McCloud, CA

In 2003, the McCloud Services District signed a contract with Nestle Waters of North America to build a one-million sq. ft. water bottling plant in town – a contract negotiated in secret and signed without any real public scrutiny.

Since then, the story has taken more twists and turns than a Hollywood thriller – and this rural town in the mountains of Northern California has been ripped apart.

What happened?

  • The original negotiations with the McCloud Services District were undertaken in secret
  • Public review of the contract was limited to one meeting – at the conclusion of which the Services District voted to accept the contract (to the stunned amazement of the attendees)
  • The contract essentially handed over control of McCloud’s water supply – for up to 100 years
  • Nestle was paying $26.40 per acre foot for water (a small fraction of the market price), and the fees paid for the water itself weren’t going to increase over the 100 year life of the contract
  • While Nestle enjoyed the first rights to the water (ahead of the town’s own residents), they also offloaded most infrastructure costs onto the town
  • 250-300 trucks per day would roll into town (24/7/365), creating a level of noise and air pollution the town had never seen
  • Nestle had never conducted any environmental review of the impacts of water removal on the watershed, so their claims of “no harm to the environment” were widely derided

A citizen’s group – opposed to both Nestle’s plant and the lack of public scrutiny afforded the contract – successfully sued to have the contract set aside, arguing that it wasn’t valid absent environmental review.

While that decision was later set aside by an appeals court, in the interim, Nestle attempted to subpoena the private, personal financial records of opponents. While this subpoena was quashed, the intent was clear: Nestle wanted to intimidate opponents, yet the move had the opposite effect of galvanizing others who opposed Nestle’s heavy-handed tactics.

BusinessWeek felt the story deserved a deeply researched article that did good of summing up the town’s oddyssey.

This passage from the story outlines

Few of McCloud’s residents knew about the agreement. That is, not until September, 2003, when board members posted a notice in McCloud’s post office announcing a town meeting to unveil the plan. Local business owner Richard McFarland did a double take when he saw the flyer.

A few days later, on Sept. 29, he and 100 other residents piled into the elementary school gym for the Nestlé town meeting. As they waited for it to start, a TV beamed a continuous loop of CEO Jeffery extolling his company’s environmental credentials.

Many assumed a discussion would be had, questions fielded, and the community would then work together to assess options. They thought they were there to hear about a proposal. But after Kampa and Palais did their PowerPoints, the crowd was dumbfounded when the gavel struck and Dragseth and the other four board members voted unanimously to sign the contract right then and there. The deal was done.

McFarland and other residents were furious. “There was no public participation in the process,” says McFarland. “That’s where it falls apart for me.” Dragseth concedes that the contract was done behind closed doors but counters: “You can’t have a room full of people to negotiate. You’d have 50 different people wanting 50 different things.”

(I love Dragseth’s comment. Instead of a room full of people “negotiating,” McCloud’s Services District was holding a garage sale for the town’s resources.)

Eventually, Nestle found itself facing the Protect Our Waters coalition, which included the McCloud Watershed Council. CalTrout (a non-profit dedicated to coldwater fisheries in the state) and Trout Unlimited (a national group like CalTrout).

This coalition began applying pressure, and as the media battle widened – and several legal challenges made their way through the courts, several things became clear.

  • The environmental impact statement prepared by the county (using Nestle data) was so incomplete, it would have to be reworked and released again
  • Nestle’s repeated refusals to put their public vows not to use groundwater or water from Lakin Dam into the contract concerned even proponents of the plant
  • Nestle repeatedly affirmed that diverting spring water before it reach Squaw Creek wouldn’t have an impact, yet they had never – for even a second – studied the flows in the creek
  • The noise and pollution impacts of 600 truck trips per day would be significant – yet they were largely ignored in the EIR
  • An economic study was commissioned by the Protect Our Waters coalition, and the EcoNorthwest study found the Nestle bottling plant could easily deliver a negative economic impact to the county

Along the way, the rising tide of opposition to Nestle finally took its tool.

In May of 2008, Nestle announced they were scaling back their plant to 60% of the original size. They cited economic conditions, not public pressure (which by then was significant).

Finally, in July of 2008, Nestle announced they were nullifying their contract with McCloud while they engaged in the watershed monitoring they should have done in the first place.

Once again, they denied that opposition to the plant lead to the shocking announcement, but a well-placed source told me Nestle was tired of being beaten like a rented Donkey.

Nestle vows to make another offer to the McCloud Services District – an offer which will certainly not be considered without public scrutiny.

UPDATE: In 2009, Nestle finally abandoned its plans for a McCloud water bottling plant.

Help Me Make Nestle Behave Like a Good Corporate Citizen

As matures, I plan to flesh out and update the community pages; if you have news or something to add, please contact me.

Huge multinationals like Nestle don’t listen to individuals. They will, however, hear an online community of individuals voicing the same concerns.

10 thoughts on “McCloud, CA

  1. Hi folks
    I was just perusing the official Nestle Mcloud website ,, and I notice that the “news” section hasnt been updated since Feb, ’08. None of their more recent Press Releases are posted. It seems to me that the local agitators should be all over their failure to keep their website current. At the very least it seems like something to point out in letter to the editor or two. It may be a small point but it is just another chink it the armor covering their soft white underbelly.

  2. Thanks Richard. It’s certainly on the list of things to look at around Nestle’s McCloud project. It’s just such a long, long list… 😎

  3. I am French, I live in southern Thailand and I fully agree with Debra Anderson. Do not let gigantic multinational companies, wherever they are from, sell national ressources. Now they want to sell the water you get for very cheap on your tap; soon, they will try to sell us the air we breathe… Keep fighting, you have to win this battle!

  4. well it seems the mcsd fell for it again. the excess record breaking rain fall in november 2008 has conveluded the squaw creek flow. the studies are done in july and august, low flow period. the water company persuaded the mcsd to allow them to do it in october and november. mistake and raise to mcsd

  5. Allowing the “low flow” studies at this time of year is ludicrous; whatever credibility Palais had as a scientist evaporated entirely when he said this was the right time to conduct low flow studies.

    For those unaware of the need to conduct low-flow studies on McCloud’s Squaw Creek (Nestle had conducted no studies there prior to signing a water withdrawal contract), I briefly covered this issue in this post.

    In essence, low flow studies must be conducted when water flows are at their lowest, and air temperature are high. One of the effects of low flows is higher water temperatures – temperatures which could easily become lethal to fish and benthic populations if low flows were exacerbated for any reason.

  6. I am so delighted to hear that there are so many people committed to mobilizing for such an important cause. Hats off to all of you who have been so diligent in the fight to stop Nestle- but this isn’t over yet. Hopefully this situation will set a resounding precedent for any multinational corporation that tries to fly beneath the radar of a determined local populus. Keep up the good work, it will be worth it for longer than the next 100 years!

  7. Given the resources of a multinational like Nestle – which employes a lot of PR specialists, not to mention their fulltime operatives on the ground (and even ignoring the paid-for groups like the IBWA) – it’s amazing the company ever loses a fight. But then, they hardly ever do – they lose, and come right back at you with a fresh set of lawyers and a bizarre new legal argument.

  8. Maybe they will abandon the plan like they did in Black Diamond, Wa. We all need to be at the next Nestle meeting to make it as hard as possible for the company to build here in beautiful,peaceful McCloud. Even with a new contract you know they will make that contract work in their favor. If any one knows when the next meeting is let me know. Thanks

Comments are closed.