House-Passed Legislation Threatens Michigan’s Water Rights

Legislation just passed by the Michigan House of Representatives would result in massive private property takings for many agricultural, commercial and industrial water users who own land in Michigan. House Bill 5068 is tie-barred to legislation that would enact the Great Lakes Water Quality Agreement. The bills would require a permit from the Department of Environmental Quality for new or expanded water use by many commercial and industrial users, depending on an extraordinarily complex set of standards, definitions, conditions and procedures, many of which are impossible to meet.

The reaction of many potential job providers who might be considering investments in Michigan will be, “Thanks, but no thanks,” and all the exotic subsidies and discriminatory tax breaks in the world won’t be sufficient to overcome that.

More fundamentally, Michigan is currently a “riparian rights” state, which means that property owners possess the water on their land and have a right to use it as long as they do not interfere with the rights of their neighbors. This long-held protection could disappear if new water use restrictions becomes law.

The legislation also creates uncertainty. The Senate version authorizes the DEQ to enforce the language of the proposed statute, but prohibits staff in the department from writing complex new rules based on their interpretation of the law. The House version grants this excessive power and discretion to DEQ bureaucrats — whose record where they have been granted similar power in other areas of law is not reassuring. If the DEQ is allowed to write rules, it would be impossible for businesses to know what water withdrawal requirements they will be faced with to obtain a permit. A more uncertain regulatory climate is the last thing the state needs. This issue is too important to Michigan’s future to be left to the whims of unelected and largely unaccountable bureaucrats.

Further, the legislation claims that “waters of the state” are “valuable public natural resources held in trust by the state.” This is untrue. Much of the water located in the state is owned by individual property owners. Just as the state cannot by legislative fiat claim ownership of all of the oil in the state without paying for it, it cannot claim all the water in the state without paying for it.

In the 1980s, when Michigan sought to limit oil drilling in a sand dune, a court held that the state was taking a property. The ruling resulted in the state agreeing to pay a $94 million settlement. The precise value of all the water in Michigan is unknown, but clearly would exceed what the state could afford, with or without a “budget crunch.”

The consequences of such a fundamental shift in water ownership are enormous. Declaring the waters a “public trust” would result in the largest private property takings in the history of Michigan. Landowners would be put in a position in many cases of having to secure permission from the government to use the water that formerly belonged to them.

Michigan is blessed with abundant water, and that resource is important for both quality of life and as a tool to spur new and badly needed economic development in the state. Making that water harder to obtain will only deepen the state’s economic plight and erode the property rights of its residents.

Russ Harding is a former director of the Department of Environmental Quality and is director of the Property Rights Network at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.