Vermont Deals a Blow to the Bottled Water Industry

With Lake Champlain, snowy peaks, and 40 inches of rain a year, the Green Mountain State isn't exactly parched. But don't tell that to Annette Smith.

Six years ago, a mining company pumped 2.7 million gallons of water from an underground well near her Danby, Vt., home. The local springs were so dry she had to spend more than $4,000 to dig a new well. When water eventually returned to the springs, the levels weren't what they once were, she says.

Such episodes have Vermonters so worried about unregulated water withdrawals that on Friday the state legislature passed a bill that establishes a water-permit requirement.

There's just one problem.

Several local bottled water companies and manufacturers worry that the new measure will boost costs and delay sales. While the measure has won praise from environmentalists, some analysts say it could violate the North American Free Trade Agreement (NAFTA) by unfairly restraining international trade.

"We're concerned that this going to add an undue cost to businesses currently in Vermont who want to expand operations," says William Driscoll, vice president of the Associated Industries of Vermont. "We're also worried about discouraging new businesses from coming to Vermont."

He estimates that the new bill would increase permit costs by 50 to 100 percent. Depending on the site, he says, a permit could cost from $20,000 to $100,000, even $200,000 in select cases.

Declaring groundwater to be a public trust, the bill aims to prevent corporations from taking more than their fair share. Enterprises withdrawing more than 57,600 gallons of water a day must now obtain a permit. (Most farms are exempt.) Gov. Jim Douglas (R) is expected to sign the measure.

"We wanted to protect our groundwater for the next several generations," says state Sen. Virginia Lyons (D), chair of the Natural Resources and Energy Committee. "If we don't have any protections, then an international company could come in and begin to extract water and take [it] without regard for the amount of resources available."

At least one Canadian bottled water company already pumps water out of Vermont, bottles it in New Hampshire, and sells it around the country, a sore spot among many locals.

"It really is commercializing and making a commodity of something that is really a staple for all of us," says Carolyn Shapiro, an East Montpelier artist who lives near a proposed bottled water site.

While Vermont is not the first state to enact such groundwater legislation, its measure is unusual because it avoids grandfathering large numbers of groundwater users -- something that has created problems in other states. Despite more than 20 years of regulation in Massachusetts, for example, an estimated 160 streams struggle to support fish and other aquatic life: Groundwater withdrawals have lowered water levels, says Kirt Mayland, director of the Eastern Water Project for Trout Unlimited, a conservation agency based in Arlington, Va.

"It's hard to overemphasize the importance of getting ahead of this problem before it's created, because trying to fix it once it's already out there is extremely difficult," says Mr. Mayland. "And from an environmental standpoint, it's almost too late because the damage has been done in a lot of these streams."

The legislation is a "good first step," says Ms. Smith, the Danby resident who also heads Vermonters for a Clean Environment. But she'd like a stronger law. "A permit is usually a permit to pollute or a permit to in some way degrade the resource," she says. "A regulatory program that permits the extraction of large withdrawals of groundwater is not necessarily one that protects the resource."

On the other side, analysts say if Vermont's permit process disrupts international companies' operations, they may challenge it on the grounds that it violates NAFTA by interrupting trade.