HOUSE BILL No. 4260


     February 11, 1997, Introduced by Reps. Alley, Freeman, Bobier, LaForge and Wetters and referred to the Committee on Conservation, Environment and Recreation.


        A bill to amend 1994 PA 451, entitled

   "Natural resources and environmental protection act,"

   (MCL 324.101 to 324.90106) by adding section 502a.

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 1         SEC. 502A.  (1) AFTER THE EFFECTIVE DATE OF THIS SECTION,

 2    THE DEPARTMENT SHALL NOT ENTER INTO AN OIL OR GAS LEASE, OR RENEW

 3    AN OIL OR GAS LEASE, UNLESS THE LEASE COMPLIES WITH BOTH OF THE

 4    FOLLOWING:

 5         (A) THE LEASE RESERVES TO THE STATE NOT LESS THAN A 1/8 ROY-

 6    ALTY INTEREST AS DETERMINED BY THE VALUE OF THE OIL OR GAS AT THE

 7    WELLHEAD.

 8         (B) THE LEASE, DIVISION ORDER, OR ANY OTHER SUBSEQUENT

 9    AGREEMENT SHALL NOT ALLOW FOR ANY REDUCTION IN THE ROYALTIES

10    ACCRUING TO THE STATE UNDER SUBDIVISION (A) DUE TO POSTPRODUCTION

11    COSTS.


   00688'97                                                 JCB
                                              2

 1         (2) AS USED IN THIS SECTION, "POSTPRODUCTION COSTS" MEANS

 2    COSTS NECESSARY TO MARKET THE OIL OR GAS FROM THE WELLHEAD OR

 3    POINT OF SALE.


















































   00688'97          Final page.                            JCB