The Nestle Project: The Contract

Legal Memorandum on the Contract
In fall of 2007, Attorney at law Donald B. Mooney issued a Memorandum to the MWC expressing his legal opinion concerning the authority of the McCloud Community Services District regarding Nestle's Proposed Water Bottling Facility. This insight is very valuable, as it puts into perspective the legal position the MCSD is in at this point, based on the Third District Court of Appeals ruling. You can read it here.

1. McCloud will be stuck with a 100-year contract that makes no provision for inflation or change in water flow or value.
2. The contract gives Nestlé a superior claim to McCloud's water over the town's ratepayers.
3. The Nestlé contract gives the water to Nestlé, but leaves the legal responsibility for the springs, infrastructure and water table in the District's hands.
4. The contract gives Nestlé the right to drill unlimited boreholes.
5. Nestlé clearly took advantage of our rural and unprepared community.

1. McCloud will be stuck with a 100-year contract that makes no provision for inflation or change in water flow or value.
Nestlé has crafted a contract that initially binds the town of McCloud to its terms for 50 years, with Nestlé holding the option to renew its hold on our water for another 50 years at the same rates. If the McCloud Community Service District wants to raise Nestlé's rates for any reason, (e.g. water scarcity or inflation), they are required to raise everyone in the community's rates equally. The Nestlé deal is not a solution to our constantly increasing service district fees. Read the contract.

2. The contract gives Nestlé a superior claim to McCloud's water over the town's ratepayers.
According to the contract, for the next 100 years, regardless of drought or other shortage, Nestlé can continue to take its maximum water draw. If the water draw is slowed or stopped for any reason, the District must make restitution to Nestlé for its losses. In other words, the District ratepayers would have to get in line behind Nestlé and become second class citizens with regard to their own water, while bearing the cost of any shortfall in Nestlé's water draw.

3. The Nestlé contract gives the water to Nestlé, but leaves the legal responsibility for the springs, infrastructure and water table in the District's hands.
This would leave the people of McCloud holding the legal bag for any environmental violations resulting from Nestlé's operations and any resulting lawsuits.

4. The contract gives Nestlé the right to drill unlimited bore holes.
Several hydrologists have already pointed out that there is not enough data or predictability in McCloud's hydrology to determine the safety of bore holes. Even with widespread public outcry, Nestlé has refused to revise the contract in any way that might limit this right.

5. Nestlé clearly took advantage of our rural and unprepared community.
Nestlé rushed and pressured the District board by threatening to take their offer off the table unless the contract was signed quickly. The result was a decision made without proper due diligence or any type of independent cost/benefit analysis. Nestlé's own cursory economic data was accepted by the District as an adequate substitute. Our Service District board even used an attorney paid for by Nestlé to review and shape the contract. Nestlé paid all the negotiating fees. The District had no one on its bargaining team that had experience negotiating similar deals with such a large, multinational corporation.