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Jul 2006
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July 10, 2006

Michigan Water Withdrawal Legislation

In a series of amendments to Michigan's environmental code, the Michigan legislature is imposing new registration, reporting, and permitting requirements on industrial facilities and other entities that use water drawn from sources other than municipal water systems. The amendments affect Part 327 (Great Lakes Preservation) and Part 328 (Aquifer Protection) of the Natural Resources and Environmental Protection Act. The amendments also modify Michigan's Safe Drinking Water Act to add new requirements for producers of bottled water.

The amendments are the result of extensive deliberations involving a wide variety of trade associations, public interest groups, and the regulatory community. A principal goal of the legislation was to incorporate needed changes to state law without adding costly new regulatory requirements.

Registration and reporting requirements will now apply to any owner of real property who has the capacity on that property to make a "large quantity withdrawal" (averaging more than 100,000 gallons per day (gpd) in any 30-day period). Facilities registered under Michigan's existing reporting program do not need to register a second time unless they develop new or increased withdrawal capacity of 100,000 gpd.

The most significant changes in the amendments pertain to new or increased water withdrawals. For example, the amendments prohibit new or increased large quantity withdrawals that would cause an "adverse resource impact," a concept that is discussed below. The amendments also require, for the first time, a permit for new or increased withdrawals of 2,000,000 gpd from inland waters or groundwater, or 5,000,000 gpd from Great Lakes and certain connecting waters.

The amendments define "adverse resource impact" as decreasing the flow or level of a water body such that its ability to support characteristic fish populations is functionally impaired. Until February 28, 2008, the prohibition on adverse resource impacts is limited to designated trout streams. After that, it will apply to all surface waters. The amendments do not define "functional impairment," a key concept that will require development. The amendments require the DNR's groundwater conservation advisory council to develop an assessment tool to assist in identifying adverse impacts.

Importantly, a facility's existing water withdrawals are grandfathered for purposes of the prohibition on "adverse resource impact" and for purposes of the new water withdrawal permitting program. The amendments focus on "new or increased" withdrawals, which are measured from a benchmark known as "baseline capacity." For most industrial facilities, baseline capacity will mean withdrawal capacity as reported to the DEQ in the annual report due April 1, 2007. Quarries and mines may use permitted discharge volume as baseline capacity. If a facility does not report baseline capacity in its next annual report, its baseline capacity will be the highest withdrawal reported in any of calendar years 2002 through 2005.

Baseline capacity is a one-time determination based on system capacity as of February 28, 2006. For all water withdrawers, baseline capacity has already been fixed and cannot be modified by changes in capacity or consumption after February 28, 2006.

Another key feature of the legislation is a prohibition against "diversion," meaning a transfer of water from the Great Lakes Basin into a watershed outside of the Great Lakes Basin. The statute contains several exceptions from the diversion ban, including ballast water, firefighting water, etc. Diversion also does not include "consumptive use," meaning water withdrawn and not returned to the Great Lakes Basin due to evaporation, incorporation into products, and certain other processes. Because of the exception for consumptive use, the water contained in cherries, potatoes, shampoo, paint, beer, and other Michigan products can be shipped out of the Great Lakes Basin without violating the ban on diversion. Additionally, the bottling of water in containers of 5.7 gallons or less is a consumptive use, thereby protecting water-bottling operations from being characterized as a diversion from the Great Lakes.

As with any new regulatory program, facility managers will need to carefully evaluate their coverage under this new program and take appropriate steps to comply, beginning with the "baseline capacity" determination discussed above.

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Scott D. Hubbard is a partner in the Grand Rapids office of Warner Norcross & Judd LLP where he specializes in environmental law with an emphasis on water resource protection.

Warner Norcross & Judd is a full-service law firm with offices in Grand Rapids, Holland, Metro Detroit and Muskegon. Because each business situation is different, this information is intended for general information purposes only and is not intended to provide legal advice.

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