Special Report: Nestlé Faces Growing Opposition to Proposed Oregon Bottling Plant

By Paul Shukovsky

May 15 — A coalition of organizations that question the public policy rationale and even the moral legitimacy of bottling water has coalesced in Oregon to fight a proposal from Nestlé S.A. to build a plant that would withdraw millions of gallons of water from a pristine spring in the Columbia River Gorge National Scenic Area.

A deal being considered by state regulators would not technically transfer water rights to Nestlé, but would have the effect of providing the Swiss multinational's U.S. subsidiary with up to 118 million gallons of spring water annually from Oxbow Springs. Currently, the state holds the water right and uses it to supply a fish hatchery. If the deal goes through, then the hatchery would get its water from municipal wells of the small Columbia River town of Cascade Locks.

Opponents of the deal are concerned that the exchange amounts to privatizing the spring water, which they view as a public good.

The Keep Nestlé Out of the Gorge coalition includes organizations ranging from Food & Water Watch and Sierra Club to Physicians for Social Responsibility and Sisters of the Holy Names, a Roman Catholic order. It also has the support of the Oregon chapter of the American Federation of State, County and Municipal Employees, among the nation's largest public-employee unions.

“We oppose privatization of this water and making water into a commodity, which is obviously what bottled water is,” Julia DeGraw, an organizer with Food & Water Watch, told Bloomberg BNA April 23. “We encourage people to drink tap water rather than bottled water, which has been marked up 5,000 percent.”

Officials at Nestlé, which calls itself “the world's largest food company,” denied to Bloomberg BNA that privatizing water is the goal, but said it does support placing a value on water as a way to better manage and conserve the resource.

“The majority of all water sources in the world are held publicly and this is completely fine as long as the water used has an assigned value,” David G. Palais, a hydro-geologist and a natural resource manager for Nestlé Waters North America Inc., told Bloomberg BNA in an April 23 telephone interview.

The issue of privatizing public water also has garnered the attention of nine Oregon lawmakers who wrote Gov. Kate Brown (D) April 17 saying the proposal “establishes a dangerous precedent regarding use of Oregon's water. We question the merit of transferring Oregon's public water rights so a corporation can bottle and sell our water.”

Bottling Plant Would Be `Huge.’

To the roughly 1,225 people who live in the city of Cascade Locks where the facility would be located and where unemployment hovers around 19 percent, the proposed bottling plant would mean 50 new jobs, a “huge” increase, City Administrator Gordon Zimmerman told Bloomberg BNA in an April 22 telephone interview.

“The big logging mill where Nestlé would go shut down decades ago. And we never recovered from the time when the mill was operating full bore,” he said.

Zimmerman cited the benefits of adding 50 jobs to Cascade Locks' 500-person workforce and the construction of a $50 million bottling plant that he says would increase property tax revenues by 67 percent.

Cascade Locks and the Oregon Department of Fish and Wildlife, operator of the hatchery, have been working closely with Nestlé for about seven years to bring the plant to town. At first, the plan was to swap municipal well water for the fish and wildlife department's water from Oxbow Springs that feeds the hatchery's tanks. An application for a water exchange was filed in August 2010 with the Oregon Water Resources Department. Under Oregon law, regulators must consider “public interest factors” in a water exchange, Racquel Rancier, senior policy coordinator for the water department, told Bloomberg BNA in an April 23 e-mail.

Food & Water Watch and a conservation group called BARK, which is dedicated to the adjacent Mt. Hood National Forest, challenged the Nestlé application in 2012 contending that the department water right should be canceled for nonuse. While they lost on the issue after more two years of legal battles that ended before an administrative law judge, another part of their challenge remained to be resolved.

No Public Interest Review 

That prompted Nestlé to change legal tactics, and in the process further raised the hackles of activists, and the lawmakers who wrote the governor too.

“If all the entities were to continue in the administrative process, we would have had at least another two years of litigation,” Palais, the Nestlé official, said. Nestlé reached out to its partners in Cascade Locks and the department to transfer water rights instead of exchanging water, Palais said.

Under Oregon law, the water department has no duty to consider public interest factors of the water rights transfer as it did under an exchange of the actual water, Rancier and Palais said.

Palais said the new legal tactics are intended to speed resolution of the process, not to avoid a discussion of what is in the public's interest in the company's acquisition of water from the state-owned spring.

‘No to Nestlé.’

The company approached the town in late 2014 with the idea of conducting a water rights trade, he said.

Just a few weeks later, the city council voted to move forward with the transfer in January, Palais said. Then the idea was presented to the fish and wildlife department and to the state water resources department. The cross-transfer applications were submitted April 10.

The reaction was immediate.

On the same day, The Oregonian, the state's largest newspaper, published a story reporting that the fish and wildlife department had agreed to trade its Oxbow Springs water right to accommodate Nestlé. On April 16, about 150 demonstrators staged a rush-hour protest at a busy Portland bridge waving “No to Nestlé” signs, the paper reported.

The next day, the state lawmakers—all Democrats in a majority-Democrat Legislature—wrote to the governor about their concerns about the proposed Nestlé plant.

In questioning the merit of what appears to the lawmakers as transferring public water rights to a corporation for bottling, the letter asserts that “Nestlé is pumping millions of gallons of water out of Sacramento, California during that state's historic drought crisis. As water becomes increasingly scarce and sought-after in the West, we should not enter lightly into a deal to extract it.”

Keeping Water a ‘Public Resource.’

Rep. Ann Lininger (D) organized her colleagues, mostly members of an environmental caucus, to sign the letter to Brown, she told Bloomberg BNA April 23.

“I am concerned that the state, through this proposed water right swap, is actually enabling a deal that would allow a multinational corporation to extract, bottle and sell a public resource, Oregon water,” she said.

Given the effects of climate change, there is reason to be concerned that drought conditions will persist, Lininger said.

“We need to recognize that in an increasingly thirsty world, Oregon's water supply is not a boundless supply, and we have to be careful about the decisions we make in terms of how to use it and whether to privatize it,” she said. “Tap water is extremely clean, affordable and doesn't come with a plastic bottle that you have to dispose of.”

The western drought has served to focus even more attention on how to manage what Lininger said is Oregon's precious resource.

“We shouldn't go lightly down the path of privatizing it,” she said, adding that she is considering legislation to address the concern.

Water Is a ‘Human Right.’

DeGraw, the Food & Water Watch organizer, called water a “human right,” and said the issue creates an opportunity for a state-level decision on whether corporations should be allowed to bottle public water in Oregon.

“Given the increasing water scarcity we are going to see with climate change, people are really concerned about corporations being able to have priority use of the resource,” she said.

The Food & Water Watch view of water as a human right is broadly shared within the Keep Nestlé Out of the Gorge coalition and mirrored from a moral perspective by the Sisters of the Holy Names. When the order first joined in the coalition, the official newspaper of Portland's Roman Catholic Diocese reported in May 2011 on the Sisters' perspective: “The value of the earth's fresh water to the common good takes priority over any commercial value.”

Nestlé Chairman's Comments

Part of the coalition's concerns are rooted in comments by Nestlé Chairman Peter Brabeck-Letmathe in a 2005 videotape in which he said it was “extreme” for nongovernmental organizations to characterize water as a human right.

“Water is of course the most important raw material we have today in the world,” Brabeck-Letmathe said. “It's a question of whether we should privatize the normal water supply for the population.”

Brabeck-Letmathe said he believes it is better to give water a market value like any other foodstuff.

“Then one should take specific measures for the part of the population that has no access to this water,” he said.

Palais denied the comments reflect a Nestlé strategy in Oregon to privatize public water.

“Our chairman refers the word `privatize' in the video to the principle of giving water a value and not to the principle of transferring ownership to the private sector,” he said. “The majority of all water sources in the world are held publicly and this is completely fine as long as the water used has an assigned value.”

From Palais's perspective, a market value for water should come into play for quantities beyond what individuals must consume for their personal health and hygiene.

“If water had no value, it would set an incentive to overuse the limited resources available,“ Palais said. “It is important to assign a value to water to encourage responsible use of the resource. In this sense, we reaffirm that Nestlé has no privatization agenda and has never had a privatization agenda.”

Public Comments Being Taken

As for the facility intended for Cascade Locks, nothing in the proposal suggests an effort to privatize public water supplies, he said. Rather, Nestlé “would be a public water supply customer like any other business in town.”

The Oregon Water Resources Department took public comment on the proposed water rights transfers through May 14.

The department's Rancier said in her e-mail to Bloomberg BNA that before approving the water right transfer, the agency must ensure that another water right will not be get less water or that the transferred right will not expand the allowed use of water.

“The Department cannot consider whether the bottling of the water should be prohibited, as this is outside the scope of the Department's authority,” said a posting on the water department website.

The department will issue a preliminary determination this summer. Protests may then be filed, which could lead to a hearing before an administrative law judge. ALJ decisions may be appealed to the Court of Appeals.

To contact the reporter on this story: Paul Shukovsky in Seattle at pshukovsky@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com