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Gov. Crist (FL) wants to stop free flow for bottled water

By MARY ELLEN KLAS, Miami Herald (Mar. 03, 2009)

In a rural North Florida town where the water tower bears the motto ”Tiny but Proud,” residents have a big secret: They give the cold, clear spring water that bubbles up from the aquifer below their soil to the nation’s largest bottled-water company — for free.

Every day, Nestlé Waters of North America sucks up an estimated 500,000 gallons from Madison Blue Springs, a limestone basin one mile north of town. It pipes the 70-degree water a mile to its massive bottling plant and distribution center, fills 102,000 plastic containers an hour, pastes on Deer Park or Zephyrhills labels, boxes it up and ships half of it out of state.

The cost to the company for the water: a one-time, $150 local water permit.

Like 22 other bottled-water companies in Florida, including giants Coca-Cola and Pepsi Co., Nestlé’s profit is 10 to 100 times the cost of each bottle.

Payment to Florida? Not a dime.

Gov. Charlie Crist wants to change that. He is proposing a 6-cents-a-gallon state tax on water used for commercial water-bottling purposes.

”It’s a resource of the state and if you’re going to withdraw it for a profit, we should charge you for that use,” said Mike Sole, secretary of the Department of Environmental Protection, which has been developing Crist’s proposal for six months.

The agency estimates the fee would apply to about 5.4 million gallons a day — the amount it believes is pumped from state springs and aquifers by bottlers that include Coca-Cola’s Dasani and Publix. The estimate does not include the water taken by bottlers from municipal water supplies.

The ”severance fee” would be phased in to raise an estimated $56 million the first year, according to the governor’s office. The money would be used to finance water projects, such as desalination plants and other alternatives to traditional water supplies. Making the money even more attractive: The fund that currently finances those projects faces a $15 million deficit since the tax dedicated to water projects dried up in the real-estate crash.

If the fee is passed on to consumers, the cost of a pint-size bottle of water would increase by less than a penny.

A SHIFT

It’s a major shift in position for the department, prompted by Crist, which until December had collected no data on bottled-water use in Florida and takes a hands-off approach to its regulation. The Florida Department of Agriculture’s Division of Food Safety makes sure bottlers have approval from local water-management districts to withdraw the water, but no state agency tests bottled water. Crist’s proposal wouldn’t change that.

Instead, Crist’s plan would treat water like phosphate, oil or natural gas, all mined from the ground. Companies that extract those natural resources from which they profit pay fees or royalties to the state. Nestlé and other bottled-water users say it is unfair to single them out from all the public and private water users who extract what the Department of Environmental Protection estimates is four billion gallons of spring water from Florida’s aquifers each day.

”I don’t see how we’re different from the agriculture users which, just a few miles from here, have 30 irrigation pivots draining more water than we are,” said Rob Fisher, who runs the Blue Springs plant and is director of operations for Nestlé’s southwest region.

Bottled water ”isn’t a luxury, it’s a choice,” he argues, “and during times of natural disaster, it’s a necessity.”

States, including Vermont and Michigan, already impose user fees on bottled-water companies, while Massachusetts has begun debating a ban on extracting water for commercial uses.

The idea isn’t completely new to Florida. In 2005, House Democratic Leader Franklin Sands of Weston proposed legislation imposing a fee on bottled water but the measure was killed in the Senate.

”The water belongs to the people,” Sands said. “If you take the people’s water, it’s about time we compensate them for it.”

Throughout the nation, the bottled water industry is under increasing attack. At the annual meeting of the U.S. Conference of Mayors in Miami last June, mayors adopted a resolution to encourage cities “to phase out, where feasible, government use of bottled water and promote the importance of municipal water.”

Among the reasons cited: Most cities produce high quality, safe drinking water while bottled-water production consumes 17 million barrels of oil per year and plastic water bottles ”are one of the fastest growing sources of municipal waste.” The Environmental Protection agency estimates state landfills collect 1.7 billion bottles per year.

The industry fired back, arguing that Environmental Protection reports that production of plastic water bottles contributes only 0.04 percent of total greenhouse-gas emissions and make up only one-third of 1 percent of the waste stream in the United States.

ECONOMIC IMPACT

Florida’s dire economy has some Republicans also ready to change the rules on bottled water. Sen. Evelyn Lynn, an Ormond Beach Republican, has filed a bill to impose the state’s 6-cent sales tax on bottled water at the point of sale.

She considers bottled water a luxury and objects to Florida water managers restricting water use by homeowners when the state is “handing out permits for major bottling companies to bottle as much as they want.”

A companion bill is being pushed by Rep. Michele Rehwinkle-Vasilinda, a Tallahassee Democrat. Economists say that if the state applies the 6-cent sales tax to every bottle of water consumed in Florida, it could raise about $42 million.

Sen. Thad Altman, a Melbourne Republican who chairs the Senate Finance and Tax Committee, has launched a review of all sales-tax exemptions to determine which should be eliminated, including the exemption on bottled water.

”It would be hard to argue that if you tax bottled water you lose Florida jobs,” he said. “Does it impede competition? No. Does removing the tax put Florida business at a disadvantage? I don’t think so.”

Nestlé’s Fisher argues that water bottling is a clean industry. Nestlé employs 1,000 people statewide. Its plant in Madison County has been certified as the largest ”green” building operation in Florida, and the plant has won numerous productivity and job-safety awards.

The plant also pays more than $650,000 in property taxes each year, proof that the state is getting something in return for the water, company officials say.

”We’re an easy target,” said Jim McClellan, spokesman for Nestlé’s in Florida.

He notes how bottled water has become essential when pipes are ruptured, there’s a boil-water order or a hurricane cuts off a community water source.

”It makes no sense to take the healthiest packaged beverage on the market today, subject it to an onerous tax and not apply it to any other beverage,” McClellan said. Environmentalists disagree.

”Most people won’t see this as an unfair tax,” said Eric Draper of the Florida Audubon Society. “It makes a lot of sense and we need the money for alternative water supply and pollution treatment.”

State Rep. Will Weatherford, a Wesley Chapel Republican whose district includes Nestlé’s Zephyrhills bottling plant, said he believes the House will be less open to imposing new taxes on bottled water than the governor and Senate. “We want to be careful not to single out any industry.”

Crist, who has carefully avoided being associated with tax increases, could be spared from repercussions on this one, Draper predicts: “This will be very popular with ordinary people who do see that these companies are taking something for free and putting it in bottles and charging a lot more.”

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