***  DNR POLICIES & PROCEDURES ***

27.23-16 - Minerals Management Procedures
 (Issued:  07/11/2005)

Supersedes

NOTE: The content of this document has not been revised since Issued March 8, 1999. 
The only change involves the conversion and numbering to the current DNR Policies & Procedures Manual Structure.

Approval Signature

K. L. Cool, Director, Department of Natural Resources

Supersedes

Preamble

The State of Michigan owns over 3.8 million acres of combined surface and mineral rights, an additional 2.1 million acres of mineral rights only and 700,000 acres of surface rights only.  In addition, the State owns 25 million acres of Great Lakes bottomlands.  Under the provisions of 1994 PA 451, as amended, the Natural Resources Commission (NRC) and Director of the Department of Natural Resources (DNR) are responsible for managing these land and mineral resources to ensure protection and enhancement of the public trust.

General Procedures:

The management of State-owned minerals shall be conducted in a manner to assure (1) protection of the environmental, recreational and other uses and values of the land, including lake bottomlands and connecting bays, harbors and waterways, (2) optimum economic return to the State, (3) protection against adverse drainage of hydrocarbons, (4) competition for the acquisition of mineral exploration and development leases and (5) orderly and systematic consolidation of surface and mineral ownership.

Specific Procedures

  1. Mineral Retention of State-Owned Severed Minerals:  The DNR shall implement procedures that allow the Department to divest itself of State-owned severed mineral rights and reunite the severed mineral rights with the surface when determined to be in the public interest and appropriate by NRC Policy and DNR Procedures.

The DNR may divest itself of severed minerals through the sale or exchange of minerals to the surface owner with the following exceptions:

  1. The DNR shall retain severed mineral rights when one of the following conditions exist:

    1. The land is in production, leased, nominated for leasing or permitted for production.

    2. The mineral rights are within DNR Management Unit boundaries or when directed by a specified area Management Plan and the DNR intends to acquire the surface.

    3. The land is part of an island.

    4. The parcel includes a listed archeological or historic site.

    5. The surface has unusual or sensitive environmental features that should remain undeveloped.

    6. The land has specific deed or other legal restrictions prohibiting leasing or mineral development.

    7. The parcel is within the management area of a federally designated Wild and Scenic River boundary or within a designated Michigan Natural River District or within a designated Michigan Natural, Wild or Wilderness Area.

  2. The DNR shall retain severed mineral rights when the parcel is greater than or equal to five (5) acres and one or more of the following exists:

    1. Transfer of mineral rights could result in adverse drainage to adjoining State acreage.  (Adverse drainage – capture/production of oil and gas from adjoining State acreage without compensation.)

    2. The parcel completes a drilling unit or voluntarily formed unit.

    3. The mineral rights may be used for exchanges to consolidate inholdings in Management Units.

    4. The parcel has known or probable mineral value.

  3. The DNR shall retain a non-participating 1/6th minimum royalty interest in all land purchased with Michigan Natural Resources Trust Fund grants.

  1. Mineral Retention When State Land Owned in Fee is Sold or Exchanged:  When the DNR sells or exchanges land it may reserve minerals, except for sand, gravel, clay or other nonmetallic minerals, when determined to be in the public interest and appropriate by NRC Policy and DNR Procedures.

When land owned by the DNR is sold or exchanged, it shall be sold or exchanged in fee.  However, the DNR shall retain the mineral rights when one or more of the following conditions exist:

  1. The land is part of an island.

  2. The parcel includes a listed archeological site or historic site.

  3. The surface has unusual or sensitive environmental features that should remain undeveloped.

  4. The severing of mineral right sis necessary to complete a land exchange.

  5. The mineral rights, for parcels greater than or equal to five (5) acres in size, will be used for exchanges to consolidate inholdings in Management Units.

  1. Mineral Acquisition:  The DNR shall support the acquisition of private minerals where the surface is owned or managed by the State.

  2. Conveyance Deed Restrictions:  When the Department sells minerals to surface owners or sells land that contains mineral rights; the DNR shall include a deed restriction that restricts the subsurface rights from being severed from the surface rights in the future.

Based upon action taken by the NRC and DNR Direction: March 11, 1999

Prepared by:  DNR - Real Estate Division
                     March 12,1999