Minnesota Water Train Proposal Exposes Flaw in Great Lakes Compact

Jim Olson, FLOW Founder

By Jim Olson

A railway company recently proposed extracting 500 million gallons of groundwater per year from Minnesota and shipping it to water-scarce states in the southwestern United States.

Although the water that would be diverted lies outside the Great Lakes Basin, and Minnesota officials said they are not likely to approve the water export proposal, the resulting controversy has renewed analysis of the Great Lakes Compact, which is designed to protect the Lakes from water diversions. And the heightened scrutiny is a good thing because part of Minnesota lies within the Great Lakes Basin.

The Great Lakes Compact has suffered from a primary weakness from the very beginning: it does not address the sale of water or consumption outside the Basin or watershed (with the exception of diversions in counties or communities that immediately adjoin the Basin). To provide for water used or diverted in products, there is a “product” exemption buried in the definition of “diversion” that permits tomatoes grown within the Basin, for example, to be shipped outside the watershed.

But buried in the definition of “product” is “water removed by human or mechanical means and transferred out of the basin” as a result of industrial, manufacturing, agriculture processes or products, and here’s the kicker, “… or intended for intermediate or end-use consumers.” So, the Compact contains a water-as-product export provision—at least to the extent that water is placed in a container. But, here’s another kicker. There is no limit to size, so railroad containers filled with water and “intended for intermediate or end-use consumer” would be exempt from the diversion ban for purchase or use by famers in Colorado, or any place on the planet.

The Compact Sec. 4.10 states in the bottled-water or “Bulk Water Transfer” provision, that water in containers larger than 5.7 gallons “shall be treated… in the same manner as a… Diversion.” What’s wrong with this language? It’s a Band-Aid that covers up the product exemption. The clause “shall be treated in the same manner as Diversion” concedes that water in a container of a certain size is not a diversion, but a product; rather than place an exemption for bottled water directly into the definition of, or as an exemption to, diversion, the negotiators and Compact tacked on a Bulk Water limit on the product exemption. But the problem is, water in any size container, whether in a railroad car or the deck of an ocean barge, is defined as a product.

So, under international trade pacts like the North American Free Trade Agreement (NAFTA) and trade laws, defining water as a “product” is admitting that this is a regulation, not a ban on bulk water diversions. The regulation of water as product lays a heavier burden on the Office of Great Lakes Governors and citizens of the Great Lakes to justify to foreign investors and countries that the export of water in large containers will not harm the environment. Worse, treating water in a container as a “product,” not a diversion, shifts the expectations of investors outside the region, who can demand equal treatment and/or massive sums of money as damages for applying the regulation to prohibit or deny their “right” to export water in containers. Why? 

A regulation to restrict the export of water as a product, as opposed to, say, a diversion, admits that the right to export water as a product exists. As indicated above once it’s a product, the Great Lakes states through the Compact governing body, the Office of Great Lakes Governors, will have to prove the regulation of the water prevents harm. If a bottled water company that has received a permit can ship water in containers less than 5.7 gallons under a permit, because a state has determined there’s no harm to water resources, how can the Great Lakes states argue water in a 10,000-gallon container from the large-volume water well can be “treated as” a diversion, when the amount of water pumped from the same well and put in a large container is no different than the amount shipped in bottles?

So, then the issue becomes factual: Can the export of water in containers be prohibited by the regulation to “treat it as” a diversion if it can be shown to harm or threaten harm to the environment or conservation. Whether water is in large containers is less than 5.7 gallons or more than that amount, if the impacts do not threaten the water, environment, or the conservation of a non-renewable resource, under international trade laws, like NAFTA or the General Agreement on Tariffs and Trade (“GATT”), its export cannot be stopped.

This is a serious problem. It was there in 2005, when the eight Great Lakes states signed the agreement that became the Compact; those close to the ink before it dried knew it, but nothing was done about it. The proposed water train from Minneapolis to Colorado may never be permitted, and it shouldn’t be. But it is a warning: the “product” exemption or loop-hole is a door that needs to be shut.

FLOW is developing a report and comment on weaknesses and future questions for states in the Compact. Clarifying the “product” exemption in the Compact is one of the critical measures that needs to be rectified. It could be done by the Compact Council through an interpretative guideline of the definition of “product.” It could be done by the legislature of each state, because the Compact allows states to impose more stringent measures than the Compact. Essentially, the fix would remove the “intended for intermediate or end-use consumers” clause in the “product” definition, and then declare that “water in any sized container” is not a product.

In the meantime, and this is critical, the best thing the Great Lakes Compact Council can do is expressly interpret and declare under Sec. 1.3 that, “The waters of the Basin” are held in, and subject to, a public trust in the waters of the Basin,” and that any consumptive use, exemption, or other exception managed or reviewed or decided by the Council is subject to the duties and overlying principles of the Public Trust Doctrine that protects the waters and citizens, quality of life, and sustainable economy in the Great Lakes region.

Fortunately, the International Joint Commission adopted a recommendation in a 2016 report that each state adopt a public trust framework, using the public trust principles as a “backstop” to future threats to the Great Lakes. The water train proposal is just such a threat and should be the impetus for the Council and states to fully implement the public trust principles that apply to the Great Lakes and their tributary waters. If not, the waters of the Great Lakes Basin could very well lose in disputes between foreign interests abroad or those in other states.

It is time for all of us who understand the essential life-giving importance of water in the Basin where it falls and flows to join with Minnesotans to stop the water train notion in its tracks, and to implement the straight-forward amendments of our water laws in each state to shut the door before the excessive demand for water in a worsening world water crisis pushes it wide open.

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