Member Article

On February 28, 2006, Michigan enacted water management legislation giving the State greater control over large quantity water withdrawals. The laws create for the first time a waterextraction permit system and user fees for largescale withdrawals from inland and Great Lakes water sources. They also impose special requirements on water bottlers. The laws represent a major shift in Michigan’s attitude toward water withdrawal regulation, which for years has been stalled by opposition from farm and business interests. It comes on the heels of the 2005 pact between the Great Lakes states and two Canadian provinces to ban new large scale water diversions from the Great Lakes Basin. Key Definitions. The legislation is keyed to two principal definitions. First, a “large quantity withdrawal” is defined as a withdrawal greater than 100,000 gallons per day (gpd) averaged over a consecutive 30-day period. Second, a “new or increased” large quantity withdrawal is defined as a withdrawal greater than 100,000 gpd averaged over a 30-day period above “baseline capacity.” For users other than municipal water systems and mine or quarry operations, baseline capacity is the capacity of the system used to make the withdrawal as of February 28, 2006. This capacity by such users must be reported to the DEQ by April 1, 2007; otherwise, the DEQ will use the highest withdrawal volume contained in prior reports. Under the law, a new or increased large quantity withdrawal cannot cause an “adverse resource impact.” This prohibition does not apply to the baseline capacity of a large quantity withdrawal (or well capable of making such a withdrawal) that existed as of February 28, 2006. Moreover, until February 28, 2008, only trout streams are subject to this provision; after that, all waters of the state (including groundwater) are protected. An adverse resource impact means an impairment of the ability of a surface water body to support its characteristic fish population. Permit Requirements Permits will now generally be required for persons who develop withdrawal capacity to make new withdrawals (or develop increased withdrawal capacity beyond baseline capacity) of more than 2 million gpd from inland sources (including groundwater, lakes, or streams) or of more than 5 million gpd from a Great Lake or connecting waterway. The DEQ must issue the permit for withdrawals from inland sources if it “determines that the withdrawal is not likely to cause an adverse resource impact.” The DEQ must issue the permit for withdrawals from Great Lake sources if all of the following conditions are met: (i) the water, less any consumptive use, is returned to the source watershed; (ii) the withdrawal will result in no individual or cumulative resource impacts; (iii) the withdrawal will be in compliance with all applicable laws, including binding interstate or international agreements; (iv) the use is reasonable under common law principles of Michigan water law; and (v) the applicant has “considered” voluntary water management practices or conservation measures. Persons who are required to obtain permits may petition the DEQ for a determination that the new or increased withdrawal is not likely to cause an adverse resource impact. The petition must evaluate the environmental, hydrological, and hydrogeological conditions that exist and the predicted effects of the intended withdrawal. If the DEQ concurs that the proposed use is not likely to cause an adverse resource impact, the water withdrawal is presumed not to create such an impact. However, this presumption is rebuttable. Moreover, DEQ concurrence does not abrogate liability for interference with common law water rights or other environmental laws. The DEQ can request that the attorney general commence a civil action to enforce the new prohibitions and permit requirements. If a person knowingly violates the provisions, the court can assess a fine of up to $5,000 per day of violation. The AG can also sue to recover the costs of surveillance and enforcement resulting from the violation. Bottling Industry Focus Not surprisingly, the legislation impacts the Michigan bottled water industry, which has been the subject of both private water rights litigation and intense media scrutiny. The new laws benefit existing bottlers by exempting from the blanket prohibition of diversion of water outside the Great Lakes basin any water in containers less than 20 liters (5.7 gallons). However, it also provides that bottlers who propose to conduct a new or increased large quantity withdrawal of more than 250,000 gallons of water per day must demonstrate to the satisfaction of the DEQ that all of the following conditions will be met: (a) the proposed use is not likely to have an adverse resource impact; (b) the proposed use is reasonable under common law principles of water law in Michigan; (c) the withdrawal will be conducted in such a manner as to protect riparian rights as defined by Michigan common law; (d) the person will undertake activities, if needed, to address hydrologic impacts commensurate with the nature and extent of the withdrawal. Before making its determination, the DEQ must provide public notice and an opportunity for public comment. To apply for this determination, the proposed bottler must pay a hefty $5,000 fee. Considerations How these new laws ultimately affect large water users will largely depend on how the DEQ interprets the data supporting the permit applications and other submissions. At this early stage, it will be important for affected businesses to comment on the “water withdrawal assessment tool” to be developed by the DEQ to evaluate whether a use causes an “adverse resource impact.” It will also be important to support applications and submissions with highly credible, sophisticated expert analyses and to present them effectively. Dykema has experienced professionals that can help produce the best possible results. For more information, or to discuss how Dykema’s water law experts can help you, contact John Ferroli at 616-776-7542 or [email protected].