The Nestle Project: The Bad Deal

1. The process for public input was inadequate and violated the trust between the District board and the community.
2. Nestlé isn't even paying close to its share when compared to community ratepayers.
3. The contract already violates the law.
4. Once an international corporation like Nestlé has negotiated a deal to extract water for sale, the water becomes a commodity on the international market and may not be protected by federal, state or local law.
5. It's Nestlé's word against common sense.

1. The process for public input was inadequate and violated the trust between the District board and the community.
The process used to approve the contract was hurried and allowed for no effective or measurable public input. On the day of the public meeting to review the contract, a member of the community was told by a District board member that there was not going to be any public debate on the matter and that it was a "done deal." The first (and only) public meeting to review the contract was held just a few days after copies the contract were made available to the public. At the end of that meeting, in the face of widespread community concern and opposition, the District board voted  unanimously to approve the contract without further discussion. This refusal to permit adequate community input regarding a binding, 100-year contract is incredible, particularly in a district where a referendum was recently held over the comparatively minor issue of whether or not to fund maintenance of McCloud's alleys.

2. Nestlé isn't even paying close to its share when compared to community ratepayers.
In the contract, Nestlé's bill for water use is 200 Household Equivalents per month. The average American family uses approximately 400 gallons of water per day. Nestlé will use 1,800,000 gallons of spring water per day, with access to unlimited ground water and 8500 acre-feet annually of water from the McCloud River pipe at Lakin Dam upon purchase of the Cal-Cedar Mill property. To appropriately bill Nestlé just for its spring water use, Nestlé would need to pay 4,490 Household Equivalents per month. Shouldn't a multibillion dollar international corporation pay for the water it uses, just like McCloud's less wealthy residents?

3. The contract already violates the law.
In an attempt to rush this dangerously defective deal through, Nestlé and the District board failed to analyze serious potential environmental impacts prior to signing the contract, in violation of California law. The McCloud Community Services District was sued by a group of local citizens for not preparing an Environmental Impact Report before the signing. As a result, Siskiyou County Superior Court ruled that the District and Nestlé must "vacate and rescind the contract." Eager to avoid meaningful scrutiny of its outrageous contract, Nestlé is appealing the ruling. Since Nestlé is well acquainted with California law, it is clear they made an assumption that the people of McCloud would be inexperienced enough to let the process of environmental review slip by.

4. Once an international corporation like Nestlé has negotiated a deal to extract water for sale, the water becomes a commodity on the international market and may not be protected by federal, state or local law.
Chapter 11 of the NAFTA allows a foreign-based corporation like Nestlé to sue for damages if contract criteria are not met. In such a proceeding, investor claims of the corporation would trump any watershed protections that might be adopted at the local, state or even federal level.

The case of Sun Belt Water, Inc. of Santa Barbara against the province of British Colombia is the best example so far of how these laws protect international corporations. The government of B.C. tried to ban the export of bulk water in 1991 and Sun Belt is suing for damages of 10 billion dollars because of the violation of its contract under the NAFTA. The trade rules of the NAFTA and GATT supersede any regional, state or federal laws, and those trade agreements are designed to protect corporate investors over community, environmental or other social concerns. Even if it were discovered that the trade of water was destructive to the entire watershed, the World Trade Organization (WTO) trade laws can prevent countries from restricting the export flow of water. In other words, once we let Nestlé in, we lose the right under international law to decide for ourselves what is best for our watershed and our community. Even the laws of the United States government cannot protect us at that point.

5. It's Nestlé's word against common sense.
Nestlé's spokesman has made frequent statements in public and in private about what Nestlé will and won't do. He is quick to reassure people in the community that most of the worst case scenarios left open by the contract will not happen because Nestlé will use good judgment and restraint for the benefit of McCloud. However, in several Service District meetings he has been asked to back up these reassurances with an amendment to the contract. These requests have been flatly and publicly rejected. The truth is that Nestlé has a long corporate history of being ruthlessly profit driven, putting profits ahead of public well being and using unenforceable verbal promises to distract from the worst aspects of its signed contracts. Nestlé's record speaks for itself. McCloud will not be getting any favors that aren't in writing. We shouldn't let smooth words make us forget our common sense.