Hood River News: Cascade Locks seeks keys to Nestle' water questions

by Julie Raefield-Gobbo
Hood River News

Just about 10 years ago, a small, picturesque town at the base of a snow-capped mountain opened its doors to a large multi-national corporation offering a solution to their economic woes and high unemployment.

That town was McCloud, Calif., and Nestlé Waters North America was the corporation that came calling.

Cascade Locks is about to undertake a similar examination of costs and benefits in their negotiations now under way with Nestlé for the construction of a 250,000-square-foot water bottling plant to be located on port property.

McCloud residents are reportedly still repairing the divisions in their town that resulted from the Nestlé battle.

According to "A Town Torn Apart by Nestlé," an article in the April 16, 2008, edition of Business Week magazine, McCloud's town administration agreed to a deal without adequate public process, limited due diligence research and no legal advice. The article may be viewed online at: http://buswk.co/RV26k.

Cascade Locks residents attending past meetings hosted by Nestlé's local representative, Dave Palais, and the port, have voiced both support for potential economic benefits and concerns about the plant, truck traffic and the use of a public spring water resource to a for-profit corporation. Citizens of McCloud faced a similar set of conflicting interests and opponents funded an ECONorthwest analysis of the deal. That report is available online at http://bit.ly/Hvt2iT.

With the recent preliminary approval of an Oregon Department of Fish and Wildlife water transfer application, initial steps toward the bottling plant have already begun; although according to Mayor Lance Masters, "no contract exists between Cascade Locks and Nestlé as of yet."

The preliminarily approved ODWF transfer application would essentially create a quantity-based split of existing ODWF Oxbow Spring water rights, allowing for a portion of ODFW water to be exchanged with Cascade Locks, while keeping another portion for continued ODFW hatchery operations. ODFW would also benefit by obtaining a back-up well water source for the hatchery during low water years.

To achieve a water sale with Nestlé, Cascade Locks must seek to obtain rights for a "water exchange" between city-owned well water and the newly created sub-portion of ODFW controlled Oxbow Spring waters.

That application process would again pass through the Oregon Water Resources Board.

If that swap is authorized, Cascade Locks could then be in a position to cut the deal with Nestlé, allowing the sale of Oxbow Spring water, supported by city well water, to the multi-national corporation for an extended period of time.

Although Masters was not aware of any specific length of time yet requested by Nestlé for water access, other recent Nestlé proposals included contract terms of 50 years with subsequent 50-year term renewal options.

Opponents to the local bottling plant recently filed a legal protest to the ODFW transfer application, citing potential harm to other water users.

Opponents include not only the environmental groups Food and Water Watch and Bark, but also a cadre of Oregon legislators and a large labor union. The broader community of opponents is focusing on the precedent-setting water exchange involved in the process. Concerns over the impact on the watershed are also cited.

In another Nestlé water bottle community, Mecosta County, Mich., a judge had to order Nestlé to reduce its pumping after it was found to damage a local watershed, ending an eight-year legal battle with residents.

In examining the record of scrapped plans for the Nestlé plant in McCloud, a significant amount of research and information has been made available for review on the questions and issues facing small towns engaging with Nestlé, the world's largest food and beverage corporation, and similar powerhouses.

A large coalition of McCloud residents opposing the Nestlé deal funded a 63-page study examining the economic and environmental impact of the plant on their town's future.

One of the first unexpected findings of the McCloud study? Nestlé was offering reimbursement rates for the proposed water purchase at $26.40 per acre-foot versus the $80 per acre-foot lease rates typical in California at that time through other corporations.

Although Chuck Daughtry, port of Cascade Locks general manager indicated that he had not read the ECONorthwest study - alleging bias in its results - the document does provide relevant guidance for assessing broad issues of concern to economic development advocates, local residents, environmentalists and public policy-makers alike.

The report offers a presentation of some of the questions pertinent to a potentially long-standing contract.

The questions span economic topics and public resource concerns including: fixed-versus-adjustable reimbursement rates, long-term impacts and reparations during drought or overuse, environmental damage impacts, truck traffic and wastewater costs and concerns, and options for future contract cancellation to protect citizen access to water in the event of a crisis.

According to Daughtry, Cascade Locks has a "team of professionals" working together to provide answers to those types of questions. "We do have to look after our own interests," said Daughtry. "But this could double the tax base in our community."

Daughtry added that once the water availability has been secured, city representatives may seek additional bidders for the resource.

Nestlé has funded an economic analysis of the project to be produced within the next month by Professor Bruce Sorte, OSU extension economist, and provided to the city. That report will assess impacts of the projected 50 new jobs on the local economy.

Back in McCloud, amid mounting local and statewide protests, Nestlé, first scaled-back and then ultimately scrapped the bottling plant, citing "transportation cost concerns."

Palais, Nestlé's water resource manager, was the lead negotiator on the McCloud project and is the local point person for the Cascade Locks deal.