Monday, July 20, 2009

A Briefing Notice from SC Attorney General Henry McMaster

Special Leadership Briefing

TO: SC Business and Political Leadership
FROM: SC Attorney General Henry McMaster
DATE: July 20, 2009
RE: Water - The fight for our economic future.

In the days ahead, you are likely to hear more and more about the legal battle we are waging in the U.S. Supreme Court to stop North Carolina from cutting off a significant portion of South Carolina's water supply.

It's true this fight is about water. But it's also about our jobs and our economic future.

The State of North Carolina, aided by Charlotte-based Duke Energy, is attempting to divert 72 million gallons of water per day from the Catawba River basin, water which now flows directly into South Carolina, from the upstate to the midlands.

If unchecked, their actions would leave vast portions of South Carolina high and dry.

It could cripple the economy and cause great hardship for businesses and families throughout the region.

Also, if they succeed, Atlanta and the State of Georgia would be given the green light to divert water away from the Savannah River, causing even greater peril for South Carolina's economy.

Because of your role of leadership, I wanted you to understand what we are doing and why.

First of fall, let me stress that the actions my office is taking are totally unrelated to the current surface water legislation in the South Carolina General Assembly. Our focus is solely on the effort by North Carolina and Duke Energy to cut off significant portions of our State's water supply.

Here are the facts:

In January 2007, North Carolina approved an "inter-basin" transfer permit which would have allowed two of its cities, Kannapolis and Concord, to divert ten million gallons of water per day from the Catawba River. Earlier permits allowed an additional 62 million gallons per day, for a grand total - to date - of at least 72 millions gallons per day.

South Carolina had no knowledge of these earlier permits. We only learned of the one for Kannapolis and Concord while it was in progress.

Daily water diversions that large could dramatically cut the water supply to York, Chester, Fairfield, Kershaw, Lancaster, Sumter and Richland counties, which contain the Catawba-Wateree basin. It could also impair the water supply further downstream along the Santee and Cooper Rivers. Future diversions would hurt us even more.

The impact?

Industries that depend on access to water could be lost and economic development efforts crippled at a time when we have the third highest jobless rate in the country. Businesses of many kinds, as well as tourism, agriculture, and recreation would suffer.

At first, we attempted to avoid litigation. We asked North Carolina to reconsider. We proposed a bi-state compact to work on a compromise. For six months, they ignored us.

Given no alternative, we brought a federal lawsuit against North Carolina to stop them. But instead of filing the case here, we went directly to the United States Supreme Court, asking it to decide an equitable way to apportion water flow between the two states.

The Supreme Court granted our request, agreeing to hear the case itself in its' original jurisdiction as a trial court, the 138th time in our nation's history it has done so.

We were well on our way to resolving the dispute. But the process was significantly delayed in the fall of 2007. Duke Energy, a North Carolina based company, and the City of Charlotte filed petitions to intervene in support of North Carolina's petition, and they are now working closely together on legal strategy.

Among other things, Duke is claiming legal title to any and all "excess" water in the river. Duke's and Charlotte's intervention has complicated the case and greatly increased the cost of litigation to the taxpayers of South Carolina.

Fortunately, others have backed our position. In the spring of 2009, the U.S. Solicitor General announced that the federal government was supporting South Carolina's efforts to have Duke and Charlotte removed from the case. In his legal brief, he argued correctly that the dispute should be limited to the two states.

Despite tight budgets, many of our state's business and political leaders vigorously joined the effort. Our General Assembly has shown leadership and determination by fully funding the case. The state homebuilders and realtors associations have also generously provided funds.

South Carolina municipalities have contributed, too, including York and Fairfield counties, Lugoff and Great Falls as well as the Lake Wateree Homeowners Association.

I am grateful to them all.

Our case has yet to be heard on its merits in Washington. But in the meantime, Duke recently applied for a certification from the S.C. Department of Health and Environmental Control (DHEC) for the five dams it operates on the Catawba-Wateree River system in South Carolina.

In its request, Duke agreed to provide 25% of water to South Carolina along the Catawba River, a flow which we believe fails to protect our state from drought and from excessive water withdrawals. Most importantly, DHEC's approval would have undercut the case we have pending in the U.S. Supreme Court on the same subject.

For all those reasons, I asked the DHEC board on July 9th to delay the certification so my office could work with DHEC to address our legal concerns. In response, the DHEC board simply denied Duke Energy's certification request entirely, which was a victory for common sense.

This case is of historic importance.

This is a fight for South Carolina rights. It's a fight for our prosperity, for economic development and for the well- being of our businesses and families for generations to come.

It is a fight we must win. No issue is more important to our state's future.

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