Bottled Water Dispute Boils Over

, 709 N.W.2d 174 (Mich. Ct. App. 2005).

Emily Plett-Miyake, 3L, Vermont Law School

On November 29, 2005, the Michigan Court of Appeals decided a case brought by the Michigan Citizens for Water Conservation (MCWC) against Nestlé Waters North America, Inc. (Nestlé). The court, affirming in part, and reversing in part, held that the “reasonable use” balancing test should be applied to disputes between riparian and groundwater users and that Nestlé’s proposed withdrawal of groundwater for its bottling operations was unreasonable.

Background
In December 2000, the defendant’s predecessor, Great Spring Waters of America, a subsidiary of Perrier Group of America, began taking steps to construct a bottling plant in Mecosta County, Michigan. Their first step was to purchase groundwater rights to property located north of the Osprey Lake impoundment known as Sanctuary Springs. Osprey Lake impoundment is a man-made body of water that was originally created by the damming of Dead Stream in 1953 and expanded in 1980. Four wells were installed on the Sanctuary Springs site in 2001 to extract groundwater. The defendants obtained permits from the Michigan Department of Environmental Quality (DEQ) which allowed the defendants to pump at a combined maximum pumping rate of 400 gallons per minute (gpm). The defendants began to construct a bottling plant approximately twelve miles from Sanctuary Springs in the summer of 2001.

In September 2001, MCWC filed a complaint requesting an injunction to bar the defendant from constructing wells, wellhouses, and the water extraction pipeline. MCWC alleged that defendant’s withdrawal of water would not be lawful under the common law applicable to riparian water rights and was unreasonable under the applicable groundwater common law. On November 25, 2003, the trial court found that the defendant’s actions had harmed and would continue to harm the plaintiff’s riparian interests. The court also found that the defendant’s water withdrawals violated the Michigan Environmental Protection Act (MEPA) by unlawfully diminishing an inland lake or stream and draining water from a wetland. The trial court granted the plaintiff’s requested injunction. The defendants filed an appeal.

Groundwater Claim
The defendant contended that the trial court erred when it determined the pumping unlawfully interfered with the plaintiff’s riparian rights based on a hybrid rule of the court’s own devising. The Court of Appeals rejected the trial court’s hybrid rule and held that Michigan law requires the application of a reasonable use balancing test to disputes between riparian owners and groundwater users.

Under the reasonable use doctrine, “a riparian owner may make any and all reasonable uses of the water, as long [as] they do not unreasonably interfere with the other riparian owners’ opportunity for reasonable use.”1 What constitutes a reasonable use is determined on a case-by-case basis. A similar doctrine has developed in Michigan regarding groundwater rights. In Schenk v. City of Ann Arbor, 163 N.W. 109 (Mich. 1917), the Michigan Supreme Court adopted the “rule of reasonable user” and stated the rule “does prevent the withdrawal of underground waters for distribution or sale for uses not connected with any beneficial ownership or enjoyment of the land whence they are taken, if it results therefrom that the owner of adjacent or neighboring land is interfered with in his right to the reasonable use of subsurface water upon his land, or if his wells, springs, or streams are thereby materially diminished in flow, or his land is rendered so arid as to be less valuable for agriculture, pasturage, or other legitimate uses.”2 Recognizing that a reasonable use standard has developed for both riparian and groundwater uses, the court explicitly adopted the reasonable use balancing test as the law applicable to disputes between riparian and groundwater rights.
Under the reasonable use balancing test, courts must balance a number of factors to determine whether the harm caused was unreasonable. These factors include, but are not limited to, (1) the purpose of the use, (2) the suitability of the use to the location, (3) the extent and amount of the harm, (4) the benefits of the use, (5) the necessity of the amount and manner of the water use, and (6) any other factor that may bear on the reasonableness of the use.3

Applying the reasonable use balancing test to the facts of the case, the court found that the MCWC’s use of the stream for recreation and aesthetic value was a reasonable use worthy of protection. The defendant’s use of the disputed water, however, also serves a beneficial purpose providing employment and water to the general public and is not inherently unreasonable. Examining the location of the use, the court found that Sanctuary Springs is not well suited for high-volume water extractions. The reduction of flow due to the bottling operations would raise the temperature of the stream resulting in the loss of habitat and recreational values. Furthermore, the court found that the defendant could augment its water supply from other sources and thereby reduce the impact on the Dead Stream. Taking all factors into consideration, the court determined that defendant’s proposed withdrawal of 400 gpm would be unreasonable. The court, however, concluded that the facts in the record before it were insufficient to determine a reasonable rate of pumping for the defendant and remanded that issue to the trial court.

MEPA Claim
The defendant next claimed that the trial court’s MEPA holding was fundamentally in error and should be reversed. The court agreed. First, the court found that the plaintiffs lacked standing to bring MEPA claims for some of the waters in question, because “any adverse effect on those areas from defendant’s pumping activities does not affect plaintiffs in a manner different from the citizenry at large.”4 The court ruled that because the plaintiffs did not present any evidence that they use Osprey Lake or the three wetlands in question, they had failed to demonstrate that they would suffer “a concrete and particularized injury distinct from that of the public generally.”5

The court then turned to the trial court’s reliance on Inland Lakes and Streams Act (ILSA) and Wetland Protection Act (WPA) violations to establish a prima facie violation of MEPA. To establish a violation under MEPA the plaintiff must show a detailed and specific finding that the defendant’s conduct has “polluted, impaired, or destroyed, or is likely to pollute, impair, or destroy, the air, water, or other natural resources” or the court must find that “the defendant has violated an applicable pollution control standard.”6 The court held that neither ILSA nor WPA violations may be used to establish prima facie MEPA violations because those statutes do not contain pollution control standards. Having made this finding, the court declined to consider the defendant’s further MEPA claims on appeal, and remanded to the trial court, which “shall determine whether plaintiffs established a prima facie violation of MEPA.”7

Conclusion
The Michigan Court of Appeals found that under a reasonable use balancing test, the defendants proposed groundwater withdrawal for its bottling operations is unreasonable. In January, MCWC and Nestlé reached a temporary compromise allowing Nestlé to extract 218 gpm from the Sanctuary Springs site this year.8 MCWC, however, has appealed the Court of Appeals’ ruling to the Michigan Supreme Court.

Endnotes
1. Michigan Citizens for Water Conservation v. Nestlé Waters North America, Inc., 709 N.W. 2d 174, 194-195 (Mich. Ct. App. 2005).
2. Id. at 198.
3. Id. at 203.
4. Id at 210..
5. Id. at 211.
6. Id. at 213.
7. Id. at 216.
8. Dawson Bell, Sides Agree in Water Dispute: Nestlé to Continue Pumping, The Detroit Free Press (Jan. 27, 2006).