Auction date set for water rights

July 9, 2005
by Stacy Shelton - Staff
Atlanta Journal Constitution

Water rights will be up for auction in December along with other assets from a bankrupt paper mill on the Georgia coast.

At a hearing in Brunswick on Friday, U.S. Bankruptcy Court Judge Lamar W. Davis Jr. asked the state --- which opposes the sale of water rights --- and the attorney for the trustee managing Durango Georgia Paper Co.'s assets to work out the details of the auction.

Bidders will have a chance to buy rights to pump up to 44 million gallons of water a day from wells, a first in Georgia. But they will be warned the state may not honor the rights.

It's uncertain how much the water rights are worth. The state issues water withdrawal permits for free, but requires permits to limit and monitor water use.

The auction, originally scheduled for this month, is now set for Dec. 6.

The state and six environmental groups had asked the judge to remove the mill's water rights from the auction, saying the sale of a water withdrawal permit is against state law. According to the state, only the Environmental Protection Division can transfer a withdrawal permit to another user.

The paper mill in St. Marys, which closed in 2002, is at the center of the state's most contentious environmental debate over whether water rights can be sold, similar to what happens in many water-poor Western states. A move to open water markets in Georgia was killed in the Legislature in 2003.

Environmentalists fear the auction could open a door that would allow the sale of water from Georgia's rivers and wells to the highest bidders.

Ward Stone Jr., a Macon attorney, is working to get the most money for Durango's assets to pay back creditors. He argues that the paper company owned the groundwater and that it can legally be sold. The state attorney representing the Environmental Protection Division disagreed, saying Durango's groundwater withdrawal permit is good only for that location and that use.

Complicating the issue is that Durango's water permit expires at the end of this year.

Stone said about 35 entities have expressed interest in the 750-acre site, including residential resort developers and paper companies.