State Water Control Board turns down ‘speculative’ water permit request

The Virginia State Water Control Board last week denied a proposal by the owners of Cranston’s Mill Pond in James City County to withdraw millions of gallons of water per day to sell to potential buyers, drawing a hard line against what state officials have cast as speculative use of a public good. 

The Virginia Department of Environmental Quality “determined that issuing a permit this speculative would set an unwarranted precedent that would encourage the privatization of a public water resource,” Scott Kudlas, director of DEQ’s Office of Water Supply, told the board. 

Pond owner Restoration Systems, however, has argued that although it has not secured an end user of the water, ongoing groundwater scarcity in the eastern portion of the state justifies the awarding of a water withdrawal permit. 

“The bottom line is that the need for this permit has been demonstrated,” said Andrea Wortzel, a lawyer with Troutman Pepper who has been representing Cranston’s Mill Pond’s owners, during Wednesday’s water board meeting. “Even as recently as October 2020, DEQ reiterated the need for innovative projects to increase alternative sources in eastern Virginia. This project is uniquely suited to meet that need.” 

Conflict over Cranston’s Mill Pond stretches back to late 2016, when the owners first began seeking permission to withdraw large quantities of water from their pond for the purpose of marketing it as a source of water supply for a third-party purchaser. 

Reliable sources of water were at the time a hot political topic in eastern Virginia. East of Interstate 95, the primary drinking water source is the Potomac aquifer. This deepwater reservoir serves some 4 million Virginians, almost half of the state’s total population, and for decades its depletion has been a source of anxiety for policymakers. 

In 2013, DEQ determined that the rate at which water was being withdrawn from the aquifer was unsustainable and began a four-year effort to slash groundwater permits held by not only large businesses like the paper mills at West Point and Franklin, but also municipalities. James City was particularly hard hit. The county had the greatest reliance on groundwater of any public water system in the state, and although it is criss-crossed by waterways, their high salinity makes them expensive to use as sources of drinking water. 

It was within this context that Restoration Systems began pursuing the use of Cranston’s Mill Pond as an alternative source of water supply. Located in James City on Yarmouth Creek, the 55-acre impoundment was viewed by its owners as a “cost-effective local solution” to DEQ’s cuts to groundwater permits. 

Some state policymakers also viewed the pond as a promising alternative to groundwater. The Eastern Virginia Groundwater Management Advisory Committee, which the General Assembly had established in response to concerns about the aquifer’s depletion, in a 2017 report explicitly mentioned Cranston’s Mill Pond as “an innovative example” of the use of water impoundments as sources of supply. 

“The water from the impoundment may result in much lower, long-term treatment costs compared to treating brackish water from other surface water sources,” the committee wrote. 

“The project conceptually is a good one,” State Water Control Board member Timothy Hayes on Wednesday acknowledged. 

DEQ, however, has balked. In agency officials’ view, Cranston’s Mill Pond’s application for a state water withdrawal permit is missing a critical piece: an end user. 

“This is contrary to the state policy as to waters established in the Code of Virginia because it would encourage speculative water withdrawal permit applications from private entities seeking to secure rights to state waters, which are a public resource, without a specific end user or beneficial use in place, which permittees would then sell to others for private personal gain, effectively privatizing the public resource,” staff wrote in a memo to the water board recommending denial of the proposal. 

Virginia law considers all state waters to “belong to the public for use by the people for beneficial purposes without waste.” State code limits the use of water “in or from any natural stream, lake or other watercourse” to “such water as may reasonably be required for the beneficial use of the public.” 

In the case of Cranston’s Mill Pond, say officials, the absence of an identified user leaves DEQ unable to determine whether the waters will go toward a beneficial use or would otherwise waste a limited resource. 

Under state law and practice, the amount of water DEQ can allow a person or company to withdraw “is based on what it will be used for,” said Kudlas.  

Consequently, issuing a permit without an identified user or ultimate use would overturn longstanding precedent, “basing the permit amount on the source rather than the beneficial use,” staff argued. 

On Wednesday the State Water Control Board backed staff’s recommendation, voting 6-1 to deny the proposal, although Hayes and board chair Heather Wood both emphasized that Cranston’s Mill Pond’s owners were free to file an amended permit application in the future.

The sole dissenting member, Paula Jasinski, said in an email that her vote was based on findings from researchers with the Virginia Institute of Marine Sciences and Virginia Commonwealth University that the project would have little to no environmental impacts, as well as the project’s history.

“I would have preferred an option to modify the permit instead of a blanket rejection, but since that was not on the table, I voted against the staff recommendation,” she said.

In a statement Wednesday, DEQ said the proposal was “inconsistent with state policy and regulations” and not “in the public’s best interest.” 

“The water resources of the commonwealth are finite and DEQ has an obligation to conserve them with the public’s best interest in mind,” said DEQ Director David Paylor. 

Mike Smith, a spokesperson for Restoration Systems, said the company is “still working through the decision” and had “no comment at this time.” 

CORRECTION: This story has been corrected to reflect that Troutman Sanders was renamed Troutman Pepper after a 2020 merger.