Governor’s Water Scheme Is All Wet

Michigan is blessed with abundant water. The Great Lakes that surround the state comprise 20 percent of all the surface fresh water on Earth. Inland lakes and streams are plentiful. Hydrologists estimate the groundwater under the state equals what is contained in Lake Michigan, or another 1.2 quadrillion gallons.

So why the hysteria in Lansing regarding water use? Recent proposals to more tightly regulate groundwater would have devastating consequences for Michigan’s economy.

The panic seems to have started when the Michigan Department of Environmental Quality in 2002 issued a permit to Nestle Waters to bottle water at its Mecosta County facility. The permit fulfilled all federal and state requirements under the Safe Drinking Water Act. The aquifer in question was intensively studied, and the proposed withdrawal is a relative drop in the bucket of Michigan’s groundwater supplies. Moreover, the bottling plant is a clean industry that provides much-needed jobs to an economically depressed area.

Nonetheless, opponents sued and somehow convinced Mecosta County Circuit Court Judge Lawrence Root to terminate water withdrawals by the company. A stroke of the judge’s pen defied the legislature and trampled basic provisions of Michigan water law, saying that “any impact” on the groundwater supply is grounds for denying a permit.

So overreaching was the judge’s ruling that the Granholm administration joined with Nestle in seeking a stay from the Michigan Court of Appeals. This was granted on Dec. 16. But in an apparent move to assure environmental groups of her dedication to water regulation, Gov. Jennifer Granholm shortly thereafter proposed a new regulatory initiative at odds with her professed desire to improve Michigan’s economy and business climate. Among other things, the governor called for creation of a groundwater permit system to regulate even minor water withdrawals.

The governor’s proposal would not benefit the state for several important reasons:

• Negative economic consequences. Michigan’s economy is heavily dependent upon manufacturing and agriculture. These operations require abundant and affordable water supplies. Michigan’s groundwater provides the state a competitive edge in both recruiting new business and maintaining the existing job base. This competitive advantage is also necessary to offset the state’s disadvantages, including uncompetitive union wages, an energy-draining climate and high tax rates.

• Overbroad regulatory power. The Governor’s proposed Water Legacy Act would vest in the Michigan Department of Environmental Quality (DEQ) unprecedented discretion in permitting decisions. Such discretion invariably creates uncertainty and increases regulatory costs. For example, the DEQ would decide whether an applicant’s use of groundwater is justified as well as the extent of water conservation measures required. Notification of groundwater withdrawals to all adjacent property owners would be required, which would invite numerous legal and regulatory challenges to even proper uses. The permit proposal also includes eligibility criteria that are open to diverse interpretations. This would increase litigation and regulatory uncertainty.

• Increased regulatory costs. The proposed permitting system would entail significant new costs for both applicants and regulators. Not only would each applicant be required to submit a voluminous plan, DEQ staff would be responsible for reviewing hundreds of such applications — despite official claims that the agency lacks funding to adequately manage current regulatory programs. The technical determinations required of staff would include whether and how the proposed withdrawal would affect water quality and supply, as well as the impact on natural resources, in general.

• Regulatory overkill. Michigan certainly does not lack water. Yet the permit proposal would eventually apply to even small users such as farmers, who are least able to afford the regulatory costs.

• Bad law makes for bad policy. Judge Root’s decision contradicts legal precedent and is likely to be overturned. The U.S. Supreme Court has repeatedly struck down states’ restrictions that constitute barriers to interstate commerce, such as its 1992 decision that determined the state could not impose certain rules on Kalamazoo-based Fort Gratiot Sanitary Landfill Company.

The Governor can’t have it both ways. She can’t credibly call for improving the business climate and making Michigan more competitive with other states, while at the same time pushing for schemes like this. Lacking any evidence that supplies of Michigan groundwater are in jeopardy, the imposition of a costly job-killing new regulatory bureaucracy is unjustified.

Russ Harding, former director of the Michigan Department of Environmental Quality, is senior environmental policy analyst with the Mackinac Center for Public Policy, a nonprofit research and educational institute. Permission to reprint in whole or in part is hereby granted, provided the author and his affiliation are granted.