Supreme Court rejects Nestle contract appeal

Without comment, the California Supreme Court declined to review a January 2007 Third
Appellate Court decision that reinstated the contract between Nestle and the McCloud
Community Services District for Nestle to build a water bottling plant on the outskirts of the
town.
The Appellate Court decision overturned a 2005 ruling by Siskiyou County Superior Court Judge
Roger Kosel who found the contract had violated CEQA in that a CEQA review should have
been completed prior to an agreement with Nestle.
Nestle and the MCSD had been sued by a local citizens group, Concerned McCloud Citizens,
and Nestle appealed.
Among other issues, the appeal by McCloud Concerned Citizens to the Supreme Court
contended the Appellate Court decision contradicted numerous decisions regarding California
Environmental Quality Act and undermined the “core” of CEQA.
“Obviously we’re disappointed,” said McCloud Concerned Citizens attorney Don Mooney. “It
was a long shot at best. They only take a few cases out of the thousands they receive. We will
continue to participate in the Environmental Impact Review process.”
The EIR comment period has ended and the draft EIR is currently in preparation for further
public review.
Nestle project manager Dave Palais was pleased with the decision and said the contract is on the
“appropriate legal path.”
“The recent decision by the California Supreme Court to deny review of Concerned McCloud
Citizen’s appeal is final confirmation that what we had planned all along was the appropriate
legal path,” Palais said. “As written, the contract between the District and Nestle Waters is
contingent on the completion of the CEQA and NEPA analysis.”
The plant proposal has generated controversy with opponents claiming the district will not
receive a fair share of the revenue, that the environmental reviews to date are inadequate, the
amount of water Nestle will draw from the springs will damage
the McCloud River and that the truck traffic to transport the water, estimated at 300 to 500 truck
trips per day, will be disruptive and dangerous, especially on Highway 89.
Proponents say the plant will take a small amount of water from the spring, 1,600 acre feet of out
an estimated total capacity of 16,000 acre feet, the jobs generated by the plant will be a boost to a
economically depressed area and that the District will benefit from the contract revenue and
other Nestle financial commitments to the city.
Recently elected McCloud Services District board member Alan Schoenstein said the issue that
will now take the forefront is the Environmental Impact Review.
“That’s the big issue. The EIR has to go through the process,” Schoenstein said. “There may also
be more suits.”
Schoenstein also pointed to the Third Appellate Court decision that said there were numerous
“ifs” that had to be fulfilled for the contract to be valid.
“It’s a complicated issue with all the ifs. They are still out there,” Schoenstein said.
In its decision to reinstate the contract, the Third Appellate Court said the contract is
“conditional” on a “series of ifs.”
“The agreement, while admittedly a binding contract, is conditional and does not grant Nestle a
vested right of use of the project. The agreement is predicated on a series of ifs and commits the
District to sell water to Nestle under the described terms only if the
described terms are successfully completed,” the opinion states.
The Court’s opinion went on the describe the “ifs” as follows:
• If Nestle determines during the contingency period water bottling from the District’s springs is
feasible and desirable;
• If Nestle selects a site for and designs a bottling facility and obtains all applicable government
approvals and permits for the site and facility;
• If the District approves a design for water testing, monitoring, collection and distribution,
including written approval of a new collection system, delivery
system, and as yet unspecified necessary ancillary facilities;
• If the District and Nestle are able to develop a water supply contingency plan to address
foreseeable emergencies; and
• If the District and Nestle are able to jointly develop a road use plan. “The biggest ‘if’ in the
agreement however is if all discretionary permits, expressly defined as including CEQA
documentation, review and approvals, along with the final adjudication of any legal challenges
based on CEQA, are secured and all environmental, title, physical, water quality and economic
aspects of the project are assessed,” said the opinion.
Diane Lowe of Concerned McCloud Citizens says the group will not give up it opposition to the
plant and said the organization is also moving ahead with the EIR process.
“Nothing has changed for McCloud. The issues involved in selling this excessive amount of
spring water for Nestlé's water mining and distribution center continues within the EIR
processes,” Lowe said. “The court has determined this a contingent, ‘tentative agreement’ within
a definite time frame, for completion of these processes.”
Lowe also reiterated a charge that the process by which the district board approved the contract
was flawed.
“We now know that on the night of September 29 2003, when the McCloud Community
Services District Board of Directors approved the contract with Nestle, that the board did not
have available to them the necessary and fundamental information for
the approval of an agreement to sell water to Nestle,” Lowe said.
“After three an a half years, an ever growing number of people, including the new MCSD board
of directors in McCloud, are beginning to learn even more the magnitude of effects of this
unprecedented, gargantuan and encompassing scheme.”
Palais said Nestle will continue to cooperate with all parties to bring the plant to fruition.
“We are glad that the proposed project is on track and we look forward to continuing to work
with the County, McCloud Community Services District and local residents to bring economic
development to the region,” Palais said.