FLOW has developed model legislation to protect water quality, advance water equity, ensure that the waters of the State remain a public resource, and provide communities and water utilities with a steady source of funding to address water affordability and infrastructure needs.
The key provisions of the legislation address long-standing, increasingly intractable problems of water equity and social justice, and protect the public’s abiding interest in Michigan’s water resources.
Frequently asked questions (FAQ) about the Michigan Water Trust Fund Act, MWTFA
Questions regarding royalties:
What does the Michigan Water Trust Fund Act (MWTFA) do?
The waters of the state are a public good that belong to the people of Michigan. Private corporations presently extract and sell public water at great profit, without any tangible benefits accruing to Michigan citizens. Public rights to water resources are threatened by hedge funds and other private entities which seek to acquire water rights and water bottling companies in anticipation of water scarcity.
The Michigan Water Trust Fund Act:
- Prevents the commodification of water by reaffirming public rights and the state’s sovereign interest in water by establishing a royalty and licensing system for the extraction and sale of water;
- Imposes a per-gallon royalty on bottled water that will raise approximately $300 million annually; and
- Establishes a water trust fund to enable communities to invest in new water infrastructure to ensure safe, affordable, clean drinking water to their residents, and better protect public health.
How does a "royalty" differ from a tax or a special assessment?
A royalty connotes an obligation to the sovereign for the use of a public trust resource. A “tax” is a levy by a governmental unit on the general public for express governmental purposes that benefit all citizens.
A special assessment is a charge against property for a public improvement that confers a special benefit to that property different from the benefit enjoyed by the general public. A royalty underscores public rights in water and distinguishes bottled water licensure as a unique category of public authorization.
How much would the royalty generate for the Michigan Water Trust Fund?
Based on a July 2020 analysis by Michigan State University, a recommended per-gallon royalty of $0.25 on the estimated 997.6 million gallons bottled in 2018 would be expected to generate $249.4 million ($0.25 per gallon is 3.125 cents per 16-ounce bottle). Sales volume in the U.S. has increased by 14.8 percent since 2018; the corresponding increase would yield approximately $287 million in 2023.
What would be the market impact of assessing a $0.25 royalty on a gallon of bottled water?
According to Forbes, depending on the brand, retail prices range from around $1.00 to as much as $11.00 per gallon, and consumers pay between 400 times and 4,400 times more for bottled water. A $0.03 per 16 oz charge would not affect consumer demand or meaningfully reduce company profits.
What is the purpose, structure, and governance of the proposed fund?
Michigan’s infrastructure needs remain in the national spotlight, creating an opportunity to build bipartisan support for revenue enhancement that is not dependent on raising taxes. The Michigan Section of the American Society of Civil Engineers 2023 Report Card for Michigan’s Infrastructure gives Michigan’s drinking water infrastructure a “C-“.
As proposed, the Act’s royalty and licensing system would establish the Michigan Water Trust Fund and support:
- Municipal drinking water infrastructure needs and drinking water infrastructure maintenance
- Lead pipe replacement
- Green infrastructure for stormwater management
- Chemical remediation of water systems and water sources (e.g., PFAs, etc.)
- Affordability plans and initiatives, including tiered or reverse-tiered pricing modeled after successful programs in other municipalities
- New resources to address substandard and failing household septic systems
- Hydrogeological studies of contaminated groundwater
The Fund would be modeled on the popular and successful Michigan Natural Resources Trust Fund, governed by a public trust fund board and managed by the State Treasurer.
Doesn't the Act commodify water by exacting a royalty?
No – importantly, the Act does the exact opposite. Licensure of water bottling operations and the payment of a royalty for the extraction and sale of a public trust resource establishes and strengthens public rights in water resources. Royalties signify state control and prevent the commodification of water, and licensure encompasses a determination that public rights and the public interest are protected.
How is using water for bottled water any different than using it to produce soda, beer or any other product?
Bottled water is often seen as a premium product with minimal added value other than packaging, while beverages like sodas, juices, or soups have a more complex product structure. These beverages create more value-added products through processing, flavoring, and packaging.
Will carbonated water be subject to the royalty?
No, because the manufacturer is incorporating something into the water. It is water itself as a product that runs afoul of the Public Trust Doctrine and leaves the Great Lakes vulnerable under international trade law.
If a bottled water company were to add a drop of flavoring to its bottled water products, would the products be exempt from the royalty?
If the drop were intentionally added to avoid the royalty, it should be subject to the royalty. Administrative rules can be promulgated to address this and similar issues.
Questions about legislation and extraction:
Why is the extraction of bottled water such a big deal given that it accounts for a small amount of the Great Lakes Basin's consumptive water use?
The difference is typically not in the resource impact, but in the precedent-setting nature of selling water itself as a product. However, the FDA definition of spring water drives bottled water manufacturers to extract water from and disrupt sensitive headwaters.
Can the Act be used as model legislation for other Great Lake States (and other states)?
The bill is well drafted and should be promoted as model bottled water legislation as it lends the Act a higher profile and potentially greater support. It will likely result in greater regional interest and support by broader geographic constituencies. Concerns over the commodification and privatization of water exist in every state. The New York legislature already introduced a bill based upon the MWTFA. In December of 2024, Michigan House Rep. Rachel Hood (D-81) and Rep. Donavan McKinney (D-14) introduced important bills (HB 6273, 6274), based on FLOW’s model legislation.
How will the public respond to the Michigan Water Trust Fund Act?
Polling conducted by Lake Research Partners indicates that 71 percent of Michiganders would favor a royalty on bottled water. Focus group and survey results show overwhelming bipartisan support for protecting water quality and water quantity. Public support for improved water infrastructure is also extremely strong. In New Zealand a proposed bottled water per liter royalty was supported by 89 percent of its public.
How much water is bottled in MI each year?
An estimated 1.06 billion gallons of water arebottled annually in Michigan. Applying the $0.25 per gallon royalty, the state would receive an estimated $263 million annually. EGLE lists 113 Michigan companies that have source water approvals for the production of bottled water.
How big is the bottled water market in the U.S.?
Revenue in the bottled water market amounted to $94.07bn in 2023. The market is expected to grow annually by 6.34% (CAGR 2023-2027).
How many plastic bottles are used every year?
Americans purchase about 50 billion water bottles per year, averaging about 13 bottles per month for every person in the U.S. In 2023, U.S. consumers drank an average of 46.4 gallons of bottled water, a per person equivalent of 370 sixteen ounce bottles per year.
Questions about health implications and PFAs:
What are the bottles made of?
Typically, polyethylene terephthalate (PET).
What percentage of plastic water bottles are recycled?
According to the National Association for PET Container Resources (NAPCOR), the US PET bottle collection rate was 33% in 2023 – the highest recycling rate since 1996.
Are there plastics in bottled water?
The average liter of bottled water has nearly a quarter million nanoplastic particles. While the specific, causal effects plastics may have on human health are yet unknown and currently being researched, animal studies suggest that plastics and plastic byproducts affect the digestive, respiratory, endocrine, reproductive, and immune systems.
