Nestlé's Abuses in McCloud,CA

McCloud, California: Nestlé’s Sweetheart Deal

On the night of September 29, 2003, a town official in McCloud, California slammed the gavel, and Nestlé Waters North America was the proud new owner of the town’s water for 50 years…with an option for 50 more.

The five-member McCloud Community Service District board had given the roughly 1,300 residents of McCloud only a few days to review and consider the proposal.[1] Not a lot of time, but enough time for many, like fourth-generation resident Debra Anderson, to know that it didn’t sound right.

“I was really concerned because of the lack of public input into the process,” said Anderson. “We had lots of unanswered questions and concerns. We soon learned that Nestlé was preying on other small towns around the country. I had no idea that large corporations were coming into rural areas like ours to privatize water.”[2]

What Anderson didn’t realize at the time was that the public hearing, and vote that followed, had been carefully choreographed. But their education about Nestlé’s practices advanced quickly – as in so many other communities who are currently challenging the continent’s number one bottler.

For Anderson and other residents the issue of water is personal. Anderson’s great-great-grandfather operated a ranch just south of town, near Squaw Creek. His dairy cows grazed on the spring-fed meadows.

Her grandparents and father fished in McCloud River, a world-renowned trout stream that has been a tourist destination for anglers since the 19th century.

So when Nestlé’s proposal appeared in a town meeting, Anderson had some history to think about.

“I thought, ‘this is crazy,’” she said. “This is a terrible deal on a resource that shouldn’t be sold as a commodity in the first place. How can water, which supposedly is held in trust by the state for the people, be sold to a foreign corporation, or any corporation, without a vote by the people?” [3]

Anderson and community members mobilized, asking critical questions during the meeting.

“Most in the audience figured the [Service District] would review the questions and call another meeting in 30 days,” said Tom Chambers, an area trout fisherman. “But instead — in front of a stunned audience — they simply voted to accept the contract without any further public review.”[4]

It was later disclosed that Nestlé had, “pressured the District board by threatening to take their offer off the table unless the contract was signed quickly.” It was also revealed that the Service District board’s legal representation during contract “negotiations” with Nestlé consisted of an attorney paid for by Nestlé.[5]

The contract allowed for Nestlé to open a 1,000,000 square foot bottling facility on the site of the town’s abandoned logging mill.[6] The corporation estimated that roughly 300 diesel trucks would be required to service the plant each day.[7]

However, what really agitated residents was the language the Service District agreed to on water takings. The agreement had the corporation paying just 6/100 of a cent per gallon and retailing it for more than the price of gasoline. [8] The math wasn’t adding up for Anderson and others, who felt you couldn’t put a price tag on the resource to begin with.

Nestlé did try and meet the community “half way,” offering to take no more than 1,600 acre-feet of water per year from McCloud.[9] The problem was that they were unwilling to put that limit in writing. Nestlé also refused commit to limiting their water withdrawals during droughts.[10]   

“Nestlé's spokesman has made frequent statements in public and in private about what Nestlé will and won't do,” the McCloud Watershed Council website notes. “Even in the wake of over-withdrawal suits around the country, he is quick to reassure people in the community that most of the worst case scenarios…will not happen because Nestlé will use good judgment and restraint for the benefit of McCloud. He has been asked to back up these reassurances with an amendment to the contract, however, and to date these requests have been flatly and publicly rejected….Nestlé's record speaks for itself. McCloud will not be getting any favors that aren't in writing.”

But for all the controversy over the contract signing, it was just a beginning, not an end. Anderson and her neighbors were not about to sell the town’s water without a fight.

Anderson helped found the McCloud Watershed Council, which works in concert with California Trout, Trout Unlimited, Concerned McCloud Citizens, and other organizations to protect the water of Siskiyou County.

As the organizations began to coalesce, the Watershed Council found that the corporation had not even performed a basic environmental review as part of the contract’s signing.[11]

The Watershed Council mobilized, securing an independent analysis that revealed dire economic and environmental consequences for McCloud if Nestlé’s plans were to proceed.[12] Meanwhile, a 2006 court ruling indicated that the Service District Board “may change the terms of—or even terminate—the contract” once a state environment review has been completed.[13]

This was good news for locals, even though the Service District had proven itself friendlier to Nestlé than its own community in the past.

Still, these developments pushed Nestlé to agree to conduct a more thorough report on the environmental impacts of their project.  And while, the report could have been Nestlé’s out or, at least cause to adjust their original contract, the corporation has thus far signaled no interest or willingness to do so.

Today, the struggle is at a stand-still. Anderson and her neighbors have managed to block Nestlé’s plans in McCloud from moving forward.

Whether the corporation ever taps the town’s most precious resource remains to be seen.

[1] Conlin, Michelle. “A town torn apart by Nestlé,” BusinessWeek, April 14, 2008;
[2] Personal communication with Debra Anderson and Corporate Accountability, April_, 2008.
[3] Personal communication with Debra Anderson and Corporate Accountability, April_2008.
[4] Chandler, Tom. “The Nestle Story I Didn’t Want to Write,” posted on the Trout Underground, May 11, 2007.
[5] Colin, Ibid.; “The Nestle Project: The Contract,” fact sheet on McCloud Watershed Council website, accessed April 8, 2008. http://www.mccloudwatershedcouncil.org/nestle/contract.html
[6] Conlin, Ibid.
[7] “The Nestle Project: Traffic,” fact sheet on McCloud Watershed Council website, accessed April 8, 2008. http://www.mccloudwatershedcouncil.org/nestle/traffic.html
[8] Gies, Erica. “Nestlé’s thirst for water splits small U.S. town,” International Herald Tribune, March 19, 2008. 1 cubic meter equals roughly 264 gallons. Therefore, Nestlé’s proposed tariff of 15.5 cents per cubic meter equals roughly .06 cents per gallon.
[9] Gies, Ibid.; Statement from McCloud Watershed Council in Response to Nestlé Concessions, February 12, 2008. Accessed April 4 2008, http://www.mccloudwatershedcouncil.org/pr21208.html
[10] Personal communication with Debra Anderson
[11]“The Nestle Project: Bad Deal,” fact sheet on McCloud Watershed Council website, accessed April 8, 2008. http://www.mccloudwatershedcouncil.org/nestle/baddeal.html
[12] “The Potential Economic Effects of the Proposed Water Bottling Facility in McCloud,” Report prepared by ECONorthwest, October 2007. Accessed April 4 2008, http://www.protectourwaters.org/ECONRpt.pdf
[13] Stranko, Brian. “Nestle Wants to Own Your Water: Time for Californians to Act,” posted on The California Progress Report on November 29, 2007. Accessed on April 4, 2008, http://www.californiaprogressreport.com/2007/11/nestle_wants_to.html