Judge nixes California village's deal to sell spring water to Nestle

Thursday, March 24th 2005, 10:06 am

By: News On 6

SACRAMENTO, Calif. (AP) _ A judge scrapped a deal under which a former lumber town planned to sell more than a half billion gallons of spring water annually to Nestle, ruling that its environmental impact should have been studied.

The judgment this week effectively halts the town of McCloud's plans to sell water to Nestle for a proposed $120 million water bottling plant that supporters said would revitalize the village at the base of Mount Shasta.

The deal would have given Nestle, the world's largest food and beverage company, up to 521 million gallons of the town's drinking water for as little as $300,000 a year. The 50-year deal could be extended for a century with little control by the unincorporated town.

A group called Concerned McCloud Citizens sued the McCloud Community Services District to block the deal after learning of its terms. Siskiyou County Judge Roger Kosel ruled Monday that the district abused its discretion by not performing a review of the project's environmental impact before sealing the deal.

``I think it says you can't kind of try to come in under the radar and negotiate a deal without really informing the public and doing the required environmental review before the deal is finalized,'' said attorney Don Mooney, who represented the citizens group.

A spokeswoman said the district did not have a comment on the ruling. Nestle said it would move ahead with its environmental review of the project.

Mooney said the district and Nestle could strike a new deal once environmental reviews are conducted.

Nestle proposed tapping into natural springs that bubble up on the side of 14,162-foot Mount Shasta and bottling the waters under its Arrowhead label at a plant that would be built on the grounds of the sawmill that closed two years ago.

Critics of the water sale said they felt blindsided when they learned details of the pact, although public officials said they disclosed outcomes of the negotiations and followed the proper rules.

``There are many, many people in McCloud now who will not take their eyes off of this precious resource,'' said Diane Lowe, one of the women who formed the citizens group. ``We have a major battle to continue, but we've passed a small hurdle.''

The deal has divided the town of 1,300 people, a former company town that once provided everything from housing to Christmas gifts for children.

Supporters point to the lack of jobs and an unsteady economy since the McCloud River Lumber Co. sold out in the 1960s. They see Nestle Waters North America, the nation's biggest water bottler and a division of the Swiss multinational, as a savior of sorts. The company had expected to open the plant next year and said it would eventually employ 240 workers.

Critics have questioned whether a provision letting Nestle drill wells would dry up aquifers or whether wildlife would be harmed downstream in the McCloud River, a popular fishing spot.

Others wonder if the town is getting enough money from a company that stands to profit by selling the community's own precious resource.

``If they gave us our fair share it wouldn't be bad,'' said Alice DeBon, an innkeeper in town. ``They can't just take us to the cleaners.''