to the season. These changes are based primarily
on precipitation and runoff to the Lakes. Levels are low in the winter, when much
of the precipitation is in the form of snow or ice, and high in the early summer, when
runoff increases.9
The Great Lakes ecosystem has been altered substantially in the last two
centuries. In the last several decades, agricultural, urban, and industrial development
have degraded water quality in the Great Lakes, posing threats to wildlife
8 For example, nearly 11% of the total employment and 15% of the manufacturing
employment for the United States and Canada are directly related to the Great Lakes basin.
Further, the tourism and fishing industry in the Great Lakes are estimated to be worth about
$4 billion each, and navigation through the Great Lakes is responsible for over 180 million
tons of shipping annually. The Great Lakes basin also contains nearly 25% of Canada’s
agricultural production and 7% of U.S. agricultural production. Environmental Protection
Agency, The Great Lakes: An Environmental Atlas and Resource Book (Chicago, IL: 2002),

46 pp. Hereafter referred to as the Great Lakes Atlas.


9 Great Lakes Atlas.

populations, human health, and the Great Lakes ecosystem. Development has also
led to changes in terrestrial and aquatic habitats, the introduction of non-native
species, the contamination of sediments, and the listing of more than 50 threatened
and endangered species.10 To counter this trend, the federal governments of the
United States and Canada, as well as provincial and state governments in the Great
Lakes basin, have implemented numerous restoration activities.
Oil and Gas Production in the Great Lakes
No offshore oil and gas drilling in the Great Lakes has occurred in U.S. waters.
Several states have attempted to drill onshore for oil and gas under the Great Lakes,
but operating wells exist only in Michigan.
Interest in modern oil and gas drilling in the Great Lakes is thought to have
begun in the mid-1950s, although some cite that Lake Erie’s first offshore gas well
was drilled in 1913.11 Oil development in the mid-1950s was encouraged in the state
of Ohio. The Ohio General Assembly provided the policy framework to allow for
the extraction of oil and gas from under Lake Erie, and leasing and production12
procedures were established by the Ohio Department of Natural Resources.
However, opposition to drilling in Lake Erie began in 1957 because of environmental13
concerns, and the program was abandoned by 1968. No offshore or onshore wells
were drilled in Lake Erie in Ohio state waters afterwards, and several temporary bans14
were placed on all types of drilling under Lake Erie in Ohio, the latest one in 2003.
In Pennsylvania, there has been no history of oil or gas production under Lake
Erie; two onshore exploratory wells were drilled in 1957 but no commercial deposits
were found. In Michigan, since 1979, 13 onshore wells under the Great Lakes have
been drilled; six were reported dry, and seven are still in production (one oil well and15
six natural gas wells). Five producing wells are under Lake Michigan and two
wells are under Lake Huron. All producers in Michigan are employing directional
drilling technology, which originates on land and drills underneath the lakes. In
Michigan, no onshore or offshore drilling can take place under the Great Lakes,
except by those who obtained leases and commenced drilling prior to April 5, 2002.
Prior to that date, state law authorized removal of oil and gas under the Great Lakes


10 The Great Lakes Regional Collaboration, The Great Lakes Regional Collaboration
Strategy (Dec. 2005), at [http://www.glrc.us/].
11 Kathy Shirley, “What’s (Not) Happening Is Erie,” Explorer (Sept. 2001).
12 Larry Wickstrom, “A Fresh Look at Exploration and Production in Lake Erie,” Petroleum
Geology Group, Ohio Division of Geological Survey, Ohio Oil and Gas Association Winter
Meeting, 2001. At [http://www.ohgeosoc.org/presentations/lake%20erie%20gas%20talk
%20-%20ooga%202001_files/frame.htm]. Hereafter referred to as “Wickstrom.”
13 Ibid.
14 Executive Order 2003-17T (July 14, 2003).
15 Communication from the Dept. of Environmental Quality, Geological Survey Division,
State of Michigan, Lansing, MI, 2008.

if directional drilling was employed. Other Great Lakes states including Illinois,
Indiana, Minnesota, New York, and Wisconsin have no history of significant oil and
gas drilling under the Great Lakes.
In Canada, 2,200 wells have been drilled in Lake Erie, of which 550 are
producing. Canada began modern commercial production of natural gas in Lake Erie
in the 1960s. This came after decades of exploration activity that began as early as
1913. Offshore gas wells are permitted in the Canadian Great Lakes, but offshore
oil wells are prohibited. If a gas well shows evidence of oil, it must be closed and
plugged, according to Canadian regulations. Directional oil and gas drilling is
allowed under the Canadian Great Lakes, and has been extensively done in Lake Erie.
In Lake Erie, annual natural gas extraction rose to 15.2 billion cubic feet (bcf) in
1985 and has since declined to about 10 bcf in 2000.16 Oil production through
directional drilling into Lake Erie has developed in Ontario. There are 100 wells to
date at an average depth of 2,800ft and 2.2 miles horizontal offset (i.e., drill location
to target reservoir).17
Table 1 provides statistics on U.S. oil and natural gas production in the Great
Lakes, all of it in Michigan state waters. Oil and gas production under the Great
Lakes in Michigan has been variable over the past few years. The average annual
production of natural gas under the Great Lakes in Michigan from 2000 to 2008 has
been approximately 1.3 billion cubic feet (bcf), whereas oil production ceased in18
2005. This annual average represents approximately 0.005% of national production
of natural gas.
Oil and Gas Resources19
Modern-day estimates of oil and gas resources under U.S. portions of the Great
Lakes have been created by the U.S. Geological Survey for 2005. The quantity of
undiscovered, technically recoverable oil and gas resources for the U.S. portions of
the Great Lakes includes a mean value of 312 million barrels of oil, a mean value of
5.2 trillion cubic feet of natural gas, and a mean value of 122 million barrels of
natural gas liquids.20 The range of these estimated values is high and is tabulated
according to the percent chance of an amount recovered. (See Table 2.)


16 Wickstrom.
17 J. L. Coleman and C. S. Swezey, A Review of Oil and Gas Resources Underlying and
Adjacent to the U.S. Portions of the Great Lakes, U.S. Geological Survey, Powerpoint
presentation, August 2008.
18 Statistics are taken from the U.S. Energy Information Administration, “Production of
Natural Gas and Use in Michigan,” at [http://www.eia.doe.gov/emeu/states/_states.html].
19 Resources have a different meaning than reserves. Reserves are quantities of a resource
claimed to be recoverable under current economic and technological conditions. Resources
are quantities estimated to be potentially recoverable from undiscovered accumulations.
Prospective resources have both an associated chance of discovery and a chance of
development.
20 J. L. Coleman et al., Undiscovered Oil and Gas Resources Underlying the U.S. Portions
of the Great Lakes, 2005, U.S. Geological Survey, Fact Sheet 2006-3049.

Table 1. Production of Oil and Natural Gas in the
U.S. Great Lakes (All Wells in Michigan)
YearOilCondensateNatural GasNatural Gas Sold
(barrels)ProductionLiquids(thousand cubic
(barrels) (barrels) f eet)
Cumulative 9,717 380,882 22,294 15,630,452
through
1999
2000 493 16,194 9,324 1,849,171
2001 2,331 12,770 7,054 1,848,584
2002 1,117 8,485 5,496 1,589,130
2003 967 5,124 2,379 1,374,546
20045153,5801,710 889,543
2005 0 2,978 2,221 916,342
2006 0 2,803 5,175 1,086,458
2007 0 2,654 4,418 979,790
Source: Michigan Dept. of Environment Quality, Office of Geological Survey, 2008.
Table 2. Great Lakes Oil and Gas Estimated Undiscovered
Resources
ResourceMean ValueF95F50F5
Oil 312 million87.0 million271.0 million675.8 million
barrels of oilbarrels of oilbarrels of oilbarrels of oil
Natural Gas5.2 trillion2.2 trillion4.8 trillion9.5 trillion
cubic feet ofcubic feet ofcubic feet ofcubic feet of
natural gasnatural gasnatural gasnatural gas
Natural Gas122 million39.7 million106.9 million254.6 million
Liquidsbarrels ofbarrels ofbarrels ofbarrels of
natural gasnatural gasnatural gasnatural gas
liquids liquids liquids liquids
Note: F95 represents a 95% chance of at least recovering the amount given; F50, a 50% chance, and
F5, a 5% chance. Mean is calculated using all estimates for the range of fractals.
Source: J. L. Coleman et al., Undiscovered Oil and Gas Resources Underlying the U.S. Portions of
the Great Lakes, 2005, U.S. Geological Survey, Fact Sheet 2006-3049.



The USGS report on estimated resources also broke down estimates by lake and
states within the Great Lakes. (See Tables 3 and 4.) Lake Huron and Lake Michigan
have the greatest amount of estimated oil resources, whereas Lake Erie has the largest
amount of estimated natural gas resources. In Canada, the Ontario Ministry of
Natural Resources estimates that about 195 million barrels of oil and 1.1 tcf of gas
remain under Canada’s portion of Lake Erie.21 Estimates for oil and gas resources
under the Canadian portions of other lakes were not available.
Table 3. Summary of Estimated Undiscovered Mean Values of
Great Lakes Oil and Gas Resource Allocations by Lake
(Areas Under U.S. Portions of Great Lakes)
LakeOil (millionGas (trillion cubicNatural Gas
barrels)feet)Liquids (million
barrels)
Lake Erie46.13.040.7
Lake Huron141.00.842.5
Lake Michigan124.61.337.4
Lake Ontario0.00.11.1
Lake SuperiorNot assessed quantitatively
Source: J. L. Coleman et al., Undiscovered Oil and Gas Resources Underlying the U.S. Portions of
the Great Lakes, 2005, U.S. Geological Survey, Fact Sheet 2006-3049.
Table 4. Summary of Estimated Undiscovered Mean Values of
Great Lakes Oil and Gas Resource Allocations by State
(Areas Under U.S. Portions of Great Lakes)
StateOil (millionGas (trillion cubicNatural Gas
barrels)feet)Liquids (million
barrels)
Illinois 0.7 0.003 0.14
Indiana 0.8 0.003 0.14
Michigan 282.5 2.2 83.3
MinnesotaNot assessed quantitatively
New York0.00.66.5
Ohio25.71.924.7
Pennsyl va nia 0.0 0.5 6.6
Wisconsin 1.9 0.008 0.3
Source: J. L. Coleman et al., Undiscovered Oil and Gas Resources Underlying the U.S. Portions of
the Great Lakes, 2005, U.S. Geological Survey, Fact Sheet 2006-3049.


21 See [http://www.mnr.gov.on.ca/en/Business/OGSR/2ColumnSubPage/STEL02_167105.
html].

A breakdown of oil and gas estimated resources by Great Lakes state reveals
that Michigan has the greatest amount of estimated oil resources under the Great
Lakes. Indeed, some have reported that if a ban against drilling under the Great
Lakes in Michigan did not exist, 20 to 30 new wells could be drilled in Michigan.22
Natural gas estimated resources are highest for Michigan and Ohio, with a majority
of the estimated resources in Lake Erie.
Potential Consequences of Drilling
There are several potential consequences associated with oil and gas drilling in
or near large waterbodies such as the Great Lakes. Possible negative effects include
oil spills, discharge of contaminated drilling fluids, and effects of the “footprint” of23
the drilling infrastructure. Possible positive effects include increased revenues for
the region and state, increased employment, and greater domestic energy production.
Under §503 of the Energy and Water Appropriations Act (EWA) of 2002 (P.L. 107-
66), the U.S. Army Corps of Engineers was directed to conduct a study of the
potential environmental effects of oil and gas drilling activity in the Great Lakes.
This report was completed in 2005 and contains a detailed discussion of the potential24
environmental effects of drilling under the Great Lakes.
This section will provide an overview of some of the potential consequences of
drilling under the Great Lakes and provide data, where available, on unintended oil
and gas releases into the Great Lakes.
Economic Consequences
Drilling under the Great Lakes can have both benefits and costs for local,
regional, and state economies. Exploration for oil and gas deposits may yield
economic benefits, such as jobs and revenue for the owner. If deposits are not found
and drilling is not fully implemented, these benefits may be short-term. If deposits
are significant, and drilling commences and expands, local and state governments
would also benefit from revenues generated from permits, leases, and taxes on the
quantity of oil and gas sold. In some Great Lakes states, revenues from oil and gas
leases potentially benefit the environment. For example, in Michigan, some revenues
from leasing rights to drill under the Great Lakes would go to the Michigan
Department of Natural Resources Trust to purchase and protect environmentally


22 Harold Fitch, “Forum on Directional Drilling Under the Great Lakes: The Basics of
Directional Drilling,” Michigan State University Law Review (Nov. 6, 2001), p. 207.
23 A footprint is generally considered to be the range of physical features and infrastructure
involved in a drilling operation. There is no set definition of what constitutes a drilling
operation footprint, and therefore it could vary between operations. The drilling footprint
may result in lower tourism and recreation in the area surrounding the operation.
24 U.S. Army Corps of Engineers, Known and Potential Environmental Effects of Potential
Oil and Gas Drilling Activity in the Great Lakes (Chicago, IL: Nov. 2005), 244p. Hereafter
referred to as the “Corps study.”

sensitive areas.25 Depending on their scope and number, drilling operations would
also generate employment. According to the U.S. Bureau of Labor Statistics, there
was a national average of 5.7 jobs generated per $1.0 million of sales by oil and gas
producers in 2002.26
Potential economic costs from drilling under the Great Lakes may stem from
drilling infrastructure and oil and gas releases. The presence of infrastructure may
lower tourism and recreational opportunities, harm the Great Lakes ecosystem, affect
scenic vistas, and lower property values.27 If spills occur in areas near or within the
lakes, economic costs could come from clean-up, lower water quality and
environmental mitigation, lost recreational and tourism opportunities, and reduced
development.
Environmental Consequences
The potential environmental consequences of oil and gas drilling have been the
primary driver in opposition to oil and gas drilling under the Great Lakes. During the
process of drilling, environmental problems can occur through leaks, spills, and
blowouts, among other things. A leak or spill can occur from a pipeline rupture,
containment failure, or from a drilling mud pit. A blowout occurs when a drill
reaches a formation with unusually high pressure, and results in the explosive
discharge of the well’s contents. Spills and leaks can also occur during transport.
In addition, drilling wastes or byproducts — such as drilling muds or cuttings,
drilling fluids, and produced waters28 — can potentially harm the environment if
released into streams or onto vegetation.
This section identifies potential effects related to oil spills and operational
releases. In addition, this section discusses directional drilling, an activity that could
have environmental consequences.
Potential Ecosystem Effects. Depending on timing and location, a
relatively minor oil spill can cause significant harm to individual organisms and
entire populations.29 Oil spills can cause impacts over a range of time scales, from
days to years, or even decades for certain spills. These are described below.


25 Constitution of Michigan, Article 9, §35.
26 Bureau of Labor Statistics estimates are based on 2002 labor productivity. At [http://
www.bls.gov/ emp/empind4.htm] .
27 Bryan Clark and Tony Dutzik, Dirty Drilling, The Threat of Oil and Gas Drilling in
Michigan’s Great Lakes (Ann Arbor, MI: PIRGIM Education Fund, Feb. 2002). Hereafter
referred to as Dirty Drilling.
28 Drill cuttings are particles of crushed rock produced by the action of the drill bit as it
penetrates the geologic formation. Drilling fluids are mixtures of natural clays and/or
polymers, weighting agents and other materials suspended in a water or oil-based material.
Water encountered during the drilling process is termed produced water. Produced waters
can contain organic hydrocarbons, phenols, and organic acids, among other things.
29 National Research Council (NRC), Oil in the Sea III: Inputs, Fates, and Effects (2003),
National Academies of Science (hereafter “NRC report”), p. 4.

Acute Impacts. Depending on the toxicity and concentration of an oil spill,
acute exposure to oil spills can kill various organisms and cause the following30
debilitating effects:
!reduced reproduction,
!altered development,
!impaired feeding mechanisms, and
!weakened immunity against disease.
These potential acute effects to individual organisms and marine ecosystems
have been confirmed by laboratory studies and well-studied spills, such as the Exxon
Valdez .31
Birds, marine mammals, bottom-dwelling and intertidal species, and organisms
in their developmental stages — e.g., fish eggs and larvae — are particularly
vulnerable to oil spills.32 Wildlife are affected by direct exposure to floating oil,33
polluted waters, contaminated prey, or depleted food resources.
Chronic Impacts. Impacts to fish and wildlife and their habitat can also
occur through chronic, low-level exposure from persistent contaminants in the
ecosystem. Chronic exposure typically occurs from continuous oil releases —
leaking pipelines, non-point sources (e.g., urban runoff), and production discharges,
such as drilling fluids and produced waters. Some have expressed concern over the
long-term effects of buried drilling wastes and injected production water on
ecosystems. Drilling wastes are generally buried onshore and in some cases
produced water is injected in drill holes for storage. Both substances contain a34
variety of toxic chemicals that could be hazardous to the ecosystem.
Although spills are normally associated with acute impacts, some oil spills have
also demonstrated chronic exposure and effects.35 There is increasing evidence that
chronic, low-level exposures to oil contaminants can significantly affect the survival
and reproductive success of marine birds and mammals.36 However, because of the
complexity of factors, including a longer time period and presence of other
pollutants, determining the precise effects on species and ecosystems due to chronic


30 These “sub-lethal” effects can occur at concentrations that are several orders of magnitude
lower than concentrations that cause death. NRC report, p. 127.
31 NRC report, p. 120.
32 NRC report, Chapter 5; also multiple conversations with National Oceanic and
Atmospheric Administration (NOAA) personnel (2008).
33 J. M. Capuzzo, “Biological Effects of Petroleum Hydrocarbons: Assessments from
Experimental Results,” Long-Term Environmental Effects of Offshore Oil and Gas
Development, D. F. Boesch and N. N. Rabalais, eds. (London: Elsevier Applied Science,

1987), pp. 343-410.


34 Corps study.
35 NRC report, p. 121.
36 NRC report, p. 134.

oil exposure in a particular locale is difficult for scientists. As a result, studies
involving chronic effects are often met with debate and some controversy.
Other Ecosystem Impacts. Discharge of oil can also lead to changes in
coastline and aquatic habitat. In aquatic habitats, spills or toxic discharges may
degrade water quality, lower dissolved oxygen, contaminate sediments, and alter37
aquatic vegetation. Water flow influences the potential impact of spills. In areas
where there is a high flow of water (e.g., rivers), impacts will be less (but potentially
more widespread) than in areas where water flow is minimal, such as in wetlands.
In low-flow areas, spills can persist longer and damage vegetation and other38
organisms that use these habitats. In the Great Lakes, water flow is variable and
therefore spills can have different impacts. For instance, water that enters Lake
Superior takes approximately 182 years to be completely replaced. This could be
considered a low-flow area compared to Lake Erie and Lake Ontario, which take
approximately three and six years, respectively, to replace water. Toxins from spills
in the Great Lakes can settle into sediments and persist for many years.
Directional Drilling. The type of drilling operation is a factor when assessing
its potential environmental consequences. For example, in Michigan, there has been
a debate over the potential environmental effects of directional drilling. Directional
drilling is considered to have less potential hazard than offshore drilling due
primarily to its location onshore.39 (See Figure 2.)
Directional drilling beneath the Great Lakes in Michigan, for example, targets
the Niagaran Reefs formation, which is four to five thousand feet below ground.
There is an impermeable geologic barrier between the hydrocarbon deposits and the
lake.40 According to an evaluation of the potential environmental impacts of
directional drilling, there is little risk of contaminating the Great Lakes through spills
at the reservoir and well. However, the study states that there is a potential risk41
associated with leaks at the wellhead, which would be located onshore. This study
also recommended that directional drilling under the Great Lakes be done at least

1,500 feet from the shoreline, and prohibited in sensitive natural areas.


Directional drilling would likely mitigate the risk of spills into the Great Lakes.
However, it is uncertain how much of the fossil fuel resources can be extracted with
current directional drilling technology.


37 D. F. Boesch and N. N. Rabalais, eds., Long-Term Environmental Effects of Offshore Oil
and Gas Development (London: Elsevier Applied Science, 1987), 708 pp.
38 U.S. Environmental Protection Agency, Sensitivity of Freshwater Habitats (Washington,
DC: Office of Emergency Management, Oil Program, 2004), at [http://www.epa.gov/
oilspill/freshwat.htm] .
39 Harold Fitch, “Forum on Directional Drilling Under the Great Lakes: The Basics of
Directional Drilling,” Michigan State University Law Review (Nov. 6, 2001), p. 207.
40 Ibid.
41 Michigan Environmental Science Board, Evaluation of Directional Drilling Under the
Great Lakes (Lansing, MI: Oct. 1997).

Figure 2. Diagram of Directional Drilling


Source: Created by CRS.
Oil Spills in the Great Lakes
The potential for oil spills in the Great Lakes would increase, if policymakers
decided to allow offshore oil exploration and production operations in the region.
As discussed above, relatively minimal drilling has occurred in U.S. oil and gas
resources under the Great Lakes. According to insurance statistics, there were no oil
or gas spills associated with the 13 onshore wells that directionally drilled under the42
Great Lakes before the ban was imposed in 2005.
Canada has been actively drilling, particularly in Lake Erie, since the 1920s.43
According to a source cited in the Corps study, there has been one reported oil spill
directly attributed to a drilling operation in the Canadian Great Lakes since 1959 and
no reported oil releases from subsurface formations into overlying waters.44
Compared to spill rates from oil extraction and production operations in U.S.
42 Michael LaFaive, Great Lakes Drilling: Environmental Threat or Phantom Menace?
(Midland, MI: Mar. 2002).
43 Dirty Drilling.
44 The Corps Study cites a draft report from the Pennsylvania Department of Natural
Resources (Borawski, T., Jr., Draft Report Concerning Possible Oil & Gas Resources
beneath Lake Erie (2005)).

waters,45 the Canadian spill figures are noteworthy. However, as mentioned above,
Canada only allows directional drilling, thus making a spill into the Great Lakes
more unlikely than offshore well locations.
Offshore oil exploration and production in the Great Lakes would increase the
risk of oil spills in the region. The risk of oil well blowouts is relatively low.46 A
major blowout has not occurred in U.S. waters in decades, which industry advocates
attribute to advancements in drilling technology.47 Advances in drilling technology
have led to decreases in spills and releases, and lower footprints for drilling rigs,
according to some industry advocates. Three-dimensional seismic imaging
technology,48 for example, allows explorers to identify areas where commercial
quantities of oil and gas may have accumulated. This technology provides a greater
rate of success in finding oil and gas deposits and therefore could reduce the number
of exploratory wells used to tap deposits.49 In some drilling operations, slimhole
drilling is employed. Slimhole drilling is defined as drilling the smallest hole size
to meet production objectives in the most cost-effective manner. This method
decreases waste volumes and takes up as much as 75% less surface area than
traditional wells.50 Other innovations include modular rigs which lower the footprint
of drilling, as well as pipeline sensors that monitor for pipeline corrosion or wall
defect s. 51
Regardless of these advancements, offshore drilling would yield some level of
risk from an oil well blowout. In addition, offshore oil production in the Great Lakes
would necessitate increased oil transportation. Increased oil transportation —
pipelines and tank vessels — would increase the potential for oil spills in the region.
Directional drilling would likely mitigate the risk of spills into the Great Lakes.
However, it is uncertain how much of the fossil fuel resources can be extracted with
current directional drilling technology.


45 See Minerals Management Service (MMS) spill database, at [http://www.mms.gov/
incidents/IncidentStatisticsSummaries.htm] .
46 Oil well blowouts from offshore oil extraction operations have historically been a source
of major oil spills. The largest unintended oil spill in world history — the IXTOC I,
estimated at 140 million gallons — was due to an oil well blowout in Mexican Gulf Coast
waters in 1979. A 1969 well blowout off the coast of Santa Barbara released approximately
4 million gallons into the environment and has been credited with catalyzing some of the
landmark environmental legislation of the 1970s.
47 For information regarding this technology, see American Petroleum Institute’s website at
[ h t t p : / / www.a p i .or g/ e h s / pe r f o r ma n c e / e xpl or e / i nde x.c f m] .
48 This technology bounces acoustic or electrical vibrations off underground surfaces,
generating data that produce multidimensional representations of those surfaces. These
images can be analyzed to find the best location for drilling.
49 American Petroleum Institute, at [http://www.api.org/ehs/water/directional-drill.cfm].
50 Ibid.
51 Ibid.

Legal Issues Associated with
Drilling in the Great Lakes
Congress has the authority to regulate the use of the Great Lakes, including the
development of oil and gas, under the Commerce Clause of the Constitution. The
repercussions of congressional action, however, depend to some extent upon the
characterization of the regulated resource. If the body of water constituting the Great
Lakes and its underlying resources are state-owned, some forms of federal regulation
could amount to a taking. If these resources are federal property, a taking would not
occur.
State Control
Eight states border the Great Lakes: Illinois, Indiana, Michigan, Minnesota,
Ohio, Pennsylvania, New York, and Wisconsin. It appears that, in accordance with
federal law, these states own those Great Lakes’ beds and resources within their
respective boundaries. Longstanding Supreme Court precedent indicates that
individual states hold title to the submerged lands beneath the waters within their
boundaries that were navigable at the time the state entered the Union.52 The
determination as to whether a given body constitutes navigable waters is made by
application of a test developed under federal law. That test states that waters are
navigable when they are “used, or are susceptible of being used, in their ordinary
condition, as highways for commerce, over which trade and travel are or may be53
conducted in the customary modes of trade and travel on water.” That the Great
Lakes would satisfy this test appears certain.54 Thus, under the common law
approach, states would hold title to some U.S. portions of the Great Lakes.
This approach is confirmed by the federal Submerged Lands Act (SLA).55 The
SLA declares that states are vested with title to both the lands beneath the navigable
waters within their boundaries and to the natural resources within those lands and
waters.56 The act makes clear that a state’s boundaries include its boundaries in the


52 Shively v. Bowlby, 152 U.S. 1, 14-16 (1894); Martin v. Lessee of Waddell, 41 U.S. (16
Pet.) 367, 410 (1842). In general, U.S. courts have recognized that the original thirteen
states acquired title to the submerged lands under the navigable waters and their underlying
resources when the American Revolution took place and the states achieved sovereignty.
Under the equal footing doctrine, states entering the Union subsequent to the Revolution
obtained similar title to the navigable waters and submerged lands within their boundaries.
Pollard v. Hagan, 44 U.S. (3 How.) 212 (1845).
53 The Daniel Ball, 77 U.S. (10 Wall.) 557, 563 (1870); United States v. Utah, 283 U.S. 64,

76 (1931); see also State v. Venice of America Land Co., 125 N.W. 770 (Mich. 1910);


People v. Babcock, 196 N.W.2d 489 (Mich. Ct. App. 1972).
54 See Utah v. United States, 403 U.S. 9 (1971).
55 43 U.S.C. §§ 1301 et seq.
56 Id. § 1311(a).

Great Lakes as they existed at the time the state became a member of the Union.57
Thus, under both common law and the SLA, a state may claim ownership of Great
Lakes oil and gas to the extent its boundaries encompass a portion of the Great Lakes
bed containing such minerals.
Finally, while the courts do not appear to have directly addressed ownership of
the Great Lakes as to each contiguous state, the U.S. Supreme Court has ruled that
the state of Illinois is entitled to the portions of Lake Michigan within its
boundaries.58 As the other Great Lakes states contain portions of the Great Lakes
within their respective boundaries59 and as they are empowered to “manage,
administer, lease, develop, and use” these submerged lands under the SLA, it would
appear that each Great Lakes state has title to the Great Lakes oil and gas resources
within its boundaries and the authority to regulate their development, assuming that
other federal law does not limit state authority.60 As stated above, the recently
enacted Energy Policy Act of 2005 does contain a provision limiting state authority
to authorize oil and gas drilling, potentially implicating the Takings Clause of the
Fifth Amendment.
Existing State Regulation
Prior to the enactment of federal laws banning permits for Great Lakes drilling,
states could claim significant authority over oil and gas-related activities in the Great
Lakes. States chose to exercise this authority in a variety of manners. State laws that
are inconsistent with the federal ban now in effect are preempted by federal law;
however, to the extent that it does not conflict with federal law, state regulation may
still remain viable.61 Further, if the existing federal ban is repealed, state regulation
would again become applicable. Each state’s existing laws are briefly summarized
below.
Illinois statutes indicate that its portion of the bed of Lake Michigan is under
the jurisdiction of the Department of Natural Resources.62 Under state law, structures
may be permitted within the waters of the state, and the Department of Natural


57 Id. § 1301(b).
58 Illinois Central R. Co. v. State of Illinois, 146 U.S. 387 (1892).
59 See 3 Stat. 289, § 2 (Apr. 19, 1816) (Indiana); 5 Stat. 144 (Jan. 26, 1837) (Michigan
admission act and Ohio northern boundary); 11 Stat. 166 (Feb. 26, 1857) (Minnesota); 2
Stat. 173 (Apr. 30, 1802) (Ohio); 71 P. Cons. Stat. § 1861(Pennsylvania); N.Y. State Law
§ 5 (New York); 9 Stat. 56 (Aug. 6, 1846) (Wisconsin).
60 Id. § 1311(a).
61 See National Fuel Gas Supply v. Public Service Commission, 894 F.2d 571, 576-79 (2d
Cir. 1990). The preemption doctrine is based upon the Supremacy Clause of the Constitution
and can occur in several different manners. Federal law will trump state law when (1)
Congress explicitly intends preemption; (2) there is actual conflict between state and federal
law; (3) compliance with both state and federal law is impossible; (4) a barrier to state
regulation is implicit in federal law; (5) federal regulation is so pervasive as to “occupy the
field” entirely; or (6) state law frustrates the purposes of federal regulation.
62 615 Ill. Comp. Stat. 5/24.

Resources may also enter into an agreement with the permit holder to authorize oil
and gas development.63 Further, Illinois’s process for leasing state-owned lands for
mineral development would not appear to exclude lake bottoms from its application,
although where the state owns 100% of the mineral interest, no leasing may occur on:
(1) lands where threatened or endangered species occur, as determined pursuant
to the federal Endangered Species Act or the Illinois Endangered Species
Protection Act, (2) Illinois Natural Area Inventory sites, (3) nature preserves
dedicated under the Illinois Natural Areas Preservation Act, (4) lands containing
a wild and scenic river as designated under the Wild and Scenic River Area Act,
(5) lands registered under the Register of Land and Water Reserves under Part
4010 of Title 17 of the Illinois Administrative Code, and (6) lands on which
federal or State laws or regulations prohibit the surface extraction or production64
facility activity.
Indiana law does not expressly address drilling in the Great Lakes, although it
would appear that the Indiana Department of Natural Resources has the authority to
permit and lease the beds of lakes for oil and gas development.65
Michigan law vests the Department of Natural Resources with responsibility
for leasing all state owned mineral resources. Recent changes to state law prohibit
future leasing of Great Lakes oil and gas. Further, no drilling can take place, except
by those who obtained leases and commenced drilling prior to April 5, 2002.66 Prior
to that date, state law authorized removal of oil and gas under the Great Lakes if
drilling operations originated from locations above and inland of the ordinary high67
water mark and were performed pursuant to a lease.
Minnesota does not appear to have an express ban on Great Lakes oil and gas
drilling. Its laws authorize issuing leases for minerals and petroleum on state lands,
including the beds of any waters belonging to the state.68
Ohio law stipulates that its director of natural resources, with the approval of
the director of environmental protection, the attorney general, and the governor, “may
issue permits and make leases to parties making application for permission to take
and remove sand, gravel, stone, and other minerals or substances from and under the
bed of Lake Erie, as he determines to be best for the state.”69 The governor of the


63 615 Ill. Comp. Stat. 5/18, 5/18b.
64 5 Ill. Comp. Stat. 615/2 (internal citations omitted); see also id. 615/1.
65 See Ind. Code §§ 14-38-1-6, 14-38-1-11, 14-38-1-12, 14-38-1-24.
66 Mich. Comp. Laws §§ 324.33938, 324.32503.
67 Id. (amended 2002).
68 Minn. Stat. § 93.25.
69 Ohio Rev. Code Ann. § 1505.07.

state has issued an executive order banning oil and gas drilling, although it could be
altered or repealed by a subsequent executive order at any time.70
Pennsylvania law allows for drilling in the Great Lakes at the discretion of the
Department of Conservation and Natural Resources. The law empowers the
Department to “make and execute contracts or leases ... for the mining or removal of
... oil and gas beneath those waters of Lake Erie owned by the Commonwealth ...
whenever it shall appear to the satisfaction of the department that it would be for the71
best interests of this Commonwealth to make such disposition of those minerals ...”
New York statutes specifically prohibit issuing either oil or gas leases in the
lands under the waters of Lake Ontario or along its shoreline. Similarly, oil leases
are prohibited for the lands under the waters of Lake Erie, although gas leases are not
prohibited. 72
Under Wisconsin law, oil and gas drilling operations are prohibited if they
extend beneath the beds of the Great Lakes or bays or harbors that are adjacent to the
Great Lakes. State law previously authorized directional drilling under certain
circumstances, but the law’s amendment would appear to indicate that such authority73
has been removed.
Legal Implications of a Federal Drilling Ban
As described above, absent federal law to the contrary, states have the authority
to regulate the use of Great Lakes resources within their territory and have instituted
a variety of approaches for dealing with oil and gas drilling within their respective
boundaries. Still, the federal government does have certain authorities at its disposal
to regulate the use of Great Lakes resources as well, which it has exercised by
banning new leases and permits related to Great Lakes oil and gas development.
Congress has broad authority under the Commerce Clause of the Constitution to74
regulate both the navigable waters and oil and gas development. While Congress
likely possesses the authority to regulate or ban oil and gas drilling in or under the
Great Lakes, such action might also constitute a “taking” of private property for
which just compensation would be required.75 The legal analysis a court would likely
undertake in determining whether a taking has occurred is described below.
A preliminary issue is whether the federal ban on oil and gas leasing or
permitting would be covered by federal navigational servitude. As stated in the SLA,
a state’s title to the navigable waters is subject to the navigational servitude, meaning


70 Executive Order 2003-17T (July 14, 2003).
71 71 Pa. Cons Stat. § 1340.302; see also 58 Pa. Cons Stat. § 601.205.
72 N.Y. Envir. Conser. §§ 23-1101, 23-0305.
73 Wis. Stat. § 295.33.
74 U.S. Const. art. I, § 8, cl. 3; Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 22 (1824).
75 U.S. Const. amend. V (stating “nor shall private property be taken for public use, without
just compensation”).

that the property interest held by the state is subject to a dominant federal right to act
in the interests of navigation.76 Thus, under its Commerce Clause authority, when
Congress regulates waters for their navigability, a property right is not taken within
the meaning of the Fifth Amendment, and no compensation is due.77 The exact limits
of the navigational servitude and whether the regulation or banning of drilling in or
under the Great Lakes is sufficiently related to navigability are unclear. The U.S.
Court of Appeals for the Fifth Circuit has held that when regulating the navigable
waters, the navigational servitude applies despite a regulatory purpose that is
unrelated to navigation.78 Under this broad interpretation, the current ban on oil and
gas leasing or permitting in or under the Great Lakes may not constitute a taking.
However, the Court of Appeals for the Federal Circuit, as well as the Supreme Court,
has held that the navigational servitude applies only when the government has “bona
fide navigational grounds ...” for its regulation.79 It is arguable that a drilling ban
could be based on navigational grounds. For example, the Army Corps of Engineers
has claimed that it has regulatory authority over both directional and vertical drilling
in the navigable waters under the Rivers and Harbors Act, which authorizes the
Corps to permit obstructions to navigability.80 As the case law varies among the
courts that have examined the issue and as it is not immediately clear whether a ban
on drilling would fall under the navigational servitude, it is unclear whether this
doctrine would prevent a taking from occurring.
Assuming the navigational servitude would not preclude a Fifth Amendment
taking, additional analysis becomes necessary.81 A taking can occur in a variety of
manners and a ban on leasing or permitting, and thus potential drilling, like other
forms of government regulation, could arguably constitute a taking. Generally, for
a court to find a regulatory taking, the regulation must result in a sufficient


76 United States v. Oregon, 295 U.S. 1, 14 (1935).
77 Kaiser Aetna v. United States, 444 U.S. 164 (1979); Scranton v. Wheeler, 179 U.S. 141
(1900).
78 Zabel v. Tabb, 430 F.2d 199, 214-15 (5th Cir. 1970).
79 Palm Beach Isles Assocs. v. United States, 208 F.3d 1374, 1386 (Fed. Cir. 2000).
80 See Rivers and Harbors Act, 33 U.S.C. § 403; 33 C.F.R. § 322.3 (a) (1997). “For
purposes of a section 10 permit, a tunnel or other structure or work under or over a
navigable water of the United States is considered to have an impact on the navigable
capacity of the waterbody.”
81 Two threshold matters must exist before a successful taking claim can be established: The
action alleged to constitute a taking must be authorized by Congress and must be for a public
use. Both of these conditions would likely be satisfied in the case of a congressional ban
on Great Lakes drilling. In general, the public use requirement has been deemed a relatively
low hurdle, and will likely be met if the government action is “in the public interest.” See,
for example, Kelo v. City of New London, 125 S.Ct. 2655 (2005). The public use
requirement is rarely an issue when takings are performed by the federal government. Along
these lines it seems likely that multiple justifications for banning Great Lakes drilling would
satisfy the test, such as the encouragement of more efficient oil and gas production or the
prevention of environmental harm.

impairment of property interests.82 The extent and nature of regulation necessary to
establish a taking under these circumstances is, however, debatable.83 As stated in
the Supreme Court’s Penn Central decision, these determinations are generally to be
made on a case-by-case basis focused on analysis of several particularly significant
factors, namely the nature of the government action, the economic impact of that
action, and the “extent to which the regulation has interfered with distinct
investment-backed expectations ....”84 In addition, it would appear that, generally,
the economic impact and interference with investment-backed expectations must be
severe for regulation to constitute a taking.85
Takings analysis in this particular context is complicated by the numerous
entities with existing property rights in Great Lakes oil and gas resources: the current
leaseholders, who may or may not be presently engaged in drilling; and the states
themselves. A person who acquired a lease prior to the enactment of the federal ban
has obtained a right, as expressed in the lease, that is considered property for Fifth
Amendment purposes.86 Assuming that the navigational servitude does not preclude
a taking, a total ban on drilling, which would effectively render an oil and gas lease
valueless, might constitute a taking as, in general, the more narrow the property right
held, the easier it is to prove that a taking has occurred.
However, the federal ban currently in place does not appear to affect leases or
permits issued prior to the enactment of the 2005 Energy Policy Act. Thus,
leaseholders with permits in place that are now or might soon begin operating would
not appear to have been subjected to a taking of any property interest. Still, it is
arguable that permit renewal might now be banned by federal law.87 Further, permits
necessary for oil and gas development would likely not be issued to current
leaseholders who had not obtained permits prior to the ban. In these situations, the
leaseholders may be able to successfully argue that their property interests, as
expressed in the lease, have been rendered valueless and thus been subjected to a
taking. Whether this is the case, however, would depend on the facts specific to each
of the leases.


82 Penn Central Transp. Co. v. City of New York, 438 U.S. 104 (1978); Pennsylvania Coal
Co. v. Mahon, 260 U.S. 393, 415 (1922); Nollan v. California Coastal Comm’n, 483 U.S.

825, 834 (1987).


83 See Penn Central Transp. Co. v. City of New York, 438 U.S. 104 (1978).
84 Id. at 124.
85 See, e.g., United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 126 (1985); R.W.
Docks & Slips v. State, 628 N.W.2d 781 (Wis. 2001); Mayhew v. Town of Sunnyvale, 964
S.W.2d 922, 935 (Tex. 1998).
86 See, e.g., Union Oil Co. of California v. Morton, 512 F.2d 743, 747 (9th Cir. 1975); Sun
Oil Co. v. United States, 572 F.2d 786 (Ct. Cl. 1978); Pennsylvania Coal Co. v. Mahon,

260 U.S. 393, 415 (1922).


87 In Michigan, for example, oil and gas drilling permits are valid for two years if they were
obtained after 1995, and if no drilling occurs. If drilling occurs, the permits remain valid
until the well is sealed.

Whether the current federal ban on lease or permit issuance constitutes a taking
of the state’s property right appears more complex.88 The states are seen to hold title
to portions of the Great Lakes, the lakebed, and the minerals underlying the lakebed.
It is also arguable that the federal ban on future leasing effectively renders any oil and
gas accumulations valueless, unless oil and gas can be extracted by a non-lease
arrangement (e.g., contracting). Thus, if a court were to define the relevant property
interest for purposes of a takings analysis as the oil and gas estate alone, it might
conclude that a taking would occur by virtue of a leasing ban. However, this analysis
may be complicated by the application of the whole parcel rule. The whole parcel
rule, as explained by the Supreme Court in Penn Central, states that “taking
jurisprudence does not divide a single parcel into discrete segments and attempt to
determine whether rights in a particular segment have been entirely abrogated.”89
Thus, in that case, regulation affecting only a portion of the plaintiff’s property,
leaving the rest unaffected, did not constitute a taking.90 It is thus arguable that a
‘taking’ of the mineral interest does not result in a Fifth Amendment taking because
the whole parcel, the totality of a state’s rights in the Great Lakes, remains otherwise
unaffected. While the whole parcel rule is backed by considerable precedent, courts
have been willing to sever certain property interests for takings analysis purposes,
and among those interests is the subsurface mineral estate.91 Most recently, in Tahoe-
Sierra Preservation Council, the U.S. Supreme Court has indicated that it rejects
conceptual severance of property rights, although this case did not address severance
of the mineral estate.92 Thus it remains unclear whether a taking of state property
would be found as a result of the current oil and gas leasing ban.
Finally, there is another possible argument for concluding that any ban on
leasing, permitting, or drilling in or under the Great Lakes is not a taking, based on
the Supreme Court’s holding in Lucas v. South Carolina Coastal Commission.93
Under Lucas, a taking does not occur, even if the total value of property is eradicated
by government regulation, if the regulation could have been imposed under the
background principles of property and nuisance law existing when the property was


88 The Supreme Court has held that the reference to private property in the Fifth Amendment
equally applies to land owned by state and local public entities. See United States v. 50
Acres of Land, 469 U.S. 24, 31 (1984); Block v. North Dakota ex rel. Board of Univ. and
School Lands, 461 U.S. 273, 291 (1983); United States v. Carmack, 329 U.S. 230, 242
(1946).
89 Penn Central, 438 U.S. at 130.
90 Id. at 137.
91 For discussion of this, see Rebecca Nowak-Doubek, “A Victory for Property Rights: How
State Courts have Interpreted and Applied the Decision from Tahoe-Sierra Preservation
Council, Inc. v. Regional Planning Agency,” 36 Univ. Of Toledo Law Review, 405, 414
(2005).
92 Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 326-27
(2002).
93 Lucas, 505 U.S. at 1031.

acquired.94 It is arguable that drilling in or under the Great Lakes could result in
pollution or damage that could be regulated as a nuisance under common law.
Several Great Lakes states have addressed the issue, albeit in different contexts from
the present scenario, as to whether oil and gas drilling constitutes a nuisance. These
cases would seem to indicate that oil and gas drilling is not a nuisance per se, but that
the right circumstances could result in a finding that drilling constitutes a nuisance.95
Thus, it may follow that the ban on leasing or permitting activities could constitute
regulation of a nuisance and that no taking has occurred; however, whether a
nuisance would exist in this case would appear to depend on the specific issues a
drilling ban is intended to address.
Conclusion
Oil and gas drilling under the Great Lakes is opposed by many who contend that
the potential environmental risks associated with drilling do not justify the potential
economic gain. Proponents of drilling, however, contend that risks associated with
drilling are not high due to advances in drilling technology and safety, and that
drilling would provide jobs and income for the states where it is done. Congress has
weighed in on these issues and enacted a permanent ban on the issuance of new
federal or state leases or permits for oil and gas drilling in or under the Great Lakes.
This ban would only affect drilling in U.S.-controlled waters of the Great Lakes and
would not affect Canadian production.


94 Id. at 1027-28.
95 Marrs v. City of Oxford, 32 F.2d 134 (8th Cir. 1929); Miller Bros. v. Department of
Natural Resources, 513 N.W.2d 217 (Mich. Ct. App. 1994); Smith v. Bellows, 20 Pa. D. 383
(Pa. Com. Pl. 1910); Cline v. Kirkbride, 2 Ohio C.C. 527 (Ohio Cir. Ct. 1901).