Can Public Trust Doctrine Create a Regulatory Floor that Protects the Great Lakes from Diversions?

PaulLeahyBlog

Can Public Trust Doctrine Create a Regulatory Floor that Protects the Great Lakes from Diversions?

By Paul Leahy, Staff Contributor

The International Joint Commission (IJC), formed by the Boundary Waters Treaty of 1909 between the United States and Canada, will in the coming months consider whether to integrate the public trust doctrine as a background principle for governing the use of Great Lakes water.[1] One question arising from this forthcoming decision, which gives pause to water law scholars from the Great Lakes region, is whether applicable laws or legal authorities will ever allow the Great Lakes to suffer a “death by a thousand leaks” from either significant bulk or cumulative small diversions.[2] Such a contingency motivated the IJC to recently release a report recommending United States and Canadian national and subnational governments adopt a set of public trust principles to serve as a “backstop” to cure any defects of existing laws.[3] In light of IJC’s recommendation, this post examines public trust principles and the deficiencies in existing international and domestic laws to explore how this common law doctrine may create a uniform regulatory floor that can protect the Great Lakes from diversions.

The Great Lakes hold twenty percent of the planet’s surface freshwater.[4] Critics may wonder under these circumstances why the national and subnational governments of the United States and Canada, as well as the public, ought to worry about minor or even significant diversions of freshwater. But even minor diversions cumulatively may amount to a significant diversion of water that can ultimately drain even an inland sea, as happened to the Aral Sea.[5] Water law attorneys have previously expressed concern that international agreements, as well as domestic laws, may displace laws protecting against similar diversions and open the door to diversions of water from the Great Lakes.[6] But many of those same attorneys now argue that public trust principles adopted contemporaneous with the ratification of the Boundary Waters Treaty of 1909 specifically merit explicit recognition as controlling background principles of state property law contributing to the development of the treaty.[7]

The IJC’s consideration of whether to recognize public trust principles in the Boundary Waters Treaty of 1909 gives an opportunity to reexamine whether international or domestic law will allow the Great Lakes to suffer such a “death by a thousand leaks.” This post first argues (1) the states can exercise discretion in defining the extent and scope of the public trust and other background principles of state law consistent with Lucas v. South Carolina Coastal Commission. Next this post argues (2) state public trust doctrine can protect the Lakes against diversions and remedy the faults of international agreements and domestic laws. Finally, this post concludes by arguing (3) other legal authorities should expressly recognize, and supplement the controlling public trust doctrine and other common law traditions. This post examines public trust doctrine in United States law, but does not purport to examine the doctrine’s applicability in the context of Canadian common or civil law traditions. Conceptual questions about the origins or nature of the public trust doctrine similarly fall outside the scope of this post though these may deserve further consideration in the future.

  1. States retain the power to define, and exercise their self-interest in determining, the scope of protection afforded by the public trust doctrine.

After the Supreme Court’s decision in Lucas v. South Carolina Coastal Commission, background principles of state property law assumed greater prominence in environmental conservation in the United States as an exception to a regulatory takings.[8] In fact, the categorical defenses against challenges to a state’s regulatory takings authorized by Lucas have eclipsed the narrow categorical takings rule outlined in the case.[9] One such categorical defense and background principle is the public trust doctrine found and recognized in both federal and state common law.[10]

As recognized over a century ago by the Supreme Court in Illinois Central Railroad v. Illinois, the public trust doctrine maintains (1) the state cannot alienate or sell property held in public trust without the “express ‘assent of the State;’” (2) the state cannot give assent where the legislature wants to transfer the property to an entity to use for a non-public purpose; and (3) authorized use or transfer cannot impair the public’s interest in the natural resource.[11] Many states apply two further standards to public trusts where courts must consider whether (4) use of a public resource impairs other public uses such as fishing, boating, bathing, and recreation and (5) the cumulative effects of small “nibbling effects” would lead to cumulative harm to the whole.[12]

All states recognize public trust principles even though many differ in the extent and scope of property held in public trust by the state and the extent of permissible public use.[13]therefore he scope of this postr research and development to determine whether court precedents and common law traditio ill be a Courts in the Great Lakes have not decided the question of whether public trust doctrine applies to groundwater though many state statutes have declared groundwater a public resource held in trust by the state.[14] A number of states recognize exceptions to the public trust doctrine allowing small scale privatization of trust resources.[15] States therefore can exercise considerable discretion in defining the scope and protection of the public trust doctrine.

One other closely related set of background principles of state property law is riparian and groundwater common law.[16] States similarly adopt and apply varying standards when evaluating whether a particular use is permissible under riparian and groundwater law. Generally (1) “reasonable use” doctrine controls riparian water law, while (2) “capture” may apply in certain instances to groundwater, or (3) balance allocation principles control where states adopt the Restatement (Second) of Torts section 858.[17] Reasonable use typically controls in the Great Lakes watershed, which means riparian landowners can use the water “in connection with the land” so long as this does not unreasonably interfere with use by other riparian landowners.[18]

But what constitutes “reasonable use?” Many courts have historically required a “natural flow” standard that requires a user not impair flows or water levels.[19] Reasonable use therefore typically has not permitted out-of-watershed diversions.[20] However, many courts in recent years have alarmed water conservation advocates by adopting a much more diversion-friendly “reasonable use balancing test,” which weighs harms against the social and economic benefits of water diversions and extraction, or the Restatement (Second) of Torts section 858.[21] A “reasonable use balancing test” allows use by a consumer of water such as a bottling plant, farmer, or manufacturer to extend beyond what may diminish flows or water levels provided the consumption results in social or economic benefits.[22] Water use may almost always result in a tangible social or economic benefit, notably jobs. A “reasonable use balancing test” diminishes consideration of environmental impact by giving weight to additional factors. Courts may apply the reasonable use doctrine found in riparian law where a public trust exists and therefore further define the limits of potential protections public trust doctrine can offer.

2. Public trust agreements may offer remedies to the faults of international agreements and domestic laws governing water use in the Great Lakes.

Recognition of the public trust doctrine as a background principle offers a remedy to one of the major faults of international agreements and domestic laws governing water use in the Great Lakes region – managing competing uses and the threat of diversions. The Great Lakes generally do not lack for legal protection as a variety of international treaties, national laws, interstate compacts, and other legal instruments govern the use of water in the watershed. The Boundary Waters Treaty along with the Great Lakes Compact control use and protect the waters of the Great Lakes. However, international laws such as the Great Lakes Compact, GATT, and NAFTA read together with national laws may not sufficiently protect state interests in conservation of water resources. This section will examine how these international agreements may compromise or invalidate existing state-based constraints on the use of water.

A few of the provisions of the Great Lakes Compact, an international and interstate agreement between eight states of the United States and two Canadian provinces, create a floor as to the diversion of waters out of the watershed.[23] But that floor, when read in conjunction with the Commerce Clause, GATT, and NAFTA, is riddled with holes in the form of various ambiguous definitions and exceptions that open the door to the diversion of Great Lakes water. For example, the Great Lakes Compact explicitly forbids “diversions” of water out of the watershed subject to a narrow set of exceptions. One such exception is for water used to produce a “product” that an entity like a business would then transfer out of the watershed. Bottled water for instance may constitute such a product, though an attorney could make the purposive argument that the preceding sentences indicate the Compact drafters intended this to apply to agricultural products and manufacturers. Other exceptions ban bulk water transfers in containers exceeding 5.7 gallons, therefore exempting bottled water.

Once defined as a “product,” a question emerges whether the water has “entered the stream of commerce” and therefore implicated the Commerce Clause of the Constitution. A line of Supreme Court Commerce Clause cases beginning with Hughes v. Oklahoma and continuing with Sporhase v. Nebraska ex rel. Douglas struck down restrictions on the export of natural resources as impermissible discrimination in favor of state residents against non-state residents.[24] In Hughes, the Court held the state could not restrict the sale of minnows to state residents and prohibit the sale to non-state residents.[25] Similarly, the Court in Sporhase struck down restrictions on the export of water as discriminating against non-state residents in favor of state residents.[26]

Once in the “stream of commerce,” the Commerce Clause of the Constitution controls.[27] Any restrictions after the water “enters the stream of commerce” may violate the Commerce Clause.[28] But considerable ambiguity remains over when exactly the water has become an “article of commerce” and has “entered stream of commerce.”[29] Does water become a product or enter the stream of commerce when pumped from a groundwater spring or well into a truck for transport to a nearby bottling facility? What about when water runs through a pipeline to a bottling facility or a freighter fills a ballast tank? Courts may come out differently on these questions.

Once water becomes a “product,” international law questions emerge as well as to whether the United States and Canada can place restrictions on the export of water to other regions. The question of whether water constitutes an international trade commodity transcends national boundaries of both the United States and Canada. GATT specifically allows for trade in freshwater as a “good.”[30] NAFTA has more ambiguous language requiring that water first have “entered into commerce” before the treaty controls.[31] National and subnational governments retain a considerable measure of discretion in determining when water has “entered into commerce.”[32]

Many academics, commentators, and environmentalists worry global climate change or resource scarcity may eventually increase demand for natural resources and pressure the United States and Canada to allow such exports from the Great Lakes.[33] Such concerns may seem farfetched to many. However, one such scheme to export Great Lakes freshwater to China actually obtained a permit from the Canadian government in Ottawa and the ensuing public outcry mobilized political opposition to deny or revoke the permit. [34] International laws presently leave these anxieties unrealized though not entirely foreclosed.

Public trust doctrine may offer a number of conceptually distinct theories that would exempt water from international trade. First, public trust doctrine may allow equitable injunctive relief (i.e. preventing bottling of water). Once consumption diminished the public interest in the waters of the Great Lakes or exceeded “reasonable use,” equitable relief would limit further diversions and keep the water out of commerce thereby avoiding the thorny international law definitions. A second theory may examine whether the state holds the water itself in public trust. A state then would retain an unalienable ownership interest in the water that would prevent the water from “entering commerce” in a legal sense if not necessarily in fact. This theory would require further research outside the scope of this post to determine whether court precedents and common law tradition foreclose this approach.

3. The Boundary Waters Treaty of 1909 and other legal authorities should expressly recognize and supplement the controlling public trust doctrine and other common law traditions.

The IJC and other legal authorities should consider expressly recognizing the public trust doctrine as a background principle for distinguishing between public trust and private property rights in Great Lakes water resources. Competition between the United States and Canada as well as their subnational governments may eventually create pressure on any of these governments to go beyond sustainable consumption of Great Lakes water thereby resulting in a familiar “tragedy of the commons.”[35] The framework of an ideal law would create a uniform regulatory floor that forecloses the significant diversions that can result in a tragedy of the commons. The IJC has all the relevant state actors at the table and public trust principles may create just such a uniform regulatory floor and can control unforeseen legal developments.[36] Significantly, the IJC recognizes the desirability of a bilateral adoption of public trust principles as a backstop and cure for any legal defects in either the Boundary Waters Treaty or the Great Lakes Compact.[37] The IJC in a recent report specifically highlights the importance of integrating public trust principles into the agreement to “fill gaps and to deal with as yet undefined stresses likely to impact negatively on the Great Lakes in the future.”[38] Such farsighted stewardship allows the IJC to tout the Great Lakes watershed as a model for watersheds all over the world and, should the commission succeed in integrating public trust principles, will ensure that remains true for generations to come.[39]

[1] See James Olson, All Aboard: Navigating the Course for Universal Adoption of the Public Trust Doctrine, 15 Vt. J. Envt’l L. 135, 179 (2014). It’s unclear whether the IJC can “recognize” and apply a uniform public trust approach to enforcement and what legal force such an approach would have absent the explicit approval of the national and applicable subnational governments of the United States and Canada. But see id. (arguing for adoption of public trust principles by the IJC).

[2] See Keith Matheny, Shipping Great Lakes water? That’s California dreaming, Detroit Free Press, April 19, 2015, http://www.freep.com/story/news/local/2015/04/19/michigan-great-lakes-water/25965121/.

[3] See John Flesher, US – Canadian agency: More work needed to protect Great Lakes, GaylordHeraldTimes.com (Jan. 21, 2016, 2:38 PM), http://www.petoskeynews.com/gaylord/featured-ght/us-canadian-agency-more-work-needed-to-protect-great-lakes/article_2d8ffb2f-1205-5200-93e1-d911ef9ca062.html.

[4] James Olson, All Aboard: Navigating the Course for Universal Adoption of the Public Trust Doctrine, 15 Vt. J. Envtl. L. 135, 140 (2014).

[5] See, e.g., Tansy Hoskins, Cotton production linked to images of the dried up Aral Sea basin, The Guardian, Oct. 1, 2014, http://www.theguardian.com/sustainable-business/sustainable-fashion-blog/2014/oct/01/cotton-production-linked-to-images-of-the-dried-up-aral-sea-basin. National Geographic has consistently and extensively covered the deteriorating condition of the Aral Sea. See, e.g., Brian Clark Howard, Aral Sea’s Eastern Basin Is Dry for the First Time in 600 Years, National Geographic, Oct. 2, 2014, http://news.nationalgeographic.com/news/2014/10/141001-aral-sea-shrinking-drought-water-environment/. See also International Joint Commission Hails Progress by Governments in Protecting Great Lakes from Interbasin Transfers and Large-Scale Water Export, International Joint Commission (Jan. 19, 2016), http://www.ijc.org/en_/news?news_id=546&myID=1 (quoting U.S. Commissioner Dereth Glance saying, “There is no surplus Great Lakes water, as only one percent of the Great Lakes water supply is renewed each year by rainfall and snowmelt”).

[6] See, e.g., James Olson, Navigating the Great Lakes Compact: Water, Public Trust, and International Trade Agreements, 2006 Mich. St. L. Rev. 1103 (2006) (arguing both domestic Dormant Commerce Clause jurisprudence and international agreements such as GATT and NAFTA may impair water conservation where water “enters commerce” as a “product” as defined within the treaty language.

[7] See, e.g., James Olson, All Aboard: Navigating the Course for Universal Adoption of the Public Trust Doctrine, 15 Vt. J. Envt’l L. 135 (2014).

[8] See John G. Sprankling and Raymond R. Coletta, Property: A Contemporary Approach 950, 957 (2d ed. 2012) (citing Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992)); Michael C. Blumm and Lucus Ritchie, Lucas’s Unlikely Legacy: The Rise of Background Principles as Categorical Takings Defenses, 29 Harv. Envtl. L. Rev. 321 (2005).

[9] See Michael C. Blumm and Lucus Ritchie, Lucas’s Unlikely Legacy: The Rise of Background Principles as Categorical Takings Defenses, 29 Harv. Envtl. L. Rev. 321, 322 (2005).

[10] See, e.g., Illinois Central Railroad Co. v. Illinois, 146 U.S. 387 (1892).

[11] See James Olson, All Aboard: Navigating the Course for Universal Adoption of the Public Trust Doctrine, 15 Vt. J. Envtl. L. 135, 151 (2014).

[12] James Olson, Navigating the Great Lakes Compact: Water, Public Trust, and International Trade Agreements, 2006 Mich. St. L. Rev. 1103, 1115 (2006) (outlining five substantive standards considered in varying jurisdictions).

[13] See James Olson, All Aboard: Navigating the Course for Universal Adoption of the Public Trust Doctrine, 15 Vt. J. Envtl. L. 135, 148 (2014). The courts of many states find the very concept of navigability malleable. See Michael Blumm, The Public Trust Doctrine and Private Property: The Accommodation Principle, 27 Pace Envt’l L. R. 649, 657 (2010) (citing Mont. Coal. for Stream Access v. Curran, 682 P.2d 163, 171 (Mont. 1984); State v. McIlroy, 595 S.W.2d 659 (Ark. 1980); Parks v. Cooper, 676 N.W.2d 823 (S.D. 2004)). Other states by statute extend the public trust even to non-navigable waterways. See James Olson, Navigating the Great Lakes Compact: Water, Public Trust, and International Trade Agreements, 2006 Mich. St. L. Rev. 1103, 1114, n.64 (2006) (citing Great Lakes Preservation, Mich. Comp. Laws § 324.32701, et seq. (2007); New Jersey, N.J. Stat. Ann. § 58:11A-2 (West 2006); and Delaware, Del. Code Ann. tit. 7, § 6001 (2001)). See also Michael C. Blumm, The Public Trust Doctrine and Private Property: The Accommodation Principle, 27 Pace Envt’l L. R. 649, 657, n.32, n.33, n.34 (2010) (listing examples applying public trust to non-navigable waterways and groundwater in California, Vermont, and the Great Lakes Compact). Many states define the extent and scope of the public trust doctrine based on the high-water mark. See, e.g., Revell v. People, 52 N.E. 1052, 1058, 1060 (Ill. 1898)). However, states differ in the how and who determines what constitutes high-water. Compare Revell v. People, 52 N.E. 1052, 1058, 1060 (Ill. 1898) (holding the Illinois Supreme Court sets the high-water mark) and Glass v. Goeckel, 703 N.W.2d 58, 71 (Mich. 2005) (adopting high-watermark from common law of the sea as “the point on the bank or shore up to which the presence and action of water is so continuous as to leave a distinctive mark”) with Ind. Admin. Code 1-1-26(2) (1995) (defining high-water by statute as 581.5 feet though using a different test for inland lakes). Courts in the Great Lakes have not decided the question of whether public trust doctrine applies to groundwater though many state statutes have declared groundwater a public resource held in trust by the state. See James Olson, Navigating the Great Lakes Compact: Water, Public Trust, and International Trade Agreements, 2006 Mich. St. L. Rev. 1103, 1114, n.64 (2006) (citing Great Lakes Preservation, Mich. Comp. Laws § 324.32701, et seq. (2007); New Jersey, N.J. Stat. Ann. § 58:11A-2 (West 2006); and Delaware, Del. Code Ann. tit. 7, § 6001 (2001)). A number of states recognize exceptions to the public trust doctrine allowing small scale privatization of trust resources. See Michael C. Blumm, The Public Trust Doctrine and Private Property: The Accommodation Principle, 27 Pace Envt’l L. R. 649, 660-62 (2010). States therefore can exercise considerable discretion in defining the scope and protection of the public trust doctrine.

[14] See James Olson, Navigating the Great Lakes Compact: Water, Public Trust, and International Trade Agreements, 2006 Mich. St. L. Rev. 1103, 1114, n.64 (2006) (citing Great Lakes Preservation, Mich. Comp. Laws § 324.32701, et seq. (2007); New Jersey, N.J. Stat. Ann. § 58:11A-2 (West 2006); and Delaware, Del. Code Ann. tit. 7, § 6001 (2001)).

[15] See Michael C. Blumm, The Public Trust Doctrine and Private Property: The Accommodation Principle, 27 Pace Envt’l L. R. 649, 660-62 (2010).

[16] See James Olson, Navigating the Great Lakes Compact: Water, Public Trust, and International Trade Agreements, 2006 Mich. St. L. Rev. 1103, 1116 (2006).

[17] Id.

[18] Id. at 1116-17.

[19] Id. at 1117-18.

[20] Id. at 1117.

[21] Id. at 1119.

[22] Id.

[23] Id. at n.141 (citing the Compact’s intention to allow states to retain the right to impose more stringent requirements).

[24] Id. at 1111-12.

[25] Id.

[26] Id.

[27] Id.

[28] Id.

[29] Id. at 1111-12, 1124, 1126-28.

[30] Id. at 1123.

[31] Id.

[32] Id. at 1123-4.

[33] See generally James Olson, All Aboard: Navigating the Course for Universal Adoption of the Public Trust Doctrine, 15 Vt. J. Envt’l L. 135 (2014); Cynthia Baumann, Water Wars: Canada’s Upstream Battle to Ban Bulk Water Export, 10 Minn. J. Global Trade 109 (2001).

[34] Jim Nichols, Canadian Firm Drops Plan to Sell Lake Water, Cleveland Plain Dealer, Dec. 1, 1998, at 4B, available at 1998 WLNR 7113310.

[35] A “commons” refers to a community owned field often found in the middle of a medieval or early modern settlement typically used on market days or for grazing livestock. A “tragedy of the commons” results from overexploitation or overconsumption of such a community owned resource by economically rational actors maximizing their personal well-being. Community member wants to extract the most personal value from the commons. Each livestock owner for instance wants to extract the most personal value by grazing the most cattle on the commons. This results in overgrazing and ultimately reduces the overall value of the commons.

[36] Protection of the Waters of the Great Lakes: 2015 Review of the Recommendations from the February 2000 Report, Report to the Governments of Canada and the United States by the International Joint Commission 6-7 (2015), available at http://ijc.org/files/tinymce/uploaded/Publications/IJC_2015_Review_of_the_Recommendations_of_the_PWGL_January_2016.pdf.

[37] Id. at 6-7.

[38] Id. at 7.

[39] International Joint Commission Hails Progress by Governments in Protecting Great Lakes from Interbasin Transfers and Large-Scale Water Export, International Joint Commission, (Jan. 19, 2016), http://www.ijc.org/en_/news?news_id=546&myID=1.

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