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When One Company Sips, Nestle Gulps

Granholm silent as coalition pushes anti-export measure

May 19, 2005 | By Andy Guy
Great Lakes Bulletin News Service

MLUI/Andy Guy

When a local company announced it would drastically reduce its municipal water consumption, Evart officials decided to make up lost revenue by selling water to Nestle.

EVART — An agreement to draw water from municipal wells here and sell it to a private, international bottling company is priming the pump for a much bigger project — building what would be Michigan’s largest spring water bottling plant in this one-stoplight town. But despite what some claim is near unanimous support among Evart residents for the new deal, it is becoming another focal point in the ongoing regional debate over how best to prevent bulk water diversions from within the Great Lakes Basin.

Ironically, the unusual deal between the City of Evart and Nestlé Waters N.A. arose because a local manufacturer voluntarily decided to do exactly what Michigan Governor Jennifer M. Granholm’s proposed Water Legacy Act aims to promote: Using water far more efficiently in the Great Lakes State.

In May 2004, Collins and Aikman, a major auto parts supplier, announced a plan to conserve water that means the company would be buying much less of the resource from the city’s municipal plant. That spurred officials here to look for another customer to purchase the saved water and protect the city from a drastic drop in revenues and higher water rates. Nestlé agreed to buy Evart’s “surplus” water and truck it to a bottling plant 40 miles south of here. That plant, in Stanwood, has been a source of intense controversy since the day Nestlé proposed it.

Collins and Aikman’s plan to achieve drastic reductions in water demand has attracted little attention. But Evart’s contract with Nestlé is re-energizing several statewide citizens groups’ collective push for new state regulations that, like the governor’s long-stalled proposal, would safeguard streams, lakes, and underground aquifers from over-pumping.

But the Granholm administrations’ reluctance, at least so far, to either openly challenge the contract or champion the industrial conservation efforts revives old questions about the governor’s strategy for, and commitment to, improving oversight of large withdrawals and sustaining the Great Lakes.

Silence, Gridlock, and a New Proposal
Here in Evart, outright opposition to the city’s agreement with Nestlé is hard to find. Mayor Bruce Robinson invited public comment three separate times at a March 28, 2005 meeting, where city leaders unanimously approved the agreement. No one at the city meeting spoke out against the proposal, according to a report published in the Osceola Edition of the Pioneer, a local newspaper.

In fact, the most substantive resistance to Evart’s plan came in the form of a letter from Jim Olson, the attorney for the Michigan Citizens for Water Conservation, an environmental group that is challenging the legality of water withdrawals at Nestlé’s Stanwood plant.

“The proposed project constitutes an unprecedented takeover or privatization of a municipal public utility water service system for exclusively private purposes and profit,” Mr. Olson wrote.

Nestlé plans to sharply ramp up its purchase of municipal water from Evart, from 8 million gallons in 2005, to 42 million gallons in 2006, 84 million gallons in 2007, 124 million gallons in 2008, and 168 million gallons in 2009. If the company ultimately builds a permanent facility here, it is projected to be Michigan’s largest spring water bottling operation.  “This will not really create any direct, immediate jobs for Evart, although many of our residents work at the [Stanwood] plant,” City Manager Roger Elkins, a former science teacher, said of Nestlé’s current activities in  Evart. “But Nestlé plans to complete a second plant [here] by 2010. That’s really the pot of gold at the end of the rainbow.”

The absence of public opposition here differs sharply from the firestorm of protest that Nestlé provoked in 2000 when the company first began exploring sites for a water bottling facility in Stanwood and Evart. Operating as Perrier at the time, Nestlé’s entrance into Michigan attracted intense media coverage, sparked a highly organized citizen campaign to run the company out of the state, and drew a letter of opposition from then-Attorney General Jennifer Granholm.

In her September 13, 2001 letter to state Senator Christopher Dingell and state Representatives Julie Dennis and William O’Neill, Ms. Granholm stated the proposed project amounted to a diversion of Great Lakes water that, under federal law, required the consent of all of the region’s governors. She also urged lawmakers to adopt “a state water use act to protect our waters from depletion.” As governor, however, she has yet to respond publicly to the agreement between Nestlé and Evart. Apparently, she has not consulted with other Great Lakes governors on the project, as she once urged then-Governor Engler to do.

She has, however, directed the state Department of Environmental Quality to evaluate the Evart project. The governor, a Democrat, also continues to urge the state Legislature to enact her Michigan Water Legacy Act, which would for the first time establish statewide water use principles. But the Republican-led Legislature refuses to even debate the bill.

Responding to the Legislature’s inaction, a coalition of environmental groups this week proposed new measures, some of them similar to the governor’s stalled proposal, to manage water withdrawals and safeguard wetlands, lakes, and streams from ill-advised projects.

The plan, which the coalition released yesterday, would establish strict regulation of water exports, allow the private sale of Great Lakes water outside the basin only with legislative approval, and require high-volume water users to report and track their withdrawals. Nine Michigan-based citizens groups support the plan, including Clean Water Action, Sierra Club, and Tip of the Mitt Watershed Council.

“The goal is to end the gridlock between Republicans and Democrats that has left Michigan’s water exposed to unregulated exports from multinational corporations and other states and countries,” said James Clift, policy director for the Michigan Environmental Council.  

Finding Win-Win
The coalition’s proposal could also drive companies to innovate in ways that would help them use water more efficiently, like Collins and Aikman plans to do in Evart. The manufacturer, which is the city’s largest water customer, aims to dial back its water consumption by as much as 90 percent. The company has yet to install the water-saving technology, but the upgrade could reduce annual water demand by more than 580 million gallons, enough to supply the city’s remaining water customers for nearly four years.

“We’re not doing anything real earth-shattering,” said David Youngman, director of corporate communications, “just a basic equipment upgrade to improve our manufacturing operation. The Evart facility currently uses large amounts of water and that is not really necessary with more modern equipment.”

The firm’s water conservation plans put it on a growing list of Michigan companies that are discovering that water conservation is part of an overall strategy to reduce costs, improve corporate image, and enhance competitiveness by spurring other, related efficiency innovations, such as reduced energy and chemical expenses. Companies that promote the benefits of improved water use performance include Ford Motor Company, General Motors Corporation, and Herman Miller Inc.

“We will be making a significant investment in the plant,” Mr. Youngman said. “But we expect to see a return on that investment in terms of reduced water needs and purchase costs. Beyond the financial benefit, water conservation will also help protect the environment. We view it as a win-win situation.”

Resistance Continues
Despite mounting evidence that conserving water is good for business, however, some of the state’s traditional trade associations strongly oppose governmental attempts to codify the practice. These groups, which include the Michigan Chamber of Commerce and the Michigan Manufacturers Association, claim that regulations that require more efficient water use will drive up business costs, chill job retention and creation, and ultimately restrict economic growth.

The often-repeated message from these groups has convinced state lawmakers to ignore proposals to install water withdrawal rules, which are essentially non-existent in Michigan. Such resistance may also be weakening similar efforts by a coalition of Great Lakes Basin governors and Canadian provincial premiers. For more than five years, these leaders have worked to establish a basin-wide policy that promotes more effective water use and establishes clear, uniform withdrawal guidelines across the region.

The proposal, known as the Great Lakes Water Management Initiative, could be released for a second round of public comment as early as June 12. Some water policy experts are plainly worried that the new version of the initiative may not be as effective as the original one.

“We’re concerned that the conservation standard in the negotiated agreement is not as strong as it could be,” said Reg Gilbert, a senior coordinator for Great Lakes United, an international coalition dedicated to protecting the Great Lakes ecosystem. “All indications are that it will not require the kind of activities that most businesses can easily do and, over time, even make some money at.”

“And that is troubling,” he continued, “because if we lack strong standards for conservation then we will continue to lack the kind of modern water use examples we ultimately need to establish the authority to prevent large-scale water diversions from the basin in the future.”

According to Mr. Gilbert, the proposed initiative likely will not directly address activities like those Nestlé now performs in Michigan — pumping, bottling, and selling water. But, he added, the current proposal could at least establish basic protections and common principles among all of the basin’s state, provincial, and local governments for evaluating large water withdrawals and avoiding the harmful ones.

A Pot of Gold?
In Evart, which sits in the middle of one of the state’s poorest rows of counties, reaction on the street is mixed about the city’s agreement with Nestlé. Few people see much immediate local economic benefit because the company plans to truck the water elsewhere for bottling and shipping. Some express concern for the wetlands and rivers that define the area’s rural character.

“I don’t know,” said Karen Pylman, the keeper of a video rental shop on the town’s deserted main street. “We need to use our water for the benefit of the community and the state, especially with what’s going on with education, blue collar workers, and the general economic problem. But I’m not sure we’re doing the right thing. The water is our heritage.”

Meanwhile, Nestlé’s Stanwood plant, which according to company records employs 158 people with an annual payroll of $9.5 million, currently is allowed to pump a monthly average of 250 gallons per minute — well below the rate the company would like to maintain. The company is appealing a November 2003 circuit court decision ordering the plant to shut down because of its potential to harm nearby streams and wetlands.

In December 2003, in a fiercely disputed decision, the Granholm administration filed an amicus brief supporting a temporary injunction to stay the district court ruling. The state Court of Appeals granted the injunction and will now hear the case in Lansing on June 14.



May 26, 2005

Granholm Approves Evart Water Sale Under Unusual Restrictions

LANSING Following months of legal review, the Granholm administration today issued a restricted permit to Nestle Waters Inc. to buy municipal spring water from the City of Evart, but blocked the company from selling any of the Evart water outside of the Great Lakes basin. The decision effectively ends the company’s consideration of a new water-bottling plant in Michigan unless it sells its products only within the Great Lakes basin.

The unusual permit conditions, which were applauded by environmental groups and protested by the company and the state Chamber of Commerce, appeared to be a clear bid by Governor Granholm to assert her leadership on water policy and put pressure on the Republican-controlled state Legislature. Legislative leaders have declined to consider the Democratic Governor's proposed Water Legacy Act, a bill introduced with some fanfare last year and intended to develop a new state framework for tapping and using Michigan’s fresh water resources.

Governor Granholm said the moratorium on new and expanded plants that ship water out of the basin will continue until lawmakers act on her proposed water withdrawal law.

It's "a wake-up call for the Legislature," David Holtz, Michigan director of Clean Water Action, told the Detroit Free Press. "You just have to say no at some point to water leaving" the Great Lakes basin.  

But the Michigan Chamber of Commerce said the moratorium is an impediment to economic growth, a point disputed in the Michigan Land Use Institute’s new report, Water Works. Doug Roberts Jr., director of environmental and regulatory affairs for the chamber, told the Detroit Free Press that the Evart permit condition "starts us down a terrible slope where any other product that has water in it, like baby food or automobiles, could be prohibited from being sold outside the state."

The chamber, added Mr. Roberts, is considering a legal challenge, as is Nestle Waters, according to a statement issued by the company today.

Andy Guy, who writes extensively about sustaining the Great Lakes in the global economy, directs the Michigan Land Use Institute’s Great Lakes Project and reports on Smart Growth from the Institute’s Grand Rapids office. Reach him at aguy@mlui.org.

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