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USA Springs says they own government permits!

Water permits at issue in USA Springs request

NOTTINGHAM — Attorneys for USA Springs want the bankruptcy court to make clear that permits previously issued by the state and town are the company’s property, and it will be the court – not local government – that will make the determination of whether they are in effect or not.

But the state of New Hampshire intends to object to the claim, saying the bankruptcy court can’t tell local governments when permits expire and under what conditions they can be renewed.

The permits relate to USA Springs’ proposed bottling plant in the town of Nottingham and the company’s ability to draw as many as 300,000 gallons a day in order to sell them to customers, mainly overseas. USA Springs said it has spent nearly a decade and almost $17 million to obtain the permits before going bankrupt in June 2008, leaving the plant half-finished. Since then, some of the permits have lapsed and others are about to lapse.

In order to emerge from bankruptcy, USA Springs said it has found an investor willing to spend $55 million to revive the project, but a key part of the deal is that the companies have these permits in place. Opponents of the plant, however, contend that they are not in place, and the town of Nottingham is already on record objecting to the bankruptcy plan because the company’s building permit has lapsed.

USA Springs last week filed a motion in bankruptcy court saying that the permits are the “property of the bankruptcy court,” asking that the court uphold the “validity and enforceability of the permits” and that it order that agencies that granted the permit to renew those that have expired.

Bankruptcy courts have such a right and USA Springs “only wants to be fully transparent” by making it clear “that the permits belong to the debtor,” said Alan L. Braunstein, an attorney for USA Springs. The company is working with local officials to renew the permits, and wanted to make sure that opponents don’t try “any sort of preventative measure” that would obstruct their renewal.

“We are not trying to wage a war,” Braunstein said.

Braunstein added that the deal would be good for the community because the investors were willing to insure that local contractors continue to work on the project. Other investors, waiting in the wings, have made no such assurances, he said.

USA Springs’ motion lists about 20 permits that should fall under its umbrella. The biggest permit – the large groundwater withdrawal issued by the state Department of Environmental Services – doesn’t expire until 2014, though attorneys for the town argued that under new rules it expires after five years if not activated. DES, however, recently declared that those rules are new and don’t apply in this instance.

There are several DES permits that have expired and are subject to renewal, according to the motion — two site-specific construction permits (which expired in May of 2007), a septic system permit (expiration date: June 2009) and a groundwater management permit (July 2009).

A building permit issued by the town of Nottingham also is listed as expired, and a state Department of Transportation highway entrance permit expired in November 2008.

The company’s new source bottled water permit has no expiration date. This permit – which is to make sure the water that is bottled is not contaminated — is different from the groundwater withdrawal permit, which was issued to protect water left in the ground. But, according to a letter from DES Commissioner Thomas Burack, bottled the water permit will lapse in October 2010 if it is not renewed. Only “minimal” work would be needed for renewal, but it would include an updated assessment of possible contamination sources and pumping of the wells for several days with water monitoring and water sampling.

Nottingham officials declined comment on the permitting issue, but the state’s Attorney General’s Office said it is filing an objection to the motion, arguing that the bankruptcy court can’t dictate the conditions in which the state shall or shall not issue a permit.

“The law doesn’t allow for review of state permits by a federal bankruptcy judge,” said Peter Roth, an assistant attorney general. While permits are property, he said, they still are under the jurisdiction of state law, and case law backs him up.

“It’s settled law, all right, but not in the way the debtor would like it to be settled,” Roth said.

Attorneys will get to battle it out on Aug. 23, in bankruptcy court in Manchester.

New Hampshire Business Review

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