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Nestle Decision a Bipartisan Challenge

Court’s ruling invites collaboration to secure fresh water

December 4, 2003 | By Keith Schneider
Great Lakes Bulletin News Service

MLUI/Pat Owen
  Nestle Waters says its 700,000 square foot Ice Mountain bottling plant in Stanwood, under construction here in 2001, could be in jeopardy, along with some of the 155 jobs, as a result of a circuit ruling last month. The judge in the case, however, said the issues were well understood by the company and Nestle Waters was warned that it was building the plant at its own risk.

When it comes to managing fresh water, the leaders of both major political parties share a rare ideological consensus: Michigan’s 19th-century policy of encouraging people to use as much water as they want, whenever they want, needs a 21st-century update.

This became apparent in 2002, when Republican gubernatorial candidate Dick Posthumus and state Senator Ken Sikkema proposed separate, comprehensive water management statutes to protect the quality and security of Michigan’s fresh water. That same year Democrat Jennifer M. Granholm won the governor’s office in part on her campaign pledge to implement a comprehensive water statute because “it is our solemn duty to protect our legacy, our endowment, and the character of Michigan by becoming the world’s best water guardians."

But in an era defined by increasing limits on government’s will to regulate industry, the consensus has produced little legislative momentum.

Mecosta County Circuit Court Judge Lawrence C. Root’s startling decision last week to order the shutdown of four high capacity spring water wells in central Michigan owned and operated by Nestle Waters North America could change that. The ruling in the most prominent dispute over the use of Michigan’s water in years could have other significant repercussions as well.

Three Lessons
First, the November 25 ruling should help business leaders see just how vulnerable their companies are to increasing competition for Michigan’s abundant fresh water. Without strong laws based on groundwater’s crucial importance to maintaining lake and stream levels, the traditional access to fresh water that Michigan’s tourism, manufacturing, farming, food processing, and other industrial sectors have long enjoyed remains in danger.

A planet-wide population desperate for new supplies of fresh water will go to extraordinary lengths to get them. Even with the Root decision, Michigan still has no broad state protection from an unlimited number of water bottlers who, like Nestle Waters, seek to pump billions of gallons of public groundwater for private, out-of-state sale. As Republican U.S. House Majority Leader Dick Armey said three years ago during a stop in Traverse City, “I’m from Texas and, down there, we understand that whiskey is for drinking and that water is for fighting over. You are going to have to protect your Great Lakes.”

Second, the ruling offers a lesson to business executives who support the steady erosion of public interest regulation and law enforcement. Judge Root’s ruling is a textbook example of the inevitable economic costs of such lackadaisical regulation. Just as purposely weakening regulation of corporate business practices led to vast financial scandals that damaged the economy and cost ordinary Americans billions in lost investments, weak natural resource protection eventually leads to serious environmental and economic damage.

In the Nestle Waters case, the business-at-any-cost attitude of the former Engler Administration and its Department of Environmental Quality produced a deliberately narrow interpretation of state environmental statutes that eased the way for the new wells. Now Nestle Waters’ $150 million investment in its new 700,000 square foot bottling plant is in jeopardy. Judge Root noted that the company had received fair warning.

“Defendant Nestle was cautioned that it was proceeding in building a bottling plant at its own risk should I decide plaintiffs’ claims have merit such that there might be no water to be bottled in the plant,” he writes in the 67-page ruling.

Third, the ruling challenges the state’s extremely conservative property rights movement to at last stand up for its principles in a meaningful way. The movement should defend landowners whose rights and property values are actually damaged by harmful behavior that was encouraged by a business-friendly government agency.

To date property rights activists have built the movement on the back of alleged harms fostered by what they view as government restrictions on the use of their land. The Nestle Waters case, though, turns to a significant degree on the real damages to property caused by government cooperation, not restriction. 

A Big Battle in Big Rapids
Such sharply defined issues are precisely what the Michigan Citizens for Water Conservation underlined in September 2001 when it filed a lawsuit against Nestle Waters, bottlers of Ice Mountain spring water. The filing in state circuit court in Big Rapids came a month after the DEQ approved Nestle’s plan to drill four wells and pump hundreds of millions of gallons of spring water annually from a shallow aquifer in Mecosta County to a bottling plant in nearby Stanwood.

The citizens group charged that pumping so much water would produce unreasonable harm to a stream, a chain of small lakes, several wetlands, and the property rights of landowners downstream. The group also asserted that withdrawing so much water expressly violated the Michigan Environmental Protection Act, the Wetlands Protection Act, and the Inland Lakes and Streams Act, all of which prohibit industrial activity that harms aquatic resources. Lastly, the group argued that bottling spring water, a public resource, and removing it from the watershed was illegal under Michigan’s common water rights law, which is shaped by cases dating to the 19th century.

The company, which ships its bottled water throughout the Midwest, disputed each assertion. It argued that pumping would have negligible affects on the environment, would not harm downstream property owners, and was expressly approved by permits that were thoroughly reviewed and authorized by the DEQ.

The case, the most extensive and intensive in the history of the 49th judicial circuit, was heard by a 55-year-old jurist who was raised in Big Rapids, educated at Ferris State and the University of Detroit Law School, and has served on the bench since 1976. Judge Root’s decision, written after a 19-day trial and based on thousands of pages of documents and court transcripts, is a tour de force of judicial prose. At times charmingly personal and lyrical in its allegiance to the principles of natural resource conservation, it pays painstaking attention to scientific and legal detail. It sent a legal blast wave through public interest, business, and political circles statewide.

Not surprisingly, members of Michigan Citizens For Water Conservation said they were nearly knocked off their feet when they realized the ruling called for a shutdown of Nestle’s pumping operation by December 16. “We got everything we wanted,” said Jim Olson, the group’s attorney.

Continued Controversy
A Nestle Waters statement called the ruling “extreme” and an “ominous signal” to the state’s water users, and promised an appeal. A company lawyer, Michael Haines, said Judge Root “fundamentally misunderstood the scientific evidence and testimony presented during trial,” and warned other industrial companies that if “Ice Mountain’s insignificant effect is considered a violation” then “what water user — industrial, commercial, golf course or farmer — would not be in similar violation?”

Richard K. Studley, senior vice president of government relations for the Michigan Chamber of Commerce, agreed. In an interview with the Great Lakes Bulletin News Service, Mr. Studley said, “This is a company that went to great lengths to comply with the law and received the necessary permits from the appropriate state agency. One of the concerns is the amount of uncertainty the decision could create about the regulatory process and the permitting process.”

Mr. Olson, in an interview, said such concerns are misplaced. He said that Judge Root’s ruling clarifies for the first time who has primary authority in the competition for water between “surface owners” and those who pump groundwater. In instances in which surface owners are harmed by ground water pumping, said Mr. Olson, the surface owners’ rights prevail. He added that the tourism industry, manufacturers, food companies, utilities, and farmers should celebrate the decision because it protects their access and right to the ample supply of fresh water that is the source of their wealth. “A multinational company like Nestle Water can’t just come in and take that water and sell it out of the watershed,” he said.

Judge Root’s decision blames both the company and the DEQ for any regulatory uncertainty. Nestle Waters, said the judge, provided the DEQ with volumes of scientific data purporting that there would be no environmental harm, but it was discredited by trial evidence, including testimony by the company’s own experts. 

Judge Root rebuked the DEQ for too narrowly interpreting both the Wetland Protection Act and the Inland Lakes and Streams Act when it determined that neither applied to the Nestle spring water bottling operation. “With all due respect,” wrote the judge, “that conclusion is simply wrong.”

Water and State Politics
For the moment, elected leaders in both major parties and senior officials of the DEQ say they are “monitoring” the case. It’s possible that the Granholm administration could intervene, though it is not at all clear on which side. 

Mr. Studley of the state Chamber of Commerce said that any intervention should defend the original DEQ decision to permit pumping, a position that Republican state Attorney General Mike Cox is likely to share. Mr. Olson said that would be a political mistake for Gov. Granholm, who has periodically called for a strong state water protection statute. He urged her to join the citizens group in defending Judge Root’s ruling in the appellate courts. 

And several noted state environmental leaders said Judge Root’s decision is a clear invitation to Gov. Granholm and senior Republican legislative leaders to collaborate on a new water management statute that secures the state’s supply.

“Governor Granholm promised comprehensive groundwater legislation in the 2002 campaign,” said Noah Hall, a lawyer and water policy expert with the National Wildlife Federation in Ann Arbor. “Ken Sikkema promised comprehensive groundwater legislation. This state needs a straightforward comprehensive permitting program that reviews new groundwater withdrawals to make sure there are no impacts. We need standards for reasonable use of water.”

Keith Schneider, a journalist and editor, is deputy director of the Michigan Land Use Institute. Reach him at keith@mlui.org

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