Originally created 05/27/05

EPD challenges court over bid



ATLANTA - The state's top environmental policy director has issued a letter challenging a federal bankruptcy judge's ruling that the water rights of a defunct coastal Georgia paper mill can be sold off to the highest bidder.

Carol Couch, the head of the Georgia Environmental Protection Division, said in the letter that it is incorrect for the court to assume that water permits issued to the bankrupt Durango-Georgia Paper Co. can be liquidated to pay off the former St. Marys paper mill's debt.

"EPD would not consider transfer of the permit to other entities for different purposes at different locations as an appropriate use," Ms. Couch wrote.

Earlier this week, she told the board of the Georgia Department of Natural Resources that she would oppose the court ruling because past opinions by the Georgia Attorney General's Office support the position that state-issued water permits are not deeds to water, but are licenses for water usage.

And, Ms. Couch explained, just as a bankrupt individual can't auction his driver's license to pay off a debt, a bankrupt company can't sell off its water usage permits.

"A permit is not property," she said. "It is not something that is owned."

The paper mill, which left 900 workers unemployed after closing in 2002, has a permit to use 44 million gallons of water per day.

Judge Lamar Davis Jr. ruled last week that trustees managing the Durango estate can accept bids on the paper mill's assets to pay off creditors. The order included the mill's state-issued water permits among the assets that could be placed on the auction block.

Ward Stone, a Macon attorney representing bankruptcy court trustees managing the Durango property, said the EPD's position will have little effect on bidders interested in buying the site.

"We're dealing with parties who are capable of reaching a decision," Mr. Stone said. "It's a nonissue. As far as we're concerned, this is not something we will respond to, at this point."

Bob Noble, the director of the Camden County Joint Development Authority, said the EPD's response to the court order also should have no impact on bids for the land.

"They (developers) bid on it with the understanding they were bidding on the property, not water rights," Mr. Noble said.

If a paper company wins the bid to buy the mill, Mr. Noble said, water rights shouldn't be an issue because the site is already permitted to pump water for pulp and paper manufacturing.

If a residential developer wins the bid, Mr. Noble said, "The only thing they would need is the ability to tap into the city of St. Marys' water and sewer system."

Bill Shanahan, the city manager of St. Marys, said representatives involved with the sale of the property met with him several months ago and told him water rights at the mill "could be an option," if the city was interested.

Mr. Shanahan said city officials expressed no interest in bidding on water rights permitted to the mill, saying that if St. Marys needs to pump more water, city officials will simply ask EPD to modify its permit with the state.

Reach Brian Basinger at (404) 681-1701 or brian.basinger@morris.com.

Reach Gordon Jackson at (912) 729-3672 or gordon.jackson@jacksonville.com.