The Michigan Chamber reaffirms its support for a comprehensive land use policy of both urban investment and a market incentive approach to growth management that protects Michigan's natural resources.

As the year 2000 legislative session begins, we encourage the Michigan Legislature to enact two promising land use initiatives that are consistent with Michigan Chamber policy:

Brownfield Redevelopment Financing Amendments - These changes are intended to improve the administrative and financial functions of Brownfield Redevelopment Authorities and expand the availability of tax incentives for business to help clean up contaminated sites and rehabilitate distressed areas.

A Model Land Preservation Plat - This proposed legislation would create market incentives to streamline the approval process for developments, while preserving environmentally sensitive land and open space. It would create options to expedite the approval process and award bonus density to those developments that are environmentally sound.

Background

The Michigan Legislature continues to consider land use legislation. The chair of a House Republican work group on land use issues hopes to have legislation introduced before the Legislature leaves for summer break and approved before the end of 2000. This land use work group panel is looking at a broad range of topics related to land use: suburban sprawl, urban redevelopment, incentives to use existing infrastructure, coordinated planning, preserving farm land, and proposals for dealing with mobile home expansion. Among the potential legislative changes are:

• Expand "eligible activities" to include infrastructure improvements, demolition (that is not a response activity), lead or asbestos abatement, and/or administrative and operating activities of an authority;
• Provide for the "eligible property" to include property in a distressed area that is functionally obsolete or blighted; or commercial, industrial, or residential property that is incurably functionally obsolete;
• Extend the eligible tax years and increase the cap for the Single Business Tax (SBT) credit; and
• Increase the number of SBT credit projects per taxpayer while including site improvements as an "eligible investment."

The Michigan Chamber is involved with a working group to draft model legislation to create an optional platting process with incentives for land preservation measures. This group included representatives from Michigan Association of Realtors, Michigan Farm Bureau, Michigan Association of Home Builders, Detroit Renaissance, Michigan United Conservation Club, Michigan Environmental Council, Public Sector Consultants, Southeast Michigan Council of Governments, Tilton and Associates, and local government officials. The following summarizes the proposed legislation.

To qualify a plat as a "land preservation plat," the proprietor must first prepare a site inventory map identifying such features as endangered species habitat, steep slopes, woodlots, farmland, and dunes, whether regulated or not. To warrant the incentives, the subdivision must then include measures to protect these features under three basic options:

The plat may also qualify by using a minimum number (6 of 10) of land preservation options within the platted area. For example, the easements would create buffers of 450 feet from farmland, 80 feet from water courses, and 50 feet from wetlands, lakes, and ponds; development may be restricted to protect viewsheds, or prohibit development of woodlots, steep slopes, farmland, shorelands, and unregulated dunes, or open space.  The last item -- open space -- is included with the understanding that many areas in Michigan simply lack features worthy of preservation. They include not only the conservation easement available by a minimum acreage, but also such measures as roads with paved surfaces no wider than 24 feet, use of existing public sewer and water systems, prohibition of impervious surface greater than 50%, or development of mixed uses.

Under this method, a plat may qualify as a land preservation plat by the dedication of a conservation easement creating 50% open space within the plat.  That acreage can be within the plat, or outside the plat in areas identified by a county inventory of natural features. Preservation of these areas is by conservation easement.

In the alternative, a conservation easement preserving farmland equal to that same acreage, identified on a county inventory within the same county, would also qualify for the incentives. This would be accomplished by trading acreage within the county and preserving features identified in a county inventory with a conservation easement.

The incentives offered to the developer are two-fold. First, the plat receives an expedited review before a county plat board and concurrent review by all approving authorities.  This streamlines a burdensome process saving time and money. Second, the residential development density may be four units per acre, so long as the land is zoned for residential use. Density is stated as a straight formula. Over the last few years, despite the education efforts of planners, many local governments have still required larger and larger lot sizes for single-family homes. This has increased the unnecessary use of land and dramatically increased the cost of home ownership. 

Land use subjects are wide ranging and diverse. The regulatory impact is real to all sectors of the Michigan business community and overall economic competitiveness, particularly natural resource based industries like tourism, mining, forestry, and resource based manufacturing.

Recognizing the emergence of quality of life and environmental issues and their interdependent relationship with the economic health and continued growth of Michigan's vibrant economy, the Michigan Chamber has been strongly advocating for the business community to play a leadership role in the policy debate on these issues. We continue to support legislation to address concerns about "urban sprawl" by encouraging urban revitalization and incentives for local units of government to streamline the planning process, cooperate on regional planning, and to provide shared services that reduce cost and improve quality. In evaluating legislative initiatives; however, the Michigan Chamber steadfastly defends private property rights and rejects proposals to impose new taxes or create additional layers of government.

The Michigan Chamber of Commerce supports the recommendations from the Michigan Environmental Science Board outlining new protections for the Departments of Environmental Quality (DEQ) and Natural Resources (DNR) pertaining to directional drilling for oil and gas underneath the Great Lakes, and urges the DEQ and DNR Commission to proceed with environmentally safe oil and gas drilling.  Furthermore, the Michigan Chamber does not support offshore drilling in the Great Lakes.

Background

Directional drilling for oil and gas under the Michigan portion of the Great Lakes has been practiced safely for more than 20 years under the administrations of Governors  Milliken, Blanchard, and Engler. Also, Canada has been drilling for natural gas under Lake Erie for nearly 90 years with more than 2,200 wells since 1913. 

In August 1997, Governor Engler asked the Michigan Environmental Science Board to evaluate the issue of directional drilling underneath the Great Lakes. The Science Board convened a team of independent experts including scientists from the University of Michigan, Michigan State University and Western Michigan University to look at the potential risks of contamination to Great Lakes waters, the potential impacts to shoreline areas, and the overall adequacy of state regulations. The blue-ribbon panel concluded directional drilling poses virtually no risk to the Great Lakes. However, the Science Board did issue 17 recommendations to address the environmental, social, and aesthetic impacts on shoreline areas. These recommendations include an adequate set-back from the lake; an outright ban on locating wells in unique environmental areas; a process that includes local input on land use issues to assure that any new development is consistent with existing land uses; and allowing wells only where existing infrastructure of pipelines and roads already exists.

Directional drilling is a method of drilling for oil and gas that leaves a small environmental footprint in order to protect wetlands, lakes, rivers, streams, unique recreational areas, shorelines, and other sensitive areas. Because of the environmental sensitivity and value of these areas, it is necessary to eliminate even the possibility of contamination. Under directional drilling, the temporary drilling platform and the long-term pumping station are located thousands of feet from the area needing protection. The drilling itself is done at an angle. The actual oil and gas resources are separated from the sensitive resource by thousands of feet of impermeable rock.

Michigan is the 10th largest producer for natural gas and the 18th for oil in the United States. Oil and natural gas production contributes over $600 million per year to Michigan's economy. Production involves over 268 companies and individuals and is estimated to employ nearly 10,000.  Nearly 4,000 crude and natural gas wells have been directionally drilled in Michigan. No incident has ever been reported regarding environmental damage to the Great Lakes from these wells.  Michigan oil and gas companies have also contributed over $500 million to the state's Natural Resources Trust Fund to fund the acquisition and the development of over 1,200 outdoor recreational projects. Oil production has declined since the mid-1980s, and natural gas production has nearly doubled over the same period. While resource pockets are dispersed, Michigan's oil and gas production is concentrated in the northwest portion of the lower peninsula, particularly Grand Traverse, Kalkaska, and Manistee Counties.

Opponents of the Michigan Environmental Science Board's recommendations believe the benefits from additional oil and natural gas production are not worth the environmental risk. They believe the reserves of oil and natural gas are so paltry that we would be better off focusing on fuel-efficient technologies, electric vehicles, and conservation to meet our future energy demands. The Michigan Legislature rejected an effort to ban directional drilling for another year. At the federal level, Congressman Bart Stupak (D-Menominee) introduced House Resolution 1302 to prohibit drilling under the Lakes. While a version of the measure banning the U.S. Army Corps of Engineers from issuing permits passed the U.S. House, federal action in not likely. In addition, the State of Michigan's permitting process covers the on-shore facilities used in directional drilling. Lt. Governor Dick Posthumus also shares the view that potential costs outweigh the economic benefits from production. 

The Michigan Chamber's Environmental Quality Committee heard presentations from advocates and opponents of directional drilling. After a careful review, the Environmental Quality Committee agrees with the Michigan Environmental Science Board.

The long history of directional drilling under the Great Lakes - and bodies of water such as inland lakes, rivers, and wetlands - demonstrates conclusively that direction drilling is a safe way to protect unique natural resources. With virtually no risk of environmental contamination and the additional beneficial development guidelines from the Science Board, opponents stand on an almost entirely NIMBY argument or that the amount of oil and gas supplies under the lakes would make little difference to consumers.

In response, no one can be certain how much oil and natural gas exists under the Great Lakes, but Michigan should not be insulated from the national energy picture and any amount of potential production is significant. For example, two existing wells in Lake Huron alone produce enough natural gas to heat almost 4,000 homes for the entire year. Overall, the Environmental Quality Committee believes Michigan's tourism, natural resource and recreational based industries will benefit from responsible resource exploration and production. 

The Michigan Chamber of Commerce supports policy initiatives encouraging the good stewardship of Michigan's environment and natural resources including conservation, recycling, litter control, and solid waste management. Such approaches should be based upon sound science with a supporting cost/benefit analysis.

The Michigan Chamber urges policymakers to consider comprehensive recycling solutions focused on keeping Michigan beautiful. These policy alternatives could include:

• Developing a comprehensive statewide strategy of recycling and litter control measures - education programs, curb side recycling, redemption centers, roadside litter control, and recreational and park recycling programs that could achieve cost effective results;
• Conducting a cost/benefit analysis of a comprehensive statewide residential recycling program versus proposed legislation expanding the bottle deposit law;
• Jointly conducting an objective litter study and solid waste analysis with the participation of State Government, the business community, and the Michigan United Conservation Clubs (MUCC);
• Supporting legislation to strengthen penalties for littering and provide for more vigorous enforcement; 
• Improving the public health, food safety and convenience of the container handling system; and
• Evaluating the effectiveness of tax incentives to cover the cost of a comprehensive recycling program to spur investment, and cover some of the expenses in new material handling systems.

Michigan is one of ten states with a bottle-deposit law. The original bottle deposit system was created 23 years ago with a voter approved ballot initiative in November of 1976. In 1989, after the system had been in place for 11 years, the law was revised by the Michigan Legislature to expand the 10-cent deposit to wine coolers and mixed spirits. In addition, the Legislature allowed 25 percent of the unclaimed deposits to go to distributors to cover their costs and the remaining 75 percent was directed to funding environmental programs. Since the change, over $81 million from unclaimed deposits have been directed towards improving the environment.

However, overall recycling rates in Michigan have dropped. In a recent study released by the Michigan Recycling Coalition, the state's 17.6 percent recycling rate is far less than states like Wisconsin and Minnesota. Those states established a comprehensive recycling system over a decade ago. Michigan is well below the Great Lakes states' average of 26 percent. The study found the reasons for Michigan's low recycling rate varied, including the lack of curbside programs, low landfill fees, and declining markets for recycled materials.  It is also clear that the most profitable recycled material, aluminum, is diverted from the waste stream by the current bottle deposit program.

Currently, House Bill 4096 and Senate Bill 233 are before the Michigan Legislature to expand Michigan's bottle deposit system to include bottle and cans from water, tea, juices and sport drinks. As introduced, this would include nearly all beverage containers one gallon-size or less. Steel cans, orange juice plastic jugs, apple juice plastic jars, and tomato juice containers are examples of commodities which would be subject to the 10-cent deposit. It is also possible for groups like the Michigan United Conservation Clubs (MUCC) to once again collect enough signatures to put a ballot question relating to expansion of the deposit law before voters.

Proponents of expansion of the deposit law contend with the now widespread consumption of drinks like water, tea, and sport drinks, the amount of litter is again increasing. The most recent Lake Michigan Beach Federation beach cleanup found that plastic beverage bottles and metal beverage cans left on Michigan beaches doubled over the previous year and the number of glass bottles found increased by 27 percent.

Opponents argue that expansion of the bottle deposit law has significant economic costs with little or no evidence of environmental gain. To date, the only rationale being offered by proponents for expanding Michigan's bottle bill is based on assumptions - i.e. consumers are drinking more non-carbonated beverages. Therefore, because these containers are not subject to a deposit, consumers are excessively littering and land filling them. Opponents believe expansion sounds simple, but it presents a whole set of complex issues that may harm the current system and bring unreasonable additional costs on job providers. 

Specifically, they cite the increased cost to consumers who would have to pay higher prices for daily staples - water and juices. While prices will increase, the additional costs on employers are significant, ranging from $15,000-$20,000 for each reverse vending machine, increased labor and sanitation requirements, space, and supplies. Grocers express concern about maintaining food safety, while having to process dirty bottles, essentially garbage, in the same store.

The Michigan Chamber's Environmental Quality Committee would support a program that meets our environmental objectives as well as the needs of businesses and consumers. Because of the economic uncertainty and lack of scientific evidence showing a demonstrated need for expansion, we believe a bottle bill expansion is not merited at this time. However, the Michigan Chamber would support a litter study and a comprehensive solid waste analysis, including the percentage of these new containers that are already being recycled through curbside and other voluntary recycling efforts. If these studies and surveys demonstrate that the empty containers of a particular beverage not covered by the current bottle deposit system present a substantial problem, then all parties should discuss the best method for addressing the problem in the most cost effective and efficient manner. At the present time, we believe the most environmental benefits can be attained through a renewed effort on comprehensive recycling and strengthening litter control statutes.

The Michigan Chamber of Commerce supports the establishment of a permanent repository for high-level nuclear waste at Yucca Mountain, Nevada as recommended by the U.S. Department of Energy and the U.S. Nuclear Regulatory Commission (NRC).

Background

Over the past four decades, nuclear power has become a significant source for the nation's electricity production. Michigan has three active plants, accounting for about 18 percent of the state's electricity generation: Donald C. Cook Facility in Bridgman (American Electric Power), Palisades in South Haven (Consumers Energy) and Fermi-2 in Monroe (Detroit Edison). Consumers Energy also has one plant at Big Rock Point near Charlevoix in the process of decommissioning.

Since the earliest days of nuclear power, one great dilemma associated with nuclear technology is how to deal with the waste materials produced. Storing 40,000 tons of used nuclear fuel in 131 different storage sites across 39 states creates many health and safety concerns for local communities. High-level radioactive waste material demands exceptional care in all facets of its storage, transportation and disposal. In Michigan, all four nuclear facilities are using spent fuel pools, or large reinforced containers filled with water to store used fuel assemblies and to absorb heat from used rods. Two locations are also using self-contained dry cask storage units for already cooled fuel assemblies.

Even before September 11, 2001, there was a growing sense of urgency with respect to the need for consolidating spent nuclear fuel and defense material at an underground repository. The issue is more than safety, it is security.

In 1982, Congress passed the Nuclear Waste Policy Act. The legislation requires the U.S. Department of Energy to build a permanent storage facility for high-level nuclear waste. The act includes a specific timetable to identify a suitable location and develop the site for holding nuclear waste. The costs for development are to be paid from a fee assessed on all nuclear energy produced. In accordance with the federal act, Michigan electric customers have already paid $420 million and continue to contribute to the federal fund for a waste facility's construction.

The safest and most secure option to store used nuclear fuel is in one permanent central and desolate location as opposed to many temporary sites in populated regions. After more than twenty years of research, the U.S. Department of Energy released a favorable site evaluation report for spent fuel storage at Yucca Mountain, Nevada in August 2001. The site was recommended to President George W. Bush, who approved the Yucca Mountain site in February 2002. Nevada has sixty days to oppose the development of a nuclear waste storage facility in that state. On April 8, 2002, Nevada's Governor Kenny Guinn officially opposed President Bush's site recommendation. Congress now has the ability to override Nevada's objections with a simple majority vote.

After 20 years and nearly $7 billion of scientific investigation, there is adequate evidence that Yucca Mountain is a suitable site for a permanent repository subject to the NRC licensing.

Currently, no other storage sites are being considered. If approved, Yucca Mountain site will be operational in 2010 at the earliest. If not approved, the temporary storage sites currently used across the nation, including the four plant locations in Michigan, will become de facto permanent storage sites.

The Michigan Chamber of Commerce supports the proposed amendment to the Michigan Constitution of 1963 sponsored by the state legislature under Senate Joint Resolution T that will be on the August 6, 2002 statewide primary ballot for voter approval.

The proposed amendment would amend the state Constitution to increase the funding available for conservation purposes from the Michigan Natural Resources Trust Fund.

Background

Since its creation in 1976, the Michigan Natural Resources Trust Fund (originally known as the Michigan Land Trust) has been the principal source of state funding for conservation and outdoor recreation projects.

Revenue for the trust fund is derived from the sale of oil, gas and mineral leases and royalties from oil, gas and mineral extractions on state-owned land.  According to the state Constitution (Article 9, Section 35), the interest and earnings of the trust fund are to be expended for “the acquisition of land or rights in land for recreational uses or protection of the land because of its environmental importance or its scenic beauty, (or) for the development of public recreational facilities...”

The trust fund is a critically important tool for conservation in Michigan and has played a major role in key Nature Conservancy projects, including a recent grant to acquire more than 6,000 acres of high priority conservation land at the tip of Michigan’s Keweenaw Peninsula. State trust funds have gained about 5 to 7 percent each year, and can do better under proper management.

Senate Joint Resolution T would enhance and preserve the state’s ability to protect Michigan’s unique natural places by amending the Constitution to make the following changes:

• Raise the overall cap on the trust fund from $400 million to $500 million.   
• Allow for prudently investing the trust fund balance to achieve higher earnings. Revenue available for expenditures could be increased substantially by giving the state Treasurer additional investment flexibility.
• Remove the $200 million oil and gas appropriation threshold. The Constitution currently stipulates that when the trust fund’s balance exceeds $200 million, as it is projected to do next year, only interest and earnings will be available for grant making.

Since its inception 25 years ago, the Natural Resource Trust Fund has spent $537 million on over 1,200 state and local recreational projects. These expenditures are important to maintaining the state’s vibrant tourism economy. Tourism accounts for 350,000 jobs and nearly $12 billion in economic activity each year. The expenditures from the trust fund on recreational uses and the protection of land also enhance Michigan’s overall quality of life - an increasingly important factor in business and personal location decisions.

In addition to the Natural Resources Trust Fund, the proposed constitutional amendment would allow the state treasurer to invest the funds from other trust funds including: the Non‑Game Fish and Wildlife Fund, Michigan Civilian Conservation Corps Fund, the Game Fish Protection Trust Fund, and the state Veteran’s and Children’s Protection Trust Funds.

The Michigan Chamber of Commerce supports the Great Lakes Water Quality bond initiative as approved by the state legislature and appearing before the voters in the November 5, 2002 general election.

Background

The proposal will authorize the state to issue $1 billion in general obligation bonds to update and repair the state’s sewer infrastructure. The proposal should help to improve water quality throughout the state. However, the financing of the program will be costly to the taxpayers of Michigan. If approved by the voters, efforts need to be taken to ensure that this proposal will provide a maximum return on investment.

Sewage entering into the waterways is one of the greatest threats to the overall environmental and economic viability of Michigan’s lakes and rivers. Raw sewage containing toxic chemicals, human waste, pesticides and detergents can pose both human and environmental threats. Recent beach closures and fish advisories have highlighted this problem.

Combined sewer overflows and failing septic systems have been major culprits of allowing sewage to enter into our waterways. Combined sewers typically work well under normal conditions, but during periods of high rains or heavy snowmelt, the systems overflow, often flooding basements and entering into Michigan’s waterways. Septic systems that are not installed properly or exceed their life cycle pose a direct risk to surface and ground waters.

In 1988, Michigan established the State Revolving Loan Fund (SRF) to allow the state to receive federal Clean Water Act dollars designed to reduce sewage related water pollution. The SRF provides loans to local governments at lower than market rates for capital projects to update and improve sewer infrastructure. Projects that can be funded through this program include wastewater treatment plant upgrades, combined sewer overflow abatement, construction of new sewers to reduce existing pollution, and non-point source pollution measures.

Since its inception in 1988, the SRF has been capitalized with over $750 million in federal funds and over $150 million in state match funds. This has allowed the state to make over $1 billion in loans for 184 projects statewide. Currently, the SRF loans approximately $165 million annually. As Michigan’s sewage infrastructure continues to age, it is creating a growing list of communities needing dollars to upgrade their wastewater systems. According to a recent study by Public Sector Consultants, an additional $125 million annually is needed to meet the current and near future needs.

HB 4625 and its companion bills, if approved by the voters, would authorize the state to issue $1 billion in general obligation bonds to update and repair sewer systems. The bills would specifically:

• Allow the state to appropriate up to $100 million annually to finance sewage treatment works projects, storm water projects and non-point source projects.
• Authorize 90% of the funds to be deposited into the SRF to provide low-interest loans to communities to upgrade failing sewer systems.
• Authorize 10% of the funds to be deposited into the newly created Strategic Water Quality Fund designed to address growing water quality concerns, including the upgrade or replacement of failing on-site septic systems. 

The Great Lakes and its surrounding water bodies play a crucial role in Michigan’s continued economic viability. The lakes drive a significant portion of our region’s economy. The $15 million tourism industry, for example, depends on water related activities including fishing, swimming and boating. As a result, the business community has a direct interest in maintaining the overall quality of the Great Lakes watershed and the resources dependent on them.

Fiscal Implications

According to estimates by the Senate Fiscal Agency, the bonds will cost $1.6 billion to pay off over a 30-year period. The debt payment would start at $8 million a year and increase to $80 million by the tenth year. The debt service would be paid directly out of the state’s General Fund. According to a written response from the bill sponsor of HB 4625, there have been no direct plans established to pay for this debt. All future proposed plans to finance the debt need to be properly evaluated.

To date the State Revolving Loan Fund has been financed by a 5 to 1 federal match. That means that for every $1 the state contributes, the federal government contributes $5. At this point, the federal government has not made a commitment to match our proposed $1 billion for sewer improvements.  In fact, given the uncertain budget situation in Washington, it is unlikely that match dollars will be provided. The lack of commitment from Washington may weaken the overall power of the bond.

Finally, the United States Senate Environment and Public Works Committee recently approved a measure mandating that all projects funded through State Revolving Loan Funds be required to pay “prevailing wages” in perpetuity. This proposed change is now headed to the full Senate. Additional requirements imposed by Washington - now or in the future - could dramatically increase the cost of sewer improvement projects, which could further weaken the buying power of the $1 billion sewer bond proposal. Efforts need to be undertaken to prevent Washington from damaging Michigan’s state revolving loan program.

EQ Committee Recommendation

The Chamber’s Environmental Quality Committee is recommending to the Board of Directors that Proposal 2-02 be supported. A majority of the committee members believe that this is an important measure that needs to be supported in order to help protect the water quality within the state of Michigan.

In June, the EQ committee heard a presentation by two members of Representative Bruce Patterson’s staff (the sponsor of the initiative) on the proposal. The committee members then each received a ballot with the proposed policy statement. Eleven members responded in support of the proposal, and three members suggested the Chamber remain neutral. Those suggesting the Chamber remain neutral had concerns about the cost and implementation of the program.

The Michigan Chamber of Commerce continues to support the goal of the Charter Annex of helping to protect, conserve, restore and improve the Great Lakes Basin for future generations.  The Chamber also believes that control of the Great Lakes should remain within the Great Lakes Basin. The current draft of the Annex contains some provisions the Chamber supports and other provisions we must oppose due to major concerns related to Michigan’s ability to utilize and manage water resources and its impact relating to retaining and attracting job providers.  Provided below are a list of major elements from the Annex and the position of the Michigan Chamber:

The Chamber Supports:

• Strict regulation of diversions of water to areas outside of the Great Lakes Basin.

Section 8.2 of the Compact provides an appropriate mechanism to regulate diversions. However, our support is predicated on the definition of diversion of water being a removal of water from the larger Great Lakes Basin and not from an individual lake basin to another lake basin as is the current definition.  This provision puts a unique and unfair burden on Michigan and the state’s ability to utilize and manage water resources. 

• An enhanced water reporting mechanism from all sectors, including public and private sources.

The Michigan Chamber urges that the reporting requirements imposed by Section 7.2 of the Compact be consistent with the existing state statutes.  In addition, reporting requirements imposed by the Great Lakes Basin Water Resources Council (herein referred to as the Regional Council) should not require additional paperwork or duplicative requirements.  The Regional Council should receive the reporting data directly from the individual states and not directly from an individual entity or organization other than the state. 

The Chamber Opposes:

•Language in the Annex authorizing the Regional Council to regulate Consumptive Uses and Withdrawals.

The Michigan Chamber believes that the Annex should provide broad latitude to the individual jurisdictions to regulate consumptive uses and withdrawals where necessary. Regulation of water withdrawals by the individual jurisdictions should be based on the four principles of the Annex to protect, conserve, restore, and improve the Great Lakes Basin. 

The Michigan Chamber has the following specific concerns related to withdrawals in the current draft:

A) Individual states should not have the ability to reject in-basin uses of water in jurisdictions outside of their own. 

Under the current draft, three states can band together to block an economic development project in another state.  The review of the Regional Council for 5 million gallon consumptive uses outlined by section 8.3 of the Compact, is wholly inappropriate and should be removed. In particular, such a requirement could endanger future food processing plants, chemical products, and electric power generation to name a few.   The combination of an uncertain decision-making process and time delays imposed by a Regional Council would make the Great Lakes region less desirable for job providers.

B) The Annex should not require individual states to regulate all withdrawals above 100,000 gallons per day.

The Michigan Chamber believes that Section 9.3 of the Compact should be stricken.  The Michigan Chamber could support language that would allow the individual jurisdictions to establish water use requirements based on the level of risk to the water resource. Such characteristics of risk may be associated with the type of aquatic system from which water is withdrawn, the location of withdrawal and/or time associated with water use.

C) The Annex must not impose new regulation on existing uses.

The Annex clearly states within its purpose in Directive #3 and Directive #6 that the management measures envisioned within the document are to apply to new or increased existing water withdrawals and water withdrawal capacity. The Annex Agreement reaches far beyond the scope by requiring existing users to meet “environmentally sound and economically feasible water conservation measures.” Further, the Compact language is silent in Section 9.3 as to the applicability of jurisdictional water management to new or increased withdrawals or to all withdrawals. 

D) There should not be a “reasonable use” test for the use of water.
 
Language contained in the Agreement that requires governments to determine what quantity of water use is “reasonable” establishes broad, boundless, new, and dictatorial authority and should be removed.  Under no circumstance should an authority be able to determine what water will be used for what purpose and in what quantities.  This condition is wholly unacceptable and represents a fundamental shift in riparian water rights throughout the basin. This provision of the Annex as written is in direct conflict with the language in Section 5.2, Section 2 that states: “Nothing contained in this Compact shall be construed as affecting or intending to affect or in any way to interfere with the law of the respective Signatory Parties relating to common law water rights.”

 
• Creation of new duplicative layers of unaccountable regional government.

The Michigan Chamber acknowledges that it may be appropriate to create a small professional staff to provide timely, accurate data and information to the Great Lakes Governors on issues relating to the Diversion of Great Lakes water.  However, the Chamber has numerous concerns with the structure of the Regional Council as proposed by the Compact:

A) The Regional Council should not be allowed to establish direct fees on users.

Language contained in section 3.6 of the Compact which allows the Regional Council to assess fees to water users should be modified or removed. Article IX Section 2 of the Michigan Constitution is clear “The power of taxation shall never be surrendered, suspended or contracted away”. The language as proposed in Section 3.6 of the compact violates the Michigan Constitution and constitutes an abridgement of state sovereignty. A preferred method would be to allow the Regional Body or Council to charge fees back to the individual states.  The states could then each determine how to pay for the services of the Regional Body.  This method would make the Council more accountable to the individual state governments. 

B) Individuals without proper legal standing should not be allowed to bring Civil Action before the Council.

The Michigan Chamber strongly opposes language contained in section 3.9 of the Compact under paragraph 4 that allows any aggrieved person to commence a civil action on a water user.  Only those with a legal standing should be allowed to commence a civil action. The Annex should not provide a mechanism for expanded civil action, create an expansion of standing, or provide expanded mechanisms for equitable relief.

C) The current draft of the Annex fails to accommodate and leverage existing environmental authorities and processes. 

Annex 2001 provisions must utilize, not duplicate nor supercede these protective instruments.  Within current drafts, the use of other environmental permit findings and demonstrations to establish that a project will not have adverse impacts is far from assured.  The Agreement states that such findings “could contribute to a demonstration of the lack of significant ecological impact.”  To avoid conflicts with other permit requirements, and to make Annex 2001 standards consistent with existing environmental policy, the findings that result from existing environmental permits must serve as sufficient demonstration of lack of adverse environmental impact. (Agreement Appendix 2, Sec. D).

Background

The policy was developed by a subcommittee composed of 15 member firms of the Chamber’s Environmental Quality Committee.  The subcommittee was broadly represented and included member firms from various industries including chemical, utility, automotive, and paper manufacturing as well as attorneys and environmental consultants. 

The Great Lakes Charter Annex is an agreement signed by all eight Great Lakes Governors as well as the Premiers of Ontario and Quebec in 2001.  The Agreement was established to provide a legal framework to protect the Great Lakes from outside diversion. From this Agreement the Charter Annex draft documents have been created. 

The current drafts of the Charter Annex are divided into two main documents, the Annex Agreement and Charter Compact. The Agreement is a good-faith agreement between the Great Lakes states and provinces. The Charter Compact on the other hand, if ratified by the states and approved by US Congress, would be a legally binding between the Great Lakes states. Currently the Annex documents are going through a 90-day public hearing process. Each of the Great Lake states and provinces are holding hearings within their respective jurisdictions.  In addition, there are two regional public meetings, one in United States and one in Canada. 

Upon completion of the public hearing process, the Great Lakes Governors and Premiers will reconvene and attempt to find unanimity of opinion on the documents. Ultimately, if all of the Great Lakes Governors sign the document, it will require action by each of the state legislatures to come into compliance with the Compact.  Once this happens, the United States Congress must ratify the Compact for it to have the force of law. At that point, the Compact will become legally binding between the Great Lakes states. However, the compact is not binding on the Canadian provinces.  The Canadian Provinces will be bound to a good-faith agreement.  To date, Congress has clearly shown its interest in having the states undertake such an effort as written in the most recent reauthorization of the Water Resource Development Act (WRDA):

(2) “to encourage the Great Lakes States, in consultation with the Provinces of Ontario and Quebec, to develop and implement a mechanism that provides a common conservation standard embodying the principles of water conservation and resource improvement for making decisions concerning the withdrawal and use of water from the Great Lakes Basin.”

In January of 2003, the Michigan Chamber Board of Directors approved policy relating to water use at the federal, state, and regional levels. The Board policy stated the following about Annex 2001:

“Michigan has long applied the reasonable use doctrine of riparian law to determine the appropriate use of water.  This doctrine allows the owner of property adjacent to a surface water body the right to use that water in a non-wasteful manner.  The resource improvement standard in the Annex should reflect riparian law by granting in-basin water users the right to use water.

In implementing the Annex, the Michigan Chamber advocates that a clear distinction be made between in-basin consumptive water use and out-of-basin water diversions. The resource improvement standard in the Annex must accommodate the allowance of safe, beneficial in-basin water use while providing a defensible resource-based mechanism that requires a higher standard for diversions that do not provide in-basin benefits.

The Michigan Chamber recognizes that water diversions could pose serious threats to the Great Lakes and therefore advocates for their strict regulation. However, the Annex must allow for the consumptive use of water within the basin. Water uses that add direct value to the economies of the Great Lakes region must be considered consumptive uses and not diversions. In allowing for the consumptive use of water, the Annex must not impose a burdensome application process.”

The purpose of this policy proposal is to revise and update the statement approved by the Board of Directors in January 2003.

The Michigan Chamber of Commerce supports policy initiatives encouraging the good stewardship of Michigan’s environment and natural resources including conservation, recycling, litter control, and solid waste management. As such, the Michigan Chamber supports the development of a comprehensive statewide recycling program.

To achieve these goals, the Michigan Chamber endorses the following:

• Support amending the Michigan Constitution to establish a recycling fee of not more than one cent per sales transaction on tangible goods sold at retail. Such a fee should not be charged to consumer or business services, business to business transactions, goods sold from vending machines, motor fuel, heating oil, prescription drugs sold for human use, or utilities.
• Support creating a Michigan Recycling Trust Fund within the Constitution. Money in the fund could only be appropriated to support recycling, waste diversion, and litter reduction programs.
• This Constitutional Amendment must contain a provision that automatically repeals the one-cent recycling fee if the Bottle Deposit law is expanded.
• Support legislation that establishes the collection of data and the creation of quantifiable goals and measures to determine Michigan’s success at recycling.
• Support legislation that ensures all recycling funds appropriated to local units of government must be used to meet measurable recycling goals and objectives. Local units of government that fail to meet established goals should not be eligible for additional funding.
• Support legislation that ensures that recycling funds be made available to private sector entities to improve recycling. This may include grants, tax credits, or tax relief to encourage the purchase and use of recycling equipment and infrastructure.
• Prohibit the use of state and local recycling funds by local government to compete against established private sector waste and recycling enterprises.

Background

House Joint Resolution O is a proposed Constitutional Amendment sponsored by State Representative Geoff Hansen (R-Hart) that would levy a one-cent surcharge on the sale of consumable goods (proposal attached). Funds collected from this surcharge would be used to support recycling in Michigan. The legislation is supported by Michigan Recycling Partnership – a coalition with members in the soft drink, beverage container, convenience store, and grocery store industries. According to supporters, it is estimated this plan will generate between $40 million and $45 million annually in new funds for recycling.

Board Policy on Recycling

On September 12, 2001, the Michigan Chamber Board of Directors approved a policy supporting the development of Comprehensive Recycling in Michigan. The policy called for a comprehensive, cost-effective statewide recycling and litter control program that includes curbside recycling, redemption centers, roadside litter control, and recreational and park recycling programs At that time the Board did not endorse a funding source to achieve this goal.

2005-06 Legislative Priorities

Priorities approved by the Board on Solid Waste and Recycling call for opposition to both expansion of the bottle deposit law and raising the state’s garbage tax. The priorities related to the bottle bill state that “expansion of the bottle deposit law would have a negative impact on Michigan’s job providers.” Raising garbage taxes would require commercial and industrial sectors to dramatically subsidize residential recycling while providing minimal benefit to the businesses themselves.

Chamber Committee Review of Recycling Fee

Because this proposal dealt with both recycling and taxation issues, it was subject to review by both the Michigan Chamber’s Tax Policy and Environmental Quality (EQ) committees. The idea was originally presented to the EQ Committee on May 25, 2005. The EQ Committee voted to support the idea in concept and formed a subcommittee to further study the proposal. On September 1, 2005 the Tax Policy Committee heard a presentation from Rep. Hansen on the plan. The Tax Policy Committee also voted to form a subcommittee. A joint subcommittee was then formed with members of both committees; the subcommittee met three times and recommended that supporters of the plan complete both a legal and policy analysis on the proposal.

The Michigan Recycling Partnership hired Bill Rustem, of Public Sector Consultants, to complete the policy analysis and Arthur Siegal, of Jaffe, Raitt, Heuer & Weiss, to complete the legal analysis of the plan. The findings of the two analyses were favorable towards the proposal, although not all members the EQ and Tax committees agreed with the findings.

On February 28, 2006, a majority of the Chamber Tax Policy Committee voted to be neutral on the plan due to a lack of consensus among committee members. Supporters of the plan on the committee argued that this plan is a viable method to fund recycling. Other members of the committee were concerned that this proposal is not actually a fee but rather a tax. In the end a majority of the committee members voted to take a neutral position on the plan.

On the following day, March 1, 2006, the EQ Committee voted to support the plan. The majority of EQ Committee members felt the one-penny fee was the best alternative to counter bottle bill expansion and garbage tax proposals. There were some on the committee that voted to be neutral or oppose the plan. Those members were concerned about a lack of quantifiable goals and objectives.

Bottle Deposit Law

Michigan is one of 10 states with a bottle deposit law. The original bottle deposit system was created nearly 30 years ago with a voter-approved ballot initiative in November 1976 and included beer, soft drink, and carbonated and mineral water containers. The act was amended in 1988 to include wine coolers and canned cocktail containers. Now, some proponents of the bottle bill see inclusion of non-carbonated beverage containers, such as juice and water, as the next logical step to improve Michigan’s recycling rates.

It is questionable if expansion of the bottle deposit law would have a measurable impact on improving recycling rates, since non-carbonated beverage containers represent less than one percent of the municipal solid waste stream. Additionally, expansion would likely lead to major sanitation issues in our state’s supermarkets.

In April 2005, the Michigan United Conversation Clubs announced the creation of the “Bigger Better Bottle Bill Coalition” which then hired a campaign coordinator to begin the process of taking to the voters a plan to expand the current bottle law. The coalition has indicated its willingness to reconsider if a viable comprehensive recycling plan is put forward.

Garbage Tax

In the 2003-04 legislative session, Senate Republicans endorsed a plan to raise garbage taxes by $3 per ton to generate $50 million annually to support recycling. Due to the financial burden that would have been placed on the business community and numerous other policy problems, the Chamber EQ Committee overwhelmingly voted to oppose this plan. In the end, this plan was never reported out of Senate committee.

In the 2005-06 legislative session, Senate Democrats have proposed a $6 per ton landfill tax while House Democrats have proposed a $7.50 per ton tax. These plans would impose between $100 million and $150 million in new taxes. The Michigan Chamber completed an analysis on the House and Senate Democrats’ plan entitled, “Tax on Canadian Trash or Tax on Michigan Families and Business.” The analysis concludes that raising taxes on garbage disposal would hurt Michigan taxpayers and have little impact on the amount of material entering Michigan. To this point, House and Senate Republicans have repeatedly defeated efforts by the Democrats to move a garbage tax.

In January 2006, House Democratic Leader Dianne Byrum announced her intentions to lead an effort to place the Garbage Tax before the voters in 2006. At this point, it is unclear if Rep. Byrum intends to proceed with this plan.

The Michigan Chamber of Commerce supports the continued investigation and development of a citizen-approved bond initiative to fund targeted, strategic investments in natural resources and communities to improve the economic vitality of the state and guarantee enjoyment of these resources for generations to come. This Conservation Bond must be coupled with the implementation of significant reform and restructuring of our state’s regulatory structure including the Department of Environmental Quality (DEQ).  

Background

The Michigan Chamber has a history of supporting environmental/conservation bonds to help invest in our state’s natural resources. In 2002, the Michigan Chamber supported the $1 billion Great Lakes Water Quality Bond Initiative. In 1996, the Michigan Chamber supported the $675 million Clean Michigan Initiative. In 2009, the Nature Conservancy and several other groups are developing a proposed Conservation Bond for 2010.

The proposal being developed by the Nature Conservancy of Michigan calls for a $1.5 billion investment in natural resources and communities. The proposal would need to be authorized by the Michigan Legislature by a 2/3 vote in both chambers and then approved by a majority of voters in the November 2010 election. The proposal is made up of three key components: working lands, healthy waters, and great communities.

Working Lands – Agriculture and Forestry

Michigan’s agriculture and forestry industries make major contributions to our state’s competitive advantage. Because of the importance of these industries to Michigan’s future, an investment in these sectors will help to support the quality of the resources on which these sectors depend.  Funding will provide resources to create incentives for on-farm management to help improve water quality in the state. In addition, funds would be made available to support research and development related to forestry and agriculture.

Healthy Waters

Michigan’s land and communities are productive and attractive because of the quality and quantity of its waters. Investing in this critical asset will benefit the state’s economy and its residents long into the future. Funding will help improve and protect coastal health including investments in cleaning up areas of concern within the Great Lakes, dredging of harbors, and control of aquatic invasive species. In addition, funding would be made available to improve inland lakes and streams through such activities as dam removal and addressing non-point source pollution efforts.

Great Communities

Both employees and employers are seeking the opportunity to live and work in a community that provides for a rich quality of life with great natural assets. Funding for Brownfield projects would provide dollars to local communities that have a partnership with private sector developers in order to redevelop abandoned and contaminated sites. Funding for transit would provide matching dollars to local communities to help leverage federal resources to create and expand high-speed rail and rapid bus service in Michigan communities. 

Regulatory Reform

Michigan’s current regulatory burden is having a negative impact on our state’s economic competitiveness. Dramatic changes are needed at the Department of Environmental Quality. The 2010 Conservation Bond should be coupled with reforms that include the following:

Brownfield (Part 201) Redevelopment

In the mid 1990’s, policymakers in Michigan recognized the need to develop a comprehensive strategy to clean up and put into productive use contaminated properties. This strategy made Michigan a leader in the brownfield redevelopment movement. Unfortunately, the success of Michigan’s cleanup program is now waning. The program has become over-burdensome and few closures of sites are now occurring. To return as a leader in the cleanup and redevelopment field and entice business investment in our communities, Michigan must enact reforms to improve the performance of our cleanup program. 

Rules, OP-Memos, Permit Issuance

Delay of permit processing imposes serious constraints on the ability of businesses to plan for their operations. The Michigan Department of Environmental Quality has been unilaterally imposing standards beyond federal rules, beyond state legislation and in some cases even beyond state rules, making Michigan less competitive with other states. Aggressive action is necessary to help reduce the overall regulatory burden which will help to encourage job growth and investment in Michigan.

Regulation of Agriculture

Agriculture is one of Michigan’s leading industries. Recent decisions by the DEQ related to agriculture have had a negative effect on the growth of agriculture in the state. The Michigan Department of Agriculture is better suited to handle the regulation of agriculture and agri-business.  All regulatory functions currently being run by the DEQ that effect agriculture should be handed over to the Department of Agriculture.

Change in Regulatory Approach

Michigan needs to develop a more consistent, predictable regulatory structure that helps to both encourage economic growth and protect the natural resources. The current regulatory structure at the DEQ is having a negative impact on the state’s economy. The slow moving bureaucracy at the Department of Environmental Quality often leads to delay in permits and poor customer service.   Serious consideration should be given to merging the DEQ with the Department of Natural Resources and/or other departments. A change in management at the DEQ may also be helpful in facilitating change at the DEQ.