LUDINGTON, MI -- For decades, an oblong tract of private property protruding north into Ludington State Park has been an awkward reminder that the value of Michigan's beautiful sand is also measured in tonnage, not just tourists.
The dune property, which has been mined for Lake Michigan sand since before the park was established, confuses visitors who think the state government is operating a mine inside the crown jewel of Michigan's park system.
But the sun may be setting on sand mining in Ludington.
The state Department of Natural Resources and the Sargent Sand Company are once again talking about a deal to finally complete what's been called the 'Queen' of Michigan state parks, a decade after the last talks broke down.
The latest discussions come at a critical juncture for the sand company, which has eager oil frackers wanting its product if Sargent owners decide to renew their five-year operating permit, which expires at the end of this year.
Nonetheless, Sargent and the state -- which has wanted to acquire the sand mine land for many, many years -- are the closest they've been to reaching a deal in nearly 30 years, according to people close to the discussions.
"Sargent is currently in active discussions with the DNR regarding the property and fulfillment of the state park's management plan goals," confirmed Phil Johnson, an environmental consultant and spokesperson for Sargent Sand.
In February, the DNR completed the park's general management plan, a long-term guidance document that outlines the DNR's hopes for acquiring the long-sought property and developing recreational facilities around a small inland lake created by mining operations that dredge sand from underwater.
A map showing Sargent Sand Co.'s past and current property at Ludington State Park.
Keith Creagh, DNR director, called the acquisition a "top priority" for the DNR and Ludington State Park, much of which was Sargent property at one time.
Specifics of the potential deal aren't known, but options discussed include the state either buying the entire 372-acre property or just the northern 60 acres of the Sargent land, which would protect as-yet untouched dunes from mining.
Sargent has been dredge mining underwater sand since 2008, but the company owns land north of its lake that features large forested dunes.
Neither side has put a solid sale price on the table yet, though. There's not yet agreement about how, or if, the state should compensate Sargent for the sand's future value in the commodities market, where most of the sand now goes for use as proppant in the hydraulic fracturing process.
While Sargent's sand has historically been used primarily for making steel, automotive glass and for traction on snowy roads, today the company website advertises 40 million tons of "high-quality, high-crush API (American Petroleum Institute) northern gold frac sand" which the U.S. Geological Survey says is primarily shipped to the Marcellus shale well fields in Pennsylvania.
Sargent's new relationship with the oil and gas industry has angered environmental groups and residential neighbors who were already unhappy with sand mining outside one of Michigan's most popular state parks, but whom particularly object to critical dunes being lost for controversial oil extraction.
The mine, which operated lightly or sat for dormant for much of the 1990s and 2000s, boosted operations a few years ago when fracking picked-up speed.
In 2014, when "frac sand" prices were high and as many as 70 sand mine trucks per day were rolling through downtown Ludington en route to the railroad, longtime state park neighbors like Albert Henning said the noise from 24-hour mine conveyors became a major disturbance that, to some degree, continues.
"The noise is...." Henning paused, "just incredible."
Enforcing a noise ordinance isn't an option. Hamlin Township, a rural municipality north of Ludington where the mine operates, doesn't have one.
Henning and others have organized a "Save Our Dunes" campaign, and some have lobbied the Department of Environmental Quality to deny Sargent's permit renewal. They argue the company needs to develop a new Environmental Impact Statement because the last one was written in 1976, the year Michigan originally passed legislation regulating critical sand dune mining.
Times have changed and Lake Michigan dunes should be preserved for public use, they argue, regardless of whether the sand is located on private property.
"There were dunes here and we're not going to get them back," said Linda Bergles-Daul, an outspoken dune preservation advocate who owns a nearby cottage with her husband, Ron. "They're gone."
Although the DEQ levies a per-ton fee on mined sand, the money only pays for agency inspections. Were the mine on state-leased land, Michigan could get royalties from the sand sale. But Sargent owns the land, meaning the state gets no compensation for the dune loss.
The company pays Hamlin Township about $20,000 a year in property taxes.
The DEQ hasn't yet received a renewal application, but Sargent Sand has until December 31 to file. Inspectors must visit the property and issue public notices before any approval decision is made. If the company is operating in compliance with state law and its existing permit, the DEQ is obligated to renew it.
Update: Sargent files for permit renewal
Sargent isn't the only sand mine up for permit renewal this year. The Walter Rohn mine in Benzie County and Sand Products Co. of Muskegon are also up for permit renewal this year. But they are in the minority. Of the more than 30 Michigan sand mines originally permitted in 1976, there are 9 active sites left today.
"There's only so much sand to be had," said Adam Wygant, supervisor in the DEQ's oil, gas and minerals office.
That reality is recognized in the U.S. tax code, which includes a more than 14 percent "depletion allowance" for silica sand miners that essentially acknowledges mine owners are depleting their income source.
But, Sargent's property includes many acres, or "cells," that haven't been mined yet and it would still take decades to exhaust the property's sand resource at peak production.
Frac sand demand is also expected to increase as shale fields rely ever more on sand to boost domestic oil output. In a September research report, Credit Suisse analysts predicted frac sand volumes to surpass 2014 levels by 2018 because well owners are using greater amounts of sand in each well.
Even if demand were to drop, Sargent could mothball the operation and keep renewing their permit until prices increased again. Or, Wygant said Sargent could sell the land and permit to a larger company like U.S. Silica -- a scenario neighbors and the DNR fear could end the opportunity for completing the park.
Wygant said the DEQ would not build a 'no-sale' provision into a renewal, but would have to approve any permit transfer.
"It is not uncommon for these properties and permits to change hands," he said.
What's unknown is what's in the mind of CEO Francessanna "Fran" Sargent, who owns the company started by her late grandfather, Ford Roland Sargent of Saginaw in 1918. Tom Webber, her son and president, oversees the daily operation.
In 1971, Sargent -- a judge advocate for Dwight D. Eisenhower during World War II and Saginaw city attorney who was inducted into the Saginaw Hall of Fame in 2015 -- donated 409 acres of dune land to the DNR, including more than two miles of Lake Michigan shoreline. If you drive into Ludington State Park from the south along M-116, you're driving through that property.
The media-shy company is nonetheless proud of its history in Michigan's automobile manufacturing supply chain. Sargent supplied sand to General Motors' Saginaw Metal Casting Operations. Other Sargent companies paved I-75 from Sault Ste. Marie to the Kentucky border and helped build the Willow Run Bomber plant of Rosie the Riveter fame.
Today, many question what kind of legacy Sargent will leave in Ludington.
"There are uses for this land that would go on for hundreds of years that would bring in far more revenue, not just to the state but in particular the local community, than Sargent is going to get operating the mine another 20 years," said Henning, who is hopeful Sargent and the state can finally make a deal.
"If we have to call this the 'Fran Sargent State Lakeshore' or something like that, or in some way acknowledge the value of the gift in the 1970s and the value of this sale to the state and citizens, I'm all for that," he said.