Capping the bottle on uncertainty: closing the information loophole in the Great Lakes-St. Lawrence River Basin Water Resources Compact.

• Author: Dornbos, Jeffrey S.

"When the Well's dry, we know the Worth of Water."

--Benjamin Franklin (1)

Will the Great Lakes be depleted by "water barons" (2) who profit by withdrawing Great Lakes water, placing it into bottles, and selling it to thirsty consumers around the world? Concern that such depletion might take place resurfaced in 1998, when Nova Group, a Canadian organization, devised a plan to help meet the growing demand for water in Asia by shipping Great Lakes water to China. (3) Nova Group received a five-year permit from the Ontario Ministry of Environment to export 158 million gallons of water per year from Lake Superior. (4) Ontario officials eventually cancelled the permit, (5) but the episode led to a cry to "create a modern, binding, international water-management system to regulate Great Lakes withdrawals for the next century and beyond." (6) As a result, legislators enacted two agreements: (1) the Great Lakes-St. Lawrence River Basin Sustainable Water Resources Agreement, (7) a non-binding agreement between the United States and Canada to implement policies protecting Great Lakes water from diversions; and (2) the Great Lakes-St. Lawrence River Basin Water Resources Compact (Compact), (8) a binding agreement among the eight Great Lakes states. (9)

Enactment of the Compact, however, has not resolved the ongoing debate over the potential threat of exporting water from the Great Lakes. Rather, enactment of the Compact has sparked a new debate over a provision in the Compact that some argue will make exporting Great Lakes water easier, the so-called "bottled water loophole." The Compact, which aims to protect the long-term sustainability of the Great Lakes, generally prohibits the transfer of water from the Great Lakes basin to other locations. (10) Under the Compact, for example, Las Vegas would be prohibited from building a pipeline to pump water out of the Great Lakes to meet its growing water demand. Because of the bottled water exemption, however, private companies would not be prohibited from selling the same Great Lakes water to Las Vegas, as long as the water was incorporated into bottles rather than pumped directly. (11) The distinction between permitting the export of water in products but not pipes has been described as the "bottled water loophole" and has sparked considerable debate.

The debate surrounding the so-called bottled water exemption has centered on whether or not bottled water companies should be permitted to withdraw, bottle, and sell water from the Great Lakes. One side of the debate argues that the bottled water exemption will permit companies to bottle and sell so much water that it will deplete the resource and undermine the Compact's purpose of ensuring the long-term sustainability of the Great Lakes basin. (12) The other side claims that eliminating the bottled water exemption will impose unnecessary costs because exporting bottled water and other water-containing products will have no adverse long-term effects on the Great Lakes system. (13)

Both sides of the debate ground their arguments on different assumptions about the long-term effect on the Great Lakes basin of exporting bottled water. Determining which assumption is correct is difficult because there is considerable uncertainty about the future cumulative impact of removing water from the Great Lakes basin in bottles and other small containers. (14) More information is needed to better evaluate each side's position.

This Note presents a different "loophole" in the Compact--an "information loophole." The information loophole exists because the Compact requires Great Lakes states to develop a registration and reporting system for water uses but mandates that only some, not all, water uses are reported. (15) Specifically, if bottled water companies and other producers were not exempted from the ban on diversions, they would need to report all of the water that leaves the basin in bottles. Because they are exempted, however, only those who withdraw over 100,000 gallons per day are required to register and report under the Compact, unless individual states adopt more stringent requirements. (16) Moreover, even for those withdrawals that are reported, the Compact does little to address the inaccurate reporting that results from estimating withdrawals, and inconsistencies across the basin in calculating how much water is used up in different processes and not returned to the basin. (17) Finally, while the Compact stresses that information about withdrawals shall be made publicly available, (18) it permits states to report aggregate information and to withhold information that a state determines to be confidential. (19) This Note argues that this "information loophole" should be closed in order to reduce uncertainty and improve decision making about the cumulative effect of exporting bottled water and other water-containing products from the Great Lakes basin.

Part I presents the ongoing debate over the Compact's treatment of bottled water. It gives an overview of the debate between those who support the bottled water exemption, referred to in this Note as the "developers," and those who oppose the bottled water exemption, referred to in this Note as the "preservationists." Part I also describes the events leading up to the Compact. Among these events was the completion of a study that found that the cumulative effect of consumptive uses like bottling water and small-scale removals of water from the Great Lakes basin, while uncertain, presented a threat to the long-term sustainability of the Great Lakes. Part I argues that the intense debate over bottled water in the Great Lakes is due, in part, to different approaches by the developers and preservationists to environmental decision making in the face of scientific uncertainty. Both approaches would benefit from more information about consumptive uses and small-scale removals of water.

Part II begins by describing the Compact's so-called "bottled water loophole." Part II goes on to present the Compact's "information loophole," and argues that the only way to resolve the debate over bottled water, and other similar debates, is to close the information loophole. Closing the information loophole will require both improving measurement and reporting of water use and making data available to the general public.

Part III argues that the Great Lakes states should require registration and reporting for all non-negligible withdrawals. (120) Specifically, Part III proposes three concrete steps to increase the amount of information available to decision makers and reduce uncertainty. First, all non-negligible withdrawals (21) should be reported in the same way as diversions, (22) removing the exemption for withdrawals that are less than 100,000 gallons per day. Second, to ensure accuracy in reporting, withdrawals should be metered and audited on a regular basis. Third, information about the amount of water that is withdrawn, incorporated into products, and shipped out of the basin should be made available to the public. Together, these three changes would help to improve decision making about contentious issues, such as the so-called "bottled water loophole."

1. THE UNCERTAIN CUMULATIVE IMPACT OF WITHDRAWALS

   1. The Debate over the Compact's Bottled Water Loophole

      The ongoing debate over the bottled water exemption has been characterized as an intense clash between "conservation and commerce." (23) For analytical purposes, this Note characterizes the debate as existing between two conflicting viewpoints: (1) the "commerce" side of the debate--those who argue in favor of permitting the export of bottled water and other products that contain water--are called "developers;" and (2) the "conservation" side of the debate--those who argue that the Compact should ban the export of all water, including bottled water--are called "preservationists."

      The developers argue that bottled water is no different than products such as soft drinks and beer and that selling such products outside of the Great Lakes basin should be permitted. (24) In a free market economy, they posit, bottled water companies should be allowed to sell bottled water to any consumer who wishes to purchase it, regardless of the purchaser's location. (25) Selling bottled water, in their view, is fundamentally different from sending water out of the basin in a pipeline because bottled water undergoes a process within the basin that incorporates it into a product. (26) They claim, in addition, that more stringent regulations on the export of bottled water would violate international trade laws such as the North American Free Trade Agreement (NAFTA) (27) and the General Agreement on Tariffs and Trade (GATT). (28) The developers also claim that state laws already prevent any long-term damage to the Great Lakes ecosystem that may occur as a result of withdrawing water to sell in bottles. Finally, because the potential future effects are uncertain, the developers would likely argue that no regulations should be placed on bottled water until there is a demonstrable negative impact on the ecosystem as a whole, if at all.

      The preservationists, conversely, argue that there is fundamentally no difference between a ship filled with Great Lakes water bound for Asia, which the Compact prohibits, and a ship filled with bottles of Great Lakes water bound for Asia, which the Compact permits. (29) Water should not be considered a product, according to this view, simply because someone puts it into a bottle and sells it. Under this view, there is no significant difference between water in its pristine state, such as a lake, and water that has been poured into a bottle. According to the preservationists, even though exporting bottled water may have no appreciable impact on the Great Lakes today, the Compact should prevent private corporations from selling Great Lakes water for a profit, in a bottle or otherwise. (30) The preservationists argue that...