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Great Lakes Water: Public or Private?

Olson warns treaty loophole could leave states, citizens defenseless

December 18, 2008 | By Brian Beauchamp
Great Lakes Bulletin News Service

  Jim Olson’s lawsuit on behalf of Michigan Citizens for Water Conservation forced Nestle Waters to reduce withdrawals from an aquifer in Mecosta County.
Earlier this year the Great Lakes Compact, the interstate agreement designed to ban diversions of Great Lakes water, made its way through the legislatures of all eight states that share Great Lakes shoreline. Congress then approved the Compact and President George W. Bush signed it into law.

Many conservationists hailed it as a major victory for the Great Lakes, but others quickly pointed out a loophole in the Compact that they said is dangerous because it could seriously threaten an ecosystem that contains 20 percent of the world’s freshwater supply—and our future ability to protect it.

Now some Compact critics are pushing back. For example, in early November, a group of water activists presented the local debut of the movie FLOW: For the Love of Water, to a sold-out audience at the Traverse City State Theater. The strong turnout, and the conversations that followed the movie at a reception, reflected a growing awareness that the Great Lakes remain vulnerable to misuse, and that a grassroots movement to stand up for them is growing.

One leader of efforts to close the Compact’s loophole is environmental attorney Jim Olson, of Traverse City, who took Nestle Waters North America to court in 2003 on behalf of Michigan Citizens for Water Conservation over withdrawals of water from an aquifer that empties into Lake Michigan. Attorney Olson sat down with the Great Lakes Bulletin News Service to talk about the problems with the Compact and why we need to fix them.

Institute: What is the loophole in the Great Lakes Compact?

Jim Olson: The first loophole undermines the structure and purpose of the Compact by stating that the term “diversion” does not apply to “water produced in the basin and used ‘in or as’ a product and transferred outside of the basin.” This sentence opens the door for exports of water as a “product.” This means that if water is produced and labeled as a product, it can go out of the Great Lakes basin without a limitation on the size of the container or quantity.

The problem with the loophole is that we’ve created a situation where water can be labeled as a product, transferring its public protection to private control using the North America Free Trade Agreement (NAFTA) and other agreements to suck water out of the Great Lakes Basin. And while some people will argue that point as debatable, I would ask those same people why we would create such a definition in the first place, which generates this debate? The fact that we have created an arguable definition of diversion is what needs to be corrected first.

The second loophole, also known as the “bulk water provision,” is a direct result of the first. It was written into the bill because the authors recognized the problem created by the definition of diversion. The bulk water provision treats water in containers larger than 5.7 gallons as a diversion and less than 5.7 gallons as a product for consumption not subject to the diversion ban. This loophole creates an exception to what is considered a diversion. It is like putting a Band-Aid on a gushing wound.

Why is the Compact’s structural definition of a diversion so important?

Mr. Olson: If you prohibit a transfer of water out of the basin as a matter of definition, then you have not created the right to transfer water to begin with.

What is the significance of that?

Mr. Olson: The definitions section in the Compact fits like a glove with the language in international trade law, potentially creating a situation where Great Lakes states could lose control over protecting our water.

If we allow water to become a commodity through the Compact, if we are not careful about what is and is not a diversion, we could be setting ourselves up to be very limited in our future ability to regulate and protect our water.

Under NAFTA, once water is “produced”—and that can mean anything pumped from the ground, lake, or a stream or labeled a “product”—or becomes a product that enters into commerce, it is then treated as a commodity and covered by NAFTA. This subjects water that is “produced” to non-discriminatory regulations, meaning businesses that sell water inside the basin vs. outside of the basin must be treated equally. This means that once a foreign interest makes an investment in water, like Nestle, for instance, the right to sell that water as a product—at least from existing sources—may not be able to be terminated without paying damages to the company. This would create a public liability potentially to numerous corporations potentially of the same magnitude of the current financial crisis.

Over time the bulk water limit of 5.7 gallons and the diversion ban will begin to leak. The holes will get bigger and bigger and over time it will be indefensible and collapse.

Are there other issues with the Compact?

Mr. Olson: There are several, but the most important issue is the failure to incorporate “public trust” principals. What I mean by that is the recognition that the waters of the Great Lakes and their tributary waters are owned by the states and held in public trust for citizens—without regard to wealth or status—under a ruling of the United States Supreme Court and various state Supreme Court decisions. In short, this means these waters cannot be transferred or sold for private gain or for any other private purposes. It would clarify that any private company that withdraws water from a Great Lake or any of its tributaries cannot alienate or sell water itself as a commodity for private purposes or gain.

Would closing the loopholes ban bottled water companies from operating in Michigan?

Mr. Olson: No. Not necessarily. Bottled water companies could claim interests in existing water facilities or sources. But it would mean that a water bottling company would have to obtain authorization from the states and their citizens in an open manner, say in the form of a license, and prove that their operation is in the best interest of the public. It would also require that such companies could not impair basic public rights and needs including boating, fishing, swimming, drinking, or any other form of recreation or use of public water.

How would public trust protect the Great Lakes and Michigan’s groundwater?

Mr. Olson: Public trust has two aspects. One is that it protects the right of public access to water for fishing, boating, and swimming on the navigable reach of inland lakes and streams and all of the Great Lakes. Groundwater supplies these systems. It’s a single hydrological system.

The second aspect is that it clearly defines water as owned by the states on behalf of the public. It becomes an explicit duty and legal obligation of the states to protect those waters from private alienation in the absence of explicit licenses that are consistent with public purpose. The duty also extends to protecting basic rights to water, fish, and other aquatic resources from harm.

In the future we may want to consider protecting the entire water cycle, not just groundwater and surface water. Leading scientists are saying that climate change will be one of the largest diversions of the Great Lakes—from evaporation or changes in weather and snowmelt or runoff patterns. The Compact is woefully deficient in addressing impending climate change as a significant factor for water being diverted from the Great Lakes as one of its consequences.

Have other states or countries declared water protected under the public trust?

Mr. Olson: Yes. The federal government and most states recognize water as a public trust subject to its principles. Even Michigan recognizes the public trust doctrine in lakes and streams, but it does not include groundwater in the definition. Since groundwater is tributary, it’s a logical extension that groundwater should be included in the definition.

There are several states that have enacted groundwater as a public trust: Hawaii, California, Vermont, and South Dakota. Supreme Court decisions almost uniformly recognize water as a public trust. It’s an ancient beacon of principle since the Roman Era and through the English Crown under the Magna Carta to the United States, Canada, and civil law countries throughout the world, so this is not some new idea. It’s really a principle of human rights, especially protecting the poorest in status and wealth, with the added responsibility and high perpetual duty to manage and protect the water for people and the planet without people having to prove the right has been harmed in the first place.

What about the argument that Michigan’s water is so abundant that we should sell it to generate revenue for our cash-strapped state?

Mr. Olson: There are three things wrong with that argument.

First, water fulfills its role, has meaning, wherever it falls and flows. We may have more water than most other states, but that does not mean it is abundant. The quality of life in Michigan and in our watersheds has already been determined by water flow and water levels. People have a right to use our water, but no one should have the right to own or sell water.

Second, abundance looks only at impact, but not the underlying principles of ownership, public trust, or the slippery slope of loopholes created by the compact under NAFTA.

Third, Michigan learned, regrettably, a long time ago, when it generated wholesale removal of its magnificent northern forests, that private ownership of public resources leads directly to short-term jobs that leave a legacy of destruction and pollution. History has shown that privatizing public resources creates a boom and bust economy, not a sustainable one. Once it’s shifted to private control or ownership, it’s gone. We as a State and people must retain public control so this never happens. That way, if down the road a mistake has been made, it can be corrected without paying a high price for something that belongs to all of us in the first place.

What are the next steps in Lansing and Washington?

Mr. Olson: In Washington, we need to close the loopholes in the Compact by rewriting the definition of a diversion, or we need to pass a joint resolution in the Congress clarifying that the Compact was not intended to say that water produced in any size container be exempt as a diversion.

Congress needs to declare that water is held in public trust by the states and that states cannot change that.

There’s work to be done in Lansing, too. Each state that adopted the Compact needs to close the loopholes and declare that water is a public trust and they will not allow private sale of water, consistent with public trust standards.

So, we need both Congress and the Great Lakes state legislatures to work together on fixing the Compact, because it is not sufficient in protecting the Great Lakes from diversions.

Where does the real opposition come from?

Mr. Olson: Those who seek to market water as a product for private gain, including bottled water. I don’t know why other users of water including farmers, industry, and utilities would oppose this, because they are not selling water itself and there is no threat that what they are doing would mean that their use would be regulated. This would actually protect the common water uses of farmers, industry, and utilities from claims of private ownership or control to sell the water out from under their noses as an export.

It also appears there has been a loose coalition—at least de facto—of bottled water interests, like Nestle, and some influential conservation organizations that have narrowed the focus of this dialogue on resource impacts and, in doing so, have turned their backs on the commoditization or control and ownership of water—a direct violation of public trust.

What’s the cost to citizens or states from such a public trust amendment?

Mr. Olson: There is absolutely no cost to correcting the problem. We have everything to gain and nothing to lose. The only groups that would pay a price are those who are trying to control and export water. The bottled water industry could escape loss as long as they obtain a license and the privilege from the public who owns and controls the water, without creating loop-holes like the Compact, and meet the standard of promoting their use of it as a direct public purpose or benefit, and show it does not impair public rights or the environment.

It’s an issue of liberty and freedom. If we allow alienation of the Great Lakes we invite real-world risks, especially with a shrinking planet with increasing population. If we don’t conserve the commons and it shifts to private ownership, we are subjecting a magnificent public commons to private control, and the more that occurs, the more people and nations will fight over water, as the case with oil, and the less secure the world. Why would we go down that path with water, especially with the uncertainties of climate change?

Why have you committed yourself to this issue?

Mr. Olson: It’s the right thing to do. Citizens worldwide recognize this. Michigan Citizens for Water Conservation, The Clean Water Coalition, Clean Water Action, Maude Barlow and the U.N. effort to include the human right to water and public trust in the Declaration on Human Rights in the U.N, the work of Sandra Postel, the battle in India between farmers and Coca Cola, the Supreme Court of India, the citizens McCloud, California, and now the State of California, and the groups and State of Wisconsin who forced Nestle out of exploiting public streams and water sources. All of these people and organizations have stood up against the privatization of water because it’s the right thing to do. If we don’t take care of it, who will?

These basic public commons and the environmental issues, human rights and water, have since been a significant part of my career.

How do you keep going?

Mr. Olson: Doing the right thing is less stressful than not doing the right thing and we’re all in this together. How this all plays out is not all on my shoulders; it’s on everyone’s shoulders. I’m just bringing information to others in hopes that it helps people here and across the planet.

Brian Beauchamp is a policy specialist for the Michigan Land Use Institute. Reach him at brian@mlui.org.

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