Act Locally » May 19, 2015
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.
If the judge rules in favor of Missoula, the win could be a game changer for communities around the country and even the world.
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.
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.