Submission to the Council of Great Lakes Governors

On the subject of the Draft Implementing Agreement for Annex 1 of the Great Lakes Charter

October 18, 2004

 Introduction:

 The Sweetwater Alliance-Detroit and undersigned individuals (referred to as ‘we’ from this point on) have devoted considerable time to the review of the proposed agreement designed to implement Annex 1 of the Great Lakes Charter. We regard the future health of the Great Lakes, in terms of water quality and quantity as a matter of the gravest importance. Nevertheless, the Sweetwater Alliance nor the other undersigned individuals can endorse the proposal as it stands.

 There are many examples of water disasters from all around the world that were caused by poor planning and/or ill-thought-out regulation.  These kinds of disasters always start out quite innocently. But, even very small political, economic or legal errors can lead to virtually irreversible trends. We often hear the expression “the devil is in the detail”. That is true, but in these times of trade liberalization the devil is also in the precedent.

 If the proposed compact and state-province agreement were consummated tomorrow, the most significant immediate change would be a few additional “trickles” of water out of the Great Lakes Basin to meet requests from several nearby communities. But that precedent, combined with a flawed decision-making regime could very well result in those short-term “trickles” turning into mid-term “cascades,” and then into long-term “torrents” of water travelling well beyond the borders of the ten Great Lakes jurisdictions, and perhaps even beyond the boundaries of the two countries. This is not only a Canada - U.S. issue.  

All leaders of jurisdictions in the Great Lakes Basin must exercise extreme caution in considering any new regime dealing with diversions and other forms of bulk removal of water from the Great Lakes.  Any proposal should be designed for stringent protection and have fail safe measures that make the rules hard to change in favor of loosening controls.  Furthermore, any proposal must be grounded in the reality that the Great Lakes are already under numerous stresses.  The largest threat to the Lakes is climate change. The climatic changes that are happening are irreversible, even with aggressive implementation of Kyoto and future climate conventions.  Although uncertainties remain as to the specific impacts on the Great Lakes, the vast preponderance of modelling and expert opinion is that the Great Lakes will experience significant declines in water levels.  This context must be borne in mind in any scheme to control diversions. We can no longer assume the Great Lakes are so large as to be indestructible. 

 We have a number of concerns, which we will address in sequence.  The first is that the time for public consultation is inadequate.  The second set of concerns relates to the concepts in the agreement. Lastly, we will put forward a series of recommendations.

 1)      Concerns about the Public Process 

The draft agreements represent what is potentially one of the most far-reaching natural resource and environmental policy initiatives in the history of North America. In spite of that, the draft agreements were passively released on the Internet in the middle of the summer holiday period, with a request for comments within 90 days.  To our knowledge, there has been no attempt at all to inform the general public about the risks inherent in the proposed decision process.  We also understand no specific effort was made to consult U.S. Tribes or Canadian First Nations.

Key information is missing.  The Great Lakes Charter of 1986 required that an inventory be prepared of water uses and conservation plans within the basin.  This has not yet been done.  The need for the public, not to mention decision-makers, to be fully informed about current uses and withdrawals from the Great Lakes is essential.  No agreement should be concluded without this essential foundation of knowledge.

 This not “just another water agreement.”  The proposals would fundamentally change the Great Lakes diversions and consumptive use issue from an environmental one to a resource trading issue. It could also conceivably lead to the commercialization of water and related natural resources in an unprecedented way. There are risks inherent in the agreement’s decision making process as well as in the substance of those decisions. The public has a right to know what is being contemplated for their resources. The public has a right to become fully informed of all the possible consequences. And the public has a right, once fully informed, to express its views on whether or not they think such a fundamental change in direction is in the public interest.  Those rights cannot be adequately exercised in the abbreviated and superficial review process that is now underway. 

 We urge the Council of Great Lakes Governors and the Premiers to extend the consultation period until at least March 2005, with provision made for direct public

Consultations in Canada and the U.S., and particularly with First Nations and tribes.

 2)         Concerns about the Concepts

 The essential purpose of the agreement and the Annex is to create a process for regulating uses and diversions of Great Lakes waters.  Under the proposed agreement, requests for diversions would be judged under a review relying on eight criteria, including requirements relating to the development of conservation plans and the assessment of significant cumulative impacts of such withdrawals on both the quantity and quality of Great Lakes waters. A benefit of the proposed approach is that it would be more transparent than decisions under the current Water Resources Development Act of the U.S. Congress, or the decisions under current Ontario and Quebec law.  Additional improvements include that the proposal clearly applies to ground water as well as the surface water of the Great Lakes.   

However, these improvements are not sufficient grounds to accept the agreement in its current form.  A careful bi-national review of the proposal makes it clear, that regardless of the intent, in practice the agreement could facilitate the diversions of Great Lakes waters.  

In particular, the agreement does not place limits on the amount of water that can be diverted (unlike the current International Joint Commission standard of no losses amounting to a cumulative 5 %), no limits on the duration of diversions, nor on the purpose for which the waters may be used, nor on the geographic area to be serviced.  

The agreement appears, in our view, to be contrary to the advice of the International Joint Commission (the IJC).  The Council of Great Lakes Governors (CGLG) approach is founded on a  “common standard” for approving withdrawals of waters from the Great Lakes, treating in-basin and out-of-basin uses and users the same.  For the first time, users out of basin would be able to claim equal rights of access to those inside the basin. This is a recipe for disaster and open ended pipes carrying the water away.

 a) Legal foundation

 The legal foundation for the approach taken by the agreement stems from some questionable legal opinions.  These opinions are not universally shared.  In fact, the International Joint Commission came to a different conclusion.  The far greater danger than an interstate trade challenge in the US is that by following the scheme for permitting diversions, particularly the resource improvement standard, the waters in the Great Lakes in their natural state can be seen to have been traded.  The risk of triggering NAFTA trading rules to water in its natural state is a very large level of risk indeed.  The legal opinion from the Denver law firm on which so much of the negotiation was premised mistakenly focuses on GATT and WTO rules.  Far more likely will be trade challenges from NAFTA.  It is the NAFTA regime that will open the taps for both countries from all water bodies should the Great Lakes scheme inadvertently treat water in its natural state as a “good” in commerce.

 b) Resource improvement standard

 The proposed decision-making regime appears to be based on two largely illusory “have your cake and eat it too” notions. The first is the so-called “resource improvement standard.”  Under this standard, the price to be paid for removing water from the Great Lakes Basin would be an improvement to some water related resource within the basin. On the surface, this has obvious political appeal. Constituents outside the basin would get access to Great Lakes water, and those inside would somehow be convinced their ecosystem was being improved even as the water disappears.

 There could in fact be local environmental improvements in the short run. But, if we look a little deeper and broader, and assume accelerating removals over time, very serious social, economic and environmental issues begin to arise. For example, look ahead to the time when lake levels are permanently lowered by several feet, which is a very likely due to the combined effects of accelerating diversions, uncertain future consumptive use patterns, increased hydroelectric power development, climate change, and probable changes to the connecting channels for navigation purposes. Local environmental improvements such as the protection and enhancement of fish and wildlife habitat will become meaningless as the wetlands become drylands. And local water quality improvements will be more than offset on a system-wide basis, as the amount of water flowing through the system is diminished, and as significant amounts of toxic substances that are now trapped in sediments become re-suspended.

 There are other problems with the resource improvement standard as well. First, as a matter of ecological principle, it is never a good idea to encourage the trading off of one ecosystem component against another. Ecosystem health depends on a number of very sensitive interrelationships that need to be preserved. Secondly, those trade-offs will have to be largely arbitrary, because one cannot logically equate quantities of water with environmental protection measures. That arbitrariness will inevitably lead to all kinds of political rancour and unpredictable legal problems further down the road.  As Canadian co-chairman of the IJC study board on the issue of Great Lakes diversions and consumptive uses, and before that, the Director of Environment Canada’s water policy, Ralph Pentland has commented, the resource improvement standard asks us to calculate “how many buckets of water are worth a dozen ducks?”

 c) Return flow

 The second illusory “have your cake and eat it too” concept is return flow. Proponents will claim that nobody should worry about “selling” water because that will be offset by waters returned to the basin by the diverters. The problem here is that there seems to be an attempt to achieve a delicate “balancing act” in the agreements. That balancing act seems to be designed to allow just enough permanent water loss to satisfy out-of-basin constituents within the agreement jurisdictions, but not enough to satisfy demands from other North American or offshore jurisdictions.  

 There are a few things wrong with that scenario. First, the return flow idea itself may turn out to have more loopholes than anticipated. Just as with the resource improvement standard, sometimes imprecise language in the draft agreement would suggest that return flow decisions may also turn out to be largely arbitrary. But just as importantly, the very fact that the return flow provisions at least appear to be designed with inter-jurisdictional discrimination in mind suggests that they would be unlikely to withstand legal challenges related to interstate commerce and international trade. What we are suggesting is that the arbitrary nature of both “have your cake and eat it too” concepts may turn the “trickles” of water losses into “cascades,” and subsequent legal challenges may turn them into “torrents”.

 It is a sign of the problems with the agreement’s reliance on “return flow” that so many supporters of the proposed approach believe it to be unworkable.   The argument runs that those concerned about the Great Lakes being compromised by withdrawals need not worry because the return flow requirements being unworkable will result in fewer withdrawals.  We are concerned that the logical flaws in the return flow requirements could just as easily result in water withdrawals without return flow, resulting in an abandonment of that requirement as unworkable or prejudicial to out of basin users. Or perhaps even worse, the water that is returned is polluted in some way. This has happened in other regions of the US where water bottlers have “replenished” aquifers with waste water.  

d) Significant cumulative impact

 Another “safeguard” touted against the risk of eroding the Great Lakes in fundamental ways are provisions related to “significant” cumulative impact. However, we know the science needed to identify “significant” impacts in this context is ill-defined. Is it possible to define “the straw that breaks the camel’s back?”  And even if it were possible, would anybody actually allow proposals to proceed until some threshold level of harm is reached, and then suddenly prohibit any additional water-dependent development in the region? In any event, if inter-jurisdictional discrimination is demonstrated in any one of the many inevitable legal challenges, this safeguard may also be struck down.

 The modification of “cumulative impact” as “significant” is very worrying.  The term “significant” is undefined in the agreement.  Given the scale of the Lakes in terms of ecological services, quantity and quality, fine tuning monitoring and assessment to identifying that level of cumulative impact that is “significant” is unlikely.  We will not likely spot the significant cumulative impact until the damage is done.  

 e)      Demands from out of basin

 We further question whether demands from outside the basin are really legitimate. All of eastern North America is blessed with a vast abundance of freshwater. Those immediately outside the basin receive the same three feet of precipitation and one foot of runoff as those inside. We can fully understand that there are several situations where the least cost short term solution would entail siphoning water out of the Great Lakes. But, that is only because in the short run bad water and environmental management is nearly always cheaper than good water and environmental management. Even without looking at the individual cases, we would hazard a guess that each and every one of them would be better off both economically and environmentally in the long run if they were to find a more local solution. Every drop of Great Lakes water is already serving some useful purpose where it is, so as a matter of principle one should think long and hard before sacrificing those uses to meet outside demands that may not be fully legitimate.

 f) Market forces/property rights

 We would also like to challenge those that argue the agreements will “unleash market forces in favour of the environment.” The primary market force that will be unleashed is water for sale to the highest bidder. And what will the revenues be used for? They will be used to meet the responsibilities of some “environmental laggards” within the basin - what economists refer to as a perverse incentive. And, application of the resource improvement standard within the basin is tantamount to a new tax on the wrong people for the wrong reason. It is important to get water prices right, and there is a well defined science to do that. In many cases that would result in a higher price, but at least those paying it would receive the local benefits. But, to raise additional revenue through a new tax on local water bills for the purpose of meeting the responsibilities of “environmental laggards,” perhaps hundreds of miles away would be entirely inappropriate.

 Last, but not least, we would like to raise a conceptual concern about the extent to which the proposed agreements may shift property rights in favour of claims of private ownership of water. We would like to quote a paragraph from a recent essay by U.S. environmental lawyer James Olson to illustrate this point.

 “Beyond impacts, this Great Lakes Basin water issue goes to the heart of citizens’ liberty and freedom as members of communities that have evolved for centuries, all of them interdependent but dependent on water as a secure public commons. The agreement must be carefully evaluated for any risk of any unintended subordination or privatization of this commons. When the commons is not respected or citizens’ fundamental right to water is alienated or at the mercy of private interests, people rebel. Citizens revolted in Bolivia, and they organized in Plachimada, India to stop Coca Cola from capturing a century old common water supply for bottles of soda pop. Citizens in Michigan and around the Great Lakes have successfully resisted efforts by Nestle to remove or divert water that would shift property rights in favour of claims of private ownership of water. These agreements could allow others to turn communities into vast water farms to serve a global economy in which citizens have little say.”  

g) Specific concerns 

There are some good things about the draft agreements, for example, the information sharing provisions and the procedures for citizen participation, as well as the consent process itself. We also agree with many of the specific suggestions being in comments being offered by Great Lakes United regarding trigger levels, phase-in periods, etc.

 However, we would like to register additional concerns at a more fundamental level: 

i)                    The most immediate threat to the Great Lakes ecosystem is a possible increase to the Chicago Diversion, because it could take place without significant new works. We understand a request may already be on the table from Illinois to do just that, and all jurisdictions may have agreed to keep that request “under wraps” until after the 90 day review period. If that turns out to be the case, we would consider that to be hugely disrespectful of the public’s “right to know”. What is even more disconcerting is that at least some reviewers have interpreted the agreement as exempting increases to the Chicago Diversion from most provisions in the agreement. We will give negotiators the benefit of the doubt on that question for now, but would request that it be made very clear in any agreements that all increases to existing diversions will be treated the same as new diversions.

ii)                   The International Joint Commission concluded that there should be a bias in favour of retaining water within the basin and using it more efficiently and effectively, and in its recommendations followed through on that conclusion. They also made it clear that different treatment of in-basin and out-of-basin withdrawals would be quite consistent with national and international traditions and legal requirements. The draft agreements, on the other hand, require exactly the same tests to be applied to in-basin and out-of-basin withdrawals, even though they would in some circumstances be applied by different people. That identical treatment is entirely inconsistent with water management and environmental principles and practices as they are applied all around the world. The result would be that either in-basin withdrawals would be treated too stringently or out-of-basin withdrawals would be treated too leniently.

 iii)         Resource improvement as defined is very clearly tantamount to offering water in its natural state for sale, and would therefore support the position of those who would argue that Great Lakes waters have effectively become a “good” under the terms of international trade agreements. That could in turn lead to pressures from both foreign public and private interests for offshore exports, pressures that may very well be supported by international trade tribunals. 

iv)        The agreements use a number of terms that are ambiguous and undefined. These include, for example, “reasonable use,” “significant impact,” and “evolving tools”. Because these notions include no clear or objective tests, they would seriously weaken any attempts to ward off challenges under international trade or interstate commerce rules. As suggested by the IJC, it is critical that water management policies be clearly articulated and consistently implemented so that undue expectations are not created.

v)         The IJC recommended a clear and unambiguous return flow requirement, that is “no net loss from the area from which the water is taken and, in any event....no greater than a 5% loss” (the average loss of all consumptive uses within the basin). The draft agreements, by speaking about but not defining water use sectors open up a number of loopholes regarding the amount of return flow, and are at times confusing and seemingly inconsistent about where the return flow will come from and where it will be returned. This level of ambiguity could lead to all kinds of acrimony and legal problems. 

vi)        The IJC recommended that all return flow should meet the objectives specified in the Great Lakes Water Quality Agreement. The draft agreement’s requirements with respect to the quality of all return flows are much less specific, and depending on how they are ultimately interpreted, could even end up being quite inconsistent with Water Quality Agreement requirements.

vii)        The draft agreements make no mention at all about preventing the introduction of alien invasive species by way of return flow, as recommended by the IJC. This is a very serious omission.

 viii)       The draft agreements exempt diversions for straddling communities and smaller diversions of less than 12 kilometres from most requirements. This could lead to serious problems, especially with respect to both water quality requirements and preventing the introduction of alien invasive species.