A Privatized River Runs Through It

To win its eminent domain suit, Missoula must prove that it is the best manager of its drinking water.

Kate Whittle May 19, 2015

Missoulans gather in support of municipalization at the Rally for Our Water on March 17. (Photo courtesy of Mountain Water for Missoula)

Mis­soula, Mon­tana, the scenic moun­tain town that inspired A Riv­er Runs Through It, is fight­ing for con­trol of the aquifer beneath it. Cit­ing emi­nent domain, Mis­soula sued last year to take over the local water util­i­ty, Moun­tain Water Com­pa­ny, from its cor­po­rate own­er, the Car­lyle Group, a glob­al invest­ment firm with $194 bil­lion in assets.

If the judge rules in favor of Missoula, the win could be a game changer for communities around the country and even the world.

Stand­ing against this mul­ti-bil­lion­dol­lar firm is the town of Mis­soula, with a pop­u­la­tion of 70,000 and an annu­al bud­get of about $116 mil­lion. If a dis­trict judge does not agree with Missoula’s argu­ment that it is the best man­ag­er of own its drink­ing water, then Car­lyle can go ahead with a planned sale of Moun­tain Water to anoth­er multi­na­tion­al, the Cana­di­an­based Algo­nquin Pow­er and Util­i­ties Corp. Argu­ments in the case have con­clud­ed, and a deci­sion is expect­ed any day.

If the judge rules in favor of Mis­soula, the win could be a game chang­er for com­mu­ni­ties around the coun­try and even the world, says Her­mi­na Harold, a Mis­soula-based activist who has orga­nized grass­roots ral­lies in favor of the city exer­cis­ing emi­nent domain. Pri­va­ti­za­tion is a fright­en­ing glob­al trend that has been con­strict­ing people’s access to water at an increas­ing pace,” she says. If we can set a legal prece­dent that helps oth­er com­mu­ni­ties win con­trol of their water, it will make the City’s efforts even more worth it, in my opinion.”

Harold cites sev­er­al rea­sons that pub­licly owned water would serve the pub­lic inter­est. For one, Mis­soula cit­i­zens pay some of the high­est rates in the state for water. The rates don’t need to pro­vide mil­lions for a par­ent com­pa­ny and investors,” she says. Addi­tion­al­ly, the city’s expert wit­ness tes­ti­fied, Moun­tain Water’s infra­struc­ture is in need of repair, with some esti­mates of leak­age rates as high as 50 per­cent — an indi­ca­tion of how pri­vate own­er­ship has failed to invest in the util­i­ty, Harold says.

When the Car­lyle Group pur­chased Moun­tain Water and its par­ent com­pa­ny, Park Water Co., in 2011, Car­lyle agreed to con­sid­er sales offers from Mis­soula. In 2013, the city twice offered $65 mil­lion for the util­i­ty, and both times, Car­lyle said no. Stat­ing that Car­lyle had made a good faith” agree­ment to sell Moun­tain Water to the city, Mis­soula May­or John Engen announced plans to con­demn the util­i­ty and to take munic­i­pal con­trol. In 2014, a few months after the city filed an emi­nent domain law­suit against Car­lyle, the com­pa­ny announced it would sell Moun­tain Water to the Algo­nquin Pow­er and Util­i­ties Corp. for $327 million.

Harold says the deal shows Carlyle’s true col­ors. They break agree­ments,” she says. Prof­it is the num­ber-one goal.” For the most part, Mis­soula cit­i­zens have backed the city’s efforts. Accord­ing to a munic­i­pal poll con­duct­ed last spring, 73 per­cent of vot­ers sup­port the city’s bid to pur­chase and oper­ate the util­i­ty. But some have balked at the cost of the fight. The city’s legal fees reached $1.9 mil­lion in April 2015, vast­ly sur­pass­ing the orig­i­nal esti­mate of $400,000. The Mis­soula Independent’s opin­ion colum­nist, Dan Brooks, wrote last fall that the city should cut its loss­es: The city has got­ten into a high-stakes game against an aggres­sive bluffer with many, many more chips.”

City Coun­cil­man Adam Hertz, one of the more con­ser­v­a­tive mem­bers of a pri­mar­i­ly lib­er­al coun­cil, says that while he’s not opposed to the city own­ing its water, the emi­nent domain suit has the abil­i­ty to set a fright­en­ing prece­dent, in that we’re a free enter­prise soci­ety, and we can force util­i­ties to municipalize.”

Some of the most vocal oppo­si­tion to munic­i­pal own­er­ship of Moun­tain Water has come from the util­i­ty itself: Pub­lic state­ments on Moun­tain Water’s web­site argue that city own­er­ship won’t mean reduced rates, and include sta­tis­tics (with­out cit­ing any sources) claim­ing that most Mis­soula vot­ers are sat­is­fied with Moun­tain Water’s ser­vice.” Moun­tain Water employ­ees, includ­ing a senior accoun­tant and civ­il engi­neer, have appeared at pub­lic meet­ings to denounce the emi­nent domain pro­ceed­ings and reject offers of employ­ment from the city, which Mis­soula City Coun­cil­man Jason Wiener chalks up to a his­to­ry of bad blood in nego­ti­a­tions between the city and the com­pa­ny. The city has promised Moun­tain Water employ­ees, except three top exec­u­tives, five years of employ­ment, which Wiener describes as incred­i­bly gen­er­ous.” When asked to com­ment for In These Times, Moun­tain Water Pres­i­dent John Kappes said he wasn’t dis­cussing the case, pend­ing the judge’s ruling.

Wiener, one of the most vocal advo­cates of the con­dem­na­tion, is opti­mistic about the city’s chances of win­ning con­trol of its util­i­ty. He is con­fi­dent the city’s attor­neys made a strong case that it would be the most effec­tive man­ag­er of the sys­tem, and points out that the $1.9 mil­lion the city has spent in the fight still doesn’t quite match the $2 mil­lion annu­al­ly spent by Moun­tain Water for admin­is­tra­tive and sup­port ser­vices” from its cor­po­rate own­ers. If Moun­tain Water is local­ly owned, those mil­lions will stay in the community.

When it comes to the fight for water, Wiener takes the long view. He con­sid­ers the exam­ple of Butte, the famous Mon­tana min­ing town that was the boom­ing, vibrant star of the state in the ear­ly 20th cen­tu­ry, draw­ing thou­sands of immi­grants from around the world to work in cop­per mines owned by nation­al cor­po­ra­tions. Today, the mines are closed, and Butte has been des­ig­nat­ed a Super­fund envi­ron­men­tal cleanup site, known for the heavy-met­al-laden Berke­ley Pit.

Wiener also takes into con­sid­er­a­tion the omi­nous head­lines about Cal­i­for­nia droughts and increas­ing water scarci­ty in the West. I have no idea if water’s going to be as pre­cious as cop­per in the future, but I can def­i­nite­ly tell you that the peo­ple of Butte would be bet­ter off today if they had been mak­ing deci­sions about how much cop­per was going to be tak­en out, and when,” Wiener says. It would be a more pros­per­ous place if those prof­its hadn’t sim­ply left.”

If the city los­es its bid for emi­nent domain, Wiener says it might choose to appeal the deci­sion, depend­ing on the judge’s ratio­nale. If Mis­soula doesn’t own its water, Wiener sees the state Pub­lic Ser­vice Com­mis­sion as the only thing stand­ing in the way of cor­po­rate malfea­sance and poten­tial abus­es of the sys­tem, and he’s not con­vinced that reg­u­la­to­ry agen­cies will be able to offer much pro­tec­tion in an increas­ing­ly cor­po­ra­tized world.

Giv­en where nation­al pol­i­tics seem to go, all that’s going to mat­ter in the future is if you own some­thing or not,” he says. And so con­cepts like jus­tice and fair­ness seem to play less and less a role in what hap­pens. So I’m not going to rely on the law or val­ues in order to pro­tect the com­mu­ni­ty in the future. We need an own­er­ship stake if we’re going to chart our own course.”

Kate Whit­tle is a Mis­soula-based jour­nal­ist with a degree from the Uni­ver­si­ty of Montana.
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